Ray v. Security Trust & Life Insurance ( 1900 )

Upon the trial the defendant asked his Honor to hold and charge: "That plaintiff is not entitled to recover because of the provision in the application that no insurance shall be in force till the delivery of the policy to deceased while in good health, and payment by her of the first premium."

His Honor declined to so hold and charge, and defendant excepted.

The issues submitted by his Honor to the jury were as follows:

1. Did defendant company contract and agree with intestate to issue a policy of insurance on her life in the sum of one thousand dollars?

2. Did defendant wrongfully and in breach of its contract fail and refuse to deliver such policy?

3. What damage is due and owing to plaintiff by reason of such wrong and injury?

The issues submitted were objected to by defendant.

The jury found the issues in favor of plaintiff and assessed his damages at $989.63, with interest from 2 May, 1899 (date of tender of balance due $10.37).

The figures arrived at were derived by deducting the difference between the premium due, $33.80, and the sum paid, $23.43, making $10.37, from $1,000.

There was judgment according to verdict, in favor of plaintiff. Defendant appealed. On 18 November, 1898, the plaintiff's intestate made application to the defendant company for a life insurance policy, with the usual questions, answers, conditions, medical examination (168) and certificate, etc. On 3 January, 1899, the president of the company addressed the applicant as follows: "I have the pleasure of informing you that your application to this company for insurance has been approved, and that a policy is being issued today, which will reach you in due time through the agent who forwarded the application."

It appeared that the defendant had a general agent at Richmond, Va., and another agent at Oxford, N.C. through whom the application was made — the principal office of the defendant being in Philadelphia, Pa. It also appears that the annual premium on $1,000, amount applied for, was $33.80, and that the Oxford agent received $23.40 thereon, he and the applicant supposing that was the amount to be paid annually.

There was some correspondence between the agents and the company. On 18 January the general agent wrote to the Oxford agent for advice, etc., and on 19 January the company wrote: "If not placed, recall policy, Corinne M. Ray, at once." On 17 January Mrs. Ray, the applicant, wrote to the company: "I wrote Mr. Marable, at Oxford, N.C. a few days ago about the policy, but as yet have heard nothing from him. It seems he is quite slow. Can't you hurry him along with it?" The policy was never delivered, and the applicant died 2 March, 1899. There was no change in her health between 18 November, 1898, and 25 January, 1899. No policy being delivered, the action is upon the contract. The plaintiff's contention is that, when the application was received and the company replied, "Your application for insurance has been approved," and that "a policy is being issued today," the contract was complete, as the minds of the contracting parties then met. Admitting the conclusion as a general rule, we must consider the result when (169) conditions and qualifying provisions are a part of the agreement. One of the provisions in the application is in these words: "That no insurance shall be in force until the delivery of the policy to, and the payment of the first premium by the party whose life is insured while in good health." So we have an agreement with an important provision or condition attached, fixing an event on the happening of which the contract shall become operative. Of course the minds of the contracting parties met as effectually on this provision as on any other part.

This proposition was made by the applicant and accepted by the defendant. How is the applicant to escape the force of this provision? The proviso is not unreasonable. There is nothing in it illegal, nor does it contravene any feature of public policy. The proviso or condition is important to both parties. The applicant wants certainty and desires a certain day, when the agreement becomes absolute, and is stripped of all doubt. The defendant wants protection against unforeseen trouble that may arise after approval of the application and before delivery of the policy. A change of habits and impairment of health may intervene, and misrepresentations in the application may be discovered. These possibilities are understood by the parties, and they would make the subject unfit for insurance. Against these, the proviso affords protection; and to remove all doubt, it is provided that, until the policy is delivered, there is no insurance in force.

We are referred to several decided cases, similar in many respects, but we have found no case in which the facts are "on all fours" with those in the case before us.

According to the view above expressed, the plaintiff has no (170) cause of action, and the consideration of the other exceptions is unnecessary. This being an action for damages, the plaintiff can not recover in this action the $23.43, as money had and received for the use of the plaintiff.

We find error committed on the trial, and that the judgment is erroneous.

Reversed.

Cited: Grier v. Ins. Co., 132 N.C. 546.