American Life Insurance & Trust Co. v. Shultz

Mr. Justice Paxson

delivered the opinion of the court, May 29th 1876.

We do not see any merit in the first assignment of error. There is nothing in the Act of 15th of April 1869, which in terms excludes the plaintiff below as a witness. But it is contended that he comes within the spirit of the act, which was intended to produce equality, and not to open the lips of one party while those of the other were closed. The answer to this is that the deceased person, Mr. Geiger, was not a party to the contract nor to this proceeding. He was merely the agent of the insurance company, and a competent witness prior to the Act of 1869. Said act makes no one incompetent who was competent before. It was manifestly intended to enlarge, not to restrain the admission of evidence. A person, natural or artificial, who contracts through an agent, necessarily loses the benefit of his evidence in case of the death of such agent. Such event-has never been held to close the mouth of the party dealing with the agent. It may be his misfortune, but it is one which we are powerless to remedy, and for which the Act of 1869 does not provide.

We are not prepared to say that the court erred in rejecting the evidence offered to show the powers of the defendants’ agents generally. But it was manifest error to exclude an inquiry as to the powers of Mr. Geiger, the agent with whom the plaintiff contracted. His acts could only bind the company within the scope of his authority, hence proof of his authority was material even for the plaintiff. The burden of proof lies on him to establish the agency and the extent of it: Hays v. Lynn, 7 Watts 525. The plaintiff having given some evidence to show that Geiger was agent for the company, but without any definite or accurate statement of his powers, it was clearly competent for the company to show what his powers were; or that he had exceeded his authority, or to deny the agency itself. The extent of an agent’s powers depends upon the authority under which he acts. This may be shown by his written-instructions or his course of dealing^ It is true the public are not always bound by the private instructions of the agent; and may hold the principal responsible, though the particular acts done are in excess of his private instructions. This was asserted in Adams Express Co. v. Schlessinger, 25 P. F. Smith 246. It applies to cases where the agent has been held out to the world as such by the principal, allowed to exercise enlarged powers from time to time, and his acts therein have been ratified by his principal. But this doctrine in no sense conflicts with the right of the principal to show that his agent in a given case exceeded his authority. The effect of such evidence when received is for the jury.

It was also error to exclude the evidence offered to show the company’s rates of insurance. The plaintiff’s action is for a breach of contract in not giving him a paid up policy. It was certainly competent for the company to show that the rates for a paid up policy were higher than the rate the plaintiff paid. If competent for no other purpose it would be entitled to go to the jury as tending to throw discredit upon the plaintiff’s statement. Eor if the amount of premium upon a paid up policy was largely in excess of the premium charged for a life policy, it would be a question for the jury whether there was not an inherent improbability in the plaintiff’s testimony as to the contract between the agent and himself.

The learned judge also erred in his instructions as to the measure of damages. The case was tried in the court below upon the theory of a rescission of the contract of insurance. But the record is not so. The declaration is in assumpsit for breach of contract in not issuing a paid up policy. The plaintiff does not seek to recover the specific sums of money paid as premiums. It is true they are set out by way of inducement. But the damages claimed are for a non-compliance with an alleged agreement to deliver a paid up policy. The proper measure of damages is the difference between the value of a paid up policy, and the life policy held by the plaintiff. To permit him to recover under this declaration as for a rescission, would be to give him all his premium money back again, and yet leave the company exposed to the hazard of a claim upon his policy in ■case of his death. I say a claim, for the declaration is not so clearly ■drawn as to render its interpretation easy or certain. But I regard this as the most reasonable construction of it, and in this view the measure of damages as adopted by the learned judge of the court •below was erroneous.

If, however, the plaintiff goes for a rescission, he is met with the fatal obstacle of his payment of premium after suit brought. He cannot rescind the contract and yet hold it. That the payment was made under protest amounts to nothing. There was no such duress as would give force and effect to such protest. Payments may be made under protest for duties in order to obtain possession of goods; or for taxes to avoid an impending seizure and sale of property. But this is a mere matter of a breach of private contract. The plaintiff either had or had not a right to rescind the contract. If he had such right there was no reason why he should continue the payments of premium on his life policy. It was an act utterly inconsistent with rescission.' It was not induced by any legal duress or constraint on the part of the company, but was the exercise of his own free will. If he had not the fight to rescind, then the payment of premium prevented his policy from falling pending this litigation. This may have been the reason why the payment was made. It was perhaps a prudent course, but fatal to a rescission of the contract. The plaintiff cannot avail himself of his protest merely to try an experiment in litigation.

What has been said covers the first, second, third, fourth, seventh, eighth and ninth assignments of error, and rules the important questions of this cause. We see no serious error in the remaining assignments.

Judgment reversed and a venire facias de novo awarded.