Reed v. Union Central Life Insurance

After-stating the facts, MiNER, J., delivered the opinion of the court: The first question for consideration is whether or not after the plaintiff had obtained the application for insurance from Mr. Beck, and the defendant had accepted said application and issued the policy to Beck receiving his notes in payment of the first year’s premium, receiving payment of one note, whether the defendant before the maturity of any of the remaining notes could, by contract with Beck, purchase the surrender of the policy for a consideration of $500 cash, and the surrender of the two un-matured notes, without proof of fraud, or without an express waiver by the plaintiff, and thus deprive plaintiff of the commissions on the remainder of the premiums, under the contract providing that commissions should be paid upon the premiums which should be paid in cash and received by the defendant. The facts show that plaintiff had performed his part of the contract and obtained an application for insurance that was satisfactory to the defendant; that after full examination defendant accepted Beck’s application and delivered a policy to him, and gave its receipt in full payment of the first year’s premium. Having accepted the Beck notes, a legal obligation, as between the defendant and the plaintiff, rested upon the defendant, to collect the notes when they became due, and out of the proceeds thereof pay the agreed commission. This obligation can not be avoided under the contract by the claim that the company afterward learned that the risk was undesirable or that it •understood that Beck had been refused insurance in another company. It might forfeit the policy for fraud in — 306 — procuring it, for misstatements in tbe application, or for non-payment of tbe notes, but this course was not attempted. On the contrary the company recognized the binding force and legality of the policy by paying $500 in cash and surrendering the notes not yet due in order to purchase Beck’s rights therein and relieve itself from liability. The < ompany could not thus relieve itself from su h liability to the plaintiff for the commission earned by voluntarily placing beyond its power the right to collect the (ash on the unmatured notes because it had purchased the policy and in part consideration thereof had surrendered the notes out of which the commissions should have been paid. The notes were not duo. Having sold them to Beck, it is estopped from denying liability on the contract simply because it refused to colle t the cash on the notes as it should have done, or should have attempted to do, unless excused from that duty by the plaintiff. By receiving back the policy the defendant may have received a full equivalent for the notes. The contract does not provide that the defendant after having accepted the risk shall have the right to buy a surrender of the policy and thereby relieve itself from its duty to collect the notes in payment of the premiums. ' A principal who agrees that his agent shall receive a percentage of money or commissions to be paid upon a contract secured through such agent, for the benefit of both,- can not dispose of his own right to receive the fund, and thus deprive the agent of the reward for his services. Otherwise the principal might receive a full equivalent for the original fruits of the agent’s labor, and yet not pay him a dollar. The principal can not do this without the agent’s express consent, and in this case the evidence does not show that consent was given. The plaintiff was simply present when the agreement to — 307 — purchase the surrender of the policy and notes was made for the consideration specified. The agent had no power to oppose the purchase or surrender; nor was his assent thereto required. Under the contract he was required to perform such, other services as the company desired him to perform. So far as appears he may have gone with Waters as required by the contract. He was willing the company should do as it pleased, although he had previously discouraged it from taking up the policy, and there was nothing in his subsequent acts to justify a release of his rights, the nature 'of which under the contract and the terms of the policy, he was ignorant. Hix v. Edison Electric Light Co., 41 N. Y. Supp., 680; Bishop on Contracts, Sec. 690; Wolf v. Marsh, 54 Cal., 228. It is also insisted that the plaintiff waived his right to the commission, and therefore is not entitled to recover; that he is estopped by his conduct to insist upon his legal rights, and that the court erred in giving its instructions on these subjects to the jury. By the contract it is provided that the plaintiff shall not make, alter, or discharge any contract or waive forfeitures. Under the contract, Beck and the conrpany could deal with the policy as they pleased, without the consent of the plaintiff. The plaintiff, under the contract, had no right to interfere in such dealings and had no power to prevent the company from giving or bargaining away the results of his labor, but in doing so the company acted at its peril. Had the plaintiff objected to the purchase of the policy, it would not have availed him. Plaintiff states that he stated to defendant’s agent, Waters, that he objected to taking up the policy unless fraud was shown. In this he is disputed by the company’s agent. The jury found the facts against the company. On the question of waiver the court instructed the jury — 308 — that if tbe plaintiff waived his right under the contract he could not recover, and that such waiver was an affirmative defense, and the burden of showing it was on the defendant. The court further instructed the jury, as follows: “You are further instructed that waiver is the intentional relinquishment of a known right. In general, no man can be bound by a waiver of his rights unless it is made with full knowledge of the rights which he intended to waive. So, in this case, if you believe, from the evidence, that the plaintiff was ignorant of the fact that under his contract he was entitled to commissions on the balance of the first year’s premiums, provided the defendant purchased the surrender of the Beck policy, then he can not be found to have waived or relinquished his right to the commission. The fact that the plaintiff deemed the commission lost to him because of the act of the company in purchasing the surrender of the Beck policy, does not constitute a waiver or relinquishment of his right to the commission, unless you find that at the time or times he so expressed himself to the defendant, or its agents, he knew he had a right to insist upon payment of the commission, even though the company, for reasons of its own, bought the surrender of the Beck policy, and with such knowledge plaintiff then intentionally relinquished the right to the commission. “You are instructed that the defendant had no right to wantonly or arbitrarily purchase the surrender of said policy, and to surrender to said Beck his notes; but if the defendant company, after the issuance of the said policy to said Beck, believed it to be to its best interests to purchase from Beck the surrender of said policy by surrendering to said Beck said notes, then the defendant had the right to purchase the surrender of the said policy by the payment of $500 and returning to said Beck his — 309 — notes; and if you believe, from a preponderance of tbe evidence, the plaintiff was fully informed and cognizant of all the facts and circumstances attending the transaction between defendant and Beck, and that he, by his acts, declarations, or conduct, intentionally waived to the defendant his rights to receive commissions on the amount of said notes surrendered, and also that the plaintiff had full knowledge of his rights in this respect, then the plaintiff can not recover, and your verdict should be for the defendant.” The question of the plaintiff’s knowledge or ignorance in the matter is involved. If the plaintiff was ignorant of the fact that he was entitled to his commission at the time and after the defendant purchased the surrender of the policy, and did not intentionally waive his right therein after full knowledge, he was entitled to recover. This is so because a waiver is an intentional relinquishment of a known right, and there must be both knowledge of the existence of the right and an intention to relinquish it. The waiver, if any, was a question of intent on the part of the plaintiff. Knowledge of the rights he had, and an intention to waive such right should be made plainly to appear before a court or jury would, in such a case as this, be justified in declaring it. It is said that the plaintiff was bound to know the law, and that he must have known the facts. So far as the written contract alone was concerned, if not ambiguous or contradictory, this may be true; but when we consider the long course of dealing between the company and Beck, the company and St. Morris, and the company and Waters, concerning which plaintiff was largely uninformed; the company’s dealings with plaintiff in reference to the Beck policy, and the ambiguous character of the contract, it can not be said that the plain — 310 — tiff had full knowledge of all the facts, or of his rights that would follow such a complicated state of facts. , Indeed, the distinguished counsel representing the respective parties to the action, after a careful and critical review of the law and the evidence, do not agree as to what the facts are, what rights the contract bestows, or what the rights of the plaintiff are under the contract and evidence, as it is presented to the court. In Bennecke v. Conn. Mut. L. Ins. Co., 105 U. S., 355, it is said: “A waiver of a stipulation in an agreement, must, to be effectual, not only be made intentionally, but with knowledge of the circumstances. This is the rule when there is a direct and precise agreement to waive the stipulation. A fortiori is this the rule when there is no agreement either verbal or in writing to waive the stipulation, but where it is sought to deduce a waiver from the conduct of the party.” Montague v. Massey, 76 Va., 314; Shaw v. Spencer, 100 Mass., 382; Hoxie v. Home Ins. Co., 32 Conn., 40; Garesche v. Loebing, 48 S. W., 657; 96 Va., 649. The further facts are that it does not appear from the answer or from the testimony that the defendant was misled by the conduct of the plaintiff; or that it would have acted differently had the plaintiff asserted his legal right to the commission at the time of the purchase of the policy. It appears that St. Morris and the company were negotiating with reference to the cancellation of the policy for fraud in the application. Waters, under instructions of the company, cancelled the policy because it was undesirable. Plaintiff did not know what his rights were, but did not want the policy cancelled unless for fraud. The defendant afterward informed the plaintiff that no blame whatever was attributable to him or to the examining physicians in procuring the application, and that other companies considered the risk a good one. — 311 — All the facts connected with the assumed waiver or estoppel, plaintiff’s right to the commission under the contract, and the purchase of the policy by defendant, were sufficiently and properly submitted to the jury by the instructions quoted and others given by the court. Under the circumstances of this case we find no reversible error arising from the instructions of the court to the jury, nor do we find that the court erred in refusing to give the instructions requested by the defendant. In its defense the defendant offered in mitigation of damages to show that Beck was insolvent at the time the notes were surrendered. The testimony was objected to on the ground that it was immaterial, irrelevant, and incompetent, and on the ground that it was estopped by the voluntary sale of the notes before they became due, of interposing that defense. This testimony was rejected. We are of the opinion that there was no error committed in the ruling of the court. The defendant could have cancelled the policy for fraud, if shown. The policy would lapse and become invalid by its terms if the notes were not paid at maturity. But the defendant did not see fit to take this course. After it had accepted the notes in payment of a year’s premium, and after one of the notes had been paid, and before the balance of the notes became due, it voluntarily made a bargain with Beck to buy from him the policy in consideration of |500-, and the surrender of the remaining notes, without obtaining the plaintiff’s assent thereto. By selling 'the notes and buying the policy, the defendant allowed Beck credit for the value of the notes. The defendant voluntarily placed itself in a position whereby it had no power to collect the notes, as it was in duty bound to do, or endeavor to do, and therefore it can not now be heard to say that the maker was insolvent — 312 — when the notes were surrendered. Hix v. Edison Elec. Light Co., 41 N. Y. Supp., 680; Wolf v. Marsh, 54 Cal., 228. In addition to this, the defense of Beck’s insolvency sought to be interposed on the trial was new matter offered in mitigation of damages, was not pleaded, or in any manner suggested in the answer. The action was on a contract to recover plaintiff’s commissions from defendant, not from the maker of the notes, and if such a defense was admissible at all in such a case as this, it should have been set up in the answer. Sec. 2968, Rev. Stat., requires a statement of any new matter constituting a defense or counterclaim to be set up in the answer. McKyring v. Bull, 16 N. Y., 297; Morrill v. Irving Ins. Co., 33 N. Y., 443; Pom. Code Rem., Secs. 693, 694, 695; Foland v. Johnson, 16 Abb. Pr., 235; Gilson v. Price, 18 Nev., 118; Babb v. McKey, 10 Wis., 314; 5 Enc. PI. & Pr., 774; 1 Suth. on Damages, Secs. 165, 166; Fenstermaker v. Tribune Pub. Co., 12 Utah, 532; 1 Enc. Pl. & Pr., 830; Piercy v. Sabin, 70 Am. Dec., 692; Williams v. Hill, 72 N. Y., 36. Upon the whole record we find that the instructions given fully and fairly covered the issues in the case. The non-suit was properly denied, and no reversible error appears in the record. The judgment of the district court is affirmed, with costs. BaseiN, J., concurs. BaRtch, C. J., dissents.