agreement clearly expressed and indorsed on the policy should not be considered as a waiver of any printed or written condition therein, the court recognized and affirmed the law, as settled in the state, that such condition can be dispensed with by the company or its general agent by oral consent as well as by writing.”

Agents in the course of their daily business are frequently asked to express opinions on the meaning of policy provisions and other matters, and it is of the utmost importance that definite relations should exist between the company and its agents as regards the expression of such opinions. What, then, is the legal effect of the agent's opinion? The general rule is that no legal effect can be given to such opinions in case, for example, they result in misleading the insured as to the meaning of any policy provision. This view is based on the theory that an agent's opinion as to the meaning of any section of the contract does not create new or change old obligations. A case in point is that of the Laclede Fire Brick Mfg. Co. vs. The Hartford Steam Boiler Inspection and Insurance Co. (9 C. C. A. 1; 60 Fed. 351). After taking a policy the insured later asked that insurance be granted on several more boilers. The agent and inspector of the company several times expressed himself to the effect that the new boilers were covered by the original policy. When a loss occurred the company denied the claim, and the court held that despite the agent's statement no modification of the insurance had been made, and that no new contract existed.

Liability of Agents for Misconduct to the Principal.— The relation of the agent to his employer is such that he must never further his own personal interests by disobeying or exceeding his instructions. Any misconduct of the agent of either the insured or insurer makes him personally liable to his principal for the damage occasioned. Among the many legal text-books announcing this principle we may

quote from Story on Agency, section 217: "Whenever an agent violates his duties or obligations to his principal, whether it be by exceeding his authority or by mere negligence or omission in the proper functions of his agency or in any other manner, and any loss or damage thereby falls on the principal, he is responsible therefor, and bound to make full indemnity."

As illustrations of this rule, a number of instances may be cited, where the agent is liable to the insured. Thus if he represents an unincorporated company he will be liable to the insured for any loss that may occur, for in the absence of any responsible principal from whom indemnity can be obtained, the law presumes that he wrote the policy on his own responsibility and account, and intended by his act to hold himself responsible. If the agent places insurance for his employer in an insolvent company he is likewise liable to him for any loss that may occur,1 and if engaged for the purpose of keeping his employer's property insured, he becomes liable if he does not protect the same as agreed.2

3

When representing the company, the agent, as we have seen, is bound to act in conformity with the definite instructions given to him by his principal, and no custom or usage can overcome the same. Failure to obey his principal's orders literally makes him responsible for any losses that may result, unless the execution of such orders is prevented by an unavoidable accident or he is required to perform an act which is illegal or immoral. If ordered by the company to cancel a policy, neglect to obey the order renders the agent liable for the amount of the loss, and this rule is not waived even though he gives instructions to a broker who placed the insurance with him to have the policy cancelled.

In the same way, if ordered to make a reduction

1 Hurrell vs. Ballard, 3 Fost. F., 445.

2 Thomas vs. Funkhouser, 91 Ga., 478.

3 Osborne vs. Rider, 62 Wis., 235.

in the amount of the policy, failure to comply will make the agent liable. Furthermore, in case he cancels policies with a view to subordinating his principal's interest to his own selfish gain, the agent is liable to the company for the premiums involved.1 Especially is this true when the agent resorts to the practice of "twisting," i.e., of inducing policyholders, when his agency with a company terminates, to cancel their policies with that company, and have him rewrite the same in another company which he now represents.. Where an agent is guilty of this practice, he is liable to the company which originally wrote the policies for the commission on the unearned premium. An agent must also account to his principal for all money collected in the manner agreed upon.

* Knowledge of Agent the Knowledge of the Company. Unless the agent's authority is restricted by the company, and the restrictions are known to the insured, it is a wellrecognized principle that the knowledge of the agent is the knowledge of the company. The principle is well summarized by Wolff in the following words: "Before he issues a policy, the power and authority of a local and soliciting agent of a fire-insurance company are coextensive with the business with which he has been entrusted, and his positive knowledge of material facts, and his acts and declarations within the scope of his employment are binding on his principal unless such principal restricts his authority, and such restrictions are known to the other party at the time of the transaction."" But a distinction must here be made between the time preceding the issuance of the policy and the time following. It is a generally accepted rule that knowledge

1 Phoenix Insurance Co. vs. Pratt, 36 Minn., 409; Northern Assurance Co. vs. Hamilton, 50 Nebr., 248.

2 American Steam Boiler Co. vs. Anderson et al., 6 N. Y., Suppl., 507.

3 Wolff's "Law of Insurance Agency," pp. 121, 122.

concerning matters pertaining to the insurance which comes to the agent subsequent to the issuance of the policy will not be considered as the company's knowledge, the company being held responsible only for the knowledge of the agent at and preceding the issuance of the policy.

The many important instances where the courts have considered the agent's knowledge the knowledge of the company, makes an understanding of this particular phase of the law of insurance agency especially desirable. Thus in case no misrepresentations are made by the insured as to his interest in the property, any incorrect statement of the same in the policy by the agent on his own knowledge prevents the company from claiming that the insured did not truly state his insurable interest. If the agent has knowledge of the uses to which the insured premises are applied, this will prevent the company from declaring a forfeiture of the policy because of provisions in the policy prohibiting such uses. An agent's knowledge will also bind the company and prevent a forfeiture of the policy, regardless of its provisions to the contrary, if he has knowledge of the true condition of the insured's title to the property, or if he knows that there has been a transfer of the title or foreclosure proceedings have been commenced against the property prior to the issuance of the policy. Similarly, if the agent knows when issuing the policy that the insured's ownership was not sole and unconditional, or that the personal property was mortgaged or the realty incumbered, this knowledge will operate as a waiver of the conditions in the policy which avoid it for any of these reasons. In all these instances, however, it is essential that the insured did not actually misrepresent the facts when applying for the insurance.

If, when writing the policy, an agent has knowledge of another policy to be obtained, the courts have declared that this knowledge will waive the provision in the policy providing against other insurance without the consent of the com

pany. Or if the agent has been notified by the insured that other insurance has been taken, and he raises no objection, the company cannot claim the policy forfeited because of the "other insurance" clause. Knowledge on the part of the agent of prior insurance will also protect the insured against a forfeiture, even though the policy stipulates that the company must give its consent to such other insurance.

The company is also held responsible for any errors of the igent, which he may commit in making indorsements on the policy, when the correct information was given him by the insured. When the premises were vacant at the time of the issuance of the policy, and the agent has knowledge of this fact, such knowledge will constitute a waiver of the vacancy clause in the policy. An agent's statement to the insured that a requested vacancy permit had been indorsed on the policy will prevent a forfeiture of the policy in case this has not been done, because the agent's statement is considered the statement of the company and the insured had a right to rely upon the same. Nor is a fire-insurance policy avoided by any increase in the hazard, although the policy so declares, if such increase is known to the local agent of the company.

1

The foregoing illustrations are a few of the many important instances where the knowledge of the agent is considered the knowledge of the company. It will be observed that in nearly all cases the company's responsibility is limited to the acts or knowledge of the agent at or before the time when the policy was issued. No liability, however, rests on the company for any knowledge of the agent acquired in the course of employment not connected with such agency. Nor is knowledge of a broker to be considered the knowledge of the company. In the case of East Texas Fire Insurance Co.

1For a detailed enumeration of examples and citation of cases see Wolff's "Law of Insurance Agency."