Burch v. Provident Life & Accident Insurance

BbogdeN, J. The question of law presented by the record is whether the local agent of defendant was authorized to extend credit to the insured in the payment of premium due on 17 July, 1929, and thus keep the policy alive. At the outset it must be borne in mind that there is a vital and fundamental distinction between liability arising from agreements made by an agent of an insurance company at the- inception of the contract and that arising from agreements made by the agent with the insured after *723 tbe contract bas taken effect, resulting in tbe modification of tbe terms and conditions of tbe written engagement of tbe parties. Tbis distinction was pointed but in Foscue v. Insurance Co., 196 N. C., 139, 144 S. E., 689. Tbe plaintiff relies upon Some Ins. Co. v. Gilliam, 13 N. E., 118, but it appears that tbe question involved in tbat ease grew out of tbe delivery of a policy of insurance containing a recital tbat tbe first premium bad been paid. Furthermore, tbe company received tbe money. There are many cases in North Carolina and elsewhere built upon tbe same idea as tbat announced in tbe Gilliam case, supra. However, tbat line of eases is not applicable to tbe facts disclosed by tbe present record. In tbe case at 'bar tbe policy bad been in force for a period of five years and tbe contract expressly provided tbat “tbe amount of premium specified herein must be actually paid in cash to a duly licensed and authorized agent of tbe company; otherwise tbis receipt is null and void.” There are many cases disclosing an effort to pay tbe premium in merchandise or things of value other than cash, and tbe overwhelming weight of authority denies tbe validity or tbe efficacy of such payments. Turlington v. Ins. Co., 193 N. C., 481, 137 S. E., 422; Tomsecek v. Ins. Co., 88 N. W., 1013 (where tbe agent agreed to accept meat from tbe market of insured in payment of a premium); Allen v. Metropolitan Life Ins. Co., 229 N. W., 879 (where tbe agent undertook to have tbe premium credited on tbe purchase price of a washing machine sold by tbe insured); Cohen v. New Zealand Ins. Co., 120 Atlantic, 417 (where tbe agent agreed to take shirts and underwear in payment of premium). Furthermore, it bas been held tbat if an insurance agent bolds for collection tbe note of insured given in payment of a premium tbat such agent bas no authority to extend tbe time of payment of such note. Bank of Commerce v. N. Y. Life Ins. Co., 54 S. E., 643; Iowa Life Ins. Co. v. Lewis, 187 U. S., 335, 47 L. Ed., 204. Tbis point, however, is not before tbe Court for a decision and is referred to merely to indicate tbe trend of judicial thinking upon tbe general subject. There are two cases directly in point. Tbe first is Cayford v. Metropolitan Life Ins. Co., 91 Pac., 266. In tbis case it is written: “Authority to collect premiums does not imply authority to extend tbe time for tbe payment of such premiums, or to waive a forfeiture, resulting from nonpayment.” Tbe other case is Farmers’ & Mechanics’ Benevolent Fire Ins. Association v. Horton. Tbis case was decided by tbe Supreme Court of Appeals of Virginia on 17 September, 1931, and is reported in 160 S. E., 315. Tbe Court wrote: “It is next said tbat where credit is extended to an agent, who in turn extends it to tbe insured, no forfeiture can be enforced for nonpayment of premiums, and we are cited, as *724 sustaining that proposition, to 32 Corpus Juris, 1312; Perea v. State Life Ins. Co., 15 N. M., 399, 110 Pac., 559; Cooley’s Briefs on Insurance, Vol. 1, p. 484; and Wytheville Insurance Co. v. Teiger, 90 Va., 277, 18 S. E., 195. With it we have quarrel. In such cases the company looks to its agent for payment, and he extends credit to the insured at his peril. Here there was no such course of dealing. No agent was ever asked to pay, or expected to pay, a dollar which he did not collect. When tickets are turned over for collection, a memorandum of them and of their amount is made, and so, loosely speaking, it might be said that an agent is charged with them; but such a statement would be misleading. A man cannot possibly be charged with something which he is never expected to pay, and which he will never be asked to pay. Upon the facts, the rule invoked has no application.” It is contended that the evidence discloses a course of dealing between the insured and the agent of the insurer with respect to the payment of premium, but there is no evidence that the defendant Insurance Company had any knowledge of such course of dealing other than such knowledge as would be imputed to it through the local agent, nor is there evidence of ratification, as defined by law, on the part of defendant. .The premium was not charged to the local agent by the Insurance Company, and such agent was expressly prohibited by the terms of the contract from accepting anything but cash in the payment of the premium or from delivering the receipt until the premium had been paid. The receipt was never delivered, and while an attempted payment was made after the death of the insured to the bookkeeper of the local agent, such payment was never recognized or ratified by the defendant. Indeed, the local agent, upon the facts presented, had no authority to waive the terms of the policy or extend credit for the premium, and, therefore, in the absence of evidence tending to-invoke the principle of ratification, the ruling of the trial -judge was correct. Affirmed.