The phraseology used by the companies or current in the trade to describe an insurance agent is of little significance in the law. The significant fact to be ascertained is this, namely, the real scope of the authority which has been granted to him as defined by the requirements of the act or the business which he has been employed by the company to do for it. Within the jurisdiction of many courts this fact is deemed more controlling over the contract rights of the parties than any general stipulation regarding the limit of the agent's authority contained in the printed policy, because the policy in any event is not the best evidence of relations existing between the insurance company and the persons employed by it; and, moreover, the terms of the policy are often settled by the agent himself, who cannot by his own acts fix the extent of his powers; and, finally, the contract is frequently closed and the premium paid before the company executes and delivers the policy.

The practice of different companies is so varied, and the authority given to the particular agent not only by his written commission but also perhaps by an extended correspondence between himself and his superiors, or by a course of usage recognized by the company, is often so ill-defined, that any brief classification must be regarded as rough and only approximately correct. In view of this consideration it is clear that the facts of every case as it arises must receive careful attention. In this country the boards of directors of insurance companies do not as a rule take an active part in the management of the details of making, altering, cancelling, or renewing policies of insurance, or in adjusting losses, or in instructing or superintending the cohort of agents who are located outside of the home office. Consequently such duties and powers, subject to the laws of the land and to charter and by-law restrictions, must become vested in the officers. Of the officers, the president and secretary more particularly are in most companies considered amply empowered with wide discretions in this regard, and are most frequently designated by the rules of the company as the proper officials to sign the policies of insurance.

§ 17. Agents of Life Companies.-Agents of American life companies located outside the home office may for our present purpose be divided into two classes-general agents so

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styled by the craft, and sub-agents. The first class are so called because they have the power to select and make contracts with sub-agents. General agents are employed by the company, and hold a contract from the home office authorizing them to canvass for insurance. They periodically account to it for premiums collected. Their jurisdiction is generally more or less territorial. Their instructions do not permit them to pass upon applications or proposals for insurance, or to make, alter, or discharge policies, or to grant permits, or waive forfeitures, or compromise claims. So far as any control over the terms of the contract is concerned, the intention of the company evidently is to restrict their powers to those of a special agency. But the business of general agents, like that of other canvassing agents, is to solicit custom for the company; and for this purpose they are furnished with blanks called applications, containing a long series of questions relating to the risk, which are to be answered by the applicant over his signature. (See form of application in the appendix.) The agent is expected, on behalf of the company, to interview the probable applicant, to use all proper inducements to secure him, to explain what the company requires, and also to write into the application the answers which the applicant almost always dictates orally. Sometimes through fraud, or carelessness, or error of judgment, the agent writes out the answers in form and substance materially different from the language used by the applicant; and the applicant, not knowing the error, or supposing that the agent understands best what the company wants, signs the paper as it is prepared.

The application is then forwarded by the agent to the home office, and though if accepted it becomes an essential part of the contract, and all its statements are warranted to be true, it is not before the insured at the time the contract is closed, nor does he have any opportunity of comparing it with the policy.

Local medical examiners have no authority to pass upon applications, but these are submitted to the medical director at the home office.

Pending the action of the company, the agent is allowed to give the applicant, on payment of the first premium, a provisional memorandum called a binding receipt, which simply amounts to an agreement on the part of the company, that if

the application shall be accepted the insurance is to be considered binding under the terms of the usual policy as of the date of the binding receipt, and that if the application is rejected the premium shall be returned. This practically prevents the applicant meanwhile from negotiating for the desired insurance with another company. The policy (see form of policy in the appendix) often provides that the contract shall not be binding until the first premium is paid in cash; but the company is sometimes aware that the agent has a habit of giving credit for special reasons in certain instances, on delivering the binding receipt, thus making himself responsible for the payment of the premium to the company. The general agent pays his own expenses, and receives or retains a commission on all premiums collected through his instrumentality, whether first or renewal premiums.

Sub-agents are often appointed by the general agents; hold a contract from them; have a narrower territory to canvass; have blank applications the filling up of which they, like general agents, superintend; are not generally supplied with binding receipts, but report any applications and bring any cash collected to the managing agent, though their contract generally provides that they may pay and report either to the general agent or to the home office. They pay their own expenses and receive a brokerage, but only on the first premium. This premium is ordinarily paid by the insured not to the sub-agent but to the general agent, and is turned in by him to the company.

There is nothing in the usual course of business as transacted by local agents of life companies, whether so-called general agents or sub-agents, from which any one dealing with them has the right to infer that they possess any authority to make or alter voluntarily the terms of policies, except, as above noticed, in some instances in regard to the method of paying premiums. But if the local agent of either class misstates answers given to him to be written into the application, and if the applicant cannot read, or without carelessness of his own is prevented from correcting the misstatement by conduct of the agent, the alleged breach of warranty based upon the misstatement is really the act of the company, and therefore the company is estopped, by what its agent has done

within the scope of his actual authority, from claiming that the insured is responsible for the misstatement.

§ 18. Agents of Fire Companies.-In fire insurance the business intrusted to agents is more complex. Three classes of agents will answer our present purpose: general managers, commissioned agents, and agents for soliciting only -that is, for receiving and forwarding proposals.

The business of general managers does not resemble that of the canvassing general agents of life insurance companies, though the latter are sometimes styled managers. Many foreign companies, fire and marine, have general managing agents in this country, and domestic companies sometimes have a managing agency in a large center like Chicago or Boston, though such agents may be advertised as special agents. The managers hold a contract from the home. office, have wide discretions, and in the matter of making, altering, cancelling, and renewing contracts of insurance, giving permits, and adjusting and compromising claims, are allowed to stand very much in the stead of officers within the territory where they have jurisdiction. In case of large losses they usually ask for instructions from the home office. The agents under them, in some instances, report to them, and in others report direct to the home office.

Commissioned agents hold a written commission from the home office, granting them "full power to receive proposals for insurance in a certain place and vicinity, to fix the rates of premiums, to receive moneys, and to countersign, issue, and renew policies of insurance signed by the president and attested by the secretary (or signed by the manager), subject to the rules and regulations of the company, and to such instructions as may from time to time be given by the officers." Policies and renewal receipts signed in blank by the proper officers are furnished them, and printed forms of riders, to enable them to fix rates and close contracts in their discretion, without conference with the home office. They often close a contract of insurance orally, it being understood that the usual policy is to be subsequently delivered, and they often take the responsibility of giving credit to the insured for premiums, making themselves responsible to the company; and of this custom

the company has knowledge.

The officers probably never give express instructions to their commissioned agents to waive conditions of the policy in any way, except as provided by the policy, to wit, by written agreement indorsed thereon (see form of policy in the appendix); but the courts generally hold that by virtue of their apparent authority, such agents may waive any of the provisions of the policy by parol, including the stipulation that prohibits waivers except in writing, unless a restriction upon their authority has been brought to the attention of the insured. Where, however, by the written form of application, if one is used, or by the terms of the policy itself, notice is given to the applicant that the agents have no authority to waive conditions of the contract except by written agreement, it is evident that, at any rate, after such notice is received by the insured, neither the ostensible authority nor the actual authority of the ordinary commissioned agent is sufficient to enable him to effect a parol waiver of the conditions of the policy. In such a case, as a general thing, any disturbance of the contract can be accomplished by him only by a positive act on his part, within the scope of his agency, and while engaged in the business of the company, upon which an equitable estoppel against the company can be predicated under a rule of law which overrides the contract. But to prevent any misapprehension, it should be added here, that, in spite of such a recital or stipulation in the application or policy of alleged lack of power on the part of any of the officers or other representatives of the company, it may still be the fact that officers and managers really have an authority sufficiently broad to enable them to waive any of the conditions of the policy inserted for the benefit of the company, including the very clause which purports to restrict their powers. The commissioned agents within the scope of the business intrusted to them. are considered general agents, except as their power may be specifically restricted. Their commission does not usually, in express terms, authorize them to adjust losses or compromise claims, but as quick settlements, before the insured have thought or talked much about their damage, are best for the insurers, it is a fact that the commissioned agents are generally permitted to settle small losses in their discretion. They are paid