Aetna Insurance v. Short

Hart, J., (after stating the facts). (1-2) At common law, contracts of insurance were not required to be in writing originally, and in the absence of any statutory prohibition a parol contract of that character will be valid. This is conceded to be the law by counsel for the defendant. The record, however, shows that if any verbal agreement was made, it was entered into between the parties a few days before the old policy expired. It is the contention of counsel for defendant that a parol contract of insurance, ip order to be enforceable, must not be executory but must take effect immediately on the making of the agreement. We do not deem it necessary to decide this question. The agent of - the insurance company was authorized to issue policies and to take renewals thereof. He was not required to receive the premium in advance as a condition precedent to making a parol contract to renew the policy, but had the authority to make the renewal on a credit. Under our own decisions this authorized him to make a preliminary contract, binding upon the defendant, to be consummated by filling out and delivering -a policy pursuant thereto. King v. Cox, 63 Ark. 204; Phoenix Ins. Co. v. Hale, 67 Ark. 433; Cooksey v. Mut. L. Ins. Co., 73 Ark. 117; Brickey v. Continental Gin Co., 113 Ark. 15. In the case of King v. Cox, supra, the court said: “An oral contract for insurance is not within the statute of frauds, and if supported by a valuable consideration, and free from, fraud, and made by competent parties, is binding, though the premium be not paid at the time, if credit be given, or it appears from the circumstances and the situation of the parties that payment of the premium at the time was not exacted.” In the case of McCabe v. The Aetna Insurance Co., 47 L. R. A. 641, the court said that it is well settled that an insurance company can, by a preliminary parol contract, bind itself to issue or to renew a- policy in the future, and further held that prepayment of the premium for .a renewal is not essential to the validity of such preliminary agreement to renew. Many cases are cited which sustain the opinion, and among them is the case of King v. Cox, 63 Ark. 204. (3-4) It is next contended that the court erred in refusing to instruct the jury that the burden of proving that its agent renewed the insurance was upon the plaintiff and that before the jury could find for the plaintiff on that issue, the evidence must be clear and convincing. The court did instruct the jury that the burden was upon the plaintiff to establish the parol contract of renewal and that the plaintiff must establish that by a preponderance of the evidence. Counsel for the defendant contended, however, that because such contracts are rarely made, the proof of such oral contract must be clear and convincing. We do not agree with them in that contention, however. As we have already seen, there is a distinction between an oral contract to renew a policy and an oral contract of insurance to take effect in the future. The alleged agreement in the instant case was not for new or original insurance, beginning then for the first time, but it was for a renewal of the old policy to take effect from the date of its expiration. A renewal of a policy is, unless otherwise expressed, on the same terms and conditions as were contained in the original policy. King v. Cox, 63 Ark. 204. The renewal of the policy in question seems to have been fully authorized according to the testimony of the plaintiff, which was believed by the' jury. The agent does not appear to have required .any new warranty or representation other than those which were made when the policy was issued. The agent must have acted upon this, unless he acted upon the knowledge which he acquired from a personal view of the stock of goods at the time he agreed to the renewal. It will be remembered that the agent was in the store when the agreement was made. The terms of the policy are neither enlarged, restricted or changed by the renewal but the rights of both parties, no matter how often a policy of insurance may have been renewed, are still bound by the provisions of the policy as originally issued. Witherell v. Maine Insurance Company, 49 Maine, 200; Aurora Fire & Marine Ins. Co. v. Kranich, 36 Mich. 289; Hartford Fire Ins. Co. v. Walsh, 54 Ill. 164. Therefore, the court did not err in refusing to instruct the jury that the renewal contract must be established by clear and convincing testimony and that the burden was upon the plaintiff to establish that fact by clear preponderance of the evidence. (5) The court allowed an attorney’s fee of $200 and the 12 per cent, penalty provided by the statute and the action of the court in this respect is assigned as error by counsel for the defendant. We agree with them in this contention. The act in question provides that in all eases where loss occurs and the insurance company liable therefor shall fail to pay the same within the time specified in the policy, etc., that a reasonable attorney’s fee, together with 12 per cent, damages upon the amount of the loss shall be taxed as part of the costs. Acts of 1905, pages 307-8. The statute in terms provides that a written policy must be issued before the attorney’s fee and 12 per cent, penalty can be taxed as costs against the insurance company. Here no policy of insurance was issued by the company. There was only a preliminary contract for renewal which had not been consummated by filling out and delivering a policy to the plaintiff. Therefore, the facts do not bring the plaintiff within the terms of the statute, and he can not avail himseíf of its provisions. The judgment for the amount of the insurance sued for will be affirmed and the judgment for the 12 per cent, penalty and attorney’s fees will be reversed and dismissed.