National Life Insurance v. Grady

Hoke, J. The authorities on the subject in this jurisdiction are to the effect that where on payment of the first premium a policy is delivered without qualification there is a completed contract of insurance, and the parties thereto are concluded as to a delivery of the policy during the good health of the insured, except in case of fraud. These decisions proceed upon and approve the position that the clause in the application, made a part of the policy, and stipulating that there shall be no contract of insurance except on delivery in good health, is executory in its nature, authorizing the company to withhold the policy in case the insured shall be taken ill before delivery, but where the policy has been finally delivered the company is concluded on this and other stipulations of like kind except, as stated, where there has been fraud on *352 the part of the insured, or those representing him in. the transaction. Trust Co. v. Ins. Co., 173 N. C., 558-563; Rayburn v. Casualty Co., 138 N. C., 379; Grier v. Ins. Co., 132 N. C., 546; Ray v. Ins. Co., 126 N. C., 166; Kendrick v. Ins. Co., 124 N. C., 315. In Trust Co. v. Ins. Co., supra, Associate Justice Allen delivering the opinion, and in reference to-the subject said: “Nor do we agree to the position that the defendant can avail itself of the plea that the insured was not in good health at the time of the delivery of the policy, and that for this reason, under the terms of the policy the contract never became operative.” If any length of time elapses between the making of the application and the issuing of the policy it is the duty of the defendant to make inquiry when the policy is delivered as to the condition of the health of the insured; and if it fails to do so, the delivery is conclusive against the defendant as to the completion of the contract. It was so decided in Grier v. Ins. Co., 132 N. C., 546, in which the Court said: “When the policy is not only issued, but delivered, its delivery (in the absence of fraud) is conclusive that the contract is completed (Ray v. Ins. Co., 126 N. C., 166), and it is an acknowledgment of payment during continuance in good health. If the agent had not delivered the policy, whether the circumstances would have justified the withholding of the delivery so as to release the company from responsibility is not a matter before us. He did deliver it, and with full opportunity to see the insured and with a suggestion that he do so, and there is no allegation of fraud and collusion, as in Sprinkle v. Indemnity Co., 124 N. C., 405. The delivery of the policy closed the contract like the delivery of any other deed, and the preliminary provisions of the application for withholding thereof ceased to be of any force. In Kendrick’s case, supra, the money was not paid till after a lingering illness and on the very day of the death, and then by a friend; but it was held that the delivery of the policy was conclusive as to the contract being complete. “Numerous authorities can be cited in support of what is here said, but the matter has been sufficiently elaborated in Kendrick v. Ins. Co., 124 N. C., 315; 70 Am. St. Rep., 592. To same purport, Life Assn. v. Lindley, (Texas), 68 S. W., 695; Indemnity Assn. v. Grogan, (Ky.), 52 S. W., 959; Ins. Co. v. Koehlar, 63 Ill., App., 188; Ins. Co. v. Schlink, 175 Ill., 284; Ins. Co. v. Quinn, 41 N. Y., Supp., 1060; McElroy v. Ins. Co., 94 Fed., 990. In Life Assn. v. Findly and Indemnity Co. v. Grogan the facts were identical, almost, with those in this case. The actual delivery of the policy concludes the contract, in the absence of fraud.” In Grier v. Ins. Co., and in Ray v. Ins. Co., it was held “that when the policy of insurance is delivered, its delivery, in the absence of fraud, is conclusive that the contract is completed and is an acknowledgment *353 tbat tbe premium was paid during the good health of the insured.” And the present Chief Jnotice delivering the opinion in the Grier case, said: “The provision in the application that the contract shall not take effect until the first premium shall have been paid, during' the applicant’s continuance in good health, is only a provisional agreement, authorizing the company to withhold the delivery of the policy until such payment in good health; but when the company actually delivers the policy, then it is estopped, in the absence always of fraud, to assert that its solemn contract is void either on account of nonpayment of premium or of ill health, which stipulations were asserted in the application as conditions to excuse it from such delivery, and are not grounds to invalidate th,e policy after it has been delivered.” Another principle recognized in this jurisdiction and pertinent to the inquiry is that, in the absence of fraud or. collusion between the insured and the agent, the knowledge of the agent when acting within the scope of the powers entrusted to him will be imputed to the company, though a direct stipulation to the contrary appears in the policy or the application for the same. Gardner v. Ins. Co., 183 N. C., 367; Fishblate v. Fidelity Co., 140 N. C., 589; Grabbs v. Ins. Co., 125 N. C., 389; Follette v. Accident Assn., 110 N. C., 378; Connecticut Indemnity Assn. v. Grogan’s Admr., 52 S. W., 959; McElroy v. British America Assur. Co., 94 Fed., 990; Northwestern Life Assur. v. Findley et al., 68 S. W., 695; Germaine Life Ins. Co. v. Koehler, 63 Ind. App., 188. In Fishblate’s case, supra, the Court in speaking to the question said: “We are not inadvertent to the clause in the policy which provides that ho notice or knowledge of the agent or any other person shall be held to effect a waiver or change in this contract or any part of it. . . .’ The effect of a clause of this kind has been very much discussed in the courts, and there is high authority for the position that to ignore such a stipulation would be to place an undue limitation on the right of contract, and to threaten the sanctity of written instruments by breaking down the rule that such contracts cannot be changed or varied by parol. But we think the great weight of authority, certainly in the State courts, favors the position that a clause of this character is ineffective for the. purpose designed and that an insurance company shall not appoint an agent, use his services, accept the results of his work, and repudiate this essential and inherent feature of the law of agency, that a knowledge of the agent is the knowledge of the company.” A proper application of these principles to the facts presented is in favor of defendant’s recovery on the policy. There is no suggestion of any collusion between the agent and the insured, nor is there any allegation or evidence tending to show fraud or any concealment from which fraud might be inferred, on the contrary it appears, and under the charge of *354 bis Honor, tbe jury bas necessarily found that on payment of tbe premium there was unqualified delivery of tbe policy, tbe agent at tbe time having knowledge or notice of the conditions presented. There is no error, and tbe judgment for defendant is Affirmed.