In the majority of states the meaning of "insurance agent" has been defined by statute. The law of Massachu

setts (section 93) will serve as an example, and resembles most of the other statutes on this subject. 'A person not a duly licensed insurance broker," the law states, "who, for compensation, solicits insurance on behalf of any insurance company, or transmits for a person other than himself an application for or a policy of insurance to or from such company, or offers or assumes to act in the negotiation of such insurance, shall be deemed an insurance agent within the intent of this chapter, and shall thereby become liable to all of the duties, requirements, liabilities, and penalties to which an agent of such company is subject." Moreover the tendency of the state statutes is to make all agents general agents, except under certain stipulated conditions; and only a few states provide that one dealing with a soliciting fireinsurance agent is bound to ascertain the extent of his authority.

But the various states have not merely attempted to make soliciting agents specifically the agents of the company, but carefully supervise the operations of the agency force representing companies incorporated in other states. The law of Pennsylvania in this respect is probably as nearly typical as that of any other state, and will serve as an example. No person, according to the Pennsylvania Act, shall act as agent of a foreign company until that company has complied with all of the state's insurance laws; and any agent who shall assist in placing risks for a foreign company that has not complied with the law, shall be subject to a fine of from $100 to $1,000, and for the second offence to the same sum, or one year's imprisonment, or both. All foreign companies must certify to the insurance commissioner from time to time the names of their agents, and no agent can transact business for such company until he has received a certificate from the insurance commissioner stating that the company

has complied with the law, and that the person named has been appointed its agent. When doing business for a foreign company without such a certificate of authority, the agent is subject to a fine of $500, and is personally liable on all contracts made by him or through him on behalf of such company. Furthermore, any person representing or adver tising himself as the agent of any fictitious or spurious com pany shall be subject to a fine of not more than $500, or imprisonment for not more than three years.

The Character of Agency.-According to the usual classification there are two classes of agents, namely "general" and "special" agents. Story, in his work on Agency, states the distinction between them to be as follows (No. 17): "A special agency properly exists when there is a delegation of authority to do a single act; and a general agency properly exists where there is a delegation to do all acts connected with a particular trade, business, or employment." Hence a general agent is one who is employed to transact all the business of his principal of a particular kind or in a particular place, while a special agent is one authorized to act only in a specific transaction. In most states the terms "general agent" and "special agent" are defined by statute or by court decision. Thus in Virginia (23 S. E. Rep., 744) a general agent is defined as "an agent authorized to accept risks, settle the terms of insurance, and to issue and renew policies of fire insurance." On the other hand, the company may appoint, we will say, a special agent with power to adjust losses. Here is an agent whose powers extend only to the fulfilment of a single transaction. In some states, like Wisconsin, the distinction between general and special agents has been eliminated by a statute which declares the agent to be the agent of the corporation to all intents and purposes.

When dealing with a general agent the insured may assume him to exercise all powers coming within the scope of

his apparent authority; but if the insured becomes cognizant of facts which would seem to indicate that the agent's authority is restricted, i.e., is special, it devolves upon him to ascertain the nature of the restrictions, and neglect to do this relieves the company from liability. In defining the powers of special agents, considerable difficulty arises, since the courts do not agree as to the powers which the insured may presume various classes of special agents to possess. In his summary of legal decisions defining the powers of special fire-insurance agents Elliott states: "There is considerable conflict of authority as to the powers of a soliciting agent who has actual authority merely to receive applications and forward them to the company for approval. It has been held that such an agent cannot bind the company by an oral contract of insurance, or for the renewal of a policy, or for additional insurance, or by his construction of the policy; nor can he consent to the assignment of the policy, or waive a condition therein. A mere collecting agent cannot bind the company by an agreement to waive any of the terms of the policy. So it has been held that an agent with authority to adjust a loss cannot waive a forfeiture of the policy, although he may waive the making of preliminary proofs of loss. ''1

The question as to whether a person may act as agent of both parties to the fire-insurance contract has been answered differently by the courts of the various states. One view is presented by the Supreme Court of Wisconsin (70 N. W. Rep., 84, and 48 Wis., 420), and is to the effect that the state statute defining insurance agents does not prevent such an agent from acting as the agent of the insured in certain cases. In the case last cited (Northrup vs. Germania Fire Insurance Co.) the agent of the company also had charge of the property as regards the collection of rents, the payment of taxes,

"Elliott on Insurance," pp. 133, 134.

and the placing of insurance. The court held that the dual relationship of the agent was not illegal, because he was not required to assume incompatible duties. Another view, however, is taken by the courts of Colorado1 and Georgia,2 the first deciding that either party to the contract can avoid a policy of insurance negotiated by one who acted as agent for both the company and the insured, unless both parties were aware of the agent's dual relationship and ratified the same; and the second holding that the company must give its consent before its agent can also be the agent of the applicant for insurance. It should also be stated here as a general rule, that if a company revokes its agent's authority and does not notify the insured of such revocation, the subsequent acts of such agent will bind the company.

Brokers Distinguished from Agents. The statutory law of most of the states makes a distinction between insurance brokers and insurance agents. In section 93 (Chapter 214, Statute of 1887) of the Massachusetts law, which is illustrative of the law in many states, a broker is defined as constituting any person "who, for compensation, not being the appointed agent or officer of the company in which such insurance or reinsurance is effected, acts or aids in any manner in negotiating contracts of insurance or reinsurance for a person other than himself. Most of the laws provide that no person shall act as an insurance broker until he has procured from the insurance commissioner a certificate of authority so to act, and has paid a license fee varying in the different states from a minimum of $10 to a maximum of $200. Such certificate of authority authorizes the broker named therein to negotiate contracts of insurance, place risks, or effect insurance, with any company established in the state, or its agents, and with the agents of any foreign

'British America Assurance Co. vs. Cooper, 6 Colo. App., 25. 2Rauspeck vs. Patillo, 104 Ga. Rep., 772.

company duly authorized to transact business within the state. In a number of states such as New York, New Jersey, and North Carolina, laws have also been enacted governing the brokerage of excess lines of insurance. The law provides that the insurance commissioner may issue a license to citizens of the state permitting them to act as agents to procure policies of fire insurance from corporations or associations which are not authorized to transact business in the state, provided both the insured and licensee execute affidavits, to be filed with the insurance department, that sufficient insurance cannot be obtained in companies legally authorized to transact business in the state.

There has always been considerable disagreement in the various states in regard to the legal position which the insurance broker bears to the insured. In some states, for example, Indiana, the courts have declared (Ins. Co. vs. Hartwell, 123 Ind., 177) the broker to be the agent of the party who pays him for his services, regardless of the source of employment. As has been pointed out, this rule will always involve uncertainty until the courts fix the ownership of the fund from which the broker is compensated. According to other states the broker is considered to represent the insurance company as its agent as regards the delivery of the policy and the payment of the premium, but is the agent of the insured in all other matters pertaining to the insurance. Some states have also seen fit, no doubt for the benefit of the insured, to enact special statutes making the broker the agent of the insurance company in certain cases. In the majority of states, however, the broker is regarded as the agent of the insured in all matters, and is declared by a statutory law to represent the insured and not to be the agent of the company.

The importance of this rule to the insured can scarcely be overemphasized. When transacting business with a broker in these states it is well for the insured to bear in mind that