Imbrie v. Manhattan Life Insurance

Opinion by Mr. Justice Dean, The defendant company, on the 23d of January, 1893, issued to John McCune of Wilkinsburg, in Allegheny county, four policies of insurance on his life, each in the sum of $5,000 ; the policies were known as life policies ; for two years the insured was to pay in advance an annual premium of $211.50 on each policy, and thereafter, on each an annual premium in advance of $369, for eighteen years ortthe remainder of Ins life. This suit is upon only one of these policies; they were all solicited by James C. McKown, who at their date, and for ten years previous, was the agent and general manager of the company for the Pittsburg district. It was agreed between McKown and McCune when the policies were taken, that the premiums on all four for the first and second years should be paid in two [12] notes of $846, each to the order of McKown, one at five months and the other at six months. These notes were delivered by McCune to McKown, who delivered to him the policies and receipts for the premiums. The notes not being paid in full when due were renewed for the balance by McCune and the old notes returned to him; two renewal notes were indorsed by McKown to third parties; a part of the amount was paid to the holders in his lifetime, and renewals had for the part unpaid; on January 4, 1895, before the expiration of the two years for which the premium had been paid in notes, McCune died. Due proofs of his death were made to the company, and claim made for payment of the policies, which was refused by the company on the ground the premium had not been actuafiy paid as required by the policies. McCune’s executor then brought suits, of which this is one, on the four policies. On the trial of the cause the facts as heretofore stated appeared, and there was other evidence as to the authority of McKown as agent, and his course of dealing with policy holders, and the knowledge, as well as ratification, of his acts by the company. The court submitted the evidence to the jury to find: 1. Whether the agent of the company had taken these notes as absolute payment of the premiuriis ? 2. If not at the time taken in payment, or if taken by the agent without authority, did the company, after full knowledge of the transaction, treat them as payment and ratify the act of its agent? The verdict was for plaintiff, and we have this appeal by defendant, assigning four errors. The first is to the refusal of the court to peremptorily direct a verdict for defendant. As our ruling on the second, third, and fourth assignments disposes of the first, we need give it no further attention. The last three raise the question as to the authority of the agent to accept notes when the policy is issued as actual payments of the premium, and whether, if he had no precedent authority, there was subsequent ratification, and the effect-of the evidence tending to prove ratification. The plaintiff having offered-the policies, premium receipts and preliminary proofs of death, the burden was on defendant to show the receipts were for notes instead of cash. For there can be no doubt the proper construction of the contract is that [13] the insured shall pay the premiums in cash to the agent. And the acceptance of notes and delivery of the policy do not bind the company unless the agent had authority to waive a cash payment or his act was subsequently ratified by his principal. The written stipulation is: “ No provision of this contract can be changed or waived except by a written agreement signed by the president or secretary of the company.” While the evidence plainly showed the notes were given, there was much evidence even on side of defendant tending to show that whatever may have been McKown’s authority, his acts in reference to this transaction were known to the company, and it by unequivocal conduct approved and ratified them. Mc-Kown was called by defendant and testified in substance that he accepted the notes from McCune in payment of his premiums and had delivered to him the policies. If the evidence had stopped here there would have been just one question for determination. Had the agent authority to waive a cash payment ? The contract or policy to which McCune was a party, and by which he was bound, answered no; then it would have been incumbent on plaintiff to show that outside the policy the company had conferred on him such authority, or, if not authorized, the company had ratified the act. No precedent authority was shown; although requested to do so, the company did not produce in evidence the written appointment of the agent showing his authority. But McKown then goes further and states he sent the notes on to the company with many others; that afterwards differences arose between him and the company, and Mr. Wemple, vice president, came from New York to Pittsburg to adjust his accounts, and brought these notes with others along; after a settlement and a large balance struck against him as agent, Wemple took these notes with others in part payment of the balance; Wemple scrutinized all the notes, and selected such as were premium notes. When the notes were about to mature they were sent on to Pittsburg by the company for collection, and when presented bore the indorsement, “ For collection on account of Manhattan Life Insurance Co. ffm. C. Frazee, Sec’y.” Part of the aggregate amount of the notes was not paid, and the company returned them to McKown, charging him back with the amount unpaid; he then took new notes from McCune for so much as remained unpaid. The testimony of the vice [14] president and secretary does not contradict these facts; they state however that the taking of the notes was an individual arrangement between McKown and McCune, not authorized by the company; that they accepted the notes from McKown only as collateral security for the balance due the company from him; that such entries on the company’s books as this, “ Due Co. Note J. D. McCune,” preceded by the number of his policy, was only a method of bookkeeping to accurately keep the account of the company with its agent. While this may be so, the question was still for the jury. Did the company, with full knowledge that the notes were given for premiums instead of cash, accept them as payment, and adopt precisely such course for their collection as if they were the owners of the notes ? The credibility of the witnesses and the reasonable inferences to be drawn from the acts of the parties were for the jury. McKown testifies that as between him and McCune he accepted them as payment; assume he had no authority to do so; if the company had knowledge of this violation of authority, took the notes from McKown in settlement of Ms balance, and looked alone to him for payment; gave no notice to the policy holder that they disclaimed the agent’s authority; the jury might infer the company ratified Ms act in accepting the notes as payment. That part of the notes was not paid at the time of McCune’s death is not important; were they accepted as cash and the policies delivered in pursuance of that form of payment is the question; he might have paid in greenbacks, and afterwards the government might have refused to redeem its obligations; the company might have accepted iron at so much per ton as cash, and after-wards have failed to sell for one half the value at which they had taken it. There is a form of contract with reference to notes accepted as premiums, which in some of the cases the courts have enforced; that is where the notes on their face stipulate that if not paid when due the policy shall be void. But that is not this case. Another significant fact tending to show the company ratified .the act of the agent in accepting these notes as absolute payment is the notice as to the third annual premium; that was due the 23d of January, 1895; McCune died the 4th of January, nineteen days before it was due; but in December, 1.894, about thirty days before it was due, the company sent [15] him formal notice to pay this premium on that day, or his policies would be void. At that date with full knowledge that notes had been received for the first two years’ premium, had been in the company’s possession, part of them paid and part not paid, the insured is notified to pay the premium for the third year, or his policy will be avoided. If McCune had lived until the 23d of January and had paid the premium, that fact alone, under the authorities, would have effectually estopped the company from denying the actual payment of the first premiums. But what is the reasonable inference to be drawn from the notice ? Is it not that the policies are now valid, the first two years’ premium having been paid, but they wul! not continue to be so if the third premium be not paid? Not having lived to pay the third year’s premium, is not the present defense an afterthought suggested by an otherwise immediate liability for the face of the policies ? We do not see how the learned judge of the court below, on all the evidence, could have withheld this case from the jury, as urged by counsel for appellant. There were one or two inadvertent misstatements of fact as to dates, and one in treating the testimony of one witness as that of another, but these trifling errors could have had no possible influence on the verdict. As to the complaint that the charge was partial and an argument to the jury.in favor of plaintiff, it is not well founded. A bare statement of the undisputed facts in this case is itself an argument against defendant’s position that McKown’s conduct was not recognized or approved by it; and if defendant failed to rebut the inferences warranted by the facts, that was not the fault of the judge, who seems to have fairly submitted the case. • It is unfortunate for this defendant that its policy holder died when he had only paid two years’ premium on $20,000 insurance, but it is generally supposed that is a risk life insurance companies take. If policy holders all lived until the annual premiums equaled the amount of the policies there would be no risk assumed. We see nothing in any of the assignments of error warranting a reversal of the judgment; therefore it is affirmed.