North Carolina Bank & Trust Co. v. Pilot Life Insurance

Bbogden, J. 1. Can a soliciting agent of a life insurance company deliver a policy and waive tbe payment of tbe first premium or extend credit for tbe payment thereof when both tbe application and tbe policy provide that tbe contract of insurance shall not become effective until tbe first premium has been paid; and further, that only an executive officer as specified shall have authority to alter or modify tbe contract ? 2. Did tbe company itself waive tbe provisions of tbe application and policy with reference to payment of tbe first premium? Tbe first question involved has been discussed in Foscue v. Ins. Co., 196 N. C., 139, 144 S. E., 689, and in Burch v. Ins. Co., 201 N. C., 720. Both of these cases bold that tbe local or soliciting agents as such have no authority to extend credit to tbe insured in tbe payment of premiums or waive tbe payments provided in tbe policy or extend tbe time of payment thereof. Moreover, it has been declared in Perry v. Insurance Co., 150 N. C., 143, 63 S. E., 679, that: “Tbe parties to a proposed contract of insurance may make such agreement as to tbe payment of tbe first premium as they may desire, and such agreement, whether express or implied, must be performed or waived. In tbe absence of any agreement, it is generally understood that prepayment of tbe first premium is not necessary to tbe validity of an oral preliminary contract, but that payment must be made upon delivery of tbe policy. "When, however, it is expressly agreed that tbe contract shall not become binding until tbe first premium has been paid, no contract, oral or otherwise, can be considered as complete unless such prepayment has been made or waived.” A clear-cut opinion upon tbe subject reaching tbe same conclusion as announced in tbe foregoing North Carolina cases, is contained in Curtis v. Prudential Co. of America, 55 Fed. (2d), p. 97. Tbe second question of law is raised by a letter written by tbe president of defendant company to tbe insured on 3 October, 1931. Tbe opening sentences in tbe letter are as follows: “We were much pleased to learn that this policy in tbe Pilot was delivered to you recently. I want to thank you personally for placing this business with us. We believe that our greatest asset is tbe confidence and loyalty of our great army *464 of policyholders and friends throughout the south/’ etc. Another item of evidence which the plaintiffs assert, constitutes a waiver, is the notice sent out by the defendant company of a quarterly premium to be due on 14 December. The evidence discloses, without contradiction, that the defendant had no knowledge of the fact that the first premium had not been paid or that the soliciting agent had delivered the policy without receiving the money and without delivering the official receipt. Waiver in such cases rests chiefly upon intention and knowledge. Both of these elements are lacking. See Gazzam v. Ins. Co., 155 N. C., 330, 71 S. E., 434; Turlington v. Ins. Co., 193 N. C., 481, 137 S. E., 422. Upon the undisputed facts the plaintiff was not entitled to recover and the motion for nonsuit should have been granted. Reversed. ClaeksoN, J., concurs in result.