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TITLE IV.

Adjuster and Adjustment.
RULE 1. Authority of adjuster or special agent to adjust loss.

2. Power of adjuster limited — Cannot delegate same.
3. Apparent scope of adjuster's authority.
4. Necessary incidents of power of adjuster.
5. Notice of limitation upon adjuster's authority.
6. Adjustment subject to terms of policy.
7. Distinction between adjustment and agreement to pay

amount adjusted — Authority of adjuster, how es

tablished. 8. Effect of adjustment and performance Fraud or

misrepresentation. 9. Effect of receipt in full. 10. Settlement with assignee holding policy as security. 11. When agreement to take less than due enforceable. 12. Adjustment and promise to pay as estoppel. 13. Effect of offer in compromise. 14. Ignorance and misrepresentation as to law - Mistake

of fact. 15. Not essential in equity to return or tender amount

received. 16. Effect of duress. 17. Not necessarily fraud for company to make indorse

ment upon policy after fire. 18. Company may recover back money paid on misrepre

sentation or fraud. 19. Adjustment of loss — Legal business - Right to follow

it in any State.

RULE 1.

Authority of Adjuster or Special Agent to Adjust Loss. The fire insurance company is generally represented in the ascertainment or adjustment of a loss, by an adjuster or a special agent, whose powers and authority are prima facie

prima facie coextensive with the business intrusted to his care; in the absence of evidence of his actual authority or notice to the assured of limitation upon his apparent authority, the company is bound by his acts and declarations within the apparent scope of his authority to ascertain or adjust the loss."

1. First Nat. Bank v. Manchester Assur. Co., 64 Minn. 96, 66 N. W. Rep. 136; First Nat. Bank v. Lancashire Ins. Co., 65 Minn. 462, 68 N. W. Rep. 1; Parsons v. Knoxville Ins. Co., 132 Mo. 583, 31 S. W. Rep. 117; Van Cleave v. Union Ins. Co., 82 Mo. App. 668; McGuire v. Hartford Ins. Co., 7 App. Div. 575, 40 N. Y. Supp. 300, affd. without opinion, 158 N. Y. 680; Georgia Home Ins. Co. v. Allen, 128 Ala. 451, 30 So. Rep. 537; Ramsey v. Philadelphia Underwriters' Assoc., 71 Mo. App. 380; Mix v. Royal Ins. Co., 169 Pa. St. 639; Farmers' Ins. Co. v. Taylor, 73 Pa. St. 342; Bartlett v. Firemen's Fund Ins. Co., 77 Iowa, 155; Harris v. Phænix Ins. Co., 85 Iowa, 238; Brink v. Merchants’ Ins. Co., 49 Vt. 442; Little v. Phønix Ins. Co., 123 Mass. 380; Brown v. State Ins. Co., 74 Iowa, 428, 38 N. W. Rep. 135; Oshkosh Gas Light Co. v. Germania Ins. Co., 71 Wis. 454, 37 N. W. Rep. 819; California Ins. Co. v. Gracey, 15 Colo. 70, 24 Pac. Rep. 577; Searle v. Dwelling-House Ins. Co., 152 Mass. 263, 25 N. E. Rep. 290; Gristock v. Royal Ins. Co., 84 Mich. 161, 47 N. W. Rep. 549, 87 Mich. 428, 49 N. W. Rep. 634; Millers' Nat. Ins. Co. v. Kinneard, 136 Ill. 199, 26 N. E. Rep. 368; Prussian Nat. Ins. Co. v. Peterson, 30 Ind. App. 289, 64 N. E. Rep. 102; Germania Ins. Co. v. Pitcher, 160 Ind. 392, 64 N. E. Rep. 921; Sisk v. American Cent. Ins. Co., 95 Mo. App. 695, 69 S. W. Rep. 687; Couch v. Home Protection Ins. Co. (Tex. Civ. App.), 73 S. W. Rep. 1077; Dobson v. Hartford Ins. Co., 86 App. Div. 115, 83 N. Y. Supp. 456; Frost v. North B. & M. Ins. Co., Vt.

60 Atl. Rep. 803.

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RULE 2.

Power of Adjuster Limited

- Cannot Delegate Same.

An insurance adjuster is ordinarily a special agent of limited authority to ascertain and adjust the loss, having no power merely as such in absence of some evidence as to his authority to alter the contract, waive any of its essential conditions (i. e. those outside the apparent scope of his authority to ascertain and adjust the loss), or to make an agreement to pay notwithstanding a forfeiture;' his position being one of personal trust and confidence he cannot delegate his authority to subagents; but otherwise where he is a general adjuster in charge over a large territory.3

1. Weed v. London & L. Ins. Co., 116 N. Y. 106, 117, 22 N. E. Rep. 229; Hollis v. State Ins. Co., 65 Iowa, 454; Alspaugh v. British America Ins. Co., 121 N. C. 290, 28 S. E. Rep. 415, 27 Ins. L. J. 441; Hartford Ins. Co. v. Smith, 3 Colo. 422; Gray v. Guardian Assur. Co., 82 Hun, 380, 31 N. Y. Supp. 237; Barry & Finan Lumber Co. v. Citizens' Ins. Co., Mich. 98 N. W. Rep. 761.

2. Ruthven v. American Ins. Co., 92 Iowa, 316, 60 N. W. Rep. 663; Albers y. Phænix Ins. Co., 68 Mo. App. 543; Dwelling-House Ins. Co. v. Snyder, 59 N. J. L. 18, 34 Atl. Rep. 931, revd., 59 N. J. L. 544, without affecting.

3. Swain v. Agricultural Ins. Co., 37 Minn. 390, 34 N. W. Rep. 738. See also “ Waiver.”

RULE 3

Apparent Scope of Adjuster's Authority. But the company is bound by his acts, declarations, and demands within the apparent scope of his authority as adjuster, in ascertaining the loss and the legal consequences which flow therefrom, although it may have been intended that his authority should be more limited;' a company cannot knowingly allow an adjuster to act as such, and then repudiate his authority.

1. Dick v. Equitable Ins. Co., 92 Wis. 46; German Ins. Co. v. Gibson, 53 Ark. 494; First Nat. Bank v. Manchester Assur. Co., 64 Minn. 96; Etna Ins. Co. v. Shryer, 85 Ind. 362.

2. Schlesinger v. Columbian Ins. Co., 37 App. Div. 531, 56 N. Y. Supp. 37.

RULE 4.

Necessary Incidents of Power of Adjuster. An adjuster authorized to settle the loss and with authority to represent the company in the settlement, has as a necessary incident the power to waive or dispense with stipulations or conditions for benefit of the company which have reference to the mode of ascertaining the liability and limiting the right of action ;' by denial of liability he may waive the period of sixty days before loss becomes due and payable.?

1. Searle v. Dwelling-House Ins. Co., 152 Mass. 263; Little v. Phønix Ins. Co., 123 Mass. 380.

2. Continental Ins. Co. v. Wickham, 110 Ga. 129, 137, 35 S. E. Rep. 287. And see “Waiver.”

RULE 5.

Notice of Limitation upon Adjuster's Authority.

Where the company's agent informs the assured that he is authorized to deliver a draft in his possession in settlement of a loss only on condition that he should receive a receipt in full for all claims against the company, and assured signs such receipt, and receives the draft, it operates as a limitation upon the agent's authority, and in legal effect as an acceptance of the company's proposition by the assured, precluding him from afterward claiming any balance alleged to be reserved or due.

Kern Brewing Co. v. Royal Ins. Co., 127 Mich. 39, 86 N. W. Rep. 388.

RULE 6.

Adjustment Subject to Terms of Policy.

When an adjustment is made in terms“ subject to terms and conditions of the policies," the true construction is that it is subject to all the terms and conditions except such as are superseded by the fact that the loss and damage have been fixed. An adjustment with such an agreement means simply that the company will pay the loss as fixed under the terms and conditions of the policy, if under them the plaintiff is entitled to payment;' and so where adjustment is made“ without reference to any other terms and conditions of the insurance contract." 2

1. Whipple v. N. B. & M. Fire Ins. Co., 11 R. 1. 139.
2. Queen Ins. Co. v. Young, 86 Ala. 424, 5 So. Rep. 116.

RULE 7.

Distinction Between Adjustment and Agreement to Pay Amount

as Adjusted -Authority of Adjuster, How Established. An adjustment of the amount of the loss, and an agreement to pay the amount as adjusted are two distinct and independent things; while the latter agreement may be made by the company or an adjuster having authority and enforced as a new agreement, independent of the policy, and need not be in writing, such agreement should be established by clear, positive, and convincing evidence. The authority of an adjuster cannot be established by his own declarations, but may be by his own testimony or inferred from his acts, and recognition by the company, or proved by declarations and admissions of its officers. A mortgagee to whom the loss is payable may claim the benefit of a new specific agreement to pay, without having been a party to it." Surrender of a groundless claim is not sufficient consideration for a new promise to pay

1. Stockton Combined H. & A. Works v. Glens Falls Ins. Co., 121 Cal. 167, 53 Pac. Rep. 565; Grier v. Northern Assur. Co., 183 Pa. St. 334, 39 Atl. Rep. 10; McGonigle v. Agricultural Ins. Co., 167 Pa. St. 364, 31 Atl. Rep. 626; McCallum v. National Ins. Co., 84 Minn. 134, 86 N. W. Rep. 892; Stoelke v. Hahn, 55 Ill. App. 497; Gerhart Realty Co. v. Northern

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