82 Pa. 46 (Pa. 1876), American Life Ins. & Trust Co. v. Shultz

Citation:82 Pa. 46
Opinion Judge:Mr. Justice PAXSON
Party Name:The American Life Insurance and Trust Co. v. Shultz.
Attorney:Wm. Aug. Atlee and Isaac Hazlehurst, for plaintiff in error D. G. Eshleman, O. J. Dickey and S. H. Reynolds, for defendant in error
Judge Panel:Before AGNEW, C. J., SHARSWOOD, MERCUR, GORDON, PAXSON and WOODWARD JJ. WILLIAMS, J., absent.
Case Date:May 29, 1876
Court:Supreme Court of Pennsylvania

Page 46

82 Pa. 46 (Pa. 1876)

The American Life Insurance and Trust Co.

v.

Shultz.

Supreme Court of Pennsylvania.

May 29, 1876

May 3, 1876

1. The death of the agent through whom a contract has been effected does not exclude the testimony of the party dealing with him, under the Act of 1869, in an action against his principal.

2. In an action brought against a life insurance company for the violation of an alleged contract to give a " paid up policy" after the third payment upon a life policy, not expressed in the policy, evidence of the powers of the agents generally is inadmissible.

3. Where a life policy has been issued upon proposals signed by the insured, and an action is brought against the company upon a contemporaneous verbal agreement to issue a " paid up policy" after the payment of the third premium, it is error to reject evidence, on the part of the company defendant, of the powers of the agent through whom the insurance was effected.

4. In an action brought against an insurance company with whom a life insurance has been effected, upon a contract to deliver a paid up policy after the third annual premium has been paid, the measure of damages is, not the amount of the premiums paid, since the action is not in disaffirmance of the contract, but the difference between the value of a paid up policy and the life policy held by the plaintiff.

5. It is error to reject evidence of the difference of rates of insurance for a paid up policy and for a life policy where the question is whether a verbal contract had been made by an agent of an insurance company contemporaneously with the execution of proposals and delivery of a life policy, to deliver a paid up policy for the premiums paid, with participation in profits, offered to show the inherent improbability that such a contract was made.

Before AGNEW, C. J., SHARSWOOD, MERCUR, GORDON, PAXSON and WOODWARD JJ.

WILLIAMS, J., absent.

Error to the Court of Common Pleas of Lancaster county: Of May Term 1876, No. 69.

This was an action of assumpsit, brought by David Shultz against The American Life Insurance and Trust Company to recover damages for the refusal on the part of the company to issue to him a paid up policy, after the payment of the third premium upon a life policy effected.

The defendant company pleaded non assumpsit and payment with leave, & c., non assumpsit infra sex annos.

Elisha Geiger was the agent of the company at Lancaster, and some time in the spring of 1866, upon his solicitation, Shultz signed an application for a mutual policy for the sum of $10,000 for the benefit of his wife.

The terms for one of Shultz's age were $81.80 per thousand per annum, with the provision that " when the premium amounts to $50 or more, annually, one half may be paid in a note at twelve months with interest."

Shultz elected to avail himself of this provision, paid in cash $409, and gave his note payable in twelve months for $409 with interest. This was done each year, and the interest on the notes added to the cash payments of each year.

Shultz alleged that Geiger said, when he made the application, whenever Shultz would pay up the third payment he could get a paid up policy for the premiums he had paid, and get dividends out of the concern whatever it would pay.

Shultz also alleged that when Geiger brought him the policy and he made the payment, Shultz refused to take the policy because it was not according to the contract. Geiger replied, " If you don't take the policy, we will keep your money; you can't get your money back; you had better go on and pay up the third payment and then you will get your paid up policy."

Geiger died soon after and Mr. Gara was appointed agent. Subsequent to the first transaction as above detailed, all of the business was conducted by Gara. Shultz continued his payments until after the third payment. Before this payment he told Gara he would demand a paid up policy; written on the back of an advertising card of the company signed by Gara, was " After this payment, you can get a paid up policy for the whole amount you have paid." After several months and repeated solicitations Gara told him the company had changed their rules and he could not get it.

The fourth and fifth premiums were paid because he was told he would lose all he had paid. After the fifth, the premiums were paid under protest that they were paid because he did not wish to run the risk of forfeiture.

On the 12th of December 1873, after making eight payments of $409, which, with the interest paid on the notes, amounted to $3869.01, he brought suit; the jury, finding for the plaintiff, awarded that amount as damages for the breach of the contract.

On the trial of the cause the plaintiff offered himself as a witness, and was objected to because Geiger, the agent for the company, with whom the contract of insurance was made, was dead. He was admitted and this was the first error alleged.

The defendant below offered to prove the powers of the agents of the American Insurance Company, and again what were Geiger's powers during the alleged contract, both of which were rejected, and are the 2d and 3d errors.

The defendant offered to prove " What were the rates in 1866 for such a policy as Mr. Shultz testifies Geiger agreed he should have," which was rejected, and is the 4th error.

The 5th and 6th assignments of error are contained in the 7th.

7th error. Instruction. " If you find that it was part of the original contract for the policy, that after paying the third payment, the plaintiff would get a " paid up policy' if he required it, and that the plaintiff was induced to sign the proposals by the representation of the agent of the company, that that condition would be part of and contained in the written contract, in the proposals when he signed them, and paid the first premium on the policy, and was omitted from the policy, and when the agent came to deliver the policy Shultz said he would not receive it, because it was not according to contract, and the agent replied, ‘ If you don't take the policy we will keep your money; you can't get the money back, & c.; further, you had better go on and pay up the third payment, and then you will get your policy, a paid up policy,’ then this omission of the special contract alleged should not be attributable to any fault of the plaintiff and you should find for the plaintiff whatever premiums or money he has paid, without interest; the plaintiff asks no more in this suit."

The 8th and 9th assignments were to the measure of damages " the money paid" with 7th.

The remaining assignments were to the answers to the defendant's points.

10th. 1st point. The acceptance of a policy agreeing with proposals signed, the retention of it and payment of premiums for some years without objection, debars disaffirmance of the contract and recovery of premiums paid. Affirmed with the qualification that a verbal promise made by the agent to obtain insurance and execution of the proposals, contemporaneously with the original contract, may be given in evidence to the disaffirmance of the contract in the proposals and policy.

11th. 2d point. No suit can be brought to recover premiums paid until the policy has been delivered to the company. Affirmed if the jury find that a paid up policy was never demanded, or tendered on condition such demand be complied with, or tender refrained from because of the refusal to give a paid up policy.

12th. 3d point. Payment of premium without objection for years without demand for a non-forfeitable policy, was in law a ratification and acceptance in its present form of the policy, and precludes recovery. Affirmed if plaintiff since its date paid premiums without making such demand, the alleged original special contract to deliver a paid up policy after the third payment would be deemed in law abandoned, and preclude recovery, this in submitting a question of fact of which there was no evidence.

13th. 4th point. Local agents have no authority to conclude absolutely a contract of...

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