Turner v. Wortzman, 169 N. Y. Supp. 494; Lauer's Supplement to the Mun. Ct. Code, 195.

Order modified, by striking therefrom the imposition of costs and the provision requiring the giving of an undertaking, and, as modified, affirmed, with $10 costs to the appellant to abide the event.

THOMAS v. HUDSON RIVER DAY LINE.

(Supreme Court, Appellate Term, First Department. May 13, 1919.) SHIPPING 132(3)-CARRIAGE OF GOODS-RES IPSA LOQUITUR-LOSS OF DOG. Where the evidence was undisputed that a dog in the custody of a carrier by water jumped overboard and was lost, its loss raised a presumption of negligence.

Appeal from Municipal Court, Borough of Manhattan, First District.

Action by John Thomas against the Hudson River Day Line. From a judgment dismissing the complaint, after a trial by the court without a jury, plaintiff appeals. Reversed, and new trial ordered.

Argued April term, 1919, before GUY, WHITAKER, and FINCH, JJ.

Toney & Morton, of New York City (Chas. E. Toney, of New York City, of counsel), for appellant.

James A. Hatch, of New York City (David W. Kahn, of New York City, of counsel), for respondent.

PER CURIAM. The undisputed evidence is that the dog was in the sole custody of defendant's employés during the trip, until it escaped from defendant's custody and jumped overboard. The loss of the dog raised a presumption of negligence, and on the evidence this was a question of fact, to be determined by the trial court acting without a jury.

The dismissal of the complaint was therefore error, and the judgment must be reversed, and a new trial ordered, with $30 costs to appellant to abide the event.

WORLD FILM CORPORATION v. AMERICAN SURETY CO. et al. (Supreme Court, Appellate Term, First Department. April 29, 1919.) PARTIES 40(2)-ACTION TO RECOVER FOR EMPLOYÉ'S EMBEZZLEMNT-RIGHT OF EMPLOYÉ TO BECOME A PARTY DEFENDANT.

In an employer's action against a surety company to recover for employé's embezzlement, the employé will not be allowed to intervene, although the surety contract provides that he shall, if found, be made a party to the suit, since it does not appear that the provision was made tor employe's benefit, but rather for that of the surety.

Appeal from City Court of New York, Special Term. Action by the World Film Corporation against the American Surety Company, alleging embezzlement by employé. From an order of the

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(176 N.Y.S.)

City Court, granting a motion of the respondent Joel R. Levy, the employé, to be allowed to intervene as a party defendant, the plaintiff appeals. Order reversed, and motion denied.

Argued April term, 1919, before GUY, WHITAKER, and FINCH, JJ.

Nathan Vidaver, of New York City (Samuel Schwartzberg, of New York City, of counsel), for appellant.

John K. Byard, of New York City, for respondent.

GUY, J. The action is to recover upon a bond delivered by the defendant surety company to plaintiff to secure the faithful performance of his duties by the respondent Levy; the complaint alleging the embezzlement of the plaintiff's moneys by the respondent. From an order allowing the respondent to intervene, the plaintiff appeals.

In the absence of special facts or circumstances, the employé would not be allowed to intervene. Charles F. Garrigues Co. v. Casualty Co. of America, 220 N. Y. 588, 115 N. E. 1036; Brooklyn Cooperage Co. v. A. Sherman Lumber Co., 220 N. Y. 643, 115 N. E. 715. In this case, however, it is provided by the contract between plaintiff and the surety that "in any suit, action, or proceeding the employé shall, if with reasonable diligence he can be found within the jurisdiction, be made a party to the suit and served with process therein," and the learned justice below held that the clause quoted brought the case within the doctrine of Lawrence v. Fox, 20 N. Y. 268, so that the respondent was entitled to avail himself of the right thus given to the surety to have the employé made a party to the action.

We disagree with the conclusion of the Special Term justice. In the Lawrence Case there was evidence of a liability of the promisee to the third party, while here, aside from the fact that the respondent is not seeking to maintain an action, but to defend one, it does not appear that the promise was made for the benefit of the respondent. In the framing of such a contract it is reasonable to assume that the surety is guided by the desire to protect its own interests.

Order reversed, with $10 costs and disbursements, and motion denied, with $10 costs. All concur.

(187 App. Div. 492)

GLOBE & RUTGERS FIRE INS. CO. v. WARNER SUGAR REFINING CO. (Supreme Court, Appellate Division, First Department. May 2, 1919.) 1. INSURANCE 96-AGENCY FOR INSURED.

An insurance broker, authorized generally to negotiate explosion insurance for a refinery, was a general agent of the refinery, and his securing a policy for it was within the apparent scope of his authority, where he had previously secured similar policies.

2. PRINCIPAL AND AGENT 116(1)-POWERS OF AGENT UNDISCLOSED LIMITATION OF AUTHORITY.

The rule that one must ascertain an agent's authority or deal with him at his peril, and that a special agent cannot bind his principal when For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

acting outside the scope of his authority, is subject to the qualification that, where an agent is intrusted with a certain kind of business, he becomes between the principal and parties dealing with him, the general agent for such business, and his acts bind the principal, though he violates a private instruction.

3. INSURANCE 188(3)-ACTION ON POLICY-QUESTIONS FOR JURY-AGENCY. In action to recover earned premiums on canceled policy of explosion insurance, whether insured gave his broker certain secret instructions, or whether insurer was justified in. relying upon the broker's apparent authority, held, under the testimony as to the giving of such instructions by certain officers of the insured, and the failure to mention them by the president of insured in his testimony, questions of fact for the jury. 4. INSURANCE ~188(3)—ACTION ON POLICY-QUESTIONS for Jury-RatIFICA

TION.

In action to recover earned premium on canceled insurance policy procured by a broker contrary to secret instructions of insured, whether the retention of the policy by the insured for two months was a ratification of the agent's acts, was a question of fact for the jury.

Shearn and Smith, JJ., dissenting.

Appeal from Trial Term, New York County.

Action by the Globe & Rutgers Fire Insurance Company against the Warner Sugar Refining Company. From a judgment for defendant, plaintiff appeals. Reversed, and new trial ordered.

Argued before CLARKE, P. J., and DOWLING, SMITH, PAGE, and SHEARN, JJ.

McLean & Hayward, of New York City (Edward A. Freshman, of New York City, of counsel), for appellant.

Carmody & Kellogg, of New York City (J. A. Kellogg, of New York City, of counsel), for respondent.

PAGE, J. The action is to recover earned premiums at the short rate on canceled policy of explosion insurance. The following facts were stipulated:

"That during the month of May, 1917, and for some time prior thereto, one Clarence T. Birkett had been and was an insurance broker carrying on a general insurance brokerage business. That during the month of April, 1917, the defendant placed with the said Clarence T. Birkett an order for explosion insurance to cover its refinery property at Edgewater, N. J., in the total amount of $3,500,000. That said Clarence T. Birkett thereafter, and prior to the 1st day of May, 1917, obtained binders for such explosion insurance, in amounts sufficient to cover the sum stated from various insurance companies with which he dealt, among which the plaintiff was one. That on or about May 1, 1917, the plaintiff delivered to said Clarence T. Birkett its insurance policy covering the same subject and between the same parties as the binder issued by plaintiff and referred to in the last preceding [clause], namely, in the amount of $1,000,000, and insuring the defendant upon its property situate at Edgewater, N. J., from direct loss and damage by explosion for a term of one year, beginning at noon May 1, 1917, and ending at noon May 1, 1918.”

Upon the trial plaintiff proved that for a number of years Birkett had acted as agent and broker for defendant in securing, placing, and canceling insurance; that prior to May 1, 1917, defendant had negotiated and secured other insurance with the plaintiff, through Birkett; that Birkett returned the policy for cancellation on June 28, 1917, and

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(176 N.Y.S.)

asked that the pro rata rate be charged; that plaintiff refused to cancel at that rate, and demanded the customary short rate, which for this period was 30 per cent. of the premium; that Birkett thereupon left the policy for cancellation, and that demand for payment was made on the defendant and refused. On behalf of the defendant there was testimony that it had given Birkett instructions (which were not disclosed to plaintiff) to place the risk only with companies which also had issued or would issue fire insurance policies on the property. Such fire insurance being under negotiation with the plaintiff at the time the explosion policy was issued, but who thereafter declined it.

[1] There are two legal questions presented by these facts: (a) Was the defendant bound by the acts of Birkett in negotiating the insurance on its behalf with the plaintiff? (b) If the act of Birkett was unauthorized was it ratified by the retention of the policy until June 28, 1917? Birkett was concededly employed by the defendant to procure insurance against loss by explosion. Therefore he had general authority to negotiate for and receive the particular kind of a policy, on the defendant's behalf, that he negotiated for and received from the plaintiff; he had theretofore negotiated for and received policies from the plaintiff on behalf of the defendant covering other and different risks. When he negotiated with the plaintiff, he was acting within the apparent scope of his authority.

[2] It is true, as a general rule, that a third person dealing with an agent should ascertain the agent's authority or deal with him at his peril, and

"that a special agent

cannot bind the principal, where he acts outside the scope of his authority; but that rule is subject to this qualification, that where an agent is intrusted to do a particular kind of business he becomes, as between the principal and parties dealing with him, the general agent for the transaction of that business; and his acts, as between his principal and strangers, in that particular lire, will bind the principal, although he violates some private instructions given by his principal not known to the public." Cox v. Albany Brewing Co., 56 Hun, 489, 10 N, Y. Supp. 213; Stahlberger v. New Hartford Leather Co., 92 Hun, 245, 36 N. Y. Supp. 708; Newman v. Lee, 87 App. Div. 116, 84 N. Y. Supp. 106; Cohen v. Goldstein, 128 N. Y. Supp. 69.

The reason for this rule is obvious. No man is at liberty to send a man forth to deal for him, with secret instructions as to the manner in which he is to execute his agency, which are not communicated to those with whom he deals and then when his agent has deviated from those instructions to say that he was a special agent, that the instructions were a limitation upon his authority, and those that dealt with him acted at their peril. If the principal deemed the transaction to his advantage, the instructions would remain a secret, and he would obtain the benefit. If in his opinion it was otherwise, he could escape liability.

[3] The other party would then be subjected to the hazard of the transaction being set aside or affirmed for reasons of which he had no knowledge and of which he could not take a like advantage. In the instant case, if there had been an explosion upon the defendant's property between the dates of the issuance of the policy and of its cancella

tion, the defendant could have recovered under the policy and the plaintiff could not have escaped liability by showing that it had not also insured against fire, and that the agent had no authority to negotiate for one without the other, for the plaintiff knew of no such limitation of his authority. Whether these instructions were given was not entirely free from doubt. Although Birkett and the vice president of the defendant testified that such instructions were given, the president of the defendant, who was present at the conversation, did not mention them in his testimony.

[4] If there was any question as to whether the instructions were given to the agent or whether the plaintiff was justified in relying upon his apparent authority, they would be questions of fact for the jury. Even if the instructions were given, and the authority of the agent was limited thereby, it was, at least, a question of fact for the jury to determine whether the retention of the policy by the defendant until June 28th was not a ratification of the agent's act.

The judgment should be reversed, and a new trial ordered, with costs to appellant to abide the event. Order filed.

CLARKE, P. J., and DOWLING, J., concur.

SHEARN, J. (dissenting). Appeal by plaintiff from a judgment dismissing the complaint, entered upon a verdict directed by the court, in an action to recover a premium alleged to be due by the terms of a policy of insurance claimed to have been issued by the plaintiff to the defendant, insuring the latter against loss or damage by explosion to the amount of $1,000,000.

The transaction was conducted entirely by one Birkett, an independent insurance broker. Although Birkett is continually referred to by plaintiff's counsel as a sort of general agent of the defendant, upon which supposition there is brought forth the familiar line of cases with regard to appearance of authority, Birkett had no connection whatsoever with the defendant, except that he had previously placed insurance of various other kinds for the defendant, as had other brokers. Birkett had also acted for the plaintiff in placing insurance. in its behalf and deducted his commissions from the premiums paid. This relation had been an extensive one, and had aggregated payments of approximately $5,000 during the year preceding the controversy in question. The defendant was the owner of a large sugar refinery at Edgewater, N. J. Shortly after the outbreak of the war with Germany, explosion insurance for the first time began to be written to a considerable extent in this country. Birkett initiated the negotiations by going to the defendant and proposing that it take out insurance against damage by explosion. What followed is partly shown by stipulation of facts entered into by the attorneys for the respective parties, set forth on pages 118 and 119 of the record. But this stipulation does not purport to set forth all of the facts, and, as shown by the uncontradicted testimony in behalf of the defendant, it omits facts. of controlling importance.

Birkett's conversation was first had with the president of the defendant, Mr. Warner. The conversation was general, and Warner said