author: Mr. Justice Crow

text:
    George Roberts, Administrator of the Estate of Nancy C. Hess, Appellant, v. George A. Minier, Appellee.
    Gen. No. 7,906.
    2. Safe deposits — nature of relation between proprietor and depositor and measure of proprietor’s duty. The relation between the proprietor of a safety deposit vault and the lessees of deposit boxes therein is that of bailor and bailee for hire, imposing upon the bailee the duty, in safeguarding the property of the lessees, to exercise such care as a prudent man takes of his own property.
    2. Bailments — bailee as insurer under special contract. A bailee may, by special contract, assume the liability of an insurer.
    3. Safe deposits — sufficiency of evidence to show use of explosives by robbers in stealing securities from safety deposit vault. Evidence in an action against the proprietor of a safety deposit vault to recover the value of securities stolen, from leased box in such vault held to show that entrance to the vault was procured by the use of explosives.
    4. Safe deposits — burden of proof in action for value of securities stolen from vault under declcuration charging absolute duty of protection and, specific omissions of duty causing loss. In an action against the proprietor of a safety deposit vault to recover the value of securities stolen from a leased box therein, where the declaration stated an absolute duty to protect the property in such box and charged specific acts and omissions on the part of the defendant as the cause of the loss, the burden was upon plaintiff to prove such allegations by a preponderance of the evidence.
    5. Safe deposits — admissibility of evidence in action for value of securities stolen from vault by burglars, that property in bank’s safe was untouched. In an action against the proprietor of a safety deposit vault to recover the value of securities stolen from a leased box therein, access to which was gained by the use of explosives, evidence that the bank’s safe was not opened by the robbers, and that property of others kept therein was therefore not stolen, was not admissible as evidence of negligence in the care of the plaintiff’s property, the inference sought to be suggested thereby being predicated upon the erroneous assumption that the standard of care required to be exercised as to plaintiff’s property was the care taken of the bank’s property, and the unfounded assumption of fact that the safe was less vulnerable to attack than the vault.
    6. Bailments — burden of proof as to manner of loss of bailed property by fire or burglary, and, causal relation to bailee’s negligence, where evidence shows' no palpable omission of bailee’s duty. In cases where a bailor seeks recovery of the value of bailed property lost by fire or burglary, wherein there is no evidence imputing to the bailee a palpable, omission of duty that might have been exercised by a reasonably prudent man to avoid the loss, the burden is upon the bailor, not only to establish the loss, but also to show the manner thereof and that the bailee could have, by some reasonable means, prevented it.
    7. Safe deposits — sufficiency of evidence to sustain verdict for defendant in action for value of securities stolen by burglars from deposit box. In an action against the proprietor of a safety deposit vault to recover the value of securities stolen from a leased box therein, access to which was procured by the use of explosives, a verdict for the defendant held proper on the ground that the plaintiff did not sustain the burden of proof resting upon him to show that the loss was due to the defendant’s negligence.

      8. Safe deposits — inadmissibility of evidence of negligent care of deposit box hey where access to vault secured by use of explosives. In an action against the proprietor of a safety deposit vault to recover the value of securities stolen from a leased box therein, access to which was gained by the use of explosives, it was not error to exclude evidence tending to show carelessness on the part of defendant in the care of the key to plaintiff’s box.
    9. Safe deposits — inadmissibility of evidence as to failure to tahe out insurance covering safe deposit vault, in action for value of securities stolen therefrom. In an action against the proprietor of a safety deposit vault to recover the value of securities stolen from a leased box therein, access to which was gained by the use of explosives, it was not error to exclude evidence that the defendant carried no insurance covering the deposit boxes, such evidence being immaterial to any issue in the case.
    10. Safe deposits — inadmissibility of evidence of newspaper advertising of safety deposit vaults, in action for value of securities stolen therefrom. In an action against the proprietor of a safety deposit vault to recover the value of securities stolen from a leased box therein, access to which was secured by the use of explosives, it was not error to exclude evidence of newspaper advertising of the defendant’s vaults, such evidence being irrelevant to the issues made by the declaration and proofs.
    11. • Appeal and ebbob — refusal of Appellate Court to consider points argued orally but not stated in brief. Where an appellant’s brief concludes with a paragraph to the effect that “certain objections to the action of the court with reference to the instructions in the case are reserved for the argument,” the Appellate Court will not, in view of rule 23. of the Rules of Practice of that court, consider alleged errors touching the giving and refusal of instructions, other mention of which is absent from the brief.
    Appeal by plaintiff from the Circuit Court of Bike county; the Hon. Heed G. Wolfe, Judge, presiding. Heard in this court at the October term, 1925.
    Affirmed.
    Opinion filed April 15, 1926.
    William Mumford and Barry Mumford, for appellant.
    Williams & Williams, for appellee.
   Mr. Justice Crow

delivered the opinion of the court. Appellee, defendant in the circuit court, was engaged in the banking business at Pearl in Pike county. In connection with his banking business, and in the building where it was conducted, he had a safety deposit vault. The vault was a room entered through the banking room and containing “nests,” or compartments fitted with boxes for the purpose of receiving papers and valuables of persons desiring that service.' The boxes were let for hire as usual with such departments. Mrs. Hess rented a box, paying therefore $2. She was contemplating the purchase of government bonds and desired a place to put them. Having procured the bonds, they were placed in her box. Afterwards in the night the banking house was entered by force by persons unknown, and her bonds, together with papers and valuables of nearly all persons holding boxes, were stolen and never recovered. She brought suit against defendant to recover the value of the stolen bonds and was defeated. On appeal to this court the judgment was reversed and the cause remanded because of errors in the admission of evidence and in giving certain instructions on behalf of appellee. She having died, on remandment her administrator was substituted as plaintiff and an amended declaration consisting of two counts was filed. The court directed a verdict as to the first, and no error is assigned upon that ruling. Upon trial by jury on the second count the issues were found for defendant and plaintiff again appeals.

The second count avers that Nancy 0. Hess at the request of defendant, and for certain hire and reward paid by her, did there hire and lease of and from defendant a certain deposit box and place of deposit for the safe and secure keeping and preserving of bonds and other valuable papers and credits of said deceased, and at the like request of defendant and for other reward there paid by her to him, she placed in said deposit box and place of deposit with the knowledge, and at the instance of defendant, divers other papers of great value, to wit: Bonds of the United States, descriptions to plaintiff unknown, of the value of $11,000 and other interest coupons thereto attached, of the value of $1,000; * * * but the plaintiff avers that the defendant did not nor did any person for him there furnish, provide and lease to the said Nancy C. Hess for the purposes aforesaid, a deposit box of such strength, structure, and so placed and protected as to keep and preserve said papers and property of the said Nancy C. Hess safely and securely but on the contrary defendant there knowingly, wrongfully, negligently and carelessly furnished, provided and leased to her for the purposes aforesaid, a cheap, insufficient, and lightly constructed deposit box and there knowingly, wrongfully, negligently and carelessly placed and kept the same in a place in said bank building which was open to easy access and invasion by other persons, of which she had no knowledge; in consequence whereof, on June 29,1919, at said banking house, through and on account of the wrongful, negligent and careless acts and doings of defendant and without her fault or negligence said bonds and coupons were wholly lost to her.

The declaration is more fully abstracted than would ordinarily be necessary to present the point upon which the decision must turn. The omission in the second count indicated by the asterisks is the statement by the pleader of the legal duty of defendant. As stated, it fixes on defendant an absolute undertaking to provide a deposit box of such strength and structure and so placed and protected as to keep and preserve the- papers of the bailor. The manner of stating the facts discloses that principle was in the mind of counsel. The statement is not in accord with settled legal principles. If it were correct, appellee was an insurer of the goods against theft. But such is not the law governing the relation between appellant and appellee as bailor and bailee, respectively.

In National Safe Deposit Co. v. Stead, 250 Ill. 584, the relation between a safety deposit company and lessees of its deposit boxes was definitely declared to be that of bailor and bailee, and that the deposit of securities and valuables by its lessees in rented safety deposit boxes or safes is a bailment, and that the law applicable to bailments generally applies to such transaction and to such property. In Mayer v. Brensinger, 180 Ill. 110, referred to and quoted in the Stead case, appellee rented from appellant a box in his safety deposit vault in which he deposited cash. During the illness of appellee the cash was removed from the box and suit was brought and recovery had. Appellee (bailor) retained the key to the box. The court on page 113 said:

“The relation which the appellant bore to appellee was that of depositary for hire. As such depositary for hire the appellant was bound to exercise ordinary care and diligence in the preservation of the property intrusted to him by the appellee. Ordinary care in such cases is such care as every prudent man takes of his own goods, and ordinary diligence as men of common prudence usually exercise about their own affairs. (Chicago & Alton R. Co. v. Scott, 42 Ill. 132.) Although one who hires a box in the vaults of a safety deposit company may keep the key himself, yet the company, without any special contract to that effect, will be held to at least ordinary care in keeping the deposit.”

It said further (page 113) :• “The duty of exercising such care arises from the nature of the business which the safety deposit company carries on. The obligation to discharge such duty is implied from the relation between the parties.”

A bailee may enlarge his legal responsibility by contract, express or implied. Thus, by special contract a bailee may assume the liability of an insurer. Agreements by a bailee that he will pay the value of property if damaged or destroyed while in his possession ; that he will assume the responsibility for its loss from any cause, or that it will be at his risk against loss by fire or otherwise until returned, are sufficient to render him liable as an insurer. It has been held that an agreement by the bailee to safely carry, be responsible, or to deliver goods does not render him liable for injury to them while in his possession but occurring without his fault. A contract enlarging a bailee’s liability must be in clear and unmistakable language. 6 Corpus Juris, p. 1111, sec. 43. In support of the statement in the text as to. an “agreement to deliver,” Standard Brewery v. Malting Co., 171 Ill. 602, is cited. In that case the brewery had delivered to the malting company grain to be malted. The malting company had agreed to deliver, malted, to the brewery all the grain delivered to it. While it had a large quantity on hand, it was destroyed by fire. In an action for damages for the loss, the court held the transaction a bailment for hire; that it was for mutual benefit and ordinary care was required, and that if the property perished in the bailee’s hands without his fault, notwithstanding the unqualified terms of the contract, the loss fell on the owner.

We held when this case was formerly before us that the standard of diligence laid down in the cases cited above applies to this case. The errors then relied on for reversal, so far as they are now open for review, were avoided in the second trial. The evidence tends strongly to show, and a careful consideration of all of it we think does show, that the entrance to the vault was made by the use of an explosive. Testimony of a witness with many years’ experience in the examination and repair of such safes, and in the methods of entering vaults and banks protected by them, is convincing. It is uncontradicted by any persuasive circumstance or evidence in the record. It is in harmony with similar cases. His testimony was taken by deposition at the instance of plaintiff but not used by him. It was then used by defendant. That circumstance does not detract from the weight to be accorded to it. It strengthens, rather than weakens it. It is corroborated by testimony of other witnesses residing in or about Pearl. He saw the evidence of explosion and the use of explosive matter as soon as he arrived. They were not prominent and escaped the notice of those not acquainted with their importance and inexperienced in such matters. Every effort was made, and successfully so far as the evidence discloses, to preserve everything as found by defendant when he entered the building the morning after the robbery. Nothing was disturbed. We conclude, therefore, that the evidence shows by a fair preponderance that the vault in which the safe deposit boxes were contained was entered by the use of an explosive breaking the combination tumblers thereby destroying all resistance of the steel door protecting the contents of the vault.

In Chicago German Hod Carriers Union & Benev. Society v. Trust Co., 315 Ill. 204, it was held that the bailee was at fault and that it was liable to lessees of a box for loss occasioned by robbery. They had $34,000 in cash, bonds, and war savings stamps in their box. The bailee’s vaults were open day and night. Four armed men went into the building, intimidated the only two persons in charge, broke into the box and took all of its contents. The fault authorizing recovery for the loss and its application in all like cases is best stated by Mr. Justice Farmer, who wrote the opinion:

“It is also contended the proof does not show the loss of the contents of the safety deposit box was due to any negligence of defendant. The evidence shows that on the night of the robbery there were only two persons in charge of the vault. One of them was in charge of the desk, located separate and apart from the vault where valuables were kept. It was his duty to see that only persons entitled to admission to the vault, should be admitted. One man was in the vault where the valuables were. It was his duty to admit anyone with the proper pass and assist him in getting access to the box. On the night of August 28, four strangers, who were not required to identify themselves, entered and rented a box from the man at the desk and paid the rent. These four men approached the door of the vault, handed the slip given them by the desk man to Jonas, who was the guard within the vault, and he admitted them. He started to take them back to where the box was located, and after they were out of sight from anyone in front the four men seized, bound and tied him to an iron pipe. They drew their guns and intimidated him from making any outcry. Ho one else was in the vault but the guard and the four men. The robbers, after securing Jonas, rifled the boxes in the vault at will. Jonas had been a guard about five months. Before that time he had been towerman for a railroad company. Weber, the man at the desk, had worked for defendant about six months. Before that time he had been a bricklayer.

“The law applicable is that relating to bailments. Defendant was bound to use ordinary care to safely keep the deposits. ‘The duty of exercising such care arises from the nature of the business which a safety deposit company carries on, and the obligation to discharge the duty is implied from the relation of the parties. As bailee the defendant was bound to exercise such care and diligence in the preservation of the property entrusted to it as every prudent man takes of his own goods of like character. * * * Under such conditions we see no reason to depart from the ordinary rule that where a bailee receives property and fails to return it, the presumption arises that the loss was due to his negligence, and the law imposes on him the burden of showing that he exercised the degree of care required by the nature of the bailment. ’ ” Schaefer v. Washington Safety Deposit Co., 281 Ill. 43; Mayer v. Brensinger, 180 Ill. 110.

The only question before the court in the Stead case was as to the status of safe deposit companies. No question of liability was presented. It was held they are bailees, and that as such they are subject to regulation by law as bailees of the successors in title to property of their bailors. It was decided that the statute requiring them to open the boxes or receptacles containing property of decedents is not an infringement of constitutional rights in any respect. The lessor of a safety deposit box for hire is a bailee of the property deposited therein for safe keeping and is liable to the bailor for a failure to exercise ordinary care with reference to the property. Schaefer v. Safety Deposit Co., supra; Mayer v. Bensinger, supra; Masonic Temple Safety Deposit Co. v. Langfelt, 117 Ill. App. 652; Banman v. National Safety Deposit Co., 124 Ill. App. 419; Lockwood v. Manhattan Storage Co., 50 N. Y. St. 974; Pittsburgh Safe Deposit Co. v. Pollock, 85 Pa. St. 391, 27 Am. Rep. 660; Cussen v. Southern California Sav. Bank, 133 Cal. 534, 85 Am. St. Rep. 221.

All of these cases involved facts showing that boxes containing money or valuables had been opened and their contents or part of them stolen. In each, as in Hod Carrier’s Union case, the court reached the conclusion of liability from the fact that if those in charge of the vaults containing the boxes had exercised ordinary care to exclude from the vault persons not entitled to admission, or to prevent keys to the boxes from being in the hands of persons not authorized to use them, the bailees would not have been liable for the losses. In all of them the courts held that the theft under the circumstances was prima facie evidence of negligence on the part of the bailee. That inference, however weak, was based upon the fact that if the bailee had used the degree of diligence required by the relation, unauthorized persons could not have entered; or if, as suspected in some, the thieves were employees, and if the bailee had exercised as close surveillance over its servants and employees as the nature of the business required, the boxes would not have been rifled by them. It was this sort of case that evoked from the California court the statement in the Cussen case, supra: “It (the bailee) was required to use that degree of care in the protection of this property from thieves without and thieves within, and was required to use the same degree of care in the selection of its employees, and in supervision of their conduct after they were employed.”

The principle underlying all of them and all of like character is that the losses were occasioned through the operation of agencies under the control of the bailees, Hunter v. Riche Bros., 127 Iowa 108, 111.

In most if not all of the reported cases on bailments, the question of burden of proof is dominant. The confusion as to the burden of proof, as shown by a careful examination of the cases on bailments, has two sources: One is failure to observe the distinction between the method of proving, and quantum of evidence necessary to establish the essential elements of the cause of action as alleged so that if more were not shown, the plaintiff must recover or must fail. The other is a failure to distinguish between the duty of producing evidence to that end in the first instance and the necessity for meeting that so produced by the adversary to avoid responsibility. The principle now universally stated is, “the burden of proof never shifts. ’’ In all cases where property bailed was stolen under such circumstances as showed negligence by the bailee in admitting unauthorized persons, or that employees were the thieves, or that' thefts were perpetrated by means of the unauthorized possession of keys, or by other agencies under the control of the bailee, the inference of negligence on the part of the bailee was deemed justified. The party “charged with the duty of persuasion” thereby met the obligation. Liability was, therefore, established, if nothing further appeared. Safe Deposit Co. v. Pollock, 85 Pa. St. 391, 27 Am. Rep. 660, was stronger for the plaintiff than most cases. The defendant had bound itself uncondito certain standards of care. But it was held that the defendant had the legal right, if it could, to produce any competent evidence that would rebut the apparently valid inference of negligence by showing any state of facts inconsistent with that inference. The plaintiff’s case being prima facie made, it was then the duty of the defendant to go on with its evidence. If it did not, the plaintiff must have a verdict. But the duty to go on did not mean that the burden of proof had shifted. It only meant that the burden, in the sense of the duty of producing evidence, must at that stage be accepted by the defendant, or as an alternative he must suffer judgment. But in the cases like that now at bar, it is the rule without dissent, that proof of mere loss will not make a prima facie case.

The case here, as stated in the declaration upon which the cause was tried, is entirely different from those holding proof of loss alone makes plaintiff’s case. While it unnecessarily, and as matter of good pleading, improperly states a duty, it states an absolute duty to protect the property of plaintiff, and charges specific acts and omissions on the part of the defendant as the cause of the loss of her property. Those averments of specific acts and omissions it was necessary to prove by a preponderance of the evidence. The allegation and proofs must correspond. The burden never shifted. Defendant did not hazard his case upon a failure of plaintiff to make a case. He put in evidence which at least tends to rebut every wrongful and negligent act charged against him. We held, when the case was formerly here, that to meet the plaintiff’s case it was necessary as matter of probative value of the evidence to equal or overcome it. But we did not by that mean to hold that the burden of proof rested at any time with defendant, or shifted from the plaintiff to the defendant as counsel seems to think. As Thayer says, after his usual thorough and discriminating discussion of this subject: “We see that the burden of going forward with the evidence may shift often from side to side; while the duty of establishing his proposition is always with the actor and never shifts.” (Preliminary Treatise on Evidence, 378.) See 1 Greenleaf on Evidence, page 105 (16th ed. Wigmore). This doctrine is applied in Donovan v. St. Joseph’s Home, 295 Ill. 125; Miles v. Hotel Co., 289 Ill. 320; Kokzura v. Standard Safe Deposit Co., 221 Ill. App. 43, 49.

In this connection the evidence shows the structure of the building, the door, the material of which it was made and the manner of entrance into the vault containing the safety deposit boxes. The evidence shows it was practically impregnable except by the use of explosives. It further shows that such explosive, probably nitro-glycerine, was used. By its use the tumblers of the lock were broken and afforded no obstacle to the moving of the steel bolts holding the door securely in place. The evidence shows they could not be broken by sledges or means other than those employed. At least the evidence shows the means employed were more expeditious. But however the theft was accomplished, the plaintiff’s obligation as to proof is the same.

But it is said defendant did not take the same care of the vault and its contents as he bestowed upon his own property in the bank. There are two assumptions in this contention, one not supported by law and the other unsupported by fact. The first assumption as to the legal obligation is not the legal standard. That standard is the care a reasonably prudent man will bestow upon Ms own property. The care actually bestowed upon his own property might fall below the standard, or ideal of protection under the circumstances, yet it would not exonerate Mm. As to the assumption of fact, it nowhere appears the spherical safe in the bank was less vulnerable to assault than the vault door. That question, it is true, was not proper for investigation at the trial and would have raised a false issue. But the assumption that it afforded greater protection to valuables than the vault door is without merit as evidence of negligence of the defendant. It certainly cannot be logically contended that the safe was more secure because the burglars broke into the vault. The place of assault was matter of their selection. If they went into the vault instead of the safe, it is quite as reasonable to infer that they knew that liberty bonds, which about that time became the prey of thieves, would probably be found in greater quantity in the deposit vault belonging to their owners than in the bank’s small safe contaimng its property. The argument as to comparative protection and as to bad faith of appellee on that basis will not withstand the test of legal nor logical validity. The offered evidence of the deposit of the property of others in the bank’s safe was properly rejected.

The cases cited by plaintiff in error are not of the class that fix the standard of proof of responsibility of the defendant upon the declaration in this case. In all eases heretofore referred to there was a palpably conscious omission of duty, which, if observed, the losses would not have occurred. In all cases of loss by fire and burglary in wMch there was no evidence or imputation of palpable omission of duty that might have been exercised by a reasonably prudent man to avoid the loss, the burden of proof rests with the plaintiff and the evidence must go to the extent of establishing the loss, and must go further and, showing the manner of the loss, show that the defendant could by some reasonable means have prevented it.

The principle governing the burden of proof in the latter class of cases, where the charge is that the loss was occasioned by burglary, by theft, by fire, by the falling of the warehouse in which the goods were stored, or by inevitable accident, is that the burden of proof is on the bailor to prove defendant’s negligence. (6 Corpus Juris, p. 1160 and notes 97 et seq.) A leading case is Claftin v. Meyer, 75 N. Y. 260, 31 Am. Rep. 46. The action was one against a warehouseman, the gravamen of the action being a neglect and failure of defendant to re-deliver goods delivered to the warehouseman as such. The only question presented by the appeal was, Upon whom rested the burden of proof where goods are delivered to a bailee and he fails on account of burglary to deliver them to the bailor? Plaintiffs rested their case upon the pleadings without proving a demand or refusal, admitting a robbery but not attempting to show any neglect in the defendant. A motion by the defendant to dismiss the case because no negligence had been shown, and the burden was on the plaintiffs, was denied. On appeal the Supreme Court held the motion should have been allowed on the grounds stated.

In Becken Co. v. Ottowa Pianophone Co., 217 Ill. App. 49, it was held that when goods in the possession of a bailee were destroyed by fire, in an action for the loss, the burden is on the bailor; that in such cases the law will not presume negligence but the onus is on the bailor. Standard Brewery Co. v. Hales & Curtis Malting Co., 70 Ill. App. 363, aff’d 171 Ill. 602; Bryan v. Chicago & A. R. Co., 169 Ill. App. 181. In a fire case, Nichols v. Union Stock Yards, 193 Ill. App. 14, the Appellate Court for the first district followed the rule in the Claftin case, citing many cases, though Judge Scanlon thought it not the better rule. Lamb v. Camden & Amboy R. & Transp. Co., 46 N. Y. 271, in which Judge Peckham’s dissent, referred to in the Nichols case, occurs, was a loss by fire; Knights v. Pilla, 111 Mich. 7, 66 Am. St. Rep. 375, was loss by theft. In all of them, whatever the cause of loss, it was not under control of the bailee and it was held, as we hold for that reason in this- case as now presented, that it was the duty of the plaintiff to show that the defendant was the responsible agent before he could recover. The burden of proof in the legal sense rested on him and he did not sustain it. We are of the opinion that, upon the facts and the law applicable to them, the verdict of the jury was clearly right.

Complaint is made as to the disposition of keys to the safety deposit boxes, the contention being that decedent’s key was kept by defendant in a careless manner. It could make no difference whether Mrs. Hess’s key to her box was, as contended, on a wire in the bank, or in her box. It is not claimed the boxes were entered by the use of keys. Plaintiff offered to prove that defendant carried no insurance on the deposit boxes. Whether defendant had insurance against burglary or not was in this suit an immaterial and foreign subject of inquiry. Insurance would not have prevented burglars from breaking into the building or the vault. It is urged the court erred in sustaining objections to the newspapers advertising defendant’s safety vaults, offered as evidence by the plaintiff. We think they were clearly irrelevant and immaterial to the issues made upon the averments in the declaration specifically charging defendant with tortious acts and omissions causing the robbery of the safety vault and the loss complained of.

The final paragraph of appellant’s brief reads:

“Certain objections to the action of the court with reference to the instructions in the case are reserved for the argument; infra.”

We again call attention to rule 23 of the Rules of Practice of this court, so far as now applicable:

“* * * Following the statement of the case, the brief shall conclude with the points made and the authorities relied upon in support of them; * * * no alleged error or point not contained in such brief shall be raised afterwards, either by reply brief, or in oral or printed argument, or on petition for rehearing. * * * The brief of any party may be followed by an argument m support of such brief, which shall be distinct therefrom, but may be bound with the same. The argument shall be confined to discussion and elaboration of the points contained in the brief.”

The rule is plain and unambiguous. It was made in pursuance of the court’s rule-making power conferred by the legislature, and is a copy of rule 15 of the Supreme Court. It was made in the interest of economy of time and conservation of labor in the examination of cases for decision. The brief is a statement of all the points upon which error is predicated. It should consist of a terse statement of each point relied upon for reversal or affirmance, with citation of .pertinent authorities in support of each. The brief is essential. The argument is optional. They cannot be combined and must not be confounded. There being no errors specified in the brief of plaintiff in error, in the refusal of his instructions, or the giving of those for defendant in error, they-will not, under the sanction of the rule, be noticed.

Having given the record that consideration the importance of the case demands, we are satisfied that, though the record is not entirely free from error, no judgment other than that rendered would, under the facts, conform to the law and it is affirmed.

Affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    Lillie McDaniel, Appellee, v. Continental Casualty Company, Appellant.
    Gen. No. 7,923.
    1. Insurance — construction of policy insuring employee and order upon employer for payment of premium with secret contract of insurer and, employer touching same subject matter. WtLere at the time of the execution of a policy insuring an employee against death by accidental means while in the employer’s service, and of an order by the employee upon the employer authorizing a monthly deduction from the employee’s wages equal to the premium for such insurance and payment thereof to the insurer, the employer being therein designated the agent of the insured for such purpose, there existed a valid contract between the insurer and the employer whereby the employer agreed to accept such orders from its employees, deduct the amounts called for from wages then due and remit same to the insurer within 30 days, and the insurer agreed, in consideration of the foregoing undertaking of the employer, to release it from any liability consequent upon any default in making and remitting such deduction from wages, such contract with the employer, although unknown to the insured, entered into and became a part of the insurance contract for the purpose of determining the liability of the insurer for a loss occurring after it was alleged, the policy had lapsed because of a failure on the part of the employer to deduct and remit a premium.
    2. Insurance — when employer agent of insured and insurer as to deductions from) wages to pay premiums on policy held by employee. Where an insurance company procured, coincidently with the execution of a policy insuring an employee against death by accidental means while in the service of the employer, an order constituting the insured’s employer his agent to make monthly deductions from the insured’s wages for the payment of premiums on such policy, when there was then existing, unknown to the insured, a valid contract between the insurer and the employer wherein the employer agreed to accept such orders from its employees, make the indicated deductions from accrued wages and remit the same periodically to the. insurer, which on its part undertook to release the employer from liability arising out of any default in making such deductions or remittances, the effect of such agreements was to make the employer the agent of both parties, thereby precluding the insurer from resisting a claim under such policy upon the ground that it has lapsed through the negIect of the .employer to make and remit a deduction for payment of a premium.
    3. Insurance — necessity for notice to insured employee of failure of employer to honor order to deduct amount of premium from wages and pay same to insurer, prior to claiming lapse of policy for nonpayment. Where an insurance company procured, coincidently with the execution of a policy insuring an employee against death by accidental means while in the service of the employer, an order constituting the insured’s employer his agent to make monthly deductions from the insured’s wages for the payment of premiums on such policy, when there was then existing, unknown to the insured, a valid contract between the insurer and the employer wherein the employer agreed to accept such orders from its employees, make the indicated deductions from accrued wages and remit the same periodically to the insurer, which on its part undertook to release the employer from liability arising out of any default in making such deductions or remittances, it was a prerequisite to the right of the insurer to cancel its policy on the ground that the employer had failed to deduct' and remit a premium that it notify the insured of such default, the insured having a right to assume performance of the employer’s agreement.
    4. Insurance — neglect of employer to deduct and pay over to insurer from wages of employee premium on policy, pursuant to agreement with insurer, as basis for claim, of lapse of insurance for nonpayment of premium. "Where an insurance company procured, coincidently with the execution of a policy insuring an employee against death by accidental means while in the service of the employer, an order constituting the insured’s employer his agent to make monthly deductions from the 'insured’s wages for the payment of premiums on such policy, when there was then existing, unknown to the insured, .a valid contract between the insurer and the employer wherein the employer agreed to accept such orders from its employees, make the indicated deductions from accrued wages and remit the same periodically to the insurer, which on its part undertook to release the employer from liability arising out of any default in making such deductions or remittances, and thereafter the insurer resists a claim based upon a loss under such policy upon the ground that the insurance had lapsed because of the .employer’s failure to deduct and remit a premium, the court will not inquire to what extent the default was due to the stipulation releasing the employer from liability in such a case, but will leave the parties thereto where their neglect or bad faith has placed them.
    5. Insurance — inaccuracies in order of employee to employer to pay insurance premiums out of wages as affecting right of insurer

      to claim, lapse of policy due to failure of employer to make deductions as agreed. Where the legal effect of an order constituting the insured’s employer his agent to deduct monthly from his accrued wages the amount of the current premium upon a policy insuring the employee against death by accidental means while in the service of the employer, and to remit same to the insurer, in view of a pre-existing secret agreement between the insurer and the employer touching the same subject matter, was an absolute undertaking upon the part of the employer to make and remit such deductions if the employee had sufficient presently due wages, no defense to a claim based upon a loss under such policy occurring after an alleged lapse of the insurance because of a failure of the employer to deduct and remit a premium when due, is afforded by proof of inaccuracies in the order upon the employer in respect of the nature and place of work of the insured employee, the order presumably having been drawn by the insurer and having been accepted by the employer.
    6. Insurance — liability of insurer under policy where loss occurs after lapse due to breach of employer’s agreement to deduct premiums from wages and pay same to insurer, where employee prevents performance by drawing out all of wages due. Where the legal effect of an order constituting the insured’s employer his agent to deduct monthly from his accrued wages the amount of the current premium upon a policy insuring the employee against death by accidental means while in the service of the employer and to remit the same to the insurer, in view of a preexisting secret agreement between the insurer and the employer touching the same subject matter, was an absolute undertaking upon the part of the employer to make and remit such deductions if the employee had sufficient presently due wages, no defense to a claim based upon a loss under such policy occurring after an alleged lapse of the insurance because of a failure of the employer to deduct and remit a premium when due, is afforded by proof that the employee prevented the making of such deduction by drawing out all of his wages, where it does not appear that the insured was notified of a cancellation of the policy for nonpayment of premium.
    7. Payment — absolute undertaking of employer, by agreement with insurer, to deduct premiums on employee’s insurance policy and remit same to insurer, as assignment of funds in employer’s hands operative as payment. Where an employer undertook absolutely, by agreement with the insurer, to honor an order by its employee authorizing a monthly deduction from the employee’s accrued wages of the amount of the premiums on the employee’s accident insurance policy, to make the indicated deductions and remit the same to the insurer in payment of premiums as they came due, such agreement and order effected an assignment to the insurer of funds in the hands of the employer for the payment of such premiums, operating as a payment in fact of premiums as they came due.
    Appeal by defendant from the Circuit Court of Coles county; the Hon. Walter Brewer, Judge, presiding. Heard in this court at the October term, 1925.
    Affirmed.
    Opinion filed April 15, 1926.
    George C. Bliss, and Craig & Craig, for appellant.
    Raymond G. Real, for appellee.
   Mr. Justice Crow

delivered the opinion of the court.

Russell McDaniel, on June 29, 1924, died as the result of personal bodily injury caused by an external, violent and purely accidental event. An indemnity policy had been issued to him against such injury, by appellant, on May 17, 1924, for the principal sum of $2,000. The annual premium for the policy was $23.60, payable as hereinafter stated. He was at the time in the employ of the Cleveland, Cincinnati, Chicago & St. Louis Railway Company at Mattoon, and had been since September, 1922, and so remained to the time of his death. The indemnity was payable to him or to his mother, Lillie McDaniel, the appellee.

The premium was payable in six instalments — four of $3.96 each, and two' of $3.90 each, from the wages of the insured for the months of June to November, 1924, inclusive. To provide for the payment of the premiums, he signed a paymaster’s order: “To the paymaster of my employer. ’ ’ Substantially, it stated: “I have this day made application to the Continental Casualty Company (hereinafter called the Company) for a policy of insurance. This order is given to provide for the payment of the premium thereon which you are authorized and requested to deduct from my wages in instalments as hereinafter designated, pay to the company for me, and charge against my pay account for services rendered or to be rendered, to my employer on whom this order is drawn. If for any reason whatever you fail to make deduction of any installment from my wages for the period hereinafter designated for that purpose, you are further authorized and requested at the option of the Company to deduct and pay the defaulted installment from any of my future wages. I understand and agree as to the duration of my said insurance: (1) That my said policy after taking effect so continues until the expiration of the period hereinafter designated for the deduction of the last installment of any premium unless I sooner cease to be in the service of my present employer, or unless default be made in the payment of any prior installment, in either of which events my insurance shall at once terminate without notice except as it may be continued in force by reason of premium previously paid; (2) that the payment of each installment in which the said premium is payable shall continue my policy in force for a period of two months, all such periods to be computed successively from the date of the policy; (3) that the paymaster is my agent for the purpose of deducting these installments from my wages, and his action in that regard is entirely at my risk; (4) that should my policy lapse at any time by reason of non-payment of any instalment and premium afterwards be paid, then such payment shall reinstate my policy only as provided therein. I also agree that if my wages are paid to me more often than once a month, then each installment, instead of being deducted and paid from a month’s wages as herein provided, is to be deducted and paid from that part of the month’s wages first payable to me.”

On the other side of the paper on which the above is printed appears the following, the first paragraph framed in heavy black lines, followed by the remainder of the order;

“Paymaster’s order No. 6172711, Agent, Notice: To avoid errors, and for the benefit of the Paymaster, write applicant’s name here, VERY PLAINLY, giving correct spelling and first name in full.

“RUSSELL McDANIEL

“I understand that no agent of the company has any authority or power to waive or change any of the printed provisions hereof. My employer is Big Four R. R. Division or Department Head, E. J. Buckbee (Not foreman in charge of sub-department) Foreman or Sub-Official and A. D. Barrett, Gr. F. My occupation is machinist helper. I am employed at Mattoon, Ill. My time is kept at Indianapolis, Ind. Division St. Louis and Shop or Section No. 233 (Always give number for Section or shop men). Dated at Mattoon the 17th day of May, 1924.

“Signature Bussell McDaniel Witness, C. E. Nelson. Agent’s name, C. E. Nelson.”

At the time of the issuance of the policy and of the foregoing paymaster’s order, a contract between appellant and the Cleveland, Cincinnati, Chicago & St. Louis Railway Company was in force, entered into by them January 1, 1914, with regard to the issuance of accident policies for employees for the railroad company. It consists of 11 paragraphs, in addition to the introductory part, and was executed by the railroad company by its president and by the insurance company by its vice-president. We shall not set them out in full, but state some of the provisions deemed pertinent to the disposition of the question for decision.

It recites that the insurance company is authorized to issue policies of insurance against death and injury by accident, and desiring to solicit contracts for such insurance from employees of the railroad company, and in consideration of one dollar by each to the other and of the mutual covenants contained in the contract, the railroad company permits the insurance company to solicit such contracts subject to the regulations of the officers of the railroad company. The policies may contain provisions for health and life, and the contract entered into in its scope shall include all divisions of the railroad company.

£ Second: The railroad company will accept delivery by the insurance company to railroad company of the properly executed orders, assignments or requests of its employes in favor of the insurance company for premiums on such policies, and will, in pursuance thereof, set apart for the insurance company, the amounts called for therein if any there shall be tb the credit of such employe upon the pay rolls of the railroad company; and the railroad company shall within thirty (30) days thereafter remit the amount thereof to the insurance company.

“Third: The insurance company shall pay to the railroad company its entire expense for the service heretofore described in a sum equivalent to a per cent to be agreed upon from time to time of all amounts paid by the railroad company to the insurance company under the orders of employes aforesaid; which sum may be deducted by the railroad company in its discretion at the time of its payment to the insurance company.

“Fourth: The insurance company, in consideration of the voluntary recognition by the railroad company of the orders or requests against or assignments of wages herein referred to agrees to waive all claims against the railroad company by reason of its failure for any cause to make any payments as herein provided, and to release the railroad company from any liability therefor. In the event any other party or parties shall attempt to enforce the collection of any of said amounts or any part thereof due or owing to said employes from the railroad company, by means of any attachment, garnishments, or similar process, or by means of any suit or action at law or in equity, the insurance company agrees to intervene in or assume the defense of any such proceeding and to assert or defend any rights claimed by it by virtue of said order, request or assignment and save the railroad company harmless therefrom, and to abide by the final determination of such proceeding or suit.

“Fifth: The insurance company further agrees to fully and wholly indemnify, the railroad company against all claims for loss or expense made against the railroad company by any persons whomsoever, on account of the nonpayment of the railroad company to the insurance company of any sums in pursuance of orders or requests against the assignments of wages made upon the railroad company in favor of the insurance company.

“Sixth: The insurance company further agrees that if the railroad company, after having made any payment or payments to the insurance company, shall nevertheless be compelled to pay the full amount of the wages from which deductions have been made or any part thereof to or upon the demand of any employe, the insurance company will thereupon at once repay to the railroad company the amount so paid to it, which the railroad company has been compelled to pay as set out above.

“Seventh: The insurance company further agrees to indemnify and save harmless the railroad company from and against all claims and demands made against the railroad company by the solicitors or other agents or employees of the insurance company arising from or growing out of injuries received or losses sustained by said agents or employees while on or about the tracks and premises of the railroad company, otherwise than as passengers, whether said injury or loss is caused by the negligence of the railroad company or its employees or otherwise.”

The eighth, ninth and tenth clauses of the agreement provide that the insurance company shall submit to the railroad company for its approval all forms to be employed by the insurance company before putting them into use, and the railroad company agrees that in exercising its right with regard to the forms of order or assignment it will be guided by reasonable regard for its protection and the interest, of its employees; the insurance company agrees when requested by the railroad company to give it all information in its possession as to accidents to employees when on duty, as to policies issued and settlements made with employees and other information required by the railroad company for its purpose under the contract.

It was stipulated at the trial that all defenses available to defendants upon proper pleas well pleaded might be made under the general issue. After plaintiff had introduced all her evidence, defendant presented its motion for a directed verdict which was denied. Thereupon defendant offered no evidence and by counsel said: “We stand on our motion and rest our case on the plaintiff’s evidence.” The jury returned a verdict for the sum of $2,043.06. Motions for new trial and in arrest of judgment having been denied, judgment was rendered for the amount of the verdict and defendant appeals. Thirty-two errors are assigned on the record.

The facts not being controverted, only their legal effect is presented by this appeal. If they, when so considered, do not authorize a verdict, the court erred in refusing to direct it for defendant. While the system of carrying insurance employed in this case is not new, no decided case in all respects like it has been cited by counsel for either party. In all cases nearly like the present the legal effect of the order as payment of premiums, under the circumstances presented by each case, has been the crucial question. In that connection, the conduct of the parties with respect to it has received the consideration of the courts in determining its legal effect. In some of the cases, the decision was adverse to plaintiff because it did not appear there was any intercompany agreement to deliver, or forward, or pay the amounts in the order to the insurer. But in this case we think the distinguishing mark is the agreement entered into between the insurer and the railroad company. It relates to that subject only. The case nearest in principle to this is Lyons v. Travelers Ins. Co., 55 Mich. 141, to be noticed more fully hereafter. In that; case, a recovery was allowed because of a construction of the contract arising out of a custom or practice of the insurance company and the railroad company with regard to the order. The custom was held in that case to be the equivalent in legal effect of a contract.

The application, policy and paymaster’s order were known parts of the contract of insurance, regulating the rights and duties of the insured and the insurer. In the application and use of the order, the insurer and the railroad company by express contract had left nothing to conjecture, implication or custom. It is claimed by no one that McDaniel knew anything of this agreement. At the time he sighed the application and the paymaster’s order the contract between the insurer and the railroad company was in force. We conclude, therefore, that the contract of insurance upon which the plaintiff may now rely consists not only of the elements known by the insurer and the insured, but that the private, and to the insured, unknown, element, as matter of good faith and fair dealing toward him, was a part of it. It would seem to be more appropriately a part of it, because more certain than a custom obtaining between the companies.

The intercompany contract is material in view of appellant’s contention as to the effect of clause (3) of the paymaster’s order “(3) that the paymaster is my agent for the purpose of deducting those installments from my wages, and his action in that regard is entirely at my risk.”

The second paragraph of the intercompany agreement is:

“The railroad company will accept delivery by the insurance company to the railroad company of the properly executed orders, assignments or requests of its employes in favor of the insurance company for premiums on such policies, and will in pursuance thereof, set apart for the insurance company, the amount called for therein, if any there shall be to the credit of such employe upon the pay rolls of the railroad company; and the railroad company shall within thirty (30) days thereafter remit the amount thereof to the insurance company.”

In this connection, the third paragraph provides for payment to the railroad company “its entire expense for the service” described, in a sum equivalent to a per cent to be agreed upon of all amounts paid by the railroad company to the insurance company, under the orders of employees, the sum to be deducted at discretion. The stipulation upon which the cause was tried is that the insurance company paid the railroad company 10 per cent of each pay for the service. It need not be said that this was a service by the railroad company for the insurance company, paid for out of its funds devoted to the payment of premiums, and therefore for the benefit of the insured.

Counsel for appellant contends that the judgment must be reversed because the particular division or department of insured’s employment with the railroad company was not correctly described in the paymaster’s order. It described his employment as “Big Four R. R., occupation, machinist’s helper at Mattoon, time kept at Indianapolis, on St. Louis Division, Section A. Shop number 233, Division or Department Head, E. J. Buckbee; Foreman or Sub-Official, A. D. Barrett, Gr. F.” The practice in carrying out the contract between the insurance company and the railroad company was for the insurance company to send to the railroad company a “paymaster’s return list,” prepared by the insurance company, in accordance with the statement contained in the paymaster’s order. That was done in this case and contained the name of Russell McDaniel, with the description of his employment as stated, with the number 6,172,711, being the policy and order number, and the amount due $3.95. T. F. Henry was the paymaster and had been for several years previous to the time in question. When he received the- return list, June 11, 1924, the first pay in June, he made thereon the notation, against the name of Russell McDaniel, “No Record,” and returned it to the insurer. No notice of default was sent by the insurer to Russell McDaniel. The paymaster sent the check to McDaniel and it was cashed.

We think, upon a careful consideration of the case made by the undisputed facts, the judgment of the circuit court was right. This conclusion is rested upon two* grounds: (1) the defendant’s contract with the railroad company, its agent to accept the instalments of wages- of the insured and pay them to the insurer; (2) before defendant could successfully defend against the" claim, it should have notified the insured of the default in the payment of the premium, if from a consideration of the admitted facts, and as matter of law, there was a default.

The paymaster’s order recited that it was given to provide for payment of the premium on the* policy to be’ issued upon the application to which it was attached. He had the right to rely upon his employer deducting the wages due him, paying them to the insurer for him, and charge such payments against his account. He did not know, it is true, when he gave the order that it and all such orders had been accepted by a written contract between the insurer and his employer based upon a valuable consideration. He designated his employer as his agent and agreed that its action in making the deduction was at his risk. This was a printed agreement. But the contract between the two companies tended to minimize the care the acceptor of the order ought to have exercised. If he had known he was dealing with an agent of the insurer, guarded by stipulations for its protection as against him, he would not, probably, as a prudent person, have trusted the paymaster so implicitly. G-ood faith on the part of the insurer is required for the protection of its policies. Every contract of insurance will be construed most favorably to the insured. Forfeitures are never favored.

The fourth and fifth paragraphs relate to controversies arising out of such assignments or orders. By the former the insurance company agreed to waive all claims against the railroad company “by reason of its failure for any cause to make any payments as herein provided, and to release the railroad company from any liability therefor.” Let it be kept in mind the insurer was then dealing with a prospective agent of McDaniel, and, as the record shows with many more, the number not being stated. That condition is not reconcilable with good faith by the supposed agent or its principal, the insurer. That paragraph promises also to defend the railroad company — to intervene in or assume the defense — if proceedings in attachment, garnishment or similar process, are instituted against it for the recovery of wages so covered by the order; not only so, but agrees to save it harmless and abide the result. If it was not understood by the parties to that contract that the agreed payments were to be deducted from the employee’s wages, there was no occasion for those stipulations. If to be deducted, the purpose of deduction, in the unambiguous language of the order, was payment of the premium.

The fifth is more insidious because it directly tends to lessen the watchfulness of the insured’s declared agent. It guarantees against the consequences of neglect to him, its principal. The insurer agrees to indemnify the railroad company against loss or expense on account of the nonpayment of the wages assigned to take care of the premiums and keep' a policy depending on it alive. The tendency of the agreement is in furtherance of the interest of the two companies with the interest of the insured as a secondary consideration. Under such circumstances courts will not stop to inquire to what extent the agent has been influenced, if at all, by stipulated immunity from the consequences of a breach of the agreement. They will leave the parties where neglect or bad faith places them.

It is said by counsel for appellant that the only authority to make deductions from the wages of the insured was the paymaster’s order and that he was the agent of the insured. This is true only so far as the literal form of the order is concerned. Its purpose reached further. By the intercompany agreement the employer of the insured by a valid agreement with the insurer had agreed to make the deduction and transmit it to the insurer. It cannot rightfully be said this was only for the benefit of the insurer. Certainly the relation here established is that on one hand of the insurer as principal and the employer as its agent, in the operation of deducting and paying to the insurer the premiums, which must, in the nature of the transaction, on the other hand, supplement the agreement between the insured as a principal and the employer as his agent. Clearly, then, the employer was the agent of both parties, though unknown to one of them, the insured, its employee. It would seem that to state the facts is to manifest the absurdity if not the impolicy of such a dual situation, to the creation of which the insured never assented and from which he had no opportunity-to dissent. It was said of a like situation by Judge Folger in Whited v. Germania Fire Ins. Co., 76 N. Y. 415, 32 Am. Rep. 330:

“No man can serve two masters. If the procurer of the insurance is to be deemed the agent of the insured, and Harmon is to be deemed such procurer, he may not be taken into the service of the insurer as its agent also; or, if he is so taken, the insurer must be bound by his acts and words when he stands in its place and moves and speaks as one having authority from it; and pro, hac vice, at least, he does then rightfully put off his agency for the insured and put on that of the insurer. * * * Nor will it (the law), hold the plaintiff so strictly to the contract he made as to permit the defendant to ignore it and take his agent as its agent, and yet make him suffer for all the shortcomings of that person while acting between them and' while under authority to act for it.”

The question of agency in the same capacity was not before the court, but the principle underlying it is of universal application. The evidence discloses .that McDaniel was continuously in the employ of the railroad company and at the time of his death more money had been earned and was in its hands than was necessary to pay the premium. This was paid to plaintiff long after insured’s death. It is stipulated that McDaniel was not employed in the exact department described. But he was employed in the railroad shops at Mattoon. He was employed as a carman helper and did not, it is true, work under Barrett. The operative words of the paymaster’s order, including the stipulation as to conditions of nonpayment, are on the first page of a printed strip of paper. On the reverse side of the paper, at the top, and before the continuation of the order proper, are the printed words:

“Agent Notice: To avoid errors, and for the benefit of the paymaster, write applicant’s name VERY PLAINLY, giving correct spelling and first name in full.” These words are followed by the name, Russell McDaniel, in the center of the paper, written by the insurance agent. The remainder of the order follows continuing the line from the preceding page. There was no other McDaniel in the employ at that place. If there had been there might be some force to the contention that the particular occupation does not describe this McDaniel, for the contention only comes to that. Besides, there is no qualification or limitation in the writing itself in this respect, but the undertaking is absolute. The railroad company undertook to deduct the wages of Bussell McDaniel.

As to the materiality of the statement of the particular place of employment in the order, counsel contend that it was a matter of convenience in ascertaining the person giving the order. The argument is that •without it “the paymaster would have to search all the different payrolls for each employee and would take all his time deducting insurance premiums instead of performing his ordinary duties.” We think a sufficient reply to all of that is that the railroad company approved the form of order. It may be assumed the insurer wrote it. But under the' intercompany agreement it was to be satisfactory to the railroad company. Yet the only caution explicitly looking towards convenience of the paymaster, his safety, or avoidance of ambiguity, is that at the top of the second page of the order. If that was thought sufficient for the convenience and benefit of the paymaster when drafted and approved by the parties to it, the defendant ought not to be heard to complain now when confronted with liability. It must be understood they intended to protect every one using the order. The railroad company by its agreement is exempted from the liability of responding to the insurer in any demand for its failure to deduct the premium. But nothing of the spirit of justice or fairness suggests any valid reason for defendant enjoying a like immunity for the negligence of its agent. The argument ab inconveiiienti has no legitimate application to the facts, The railroad company is not making that defense, and we think it does not lie with defendant to make it.

Appellant contends that the failure of the paymaster to make the deduction was due to the insured’s fault. Counsel say in their brief:

“By drawing his full pay for the first half of June, insured had knowledge that the first installment was not deducted. His failure to leave with the paymaster of the railroad company the amount of the first premium installment precludes recovery.” Apparently a sufficient reply to the contention is that there was no failure on his part in that respect.

In support of the legal contention, among other cases are cited: Lacy v. Continental Casualty Co., 170 Ill. App. 527; Geddes v. Ann Arbor Railroad Employees’ Relief Ass’n, 178 Mich. 486; McMahon v. Travelers Ins. Co., 77 Ia. 229.

The Lacy case arose out of a contract of insurance issued upon a paymaster’s order similar to the one in this case. The insured in that case was a dining car waiter with uncertain employment with the Pullman Company. In the opinion it is said he drew $17.37 which was all the wages he had earned during the calendar month of April, 1907, and earned no more that month. May 1, 1907, he went out on a trip and was killed May 11. The “paymaster’s return list” was sent to the Pullman Company April 22, and returned to the insurance company with truthful notation, “not enough time.” The policy was thereupon marked “Lapsed.’’ The court says in the opinion at page 534:

“A few days before the Casualty Company forwarded the paymaster’s order to the Pullman Company, Lacy drew from the Pullman Company all of the wages he had earned for April, and worked no more for it during that month; so that by his own act he had made it impossible for the Pullman Company to comply with its order to pay the first insurance installment out of his April earnings.” Earlier in the opinion, addressing himself to the obligation of the paymaster’s order, Judge McSurely said that legally the Pullman Company became liable for the instalment as soon as the employee had earned his monthly wages, but it took about a week to make up all the accounts (about 3,000) and it could not be known just what day any particular account would be made up, and the amount of the instalment placed to the credit of the insurance company.

In the McMahon case, the portion of the policy to which importance was attached was: The insurance company in consideration of the warranties in the application for this policy, and of an order (for the moneys therein specified) on C. B. & Q. R. R. Co., does hereby insure John McMahon, etc. The order was sent to the railroad company but not formally accepted, but retained by it as a voucher. Afterwards defendant sent to the railroad company a “deduction list” for the month of June, showing five dollars due from McMahon’s wages. This was returned to the defendant with the statement McMahon was not employed by the railroad company. The policy was not canceled nor the order returned to McMahon. He was employed by the company though on a different division. He drew all his earnings for the month of June. On the 29th of that month he wrote to the general agent of defendant: “I have left John Smith’s gang. You will please cancel my accident policy as I don’t care to keep it any longer. ” On the 18th of July he was killed. The court, of course, reversed the judgment in favor of plaintiff. Several reasons or grounds for the conclusion are stated in the opinion. One alone was sufficient in that case, and everything else said in the opinion was unnecessary. In the second division of the opinion it is said:

“It further appears that he directed the cancellation of the policy less than three weeks before, and his acceptance of all his, earnings, for June was evidence that he intended to terminate it, and considered it of no further force.” It is said in this division of the opinion that it does not appear when defendant learned of the failure of the railroad company to make the second payment. But it appears that McMahon drew all his wages for the month of June at the time the railroad company usually paid such wages, and that therefore he knew the second payment was not made and could not be prejudiced by failure of defendant to give him actual notice of the fact.

In the Geddes case, the application contained an order authorizing the railroad company to deduct from his wages the monthly premium “required for by insurance,” under the policy applied for, “as such premium shall from time to time become due and payable.” It was further provided that the insurance should be good only while he remained in the employ of the railroad company and while the monthly premium should be punctually and fully paid to the insurer as required by the conditions of the policy. The deduction sheets- containing his name with others were sent to the employer. Through some error in the auditing department the sheet was returned with the notation “no time” opposite his name. After several such returns, the insurer dropped his name from the list assuming, though erroneously, he had left the employ of the railroad company. In the statement preceding the opinion from which the foregoing is abridged, it is said: “We are unable to discover from an examination of the application, the policy or the by-laws of the defendant, that the railroad was under any contract or obligation to deduct the assessments from the wages of the insured and forward them to the secretary of the defendant. The contract between the insured and defendant does not make it the duty of defendant or its officers to see that the deductions are made.” By a divided court of five to three, it was held there was an authorization to the railroad company to deduct premiums, but defendant was given no interest therein, and the fact he had drawn full pay was notice to him that his premium was not paid.

In York v. Accident Association, 51 W. Va. 38, 45, much relied on by appellant, the court say: “The contract does not provide that the railroad company should transmit to the home office of the insurance company the premiums deducted from wages, but only that it should deduct the premium from the wages of the employe. By so doing, the railroad company would become the debtor of the insurance company and it is difficult to see any of the elements of agency between the railroad company and the insurance company in the situation of the parties or provisions of the contract.”

The foregoing eases are the strongest cited in favor of appellant’s contention. No case with all the facts present in this has been cited by either party. Lyon v. Travelers Ins. Co. of Hartford, Connecticut, 55 Mich. 141, is cited by counsel for appellee as supporting Ms contention. In that ease the premiums on the insurance policy were provided for by a paymaster’s order. The insured was in the employ of a railroad company. The order was for $27, to be paid by instalments of $6.75 each for the months of April, May and June, 1883. By the opinion it appears that the defendant, after receiving the order and soon after its date, deposited it with the railway company in accordance with a custom existing in such cases between them, “and it was the practice of the defendant, early in each month, to send to the railway company a statement of the amount due from the employees of such company by reason of insurance, which the said railway company stopped against the pay of such employees about the middle of the month and paid it to the defendant. ’ ’ Lyon had money due him for March, April and May in excess of the amount due on the order. Defendant rendered statements of the amount due on the order on the first of April, May, June, July and August. The first two were paid from the March and April wages, paying the insurance to July 3. The third instalment was not paid, though the railway company had money in its hands subject to the order. Lyon was killed seven days before the expiration of the third insurance period. Defendant, as in this case, did not notify Lyon of the nonpayment of the third instalment, nor cancel the policy, nor return the order to him. The first notice there, as in this case, that the premium had not been paid was when inquiry was made of the company as to proofs of death. In response to that request, it informed the beneficiary the policy was not in force because of nonpayment of premiums.

The Supreme Court reversing the judgment in favor of the insurance company, by Judge Sherwood, said:

“I think the facts in the case show clearly a transfer of the premium for the third period to the Insurance Company, and Mark Lyon received the consideration therefor in the policy issued to him. The assignment is in writing, and independent of the order given on the Railway Company for the amount. The order is but a notice to the Railway Company of the transfer, and voucher for it when paid. The assignment is complete without it, and the Insurance Company could, when the instalment became due in May, have brought suit for it against the Railway Company. The assignment, though made at the time the policy issued, did not take effect until the money for the premium for the particular period was earned by the insured. The May instalment was earned and in the hands of the Railway Company, in accordance with its rules and customs in dealing with the defendant in such cases, and its practice in this particular case, when the same became due. Hall v. Steel, 68 Ill. 231; Mandeville v. Welch, 5 Wheat. 286, 23 Am. Law. Reg. 189. It is true, nonpayment of the premium for any one of the periods suspends the enforcement of the policy; but the insured, in a case like this, when he has provided for the payment when due, and the premium made is in possession of the defendant or under its control, payment will be deemed to have been made, until the insured is notified by the defendant to the contrary. A failure of the Railway Company to make payment when the amount assigned became due will not be presumed.”

After discussing another phase of the case, the opinion continues:

“Payment of the premiums will be presumed and deemed to have been made out of the fund provided and assigned to the company for that purpose, until notice of non-payment is given to the insured.”

Johnson v. Fidelity & Casualty Company, 184 Mich. 406, followed the Lyon case and affirmed a judgment for plaintiff under similar conditions as to payment of premiums by paymaster’s order. There the insured left the employ of the company October 23,1911, dying November 21, 1911. His wages for October would be due November 15. Before the latter date the insurer was notified by the employer that the insured had left his employ. At the time of leaving the employ, the money for his wages was in the hands of the employer and so remained until January 4,1912, when it was paid to the plaintiff, as in this case. The court held the premiums had been paid. It was further held that decision was not in conflict with Geddes v. Ann Arbor Railroad Employees’ Relief Ass’n, 178 Mich. 486, relied on by appellant in this case. It should be observed that in the Geddes case the court say:

“We are unable to discover from an examination of the application, the policy, or the by-laws of defendant that the railroad company was under any contract or obligation to deduct the assessment from the wages of the insured and forward them to the secretary of the defendant.”

The absence of that essential element materially distinguishes that case from this now under consideration. It is further weakened as support for defendant’s case by the dissent of three of the justices, and by the further fact that the judgment in the Johnson case was by an undivided court.

In National Benefit Ass’n v. Jackson, 114 Ill. 533, a policy of accident insurance was procured, the insured giving in payment of the premium two orders on the paymaster of the railroad company by which he was employed. One out of his March time was paid. The second was unpaid, and returned to the insurance company by the paymaster with the statement Jackson had “no time,” which was a mistake of the paymaster. The insistence by defendant was that there was no liability on the policy which had been delivered to the insured. The court, by Mr. Justice Craig, said:

“The association had the right, if it saw proper, to waive cash payment and accept in lieu of cash the orders on the railroad company, and if these orders were taken as cash, although the association failed to collect one of them, that fact cannot be held to defeat the policy.”

Speaking of the “binding receipt” which it was stated in the application was conclusive evidence the premiums had been paid, and which contained the same number as the policy, he said:

“This receipt never would have been given unless the association treated and accepted the orders as cash. Indeed, all the facts bearing upon the question point to the fact the orders were accepted as cash, and the association having accepted them as cash, it must be bound by that act. At all events the association having accepted them as cash, when one of them was returned by the railroad company unpaid, good faith required that Jackson should be notified of the nonpayment of the order, and the association could not, on any principle of fair dealing, claim a forfeiture of the policy for non-payment without giving Jackson notice, which was not done.”

The basic principle of this holding is that, having received the order as cash, a synonym for payment, when it developed, if it did, that it was unpaid, the insurer was bound unless the insured was notified of the nonpayment of the order. Stated in another way it was payment of the premium unless and until he was notified that it was unpaid, so that he might protect himself against default.

Counsel say the paymaster’s order did not operate as an assignment of the funds in the hands of the employer. Why not? On its face it is stated that it was given to provide for the premium on the policy of insurance for which he had that day made application to Continental Casualty Company. It authorized and requested the employer to deduct the several sums from his wages, pay them to the insurance company, and charge the payments against his account. It was delivered to the insurance' company, which was to get the money as a consideration for the insurance. It was regarded by the insurer as the equivalent of money, and as payment for the insurance, because the policy under the terms became effectual from the date of the order and application.

But if it be conceded the verbiage of the order is not sufficient to constitute an assignment, as appellant contends it is not irrelevant to notice how the insurer and the employer regarded it. In clause 2 of the intercompany contract, the railroad company covenanted with the insurer that when orders, assignments or requests of its employees, in favor of the insurance company for payment of premiums, should be delivered to it, it would accept such orders and would, in pursuance thereof, set apart for the insurer the amounts therein, and would remit them to the insurer within 30 days thereafter. Term the transaction whatever one will, it was regarded by the insured, the insurer and the insured’s employer, as a provision for the payment of the premiums of the policy. He provided for the payment and the insurer accepted it as a “provision for the payment,” and not as a provisional payment, as where promissory notes are sometimes given for the premium.

The undisputed facts in the light of the law applicable to them in our opinion disclose a payment of the premium on the policy. We think that the railroad company was the agent of the insurance company for the purpose of paying the premium and that when it failed to deliver to the insurer the premium, the default was not that of McDaniel.

The judgment of the circuit court is affirmed.

Affirmed.


text:
    W. H. McKeown, Appellee, v. Western Union Telegraph Company, Appellant.
    Gen. No. 7,952.
    1. Contracts — filing of telegram unconditionally accepting telegraphic offer as completion of contract. Where an offer is made by telegraph and an unqualified acceptance is dispatched, the contract is complete the moment the acceptance is delivered for transmission.
    2. Telegraphs and telephones — sufficiency of evidence as to causal relation between delay in delivery of telegram completing contract and. refusal of shipment on delivery thereunder. In an action to recover damages for a loss sustained by a seller of flour resulting from the refusal of the buyer to accept delivery of the shipment because he failed to receive the seller’s telegraphic acceptance of the buyer’s offer, evidence held to show that the efficient ca.use -of the seller’s loss was either a breach by the buyer of a valid contract or a decline in the market price of flour while the shipment was delayed in transit, and not the delay in the transmission of the buyer’s offer, such delay not having exceeded five hours and the shipment having been loaded immediately following dispatch of the telegram of acceptance.
    Appeal by defendant from the Circuit Court of Pike county; the Hon. Habry Higbbe, Judge, presiding. Heard in this court at the October term, 1925.
    Reversed.
    Opinion filed April 15, 1926.
    Francis B. Stark and Brown, Hat & Stephens, for appellant.
    Capps & Weaver, for appellee.
   Mr. Justice Crow

delivered the opinion of the court.

This case was tried a second time in the circuit court resulting in a verdict for plaintiff for the sum of $478.67. After motions for new trial and in arrest of judgment were overruled, plaintiff remitted 53 cents, and judgment was rendered for the sum of $478.13, and defendant appealed to this court.

Substantially the declaration filed March 30, 1922, charged that on March 26, 1921, the plaintiff received an offer by Western Union wire from John W. Eckhart & Company, of Chicago, to buy from plaintiff 300 barrels of flour at $7.25 per barrel, with direction to answer by wire; that delivery of that message was unreasonably delayed but that plaintiff delivered to defendant a message accepting said offer by wire immediately upon its receipt; that said acceptance was not delivered to John W. Eckhart & Co.; that plaintiff immediately shipped the said flour not knowing the offer had been delayed and not knowing that his wire of acceptance had not been delivered; that on April 12, John W. Eckhart & Company refused to accept the consignment of flour for the reason it had not received a reply to its offer of March 26, 1921; that plaintiff was under the necessity of selling the flour so consigned at a loss of $654.33 as the price of flour had in the meantime declined; that all of said loss was sustained solely on account of the negligence and wilful misconduct of defendant as aforesaid, to the damage of plaintiff of $1,000.

A general demurrer to the declaration being overruled, defendant filed the general issue and two special pleas. To the first special plea a demurrer was sustained. No assignment of error having been made on the court’s ruling it need not be further noticed.

The second special plea in substance was: By the terms of the contract between plaintiff and defendant for the transmission of the telegram of acceptance it was agreed that defendant would not be liable for damages or statutory penalties in any case where claim was not presented in writing within 60 days after the message was filed with the defendant for transmission and that-no complaint in writing was filed with defendant within a period of 60 days from the date when the telegram was filed with defendant company for transmission. Issue was joined on the general traverse to the declaration and on the replication tendering an issue on the second special plea. While the benefit of the special plea is urged we deem it unnecessary to notice appellant’s contention with regard to it.

The cause was before this court at the October term, 1923, and is reported in 231 Ill. App. 503. At that time the judgment appealed from was for the same amount as the present judgment. We then held that the evidence of the negligence charged in the declaration was insufficient and incompetent. The judgment was reversed and the cause remanded. There is no substantial difference between the parties as to the facts. There being no controversy as to the integral facts, only a question of law is presented.

The underlying facts are that Eckhart, a flour broker in Chicago, desired to purchase 300 barrels of flour bearing the trade name “Ideal Production,” manufactured by plaintiff. Employing the Western Union Telegraph Company to convey his offer, he delivered to it a message saying so, in these words: “Will book 300 barrels Ideal like sample seven twenty-five plain jutes Chicago wire.” From previous dealings between them plaintiff knew the meaning. He says it meant Eckhart offered to buy 300 barrels of Ideal Production flour like the sample furnished, delivered in jute bags at Chicago and would pay $7.25 per barrel. In response to the offer plaintiff delivered to Western Union his acceptance thereof in these words: “All right have booked.” They meant to Eckhart and to McKeown, “I accept your offer.” Plaintiff immediately shipped the flour to Eckhart in Chicago.

The transaction between the .parties was had on Saturday, March 26, 1921. The offer was filed at Chicago for transmission at 10:53 a. m. and received at G-riggsville by Western Union at 11:45 a. m., delivered in the afternoon and the acceptance was transmitted at 4:35' p. m. Plaintiff confirmed his acceptance of the telegraphic offer by letter, its date, time of posting, and when, if ever, it came to the hands of Eckhart, are not shown. It is not now material. By plaintiff’s own testimony it is shown “there had been a rapid decline in the market while the flour was on the road.” This is the only evidence as to the time of decline in price. There is no evidence in the record tending to show that the price of flour declined between the time the offer was sent and the time it was accepted. There is now, as when the case was first here, a total lack of evidence as to when the flour arrived in Chicago or as to the market price when it did arrive. Plaintiff employed Eckhart to dispose of the flour for him. It is only upon the report of sales made by Eckhart, unsupported by testimonial evidence, that the plaintiff established the facts supporting his damages.

Appellant contends that a contract by telegraph for the purchase of flour was complete and that, therefore, plaintiff cannot recover. The statement of the undisputed facts discloses that there was a consummated contract of sale. The offer to purchase and the acceptance dispatched were unqualified and unambiguous. The authorities are in unusual harmony upon the proposition that where an offer is made by telegraph, and an unqualified acceptance is dispatched, the contract is complete the moment the acceptance is delivered for transmission. It is not necessary, as the declaration erroneously assumes, that the acceptance shall be delivered to the offeree. The same principle applies in the formation of contracts by correspondence. Depositing the acceptance in the mail, properly addressed and with sufficient postage, is a completion of the contract though it may be lost, delayed or never received. The principles governing formation of contracts by mail were first laid down and afterward applied by analogy to contracts by telegraph.

“A contract by mail is complete when the latest proposition on the part of one is assented to by the other of the parties. This occurs at the time an unqualified assent to the offer is dropped in the post office properly directed and stamped.” 1 Elliott on Contracts, § 44, p. 52. In support of the statement a multitude of cases is cited, among them, Haas v. Myers, 111 Ill. 421, and Chytraus v. Smith, 141 Ill. 231. On the specific subject of contracts by telegraph, the same author says (section 45): “There is but little, if any, difference between the rules governing contracts formed by correspondence through the post-office and those governing contracts made through communication by means of the telegraph. It is universally conceded that people may contract by means of telegraphic messages. Contracts thus formed are governed, the same as all other contracts, by general rules relative to offer and acceptance. A telegram, in order to constitute an offer, must be made with the intention to form a legal obligation or relation. It must not be intended only as a preliminary negotiation. The telegrams sent and received must be final, free from fatal ambiguity or indefiniteness, and sufficiently designate the parties. And the answers must usually be given promptly in order to form a binding contract. In short, they must show all the essential elements of the contract. As in case of offer and acceptance by letter, the contract becomes complete at the time the acceptance is delivered to the telegraph company without reference to the time the telegram is actually received. ’ ’ The last sentence of the text is supported by citation of many decided cases, among them, Burton v. United States, 202 U. S. 344, 381 et seq., 56 L. Ed. 1087. The rule is there stated by Mr. Justice Harlan, reinforced by citation of many decided cases and law writers. Williston on Contracts is not at hand. But in section 93 of the Supporting Treatise written by him in support of the Bestatement of the law of contracts, he states the rule as to contracts by correspondence, as stated by Elliott, citing a great many cases. In section 94 he says: “By analogy to the law governing contracts by mail, it is held that a contract by telegraph mav-Jie' completed by delivering a telegraphic dispatch of acceptance for transmission at the receiving office of the telegraph company”; citing cases, among which are Haas v. Myers, supra, and Cobb v. Force, 38 Ill. App. 255. This court in the latter case held that an oral offer of compromise and settlement of a claim, which by agreement was to be accepted by telegraph, was duly accepted by the transmission of the telegram to that effect. After unconditional acceptance had been delivered to the telegraph company it was followed by another withdrawing acceptance. It was held the withdrawal was ineffectual, the acceptance being complete, though n,ot received when the second was sent.

A careful consideration of all the competent evidence in this ease fails to disclose, if that were necessary, that as matter of fact Eckhart did not receive the telegram of acceptance. As shown by the authorities it would be immaterial whether he actually received it or not, so far as the consummation of the contract was involved. The only evidence as to its non-delivery was that of Kahnert, a buyer for Eckhart in Chicago. He was in the office and says that no such telegram as that sent by plaintiff came to him. He was not an officer of Eckhart and Company at that time. He testified: “To my knowledge no telegram was received by John W. Eckhart & Company. As to whether or not any other employee received any telegram from Pike Mills, that is only a matter of hearsay with me, what they told me about it.” Asked whether, if such telegram had been received, he would have known about it, he answered: “No, only when it has been given to me either by the stenographer, bookkeeper, or Mr. Eckhart himself, whoever has taken it at the time I was not there. All these telegrams go down to' that desk. They are handed to me.” — Question: “All such telegrams?” — Answer: “Yes.”— Objection to all this testimony was overruled. On cross-examination he said: “All I really know about it is that no such telegram ever came to my notice.”— Question: “To say that no such telegram was ever received by John W. Eckhart you would have to say that based upon what other employees in the office have told you?” — Answer: “The stenographer, should she take it, I say yes, it would depend on that.” A motion to strike this testimony was denied. All of this evidence was irrelevant and incompetent. Objections made should have been sustained and the motion to strike it should have been allowed.

We are of opinion that the evidence does not show that the delay in the delivery of the offer or of the transmission of its acceptance was the proximate cause of plaintiff’s damage, granting there was delay and that he sustained damage. The acceptance sent at 4:35 p. m. on Saturday did not reach Eckhart until Monday, their office being closed. But plaintiff immediately on receipt of the offer and dispatch of acceptance began loading the flour for shipment. This he had a right to do, for there was nothing requiring further word from Eckhart, the contract being complete. It was shipped, but when it left Grriggsville, or when it reached Chicago, does not appear. He testified “there had been a rapid decline in the market while the flour was on the road.” It is clear therefore that a sudden decline in the price after acceptance, or delay in transportation of the flour during which the decline occurred, was the efficient cause of plaintiff’s loss. Suppose that the offer had reached plaintiff in 30 minutes after its delivery to defendant, a reasonable time as contended by plaintiff, and that the acceptance had reached Eckhart in 40 minutes thereafter — allowing ten minutes to write it, — and that the shipment had been started that afternoon, when it arrived at its destination the consignee, though the price had declined, would be liable nevertheless for the contract price. Plaintiff having charged the negligence found in the declaration in this case must show by the evidence not only the decline in price after the telegrams were sent, but he must go further and show by the preponderance of the evidence upon his contention that his loss was proximately occasioned by delay in their delivery. The burden of proof was on him to establish not only the result complained of, but to" establish the causal condition charged in his declaration and that it was the efficient cause of his loss. This is elementary. We think he has not sustained this obligation. While it would not necessarily be a defense to the action that some one else contributed to plaintiff’s- loss, if more than one party caused it, yet if loss was occasioned as here, by vendee’s breach of a valid contract to pay the agreed purchase price, or by a decline in price while the flour was' in transit, the necessary element of tortious violation of legal duty charged against defendant and the proximate consequences are not made out. That alleged violation was not the efficient cause of plaintiff’s loss. Seith v. Commonwealth Electric Co., 241 Ill. 252, 260.

Upon the* undisputed facts and the law applicable to them, we are of the opinion plaintiff cannot maintain his action, and the judgment of the circuit court is therefore reversed.

Judgment reversed.