American Standard Life Ins. Co. v. Denwitty

• Decision Date: 06 February 1953
• Docket Number: No. 14564,14564
• Parties: AMERICAN STANDARD LIFE INS. CO. v. DENWITTY ex ux.
• Court: Texas Court of Appeals

Page 864

256 S.W.2d 864

AMERICAN STANDARD LIFE INS. CO. v. DENWITTY ex ux.

No. 14564.

Court of Civil Appeals of Texas, Dallas.

Feb. 6, 1953.

Rehearing Denied March 27, 1953.

Samuels, Brown, Herman & Scott, Fort Worth, for appellant.

Burt Barr and J. Lee Zumwalt, Dallas, for appellee.

YOUNG, Justice.

Appellant's proceeding by bill of review, seeking to set aside a default judgment obtained against it, resulted in a denial of the bill; and this appeal has been prosecuted from such adverse rendition.

Statement of the case in nature and result as made by appellant is not challenged and will be adopted to the extent quoted. 'The original default judgment against the Company for the sum of Six Hundred Thirty ($630.00) Dollars was dated October 27, 1951, and was recovered in a suit brought by Lester Denwitty and wife, Martha Denwitty, in cause No. 95867-A in the County Court at Law No. One, Dallas County, Texas. Process, issued in said cause, was served upon Mabel Gustard asserted to be an agent of the defendant company, residing in Dallas County, Texas. The defendant insurance company first had notice of the fact that said suit had been filed and judgment recovered therein on December 11, 1951, when it received notice that a writ of execution was in the hands of the Sheriff of Tarrant County, Texas. Whereupon the insurance company caused this bill of review to be filed, seeking to set aside the former judgment on the ground that it had never been served with citation in the above styled cause; that Mabel Gustard, alleged to be its agent and upon whom service of citation had been had, was at the time of such service neither an agent, servant or employee of the insurance company and had not been for over a year and that the company had a meritorious defense to the original suit in that the policy sued upon which had been issued to the plaintiff's wife, Martha Denwitty, on September 13, 1949, had lapsed for nonpayment of renewal premiums long prior to the date of the injury to Martha Denwitty for which claim had been made, said injury having occurred on or about June 11, 1951. The trial on the bill of review was to the court without a jury, and on January 23, 1952, judgment was entered finding that the former judgment was a proper judgment and that no meritorious defense to the cause of action stated therein existed.'

The following facts appear without dispute: Home Office of Appellant Company is in Fort Worth, Tarrant County. On September 13, 1949 Mabel Therkerield (now Gustard), employed by said Company to solicit applications for insurance, procured the issuance of a policy to Martha Denwitty, wife of appellee Lester Denwitty. The policy, No. 58516, provided for certain indemnity to the holder in event of disability from accidental injury. It was delivered to insured by Mabel Gustard and accepted-the $39 initial premium being duly paid. From and after January 1950, Mabel Gustard ceased to have any connection with appellant; her appointment from the State Board of Insurance Commissioners as an agent for the Company expiring April 1, 1950 without renewal. She was therefore not an agent, servant or employee of the American Standard Life Insurance Company on September 13, 1950 (due date of renewal premium), or on September 25, 1951 when citation addressed to the said Company was served upon her as its agent. There was no service on appellant in the original cause wherein default judgment was rendered other than the purported service on Mabel (Therkerield) Gustard. Martha Denwitty testified that the renewal premium of $39 was paid to Mabel Gustard in September 1950 without any notice from either the latter or the Company that Gustard's agency had terminated; the injury for which claimant asserts liability under the policy occurring in June 1951. Gustard admitted receiving the payment, though telling Martha that she was no longer an agent, but that she would take the money and deliver it to Doc. Harbert, a Company supervisor. This witness (Gustard) about that time left the City on a sick call and placed the money with an acquaintance for delivery to Harbert; said third party failing to do so. At any rate, appellant never received this 1950 renewal payment nor is there any evidence that the matters last related were ever called to the Company's attention until after Martha's injury, when she made demand for blank forms in establishment of claim. Mabel Gustard further stated that in the initial transaction (purchase of policy) the receipt delivered to Martha Denwitty was on a Company form originally attached to the signed application; the receipt signed by her on taking the $39 renewal of premium from Martha in September 1950 being of the former's own composition and not on the standard form required by the Company.

Material here, the policy sued on contained the following recitals: 'All premiums shall be paid in advance, either at the Home Office of the Company or to its properly authorized agent, in exchange for a receipt signed by the Registar or Secretary and countersigned by such agent. A grace period of thirty-one (31) days shall be granted under this life policy only for the payment of any premium after the first, and failure to pay a premium within this period makes this life policy null and void and of no further force and effect.' Additional provisions: 'Upon the failure of the Insured to pay any advance premium at the Home Office of the Company in Fort Worth, Texas, on or before the date fixed for payment, the Insured shall be in default and all rights to any benefits here-under shall terminate on said date at seven o'clock P.M., Standard Time, of the place where the Insured resides, and the receipt of a premium notice or offer of reinstatement shall not be held to be a waiver of this condition. A receipt signed by the Secretary or Registrar of the Company shall be the only evidence binding on the Company of the payment of any premium after the first. Upon the payment of any claim hereunder, any balance of premium for the current policy year remaining unpaid may deducted therefrom.' V.A.T.S. Insurance Code, Art. 21.04 (formerly Art. 5063, R.S.), captioned 'Solicitor Deemed Company's Agents', reads in part: '* * *, but such agent shall not have the power to waive, change or alter any of the terms or conditions of the application or policy.' In this connection Martha Denwitty testified that she had never read the policy although, so far as the record reveals, it had continuously remained in the possession.

Several points advanced by appellant may be stated in substance: (1) Invalidity of the original or default judgment because of a lack of proper service upon the Company; (2) a valid and meritorious defense to the policy was established, the evidence showing that such policy, first issuing on September 13, 1949, lapsed prior to date of injury upon which the claim was predicated; and (2) receipt by a former agent of renewal premium without knowledge of the Company and never received by it, was of no force and effect in view of the policy provision that 'A receipt signed by the Secretary or Registrar of the Company shall be the only evidence binding on the Company of the payment of any premium after the first.' Appellees' counterpoints are to the effect that, (1) appellant's remedy was by way of writ of error, Art. 2249a, Vernon's Ann.Civ.St. to set aside a default judgment; and is hence not entitled to maintain the instant bill of review; (2) estoppel on part of the Company to deny agency, claimants having paid the renewal premium to Gustard, soliciting agent, without knowledge that the latter's authority had terminated; (3)(a) the policy provision for payment of initial premium was contained in a 'hidden and obscure part of the policy,' and therefore void, (b) and that such provisions relating to renewals were in conflict with V.A.T.S. Insurance Code, Art. 3.44, sec. 1 (old art. 4732, R.S.), and void.

We will consider the foregoing points generally and in inverse order. Viewing the evidence adduced most favorably from standpoint of claimants, there exists no basis of estoppel whereby the Company was bound by the acts of Mabel Gustard, it having no knowledge of her attempted collection of renewal premium until after Martha's injury. When a liability is enforceable because of the 'apparent' or 'ostensible' authority of an agent, having no actual authority, it is upon the principle of estoppel. 2 T.J., p. 424; Continental Oil Co. v. Baxter, Tex.Civ.App., 59 S.W.2d 463. Appellees were on notice of the policy limitations concerning method of renewal payments and their...