Rhodus v. Kansas City Life Insurance

ELLISON, J. Defendant is a life insurance company located at Kansas City, Missouri, and it had an agent named Galvin, who solicited insurance at different places in the state, took applications and notes for first year’s premiums, collected the notes and sometimes delivered policies after they were issued. Defendant also had a local medical examiner at Lawson, a town about fifty miles from Kansas City. Plaintiff, claiming that defendant made a binding verbal contract of life insurance oh the life of her deceased husband, Charles O. Rhodus, in her favor, for five thousand dollars, brought this action for that sum and recovered judgment in the trial court. The action is based on the following facts: On the 6th of January, 1909, at Lawson, Rhodus made written application to defendant, through Galvin, for the insurance claimed, payable to his wife at his death, and on the same day was examined by the local medical examiner at that place. The examination was written, made a part of the application and transmitted to defendant at Kansas City, Defendant insists that it did not receive the application until something more than a month, February 9th, thereafter; but it may be said from the whole record that there was evidence tending to show that it was received two days after its date; viz., January 8th, But, be that as it may. on the day the application was made, Rhodus gave his note to Galvin for $173.80 as the first year’s premium, and the latter sold it to a bank in a nearby town, but by some means got it back again. Just one month after the application and note were taken, February 6th, Rhodus died. Defendant, at its'office in Kansas City, did not know of his death for five days. In the interval there was some [283] degree of activity by the deceased’s brothers, seemingly aided by defendant’s agent. One of the brothers telephoned to the agent, who at the time seems to have been in Kansas City, telling him that he would like to get the premium note given by his deceased brother, and that if he, the agent, would go to a certain commission company in that city he could get the money due on the note. The agent collected the money from the company, and keeping out the larger part as his commission on the insurance, remitted the balance to the defendant by check on February 8th, which defendant, not knowing of Rhodus’ death, accepted, but which it retained after learning of the death and still retains. The application made by Rhodus was the usual one, embracing questions as to his age, health, bodily condition, other insurance, whether ever rejected by other companies, etc. The entire face of it showing that it was merely asking the company to insure him, and not purporting in any way to be an insurance. It also contained the following clause: “Should my application be approved and a policy of insurance issued, such policy Avith this application shall be and constitute the contract betAveen the parties hereto. It is expressly agreed and understood upon my part that this contract is to be null and void and of no binding force whatever, unless my application is received and accepted at the home office of the company, and approved by the medical director, and the policy of insurance is delivered to me, or my beneficiary, during my lifetime and while in good 'health.” The undisputed fact appeared that at the time of Rhodus’ death the application had not been acted upon; it was neither approved nor rejected by the company, and had not been seen by the medical director and no policy was ever issued by the company. On the foregoing state of facts, defendant insists that a demurrer to the evidence should have been sustained by the trial court. [284] An application to be insured as tbe word signifies, in that connection, is no more than a proposition to the insurance company, and necessarily it must be first accepted before there can be a meeting of minds so as to form a binding contract. [McCully v. Ins. Co., 18 West Va. 782; McMaster v. Ins. Co., 99 Fed. 856, 866; Kohen v. Ins. Co., 28 Fed. 705.] And'where this written proposal states the time and manner for the proposition to ripen into a completed contract, as in this case, those conditions must transpire before the contract takes effect. [Kilcullen v. Ins. Co., 108 Mo. App. 61; McCully v. Ins. Co., supra; Noyes v. Ins. Co., 1 Mo. App. 584; Farmers & Merchants Ins. Co. v. Graham, 50 Neb. 818; Chamberlain v. Ins. Co., 109 Wis. 4.] In this case the applicant himself made the binding statement in his application that there should be no contract of insurance until his application was accepted at the home office, approved by the medical director and a policy delivered during his lifetime. The evidence makes clear that neither of these conditions was complied with and undoubtedly there was no contract of insurance, unless they were waived by the company. It is undoubtedly true that agents soliciting life insurance and collecting the premium, are not considered as authorized to make binding contracts of insurance. [Bliss on Life Ins., sec. 288.] The approval of an application, evidenced and followed by the delivery of a policy, is generally, though not universally, the consummation of a valid contract of life insurance, and so it is understood. Delivery of the policy during the life of the assured is a “condition precedent in order to complete” the contract. [Cravens v. Ins. Co., 148 Mo. 583, 599; Horton v. Ins. Co., 151 Mo. 604, 620; Kilcullen v. Ins. Co., supra.] Were these conditions, as emphasized by the above quoted provision in the application, waived? We do not find any evidence in the record that the defendant company ever authorized its agent Gaivin to do [285] more than solicit insurance (taking applications therefor), collect the first year’s premium (or take a note for it), and sometimes, when an application was approved, to deliver the policy which it would enclose to him for that purpose. There being no evidence that he had authority to sign, countersign or issue policies, this was not.authority to contract for insurance; nor do the cases of King v. Ins. Co., 195 Mo. 290, or Springfield S. L. Co. v. Ins. Co., 151 Mo. 90, or Nickell v. Ins. Co., 144 Mo. 420, lend any countenance to such proposition. The evidence in this case as to the acts of the agent, do not put it within that class of cases where a fire insurance agent makes the contract, writes or fills out a policy in accordance therewith, and delivers it to the assured, as in Bush v. Ins. Co., 85 Mo. App. 155. But Galvin, though unauthorized, yet assuming to act for the company, did several things which can only mean that he recognized an existing, completed contract of insurance. He received payment of the note through the agency .of the deceased’s brother; or, at least, he negotiated it and received the money upon it, after he knew of the-death. He retained that part of it which Avas due him as commission for securing the insurance, and paid to defendant the balance, which it received and has kept with full knowledge of all the facts.. It is true that “there can be no valid insurance upon the life of one already dead at- the time when the contract becomes complete.” [1 Cooley’s Briefs, 113.] But the evidence in this case does not show the negotiation and completion of a contract to insure the life of one Avho was dead. In other words, this case does not present an instance of a proposition to insure the life of a dead man. This is a case where the proposition for insurance was made by a live man, in good health, to an agent authorized to receive it and to transmit it to the. defendant company. It was then for the approval or rejection of the company. As matters stood contractually, the company could have rejected it, and more [286] than that, it could have relied upon the provision which Ave have quoted from the application, that there was to he no contract until a policy was issued and delivered. But the company did not choose to stand on these conditions. It waived them by accepting the premium which Avas paid for insurance, with full knowledge of what the payment was for and of the assured’s death. By that act it adopted the agent’s acts as consummating a contract of insurance without a formal approval of the application by the medical director, or the issuance of a policy. We have noticed the objections made to instructions given for the plaintiff, though we need not consider them, since the undisputed evidence—the conceded facts—show that a case was made against the defendant. Hence we affirm the judgment. All concur.