Mutual Life Ins. v. Vaughan , 125 Miss. 369 ( 1921 )

Ethridge, J.,

delivered the. opinion of the court.

This is an appeal from a judgment of the circuit court against the appellant for two thousand dollars. The facts briefly stated are as follows: In June, 1918, plaintiff’s husband, Albert Truly Vaughan, applied in writing to the appellant for two five-year term policies of life insurance on his life, in the sum of two thousand dollars each, payable. on his death to his wife. The application contained, among other things, a provision that the policy should not take effect unless and until the first premium shall have been paid during the applicant’s continuance in good health, and unless also the policy shall have been delivered to, and received by, the applicant during his continuance in good health, except in case a conditional receipt shall have been issued as hereinafter provided. The applicant also agreed in the application that no agent or other person except the president, vice president, a second vice president, a secretary, or the treasurer of the insurance company bad power on behalf of the company to make, modify, or discharge any contract of insurance, to extend the time for paying a premium, to waive any lapse or forfeiture or any of the company’s rights or requirements, or to bind the company by making any promise respecting any benefits under any policy issued under the application, or by accepting any representation or information not contained in the written application.

The application, with the medical examination, was transmitted to the home office of the company, and the company declined to issue the policy on the plan requested, but did issue two policies of ordinary life insurance for two thousand dollars each and transmitted them to the Mississippi agent for delivery. Vaughan declined to accept the policies tendered and they were returned and canceled. But thereafter the local agent induced Vaughan to accept one of the policies tendered by the company, and the company was notified to this effect, and made out and sent to its state' manager a policy for two thousand, dol-dars on the life of Vaughan, which policy on its face re-citéd, “In consideration. of the annual premium of fifty and 10/100 dollars, the receipt of which is hereby acknowledged and of the payment of a like amount upon each Twenty-third day of September hereafter until the death of the insured.” Accompanying this policy was a letter to the company from its state manager, and also a blank application with blanks for a medical report. The letter to the state manager instructed him to deliver the policy on procuring a satisfactory certificate of health, or, to quote more exactly from the letter, “Policy No. 2503511 is forwarded, herewith, but before delivery you are to procure a satisfactory certificate of health.” The state manager of the insurance company, on receipt of the policy with the inclosed blanks and letter, sent to the local agent the policy and blank application or certificate with the following letter:

“I send you herewith Policy No.' 2503511. Amount $2,000. Prem. $50.10. Policy of Albert Truly Vaughan is forwarded herewith, but before delivery you are to procure a satisfactory certificate of health. Please acknowledge receipt.”

The local agent testified that he inclosed the policy, with the blank application for medical examination, with a letter therein addressed to Mr. Vaughan at Jackson, Miss., a copy of the letter reading as follows:

“They were rather slow about it, or else I overlooked matter for a time. But anyway I Avrote second time and am pleased to hand you hereivith policy as suggested. Note that I have had date moA^ed up to date, as I do not think you should pay for about ninety days without having had the protection and in this way second premium not due until Sept. — Oct. 23, 1919, instead of June, 1919, as if original sent out. Necessary, however, to have enclosed form signed and witnessed by the examiner, Dr. Hunter. Please take this form to him on receipt of same, fix it, and mail to me. You can use thirty days if you care to on payment this premium from date of this form completion by Dr. Hunter. Amount for first year’s premium twenty-seven dollars and five cents. This includes tAvo dollars health certificate fee to the examiner. If you prefer settle this fee Avith the doctor and remit me twenty-five dollars and five cents premium. Trusting this satisfactory and to hear from you in due course,” etc.

The deceased, Albert Truly Vaughan, died some days after the mailing of this policy, and after its receipt -by him.

It appears from the plaintiff’s testimony that she, in company with her husband, the deceased, went to the post office at Jackson, Miss., on their way to a picture show at night, and that her husband received the letter and opened it in her presence, the envelope containing only the policy of insurance, and containing no form nor letter nor instructions of any kind. That she examined the policy in the envelope and saw there was no inclosure with the policy. She testified that Vaughan was in good health at the time. A few days thereafter Vaughan went to New Orleans, and returned and developed a case of influenza, and died within a few days. The widow, the plaintiff, notified the company of the death, and requested forms to make out proof of death, which the company refused to furnish, contending that it had not delivered the policy and that the policy was not an obligation against the company, whereupon suit was brought upon the policy. The policy was attached to the declaration, and the application of the deceased for insurance upon which the policy was issued is made a part of the record.

The defendant filed the general issue, and also special pleas. The general issue denied that it undertook or promised, or that it was indebted in the manner and form as charged in the plaintiff’s declaration. The special pleas, of which there were three, set forth that the said policy was never executed or delivered setting forth that the application made in June, 1919, was rejected by the company as applied for-, and that the company, on the written medical examination or report of the medical examiner, declined to issue the policy as applied for, but tendered to the deceased ordinary life plan policies for said amount, which Vaughan declined to accept; that afterwards, in August, 1918, said Vaughan made known to the defendant that he was willing to accept one policy for two thousand dollars on ordinary life plan, and requested that such policy be executed, and thereupon defendant agreed to write such policy on his life, if he would furnish a new medical examiner’s report showing his then state of health and physical condition to be as good as it was when the previous medical examination was made, and that the medical examiner’s report was a condition precedent to the execution of any policy of insurance by the defendant on the life of the said Vaughan; that on the 23d day of September, 1918, the defendant prepared in writing in form a life insurance policy on Vaughan’s life, the paper printed and written sued upon in this case, and transmitted the same to its manager, with instructions that it should not be delivered before receiving from him a satisfactory certificate of health and report of the medical examiner showing his health and physical condition at the time, and that the said policy by its terms required as a condition to its validity that the first premium of fifty dollars and ten cents should be paid; that said Vaughan should be in good health at the time of its delivery to him; that its said manager forwarded the policy and directions to the local agent with instructions in writing not to deliver the policy to Vaughan until Vaughan should deliver to defendant a satisfactory certificate of health and a medical report; that said certificate was never delivered, and the premium was never paid. Issue in short was joined on these special pleas.

On the trial the local agent testified that he mailed the policy, together with the letter and forms aboye referred to, to the deceased Vaughan; that he had previously instructed Vaughan that it would be necessary to obtain a health certificate from the company’s examining physician. Dr. Hunter. He also says that he had no authority to so deliver the policy. Various rules of the company furnished to its agents by the appellant were offered in evidence, limiting and restricting the authority of the agents in various ways in the discharge of their duties.

It was the duty of the agent to solicit policies and to collect premiums, and also to deliver policies. The trial court submitted the issues to the jury under instructions for the plaintiff and defendant. It gave one instruction for the plaintiff which reads as follows:

“The court instructs the jury for the plaintiff, if they believe from the evidence that the insurance policy introduced in evidence in this case was duly and legally issued by the regularly constituted authorities of the defendant company, the Mutual Life Insurance Company of New York, upon the life of Albert T. Vaughan, on the 23d day of September, 1918, and that said policy was duly received by the said Albert T. Vaughan while in good health, as testified to by the plaintiff, Margaret B. Vaughan, and that no other papers, letters, or written statements pertaining to said policy were ■ received by’ said Albert T. Vaughan with said policy, and that no other conditions, or requirements affecting said policy were ever communicated to said Albert T. Vaughan, and that said Albert T. Vaughan died on the 18th day of October, of influenza and pneumonia, then the jury will find for the plaintiff an amount not to exceed the face value of said policy, to wit, two thousand dollars, together with six per cent, interest per annum thereon from March 12, 1919, to the present date, to wit, the 15th day of October, 1919.”

For the defendant the court instructed that if the jury believed the agent delivered the policy in violation of instructions of the defendant they should find for the defendant.

The local agent testified that no health certificate was ever delivered to him. It appears from the evidence that Dr. Hunter was the physician- who examined applicants for the company. He was not introduced as a witness as to whether the deceased was ever re-examined by him, but the local- agent testifies that no medical certificate was ever furnished to him of any such examination.

It is insisted that there was no delivery of the policy in such sense as to bind the company. It was also insisted that there is no proof of the payment of the premium under the terms of the policy and the application for the policy, and the officers of the company -whose depositions are taken, who have charge of this department of the company’s business at its home office, testify that no premium was ever paid, as also does the local agent, while the plaintiff testifies that she has no knowledge of the payment of the premium. It will be first necessary to determine whether the policy was delivered, and, if it was delivered, it will then be necessary to determine the effect of the receipt contained on the face of the policy upon this question.

In Stewart v. Coleman & Co., 120 Miss. 21, 81 So. 653, we construed section 2615, Code of 1906 (section 5078, Hemingway’s Code), and held that the agent delivering a policy of insurance under that section of the code was the agent of the company for that purpose, and gave effect to a delivery of a policy in the same manner and to the same extent as if it had been delivered by the principal. The section above referred to precludes an insurance company from delivering a policy through an agent in this state, and then avoiding the effect of such delivery. In the present case the delivery must be determined bv the same rule that would govern had the proper officers of the company made the delivery. In sending a policy to an agent in this state for delivery, with instructions as to what to require, the instructions will not be binding upon the beneficiary in the policy, unless the beneficiary or the insured had knowledge of the conditions contained in the instructions to the agent. If the agent violated his instructions, without knowledge or acquiesence on the part of the beneficiary, or on the part of the insured, then the company must bear the consequences of the agent’s violation of his instructions so far as the beneficiary and the insured are concerned. Under our statute, making the delivery by an agent a delivery by the principal, a contract becomes a Mississippi contract, and provisions in the rules or instructions to the agent in conflict with the statute will not be allowed to prevail.

The company issued the policy upon a medical examination conducted by its own officers, and if it intended not to deliver the policy until an additional health certificate was furnished it should have withheld the policy until that was received. The provision in the policy is that the proposed policy should not take effect unless the policy should have been delivered to, and received by, the insured during the continuance of good health. The question is then to be determined Avhether the applicant was in good health at that time! The health certificate, if one Avas furnished, is mere evidence of the fact of good health, and if the company delivered the policy when the insured was in good health, without requiring the certificate to be delivered prior to the delivery of the policy, it waived this provision or requirement, and it is immaterial that the waiver occurred through the default of the agent or whether it was the default of the principal. The company cannot withhold from the insured the benefit of the policy which it delivered without bringing the conditions to the knowledge of the insured or the beneficiary. The proof on this point is conflicting. The plaintiff testifies positively that no papers other than the policy itself were inclosed in the envelope received by her husband, the" insured. The agent testifies positively that he mailed the application and letter to the insured in the same inclosure that contained the policy. It is urged in argument that the inclosures may have gotten lost in the mail, and that this possibility would prevent a conflict of evidence upon the point involved. There is no fact in the record which would warrant the presumption that the incldsures were lost in the mail. There is no proof that the' letter was opened, or rifled, or anything taken therefrom. Therefore the evidence upon this point was for the jury, and the jury resolved it in favor of the plaintiff.

We are next called upon to consider the effect of the receipt of the money contained in the face of the policy.

In Britton v. Metropolitan Life Ins. Co., 165 N. C. 149, 80 S. E. 1072, Ann. Cas. 1915D, 366, it was held that an acknowledgment in a life insurance policy of the receipt of a semiannual premium is not a mere receipt, but a part of the contract, in so far as the insurer’s right to forfeit the policy is concerned, and estops the insurer to claim a forfeiture because of the parol contract between the insured and the insurer’s agent that the premium should be paid quarterly, pursuant to which agreement only payment of the quarterly permium at the beginning of the insurance term, instead of a semiannual premium, was made. It was held in this case, and by numerous authorities cited therein, that the receipt in such case is not a mere receipt which may be contradicted by parol proof. In the case note to this report to the Ann. Cas. 1915D, 366, the learned editor of this series says:

“The reported case is in accord with the weight of authority in holding that where a life insurance policy is delivered unconditionally, an acknowledgment in the policy of the receipt of the premium, estops the insurer in the absence of fraud to contest the validity of the policy on the ground of nonpayment of the premium.”

And a large line of authorities are cited to sustain this statement. The rule seems to be that, as between the insurer and the insured for the purpose of collecting the premium, such receipt is not conclusive but is only prima-facie evidence of payment, but, as between the beneficiary and the insurer, a receipt is conclusive, being contractual. We think the rule is amply supported by authority, and so the policy is not void because the premium was not paid before delivery, if in fact it was not paid, which seems to be proven, the insured being dead and unable to testify as to this fact.

It is insisted that the instruction above set out for the plaintiff is erroneous, and the judgment should be reversed for that reason. We do not undertake an analysis of the various grounds of objection to this instruction; nor does it, when considered in connection with the instructions given for the defendant, omit any legal requirement. Taking the instructions as a whole, one as supplementing the other, we think the law was announced as favorably to the defendant as it could be. Indeed, the plaintiff was required to meet more than the law imposed upon her.

The judgment trill be affirmed.