Knodel v. Equitable Life Ins. Co.

This was a suit by appellants, Hermine and Wm. Knodel, against the Equitable Life Insurance Company and the Great Southern Life Insurance Company, to recover upon two life insurance policies, for the sum of $1,000 each, issued upon the life of Hermann Reinhold Knodel, July 14, 1913, by the Equitable Life Insurance Company, and subsequently assumed by the Great Southern Life Insurance Company. The premium was payable annually in advance. The first premium was paid upon delivery of the policy, and before it became effective; the second premium was, by the terms of the policy, payable to the company at the home office on or before July 14, 1914, as required by statute (Rev.St. 1911, art. 4741). This second annual premium was never paid. Hermann Knodel died October 4, 1914, more than 75 days after default in payment of premium. By the terms of the policy the failure to pay the second premium on July 14, 1914, ended the policy. No act of the company was required to declare or enforce the forfeiture. The failure to pay the premium when due alone forfeited the policy. Equitable Life Assurance Co. v. Ellis, 105 Tex. 536,147 S.W. 1152, 152 S.W. 625.

Appellants, to avoid the effect of the terms of the policies sued upon, alleged and offered testimony to prove that, before the applications for the policies were signed by the insured, the agent of the company agreed with the insured, the beneficiary, Mrs. Hermine Knodel, and with Win. Knodel, her husband, that the policies would not contain the clause providing forfeiture for nonpayment of the annual premiums at the home office when due, and agreed that the clause should provide that the policy would not be forfeited for nonpayment of premium unless Wm. Knodel had been notified to pay the premium and default was thereafter made. Evidently realizing that the terms of a written contract could not be thus altered by such parol testimony, appellants pleaded further, and offered to prove, that the agent told the insured, the beneficiary, and her husband that the applications contained the last-mentioned clause of no forfeiture for nonpayment of premium unless Wm. Knodel was notified, and further stated that both policies also contained similar clauses. They all three relied upon the said promise and the statements of the soliciting agent, because he was well and favorably known to them, and because none of the three could read the English language understandingly, and because the insured was feeble-minded. These statements, claimed to have been made by the agent, were false, for neither the applications nor policies contained such clauses.

Under the foregoing pleadings and facts offered to be proven, appellants contend that the promised agreement of the agent should be read into the policies, and that appellants be permitted to recover the face of the policies, with interest, less the annual premium, with interest, and that they also recover reasonable attorney's fees and the statutory penalty. Appellees contended that such promise and statements, if made by the soliciting agent of the company, cannot bind the companies, for the reason that the statute (article 4953) requires the entire contract to be expressed in the policies, or application and policies, and for the reason that it is not shown that the agent had such authority; but, on the contrary, appellees insist that the applications themselves expressly limit the agent's authority in the following language:

"Any policy issued hereon shall be in the form now used by the company and together with this application and part 2 [medical examination] thereof shall constitute the entire contract, which can only be varied by the president, a vice president, or secretary of the company, and then only in writing" — and that both policies delivered contained the following limitation:

"Only president, a vice president, or secretary has power on behalf of the company to make or modify this or any contract of insurance, * * * and the company shall not be bound by any promise or representation heretofore or hereafter made, unless made in writing by one of said officers."

There is no pleading nor evidence tending to show ignorance of this limitation of the agent's authority, nor any to excuse appellants for not knowing the limitation. The court excluded all offered evidence to prove by parol a contract variant from the written one and not expressed in the policies, and excluded testimony of declarations of the agent as to the extent of his authority, to which rulings of the court appellants excepted. The court instructed the jury to find for the appellees and rendered judgment thereupon against the appellants. By ten assignments appellants present for our consideration three questions:

First. Could the extent of an agent's authority be proven by evidence of his declarations?

This must be answered in the negative. The court properly excluded declarations of the agent as to the extent of his authority. Alamo Live Stock Com. Co. v. Heimer, 192 S.W. 591.

Second. Was the company bound by the promise of the agent that there would be no forfeiture for nonpayment, unless Wm. Knodel were first notified and thereafter defaulted, and the agent's statement that the applications and policies contained such clauses?

Third. If the agent could so bind the company by his promise and statements, can the court read the promise into the policies and enforce them as thus amended?

We think both of the last questions must also be answered in the negative. Appellants did not pray for cancellation of the policies and sue for recovery of the premium paid and cancellation of obligations for premium because the minds of the parties had not met, as was the cause of action in Mutual Life Ins. Co. v. Hargus, 99 S.W. 580, and Equitable Life Ass'n Soc. v. Maverick, 78 S.W. 560. On the contrary, appellants sought to enforce the written contract as changed by the parol promise.

The policies which are the basis of this suit, were executed after 1910, and are controlled by article 4953 of the Revised Civil Statutes:

"Every policy of insurance issued or delivered within this state on or after the first day of January, 1910, by any life insurance company doing business within this state, shall contain the entire contract between the parties, and the application therefor may be made a part thereof."

In our opinion this statute is binding upon all parties to an insurance contract, and excludes all evidence of parol agreements not expressed in the policies. National Live Stock Ins. Co. v. Gomillion, 178 S.W. 1050.

For the reasons apparent from the above, we overrule all the assignments of error, and affirm the judgment of the trial court.

Judgment affirmed.