Marland v. Royal Insurance , 1872 Pa. LEXIS 169 ( 1872 )

The opinion of the court was delivered, by

Agnew, J.

With all the desire we feel to compel a corporation such as this to keep good faith towards those with whom it deals, we have been unable to discover sufficient evidence in this case of a consummated contract of insurance. This action is in covenant, and is founded directly upon the policy, though it is clear it never was delivered. This brings us at once to the question: Had Marland & Co. entitled themselves to a delivery of the policy ? On this point the first witness of the plaintiffs testifies directly against them. He says the business of the company is a cash business. The receipt for the premium was held by Thompson. The company kept no account with him. He could return the policy at any time if the premium was not paid. It was delivered to him to be handed over if the premium was paid. The company did not charge him with the premium or keep any account with him. Thus by their own showing, the company in handing over the receipt and policy, gave Thompson no authority to deliver it to them without payment of the premium.

The policy, by its own terms, declares that “No insurance proposed to this company is to be considered in force until the premium and duty are actually paid, and persons desirous of continuing annual insurances must make their respective payments of the premium, and the duty thereon, on or before the commencement of each succeeding year.” Having no authority to deliver without payment of the premium, it is obvious Thompson’s willingness to do so, or to give credit, can create no contract with his principals. This is not one of those catching clauses in a policy we so often see only to condemn, but it is a demand for prompt payment of the only consideration which gives vitality to the contract of insurance. The premiums are the very bread upon which the company feeds. All its sustenance and ability to pay its losses are drawn from this source, and the payment constitutes the only consideration and just title of the insured to demand payment of the loss. What was testified, therefore, about the company’s having accepted the risk, and having delivered the receipt and policy to Thompson, as the broker and mutual agent of the parties, creates no contract. Accepting the risk meant no more than a willingness to make the insurance, but indicates no purpose to waive payment of the very consideration which moves the company to insure. It changes none of the terms of the policy to be issued. To make a different contract there must be evidence of the company’s assent to the change, of which there is not a spark in the case. There is evidence that Thompson, who, as a broker, took many policies for the company, was in the habit of making monthly settlements with the company, and then paying over the premiums he had received during the preceding period. But the delivery of the policies to him to collect the premium and hand over the policy, necessarily postponed settlement with the company to a future period, and the fact that he, for convenience, settled monthly, does not change the character of the transaction. There is no evidence that the company treated him as their debtor and charged him with the premiums. On the contrary, the proof is that no account was kept with him, and that he had a right to return all policies not paid for. The company trusted to him to hold the policies and deliver them on receiving the premiums, and when he accounted for these premiums, took no further account of the policies on which they were paid. But this mode of dealing evidently gave him no power to make contracts on different terms, or to deliver the policies without payment in direct violation of the clause in it to the contrary. Much reliance is placed upon the testimony of the plaintiffs, especially that of Mr. Haley, that Thompson offered them the binding receipt, and when asked if they were safe, provided the premiums were not paid at once, he said they were perfectly safe if the mill should burn down that afternoon; and also when told that if not safe, they would go out and get the money, he replied they were perfectly safe and could have thirty or sixty days; that he had given them credit before, and he offered to keep the policies for them. But how can all this alter the case when Haley admits that Thompson showed him the policy, and he read it, and then asked Thompson to keep it until the following week ? He knew therefore that Thompson had no authority to deliver without payment, and that the policy was worthless without it. He knew that the company required payment as a condition precedent to the insurance, and had he asked Thompson whether he had authority to waive this condition, his answer following the evidence given by themselves would have been that he had not. If deceived or lulled into security, it was not by any act of the company, but by trusting to the mere opinion of one who had no authority to bind the company by any such expression. The very question put to Thompson, whether they would be safe without payment of the premium, evinces a knowledge of the necessity of payment, and it was their folly therefore to delay making it. The true and easy explanation is, that they did not expect that a fire would take place so speedily, and thought they would have time enough to close the business. When we turn at last to Thompson’s testimony, we find that neither he nor they understood that they were entitled to the policy. He says he had given them an opportunity to take the policy before the fire, and they had not taken it, and after the fire he did not feel justified in handing it over. He also says that after the fire they did not attempt to get the policy from him, or offer any inducements, while he told them he was sorry for them, for they had no insurance, or at least he had his doubts about it. This tallies with the conduct of Wood, the actuary of the company, who, when called on by Thompson and the plaintiffs, asked Thompson if they had paid the premium, and when Thompson said “No,” said then, “I won’t acknowledge the loss.” This was a judgment of nonsuit upon the trial, and we have .been thus forced to travel through the evidence to discover any sufficient evidence of a contract to require the case to be submitted to the jury; and finding none the judgment is

Affirmed.