Kaley v. Northwestern Mutual Life Insurance

Letton, J. Both parties rely upon the law of Wisconsin. Plaintiff cites the case of Timlin v. Equitable Life Assurance Society, 141 Wis. 276. In this case the evidence established that the policy with the statement attached thereto was issued at the home office' of the company. In the heading of- the paper is found: “These estimates are the authorized figures of,the society.” It was held under the evidence that the statement constituted a part of the contract; that the amount of the life annuity which was in controversy was definitely fixed in the statement, and that the company was liable for the amount thus specified. Defendant relies upon the case of Tourtellotte v. New York Life Ins. Co., 155 Wis. 455. In this case the jury found that an unsigned statement inclosed with the policy, but not attached thereto, allowing certain options, the first of which was to withdraw the cash value. of $8,160, was a part of the contract-of insurance, and that plaintiff was entitled to withdraw this amount. The supreme court said: “The question raised by the appeal is: Does the statement, exhibit 2, treating it as-a part of the contract of insurance, change the policy so as to make it guarantee or promise a cash value of $8,160 at maturity? The trial court held that it did not. Was [139] such ruling correct?' The statement purports to do nothing hut illustrate or explain the contract. It contains no words of promise or guaranty.” It is also said the statement in the Timlin case contained “words of promise as to the amount to he paid, while here we have language which purports only to illustrate the policy, and which states the source of the figures upon which the illustration is based.” It was held that there was no liability by reason, of this statement for more than the actual surplus and reserve. The opinion cites Untermyer v. Mutual Life Ins. Co., 128 App. Div. (N. Y.) 615, Langdon v. Northwestern Mutual Life Ins. Co., 199 N. Y. 188, and Grange v. Penn Mutual Life Ins. Co., 235 Pa. St. 320, which support the conclusion reached. Of the two Wisconsin decisions, the facts in the Tourtellotte case are more nearly like the facts in this case. It is undisputed that the blank form of “estimate” was prepared and procured to be printed by J. H. Mockett & Son in conjunction with another agent of the company, and that no officer of the company was aware of its existence or use until plaintiff sought to exercise the option. There is testimony that the estimate was taken from a book issued by a private individual and sold to agents generally and used to the knowledge of the company by its soliciting agents, but there is no proof that the estimates shown in the book or set forth in the statement were not- based on past experience, or that there was a wilful attempt to mislead and defraud. Plaintiff is a man of intelligence and education, and while he testifies that he was then not aware of the meaning of the word “tontine” or what the tontine plan of insurance was, we.must conclude that he was aware of the meaning of the word “estimate,” which is a word in common use. The statement is entitled “A Conservative Estimate of a Semitontine Policy.” This is not the language of contract, but merely of expectation. The language used in the “estimate:” “At the expiration of 20 years you [140] can choose from the following options: First Option. Surrender policy and take your entire share of its earnings in cash, namely: Guaranteed reserve — $1,377.90. Surplus — $1,766.17”—shows that it was the amount of the reserve that was guaranteed, and not the amount of surplus. This of itself was significant. The policy stated the contract and the options which could be exercised under it. There was indorsed upon it a statement that agents had no power to make, alter, or discharge contracts. It provided in what manner the surplus which was to be divided at the end of 20 years should be accumulated, but made no attempt to specify its amount.' Manifestly this would depend upon so many circumstances as to be impossible of accurate prediction. The number of policyholders in the tontine class, the number of lapses, the future condition of the money market which would determine the rate of interest which investments would draw were all uncertain factors. Legislation limiting forfeitures, increasing the rate of taxation, or changing the method of assessment, might reduce materially the funds which would otherwise fall into the surplus. The “estimate” fixes and liquidates matters which are left indefinite in the policy, and is so far inconsistent with its provisions. The application shows that plaintiff affirmatively stated that he agreed and understood “that no statements, representations or information made or given by or to the person soliciting or taking this application for a policy, or to any other person, shall be binding on the company, or in any manner affect its rights, unless such statements, representations or information, be reduced to writing and presented to the officers of the company at the home office in this application.” This was no doubt designed to avoid just such' controversies. The desire of an agent for commissions may tempt him to make promises which his principal is unable or unwilling to fulfil, hence the necessity of such a provision. Only such statements [141] as have been brought to the company’s attention in writing in the application are authorized by it, and can be relied upon. Ordinarily the acts of an agent within the scope of his authority Will bind the principal; but, where there is an express limitation of this brought to the knowledge of the person dealing with the agent, no act of the agent beyond the limitation can bind the principal. Life insurance is based upon mathematical principles. Its plans of insurance, and the rates and premium payments to be made are prepared by actuaries and based upon mortality experiences. The safety and permanence of such associations and the welfare oí their policyholders demand that their contracts may not be held subject to be changed at will by a mere agent whose limited powers have been brought to the knowledge of the applicant. Plaintiff has called to our attention the case of Forman v. Mutual Life Ins. Co., 173 Ky. 547. The facts in that case are not the same as in this; but, even if identical, we are of the opinion that the cases cited by the Wisconsin court, supra, and the following eases from other jurisdictions are more to be preferred as persuasive authority. Donoho v. Equitable Life Assurance Society, 22 Tex. Civ. App. 192; Truly v. Mutual Life Ins. Co., 108 Miss. 453 (this case distinguishes a former case in that state cited by plaintiff); O’Brien v. Equitable Life Assurance Society, 173 Mich. 432; Williams v. New Yorh Life Ins. Co., 122 Md. 141. If the evidence had established that the estimates were not based upon former experiences, were beyond reason and fraudulent, and that the insurance company had knowledge of the use of such false and fraudulent estimates by their agents, then the law would afford an appropriate remedy to one injured' or defrauded. As the ease stands, the judgment of the district court is Affirmed. Sedgwick, J., not sitting.