Williams v. Philadelphia L. Ins. Co.

August 25, 1919. The opinion of the Court was delivered by Let the statement of facts appended hereto be reported with the opinion.

The major and decisive issue in the case is one of law, and it is this: Did the testimony tend to prove a contract of life insurance betwixt the parties?

We are of the opinion that the written testimony tended to prove such a contract, and that, therefore, the order of *Page 444 nonsuit ought not to have been ordered, the second nonsuit now granted in this cause. 105 S.C. 305 , 89 S.E. 675 .

Beyond question a policy for $2,000 was written on the life of Mrs. Williams by the defendant, and was sent from Philadelphia to Monroe, N.C., to the Gordon Insurance Investment Company (hereinafter called the Gordon Company), described on the application blank as the "general agent" of the defendant, for delivery to Mrs. Williams. So far, therefore, as the defendant company's part in the contract is concerned, it was fully intended to be performed and was performed.

The original policy was before the trial Court and before us, and it is uncanceled.

The prime argument of the defendants' counsel at the trial was thus expressed by him:

"Mr. Parker: Your Honor, we produce this policy as the policy which was sent to the Gordon Insurance Company. We propose to deny that it is a binding contract."

The major argument at that time and now is that the company is not bound by the policy, because Mrs. Williams was not bound, and that she was not bound because she had never applied for a policy of that character, but for a policy for $5,000 of an essentially different character, and that she never knew of and never assented to the $2,000 policy which the company wrote.

That postulate of law is based on the case of Insurance Co. v. Young , 23 Wall. 105 , 23 L.Ed. 152 , decided in 1874 and it is, of course, sound if the facts are right.

But in the instant case there is written in pen script, on a margin of the $2,000 policy, by one of its chief officers, the man who signed the policy, that which tends to prove an admission by the company that Mrs. Williams knew of, and assented to, the $2,000 policy. The writing is set out in the statement of facts, but is here repeated. It reads: *Page 445

"At the request of the insured the premiums hereon are changed to semiannual installments of fifty-two and 50/100 dollars, each, payable on the twenty-eighth day of December and June in each year hereafter during the premium paying period of this policy. Philadelphia, December 31, 1910. Wm. H. Hubbard, Secretary."

Thereby the secretary of the company declared that the insured requested the premiums "hereon" — that is to say, on the instant policy — should be paid semiannually, and the there stated premiums were those chargeable on policies of the character on the instant $2,000 policy, and not those chargeable on the $5,000 policy.

It is irrelevant to inquire how Mrs. Williams got that knowledge, for the defendant declares in writing that she had it. The case does not show that this significant declaration of the company was even called to the trial Court's attention. And the letter of the company's actuary to H.T. Williams (set out in the statement of facts) tends to show that the $2,000 policy was forwarded by the company to its general agent at Monroe, N.C., the Gordon Company, for delivery to the insured. The defendant did all it could to make and to deliver a contract of insurance.

There will be no question about the truth of the following postulate, that generally, when an insurance company sends a policy the contents of which is known to and assented to by the insured, to the company's general agent for delivery to the insured, then delivery is affected, and the contract of insurance is of force. The defendant admits so much in the argument. See opinion in the former appeal, cited supra.

The other exceptions become irrelevant, save that which refers to payment of the initial premium. The Court did not rule upon that issue, though it was made; but an exception goes to the exclusion of testimony offered by the plaintiff to prove payment, and a sustaining ground goes to an *Page 446 absence of proof of payment to sustain the nonsuit. We shall, therefore, consider the question of payment to guide the Court on the new trial, for the issue must arise there, and the cause has already been tried on the Circuit many times.

There is no pretense by the plaintiff that the initial premium was paid in money or its equivalent by the applicant, or by anybody for her in the company's hands, or into the hands of anybody acting for it.

The only contention of the plaintiff is that the defendant company, by and through its general agent, the Gordon Company, agreed by parol with H.T. Williams, the agent of the company, to sell insurance, and the husband of the applicant and by the words of the application constituted the payer of the premiums, that the initial premium should be paid by a bonus to be earned by H.T. Williams as selling agent for the company.

The defendant denies that any such contract was made, and it contends that, if made, the proof of it is cut off by two clauses in the applications, part 1 and part 2, set out in the statement of facts.

Reverting to these clauses, that in part 2 of the application has no relevancy to the present issue; it expressly refers to statements and answers touching the applicant's health and habits.

That clause found in part 1 of the application needs, therefore, only to be considered; it is short, and we repeat it here. It is:

"I hereby agree (1) that all representations and agreements (2) made by or with the company (3) or the agent taking this application (4) are reduced to writing and (5) made a part of this application (6) and the policy issued hereunder." *Page 447

The numerals are supplied.

Plainly, the agreement of H.T. Williams with the Gordon Company, to which H.T. Williams offered to testify, was not so reduced to writing and made a part of the application. For that reason it is incompetent, and the Court was right to exclude it.

Nevertheless, the Court ought not to have ordered a nonsuit (1) upon the ground that there is no testimony tending to show that the initial premium had been paid; or (2) upon the ground that there was no testimony tending to prove that the company had waived so much of the contract of insurance as prescribed a prepayment of the initial premium.

The written agreement of the parties, it is true, was that the policy should not take effect until the premium thereon was paid.

But payment may be affected by many mediums; and the parties may forego that part of the contract which prescribes prepayment by a waiver of it.

The policy recites payment of the premium, and it was sent to the general agent for delivery. So much raises the presumption that the premium was paid. It is true that waiver is defined to be the voluntary relinquishment of a known right; but it often rests in a subtle operation of mind and speech. It may arise by expression, but more often by implication.

If the company, who had a right under the contract, especially a right like the instant one, shall make any speech or perform any act from which a reasonable inference may be drawn that the company does not stand upon its right, then waiver may be inferred.

In the case at bar the letter of the 13th April, 1911, before set out in the statement of facts, was a declaration by the company which has at least a doubtful meaning. It should have been left to a jury to find if the company thereby meant that the delivery therein referred to should depend upon a prepayment of the premium, *Page 448 and if the policy was returned for nonpayment, or because it was declined by the applicant, or for any other reason, and whether the "revival" therein referred to meant the revival of a policy always dead, or one which was once alive, but which afterwards became dormant.

The order of nonsuit is set aside and a new trial is ordered.

MR. CHIEF JUSTICE GARY and MESSRS. JUSTICES HYDRICK and WATTS concur.

MR. JUSTICE FRASER. I dissent. If it be true that the insured was willing to take a different kind of policy from that originally applied for, had expressed her willingness to do so, and that the general agent had the authority to waive the payment of the initial premium in cash, and to substitute therefor a parol agreement to look to future unearned profits for the payment of the initial premium, still the record shows that the agent of the deceased, who was authorized to make the payment, did not do so, but took for his own use the profits when earned, and thereby failed to carry out the agreement on behalf of the insured.

The opinion of the Court was delivered by Mr. Justice Gage.

Let the statement of facts appended hereto be reported with the opinion.

The major and decisive issue in the case is one of law, and it is this: Did the testimony tend to prove a contract of life insurance betwixt the parties ?

We are of the opinion that the written testimony tended to prove such a contract, and that, therefore, the order of *444 nonsuit ought not to have been ordered, the second nonsuit now granted-in this cause. 105 S. C. 305, 89 S. E. 675 .

Beyond question a policy for $2,000 was written on the life of Mrs. Williams by the defendant, and was sent from Philadelphia to Monroe, N. C., to the Gordon Insurance & Investment Company (hereinafter called the Gordon Company), described on the application blank as the “general agent” of the defendant, for delivery to Mrs. Williams. So far, therefore, as the defendant company’s part in the contract is concerned, it was fully intended to be performed and was performed.

The original policy was before the trial Court and before us, and it is uncanceled.

The prime argument of the defendants’ counsel at the trial was thus expressed by him:

“Mr. Parker: Your Honor, we produce this policy as the policy which was sent to the Gordon Insurance Company. We propose to deny that it is a binding contract.”

The major argument at that time and now is that the company is not bound by the policy, because Mrs. Williams was not bound, and that she was not bound because she had never applied for a policy of that character, but for a policy for $5,000 of an essentially different character, and that she never knew of and never assented to the $2,000 policy which the company wrote.

1 That postulate of law is based on the case of Insurance Co. v. Young, 23 Wall. 105 , 23 L. Ed. 152 , decided in 1874 and it is, of course, sound if the facts are right.

But in the instant case there is written in pen script, on a margin of the $2,000 policy, by one of its chief officers, the man who signed the policy, that which tends’ to prove an admission by the company that Mrs. Williams knew of, and assented to, the $2,000 policy. The writing is set out in the statement of facts, but is here repeated. It reads:

*445 “At the request of the insured the premiums hereon are changed to semiannual installments of fifty-two and 50/100 dollars, each, payable on the twenty-eighth day of December and June in each year hereafter during the premium paying period of this policy. Philadelphia, December 31, 1910. Wm. H. Hubbard, Secretary.”

Thereby the secretary of the company declared that the insured requested the premiums “hereon” — that is to say, on the instant policy — should be paid semiannually, and the there stated premiums were those chargeable on policies of the character on the instant $2,000 policy, and not those chargeable on the $5,000 policy.

It is irrelevant to inquire how Mrs. Williams got that knowledge, for the defendant declares in writing that she had it. The case does not show that this significant declaration of the company was even called to the trial Court’s attention. And the letter of the company’s actuary to H. T, Williams (set out in the statement of facts) tends to show that the $2,000 policy was forwarded by the company to its general agent at Monroe, N. C., the Gordon Company, for delivery to the insured. The defendant did all it could to make and to deliver a contract of insurance.

2 There will be no question about the truth of the following postulate, that generally, when an insurance company sends a policy the contents of which is known to and assented to by the insured, to the company’s general agent for delivery to the insured, then delivery is effected, and the contract of insurance is of force. The defendant admits so much in the argument. See opinion in the former appeal, cited supra.

The other exceptions become irrelevant, save that which refers to payment of the initial premium. The Court did not rule upon that issue, though it was made; but an exception goes to the exclusion of testimony offered by the plaintiff to prove payment, and a sustaining ground goes to an *446 absence of proof of payment to sustain the nonsuit. We shall, therefore, consider the question of payment to guide the Court on the new trial, for the issue must arise there, and the cause has already been tried on the Circuit many times.

There is no pretense by the plaintiff that the initial premium was paid in money or its equivalent by the applicant, or by anybody for her in the company’s hands, or into the hands of anybody acting for it.

The only contention of the plaintiff is that the defendant company, by and through its general agent, the Gordon Company, agreed by parol with H. T. Williams, the agent of the company, to sell insurance, and the husband of the applicant and by the words of the application constituted the payer of the premiums, that the initial premium should be paid by a bonus to be earned by H. T. Williams as selling agent for the company.

The defendant denies that any such contract was made, and it contends that, if made, the proof of it is cut off by two clauses in the applications, part 1 and part 2, set out in the statement of facts.

Reverting to these clauses, that in part 2 of the application has no relevancy to the present issue; it expressly refers to statements and answers touching the applicant’s health and .habits.

That clause found in part 1 of the application needs, therefore, only to be considered; it is short, and we repeat it here. It is:

“I hereby agree (1) that all representations and agreements (2) made by or with the company (3) or the agent taking this application (4) are reduced to writing and (5) made a part of this application (6) and the policy issued hereunder.”

*447 The numerals are supplied.

3 Plainly, the agreement of H. T. Williams with the Gordon Company, to which H. T. Williams offered to testify, was .not so reduced to writing and made a part of the application. For that reason it is incompetent, and the Court was right to exclude it.

Nevertheless, the Court ought not to- have ordered a non-suit (1) upon the ground that there is no testimony tending to show that the initial premium had been paid; or (2) upon the ground that there was no testimony tending to prove that the company had waived so much of the contract of insurance as prescribed a prepayment of the initial premium.

The written agreement of the parties, it is true, was that the policy should not take effect until the premium thereon was paid.

4 But payment may be effected by many mediums; and the parties may forego that part of the contract which prescribes prepayment by a waiver of it.

5 The policy recites payment of the premium, and it was sent to the general agent for delivery. So much raises the presumption that the premium was paid.

6 It is true that waiver is defined to be the voluntary relinquishment of a known right; but it often rests in a subtle operation of mind and speech. It may arise by expression, but more often by implication.

7 If the company, who had a right under the contract, especially a right like the instant one, shall make any speech or perform any act from which a reasonable inference may be drawn that the company does not stand upon its right, then waiver may be inferred.

8 In the case at bar the letter of the 13th April, 1911, before set out in the statement of facts, was a declaration by the company which has at least a doubtful meaning. It should have been left to a jury to find if the company thereby meant that the delivery therein referred to should depend upon a prepayment of the premium, *448 and if the policy was returned for nonpayment, or because it was declined by the applicant, or for any other reason, and whether the “revival” therein referred to meant the revival of a policy always dead, or one which was once alive, but which afterwards became dormant.

The order of nonsuit is set aside and a new trial is ordered.

Mr. Chief Justice Gary and Messrs. Justices PIydrick and Watts concur.