McGurk v. Metropolitan Life Insurance , 56 Conn. 528 ( 1888 )

Park, C. J.

This action is based upon a policy of life insurance, issued by the defendants upon the life of one-William McGurk.

At the time application was made for the policy, and when it was issued, and during all the remaining life of Mc-Gurk, he was carrying on the business of a grocer, and at the same time was engaged in selling Avines and spirituous liquors at retail in one part of his grocery establishment, separated from the remainder by a wooden partition. In his application for the policy he stated, in ansAver to a question regarding his business, that his “ occupation was that of a grocer.” No other or fuller answer was given to the question.

He further declared that the statements he had made in his application were “ strictly correct and wholly true; and that they might form the basis and become a part of the contract of insurance, if one should be-issued.” The policy counted upon these statements, and they formed a part of the consideration of the contract.

In one claiise of the policy it is stated that “the per* son upon whose life this policy is issued, shall not be connected in any capacity with the ale, wine or liquor business, unless so specified in the application heretofore referred to, or unless permission be given by permit, signed by the president or secretary.” In another clause of the policy it is stated that “ agents are not authorized to make, alter or discharge contracts, or waive forfeitures, or receive premiums on policies in arrears after the time allowed by the regulations of the company.”

On the trial of the cause in the court below the plaintiff offered evidence to prove, and claimed that he had proved, that the application of McGurk Avas taken and filled out by one Curtis, who was the assistant superintendent of the defendants in the district where the insured resided; that it was taken in the room where the insured kept his liquors; that while it was being done the insured sold liquors to divers persons in the presence and with the knowledge of Curtis, who likewise drank liquor there at the time; that another agent of the defendants, who performed the duty of collecting premiums of insured persons, and who afterwards collected weekly premiums of McGurk during nine successive weeks next after the issuing of the policy, was also present at the taking of the application and saw McGurk selling liquors; that two other agents of the defendants, who collected premiums of the insured, knew that he was engaged in the business of selling groceries and spirituous liquors, and one of them drank such liquor there, but they knew nothing concerning the statements in the application; and that Curtis delivered the policy to the insured in the same room where the liquors were sold, which had' all the ordinary accompaniments of a bar-room.

It further appeared in the case by the evidence offered by the defendants, that the duties of superintendents of districts and assistant superintendents, were to employ and instruct agents in their duties of canvassing for applications for insurance and in the collection of premiums, and to inspect their business and examine their accounts of premiums collected.

These facts form the basis of the questions that arise in the case.

The defendants’ answer sets forth a false warranty of McGurk in his application, in this,"that he stated in it that his occupation was that of a grocer, which was not strictly and wholly true, for at the same time he was engaged in the ale, wine and liquor business as a part of his occupation, which he continued, to carry on during the remainder of his life, without the business being stated in his application and without having the permit to do so signed by the president or secretary of the defendants; which was contrary to his warranty and to his contract of insurance.

The plaintiff’s reply to the answer of the defendants sets forth that the defendants well knew, when the application was made and the policy was delivered, and during all the subsequent life of McGurk, that he was engaged in such business, but notwithstanding they collected, and continued to collect of him the weekly premiums as long as he lived, and in consequence thereof they waived all objection to the liquor’ business of McGurk, and are now estopped from claiming the objection set forth in their answer. To this reply the defendants demurred, and the court adjudged the reply sufficient, and required the defendants to plead over, which they did by denying the facts stated in the reply to which they had demurred.

On the trial of the cause evidence was offered by the parties pro and con on this issue, and under the charge of the court the jury found the facts as stated by the plaintiff.

The question of fact, therefore, has been settled, and cannot be reviewed, if there was any substantial evidence that went to the jury in support of their verdict, inasmuch as the case is not brought up on the ground of a verdict against the evidence.

But the defendants complain of the charge of the court. They say the court erred in not charging the jury according to their request, which was as follows:—(1.) “ That the answer in the application that McGurk was a grocer, without stating that he was engaged in the liquor business, was an incomplete and false answer, and constituted a breach of warranty, and that the contract of insurance was thereby rendered void. (2.) That by reason of the false answer and warranty, the contract never became operative and binding, but was void from its inception. (8.) That under the conditions of the contract of insurance, McGurk being engaged in the ale, wine, and liquor business, the contract never took effect, but was invalid and void.”

Upon this subject the court charged the jury as follows:— “ The court instructs the jury that the omission of McGurk to state in his application that he was engaged in or connected with the ale, wine or liquor business, does not render thereby the issue of the policy of insurance null and void by reason of the first condition of the policy. The provisions of this condition, which are that the person upon whose life the policy is issued shall not be connected in any capacity with the ale, wine or liquor business, unless so specified in the application or unless permission be given by permit signed by the president or secretary, apply only to such connection with such business after the date and delivery of the policy. It is a condition which takes effect on the delivery of the policy, and looks only to the business of the insured subsequent to such delivery! The question of fact then is, was McGurk connected in any capacity with the ale, wine or liquor business after the delivery of the policy?”

The defendants’ request to charge is, in substance, that the omission of McGurk to state in his application that his occupation in part was the business of selling ale, wine and liquors, constituted a breach of his warranty that his answers should be strictly correct and wholly true, and therefore rendered the contrrct of insurance which was afterwards given void in its iricej.- Aon.

It does not appear that McGurk was informed at all as to what would appear in his contract of insurance, if one should be issued. It was in the contract alone, afterward delivered, that he obtained the information that he should not “ be connected in any capacity with the ale, wine or liquor business, unless so specified in his application for the insurance, or unless permission vvas given by permit, signed by the president or secretary.” Webster defines the meaning of the word “ grocer ” to be—“ A trader, who deals in tea, sugar, spices, coffee, liquors, fruits,” etc. The word therefore properly described McGurk’s occupation, and nothing whatever appears in the case tending to show any want of sincerity on his part in his answer, much less that by it he committed a fraud on the defendants which made void the contract of insurance in its inception. He doubtless believed at that time that the word “ grocer ” covered his entire occupation. The answer was made in the bar-room of McGurk, in the midst of his liquors, and in the presence of two of the defendants’ agents—a poor time and place, at least, to practise such a fraud on the defendants.

It is true that, after McGurk knew what the contract required, he should have conformed to it or rejected it altogether; but to say that the contract was void in its inception, before he knew or had any opportunity to know what it required, was incorrect, and would have been error in the court if it had so charged. The view that the court took of the contract in this respect was strictly correct. It had nothing whatever to do with the occupation of McGurk before it took effect on its delivery.

The defendants further claim that the evidence offered by the plaintiff on the trial, tending to show a waiver by the defendants of the want of a permit to McGurk to engage in the ale, wine and liquor business, signed by the president or secretary of the company, should have been excluded, on the objection made by them, that, the power of the agent who took the application, delivered the policy and collected premiums, being limited, with full knowledge of the insured, to those specific duties, and notice being given in the policy that such agent could not alter the contract or waive forfeitures, it follows that anything done or said by any such agent would not be a waiver of any condition or in any manner affect the rights of the defendants under this contract.

The evidence was offered to show that the defendants themselves had full knowledge that McGurk was engaged in the ale, wine and liquor business, and that with such knowledge they voluntarily accepted premiums, and thereby waived all objection to the omission to state such business in the application, and to the want of a permit signed by the president or secretary of the company allowing McGurk to pursue such business ; and for this purpose the evidence was clearly properly receivable.

The presumption was a very strong one that the assistant superintendent of the district, who took and filled out the application of McGurk, and who afterwards delivered to him the policy and collected the premium thereon, whose duty it was to see that all the agents of the defendants soliciting applications for insurance and collecting premiums of the insured within his district performed their duty, informed the defendants of all the facts respecting the occupation of MeGurk, so recently within his knowledge, and which it was his bounden duty to do when he took to them McGurk’s application for insurance. He would have been recreant to his manifest duty had he failed so to inform them.

Had the duties of the assistant superintendent been coextensive with the business of the defendants, although his authority would not have been greater over any particular district than it was over the one in question, still he might be regarded as the general agent of the company in that department of their business. All the business of the defendants in procuring applications for insurance, delivering policies and collecting premiums, was committed to this class of agents. If one, having the entire management, might properly be called a general agent, it is difficult to see why one having the same management over certain territory might not in like manner be properly so called.

It is everywhere held that information which comes to an agent concerning the business he is transacting for his principal within the limits of his agency, is information to the principal. In the case of The Distilled Spirits, 11 Wallace, 356, the United States Supreme Court say:—“ The question how far a purchaser is affected with notice of prior liens, trusts, or frauds, by the knowledge of his agent who effects the purchase, is one that has been much mooted in England and this country. That he is bound and affected by such knowledge or notice as his agent obtains in negotiating the particular transaction, is everywhere conceded. . . . The general rule that a principal is bound by the knowledge of his agent is based on the principle of law that it is the agent’s duty to communicate to his principal the knowledge he has respecting the subject matter of negotiation and the presumption that he will perform that duty.” May (on Insurance, 2d ed., § 132), says:—“ Facts material to the risk, made known to the agent before the policy is issued, are constructively known to the company, and cannot be set up to defeat a recovery on the policy.” See also Commercial Ins. Co. v. Spankneble, 52 Ill., 53; Reaper Ins. Co. v. Jones, 62 Ill., 458; Lycoming Ins. Co. v. Barringer, 73 Ill., 230. In Bartcher v. Hawkeye Ins. Co., 47 Iowa, 253, the court say:—“We are, in the next place, required to determine whether the defendant is bound by the knowledge possessed by its agent as to the fact that the building was not occupied. The district court instructed the jury that if the agent was authorized to solicit and forward applications for insurance, to deliver policies and to collect and transmit premiums, the defendant was bound by the knowledge possessed by him touching the character of the risk and the fact that it was not occupied as a hotel. The jury must have found that the powers and authority of the agent were such as are specified in this instruction; and the evidence supports such conclusion. This rule of instruction has been recognized by this court.” In Globe Mut. Ins. Co. v. Wolff, 95 U. S. R., 326, the court say: “It is true that where an agent is charged with the collection of premiums upon policies, it will be presumed that he informs the company of anj circumstances coming to his knowledge affecting its liability, and if subsequently the premiums are received by the company without objection, any forfeiture incurred will be presumed to be waived.”

These cases, and many others that might be cite,d, fully ' establish the doctrine that knowledge affecting the rights of the insured, which comes to an agent of an insurance company while he is performing the duties of his agency in procuring applications for insurance and delivering policies and collecting premiums, becomes the knowledge of the company, and if the latter afterwards collects premiums of such parties it waives all objection with regard to the matters of which it has such knowledge.

There is no error in the judgment complained of.

In this opinion the other judges concurred.