Amarillo Nat. Life Ins. v. Brown , 166 S.W. 658 ( 1914 )

Motion for Rehearing. In this cause the record is susceptible of the construction that Wellborn Bros. were the general agents of the insurance company. The contract between them in writing was signed by them as general agents, and provided that the appellant had appointed "said second party as its general agents"; and considering the territory embraced in said contract, with the power delegated to them to appoint subordinate agents, and the absence of any evidence contradictory of such an inference, justifies the conclusion that their relation to the company was of such capacity.

The record indicates that a confidential statement was made on a blank form furnished by the company, and we clearly think by this form, with the answers thereto, in connection with the testimony of Mr. Brothers, the secretary of the company, and Mr. Wellborn, the general agent, and Nelson, the subordinate agent, that it was contemplated by the company that its agents might take notes for premiums or extend credit to applicants for policies for the purpose of obtaining insurance. It did indicate that notes were taken at agents' risk, but the company also desired a description of the same, and indicated that no cash might be paid at all, by the question to the agent, "Have you received any cash?" And the further recitation by the company in this confidential statement indicates that a settlement for the first premium may be made in a different manner than that of a cash payment, as follows: "If no settlement has been made for first premium, state how and when it is expected to be made." In this instance, the statement of the agent was, as to the settlement of the first premium for the insurance first applied for by the applicant, Brown, that the settlement for the first premium would be made the 1st day of October, 1911; and Mr. Brothers, the secretary of the appellant testified: "We issued this policy in suit on the original confidential report," etc.

The appellant seems to be seriously insistent in this matter that we erred in concluding that the evidence supported the jury's verdict in regard to the extension of credit to Wellborn by the company and the power of the latter to extend credit to Brown for the premium. Unless for some legal reason the power could not be exercised by the company, upon the theory in support of the jury's verdict, the evidence was amply sufficient. As expressed by the Supreme Court of Massachusetts, however, in a fire insurance cause, upon partly a similar state of facts (White v. Conn. Ins. Co., 120 Mass. 332): "It is a fair inference, from all this, that the duly authorized agent of the company [in this case, a general agent dealing with a subordinate representative] had accepted the individual credit of Hunt as a payment of the required premium. It is not a question of waiver, by parol agreement, of an express stipulation in a written contract, within the cases cited by the defendant. It is rather a compliance with the condition required to give validity to the policy, within a large class of cases in which it is held sufficient. Tayloe v. Merchants' Ins. Co., 9 How. 390-402 [13 L. Ed. 187]; Miller v. Life Ins. Co., 12 Wall. 285-303 [20 L. Ed. 398]; Sheldon v. Atlantic Ins. Co., 26 N.Y. 460 [84 Am.Dec. 213]; Sheldon v. Connecticut Life Ins. Co., 25 Conn. 207 [65 Am.Dec. 565]; Bouton v. American Life Ins. Co., 25 Conn. 542." The following additional authorities, in certain portions of the different opinions, are distinctly upon the point: Fidelity Casualty Co. of N.Y. v. Willey (C.C.A. 3d Circ.) 80 F. 499, 25 C.C.A. 593; Miss. Valley Life Ins. Co. v. Neyland, 72 Ky. (9 Bush) 435-437; Wytheville Insurance Banking Co. v. Teiger, 90 Va. 277,18 S.E. 196; Lebanon Mutual Ins. Co. v. Hoover, 113 Pa. 591, 8 A. 164, 57 Am.Rep. 511.

Appellant asserts that the evidence totally fails to justify our statement to the effect that Nelson, the subordinate agent, reported to Wellborn the next day that he had notified Mr. Brown over the telephone, in regard to the policy and the disposition to be made of the same, and reported to Mr. Wellborn that "Mr. Brown said it was all right; he would be down in a couple of weeks and get it." We accepted this statement from page 17 of the appellant's brief, verified by us from the statement of facts, and there is no contradictory statement in the brief of the inference and the fact stated. We are now referred to the record that this is not true on account of certain testimony, but in reading all the testimony closely we are clearly of opinion that it was a matter entirely for the jury.

Appellant says that the finding that Brown "was a man of considerable wealth, having ample means and resources," is wholly immaterial. It is clearly material on the question of extension of credit.

Appellant again insists that the following statement (as quoted by it) is also error: "The note to Wellborn included the additional premium called for in the new policy, was paid to Wellborn after Brown's death." This court did not find the fact attempted to be quoted by appellant; it found that "the note to Wellborn, including the additional premium called for in the new policy, was paid to Wellborn after Brown's death," which is a distinct and different finding from that asserted by appellant.

Appellant also assigns that the court erred "in that part of the opinion * * * which seeks to analyze and apply a rule of law as laid down in the case of Kimbro v. Insurance Company, 99 Minn. 176, 108 N.W. 861, * * * because in that case there was nothing to be done by the insured except to receive the policy and the agent to deliver the policy. In fact, the company had delivered the policy when it mailed it." The wrong page number of the Kimbro Case was given in a portion of the opinion, and the Kilborn Case, 99 Minn. 176, 108 N.W. 861, was cited upon another point in a different portion of the opinion, and which holds the principle with reference to the mailing of the policy when the contract is fully executed and consummated. The Kimbro Case (Iowa) 108 N.W. 1025,12 L.R.A. (N.S.) 421, attempted to be analyzed in our main opinion, was cited by us upon the question of implied power of the agent to consummate the contract of insurance, notwithstanding the secret instructions with reference to the signature by the insured to the new application requested by the company in its letter to the agent; and in support of the doctrine we further cite the following cases: Life Ins. Co. v. Findley, 29 Tex. Civ. App. 494, 68 S.W. 695; Insurance Co. v. Berwald (Civ.App.) 72 S.W. 436; Woodman v. Carrington, 41 Tex. Civ. App. 29,90 S.W. 923; Insurance Co. v. Calvert (Civ.App.) 100 S.W. 1035; Ins. Co. v. Bowen (Civ.App.) 102 S.W. 167; Insurance Co. v. Owens (Civ.App.) 130 S.W. 963; Insurance Co. v. Ellis (Civ.App.) 137 S.W. 187.

We conclude that Wellborn, or Nelson, in his stead, intended to deliver the policy when the telephone conversation occurred upon Brown's acceptance, after an explanation made to him of the difference in the term, and the difference in the premium, between the policy applied for by him and the one forwarded by the company. The new application to be signed by Brown, as stated in the original opinion, was the same as the old application for the 15-year endowment — the inquiries being the same, and the answers of Brown adopted by the company. When Nelson explained this difference, without any statement with reference to any new application to be signed, with the only change as indicated, and Brown accepted the policy as changed, we think the minds of the parties met, and the policy and the old application constituted the contract. When the company, upon the application, rejected the 15-year endowment and reduced it to a 10-year endowment, Mr. Brothers, the secretary of the company, indorsed the old application, "Reissued, see No. 982," which latter was the number of the new policy.

We do not think that the statutes on insurance avoid a policy where the company extends credit and receives an obligation of another as payment of the first premium, instead of cash. Article 4741, R.S. 1911, says that no policy of life insurance shall be issued or delivered in this state unless the contract shall contain a provision substantially that all premiums shall be payable in advance, either at the home office of the company or to an agent of the company upon a delivery of the receipt signed by one or more of the officers who are designated in the policy, and required a further provision in the policy that the policy, or policy and application, shall constitute the entire contract between the parties. These provisions were in this policy. Article 4954 is a provision aimed at the prevention of insurance companies discriminating between insured of the same class and of equal expectation of life in the amount of payment of the premiums to be charged for such insurance; also stating that life insurance companies, or their agents, shall not make any contract of insurance or agreement other than as expressed in the policy issued thereon, providing for a punitive penalty by criminal prosecution and an additional penalty of forfeiture of its certificates of authority to do business in the state.

We are not prone to believe that the provisions of the statutes were intended to prevent an extension of credit, where insurance companies thought it expedient to do so, in payment of premiums for such contracts. The statutes do not say that all premiums shall be payable in advance "in cash," either at the home office or to the agent of the company, and in the business world extensions of credit are equivalent to cash. We are not inclined to think that these statutes contemplated a well-known method pursued by insurance companies was to be prohibited to them in the conduct of their business.

Again, if we are mistaken in this view, it is noted that article 4954, in prescribing that an insurance company or agent thereof shall not make a contract other than as expressed in the policy, does not declare that the policy of insurance shall be void. Article 4954 is in substance the same as the statutes of several states, prohibiting discrimination and rebates and containing the same clause with reference to the company, or the agent thereof, making only that contract of insurance as expressed in the policy, and the tendency and swing of the decisions, in so far as the question of rebate is concerned (the other question we are not able to find decided), is against the proposition that the policy is void. McNaughton v. Des Moines Life Ins. Co., 140 Wis. 214, 122 N.W. 765; Laun v. Pac. Mutual Life Ins. Co., 131 Wis. 555, 111 N.W. 660, 9 L.R.A. (N.S.) 1204; Rideout v. Mars, 99 Miss. 199, 54 So. 801,35 L.R.A. (N.S.) 485, Ann.Cas. 1913d 770.

Again, if we concede that the statute is a prohibition of the making of a contract for the payment of a premium by an obligation instead of by cash, the question, however, is akin to the principle applied by the Supreme Court of the United States, in construing Revised Statutes, § 5137 (U.S. Comp. St. 1901, p. 3460), an act of Congress which forbids a national bank to loan money upon real estate as security. It is not necessary to cite the repeated holdings of the Supreme Court of the United States with reference to this statute. As applicable here, however, the Supreme Court in the case of National Bank v. Whitney,103 U.S. 99, 26 L. Ed. 443, said: "The statute did not declare such security void, but was silent on the subject; that had Congress so intended it would have been easy to say so, and it can hardly be presumed that this would not have been done, instead of leaving the question to be settled by the uncertain result of litigation and judicial decision."

Motion for rehearing overruled.

HUFF, C.J., not sitting.