Illinois Bankers' Life Ass'n v. Mann

Smith, J., (after stating the facts). Is the appellant company liable in any event for the statutory penalty and-attorney’s fee? The showing is made that appellant company is a mutual company and does business as such, but it was not shown to be a fraternal company. In the recent case of Indiana Lumbermen’s Mutual Ins. Co. v. Meyers Stave & Mfg. Co., ante p. 199, we said: “It will be observed that the penalty statute applies in the broadest terms to suits to recover for losses by ‘fire, life, health, or accident insurance,’ but in the Anderson case, supra, we held that fraternal benefit societies were exempt from that provision, for the reason that the statute Kirby’s Digest, § 4352, as amended by act of March 28, 1917 (Crawford & Moses’ Digest, 6068 et seq.), authorizing them to do business, exempted them from the general operation of the insurance law, but the statute containing those exemptions related only to fraternal societies paying death benefits, and did not relate to fire insurance. . It follows therefore that appellant company is liable for penalty under tbe same terms as other fire insurance companies are liable therefor.” The case of United Assurance Assn. v. Frederick, 130 Ark. 12, is cited by appellant as authority for its claim of exemption from liability for the penalty and attorney’s fee. We held in that case that the insurance company was not liable for the penalty and attorney’s fee upon the assumption that it was similar in its operation to the Knights of Maccabees, which was held not liable for penalty and attorney’s fee in the case of Knights of Maccabees v. Anderson, 104 Ark. 417. By section 6155, C. & M. Digest, it is provided that “in all cases where loss occurs, and the fire, life, health, or accident insurance company liable therefor shall fail to pay the same within the time specified in'the policy, after demand made therefor, ’ ’ the company shall be liable for a penalty and an attorney’s fee. This apparently includes all insurance companies, and does include all companies except those exempted by other legislation from the operation of that section, and those are the companies included in § 4352, Kirby’s Digest, as amended by act of March 28, 1917, C. & M. Digest, § 6068, et seq. Indiana Lumbermen’s Mutual Ins. Co. v. Meyer Stave & Mfg. Co., supra. As appellant does not show itself to be a fraternal society paying death benefits, it is liable for the penalty and attorney’s fee in a proper case. Is appellant liable, under the facts stated in the first appeal, for the penalty and attorney’s fee? We answer this question in the negative, for the reason that the beneficiary in that policy demanded a sum in excess of a thousand dollars, the face of the pdlicy, and accepted in satisfaction of his demand a sum less than the amount demanded. The premium paid by the insured may have entitled his beneficiary to a sum in excess of a thousand dollars, but that fact has not been adjudicated. Upon the contrary, the judgment is for the face of the policy only, and this sum was tendered before suit. The penalty is imposed to require insurance companies to pay promptly, the sums for which they are liable. It was not intended to require insurance companies to pay anything in excess of their just liability. .So that the action of the beneficiary here in refusing to accept the face of the policy, and of demanding a sum in excess of the amount for which judgment was rendered, absolved the company from liability for the penalty and attorney’s fee, and the part of the judgment of the court awarding penalty and attorney’s fee is-reversed, and the suit therefor dismissed. Simons v. American Ry. Exp. Co., 147 Ark. 339. In. the second appeal it is insisted that an excessive attorney’s fee was allowed. As we are reversing that judgment also upon another ground, we do not feel called upon to decide what a proper attorney’s fee would be. But if there should be a recovery in that case upon the remand of the cause, the court may look to the opinion of this court in the case of Indiana Lumbermen’s Mutual Ins. Co. v. Meyers Stave & Mfg. Co., supra, for a proper basis upon which to fix an attorney’s fee. In the suit on the second policy the plaintiff was permitted to prove by Dr. McGuire, over the objection of the. defendant, that he (Dr. McGuire) had examined the insured, and had mailed the application and medical examination to appellant company, and that the papers which he mailed showed that the insured’s wife had died-of consumption, and then admitted testimony tending to show that. the company did receive these papers, thus bringing notice to the company that the insured’s wife had died of consumption. The court permitted J. R. Meriwether, the soliciting agent of the company,- to testify that he saw a letter from the company addressed to Dr. Cohn, acknowledging receipt of the papers sent in by Dr. McGuire. This testimony was objected to on the ground that the loss of the> application and the medical examination and the letter to ■ Dr. Cohn was not proved. The objection to this testimony is answered by saying that it was competent for-the plaintiff to prove, if he conld do so, that the insurance company knew the facts in regard to the alleged false answer, for the purpose of showing a waiver of the warranty in that respect; and as to the failure to produce the originals of the writings referred to, it is pointed out that none of them were or had been in plaintiff’s possession. The second policy issued on an application taken by Ira Meriwether, a brother of J. E. Meriwether, and it is admitted that Ira Meriwether was not an agent for the company, and that in taking the application he acted for his brother, J. E. Meriwether; and it was also shown that no one connected with the insurance company except J. E. Meriwether had knowledge of that fact. Dr. McGuire conducted the first medical examination for the policy sued on in the second suit, and, on account of some- delay, Dr-. Cohn also examined the applicant. The examination sent in by Dr. Cohn answered the question about insured’s association with consumptive persons in the negative, and the plaintiff proved by Ira Meriwether that he was present when this examination was made, and that he heard the questions propounded by Dr. Cohn, and that he was surprised -when no question was asked about the insured having associated with consumptive persons, but that question was not asked, and the insured -gave no answer thereto. To charge the insurance company with responsibility for this knowledge of Ira Meriwether, an instruction numbered 1 was given, which told the jury that the person soliciting the insurance and the examining physician were both the agents of the insurance company, and that information possessed by either of them would be imputed to the company. •This was a correct instruction so far as it related to thé examining physician, but it was erroneous -in so far as it related to the knowledge of Ira Meriwether, for1 the reason that, under the undisputed evidence," Ira Meriwether' was not the agent of the- company, and his knowledge could not therefore be imputed to the company; It is true he took the application, but it is not shown that the company ever knew that fact. He took it in the name of his brother, and the company cannot be held to have ratified his action in doing- so, for the reason that it did not know him in the transaction. The doctrine that an insurance company becomes bound upon the acceptance of an application for insurance from an unauthorized agent is not applicable here. The question is whether the company is chargeable witli notice of the falsity of the answer to the- question in-the application because Ira Meriwether was present when the examination occurred and knew that a false answer was written down, without the knowledge of the applicant for the insurance. We answer that the company was not so chargeable, because, as we have said, Ira Meriwether was not its agent, and it did not know he had assumed to act for it. 21 E. O. L. 840. For the error in giving- instruction numbered 1 the judgment is reversed, and the cause remanded for a new trial.