American Cent. Life Ins. Co. v. First Nat. Bank

• Decision Date: 27 October 1921
• Docket Number: 4 Div. 911
• Parties: AMERICAN CENT. LIFE INS. CO. v. FIRST NAT. BANK OF ENTERPRISE.
• Court: Alabama Supreme Court

90 So. 294

206 Ala. 535

AMERICAN CENT. LIFE INS. CO. v. FIRST NAT. BANK OF ENTERPRISE.

4 Div. 911

Supreme Court of Alabama

Oct. 27, 1921

Appeal from Circuit Court, Dale County; J.S. Williams, Judge.

Suit by the First National Bank of Enterprise against the American Central Life Insurance Company. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

Woolen Cox & Welliver, of Indianapolis, Ind., and Riley & Stokes and H.L. Martin, all of Ozark, for appellant.

Sollie & Sollie, of Ozark, for appellee.

SAYRE J.

We state the pleadings and rulings in this cause summarily, but sufficiently to disclose the fundamental error underlying the judgment rendered in the trial court: Plaintiff (appellee) sued on a policy of insurance issued by defendant (appellant) on the life of R.L. Towles, now deceased, and assigned to plaintiff by the beneficiary, the wife of assured. Defendant pleaded that insured, in his application for the policy, had falsely, and with actual intent to deceive, represented that he did not use, and never used, spirits, wines, or malt liquors, in any quantity. For replication to pleas setting up these facts plaintiff replied in substance, that assured had disclosed to defendant's agent, while acting for defendant within the scope and purview of his authority the matters and things alleged in the pleas, that by reason of such disclosure defendant had knowledge of said matters and things so communicated to its agent, and by accepting assured's application with such knowledge had waived and was estopped to set up said matters and things in avoidance of the policy sued on. The trial court overruled a demurrer to this replication, and that ruling is now assigned for error. Substantially the same question was raised in other ways. Speaking generally, there is no doubt of the proposition that, when, in the course of his employment, an agent acquires knowledge or receives notice of any fact material to the business he is employed to transact, his principal is deemed to have notice of such fact. As said by the Supreme Court of Michigan in Ketcham v. Am. Mut. Acc Ass'n, 117 Mich. 521, 76 N.W. 5:

"The courts have always been anxious to take care of the rights of the assured when the applicant has relied upon the agent informing the company of what has been truthfully told to him about the character of the risk; but the courts never have said the company is bound by statements contained in an application, when not only the agent, but the assured, knows they are untrue and calculated to deceive, and the application is to be forwarded to the company as the basis of its action."

In the editorial note to Mudge v. Supreme Court I.O.F., 14 L.R.A. (N.S.) 280 (149 Mich. 467, 112 N.W. 1130, 119 Am.St.Rep. 686), it is said that--

"The courts are almost unanimous in holding that an insurance company will not be

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