Bothell v. National Casualty Co. , 59 Wash. 209 ( 1910 )

Gose, J.

On October 15, 1908, one A. J. Bothell made a written application to the appellant for a policy of accident insurance. Immediately preceding his signature to the application, the following provisions are printed in the same type-as the remainder of the application:

“I understand and agree that, if I contract ilhiess or am injured fatally or otherwise after having changed my occupation to one classified by this company in their manual as-more hazardous than that herein stated, or if I am injured: while performing, temporarily or otherwise, any act pertaining to any more dangerous hazard or exposure, or occupation, the company’s liability shall be only for such proportion of the principal sum or other indemnity as the premium paid' by me will purchase, at the rate fixed by the company for-such greater or more perilous hazard or exposure,”

and

“I further agree to accept the policy subject to its provisions, conditions, limitations and the company’s manual of' classification of hazards.”

The application states that the applicant is the owner of a logging camp, and that his duties are “contracting only; not working.” The appellant accepted the application,, issued its policy of insurance with a copy of the application attached, and forwarded it to the insured. The application-is by express words made a part of the policy. The policy was issued on October 17, 1908, and the insured sustained'¹ injuries from which he died, while working as a logger on November 17 following. The case was tried to the court,, and a judgment entered in favor of the respondent for $1,000 and costs. The appellant contends that the judgment should, have been entered for $100, with legal interest and costs, which it tendered in its answer.

The record presents but one question. The respondent-pleaded, and was permitted to prove, that the insured fully and truthfully stated the duties of his occupation to the appellant's solicitor, who procured the application, and that-the solicitor wrote á false answer to the printed question in the application, and thereby caused the application to falsely ■ state that the duties of the insured were “contracting only;. not working,” when the insured had informed him that he-did “everything about the camp. Sometimes I tend hook; sometimes drive team, run engine,” etc. The appellant objected to the introduction of this evidence. The appellant’s manual of classification of hazards, which was admitted in evidence, provides that the death indemnity for a logger-under the policy is $100. We think the respondent can. recover only this sum with legal interest. The policy automatically adjusts itself to the occupation of the insured, and-gives him such indemnity as the premium paid by him will purchase in the occupation in which he is engaged when injured. This is fair and equitable to both the insurer and' the insured. True, it does not give the beneficiary all that the solicitor promised, but it does give her all that the premium would have purchased had the application truthfully stated the occupation. By the automatic provisions of the-policy the insured is guaranteed protection, and the company is protected against the overzeal and dishonesty of its agents.

The case is not analogous to the cases in this and other-jurisdictions hereafter referred to, where the insurance company sought to avoid all liability on account of breaches of' warranty clauses, where the true facts were stated to the-agent and false answers were written in the application by him. In such cases it has been held that his knowledge is. the knowledge of the company, and that it will not be presumed that the company intends to issue a worthless policy. An analogous case may be stated by supposing that a man fifty years of age applied for a policy upon his life, correctly stating his age; that the agent falsely stated in the-application that the applicant was twenty-one years of age, and the policy contained a provision adjusting the liability of the company to such sum as the premium paid would purchase according to the age of the applicant at the time of the issuance of the policy. Certainly, in such a case, the beneficiary could not recover more than the premium paid would purchase at the regular premium rate according to-the mortality tables. Ferguson v. Lumberman’s Ins. Co., 45 Wash. 209, 88 Pac. 128, is in point. That was an action to recover upon a fire insurance policy. The application and the policy described only lumber while contained in the yard, or the sheds in the yards of the assured. The court permitted oral evidence on the part of the insured, to the effect that the agent of the company stated to the insured when the application was signed, that the policy was an “unlimited policy,” meaning that it covered lumber in the mill and the adjoining buildings as well as lumber in yards, and that the insured would not have taken the policy but for such statements ; and also that, at the time the policy was delivered and thereafter, the agent renewed the statement. It was held that the evidence tended directly to contradict the terms of the policy and the application, and that the court erred in admitting it. We think this case in principle clearly supports the view that the terms of the application and policy in the case at bar must control. In the Ferguson case it was sought to show that the agent represented that the policy included property not described in the application or the policy. In the case at bar the respondent contends that it can recover on the policy as modified by the parol testimony.

In Employers’ Liability Assur. Corp. v. Bach, 102 Fed. 229, circuit court of appeals, ninth circuit, an instructive case upon this point, the written application of the assured stated that:

“My occupation is that of an importer and dealer in Chinese merchandise and contractor for Chinese labor. The class of risk under my occupation is agreed to be ordinary. I understand that risks are differently classified, according to occupation; and I agree that for any injury received in any occupation or exposure classed by this company as more hazardous than those above stated I shall be entitled to recover only such amount as the premium paid by me would purchase at the rates fixed for such increased hazard.”

The policy, issued and accepted pursuant to the application, provided that the company insured the assured, “engaged in the business or occupation of a merchant under classification ordinary,” in the sum of $5,000. The policy, among other conditions, stipulated that:

“If the insured is injured in any occupation or exposure classed by this corporation as more hazardous than that herein given, his insurance and weekly indemnity shall be only for such amounts as the premium paid by him will purchase at the rate fixed in such increased hazkrd.”

The insured sustained an injury from which he died. The answer alleged that, after the issuance of the policy and without the knowledge or consent of the company, the insured engaged in employment as a foreman of Chinese laborers and as a laborer, and that while engaged in such employment he met with the accident which caused his death; that such occupation was much more hazardous than that described in the policy, and that, according to the rules, customs, laws, and rates established by the company and by others engaged in the business of accident insurance, in force long prior to the issuance of the policy, the business of a laborer or a foreman of Chinese labor was and is classified as a special risk; that the premium paid by the insured, if he had insured with the defendant and had been described in the application and policy as a foreman of Chinese laborers, would have purchased insurance in the sum of $3,000, and no more, payable in the event of the death of the insured under the circumstances mentioned in the policy; and that, had the company known that he intended to engage in the occupation of a laborer or foreman of Chinese labor, it would have classified him in the policy as special, and would have refused to insure him in excess of $3,000. The answer contained an offer to pay $3,000, or to consent to judgment in that sum. By an amendment to the answer, it was alleged that the solicitor was the agent of the insured, and that the solicitor knew that the assured was engaged when he signed the application, and intended to continue, as an actual working foreman of Chinese laborers, and did not disclose that fact to the company. The trial court found that the solicitor was the agent of the company, that the insured fully and truthfully stated to him the nature of his employment, and concluded, as a matter of law, that the beneficiary was entitled to recover $5,000. In reversing the case the court said that it was not material that the solicitor knew the actual occupation of the assured, and that it was not material whether he was the agent of the assured or the company, and that, under the application and the policy, the assured could only recover such sum as the premium paid by him would purchase at the rates fixed for such increased hazard.

The respondent insists that the judgment in this case must be affirmed upon the authority of Foster v. Pioneer Mut. Ins. Ass’n, 37 Wash. 288, 79 Pac. 798. In that case a policy of insurance against loss by fire had been issued, based upon a written application signed by the assured, stating, in answer to questions, that the chimneys and flues of the house were constructed of brick, that the applicant was the sole owner of the land upon which the building stood, and that none of the personal property was incumbered. The fact was that the flues were not made of brick, the land was held by the assured under a contract of purchase, and the personal property was purchased by him under a conditional sale contract. It was held that it was competent for the insured to show, that he stated the exact truth to the agent of the company before signing the application; that the agent wrote false answers, and that the assured did not and could not read either the answer or the application, but that he signed the application relying upon the assurance of the agent that he had truthfully recorded his answers. This case and Mesterman v. Home Mut. Ins. Co., 5 Wash. 524, 32 Pac. 458, 34 Am. St. 877; Hart v. Niagara Fire Ins. Co., 9 Wash. 620, 38 Pac. 213, 27 L. R. A. 86, and Staats v. Pioneer Ins. Ass’n, 55 Wash. 51, 104 Pac. 185, in this jurisdiction, and Despain v. Pacific Mut. Life Ins. Co., 81 Kan. 722, 106 Pac. 1027; Michigan Mut. Life Ins. Co. v. Leon, 138 Ind. 636, 37 N. E. 584, and Otte v. Hartford Life Ins. Co., 88 Minn. 423, 93 N. W. 608, 97 Am. St 532, in other jurisdictions, announce the rule that the agent who solicits the insurance is the agent of the insurance company, and that a policy will not be held void, nor will a warranty clause in a policy be held to have been breached, for a cause known to the agent before the application for the policy was signed, where the assured fully and truthfully related the facts to the solicitor and false answers were written in the application by the solicitor. But we do not regard these cases as announcing any principle which would permit the respondent to recover $1,000, the indemnity for the death of a contractor under this policy, or as announcing a principle which would defeat and destroy the automatic provisions of policies of this character.

Travelers’ Ins. Co. v. Snowden, 60 Neb. 263, 83 N. W. 66, and Carpenter v. American Accident Co., 46 S. C. 541, 24 S. E. 500, cited by the respondent, support her contention. This distinction, however, may be remarked: In the Snowden case, a general agent classified the assured with full knowledge of his occupation, and the application was not attached to and made a part of the policy in either case. The court ruled in both oases that the knowledge of the agent was the knowledge of the company, and that it was estopped to raise the question of an erroneous classification. To follow the rule announced in the last two cases would be to say that an insurance company is powerless to make a contract of insurance which is equitable and just to the insured, and which will at the same time protect the company against the dishonesty of its agents.

The judgment is reversed, with directions to enter judgment in conformity with this opinion.

Rudkin, C: J., Chadwick, and Morris, JJ., concur.