Hicks Ex Rel. Mitchell v. Home Security Life Insurance

Seawell, J. A careful study of the exceptions appearing in the record leads to the conclusion that they do not disclose reversible error. ¥e direct our attention to that phase of the case which is regarded as more important to the disposal of the appeal. The case properly hinges upon the question of waiver: Whether the facts and circumstances of record, constituting the history of the dealings between the parties, the conduct of the insurer toward the insured, and its attitude toward the policy it issued, works a waiver of the condition which purports to render it void if at the time of its issue there is in force a previously issued policy on the life of the insured in the same company unless a properly signed waiver of the condition is endorsed on the policy. Involved with this question is the stipulation that in the absence of such endorsement, the company shall not be assumed or held to know of the existence of such prior policy, “and that the issue of this policy shall not be deemed a waiver of such last mentioned conditions.” If the conduct of the defendant was such as to mislead the insured and induce in him a belief that he was protected by a valid policy while he continued to pay the premiums — that the condition imposed in the policy had been waived — and this can be established agreeably to the rules of *617 evidence and standards of practice prevailing in our courts, we have no doubt that tbe stipulation, intended to foreclose tbe plea of waiver altogether by binding tbe insured against tbe existing facts upon wbicb it arises, would likewise, and for strong reasons of public policy, become ineffectual. Waiver of the forfeiture provision in a policy of insurance is predicated on knowledge on the part of the insurer of the pertinent facts and conduct thereafter inconsistent with an intention to enforce the condition. In Coile v. Com. Travelers, 161 N. C., 104, 76 S. E., 622, quoted in Paul v. Ins. Co., 183 N. C., 159, 162, and in Arrington v. Ins. Co., 193 N. C., 344, it is said: “A course of action on the part of the insurance company wbicb leads the party insured honestly to believe that by 'conforming thereto a forfeiture of bis policy will not be incurred, followed by due conformity on bis part, will estop the company from insisting upon the forfeiture, though it might be claimed under the express letter of the contract.” Ins. Co. v. Eggleston, 26 U. S., 577; Ins. Co. v. Norton, 96 U. S., 234. The majority of decided cases adopt the view that where the insurer is affected with knowledge of the existence of - the prior policy, either the issue of the second policy or the continued acceptance, with such knowledge, of premiums paid thereupon, will work an estoppel or constitute a waiver of the condition. Mellick v. Metropolitan L. Ins. Co., 84 N. J. L., 437, 87 A., 75 (affirmed in 85 N. J. L., 727, 91 A., 1070) ; Western & S. L. Life Ins. Co. v. Oppenheimer (1907), 31 Ky. L. Rep., 1049, 104 S. W., 721; McGuire v. Home L. Ins. Co., 94 Pa. Super. Ct., 457; National Life & Acci. Ins. Co. v. House (1937), 104 Ind. App., 403, 9 N. E. (2d), 133; Lanigan v. Prudential Ins. Co., 18 N. Y. S., 287; Clay v. Liberty Industrial L. Ins. Co. (La.), 157 So., 838; Wills v. Liberty Industrial L. Ins. Co. (1935—La. App.), 159 So., 141; Atlas v. Metropolitan L. Ins. Co., 181 N. Y. S., 363. What we regard as the best considered eases also bold that, notwithstanding the stipulation to the contrary, knowledge of the prior existing policy may be inferred from the fact that both policies are issued by the same company and upon the same life. Some cases bold that knowledge to the agent soliciting the insurance or receiving the application will not be imputed to the insurer unless the information is given to an agent clothed with authority to make the waiver. the contrary view has been adopted in this State. Follette v. Accident Association, 107 N. C., 240, 12 S. E., 370; S. c., 110 N. C., 377; Dibbrell v. Ins. Co., 110 N. C., 193, 14 S. E., 783; Horton v. Ins. Co., 122 N. C., 498, 29 S. E., 944; Short v. Ins. Co., 194 N. C., 649, 650, 140 S. E., 302; Marsh v. Ins. Co., 199 N. C., 341, 154 S. E., 313; Laughinghouse v. Ins. Co., 200 N. C., 434, 436, 157 S. E., 131; Mahler v. Ins. Co., 205 N. C., 692, 172 S. E., 204; Cox v. Assurance Soc., 209 N. C., 778, 185 S. E., 671; Heilig v. Ins. Co., 222 N. C., 231, *618 233, 22 S. E. (2d), 429. The issue of tbe second policy, or the continued collection and receipt of premiums thereupon with such knowledge, whereby the insured is induced to believe he is protected by valid insurance will constitute a waiver of the statement in the application, whether innocently or falsely made, that there was no prior insurance on his life in the company. Monahan v. Mutual L. Ins. Co., 103 Md., 145, 63 A., 211; Clay v. Liberty Industrial Ins. Co., supra. Forfeiture of right under the policy is not imposed as a penalty for making a false statement, which the insurer máy invoke at his pleasure at any time, regardless of its own antecedent conduct. It is based on the principle that the insurer has been misled to its damage. The insurer is not misled when it knows the facts; and when that knowledge exists or is acquired, it becomes the right and the duty of the insurer either to cancel the policy or forego further collection of premiums. Failure to do either will operate as a waiver. In the instant ease, nothing else appearing, the representation is material, of course, as affecting the risk which the insurer is willing to take, and, whether innocently or fraudulently made, would, at the instance of the insurer, avoid the contract. Assurance Society v. Ashby, 215 N. C., 280, 1 S. E. (2d), 830. (In the Ashby case, supra, the misrepresentation was in regard to the health of the applicant, a matter which was neither presumptively nor actually within the knowledge of the insurer.) But here something else does appear — as in all cases of waiver or estoppel — and that is, the knowledge of the company that the facts are contrary to the representation. In most cases the representation is practically indistinguishable as a separate factor in a discussion of the subject and is uniformly treated as subject to waiver. The equities of fair dealing will not permit an insurer knowingly to collect premiums on a void policy, thereby inducing -the holder to believe he is protected by valid insurance. While the premiums are punctually paid and cheerfully received, conditions may intervene which will render it impossible to procure any other insurance. One of those conditions is death. At the risk of consuming valuable space, we venture to quote from some of the cited cases : In Clay v. Liberty Industrial Ins. Co., supra, it was said: “The insurer is presumed to be cognizant of its own records. It collected premiums for fifty weeks without attempting to cancel the policy upon the ground of the prior issue of another policy, and cannot now be allowed to deny validity of the policy upon that ground.” In Wills v. Liberty Industrial Ins. Co., supra, it is said with regard to the insurer: “Having accepted these premiums on the second policy, with full notice of the existence of the first, they cannot avoid their obligations under it upon the defense advanced herein. 'The acceptance by *619 an insurance company with knowledge of facts authorizing a forfeiture or avoidance of the policy, of premiums or assessments which were in no degree earned at the time of such forfeiture or avoidance, constitutes a waiver thereof.’ ” In Monahan v. Mutual L. Ins. Co., supra, it is said: “If the company, to serve its own purposes, saw fit to adopt an imperfect and incomplete system of recording its policies, whereby its books failed to show what, if prudently and methodically kept, they would have revealed with respect to the names of the insured, it certainly should not be permitted to set up its own ignorance resulting from its own negligence, as a valid reason for the nonapplication of the doctrine of waiver.” Pointedly refusing to give effect to a stipulation, substantially identical with that presented on this appeal, that no knowledge of the existence of the prior policy should be imputed to the company by the issuance of the second, it is said in McGuire v. Home L. Ins. Co., supra: “We hold that an insurance company will not be permitted to accept premiums, under a policy which it knows to be void, until the death of the insured, and then seek to avoid responsibility under it by appealing to an equivocal agreement that it shall not be held to. know what it does in fact know. A provision that there shall be no waiver under such circumstances amounts to an attempt to set aside the wholesome requirement of law that good conscience must prevail in dealings between citizens.” Directed towards the same kind of stipulation, as well as generally to the subject of waiver, in Cobbs v. Unity Industrial L. Ins. Co. (1935), La. App., 158 So., 263, where the reasonableness of this provision was urged because the premiums on the policies involved were collected by different agents, the Court said: “No matter how many agents collected the premiums, there was ample opportunity to ascertain the fact that the two policies were in existence.” And in Atlas v. Metropolitan L. Ins. Co., supra, where conditions and stipulations in the policy are parallel with those now under consideration, it is said: “Receipt of premiums continuously after the issuing of the policy is . . . on familiar principles, if unexplained, conclusive evidence of a waiver of the condition.” Objection to the issues presented to the jury is not tenable. Both the evidence as to the oral statement made by the applicant to the agent and the issue framed thereupon were directed to the knowledge which might be imputed to the company because of the information given the agent, and the issue is not objectionable because within itself it did not purport to completely determine the controversy. Waiver is a mixed question of law and fact. When the facts are determined, it becomes a question of law. In the instant case, upon an issue directed to that question, the jury found that the insurer had knowledge of the existence of the prior policy at the time it issued the second policy. *620 The formal tender in court of all the premiums collected upon the policy from the time of its issue to the time of the death of the insured is sufficient admission that they were duly collected and received. The court had all the facts before it which were necessary to justify and support the judgment. We find No error.