Collins v. Metropolitan Life Insurance

80 P. 609, 32 Mont. 329, 1905 Mont. LEXIS 174

• Court: Montana Supreme Court
• Decided: April 20, 1905
• Docket: No. 2,084
• Status: Published

Opinions

ME. CHIEE JUSTICE BEANTLY

delivered tbe opinion of tbe court.

While several errors are assigned as grounds for tbe reversal of tbe judgment and order, tbe principal question submitted for decision is tbat of forfeiture. It was presented upon a motion for nonsuit and specifications of tbe insufficiency of tbe evidence to sustain tbe verdict.- It is contended by tbe defendant tbat tbe evidence is conclusive on tbis question in its favor on both tbe grounds urged in tbe trial court.

1. Tbe evidence bearing on tbe question of forfeiture for material misrepresentations to induce tbe issuance of tbe policy is tbe following: Tbe assured was a restaurant-keeper. Tbe room in which be conducted bis business was divided by a partition set at a right angle to its length, and pierced by an archway, allowing free passage from tbe front to the rear. In the front part of tbe room was a saloon kept by one Nelson. Tbe rear portion of tbe building was fitted up with a kitchen, dining-room, etc. Entrance was gained to tbe restaurant by means of a side door going through tbe kitchen, or through tbe saloon by means of tbe archway. Nelson boarded with tbe assured. Sometimes while Nelson was taking bis meals, and in order to accommodate him, tbe assured would wait on customers at tbe bar, going to Nelson to secure change when necessary, but not using the cash till or register. At times, also, when Nelson was called out temporarily during the day, the same accommodation was extended by the assured. The latter had no interest in the saloon in any way, and such occasional service as he thus rendered to Nelson was without compensation. At the time when Thompson, the agent of the defendant company, took the application for the policy, he and one Eoberts, a solicitor employed by him, were invited by the assured to drink, and did so, he serving them. At that time Thompson asked him if he had any connection with the saloon. He replied: “Only as you see. When Nelson is away, if anybody comes in, I generally wait on them.”

Ho these facts show that the assured made false statements as to his connection with the manufacture and sale of spirituous liquors, within the meaning of his declaration contained in the application? It is certainly clear that the assured had no other occupation (that is, no other vocation, calling, employment, trade or business) than conducting the restaurant, for all the witnesses who had knowledge of his business testified to this effect. That was the business from which he obtained his livelihood, and to which he devoted his time and attention. .His statement as to his occupation was therefore literally true.

The word “connected,” in its popular sense — and in this sense it must be presumed to have been used here (section 2209, Civil Code), for there is no ground to think that it was used in any other sense — means joined to, connected or closely associated with, conveying the idea of more or less permanency. This idea is associated with the expressions “connected by blood,” “connected in business,” “connected by rail or water,” and the like, involving' the idea of something more than a casual or accidental association or union. In this sense we think it was intended to be used by the parties here. Otherwise the single accommodation extended to Nelson at the time the application was written — such as when the assured invited Thompson and his solicitor to drink with him, and he himself served them — would have to he construed as such a connection with the particular business as to work a forfeiture of the policy, if not stated. Thompson evidently understood such connection as he observed between the assured and the business of Nelson not to be substantial or permanent in the sense in which the word “connected” is ordinarily used. Thompson’s understanding of the term, while not conclusive upon the company, is illustrative of the sense in which it was intended to be employed. If this be the correct interpretation of the term, then such incidental or occasional service of the assured in tending that bar was not such connection with the business as to make his negative statement in the application a misrepresentation. The evident purpose of requiring the declaration in the application was to inform the company exactly as to the business connections of the applicant, so that it, through its agents, could determine whether or not the risk was a suitable one. From this point of view — and we think it the proper one — the statement was true, and the contention of the defendant cannot be sustained.

Counsel cite many authorities in support of their contention —among them, the following: Metropolitan Life Ins. Co. v. Rutherford, 98 Va. 195, 35 S. E. 361; Graham v. Insurance Co., 87 N. Y. 69, 41 Am. Rep. 348; Jeffrey v. United Order of the Golden Cross, 97 Me. 176, 53 Atl. 1102; Dimick v. Metropolitan Life Ins. Co., 67 N. J. L. 367, 51 Atl. 692, 55 Atl. 291, 62 L. R. A. 774; Aetna Life Ins. Co. v. France et al., 91 U. S. 510, 23 L. Ed. 401; New York Life Ins. Co. v. Fletcher, 117 U. S. 519, 6 Sup. Ct. 837, 29 L. Ed. 934. These cases undoubtedly sustain the view that it makes no difference whether the particular representation is material to the risk or not, or whether the applicant acts in good faith. The question of materiality is settled and determined by the stipulations of the contract, and their .truth or falsity made determinative of the rights of the parties. They do not, however, sustain the view contended for by the defendant.

The case of Insurance Co. v. Rutherford involved a warranty by the assured touching the cause of the death of his father. In the application the cause given was cholera morbus. In the proof of death the cause given was fistula. The court held that, it having been made to appear that the statement made in the application was false, the policy was avoided.

In Graham v. Insurance Co., two policies of fire insurance were issued upon application of the agent oí the plaintiff, who made false representations as to the ownership of the property insured. These representations were held to avoid the policy, since by the terms of the contract they were made material.

In Jeffrey v. United Order of the Golden Cross, the truth of the representations of the assured as to her previous condition of health was by the terms of the policy made a condition precedent to the liability of the company. She stated in the application, among other things, that she had suffered from dyspepsia, in light form, previous to the date of the application, but that her health was then good, whereas it appeared from the evidence that she had for twenty years been suffering from chronic dyspepsia and other ailments, which continued up to the date of the application. This representation, being false, was held sufficient to avoid the policy.

So the other cases cited all support the general rule that where, by the terms of the policy, the statements contained in the application are made a part of it, as conditions precedent, and the insurer assumes the risk only on the faith that they are true, the insurer does not become liable unless the representations are literally true. In each of the cases cited the representation was an unequivocal false statement in direct reply to the question propounded to the applicant.

Nor does it make any difference that the agent or solicitor knows that the representations are not true, since, under the terms of the contract, he has no authority to waive any requirement in this regard made by his principal. (New York Life Ins. Co. v. Fletcher, 117 U. S. 519, 6 Sup. Ct. 837, 29 L. Ed. 934.)

In this ease we have seen that the applicant stated the truth about his occupation. So, also, he did as to his connection with the sale of intoxicating liquors, under a proper construction of the term “connected,” as used in the application; for an occasional or gratuitous service by way of accommodation to another in.his business may not be construed into an engagement in the pursuit of such business. Such a construction would be excessively technical, and not in accordance with the meaning of the term in its ordinary, popular sense.

2. The contention that the policy was forfeited by the failure of the assured to pay the premiums according to its terms must be sustained. The facts shown by the evidence are that, within a few days after the policy was remitted to Thompson, he went to the restaurant of the assured to deliver it and to collect the first premium. The assured told him that he did not have the money, and would not have it until the 20th or 21st of the month. He further said that he could not pay the premiums semi-annually, and desired Thompson to arrange for him with the company so that he could pay quarterly on the 20th or 21st of the month, his reason being that his customers were railroad men, and, as their pay-day came on the 20th and 21st, his collections were made at that time, and it would be more convenient for him. Thompson agreed to arrange for The quarterly payments. At the same time he told the assured that he could pay on the 20th, 21st or 22d, or, as some of the testimony tends to show, at any time before the 30th. Upon the delivery of the policy on the 21st, one-half of the semi-annual premium was accepted. On August 29th permission was granted by the company, in writing signed by its secretary, to pay the premiums quarterly, but the 6th days of August, November, February and May were fixed as the dates of payment, thus indicating either that Thompson did not report to the company the proposed change in date of payment, or that the company was not willing to grant this further departure from the terms of the policy as already written. Thereafter, according to the receipts of payment to Thompson introduced in evidence, and his statements accompanying his remittances to the company, payments of premiums were made as follows: November 8, 1902; February 6, 1903; May 22, 1903. According to the testimony of Roberts, the solicitor, the payment of February 6, 1903, was actually made on the 22 d of the month.

The insured became ill in May, 1903, and was taken to a hospital. The plaintiff, being a personal friend, went to the office of the agent, Thompson, on May 22d, and paid the premium due on the 6th to a clerk — Thompson being absent — and obtained the receipt. He did this at the request of the assured, but said nothing to the clerk in Thompson’s office of the illness of the assured. On the 25th Thompson, having discovered the facts, and presumably at the instance of the company, tendered to the plaintiff, for the assured, the amount of the premium so paid. It was not accepted. There is no evidence in the record that the written consent of the defendant was obtained that the premiums might be paid at times other than those fixed in the written permission of the company to pay on the dates named therein.

It is conceded by the respondent that, under the terms of the written contract, the premiums should have been paid at the time specified, and that a failure in this respect would ordinarily avoid the policy. The contention is made, however, that the evidence shows that Thompson, the agent, perimtted the payments of November, 1902, and February, 1903, to be made at later dates, and that this fact, coupled with the fact .that he agreed that any and all payments might be made as late at least as the 22d of the designated months, showed a waiver of this condition, so that the company could not repudiate the payment made on May 22d, and thus avoid the policy. This contention involves the assumption that the acts and engagements of Thompson were within the apparent scope of his authority, and therefore binding upon the company, or that, if such be not the case, the knowledge of his acts was brought home to the company, and a course of dealing thus permitted by the company which estopped it to deny its liability.

That the acts and engagements of Thompson were not within the apparent scope of his authority is clear. The eighth condition of the policy is an express limitation upon the authority of the agent. It declares that “the contract between the parties hereto is completely set forth in this policy and the application therefor taken together, and none of its terms can be varied or modified, nor any forfeiture waived or premiums in arrears received except by agreement in writing signed by either the president, vice-president, secretary or assistant secretary, whose authority for this purpose will not be delegated; no other person has or will be given authority.” It limits the authority of the agent to the taking of applications, the delivery of policies, the collection of premiums, and other matters of like nature, and to this limitation the assured gave his assent. He knew of it at the time he accepted the policy, or, what is the same thing, the conclusive presumption is that he knew. Such being the case, he knew that any engagement he entered into with Thompson was not binding on the company unless it was brought to its knowledge and ratified by it. It was his duty to read the policy and all the conditions and limitations it contained, and, if he did not do so, the omission was his own fault, and the loss, if any, must fall on him. He could not be permitted to enter deliberately into the contract, and then, after disregarding its plain conditions, be heard to say that the other contracting party was nevertheless bound. In such case the knowledge of the agent cannot be imputed to the principal so as to bind it, for the obvious reason that the particular act or declaration in controversy is known by the party dealing with him to be beyond the scope of his authority. The opposite view would render nugatory and destroy the very precaution taken by the principal to prevent the agent from departing from the strict terms of the contract without authority granted, as in the contract provided, and would result in a substitution of a different contract for the one made by the parties. The following authorities fully support this view: Knickerbocker Life Ins. Co. v. Norton, 96 U. S. 234, 24 L. Ed. 689; Insurance Co. v. Wolff, 95 U. S. 326, 24 L. Ed. 387; Northern Assurance Co. v. Grand View Bldg. Assn., 183 U. S. 308, 22 Sup. Ct. 133, 46 L. Ed. 213; New York Life Ins. Co. v. Fletcher, 117 U. S. 519, 6 Sup. Ct. 837, 29 L. Ed. 934; Allen v. German-American Ins. Co., 123 N. Y. 6, 25 N. E. 309; Quinlan v. Providence Wash. Ins. Co., 133 N. Y. 356, 28 Am. St. Rep. 645, 31 N. E. 31; Modern Woodmen of America v. Tevis, 117 Fed. 369, 54 C. C. A. 293; 1 Current Law Review, 50, and notes; Dewees v. Manhattan Ins. Co., 35 N. J. L. 366 ; Assurance Co. v. Norwood, 57 Kan. 610, 47 Pac. 529; Kyte v. Assurance Co., 144 Mass. 43, 10 N. E. 518. See notes to Smith v. Niagara Fire Ins. Co., 60 Vt. 682, 6 Am. Rep. 144, 15 Atl. 353, 1 L. R. A. 216, and Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129, 39 N. W. 76, 1 L. R. A. 222.

In Northern Assur. Co. v. Grand View Bldg. Assn., supra, the United States supreme court, after an extensive review of the authorities, both state and federal, touching the authority of insurance agents, expressed its views as follows: “That contracts in writing, if in unambiguous terms, must be permitted to speak for themselves, and cannot by the courts at the instance of one of the parties, be altered or contradicted by parol evidence, unless in case of fraud or mutual mistake of facts; that this principle is applicable to cases of insurance contracts as fully as to contracts on other subjects; that provisions contained in fire insurance policies that such a policy shall be void and of no effect if other insurance is placed on the property in other companies without the knowledge and consent of the company are usual and reasonable; that it is reasonable and competent for the parties to agree that such knowledge and consent shall be manifested in writing, either by indorsement upon the policy or by other writing; that it is competent and reasonable for insurance companies to make it matter of condition in their policies that their agents shall not be deemed to have authority to alter or contradict the express terms of the policies as executed and delivered; that where fire insurance policies contain provisions whereby agents may, by writing indorsed upon the policy or by writing attached thereto, express the company’s assent to other insurance, such limited grant of authority is the measure of the agent’s power in the matter,, and where snch limitation is expressed in the policy, executed and accepted, the insured is presumed, as matter of law, to be aware of such limitation; that insurance companies may waive forfeiture caused by nonobservance of such conditions; that, where waiver is relied on, the plaintiff must show that the company, with knowledge of the facts that occasioned the forfeiture, dispensed with the observance of the condition; that, where the waiver relied on is an act of an agent, it must be shown either that the agent had express authority from the company to make the waiver, or that the company subsequently, with knowledge of the facts, ratified the action of the agent.” These conclusions were stated after a consideration of the conditions contained in a fire insurance policy, but they apply with equal force to any species of contract.

The company not being presumed to have knowledge of the-engagements and conduct of the agent, do the facts tend to-show that it ratified them, or that after notice it pursued such a course toward the assured that it estopped iself? The first payment was made on the delivery of the policy. This was a. condition precedent to the validity of the policy. The payment in November was made on the 8th, two days after it was due. It was so reported to the company. By retaining this premium the company is conclusively presumed to have ratified the act of the agent, and to have waived the forfeiture. The-only knowledge the company had of the date of the next payment, so far as the evidence tends to show, was that it was made-on February 6th, the agreed date. The last payment was made-sixteen days after it was due, but was tendered back, and the act of the agent in receiving -it repudiated. It seems significant that, though the third payment was in fact not made until it was overdue, the company was informed that it was made when due. From this fact the inference might be drawn that this misrepresentation was made because the agent understood that the company would not waive another forfeiture. But be this as it may, it was a misrepresentation .which prevented any ratification or waiver by the company. There was then but the single act of waiver by the company in November upon which the plaintiff bases his claim of estoppel. This is not sufficient to sustain it.

Nor is the fact, incidentally shown in the evidence, that the company waived forfeitures of policies held by other persons, of evidentiary value, it not being shown that the holder of this policy knew of such waivers, and that his conduct was influenced by such knowledge. Under the circumstances, fair dealing also required that the assured inform the company of his condition at the time the last payment was made. For it was entitled to know the facts, so that it might intelligently exercise its option, for, the forfeiture having already occurred, the concealment of the fact that the assured was probably already in extremis was fraudulent. (Globe Mutual Ins. Co. v. Wolff, 95 U. S. 326, 24 L. Ed. 387.)

3. No complaint is made that the court erred in admitting or excluding evidence, except with reference to that showing that the assured received no compensation for his occasional service at Nelson’s bar. Objection was made that this was immaterial. We think it was of some materiality, as tending to show the exact relation of the assured to the business.

Some criticism is made of the instructions submitted to the jury. It is not necessary to notice them, since what has already been said is sufficient to guide the court in further proceedings in the case.

The judgment and order are reversed, and the district court, is directed to grant a new trial.

Reversed and remanded.

Mr. Justice Milburn and Mr. Justice Holloway concur. (Submitted May 15, 1905. Decided May 29, 1905.) Petition for Rehearing — When Proper to he Presented — When not. A petition for rehearing should be presented only in those cases where reasonably good grounds therefor exist, and this should appear on the face of the petition. The court should not be ashed to reconsider matters which have been considered and determined, especially where its view is conceded by counsel to be supported by authority.