Stearns v. Merchants' Life & Casualty Co.

Bruce, Ch. L. This is an action to recover on an accident insurance policy, and the appeal is by the plaintiff from a judgment entered against him upon a directed verdict. [528] On October 2, 1911, the plaintiff paid a policy fee and premium to a duly authorized agent of the company, and obtained the following receipt: Deceived of Arthur Stearns an application for a policy in the Merchant’s Life & Casualty Company, and the sum of $5 being payment in advance to carry policy so applied for to December 1, 1911. Signed, F. P. Francis. It is expressly agreed, that should said company decline to issue a policy herein in twenty days from date hereof, the amount of payment actually made shall be returned to said applicant by the person signing this receipt. Applicants will please notify the company at Minneapolis, Minnesota, should the policy not be received in ten days from the date hereof. At the same time that the money was paid to the agent and the receipt obtained, an application was signed by the insured and delivered to the agent, which contained the following language: “This application shall not be binding upon the company until accepted at the home office, and the policy shall not be in force until actually issued and the policy fee and premium paid.” According to the rules of the company this first premium was to be paid to the agent and retained by him as a commission.. It at no time was repaid or offered to be repaid to the plaintiff. The application, for some reason or other, was not received at the home office of the company until October 31, 1911. The accident to the plaintiff took place on October 28, 1911. On October 31st the policy was issued and mailed directly to the plaintiff, the general office not at that time having any knowledge of the prior accident. It also appears that on January 12, 1912, the company received $3 additional premium from the plaintiff, Stearns, being the premium to March 1, 1912, and receipted therefor, and as far as the record shows has not returned or offered to return the same. The preliminary notice of disability was recovered on November % 1911. [529] The verdict for the defendant was directed on the theory that the accident occurred before the policy was issued. The receipt acknowledged that the sum of $5 was a “payment in advance to carry the policy so applied for to December 1, 1911. It “expressly agreed that, should said company decline to issue a policy herein in twenty days from date hereof, the amount of payment actually made shall be returned to said applicant by the person signing this receipt.” It is true that it also contained a request in the form that “applicants will please notify the company at Minneapolis, Minnesota, should the policy not be received in ten days from date hereof;” but this was a request, and not a condition. It is also true that it contained a provision that “this application shall not be binding upon the company until accepted at the home office, and that the policy shall not be in force until actually issued and the policy fee and premium paid;” but the money was retained, the application was approved, the policy was mailed to and received by the plaintiff, and the refusal to pay was not based on any defect in the application or any fault of the insurer. The contract in short to any fair-minded man must have been, and was, that the company had twenty days in which to pass upon the application and in which to return the money if it declined to accept the risk; and that, if it did not act upon this option, the insurance would be binding. In the eyes of the law, therefore, a contract of insurance existed on the terms of the application, and the policy contracted for, whether the policy was actually and physically issued or not. The receipt was positive, to the effect that the $5 premium was received as “payment in advance to cany policy so applied for to December 1, 1911; and the options were options for the benefit of the company, and not of the insured. It could not delay the matter for twenty days and keep the money, and then repudiate the contract. This being the case, there was, as we have before said, an implied contract of insurance upon the terms and conditions of the application and the policy; and it is immaterial whether the complaint was based upon a contract for insurance or an actual insurance contract. The policy in short was, to all intents and purposes, issued. The clause of the complaint, therefore, is sufficiently sustained by the proof, which alleges: “That on the 2d day of October, 1911, for an agreed payment [530] which was then and there made to the defendant by the plaintiff, the said defendant did thereafter issue to the plaintiff a policy on the life and health of the plaintiff, and did deliver the same to him, etc.” Western Assur. Co. v. McAlpin, 23 Ind. App. 220, 77 Am. St. Rep. 423, 55 N. E. 119. It is true that some authorities seem to hold that the action in a case such as that which is before us should be based on the theory of the negligence of the agent in not transmitting the application to the head office of the company within the twenty days’ period, but we can see no real distinctions. All of these cases hold the company, as well as the agents, liable, and base the liability of the company on the terms and conditions of the policy which should have been issued. The plaintiff in short is allowed to recover for his losses sustained under the proposed policy, and not merely for his premium or his loss of time. As the supreme court of Kansas has so aptly said, the agent “was merely the arm of the defendant; the obligation resting on him was the obligation of the defendant.” Boyer v. State Farmers’ Mut. Hail Ins. Co. 86 Kan. 442, 40 L.R.A.(N.S.) 164, 121 Pac. 329, Ann. Cas. 1915A, 671; Pfiester v. Missionary State L. Ins. Co. 85 Kan. 97, 116 Pac. 245. It is to be remembered in the case at bar that the company actually accepted the risk and issued the policy, so there can be no claim that the risk was in any measure undesirable or the applications inadequate. It is also to be remembered that in such cases the agent is the agent of the company, and not of the insurer; and that the company, therefore, is chargeable with his negligence in failing to forward the application and to report the payment of the premium within the twenty days. Duffie v. Bankers’ Life Asso. 160 Iowa, 19, 46 L.R.A.(N.S.) 25, 139 N. W. 1087; Boyer v. State Farmers’ Mut. Hail Ins. Co. supra. It is also to be remembered that, even after the twenty days had passed, and after the notice of the accident, the company accepted another premium of $3-thereon. It in short accepted the risk, and that acceptance at least dated back to the last day of the twenty days’ period. The judgment of the County Court is reversed and a new trial is. ordered.