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Company not bound by defiant agent's actions

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A trial court erred in finding that a company was bound by its insurance agency's acts even though the agency acted against the company's wishes, the Indiana Court of Appeals ruled today.

Lupke Rice Insurance Agency sued former client Maxitrol to recover workers' compensation insurance premiums the agency paid on behalf of Maxitrol to insurance providers EBI Cos. and Royal Sun Alliance. Audits by the insurers found Maxitrol improperly classified some workers and owed additional premiums. Lupke Rice paid those premiums against the wishes of Maxitrol, which challenged the adjustment to their premiums. Lupke Rice agent Stanley Rice never told Maxitrol the company paid the premiums until after Maxitrol ended its workers' compensation insurance with Lupke Rice.

Maxitrol and Lupke Rice didn't reach an agreement on the unpaid adjustments and Lupke Rice sued Maxitrol for the nearly $64,000 in premium adjustments. The trial court found in favor of Lupke Rice, ruling Maxitrol was bound by Lupke Rice's acts, and that Maxitrol ratified the agency's payment of the adjusted premiums.

In Maxitrol Co. v. Lupke Rice Insurance Agency, Inc., No. 02A03-0905-CV-216, Maxitrol argued it's not liable for the adjusted premiums because Lupke Rice disregarded its instructions not to pay them. The Indiana Supreme Court has said that a principal is bound by the acts of a general agent if the agent acted within the ordinary and usual business scope in which it was employed, even if the agent violated private instructions of the principal. If either an innocent principal or a third party must suffer due to the betrayal of an agent's trust, then the loss should fall on the principal as the party who is most at fault because it put the agent in the position of trust.

But the rationale behind the rule doesn't apply in the instant case, wrote Senior Judge John Sharpnack.

"Here, we have a disobedient agent seeking reimbursement rather than an innocent third party seeking to enforce an agent's representations," he wrote. "Further, where a principal has instructed an agent not to do something, and the agent disobeys the principal, the agent is clearly more at fault than the principal. The rule was not intended to protect a disobedient agent."

The trial court also erred in ruling that Maxitrol ratified Lupke Rice's payments to Royal Sun Alliance. To hold a principal liable on grounds of ratification - explicit or implicit - it must be shown the principal ratified upon full knowledge of all material facts, or that he was willfully ignorant. Maxitrol didn't know Lupke Rice paid the RSA the premium adjustments and didn't learn about them until more than a year after the last payment was made.

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  1. Can I get this form on line,if not where can I obtain one. I am eligible.

  2. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  3. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  4. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

  5. Could be his email did something especially heinous, really over the top like questioning Ind S.Ct. officials or accusing JLAP of being the political correctness police.

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