Life Casualty Insurance Co. v. Brockett

1. The court did not err in overruling the demurrers to the petition.

2. The special grounds of the motion for new trial are without merit.

3. Where an application contains no mention of time policy is effective, and where application contains no limitation of authority of agent; and where the agent simultaneously with obtaining the application covering accident insurance issues a "binding receipt" for five weeks premiums, in advance; and where an injury to insured was received between the date of the application and the date the policy was delivered, which injury was known to the agent at the time the policy was delivered, and of which injury the agent afterwards informed the company; and where thereafter another premium was collected by the agent and accepted by the company, and after the payment and acceptance of the second premium total loss of eyesight resulted from the injury; the company is liable notwithstanding provisions of the policy stipulating (a) that policy shall not become effective until after delivery and at a time when insured is in good health, and (b) that the agent is without authority to change the terms of the policy.

DECIDED JUNE 17, 1942. REHEARING DENIED JULY 27, 1942. W. J. Brockett sued Life Casualty Insurance Company to recover $500 for the accidental loss of the sight of his left eye. Before pleading to the merits the defendant filed general and special demurrers to the petition, which were overruled, and it excepted pendente lite. A jury returned a verdict in the amount sued for. The court overruled a motion for new trial, and the defendant excepted.

Briefly, the petition alleged that S. A. Meeks, agent for the defendant, on March 29, 1940, procured an application from plaintiff for an industrial travel and pedestrian policy. On the date the application was executed and delivered by plaintiff to the agent, he, Meeks, executed a receipt: "Life and Casualty Insurance Company of Tennessee. Form 28. 3-29 1940. District Albany. Received of W. J. Brockett the sum of twenty-five cents dollars for application fee T. P. Week of March 25, 1940. (Binding receipt.) S. A. Meeks." On April 3, 1940, plaintiff received an injury to his left eye, in an automobile accident. On April 16 or 17 following the policy for which the plaintiff had made application was delivered to him. On May 2 the plaintiff paid the defendant an additional premium of twenty-five cents. Soon thereafter, by reason of the accident, the sight of plaintiff's left eye was completely and permanently lost. It was further alleged that at the time of the injury and the loss of the eyesight the policy was of full force and effect.

The defendant filed an answer to the following effect: Jurisdiction is admitted. All the other allegations of the petition are denied. Further answering, the policy was not issued until April 15, 1940. The injury occurred on April 3, 1940. The policy was not in force on April 3, the date the injury was received. The policy stated: "This policy shall not take effect prior to the date of same, nor unless the first premium shall have been paid in cash, and the contract delivered and accepted during the lifetime and sound health of the insured. And if the insured is not in sound health at the time of the delivery of the policy it shall be void, whether the condition of bad health had its origin prior or subsequent to the application for this policy, or was not known to the assured. Knowledge of the agent shall not be taken to be knowledge of the company." The defendant further alleged that the agent, Meeks, was not authorized to bind the company by any "receipt or writing;" that the "binding receipt" did not bind the company; that the provisions of the policy were binding on the insured; that the policy provides: "The acceptance of this policy shall be everywhere construed as incontrovertible evidence that it has been read, understood, and accepted by the insured and beneficiary. It is subject to the terms and provisions on this and the reverse side hereof. If these terms and provisions are not in all respects observed, this policy shall thereupon become void and all rights thereunder forfeited." Also, that the alleged injury of plaintiff was sustained before the policy was issued or delivered, and that under the terms of the policy the defendant is not liable.

While the evidence on some issues was conflicting as to the material allegations of the petition and the answer it was substantially as follows: Meeks was agent for the defendant and Brockett was agent for other insurance companies. Both sold similar policies of insurance and both were familiar with what is known to the trade as "binding receipts." The receipt for twenty-five cents on which the words "binding receipt" were written was for five weeks' premiums. Meeks testified: "The word ``binding receipt' was not usual in a policy of this kind, and this is the only receipt that I have issued on a policy like this, the one sued on in this case. At that time I was under the impression that after a copy had been okayed by the home office that it was in force from the date of the first payment." Brockett testified on this point, in effect, that it was intended that the policy should become effective from the payment of the premium. Before and at the time the policy was delivered by Meeks to Brockett, the evidence was to the effect that Meeks was told by Brockett of the injury to the eye; that he had been to several specialists and that there was a possibility of his losing his eyesight; that he, Meeks, knew this at the time he delivered the policy on March 16 or 17; that after the policy was delivered he notified the company to this effect.

There was likewise no conflict in the evidence to the effect that the injury to the eye of plaintiff grew steadily worse, and that the sight was totally and permanently lost soon after the payment of the second premium on May 2, 1940. Both of these premiums were remitted by Meeks to the company, which premiums were retained until plaintiff filed his claim on August 10, 1940, whereupon defendant tendered the premiums, in the form of a check, to plaintiff by mail. It does not appear from the application, which was not made a part of the policy, but which was introduced in evidence, that there was any limitation on the agent Meeks to bind the company from the time of the payment of the first premium until the company passed on the application to determine whether the company would issue or refuse to issue the policy. The limitations on the authority of the agent, as set up in defendant's answer, are those set out in the policy. Several officers of the defendant testified that the company did not authorize the agent to issue binders in the type of policy in question, and that where binders were permissible the type of binders was introduced in evidence. These officers testified that the agent Meeks had no authority to so bind the company. 1. The demurrers raised practically the same issues as those raised by the general grounds of the motion for new trial, the only difference being that the evidence introduced to sustain the allegations of the petition was more in detail than were the allegations themselves. Under our view of the case, hereinafter more fully discussed, the judge did not err in overruling the demurrers.

2. (a) Grounds 1 to 10 inclusive and 12 of the amended motion assign errors on the admission of the policy, the receipt of March 29, 1940, and parol testimony in connection with said documents, on the grounds that such testimony was immaterial and its admission was prejudicial. The ultimate effect of the errors assigned is that the court erred in admitting testimony to sustain the allegations of the petition. Since we have held that the demurrers and the general grounds go to the same question, whether the plaintiff was entitled to recover as a matter of law, under the allegations of the petition and the evidence introduced thereunder, these grounds of the amended motion may be properly dealt with under the last division of this opinion. (b) Ground 11 complains generally that plaintiff could not recover because the witness Meeks testified that the company paid a claim on another contract which Brockett had with the company, and cites a provision of the contract that if the company had previously issued another "industrial travel and pedestrian policy" to the insured, concurrently in force with the policy sued on, in excess of $1000, the policy sued on would be void. Such defense was not set up in the answer. The first mention of it was in a vague sort of way in the evidence above quoted, and the next mention of it was in ground 11 of the amended motion for new trial. It nowhere appears in the record that the other policy thus incidentally and vaguely referred to was another "industrial travel and pedestrian policy" which made the amount of this type of insurance exceed $1000 in favor of the insured, issued by the defendant. This ground is without merit. (c) Grounds 13 and 14 assign error because the court failed to charge more fully regarding the issues involved. There were no written requests to charge. The charge as a whole was not subject to the errors assigned.

3. We will now discuss the general grounds, as to whether Meeks was authorized to bind the company from the time the first payment was made and the "binding receipt" issued therefor until the company passed on the application. It will be noted from the evidence that Meeks, the agent of the company, testified that he "was under the impression that after a copy had been okayed by the home office that it was in force from the date of the payment, the first payment, and the issuance of the receipt." It must be kept in mind that the application which the plaintiff executed placed no limitation on the authority of the agent. The application does contain memoranda of the nature and amount of the policy of insurance for which the application was made. If the application had stipulated that the policy was not to become effective until it was issued and delivered at a time when the insured was in good health, the case would be different. Counsel for plaintiff in error cites Newton v. Gulf Life InsuranceCo., 55 Ga. App. 330 (190 S.E. 69), as authority for his contention that the policy did not cover an injury sustained between the date of the application and the payment of the first premium and the date of the delivery of the policy. A reading of this case will reveal that the limitation of the agent was stated in the application, as well as in the policy: "Where a person makes application to a foreign accident insurance company through the latter's agent, and the context of the application shows that a certain, specific, and definite policy of insurance is applied for, the applicant is presumed to be fully acquainted with all the terms and conditions of the policy applied for, and where the policy provided that ``it is especially agreed that only the president, secretary, or actuary shall have power to alter or change the terms of this contract or waive forfeitures, and that it shall not be within the scope of the authority of any agent, manager, or superintendent, other than the said president, secretary, or actuary, to alter or change the terms of this contract or to waive any of the terms thereof,' the applicant is on notice, in the absence of proof to the contrary, that the soliciting agent is without authority to accept a payment or payments on premiums on the policy and to agree with the applicant that the policy is in effect before its delivery to the applicant, in contradiction to aprovision in the application, that the ``policy will take effect on delivery to the applicant.'" (Italics ours.) Counsel citesRome Industrial Insurance Co. v. Eidson, 138 Ga. 592 (75 S.E. 657), holding that after a policy had been accepted the agent could not exceed the limit of authority expressed therein. InCotton States Life Insurance Co. v. Scurry, 50 Ga. 48, which counsel cites as authority for his position, it was held: "Whether it [a binding receipt] is binding on the company until action is had by the company on the application, is a question that does not arise under the facts of this case." Reliance LifeInsurance Co. v. Hightower, 148 Ga. 843 (b), cited by plaintiff, holds as follows: "Where the application for a policy of life insurance and the policy itself stipulate that the insurance shall not become effective until the first premium shall have been actually paid while the applicant is in good health, and that agents are not authorized to modify the policy or extend time for paying a premium, the actual payment of the first premium during the good health of the applicant is a condition precedent to the liability of the insurer; and a local agent of the company could not waive such condition."

Other cases cited, Hutson v. Prudential Insurance Co.,122 Ga. 847 (50 S.E. 1000), Haupt v. Phoenix Insurance Co.,110 Ga. 146 (35 S.E. 342), Life c. Insurance Co. v.Palmer, 50 Ga. App. 506 (178 S.E. 763), and Sovereign CampW. O. W. v. Hart, 187 Ga. 304 (200 S.E. 296), are to the effect that the agent for the company can not waive the specific terms of the application for insurance or of the policy after delivery. We think the instant case is controlled by the authorities to which we will now refer.

This court held, in Queen Insurance Co. v. Hartwell Ice c.Co., 7 Ga. App. 787 (68 S.E. 310), that a binding slip issued the applicant for insurance is a mere written memorandum of the most important terms of the preliminary contract of insurance, intended to give temporary protection pending investigation of the risk. While it may be said that the binding receipt issued in the case at bar does not contain memoranda of the most important terms of the policy, when it is taken in connection with the application which was signed it does do so.

It was held in Gardner v. North State Ins. Co., 163 N.C. 367 (79 S.E. 806, 48 L.R.A. (N.S.) 714, Ann. Cas. 1915B, 652), to the effect that when properly executed the "binding slip" protects the applicant for insurance against the contingency of sickness intervening its date and the delivery of the policy, if the application for insurance is accepted. We find the same principle discussed at length approvingly in Lea v. Atlantic Ins. Co., 168 N.C. 478 (84 S.E. 813), and also in Hallauer v. Fire Association of Philadelphia, 83 W. Va. 401 (98 S.E. 441).

In addition to what has been said, it must be kept in mind that it is the law and the policy of this State as to limitations of authority of an insurance agent which are contained in the policy, and where such limitations are contained only in the policy, that the limitations refer to matters which occur subsequently to the issuance and delivery of the policy. SeeMechanics Traders Insurance Co. v. Mutual c. Asso.,98 Ga. 262, 266 (25 S.E. 457), and Johnson v. AEtna InsuranceCo., 123 Ga. 404 (infra), citing the Mechanics Traders Co. case, supra. It was also held in Interstate Life Accident Co. v. Bess, 35 Ga. App. 723 (134 S.E. 804): "Where limitations upon the authority of the agent who solicited the insured to enter into the contract were contained only in the policy itself, they are to be deemed as referring to matters occurring subsequently to the issuance of the policy, and do not apply to facts or conditions which were existing at the inception of the contract. In such a case the knowledge of the agent is the knowledge of the insurer, and if a policy is issued with knowledge by the agent of a fact or condition which by the terms of the contract would render it void, the insurer will be held to have waived the existence of such fact or condition, and the policy will not be voided thereby. Johnson v. AEtna InsuranceCo., 123 Ga. 404 (2) (51 S.E. 339, 107 Am. St. Rep. 92);Athens Mutual Insurance Co. v. Evans, 132 Ga. 703 (5) (64 S.E. 993); Athens Mutual Insurance Co. v. Ledford, 134 Ga. 500 (1) (68 S.E. 91); Supreme Lodge Knights of Pythias v.Few, 138 Ga. 778, 781 (76 S.E. 91); Springfield Fire c.Insurance Co. v. Price, 132 Ga. 687 (2) (64 S.E. 1074);Liverpool c. Insurance Co. v. Georgia Auto c. Co., 29 Ga. App. 334,354 (115 S.E. 138)."

It was held, Chief Judge Broyles rendering the opinion, inPeninsular Casualty Co. v. McCloud, 47 Ga. App. 316 (170 S.E. 396): "``An insurance company can not avoid liability for a loss on one of its policies on the ground that the contract was void from the beginning, when, at the same time, it is collecting assessments on such contract.' Matt v. Roman Catholic Society,70 Iowa, 455 (30 N.W. 799); German American Life Asso. v.Farley, supra." And, "It appearing without dispute, from the evidence, that the insurance company's agent, who wrote and delivered the policy, knew, when the policy was written and delivered, that the insured was not in sound health, and that notwithstanding such knowledge he wrote and delivered the policy and subsequently collected the weekly premiums thereon when they became due, the insurer, after the death of the insured, and in a suit upon the policy, was estopped from setting up as a defense to the action the terms of the policy providing that the policy would be void if the insured was not in sound health at the time of the delivery of the policy." See also in this connectionFair v. Metropolitan Life Insurance Co., 5 Ga. App. 708 (63 S.E. 812).

The Supreme Court held, in German American Life Asso. v.Farley, 102 Ga. 720 (29 S.E. 615): "If after a policy of insurance has been issued knowledge be brought home to the insurer that certain statements material to the risk, made by the assured to procure insurance, are untrue, but which were by him warranted to be true, and notwithstanding such knowledge the insurer thereafter receives the premiums in accordance with the terms of the policy, he will, after loss, be held to have waived any forfeiture which might otherwise have resulted from such breach of warranty, and would be thereafter estopped to deny the validity of the policy."

When we apply the principles of law announced in the decisions above quoted, as they apply to the contentions of the plaintiff in error as revealed by the record, the court did not err in overruling the demurrers or in denying a new trial.

Judgment affirmed. Broyles, C. J., and MacIntyre, J.,concur.

ON MOTION FOR REHEARING. On its motion for rehearing counsel for plaintiff in error earnestly contends that this court overlooked paragraph 5 of the answer and the evidence sustaining the allegations of same. The paragraph reads: "This defendant shows that its agent was not authorized to bind the company by any receipt or writing and that the terms of the policy were binding on the insured and that the insured was bound by these provisions, the policy on this paragraph stated: ``The acceptance of this policy shall be everywhere construed as incontrovertible evidence that it has been read, understood and accepted by the insured and beneficiary. It is subject to the terms and provisions on this and the reverse side hereof. If these terms and provisions are not in all respects observed, this policy shall thereupon become void and all rights thereunder forfeited.'"

Concerning another outstanding policy of industrial travel and pedestrian insurance on the insured by plaintiff in error, the only evidence to substantiate the same appears in a provision on the reverse side of the policy in question reading as follows: "If another industrial travel and pedestrian policy, or policies, previously issued by the company to the insured, be in force concurrently herewith, making the aggregate maximum indemnity in excess of $1000 this policy becomes excess insurance and shall be void and all premiums paid hereunder shall, upon demand, be returned to the insured, or the person properly entitled thereto. The company shall not be presumed to know of the existence of any prior policy, and the issuance of the policy shall not be deemed a waiver of this condition."

The above is a provision of the policy sued on. No other policy was introduced and the nearest approach of any evidence to sustain such plea, if indeed it could be construed to be sufficient to raise such issue, is the following: "But they paid a claim on another contract Mr. Brockett had with the company." There is no evidence whatsoever that the other contract was an "industrial travel and pedestrian policy." The agent for the company testified: "I took all types of applications of insurance written by my company and collected premiums."

Rehearing denied.