Avis C. Rein v. New York Life Insurance

• Decision Date: 20 June 1941
• Docket Number: 32,578
• Citation: 299 N.W. 385,210 Minn. 435
• Parties: Avis C. Rein v. New York Life Insurance Company
• Court: Minnesota Supreme Court

299 N.W. 385

210 Minn. 435

Avis C. Rein v. New York Life Insurance Company

No. 32,578

Supreme Court of Minnesota

June 20, 1941

Action in the district court for St. Louis county to recover under the double indemnity and waiver-of-premium-for-disability provisions of a policy issued by defendant on the life of Floyd P. Rein. The case was tried before Martin Hughes Judge, and a jury. After verdict of $10,256.67 for plaintiff defendant moved for judgment notwithstanding or a new trial. The motion for judgment was granted, but a new trial was denied. Plaintiff appealed from the order. Affirmed.

Austin & Wangensteen, for appellant.

Holmes Mayall, Reavill & Neimeyer, for respondent.

The opinion of the court was delivered by: Olson

Insurance -- life -- waiver of premium for disability -- powers of agent of insurer.

1. The insured by accepting and retaining his life insurance policy over a period of nearly two years was bound to know its terms, and, as such, his beneficiary is estopped from setting up powers in the agent in opposition to the express limitations contained in the policy.

Insurance -- agent of insurer -- powers in general.

2. It is the undoubted right of an insurance company, as in the case of any principal, to impose a limitation upon the authority of its agents. And it is as elementary as it is reasonable that if an agent exceeds his actual authority and the person dealing with him has notice of that fact, the principal is not bound.

Insurance -- proof of loss -- purpose of furnishing promptly.

3. The purpose of requiring the prompt furnishing of proof of loss under any policy of insurance is to provide the insurer with such information as will permit it to investigate the facts and determine whether there is liability on its part.

Insurance -- construction of policy -- right to have terms maintained unimpaired.

4. While it is important that ambiguous language should not be permitted to serve as traps for policyholders, it is equally important, to the insured as well as the insurer, that the provisions of insurance policies which are clearly and definitely set forth in appropriate language and upon which the calculations of the company are based, should be maintained unimpaired.

JULIUS J. OLSON, JUSTICE.

Plaintiff's action to recover on an insurance policy issued by defendant upon the life of her lately deceased husband resulted in a verdict in her favor. The court, however, on defendant's alternative motion for judgment notwithstanding or a new trial, granted the former but denied the latter. Plaintiff appeals from that order.

The policy, issued June 28, 1937, in the amount of $5,000 provided for "double indemnity" if the insured should die from accident as therein limited and defined. It also contained this provision:

Upon receipt by the Company at its Home Office of due proof * * * that the Insured has become totally disabled by bodily injury or disease so that he is and will be thereby wholly prevented from performing any work, following any occupation or engaging in any business for remuneration or profit, and that such disability has already continued uninterruptedly for a period of at least six months (such total disability of such duration being presumed to be permanent only for the purpose of determining liability hereunder)," the company will waive payment of premiums falling due after and during such disability if the disability occurs while the policy is in force, and if written notice thereof is received at its home office while the policy is in force, the insured is alive and the disability continues.

By another important provision the company agreed to waive payment of premiums falling due after and during such disability if the disability occurred while the policy was in force, and if written notice thereof was received at its home office while the policy was in force, the insured was alive, and while his total disability continued.

The annual premium was fixed at $68.25, out of which $8.40 represented the premium for the double indemnity benefit and $4.75 for the disability benefit.

In July, 1938, the annual premium then being past due but within the 31 days of grace provided by the policy, the insured having become totally disabled under the provisions of the policy, as claimed by plaintiff, the latter conferred with defendant's soliciting agent at Hibbing, one Louis Nides, in respect to receiving the benefits of waiver of further premiums. She testified that she inquired of Nides why she and insured were not entitled to a waiver of premiums; that he told her that the reason was that insured was not totally disabled "because he could drive a car, and because he could walk down Howard street [in Hibbing]," and that while they (meaning insured and plaintiff) "could put in a claim [for a waiver of premiums], but it would be useless." Upon the strength of that statement by Mr. Nides, so it is claimed, neither plaintiff nor the insured gave any notice nor did they file any proof of disability as required by the policy or otherwise. Mr. Nides denied the conversation.

Instead of paying the premium annually, the insured thereupon requested a change, a right under the terms of the policy, to pay it in quarterly installments. This was granted. He paid the next three premium installments, but the one falling due March 28, 1939, was not paid. The insured died sometime between May 10 and May 17, 1939, by drowning in Snowbank Lake in the northern part of St. Louis county. Obviously, this was more than 31 days after the March premium fell due.

The application for the policy, made part of the insurance contract, contains this language:

"That only the President, a Vice-President, a Second Vice-President, a Secretary or the Treasurer of the Company can make, modify or discharge contracts, or waive any of the Company's rights or requirements; that notice to or knowledge of the soliciting agent or the Medical Examiner is not notice to or knowledge to the Company, and that neither one of them is authorized to accept risks or to pass upon insurability."

There is also an endorsement on the policy which reads:

" Notice -- It is not necessary for the Insured or the Beneficiary to employ the agency of any person in collecting the insurance under this Policy, or in receiving any of its benefits. Time and expense will be saved by writing direct to the Home Office, 51 Madison Avenue, Madison Square, New York, N.Y."

So the determinative questions are: (1) Whether insured had become totally disabled within the meaning of the policy and as such entitled to the benefits provided thereby, and (2) whether the information given by plaintiff to Mr. Nides and his representations then made to her amounted to a waiver on the company's part of the requirement of notice and proof of disability.

Important, too, on this phase are the following policy provisions:

"Written notice of claim hereunder must be received by the Company at its Home Office during the lifetime and during the continuance of total disability of the Insured."

Also:

"No agent is authorized to make or modify this contract, or to extend the time for the payment of premium, or to waive any lapse or forfeiture or any of the Company's rights or requirements."

Concededly, there was here no such notice or proof furnished. Equally clear it is that the insurance contract had lapsed because of the failure to pay the stipulated premium falling due March 28, unless there is adequate proof to sustain the jury's finding of a waiver of notice and proof of total disability.

Mr. Nides' granted authority, which was in writing, was limited to that of a "special agent for the purpose of canvassing for applications for insurance on the lives of individuals, and of performing such other duties in connection therewith as the officers" of the company might "in writing expressly require of him." He had "no authority * * * to accept risks of any kind, to make, modify or discharge contracts, to extend the time for paying any premium, to bind the company by any statement, promise or representation, to waive forfeitures or any of the company's rights or customary requirements." Upon that basis Mr. Nides accepted his appointment and thereafter acted.

The court in an exhaustive and most helpful memorandum states its reasons for making the order here for review. The following excerpts are particularly pertinent:

"In the instant case, as I view it, there is no basis for a finding of any intent to defraud the insured on the part of Mr. Nides.

"It is a fairly close question as to whether the evidence would warrant a finding that the insured was so disabled as to be entitled to a waiver of premiums. He was capable in a measure to oversee his timber operations, to make trips to distant markets in connection with his business, to drive a car, and to walk, although only for a short distance, and in the conversation between the plaintiff and the agent she advised the agent that insured's health was then improving somewhat. When the agent stated to the plaintiff that insured was not entitled to a waiver of premiums because he could drive a car and walk on the street and with what knowledge the agent then had of the insured's condition, I am satisfied that he was giving her his honest opinion that the insured was not disabled to the required extent to make a valid claim for a waiver of premiums under the terms of the policy. * * *

"There is also in the insurance contract in question here a provision that in any event notice in writing of the claimed disability should be given to the home office during the lifetime of the insured and while the disability still continued."

But, continued the court:

"Brushing aside all of the other questions raised...