Conservative Life Ins. Co. v. Condos

The record in this error proceeding discloses that the Conservative Life Insurance Company, of Wheeling, W. Va., was represented in Akron by an agent by the name of G.W. Hall; that said agent solicited Stephen Condos and obtained from him an application for a policy of insurance by agreeing to take the note of Condos and his wife, who was the beneficiary, for the first year's premium, payable 60 days after date.

The policy was issued and delivered and Condos and his wife executed and delivered a cognovit note for said premium, payable in 60 days, with interest at 7 per cent., said note being payable to "the order of G.W. Hall," which note contained no reference whatever to said insurance transaction.

By the arrangement between the company and its agent 75 per cent. of the premium belonged to the agent, and the agent was the owner of the note and was responsible to the company for its one-fourth share of said premium.

The company sent the agent a statement for its share of the premium and the agent replied that he was unable to collect the note; thereupon, after said note was past due, by arrangement between the agent and the company the note was indorsed by the agent and delivered to the company and the agent was relieved of liability for the company's share of said premium.

The company then wrote Condos, demanding payment of the note, but, Condos having moved, said letter was returned to the company; whereupon the company attempted to give Condos notice that the policy was canceled by sending to him a registered letter, addressed as was the former letter, but said notice did not reach Condos and was returned to the company.

About two and a half months later, Condos died, never having paid any part of said note. Proper proofs of death were furnished, and, the company refusing to pay, this suit was brought to collect upon the policy.

As a defense to such suit, the company in its answer alleged "that said promissory note executed and delivered in payment of said premium as hereinbefore set forth, was not paid by said Stephen Condos or Angeline Condos, plaintiff herein, or by any other person for their account," and that thereafter said company "canceled upon its books said policy of insurance" and sent notice thereof to said Condos. As hereinbefore stated, that notice was not received by Condos and the registered letter containing same was returned to the company.

There is no provision in the policy authorizing the sending of notice of forfeiture or cancellation through the mails; and there was nothing in the note or in the policy providing for a forfeiture of the policy for failure to pay said note.

At the close of all of the evidence, the trial court, upon motion of plaintiff, directed a verdict in favor of plaintiff for the amount of said policy.

There being no conflict in the evidence, the trial court was right in determining, as a matter of law, that, so far as the liability of the company was concerned, the premium on said policy had been paid.

The company held the agent responsible for its small share of the premium, and he became the debtor of the company therefor, and he could therefore accept cash, or a note, or a horse, in payment of the premium, and in this case the agent did accept a note by the insured and a third party, and when that was done, and the policy was delivered, the contract between Condos and the company was complete, and the subsequent efforts of the company to cancel the policy were of no avail — not merely because there was no provision in the policy for such a forfeiture, and no notice given of forfeiture, but because the note of the insured,signed also by a third party, having been accepted in payment of the premium, as admitted in the answer, and the agent having thereby become the creditor of the insured and responsible to the company for its share of the premium, there was no ground for a forfeiture.

Where, as soon as a life insurance policy was issued, the company had charged up its agent with the part of the premium due it, the debt to the company was transferred to the agent, and it could not claim that because of plaintiff's alleged failure to pay the premium within the required time the policy becomes void.Perea v. State Life Ins. Co., 15 N.M. 399, 110 P. 559.

"Upon the question of law whether or not the taking of a note constitutes a payment, it is well settled by the weight of authority that an agent of a life company, who is intrusted with the business of closing the contract by delivering the policy, has an implied authority to determine how the premium then due shall be paid, whether in cash, or, as is sometimes done, by giving credit, in which case the agent becomes the creditor of the insured, and the debtor of the insurer. In that event, though the agent should subsequently default, and the premium should never reach the company, the policy would still be binding."Mutual Life Ins. Co. v. Logan (C.C.A.), 87 F., 637.

See, also, Miller v. Life Ins. Co., 79 U.S., (12 Wall.), 285,20 L. Ed., 398; Griffith v. New York Life Ins. Co., 101 Cal. 627, 36 P. 113, 40 Am. St. Rep., 96;Devine v. Federal Life Ins. Co., 250 Ill. 203, 95 N.E. 174;Goddard v. Northwestern Mutual Fire Ass'n., 85 Wash. 585,148 P. 893; Fidelity Casualty Co. v. Willey, (C.C.A.), 80 F., 497;Lebanon Mutual Ins. Co. v. Hoover, 113 Pa., 591, 8 A. 163, 57 Am. Rep., 511.

There was, however, a mistake in the amount of the judgment which was rendered by the trial court.

The policy provides that any indebtedness to the company for unpaid premiums will be deducted from any benefit under the policy. Such indebtedness was the full amount of the first year's premium, to wit, $31.47, and interest. As this is an error in calculation merely, it may be corrected by this court.

The judgment is modified by reducing it to $986.40, as of the date when rendered, and, as so modified, the judgment is affirmed.

Judgment modified and affirmed.

FUNK and PARDEE, JJ., concur.