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U. S. Circuit Court of Appeals,

THIRD CIRCUIT.

BRADFORD, Plaintiff in Error, v. THE HANOVER

defendant was appointed and constituted the agent of the plaintiff company with authority to receive proposals for insurance against loss and damage by fire, in New Brighton, Pa., and

FIRE INSURANCE COMPANY OF THE CITY vicinity, to fix rates of premium, to receive

OF NEW YORK, Defendant in Error.

Fire insurance-Fraudulent signature-Principal and agent-Apparent authority.

B., who maintained an insurance office, employed H. to attend to office duties, make daily reports, collect premiums and deliver policies. B. signed all papers, and no policy was valid unless countersigned by B. H., unknown to B., placed a policy upon a prohibited risk, countersigned B.'s signature to the policy, collected the premium and placed the same to B.'s credit, but made no report to the company. B. did not know that the policy had been issued, or that the premium had been paid, until after a loss. The insured obtained judgment against the company, which did not notify B. to defend the action. This judgment was paid by the company. The company then brought suit in trespass against B. for fraudulently and negli

gently issuing the policy upon a risk which he knew was prohibited. Held,

(1) That, because B. had not been notified to defend the action, he was not concluded by the judgment against

the insurance company and it was open to him to

show that the judgment ought not to have been recovered against the company.

moneys, and to countersign, issue and renew policies of insurance, signed by the president and attested by the secretary of the plaintiff | company, subject to the rules and regulations of said company, and such instructions as might from time to time be given by its officers. The defendant immediately accepted this appointment and thereafter acted thereunder as the plaintiff's agent.

"2. The defendant maintained an office at New Brighton, Pa., for the conduct of the insurance business, he being agent for several insurance companies, and in the prosecution of said business the defendant had in his employment one H. N. W. Hoyt, who not only did all the clerical work of said office, but also made daily reports of business to the plaintiff's general agents for the State of Pennsylvania, at WilkesBarre, and further in the regular course of business and with the defendant's knowledge and by his authority, solicited insurance, collected premiums and from time to time delivered poli

(2) That H. was not employed to deliver spurious policies of insurance to the person insured.
cies, but only genuine ones, and B. was not liable for
the forgery of H.

In error to the Circuit Court of the United
States for the Western District of Pennsylvania.
Before DALLAS and GRAY, Circuit Judges,
and BRADFORD, District Judge.

"3. The Mayer Pottery Works, situate in Beaver Falls, Pa., in the vicinity of New Brigbton, had been insured by policies aggregating the sum of $15,000 issued by companies other the insured had procured through the defendthan the plaintiff company, and these policies ant as the representative of the companies. Opinion by DALLAS, J. Filed May 15, 1900. Shortly before July 1, 1896, Joseph Mayer, one The proceeding under review is an action of the proprietors of those works, addressed a of tort. It was brought by an insurance com- letter to the defendant at New Brighton, calling pany, the defendant in error, against the plain- | his attention to the fact that these policies tiff in error, to recover "damages resulting from would expire on the last-mentioned date, and the defendant's negligence and misfeasance in desiring information whether he, the defendthe discharge of his duties as agent of the plain-ant, would continue the insurance in companies tiff company, in the business of insuring the represented by him. In response to this letter owners of poperty, real and personal, from loss the said H. N. W. Hoyt visited said Mayer and by fire." The cause of action, as more specific-informed him that the policies would be really alleged, was that, although the defendant had been instructed to insure no potteries, "yet the said defendant well knowing his instructions and his duty in the premises and wholly disregarding the same, negligently, wrongfully and fraudulently issued" a policy of the plaintiff company insuring the owners of a certain pottery against loss thereof by fire. The plea was "not guilty." In pursuance of a stipula tion in writing, the cause was tried by the court without the intervention of a jury, and the facts were found to be as follows:

newed; and on July 1, 1896, said Hoyt, acting on behalf of the defendant, brought to said Mayer and delivered to him six policies of insurance, amounting together to $15,000, against loss by fire, upon the said pottery works and the contents thereof. One of the policies of insurance so delivered by Hoyt to said Mayer was policy No. 307,782 of The Hanover Fire Insurance company (the plaintiff company), dated July 1, 1896, signed by the president and attested by the secretary of the company, and purporting to be countersigued by Thomas "1. By an instrument dated April 20, 1887, the Bradford, the defendant, as agent of the com

10, 1898, the defendant therein paid to the plaintiff therein the amount of the judgment and costs, namely, $2,572.36.

pany, whereby in consideration of the premium of $37.50 that company insured J. & E. Mayer and the Mayer Pottery Company, Limited, for the term of one year from July 1, 1896, against "10. Thomas Bradford, the defendant here, loss by fire to an amount not exceeding $2,500 was not notified by The Hanover Fire Insurto the Mayer Pottery Works, to wit, the pot-ance Company to defend the said suit against tery building and the contents of the same.

4. On the 8th day of July, 1896, the insured mailed a check for $225, the amount of the premiums on said six policies payable to the order of Thomas Bradford, in a letter addressed to him at New Brighton. On July 11, 1896, this check, indorsed by said Hoyt thus, "For the credit of Thomas Bradford, agent," was deposited by Hoyt in the defendant's bank to the credit of the defendant, as agent, in his bank account, as agent. The check was paid by the drawer to the bank.

"5. Such risks as that covered by said policy No. 307,782, on July 1, 1896, were and long had been prohibited by the plaintiff company and the defendant knew of this prohibition. Long before July 1, 1896, the defendant had received instructions from the plaintiff company through its proper officers not to insure potteries.

the company upon the policy No. 307,782, but at the trial of that action he was called as a witness for the defense and testified."

The court below rightly held that it was open to the defendant to show that the insurance company was not liable upon the policy in question, and therefore no question is presented under the tenth clause of the foregoing findings. But upon the facts stated in the preceding clauses. Judgment was entered in favor of the plaintiff for $2,803.87, and we are now to consider whether or not this judgment was well founded in point of law. The learned judge based it upon two grounds, and as there is no other upon which it could have been rested, we may dispose of the case by examining those grounds separately.

1. The principal is civilly responsible for some, but not for all, acts of his agent. This

"6. Said policy No. 307,782 was not counter-responsibility extends to the tortious acts of the signed by the defendant personally but said Hoyt countersigned the policy for and in the name of the defendant by writing the defendant's name at the proper place. This he did without authority from the defendant and with out the defendant's knowledge. Hoyt delivered said policy to Mayer without the defendant's consent or knowledge. The defendant had no knowledge that this policy had been issued until after the fire and loss hereinafter to be mentioned.

"7. The issuing of said policy No. 307,782 to J. & E. Mayer and the Mayer Pottery Company, Limited, was not reported to the plaintiff company and the plaintiff had no knowledge whatever of the transaction until after the fire and loss had occurred.

"8. On October 21, 1896, the said insured property of J. & E. Mayer and the Mayer Pottery Company, Limited, was destroyed by fire. "9. Afterwards suit was brought in the Court of Common Pleas of Beaver county, Pa., at No. 224 of March Term, 1897, by J. & E. Mayer and the Mayer Pottery Company, Limited, against The Hanover Fire Insurance Company (the plaintiff here) upon the said policy of insurance No. 307,782. On January 28, 1898, upon trial by jury, a verdict therein was rendered in favor of the plaintiff in the sum of $2,529.20, and on February 8, 1898, judgment was entered on the verdict against the defendant therein in the sum of $2,529.20, and costs, $43.16. On February

agent, but only where they are committed for the principal's purposes and by his authorityeither actual or apparent, or where he ratifies them, or accepts and retains some benefit from them: Flower v. Railroad Co., 69 Pa. 210; Towanda Coal Co. v. Heeman, 86 Id. 418; Brunner v. Tel. Co., 151 Id. 447; Hower v. Ulrich, 156 Id. 412. In England, the princi pal's liability is, perhaps, somewhat more restricted. In his work on the law of Torts Pollock (Webb edition, page 388) defines it thus: "The necessary and sufficient condition of the master's responsibility is that the act or default of the servant or agent belonged to the class of acts which he was put in the master's place to do, and was committed for the master's purposes." But the decisions of the courts of this country have, we think, settled the rule in accordance with our statement of it, and with this in mind, we pass to the consideration of the facts of the case.

The declaration alleged that "the defendant negligently, wrongfully and fraudulently issued the said policy," and upon the truth of this allegation the existence of the asserted right of recovery was absolutely dependent. Did the facts as found maintain it? Bradford personally, "did not disregard his instructions nor did he negligently, wrongfully or fraudulently issue or cause to be issued the policy of insurance now in controversy." This the court found in its answer to one of the points

ble. Bradford did not-manifesty could notauthorize the forging of his own signature; and, this being so, we are unable to discern in his delegation of power to deliver policies bearing his genuiune signature, any apparent authority for the delivery of one falsely and feloniously subscribed. In short, we are of opinion that, as Hoyt's principal, Bradford could be held liable, if at all, only upon the theory that the agency of Hoyt vested in him authority to sign the name of Bradford, and as such authorityeither actual or apparent-did not exist, it remains only to consider whether Bradford is precluded from repudiating the transaction which Hoyt fraudulently effected.

submitted. Bradford, therefore, did not himself commit the tort which was the basis of the action. Did he do so by another? Hoyt, the actual tort-feasor, was the agent of Bradford, with authority "to solicit insurance, to collect premiums and to deliver policies." He forged the signature of Bradford to the policy, and he delivered that policy as and for a genuine one. But Bradford was not responsible for these unlawful acts merely because, for lawful purposes, Hoyt happened to be his agent. To make him responsible for them something more was requisite, and none of the conditions necessary to charge him was made to appear. Neither of the wrongful acts was committed for his purposes. The motive, whatever it was, was not 2. "When any person under a legal duty to his, but Hoyt's. It is also clear that Bradford any other person to conduct himself with reaneither expressly authorized them, nor ratified sonable caution in the transaction of any busithem, nor consented to profit by them. But it ness neglects that duty, and when the person is insisted that they were perpetrated in the to whom the duty is owing alters his position line of Hoyt's employment, and with Brad- for the worse because he is misled as to the ford's apparent authority, and this contention negligent person by a fraud, of which such presents the only serious question which is in- neglect is in the natural course of things the volved in the point now under consideration. ] proximate cause, the negligent person is not. Hoyt was not in fact authorized to sign Brad-permitted to deny that he acted in the manner ford's name, and the scope of his actual em- in which the other person was led by such ployment embraced the delivery only of poli- | fraud to believe him to act:" Stephen's Ev., cies which Bradford himself had signed. The Art. 102. This statement was intended (see signature in question was not so written as to note XXXVIII) to properly apply the doctrine of indicate that it was made for Bradford, but as estoppel in pais to the case of a negligent act if made by him. It was simply a forgery. causing fraud, and we think that it does so. There was no assumption nor pretense of au- The vital principle of that doctrine is, that "he thority for it, and it is quite impossible to per- who by his language or conduct leads another ceive that such authority apparently existed. to do what he would otherwise have done, The specific offense of Hoyt was one which shall not subject such person to loss or injury Bradford himself was incapable of comitting, by disappointing the expectations upon which and the act of the agent, therefore, was one he acted:" Dickerson v. Colgrove, 100 U. S. which the principal not only could not have 530. And, in a case like the present, it is esbeen justified in doing, but could not possibly sential to the estoppel that the person sought to have done: Seeber v. The Bank, 77 Fed. Rep. be estopped shall be legally chargeable with 957. Nor was Bradford responsible for Hoyt's negligence, which in the natural course of delivery of this policy. He was authorized to things caused the other person to be be misled deliver genuine policies-not spurious ones; to his prejudice; and negligence in fact is, as to and of this particular transaction Bradford had this point, the specific wrong expressly alleged no knowledge until after the fire and loss had in the declaration. But in what respect was occurred. If the forgery had been known by Bradford negligent? The learned judge of the those to whom the policy was delivered, they Circuit Court placed his liability upon the certainly would not have been warranted in ground that he had "put the wrongdoer in a accepting it upon the supposition that its de- position of trust and confidence and thus enlivery was sanctioned by Bradford, or that, in abled him to perpetrate the wrong." We canmaking it, Hoyt was acting within the appa- not assent to this. It was not pretended that rent scope of his employment. On the con- Bradford was not duly careful in the employtrary, they must inevitably have seen that Brad- ing Hoyt or in retaining him in his employford had not authorized it, and that Hoyt was ment. So far as appears, no ground existed for grossly transcending the limits of his agency. suspecting that he would abuse any confidence The imposition which was consummated by which was or might be reposed in him. Morethe delivery had its inception in the forgery, over, the signing of Bradford's name was not and by that alone was the delivery made possi- | confided to him, nor had Bradford done any

our belief that no man of ordinaey prudence would think of taking any precaution to preclude such a forgery of his signature as that for which the plaintiff in error in this case has been charged with responsibility.

We examined a number of authorities, including those mentioned in the opinion of the court below and the additional cases cited by counsel; but we do not deem it necessary to further extend this opinion by reviewing them. It is enough to say that we have given them careful consideration, and are entirely satisfied that as a whole they show the law to be in accordance with the views we have expressed.

The judgment of the Circuit Court is reversed and the cause will be remanded to that court, with direction to enter a judgment for the defendant in the action.

For plaintiff in error, J. M. Swearingen (Buchanan & McConnel with him).

For defendant in error, W. S. Moore (Henry Hice and A. S. Moore with him).

thing to make it appear that it was. The policy was not accepted in reliance upon any seeming or supposed authority of Hoyt to sign, but under the belief that Bradford had signed it; and this misleading belief was caused, not by any negligent act or omission of Bradford, but solely by the personal criminal conduct of Hoyt. Bradford, it is true, had made Hoyt his agent, but surely negligence cannot be imputed to him upon that ground alone. Such agencies are by no means uncommon, and the reported cases exhibit many instances of them. There was no more reason for supposing that the agent in this instance would be guilty of forgery than of any other offense, and his principal was under no obligation to prevent his commission of crime. The whole duty of Bradford in the matter was to see to it that no negligence of his own should, through any wrongdoing of Hoyt, occasion injury to another, and this duty does not appear to have been violated. The true test of liability under this head was correctly applied by the Supreme Court of Pennsylvania in Leas v. Walls, 101 Pa. 57. In that case one person had procured another to sign a promis. RIGHTS OF PASSENGERS ON STREET CARS. sory not, partly printed and partly in writing. In the form used there was a long blank for the insertion of the amount. The person who obtained the note had, before its execution, inserted in this blank the written word "eight" and filled up the remaining portion of the blank, except a small space immediately after that word, with a scroll terminating with the printed word "dollars;" but, after execution, he added to the word "eight" the letter "y," so that as thus altered it read "eighty" dollars. The action was brought by a bona fide purchaser of the note, for value and before maturity; and yet the finding of the jury that there was no lack of ordinary care on the parting to her and saying: "You are a good-looking of the maker of the note, was expressly approved by the Supreme Court, and the judgment for defendant, which was entered upon that verdict, was affirmed. In its opinion, after referring to some of its earlier decisions, the court said: "These cases do not decide that the maker would be bound to bona fide holder on a note fraudulently altered, however skilful that alteration might be, provided that he had himself used ordinary care and precaution. Hesponsibility of common carriers to the extreme, would no more be responsible upon such an altered instrument than he would upon a skilful forgery of his handwriting. . . . In the common experience of men, very few persons write their words so closely together that a single letter cannot be added at the end of one of them without attracting attention;" and common experience, we think, equally supports

According to a recent decision of the Supreme Court of Tennessee, in the case of Knoxville Traction Co. v. Lane, injuries to the feelings and sensibilities of a woman of good reputation while a passenger on a street car, caused by insulting and indecent language used to and about her by one of the employees in charge of the car, renders the carrier liable for damages, and this irrespective of any negligence in employing the servant, or of any authorization or ratification of his act. In this case the motorman on whose car the plaintiff had taken passage began his insulting remarks by turn

old girl, and I would like to meet you when you get off." The court held that when a passenger entered a car and paid his or her fare there was an implied contract on the part of the company that he or she should receive proper, polite and courteous treatment from its employees, and that the passenger should be protected against hearing obscenity and insults. This is carrying the doctrine of the re

perhaps, but it seems no more than fair and just that passengers should have some redress for insults at the hands of servants and employees, whose character is likely to be looked into somewhat more carefully than at present in case this decision is followed by the courts in the other more populous States.-Albany Law Journal.

Pittsburgh Legal Journal

ESTABLISHED 1853.

EDWARD B. VAILL, Editors. THOMAS EWING, Jr., J

N.S., Vol. XXX.

O. S., Vol. XLVII.)

PITTSBURGH, PA., JUNE 6, 1900.

Third. That Samuel R. Smythe, the brother of plaintiff, and until his death the president of the S. R. Smythe Company, was in his lifetime the owner of four certain pieces of real estate situate in the 20th ward, Pittsburgh, being Nos. 5523, 5525, 5534 and 5536 Centre avenue, also No.46. 137 shares of the capital stock of the Lawrence Glass Company, and also four-fifths (600 shares) of the entire capital stock of the S. R. Smythe Company; that the par value of the shares of the S. R. Smythe Company is fifty dollars.

Court of Common Pleas No. 2,

ALLEGHENY COUNTY.

SMYTHE v. O'BRIEN & ASHLEY.

Fourth. That Samuel R. Smythe died on October 27, 1899, testate and by his will dated September 11, 1899, which was duly probated and recorded, bequeathed to plaintiff 425 shares of the capital stock of the S. R. Smythe Company and to his sister, Mrs. Annie Dietrick,

Contract for fees-Depending on cost of prop- 175 shares of the stock of that company; that

erty-Validity.

A. was the owner of certain stock in the X. and Y. com

panies and an undivided interest in certain real estate. B., his sister, owned stock in the same companies and the balance of the same real estate. A. was desirous of obtaining B.'s stock and employed an attorney, C., to negotiate for it, agreeing to give his real estate and $8,000 for the stock, and if C. obtained it for less the amount to be saved was to go to him for tees and A. was not to be liable for any further fees. C. obtained the stock on an even trade for the real estate and saved the $8,000. A. understood fully the value of the stock and property and no misrepresentations were made by C. Held, on bill in equity filled by A. to recover the $8,000 from C., that he was not entitled

to be relieved from the contract.

No. 91 April T., 1900.

Opinion by FRAZER, J. Filed April 24, 1900. The bill in this case was filed for the purpose of compelling the defendants to account for and pay over to plaintiff the sum of $8,000 which sum plaintiff claims defendants unlaw- | fully withhold from him. From the bill, answer and testimony we find the following facts: First. That the plaintiff, H. E. Smythe, prior to October 27, 1899, was secretary and treasurer of the S. R. Smythe Company, a corporation engaged in the business of "engineering and contracting" with offices in the Park Building, Pittsburgh, and the owner of 133 shares of its capital stock; that about November 1, 1899, he succeeded his brother, S. R. Smythe, who died shortly before that date, as president of the company, still occupies that position.

Second. That the defendants, Charles A. O'Brien and Charles W. Ashley, are both members of the Allegheny County Bar, and are now and have been for some time practicing their profession as co-partners under the firm name of O'Brien & Ashley.

the testator also bequeathed to Mrs. Dietrick 137 shares of the capital stock of the Lawrence Glass Company, and devised to the plaintiff aud Mrs. Dietrick the four houses and lots on Centre avenue in equal shares.

Fifth. That plaintiff being desirous of becoming the owner of the 137 shares of Lawrence Glass Company stock and the 175 shares of S. R. Smythe Company stock bequeathed to his sister, Mrs. Dietrick, and not being on friendly terms with her, employed defendants to conduct negotiations with her for the purchase of the same and suggested to defendants that in consideration of a transfer to him by Mrs. Dietrick of said stock, he would convey to her his one-half interest in the Centre avenue properties and also pay the sum of $6,000 in cash; that after interviews between plaintiff and defendants in regard to compensation for their services the following contract was entered into, viz.:

"PITTSBURGH, PA., Nov. 23, 1899. "Messrs. O'BRIEN & ASHLEY,

"Gentlemen: I hereby authorize and empower you to negotiate with my sister, Mrs. Annie Dietrick, for the purchase from her of the Lawrence Glass Company stock and the 175 shares of the S. R. Smythe Company stock bequeathed to her by my deceased brother, S. R. Smythe; and I further authorize and empower you to purchase said blocks of stock upon the following terms: I will convey to my said sister all my undivided one-half interest in the real estate of my deceased brother, and will also pay in cash the sum of eight thousand dollars ($8,000). I further agree that if you succeed in obtaining a transfer of said stocks to me for the said conveyance of my interest in said real estate, and the sum of $8,000, to allow you as compensation for your services,

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