Robinson v. Brotherhood of Locomotive Firemen & Engineers

Hoke, J., after stating the case: There being evidence tending to show that the policy or certificate sued on was issued contrary to the rules and regulations of defendant company as contained in its constitution and by-laws, the same cannot be recovered on unless this defect has been in some way waived or the company is estopped from insisting on a forfeiture. Speaking, then, to the facts as established by the verdict, it is the recognized position in this State that in one of these fraternal organizations having an insurance department as one of its features a member holding a policy of insurance or benefit certificate occupies a double relationship towards the company. As" a member he is bound by the rules and proceedings of the order, regularly taken, but as a holder of one of the policies he stands, and under his policy the relationship, in most respects, is that of insurer and insured and subject to the principles ordinarily prevailing in that class of contracts. Bragaw v. Supreme Lodge, 128 N. C., pp. 354-357; Peterson v. Gibson, 191 Ill., 365. Considering the record in that aspect, it has been held in several cases with us, and the ruling is well supported by authority elsewhere, that when a policy has been obtained on application of the insured, and the same contains false statements, material to the risk, and the company, with full knowledge of the facts and the falsehood, issues a policy, receives the premiums, and recognizes and continues to recognize the applicant as holding a contract of insurance, it will ordinarily be estopped from insisting on a forfeiture of the policy that might otherwise ensue. Fishblate v. Fidelity Co., 140 N. C., pp. 589-595; Gwathney v. Ins. Co., 132 N. C., 925; Grabbs v. Ins. Co., 125 N. C., 389; Horton v. Ins. Co., 122 N. C., 498; Follett v. Accident Assn., 110 *549 N. C., 377; Bergeron v. Ins. Co., 111 N. C., 45; Ins. Co. v. Goyne, 79 Ark., 315; Ins. Co. v. Galligan, 71 Ark., 295; Ins. Co. v. Vogel, 166 Ind., 239. But tbis principle, we apprehend, will be found to exist chiefly in reference to the terms of the contract between the parties or the adjustment of rights thereunder where the policies of an incorporated company are issued through a general agent, having full power in the premises or where the agent, though one of restricted powers, has issued the policy in the course and scope of his agency and to an applicant who has no notice of the limitations upon his powers. Gwaltney v. Ins. Co., supra; Miller v. Ins. Co., 31 Iowa, 216; Ins. Co. v. Wilkinson, 80 U. S., 222. And we see no reason why, in a case of limited or restricted agency, the general doctrine applicable should not prevail, to the effect that one who deals with an agent of that kind, having notice of restrictions put upon his power, is bound by such limitations and may not insist on a contract which he knows is in excess of the power conferred. Wynne v. Grant, 166 N. C., 39; Stephens v. Lumber Co., 166 N. C., 107; Swindell v. Latham, 145 N. C., 144; Bank v. Hay, 143 N. C., 326; Building and Loan Assn. v. Some Savings Bank, 181 Ill., 35; Ins. Co. v. Wilkinson, supra. In the present ease the agents acting for the company, while having general charge and control of the insurance department, were prohibited by express provision in the constitution and by-laws from issuing any certificate to a member over 45 years of age at the time of his application, and there áre facts in evidence tending to show that the applicant was aware of this limitation on the agent’s powers, and falsely represented his age as 35 years. While the knowledge of the company of the falsity of this statement might, under the decisions heretofore cited, prevent defendant from insisting on such representations as a feature of the contract between the .parties, it does not, to our mind, prevent the operation of the principle that one dealing with an agent of restricted powers and having notice or knowledge of existent limitations is bound by them. As said in the recent ease of Woodly v. Telephone Co., 163 N. C., 284: “In order to a valid waiver, there must be an agreement founded on sufficient consideration or some element of estoppel in pahs.” And if the applicant attempted to make a contract with the agents of defendant when he had notice or knowledge that they were acting in excess of their powers, and particularly if he procured the contract by reason of his own false statements, no recovery should be allowed on such a contract. There could be no waiver by agreement, for an utter want of capacity in the agents to make it,. nor by estoppel, for that would clearly not arise to one who was aware of the agent’s lack of power. True, there *550 are many well considered decisions to tbe effect that limitations on the powers of an agent will only avoid a policy of insurance when they are contained in the legislative charter of the general law affecting the contract, Wood v. Mystic Order, 212 Ill., 532; In re Assignment Mutual Ins. Co., 107 Iowa, 143; but these were cases applying the doctrine of ultra vires, by which the contracts were avoided whether the applicant had notice of the limitation or not, and there is nothing in these decisions which militates against the enforcement of conventional limitations when, as stated, the applicant may have known of the agent’s lack of power to make the contract. His Honor’s ruling, to the effect that notice of the applicant’s age to the local medical examiner, acting in this particular matter for and by authority of the central lodge, would be imputed to the company, is in accord with authoritative decisions here and in other jurisdictions, Bragaw v. Supreme Lodge, supra; Grabbs v. Ins. Co., 125 N. C., supra; Knights of Pythias v. Withers, 177 U. S., 260; Johnston v. Ins. Co., 123 Ga., 404; and there is also authority for the position as expressed by him, that data on the official files of the company, received in’farmer dealings with the applicant, giving his correct age, etc., may, at times and on some issues, affect the company with notice, O’Rourke v. Ins. Co., 23 R. I., 457; Ins. Co. v. Nichols, Court Civ. App., Texas, 26 S. W., 998; but he committed reversible error in making, as he did in his charge, the determination of the seventh and eighth issues to depend entirely on the response to the fifth issue, that is, on the knowledge the company, through its agents, may have had of the falsity of the applicant’s statements at the time the policy was issued, for, though the company may have known this, the policy being in excess of the powers conferred upon these agents, if the applicant was aware of this at the time, he could insist neither on the principle of waiver by agreement nor estoppel. For the error indicated, there will be general new trial, and this will be certified, that the cause may be properly determined on these or other issues properly determinative of the controversy. New trial.