National Life & Accident Ins. v. Holbrook

HOLMES, Circuit Judge. This appeal is from a judgment for the beneficiary in a policy of insurance upon the life of W. L. Holbrook, husband of appellee. The contention of the Company is that the policy had not been delivered and accepted, as required by its terms, during the life of insured. The application for the policy contained a provision to be filled out when accompanied by a deposit of premium. It recited the deposit, and that the applicant, who held the receipt of the agent for the same, assented to the terms of said receipt. No premium was paid when the application was made, and the blank space was filled in as follows: “C. O. D. to cover.” Attached to the application was a form of receipt to he detached and used by the agent receiving a deposit for premium. Since no premium was paid, this receipt was not used, but remained attached to the application until after its delivery to appellant. The application contained a recitation that the proposed policy should not become effective until the policy had been issued, the first premium paid and accepted, and the policy delivered to and accepted by the insured in his lifetime and while in good health, except as provided in the receipt above mentioned. After the- application, with the receipt attached, had been turned in to the district office of appellant, but before it received consideration at its home office, the insured paid in full the first annual premium on the policy. This payment was accepted by appellant as a deposit, and treated in the same manner as if it had accompanied the application. The receipt provided as follows : “No insurance is in force on such application unless and until a policy has been issued thereon and delivered in accordance with the terms of such application, except that when such deposit is equal to the full — 782 — premium on the policy applied for and such application is approved at the Home Office of the Company for the Class, Plan and Amount of insurance and at the rate of Premiums as so applied for, then, without affecting the issue date and anniversaries as set forth in the policy, the amount of insurance applied for will' be in force from the date of this receipt, but no obligation is assumed by the Company unless and until such application is so approved. “If a policy is offered by the Company that is not in all respects the same as the policy applied for, such policy will not take effect unless and until it -has been accepted by the applicant and the additional premium therefor, if any, has actually been paid to and accepted by the Company during the lifetime of the applicant.” Appellant declined to issue the policy applied for, but issued one at a higher rate, providing for the same benefits and protection, and • transmitted the same to its district agent, who received it on Saturday morning. The policy issued provided for payment on a semi-annual basis, and appellant had on deposit more than enough to pay the first semi-annual premium. The agent notified the insured of the arrival of the policy, and these two met at the office of appellant on Sunday morning, at which time the agent attempted to obtain the policy for delivery, but was prevented from doing so because the safe in which the policy had been placed was locked and the persons able to open it were not available. On the trial of the case, the agent testified that he had explained to insured that the premium would be at a higher rate, but that the benefits and protection were the same as applied for; that, while the insured did not expressly say that he would accept the policy, he did use language which led to the belief, that he would; that he gave his assent to the change in premium and method of payment; and that, on learning that it would be impossible to get the policy at that time, said, “Well, we will just have to wait,” and asked the agent to bring the policy out to him. This testimony is corroborated and not denied or questioned. After the failure actually to deliver the policy on Sunday, the agent was out of the city, and nothing further was done until the following Thursday afternoon. At that time,.he called at the residence of the insured with the policy in his possession. He was informed that insured was sick, so went away'without seeing him: He called again on Saturday to deliver the policy, and found insured sick in bed, so did nothing, because the rules of the Company forbid delivery when the insured is in “unsound health.” On this occasion, the insured asked about the policy, and was assured by the. agent that everything was all right The agent next saw insured at the hospital late in the following week. Learning that the illness was serious, he returned the policy to the district office, which, in turn, returned it to the home office of appellant. The latter cancelled the policy and mailed its check for the amount of the premium deposit to the insured. It arrived after his death and was returned by appellee. On the trial, appellant relied upon its motion for an instructed verdict. The motion was overruled, and the cause was submitted to the jury. Appellant contends that the receipt attached to the application, and referred to therein, does not affect the policy and application, because not executed by the agent and because not attached to the policy, as required by the Texas statute. The view that execution and delivery of the receipt were necessary to make it a part of the record of the negotiations between the parties would render meaningless the exception contained in the provision of the application with reference to delivery of the policy. The reference there is clear and explicit that the exception made in the,receipt is to apply. It is not made dependent upon the signing and. delivery of the receipt. The application effectively incorporates the receipt by reference, and adopts the provisions thereof. Acceptance of the application by appellant included the acceptance of the exception recited therein and set out in the receipt. The statute relied upon is Article SOSO of the Revised Civil Statutes of Texas, which provides: “Every policy of insurance issued or delivered within this State by any life insurance company doing business within this State, shall contain the entire contract between the parties, and the application therefor may be made a part thereof.” In applying this statute, a distinction must be drawn between the policy itself and the negotiations leading thereto. The statute distinguishes between the two, providing that the policy shall contain the entire contract and that the application may be incorporated therein. Thus it was contemplated that the prior negotiations might or might not be integrated into the final agreement. Legal prerequisites being satisfied, a contract may come into being on — 783 — the acceptance of an application. Such a contract would not be a policy under the above statute, but it would be a contract of insurance. In determining whether or not the applicant was entitled to insurance, the provisions of the application and its acceptance would control. In determining whether or not certain contingencies were insured against and the protection afforded therefor, the provisions of the policy would control. Here, we are not concerned with the provisions of the policy, the right to recover being conceded if the policy went into effect prior to the death of the insured. Under these circumstances, the statute has no application. We think this is entirely in accord with the case of Jefferson Standard Life Ins. Co. v. Baker, Tex.Civ.App., 260 S.W. 223, relied upon by appellant. In that case, a premium receipt, not attached to the policy, was relied upon to fix the anniversary date of the insurance. By its very nature, insurance is a contract relating to time, and, if the period for which the protection is to exist is not determined in some way, none is afforded. Any provision limiting or fixing the period is a part of the contract of insurance, and, under the above statute, would not be valid unless made in the policy. Thus we find the parties agreeing in the application and its acceptance that no insurance would be in force thereon without delivery as recited therein, except that, when such deposit is equal to the full first premium on the policy applied for, and such application is approved at the home office of the Company for the class, plan, and amount of insurance, and at the rate of premiums applied for, then, without affecting the issue date and anniversaries as set forth in the policy, the amount of insurance applied for will be in force from the date of the receipt. Had the policy been issued in the form applied for, the protection would have been afforded from the date of the application, the issue date and anniversaries set forth in the policy notwithstanding. The' only difficulty arising on the death of the insured was the condition imposed in the last paragraph of the receipt. As applicable to this case, the provision is as follows: “If a policy is offered by the Company that is not in all respects the same as the policy applied for, ¡such policy will not take effect unless and until it has been accepted by the applicant.” It is noted that the provisions requiring delivery of the policy, as contained earlier in the receipt, in the application, and in the policy, are omitted. Thus, while delivery and acceptance were treated as related and connected transactions and occurrences in the other provisions, here acceptance alone is required. In such case, acceptance is construed to mean assent, acquiescence, or agreement to the terms and conditions of the policy, and specifically in the present case to the change made in the application. The authorities are uniform on the proposition that whether or not a policy of insurance has been accepted is a question of fact. The district court so held in, denying the motion for an instructed verdict. Upon all of the evidence, an issue of fact was presented as to the meaning to be attributed to the words and conduct of the insured when the agent made his attempt to deliver the policy. If Holbrook agreed to the write-up in premium, he accepted the policy. Since this was a question upon which reasonable men might differ, the court appropriately submitted the cause to the jury. Cf. Amarillo National Life Ins. Co. v. Brown, Tex.Civ.App., 166 S.W. 658, and cases cited. This renders it unnecessary to consider the question of whether manual tradition was necessary for delivery, or if it could be accomplished by an intention, coupled with appropriate conduct, to have the agent retain possession of the policy for the insured until it came manually into his possession. The judgment of the district court is affirmed.