RATIFICATION IN INSURANCE LAW
A
QUESTION
OF
RATIFICATION
IN
INSURANCE
93
LAW
By Frederick T. Case IT seems to be the opinion more or less alous situation as far as the principle and generally among insurance attorneys that theory of the law is concerned, and immedi even after loss an assured may ratify the ately raises a protest from those who like to unauthorized act of his broker or agent in regard the law as a science. For when was obtaining for him a policy of insurance. the contract completed? Surely not after Such is stated to be the rule in Mr. Clement's the loss, because it is a clear principle of recent book on fire insurance,1 and as re insurance law that one cannot take out in cently as last February a decision adopting surance on property that he knows is already this same rule was handed down at special destroyed. Surely not before the loss, term in the New York Supreme Court.2 because at that time neither the person In that case an insurance broker acting for insured nor any one having authority from a property owner had obtained for his prin him was a party to. the contract or even cipal certain insurance and had actually knew of its existence. Thus there was no delivered the policies to him. His author mutuality, and no meeting of minds until ity in the matter was of course thereby ex after the fire had happened, nor until there hausted, and any further action on his part was no longer any property to which the in relation to the assured's insurance was insurance could attach, and then it was wholly unwarranted and not binding.* But obviously too late to take out insurance. he was thereafter notified by one of the com The situation is the same as if my neighbor, panies on the risk that its policy must be without consulting or notifying me, takes cancelled, as it declined to carry the risk, out a policy of insurance in my name upon and he immediately made application in my house. There is clearly no contract assured's name for a like amount of insur with me, for I never consented or agreed to ance in another company, and the applica the insurance, knew nothing of. its exist tion was accepted. Before the assured heard ence, and of course cannot be required to of the transaction, his property burned, and pay the premium for it. Nor was my neigh thereupon he forthwith ' ' elected ' ' to ratify bor a party to the contract for he took it out the agent's act in taking out the additional in my name, did not agree himself to pay the premium, and did not for a moment claim insurance — and the learned judge sup ported him in his election. After holding, or admit that he had any other interest or from some evidence that does not appear, obligation in the contract than to obtain that the agent did have authority, the court it for me. The insurance company, to be said, without citing any cases however, sure, believed he was my duly authorized that even apart from such authority, "the agent, believed that there was a complete defendants cannot assert that the intended contract binding on it and on me, but their contract, made with the agent for the prin belief and their acting on that belief could cipal, was no contract, when the principal not make such man my agent. The sum total of the transaction is that one of the has confirmed the agency." Any such doctrine produces a most anom- two contracting parties never entered into the contract — a stranger purported to 1 Clement on Insurance Vol. II, p. 481. s Bauer v. Firemen's Fund Ins. Co., N. Y. Law- agree to it for him. If nothing else were ever heard of the policy of insurance so Journal, Feb. a, 1906. • Wilson v. New Hampshire Fire Ins. Co., 140 taken out except perhaps a suit by the in surance company to recover the amount of Mass. 210.
