Tomsecek v. Travelers' Insurance Co.

57 L.R.A. 455, 88 N.W. 1013, 113 Wis. 114, 1902 Wisc. LEXIS 44

• Court: Wisconsin Supreme Court
• Decided: January 28, 1902
• Status: Published

Opinion

MaRshaix, J.

Many suggestions are made in tbe briefs of counsel for respondents wby tbe judgment is right and should be affirmed, wbicb, in our view of tbe case, need not be considered. Tbe learned trial court rightly decided that if tbe agreement between Tomsecek and appellant’s agent, that tbe first premium on tbe policy might be paid otherwise than in money, and tbe delivery of tbe policy pursuant to such agreement, constituted ■ a waiver by .the company of payment of such premium and of tbe condition that tbe policy should not take effect unless sucb payment should be made while Tomsecek was in good health, then tbe policy took effect before Tomsecek died and plaintiffs were entitled to recover; otherwise appellant is entitled to judgment. Was tbe decision of that'question in respondents’ favor right? That is tbe proposition upon wbicb this appeal turns.

Many authorities are cited to our attention to tbe effect that possession of a policy by the assured at the time of bis death 'prima facie establishes all conditions necessary to its having taken effect as a binding insurance contract in bis lifetime, notwithstanding it contains a stipulation that it shall not take.effect unless tbe first premium is paid while tbe assured is in good health; that if such payment was not in fact made, a waiver thereof will be presumed in tbe absence of evidence to the contrary. Some of sucb authorities bold to rather an extreme doctrine when applied to a policy which does not contain a receipt 'for payment of the first premium and indicates that an independent instrument, evidencing such payment, is to be delivered to the assured upon such payment being made, as in this case. To that extent they are not in harmony with McDonald v. Provident S. L. A. Soc. 108 Wis. 213, and do not meet with our approval. The trial court applied the doctrine of such authorities to this cs.se, and in that, as it seems, committed error. The court went further, not only holding that the agent waived and had implied authority to waive payment of the first premium while the applicant for insurance was in good health, but waived and had authority to waive payment of such premium in money and to make an agreement, binding on appellant, that payment might be made by applying the amount of the premium on the agent’s indebtedness for meat and as a credit entitling him to further delivery of meat. The principle is familiar that the authority of an agent as to waiving conditions of an insurance policy before it takes effect is pretty broad, but it does not go beyond his actual authority and that reasonably implied from the nature of the business carried on. The rule in that regard is the same in respect to an agent for an insurance company as any other. There is no daim that the agent had actual authority to make the agreement found by the jury, so his authority in that regard must be tested wholly by what may be reasonably implied. It may be admitted that Webb was a general agent, and still the difficulty is not lessened, because it cannot be implied that he had any authority in excess of the power of the corporation, and it must be presumed that such power did not include the issue of policies of life insurance for anything but money.

Several cases are cited to- our attention to sustain the decision that an agent may waive the conditions of an insurance .policy calling for payment of the first premium in money, but none of them fit the facts of this case. The nearest ap-proaeh. to a situation similar to the one under consideration is that involved in John Hancock M. L. Ins. Co. v. Schlink, 175 Ill. 284. There the agent agreed to waive payment in money of a part of the first premium, such part not exceeding the amount allowed to him as his commission. The policy was sustained upon the ground that payment of the full amount going to the company was made in money, the court inferentially holding that the agent had no authority to waive payment thereof. The decision followed Lycoming F. Ins. Co. v. Ward, 90 Ill. 554, where the agent agreed to take part payment of the first premium out of the assured’s saloon. In respect to the defense of nonpayment of the first premium in money, the court said:

“As the amount paid in cash was more than enough to pay the premium on this policy, we see no ground for holding that the premium was not all paid in cash.” The agent “was entitled to commissions for procuring the insurance, and if he saw proper to take out his commissions in the saloon, we know of no reason or authority to debar him from doing so.”

So many loose expressions are found in text-hooks and legal opinions as well, as to the power of a general agent of an insurance company to waive the conditions of a policy calling for payment of premiums in money, that it is not to he wondered at that attorneys and courts as well sometimes go astray. A careful analysis of the authorities will show that with few exceptions, which are not of sufficient significance to he followed, the idea, that the agent of an insurance company has implied authority to waive payment of premiums' on an insurance policy in money and agree to take something in lieu thereof which is neither money nor an agreement to pay money, nor an equivalent to money to the insurance company when taken, has'no support. In May, Ins. § 360D, it is said:

“An agent authorized to deliver policies and receive payment may waive the payment of the premium in cash notwithstanding a stipulation in tire policy to the contrary,” citing Home Ins. Co. v. Gilman, 112 Ind. 7.

In that case tbe agent agreed to receive credit on bis own debt to the assured for the amount of the first premium and to pay the insurance company the amount thereof, which agreement was fully carried out, the company actually receiving payment in money. The decision was grounded on the fact that the company received cash for the first premium, substantially according to the contract. The court said:

“We are not required to decide what the rights of the parties would have been in case . . . the agent had failed to give the company credit and remit in the usual course.”

However, the court quoted, without explanation or qualification, and in a way to lead one astray if he fails to examine the supporting authorities, from sec. 360 of May, Ins., this language:

“If the agent be authorized to receive the premium, an agreement between the assured and the agent that the latter will be responsible to the company for the amount, and hold the assured as his personal debtor therefor, is a waiver of the stipulation in the policy that it shall not be binding until the premium is received by the company or its accredited agent,” citing Sheldon v. Conn. M. L. Ins. Co. 25 Conn. 207; Home Ins. Co. v. Curtis, 32 Mich. 402; Willcuts v. Northwestern M. L. Ins. Co. 81 Ind. 300, 309.

The text in May is supported by Sheldon v. Conn.M.L.Ins. Co., supra, and Southern L. Ins. Co. v. Booker, 9 Heisk. 606. In the last case mentioned the agreement was to the effect that the agent should give the assured time to make the first pay ment. There was no waiver of payment in money. In Sheldon v. Conn. M. L. Ins. Co. the facts were that the agent agreed to give the applicant time to make payment of the first premium, to take his note, payable to the company on short time for one half thereof, and his promise to pay such agent the other half, and to personally make the cash payment to the company. It was the custom between the company and the agent to charge the amount of the first premium to the latter upon forwarding to him the policy for delivery, and for the agent to mate settlements with the company from time to time, and to remit money on account. There was no waiver of the payment in money, only a waiver of the time of payment. In Home Ins. Co. v. Curtis, the agent advanced the money for the assured for the first premium, actually paying it to the company, and it was held that there was a sufficient compliance with the provision of the policy requiring payment of the first premium as a condition of the policy going into effect. In Willcuts v. Northwestern M. L. Ins. Co. the facts were that the policy was issued to one of the medical examiners of the company and it was agreed between him and the agent that the dues to the applicant for services as medical examiner might be applied on the premiums. It was held that such agreement was binding on the company as to services actually rendered before the premium became due, because, to that extent, it did not really constitute a waiver of payment in money, as the amount due to the examiner from the company was equivalent to it to a cash payment to that extent.

Enough has been said to indicate the character of the authorities relied upon to show that a general agent of an insurance company has implied authority to waive the provision of an insurance policy calling for payment of the first premium in money. None of them go to the extent of holding that the agent may waive such payment and take something in lieu thereof which does not amount to payment to the corporation in cash,, such as an agreement on the part of the agent to take pay for a premium in meat, no credit being given or payment actually made to the agent, or credit being given by him to the corporation in the usual course of business. The precise question we have here was decided in Hoffman v. John Hancock M. L. Ins. Co. 92 U. S. 161. There the first premium was paid to a local or special agent, by consent of the general agent of the company, in a horse, tbe cancellation of an indebtedness of tbe special agent to tbe applicant for insurance, a note to sncli agent and a note to tbe corporation. Tbe transaction was beld void, SwayNE, T., wbo delivered tbe opinion of tbe court, saying:

“It is an elementary principle, applicable alike to all kinds of agency, that whatever an agent does can be done only in tbe way usual in tbe line of business in wbicb be is acting and tbe implication to that effect “is present whenever bis authority is called into activity, and prescribes tbe manner as-well as tbe limit of its exercise.”

It was further said, in effect, that as life insurance is a cash business, tbe agent of an insurance company, whether be be a general or a special agent, has no implied authority to take or agree to take personal property, such as a horse, in payment of a premium upon an insurance policy; that such an agreement, even if made by^’tbe company itself, would be ultra vires, and if made by an agent without tbe knowledge of tbe company it would not only be ultra vires but a fraud both upon tbe part of tbe agent and tbe applicant for insurance, for tbe latter must be presumed to know that an insurance premium cannot be legitimately paid in horses.

It would seem that nothing further need be said to show that tbe policy in question never became binding upon appellant. Tbe jury found that tbe agent agreed to accept bis own indebtedness for meat as part payment for tbe first premium and to take meat for tbe balance thereof. It is undisputed that such agreement was never carried out by tbe insured so as to obligate tbe agent to pay tbe company. Neither tbe company nor tbe agent received pay for tbe first premium. There is no analogy between this case and one where tbe agent merely agrees to give the applicant for insurance time to make tbe first payment, or agrees that be will advance the amount of tbe first payment himself, and actually does advance it, or agrees to charge himself with the first premium in bis account with the company, according to a custom of doing business between bimself and bis principal, thereby becoming liable to the company. We must bold bere tbat the agent bad no implied authority to use the appellant’s policy of insurance to pay bis meat bills or to build up a credit for future purchases of meat. There are no circumstances disclosed in the evidence to avoid the effect of tbat conclusion. . The motion made by appellant’s counsel for-judgment on the special verdict should have been granted and the duty devolves upon this court to reverse the judgment and remand the cause with directions to strike out the general verdict and render judgment in favor of defendant on the special verdict, dismissing the complaint with costs.

By the Gourt. — So ordered.