Maddox v. Life & Casualty Insurance

1. 2. In an action predicated upon a receipt from an insurance agent, which by reference to an application for insurance showed that the two instruments were complementary and together constituted the agreement between the parties, the court did not err in requiring the plaintiff to attach a copy of the application to the four counts of the petition, under the facts of this case.

3. The court did not err in sustaining the general demurrer and in dismissing the action as against the following contentions of the plaintiff: (1) a. that the application was approved by the company; b. that the application and receipt constituted a temporary policy; (2) that the agent's authority was not limited by the provisions of the application; (3) that the receipt and application were ambiguous; (4) that the advance receipt of a premium constituted a binding contract of insurance; (5) that the agent's statement to the effect that the insured was protected from the date of the receipt was binding on the company; (6) that an alleged custom of the company could contradict the plain and unambiguous contract.

4 (a), (b), Additional discussion of some questions raised.

DECIDED APRIL 22, 1949. Mrs. Mary C. Maddox sued Life Casualty Insurance Company of Tennessee for $5,000, and damages and attorneys' fees, the action being based on a receipt which she alleged made a contract of temporary insurance. The petition was brought in four counts. Count one alleged substantially: that the plaintiff is the widow of Jack F. Maddox, who died on May 22, 1947; that three or four days prior to his death the deceased husband filled out an application with the defendant insurance company for a $5,000 life policy, the plaintiff being named beneficiary in the application, the original of which was in the defendant's possession; that $11.20, the required monthly premium, was paid and the defendant's agent issued a receipt which allegedly constituted a binder for $5,000 until a policy could be issued, a copy thereof being attached to the petition. The receipt, in addition to acknowledging receipt of $11.20, set out the following conditions: "If this sum is equal to the full first premium on the policy applied for, then if the Company shall be satisfied that at the time of the completion of the medical examination or Part B of the application, if no medical examination is required, that the risk was acceptable to the Company under its rules, for the plan and amount of insurance herein applied for at the rate of premium declared paid, then the insurance applied for shall be in force as of the date of the completion of the medical examination, or of Part B of the application if no medical examination is required, but otherwise no insurance shall be in force under said application unless and until a policy has been issued and delivered, and the full first premium stipulated in the policy has actually been paid to and accepted by the Company during the life-time and continued insurability of the applicant." (Part B of the application referred to in the foregoing receipt consisted of various questions asked of the applicant by the defendant's agent as to the applicant's physical condition and general health in order to determine his qualifications for insurance.) The petition further alleged that, before delivery of the policy, the plaintiff's husband died; and that the plaintiff as beneficiary has demanded payment, but the defendant refused the same even though it admits receipt of $11.20.

In count two, the plaintiff by reference adopted substantially the allegations of count one, and in addition alleged: that, at the time of payment of the $11.20 premium, the defendant's agent and representative told the plaintiff's husband that, if the premium was paid in advance, the insurance would begin from that date; that the deceased, acting upon said statement, made the payment; and that, when given the receipt and binder, the plaintiff's husband was assured by the agent and representative of the defendant that he was insured from that date.

Count three is the same as count two with the additional allegations: that it is provided in the application that when the applicant is not over 40 years of age and the life policy is for not more than $5,000, no medical examination is required but only the personal approval of the defendant's agent: that the plaintiff's husband at that time was 25 years of age; that the defendant's agent and representative personally examined the deceased and approved said application, he having well known the plaintiff's husband for some six months; that it was the trade custom of the defendant company that, where the premium is paid in advance, protection begins as stated by the defendant's agent to the plaintiff's husband; and that, if the applicant died before the issuance of the policy, it was the trade custom of the defendant to pay the amount of insurance as set out in the application.

Count four is the same as count two with the additional averments; that, under the terms of said application, an applicant who is under 40 years of age and applying for a life policy not greater than $5,000 is not required to submit to a medical examination, and all that is necessary is a personal examination of the applicant by the defendant's agent supported by personal knowledge and investigation of said agent; that the defendant's agent, W. A. May, having known the plaintiff's husband for six months, examined the deceased and approved said application, and on May 21, 1947, H. B. Hatcher, home office inspector for the defendant, approved and recommended the issuance of the policy.

The defendant filed its demurrers, both general and special. The court sustained ground three of the special demurrer to paragraph four of all counts, and issued the following order: "1. The plaintiff is required to amend said counts by attaching a copy of the application referred to in said ground of demurrer, and referred to in the petition as No. 591846. The amendment hereby required shall be allowed and filed on or before 22nd day of December, 1948. It will be observed that the plaintiff attaches the receipt issued by the defendant, as exhibit A to count one, and by reference makes the same a part of the other counts, but does not attach the application to which the receipt refers. It is evident from the allegations contained in the several counts of the petition that the plaintiff relies, for a cause of action, on both the receipt and the application. In order that the court may properly determine whether or not the plaintiff has a cause of action, it is necessary that the application be attached, that the same may be considered in connection with the provisions of the receipt. Code, § 81-105;Social Benevolent Society v. Holmes, 127 Ga. 586 (3) (56 S.E. 775); Driskal v. Mutual Benefit Life Ins. Co., 144 Ga. 534 (87 S.E. 668); Southern Express Co. v. Cowan, 12 Ga. App. 318 (2) (77 S.E. 208); Red Line Products Co. v. J. M.High Co., 53 Ga. App. 531 (186 S.E. 698).

"As was said in Himes v. Metropolitan Life Ins. Co.,207 S.C. 420 (36 S.E.2d 137), where the court had under consideration a somewhat similar receipt, . . ``The application and receipt must be considered together and constitute the written agreement between the parties. . .' The receipt alone, unaided by allegations relative to the provisions of the application, does not constitute a contract of insurance. The amount of the policy is not stated, nor are the terms of payment.Todd v. German-American Ins. Co. of New York, 2 Ga. App. 789 (1) (59 S.E. 94). Neither is the plaintiff designated as a beneficiary in the receipt. Life Casualty Ins. Co. of Tenn. v. Marks, 72 Ga. App. 640 (34 S.E.2d 633).

"2. It is further ordered that the defendant file in the registry of the Court, by filing with the Clerk of Wilkinson Superior Court, on or before the 14th day of December, 1948, the original application referred to in the several counts of the petition, and numbered 591846, in order that the plaintiff, and her counsel, may have an opportunity to examine the same for the purpose of preparing the amendments required by this order.Gonackey v. General Accident Fire Life Assurance Corp.,6 Ga. App. 381, 384 (65 S.E. 53); Social Benevolent Society v.Holmes, 127 Ga. 586, 590, supra. A copy of the application appears attached to the defendant's answer, and the court therefore takes judicial notice of its additional availability to the plaintiff. Branch v. Branch, 194 Ga. 575, 577 (22 S.E.2d, 124).

"3. While the terms of this order require that each count of the petition be amended by attaching thereto a copy of the application, the court has no objection, if agreeable between counsel, that the application be attached to only one count, and made a part of the others by reference, as has been done in the present petition with respect to the receipt.

"4. In view of the terms of this order, no ruling is made at this time on the grounds of demurrer to the several counts, other than herein stated."

To this ruling, the plaintiff filed exceptions pendente lite, but subsequently amended her petition complying with the order of the court by attaching a copy of the application. The application referred to in the receipt set out, among other things, the same conditions as in the receipt, and in addition thereto stated: "(3) With the exception of officers of the company, notice to or knowledge of the agent, medical examiner or any other person is not notice to or knowledge of the company unless stated in either Part A or B of this application, and none of such persons are authorized to accept risks or pass upon insurability nor shall any of such persons have the power on behalf of the company to make or modify any contract on behalf of the company or to waive any of the company's rights or requirements."

The defendant then renewed its original demurrers to the petition as amended. The court sustained the general demurrer and dismissed the action. To this judgment and the order requiring the plaintiff to amend by attaching the application, she excepts. 1. The plaintiff in error contends that the court was without authority to require her to attach a copy of the application to the petition. Her contention is that the requirement was not made under penalty of having the action dismissed, but was an exercise of judicial power for disobedience to which she would have been subjected to a citation for contempt of court. Assuming for the sake of argument that this contention is correct, the judgment of the court was not harmful to the plaintiff for the reason that the court properly required the attaching of the application insofar as such action was necessary in order for the court to determine whether the plaintiff had a cause of action, and the question of contempt was eliminated by the submission to the order. The trial judge's order covers fully the reasons for his action and cites the authority for it, and it is needless for us to repeat the reasons or authority which are set forth in full in the statement of the case. If the judgment requiring the amendment was simply rendered under the implied penalty of a dismissal of the action, the ruling became the law of the case when the plaintiff acquiesced in the ruling, and it is immaterial that the judgment did not include an express provision for the dismissal of the action if the amendment was not filed. The case of Luke v. Ellis, 201 Ga. 482 (40 S.E.2d 85), is not authority to the contrary, because there the judgment requiring an amendment was not acquiesced in. See Barley v. Horton,149 Ga. 605 (110 S.E. 680); Farrer v. Edwards, 144 Ga. 553 (87 S.E. 777); Wade v. Drinkard, 76 Ga. App. 159 (45 S.E.2d, 231); Jenkins v. Atlanta Police Relief Assn., 54 Ga. App. 209 (187 S.E. 597). This principle is so well settled that it seems to us that a certification of the question to the supreme Court would be needless and futile. The request to certify the question is denied.

2. Counsel for the plaintiff in error insists that the action is upon the so-called "binder receipt" alone. The ruling of the trial judge shown above completely answers this contention. It is only necessary to call attention again to the facts that in the receipt the plaintiff is not named as beneficiary, nor is any amount of insurance provided for. If there was a cause of action on the receipt, it was not in the plaintiff. It is plain that the plaintiff had no cause of action without consideration of the application, and that examination of the application was necessary to determine whether she had one or not.

3. The trial court rendered a most thorough and exhaustive opinion, which we shall take the liberty of adopting and setting forth in full, and merely make a few comments in addition thereto.

"The instant suit is based on an application made by Jack F. Maddox to Life Casualty Insurance Company of Tennessee, dated May 20, 1947, for a policy of life insurance in the sum of $5,000, in which Mary C. Maddox, applicant's wife, is designated as beneficiary, and upon a conditional receipt issued to the applicant by an agent of the company, dated May 19, 1947. It further appears that the applicant died on May 22, 1947. The defendant demurred generally to the petition, as amended, and the issues made by the several counts of the petition may be generally stated as: (1) Was the applications approved by the company, or was further approval necessary? (2) The effect of the limitation on the agents' authority contained in the application. (3) Are the provisions of the application and the conditional receipt ambiguous? (4) Whether the payment of an advance premium made the insurance applied for immediately effective? (5) Whether statements by the company's agent that the insurance was immediately effective were binding on the company, notwithstanding the limitation of authority placed on the agent in the application? And (6) whether custom might serve to modify or change the terms of the application and conditional receipt?

"1. Approval of application by Company. ``Insurance is a matter of contract.' North British Mercantile Ins. Co. v. Tye,1 Ga. App. 380 (58 S.E. 110). ``Insurance is business.' MobileFire Dept. Ins. Co. v. Coleman, 58 Ga. 251, 256. ``A contract of life insurance is consummated upon the unconditional written acceptance of the application for insurance by the company to which such application is made. . . So long as the application is not acted upon by the insurance company, of course no contract has been consummated; and if the applicant should die before the acceptance of his application, the company has incurred no liability.' New York Life Ins. Co. v. Babcock, 104 Ga. 67 (1), 70 (30 S.E. 273). ``In this case the application amounted only to an offer, and the company was free either to accept or reject it entirely.' Boswell v. Gulf Life Ins. Co., 197 Ga. 269,272 (29 S.E.2d 71). Compare also McCully's Adm'r v. Phoenix Mutual Life Ins. Co., 18 W. Va. 782.

"In Hill v. Life Casualty Ins. Co., 51 Ga. App. 578 (1) (181 S.E. 104), it was held: ``Where, in consideration of a payment to an insurance company of a certain stipulated amount of money as a premium for life insurance, the company agreed that upon the approval at the home office of the application for the issuance of the policy, the company will, in the event of the death of the person insured prior to the issuance of the policy, pay to the beneficiary the amount of the insurance which would have been due had the policy been issued, there arises no contract of insurance in the absence of an approval of the application at the home office.' See also Fowler v. PreferredAccident Ins. Co., 100 Ga. 330 (28 S.E. 398); Fireman's FundIns. Co. v. Rogers, 108 Ga. 191 (1) (33 S.E. 954); Newton v. Gulf Life Ins. Co., 55 Ga. App. 330, 331 (190 S.E. 69);Home Ins. Co. of New York v. Huguley, 42 Ga. App. 598 (157 S.E. 391); Smith v. Metropolitan Life Ins. Co., 76 Ga. App. 229 (45 S.E.2d 471). The rule applied by the Georgia courts appears in accord with that applied in other jurisdictions. Compare 29 Am. Jur. 160, § 144; Appleman on Insurance Law Practice, Vol. 12, p. 315, § 7223; Reynolds v. Northwestern Mutual Life Ins. Co., 189 Iowa 76 (176 N.W. 207, 81 A.L.R. 332); Northwestern Mutual Life Ins. Co. v. Neafus,145 Ky. 563 (140 S.W. 1026, 36 L.R.A. (N.S.), 1211); Kronjaegerv. Travelers Ins. Co., 124 W. Va. 730 (22 S.E.2d 689 (2)); Himes v. Metropolitan Life Ins. Co., 207 S.E. 420 (supra); Hyder v. Metropolitan Life Ins. Co., 183 S.C. 98 (190 S.E. 239); Cheek v. Pilot Life Ins. Co., 215 N.C. 36 (1 S.E.2d 115); Keller v. Provident Life Accident Insurance Co. (S.C.), 49 S.E.2d 577 (2-4).

"Nor do the application and conditional receipt constitute a temporary policy. The distinction is pointed out in Fort ValleyCoca-Cola Bottling Co. v. Lumbermen's Mutual Casualty Company,69 Ga. App. 120 (24 S.E.2d 846), Where it is said: ``1. An application for insurance is a mere offer. 2. A ``binder' for insurance is very different, in that it is not a mere offer, but is in itself a contract in praesenti . . temporary, sketchy, and informal, but a contract notwithstanding.'

"In Mutual Life Ins. Co. of New York v. Young, 90 U.S. 85 (23 L. ed. 152), where the receipt under consideration was somewhat similar to the one declared on in the present case, Mr. Justice Swayne, speaking for the court, said: ``The receipt of the 5th of June was the initial step of the parties. It reserved the absolute right to the Company to accept or reject the proposition which it contained. . . The applicant assented to the proposition contained in the receipt, but the Company did not. . . The mutual assent, the meeting of the minds of both parties, is wanting. Such assent is vital to the existence of a contract. Without it there is none, and there can be none. . . The requisite assent must be the work of the parties themselves. The law cannot supply it for them. That is a function wholly beyond the sphere of judicial authority. As the applicant was never bound, the company was never bound. The policy was, therefore, no more a contract than the receipt. Both had the same fatal defect, the want of the assent of one of the parties. . . The law involved is expressed by the phrase, "it takes two to make a bargain."' The Georgia rule is the same. ``Before the alleged contract would be binding, the offer must be accepted "unequivocally and without variance of any sort."' Gray v. Lynn, 139 Ga. 294, 296 (77 S.E. 156), quoting Robinson v. Weller, 81 Ga. 704 (8 S.E. 447).

"As in Smith v. Metropolitan Life Ins. Co., 76 Ga. App. 229,230 (supra), where the court said: ``The whole contention of the plaintiff seems to be that the so-called contract of temporary insurance is ambiguous and is capable of being construed in more than one way, and should be construed in a manner most favorable to the insured and so as to uphold and sustain the receipt as a contract of temporary insurance' — similar contentions are pressed in the instant case. In theSmith case the court also observed: ``We recognize the rule that, if a policy of insurance is capable of being construed in two ways, that interpretation must be placed upon it which is most favorable to the insured. See Mass. Benefit Life Assn. v.Robinson, 104 Ga. 256 (2) (30 S.E. 918). After carefully considering all of the provisions of the receipt we have concluded that it is not ambiguous and that it can not be construed as a contract of insurance under the facts alleged. The receipt speaks for itself and needs little explanation.' While it is true that in the Hill and Smith cases, supra, the receipt required approval ``at the home office of the company,' the application and receipt now under consideration are not rendered ambiguous because they do not contain such a statement. Clearly, under both the application and the conditional receipt, the company must be satisfied of the insurability of the applicant and that applicant was a risk acceptable to the company under its rules. It will be observed that the application commences with the following statement: ``Application to the Life Casualty Insurance Co. of Tennessee, Home Office, Nashville, Tennessee.'

"2. Right of Company to limit agent's authority by provisions in application. ``It was within the power of the insurance company, as between itself and its agent, to define and limit the powers of the latter. Limitations upon the power of an agent affect all third persons dealing with him, who have knowledge or notice thereof; and any notice of limitations upon the agent's power, which a prudent man is bound to regard, is the equivalent of knowledge to the insured.' Reliance Life Ins. Co. v.Hightower, 148 Ga. 843, 845 (98 S.E. 469). ``The stipulation in the signed application limiting the powers of agents, medical examiners and other persons, coupled with other words in the policy, were sufficient to charge the applicant with notice that she was dealing with a special agent with limited powers.'Davis v. Metropolitan Life Ins. Co., 161 Ga. 568 (2) (131 S.E. 490). See also Hutson v. Prudential Ins. Co., 122 Ga. 847 (50 S.E. 1000); New York Like Ins. Co. v. Patten,151 Ga. 185 (106 S.E. 183); Bank of Commerce v. New York LifeIns. Co., 125 Ga. 552 (3) (54 S.E. 643); Great EasternCasualty Co. of New York v. Reed, 17 Ga. App. 613 (1) (87 S.E. 904); Puckett v. Metropolitan Life Ins. Co., 32 Ga. App. 263 (122 S.E. 791).

"3. Ambiguity. ``A contract may be so clear as not to require interpretation, but a mere lack of clarity on casual reading is not the criterion for determining whether a contract is afflicted with ambiguity within the rule as to the admission of parol evidence to explain its meaning. Nor is a contract ambiguous within that sense merely because it may be even difficult to construe. The construction of a contract, if needed, being a question of law for the court, as well as a duty that rests upon the court, there can be no ambiguity within the rule to which we have referred, unless and until an application of the pertinent rules of interpretation leaves it really uncertain which of two or more possible meanings represents the true intention of the parties. Code §§ 20-701, 20-702.' McCann v. GlynnLumber Co., 199 Ga. 669, 679 (34 S.E.2d 839).

"Rule of construction and duty of court to construe. ``Courts are not called upon, because of the rule that contracts of insurance are to be strictly construed against the insurer and because the contract itself is one of insurance, to call forth doubt, through construction of plain and unambiguous provisions of such a contract. They should not make hypercritical construction of such contracts. "The language of the contract should be construed in its entirety, and should receive a reasonable construction and not be extended beyond what is fairly within its terms."' New York Life Ins. Co. v. Thompson,45 Ga. App. 638 (165 S.E. 847); AEtna Life Ins. Co. v.Padget, 49 Ga. App. 666, 669 (176 S.E. 702). ``Contracts of insurance, like other contracts, must be construed according to the terms which the parties have used, to be taken and understood, in the absence of ambiguity, in their plain, ordinary, and popular sense.' Bergholm v. Peoria Life Ins. Co.,284 U.S. 489 (52 Sup. Ct. 230, 76 L. ed. 416). See also NorthBritish Ins. Co. v. Tye, 1 Ga. App. 380, 389 (supra). ``The natural, obvious meaning of the provisions of a contract should be preferred to any curious, hidden sense which nothing but the exigency of a hard case and the ingenuity of a trained and acute mind would discover.' Hawkeye Commercial Men's Assn. v. Christy, 294 Fed. 208, 213. ``Where the language is unambiguous and but one reasonable construction of the contract is possible, the court must expound it as made.' Cato v. Aetna Life Ins.Co., 164 Ga. 392, 398 (138 S.E. 787), cited in Quillian v.Equitable Life Assurance Society, 61 Ga. App. 138, 142 (6 S.E.2d 108).

"A reasonable construction of the application and conditional receipt is that the company, by an officer of the company, as distinguished from an agent or employee, must determine the insurability of the applicant, and whether or not he was a risk acceptable to the company under its rules. As was held inVardeman v. Penn. Mut. Life Ins. Co., 125 Ga. 117, 119 (54 S.E. 66): ``Officers, as such, are the corporation.' Thus approval by the company or officers of the company means one and the same thing. In the instant case, the fact that no specific officer of the company is named to approve the application, or that approval at the home office is not required, is without significance. In the Vardeman case, supra, the contract of insurance contained the following provisions: ``No alteration of this contract or waiver of any of its conditions shall be valid unless made in writing and signed by an officer of the company.' In the instant case, whether the authority of May, the soliciting agent, or Hatcher, the home office inspector, be relied upon, the result is the same. Neither was clothed with authority to determine insurability. As was further said in the Vardeman case, supra, at page 119: ``In the present case the person authorized to make the waiver is designated by the general term "officer," and the question is whether a general agent is an officer. . . One distinction between officers and agents of a corporation lies in the manner of their creation. An office is created by the charter of the corporation and the officer is elected by the directors or stockholders. An agency is usually created by the officers, or one or more of them, and the agent is appointed by the same authority. It is clear that the two terms, officers and agents, are by no means interchangeable. One, deriving its existence from the other, and being dependent upon that other for its continuation, is necessarily restricted in its powers and duties, and such powers and duties are not necessarily the same as those pertaining to the authority creating it. The officers, as such, are the corporation. An agent is an employee. "A mere employment, however liberally compensated, does not rise to the dignity of an office." 21 Am. Eng. Encl. L. (2d. ed.) 836.' See also Great Eastern Casualty Co. of New York v.Reed, 17 Ga. App. 613 (87 S.E. 904).

"The report of the home office inspector (Application, Part F) does not purport to be an acceptance of the application for insurance. There is no contention in the several counts of the petition that the home office inspector is an officer of the company.

The district office report (Application, Part E), signed by a clerk, after the death of the applicant, could, in no event, be construed as an acceptance by the company.

"4. Acceptance of premium in advance. ``Where pending mere negotiations for a policy of insurance, the person on whose life it might or might not have been written dies, the company is not liable on the proposed policy simply because it accepted premiums in advance on the supposition that the policy would be issued.' McGlothin v. United States National Life CasualtyCo., 36 Ga. App. 325 (3) (136 S.E. 535), and cit; JohnHancock Mutual Life Ins. Co. v. Ludwick, 45 Ga. App. 631 (3) (165 S.E. 918).

"5. Statement by agent contrary to provisions of application and receipt. ``While we recognize the rule that a policy of insurance must be construed most strongly against the insurer, still the words of the policy must be given the meaning which they ordinarily bear; and where it is manifest that it was the intention of the insurer that liability should attach only in given circumstances, the law will uphold the contract according to its true intent and import. . . The writing being unambiguous, parol evidence as to what was said by the parties at the time it was executed will not be admitted to vary or alter the terms of the writing. The petition set forth no cause of action, and was properly dismissed on demurrer.' Wheeler v. Fidelity Casualty Co. of New York, 129 Ga. 237, 240 (58 S.E. 709), cited in Mitchiner v. Union Central Life Ins. Co., 185 Ga. 194,195 (194 S.E. 530). Nor would the ``verbal assurance by the agent to the applicant that he is insured from the date of the application, and the giving of the receipt, constitute a contract of insurance upon which an action can be maintained.' Fowler v.Preferred Accident Ins. Co., 100 Ga. 330 (2) (28 S.E. 398);Fowler v. Liberty National Life Ins. Co., 73 Ga. App. 765,770 (4) (38 S.E.2d 60); Newton v. Gulf Life Ins. Co.,55 Ga. App. 330, 331 (190 S.E. 69).

"6. Custom in insurance cases. ``When parties make an express contract which is plain, evidence of usage and custom is inadmissible to control, vary or contradict it.' Custom or usage can not be ``repugnant to, or inconsistent with, the contract.'Park Iverson v. Piedmont c. Ins. Co., 48 Ga. 601. See also Merchants Nat. Bank of Savannah v. Demere, 92 Ga. 735 (19 S.E. 38); Emery v. Atlanta Real Estate Exchange,88 Ga. 321 (14 S.E. 556); Haupt v. Phoenix Mutual Ins. Co.,110 Ga. 146, 149 (35 S.E. 342); Vardeman v. Penn Mutual Life Ins.Co., 125 Ga. 117, 120 (supra).

"7. Accordingly, applying the principles above stated, it is ordered that the defendant's general demurrer, renewed to the petition as amended, be, and the same is sustained, and the petition is dismissed, at plaintiff's costs."

4(a). It might be well for us to state one or two more reasons why the trial court's judgment was correct. The plaintiff in error insists that rules of the insurance company not shown in the application and receipt are not binding on the insured. The rules referred to in Code § 56-904 are rules which form a part of the contract of insurance. This principle of law does not apply to the rules by which the insurance company determines the insurability of an applicant and the desirability of the risk.

(b) The plaintiff in error contends that "completion of Part B" of the application means completion by the soliciting agent and home office inspector. Aside from the general practice that such agents do not and cannot issue contracts of insurance, the application shows that the soliciting agent makes a report to someone of his opinion as to whether a policy should be issued. The same is true of the home office inspector. Question 12 in the application signed by the soliciting agent is: "If question 10 shows any policies lapsed, would you, in view of the applicant's lapse record, advise the insurance of this policy?" Question 7, signed by the home office inspector is: "Do you recommend issuance of policy?" Answer: "Yes." These questions alone show that the application must go higher up for approval and the application so specifically states. The fact that no medical examination was required does not mean that the soliciting agent or the home office inspector could bind the company by a final contract of insurance. The officials still have the right to investigate the condition of the applicant's health, his character, and his desirability as an insurance risk. The completion of section or part B of the application means the final decision on the part of the officers of the company to issue a policy, after it has made whatever investigation it sees fit to make. The application and receipt provide that insurance is to become effective after such a completion of part B of the application — not from the date of the application. If the plaintiff in error's contention is correct, the company might as well turn their non-medical examination policies over to the soliciting agents and home office inspectors and permit them to issue policies directly.

The court did not err in sustaining the general demurrer to each count and in dismissing the action.

Judgment affirmed. Sutton, C. J., and Parker, J., concur.