Travelers Indemnity Co. v. Collier , 205 Okla. 247 ( 1951 )

GIBSON, J.

This is an appeal from a judgment by the district court of Atoka county rendered on a jury verdict, in an action wherein plaintiffs sued defendant for money alleged to be due as a balance of certain insurance premiums earned on policies issued by plaintiffs.

The parties appear here in the same order as in the trial court, and will be referred to as plaintiffs and defendant.

Two separate suits were filed. In one the Travelers Insurance Company, a corporation, sued J. Claud Collier, defendant, for premiums due on a Workmen’s Compensation policy in its first cause of action, and in its second cause for premiums due on a Garage Liability policy. On the same date the Travelers Indemnity Company, a corporation, filed a similar action against the defendant for a balance of premiums due on its Garage Liability policy. Both companies executed the last-named policy, but each assumed liability for separate items of coverage.

By order of the trial court the two cases were consolidated. It was stipulated by the parties that if defendant was indebted to plaintiffs, the debt was in the amount prayed in these petitions.

In both cases plaintiffs claim that the several policies were issued to and accepted by defendant and that defendant paid an estimated advance premium as stated in the face of the policies, and that he contracted to pay to plaintiffs a total adjusted premium to be determined by a pay roll audit of defendant’s total remuneration or wages paid to its employees after the expiration of the year covered by the policies; that the payment made at the delivery of the policy was not a full payment of the premiums and that the earned premiums on the total of defendant’s payroll was greater than the down payment, and therefore there was the unpaid balance for which judgment was prayed.

Defendant admits that he accepted the policies but says that at the time of acceptance he had a definite oral understanding with plaintiffs’ agent that the down payment made was for the full amount of the premium, and that plaintiffs accepted the same as full payment of his indebtedness on the policies. Defendant further alleges that said oral agreement was a part and parcel of the agreement entered into at the time of the delivery of said policies.

Plaintiffs filed replies wherein it was alleged that plaintiffs’ agent had no authority to make any agreement contrary to the provisions of the policy, and if such agreement was made it was ultra vires, and further, that it was defendant’s duty to read the policies and that he was bound by its provisions, having enjoyed its benefits for the full term.

From judgment for defendant, plaintiffs appeal.

For reversal the plaintiffs urge, first, that their soliciting agent did not have authority to reduce the amount of premiums fixed by law on the policies issued to defendant.

It is admitted by defendant that he accepted the written policies; that on the Workmen’s Compensation policy he paid by check the sum of $129.28, which is the exact amount set forth on the face of the policy under the designation “Estimated Advance Premium”, and that he held such policy for more than a year, which was the term of the policy.

The same admissions were made as to the Garage Liability policy except that the amount paid upon delivery of the policy was $72.45. That amount is designated on the face of this policy as “Total- estimated advance premium for Policy.” Thus it appears that defendant had full benefits of both policies for the entire policy year.

The Workmen’s Compensation policy contained the following provisions, which are pertinent to the issues presented:

“A. The premium is based upon the entire remuneration earned, during the Policy Period, by all employees of this Employer engaged in the business operations described in said Declarations .... At the end of the Policy Period the actual amount of the remuneration earned by employees during such Period shall be exhibited to the Company, . . . and the earned premium adjusted in accordance therewith at the rates and under the conditions herein specified. If the earned premium, thus computed, is greater than the advance premium paid, this Employer shall immediately pay the additional amount to the Company, if less, the Company shall return to this Employer the unearned portion, but in any event the Company shall retain the Minimum Premium stated in said Declarations ....

“L. No condition or provision of this Policy shall be waived or altered except by endorsement attached hereto signed by the President, a Vice-President, Secretary, or Assistant Secretary of the Company, or by a Registrar of the Company when specially authorized so to do by printed endorsement attached hereto; nor shall notice to any agent, nor shall knowledge possessed by any agent, or by any other person, be held to effect a waiver or change in any part of this contract.”

Similar provisions were printed in the Garage Liability policy. The rates were set forth in the declarations of each policy. There is no endorsement, appearing on either policy, purporting to change in any respect these printed conditions of the policies.

The testimony as to the negotiations leading up to the execution and delivery of the policies was in conflict. The agent for the plaintiffs testified that the advance premium was computed on an estimated $6,000 annual pay roll but that he told the defendant’s representative that the premium would be based on the payroll for the policy period and that an audit would be made in about one year.

For defendant, Sam A. Brown testified that he was administrative executive and bookkeeper of defendant and that he conducted the negotiations for the policies with plaintiffs’ agent.

The defendant testified that he had been in business for 20 years; that he did not read the policies; that he signed the two checks in evidence; that it was his understanding that they were for one year’s premium and he was greatly surprised when a man came to audit his books about 15 months after the policies were written and later he received the statement for the balance of the premium; that when the policies were delivered the plaintiffs’ agent said “This is all the premium.”

At the conclusion of the testimony the plaintiffs moved the court to instruct the jury to find a verdict in favor of the plaintiffs and against the defendant. This motion was overruled and exceptions allowed plaintiffs. Plaintiffs preserved this alleged error in their motions for new trial, which were overruled and exceptions allowed.

There is no evidence in the record to show that Mr. Hudspeth was other than a soliciting agent for plaintiffs.. With his limited powers as such an agent he had no authority to make an insurance contract other than the written contract submitted. He had no authority to fix rates or premiums other than those shown in the policies.

In dealing with this agent defendant knew that the agent was taking defendant’s application, which was to be submitted to plaintiffs, and that he would receive the policies at a later date. He did receive them. Mr. Brown read the policies, studied them, and discussed with Mr. Hudspeth Paragraphs “A” and “L”. “A” specifically provided for computation of the premiums on the basis of a payroll audit, and “L” specifically limited the power of representatives of the company with reference to waiving or altering any of the provisions of the policies. With such knowledge of the limitation of the soliciting agent’s authority, defendant relied at his peril on any act or statement of the agent in excess of his authority. Hartford Fire Ins. Co. v. McAvoy, 177 Okla. 60, 57 P. 2d 242. When such limitation of the agent’s authority was known or should have been known to the defendant, an oral representation beyond and opposed to the specific provisions of the policies was not binding upon the insurance companies. American Surety Co. v. Lind, 132 Wash. 326, 232 P. 280.

In Penman v. St. Paul Fire & Marine Ins. Co., 216 U.S. 311, 54 L. Ed. 493, the court was dealing with a policy containing limitations on the powers of agents similar to the case at bar. In the body of the opinion, the Supreme Court said:

“We think also that the policy furnishes the only way by which its terms can be waived. ... It guards against any acts of waiver of its conditions or a change of them by agents. It provides that such waiver or change ‘shall be written upon or attached’ to the policy. The company could have used no words which would have been more explicit. There is no ambiguity about them. Parol testimony was not needed nor admissible to interpret them. They • constituted the contract between the company and the insured. No agent had power to change or modify that contract except in the manner provided.”

“A contract in writing, if its terms are free from doubt, or ambiguity, must be permitted to speak for itself, and cannot by the courts, at the instance of one of the parties, be altered or contradicted by parol evidence, unless in case of fraud or mutual mistake of facts, and this principle is applicable to contracts of insurance.” Badgett v. Oklahoma Life Ins. Co., 176 Okla. 86, 54 P. 2d 1059; California State Life Ins. Co. v. Bailey, 176 Okla. 153, 54 P. 2d 647; Brown v. Connecticut Fire Ins. Co., etc., 52 Okla. 392, 153 P. 173.

It was error for the trial court to overrule plaintiffs’ motion for a directed verdict.

Reversed and remanded for a new trial.

HALLEY, V.C.J., and CORN, JOHNSON, O’NEAL, and BINGAMAN, JJ., concur. WELCH and DAVISON, JJ., dissent.