Bailey v. Life & Casualty Ins. Co. of Tennessee

Decision Date30 November 1951
Citation35 Tenn.App. 574,250 S.W.2d 99
PartiesBAILEY v. LIFE & CASUALTY INS. CO. OF TENNESSEE. 35 Tenn.App. 574, 250 S.W.2d 99
CourtTennessee Court of Appeals

[35 TENNAPP 576] William J. Harbison, Trabue & Sturdivant, Nashville, for plaintiff in error.

Walker & Hooker, David M. Keeble, Nashville, for defendant in error.

HICKERSON, Judge.

Mrs. Mary Juanita Bailey brought this suit against Life & Casualty Insurance Company of Tennessee to recover upon a policy of life insurance issued by defendant upon the life of J. R. Bailey with plaintiff named as beneficiary.

Defendant pleaded the general issue; and, also, by special plea tendered the sum of $8.25 which J. R. Bailey had paid to the agent of defendant as a part of the first premium. (For convenience J. R. Bailey will be referred to as insured.)

Judgment was entered upon a jury verdict for the face amount of the policy, including double indemnity, it being admitted that insured met his death by accident; and the policy provided for double benefits in such event.

[35 TENNAPP 577] From that judgment, defendant appealed in error to this Court.

These determinative questions are presented to this Court:

(1) Did the court err in admitting in evidence the statement of J. M. Crump, agent of defendant, whereby plaintiff sought to show that defendant could not rely upon the defense of forfeiture for nonpayment of premium and nondelivery of policy to insured while he was insurable?

(2) Did J. M. Crump have actual authority to accept part of the first premium from insured and put the policy into immediate effect, giving insured thirty days to pay the balance of the first premium, when the application and the policy contained provisions to the contrary?

(3) Did J. M. Crump have apparent or ostensible authority to accept part of the first premium from insured and put the policy into immediate effect, giving insured thirty days to pay the balance of the first premium, when the application and the policy contained provisions to the contrary?

(4) Did defendant waive, ratify, or estop itself to rely upon the provisions of the policy and the application which state that the policy shall not be effective until the first premium is paid in full and the policy delivered to insured while he was insurable?

(5) Did the trial judge err in refusing to direct a verdict for defendant upon its motion?

As the case comes to this Court, there is no dispute about the facts. As soliciting agent of defendant, J. M. Crump discussed life insurance with J. R. Bailey. On September 12, 1949, they agreed upon an endowment policy in the amount of $5,000 with double indemnity in the event of accidental death.

[35 TENNAPP 578] Written application was made for the insurance signed by J. R. Bailey. Mr. Crump represented to insured that the policy would take effect immediately if a cash payment were made at the time the application was executed. Insured paid $8.25 as a partial payment on the first premium, then signed the application. This application provides:

'It is Understood and Agreed: (1) that the foregoing statements and answers, together with those made in Part B hereof, are full, complete and true, and are offered to the Company as a consideration for the insurance applied for:

'(2) That the Company shall incur no liability under this application until it has been received, approved, and a policy issued and delivered, and the full first premium stipulated in the policy has actually been paid to and accepted by the Company during the lifetime and continued insurability of the applicant, in which case such policy shall be deemed to have taken effect as of the date of issue as recited on the first page thereof, except that if the applicant pays in cash to the Company on the date this application is signed an amount equal to the full first premium on the policy applied for, then if the Company shall be satisfied that at the time of the completion of the medical examination or of Part B of the application, if no medical examination is required, that the applicant was a risk acceptable to the Company under its rules, for the plan and amount of insurance herein applied for at the rate of premium declared paid, then the insurance applied for shall be in force as of the date of the completion of the medical examination, or of Part B of the application, if no medical examination is required;

[35 TENNAPP 579] '(3) With the exception of officers of the Company, notice to or knowledge of the agent, medical examiner or any other person is not notice to or knowledge of the Company unless stated in either Part A or B of this application, and none of such persons are authorized to accept risks or pass upon insurability, nor shall any of such persons have the power on behalf of the Company to make or modify any contract on behalf of the Company or to waive any of the Company's rights or requirements;

'(4) In case of apparent errors or omissions discovered by the Company in Parts A or B hereof, or in case the Company, according to its rules, should issue a policy different from that applied for above, the Company is hereby authorized to amend this application in the space entitled 'Corrections and Amendments,' and the applicant's acceptance of any policy issued on this application shall constitute a ratification by the applicant of such amendments.'

Mr. Crump gave insured a receipt for the $8.25 payment on the first premium. This receipt provides:

'If this sum is equal to the full first premium on the policy applied for then if the Company shall be satisfied that at the time of the completion of the medical examination or Part B of the application, if no medical examination is required, that the risk was acceptable to the Company under its rules for the plan and amount of insurance herein applied for at the rate of premium declared paid, then the insurance applied for shall be in force as of the date of the completion of the medical examination or of Part B of the application if no medical examination is required, but otherwise no insurance shall be in force under said application unless and until a policy has been [35 TENNAPP 580] issued and delivered, and the full first premium stipulated in the policy has actually been paid to and accepted by the Company during the lifetime and continued insurability of the applicant.'

The policy which was issued pursuant to this application provides:

'Premiums. This Policy shall not take effect until the first premium shall have been paid in cash and the contract delivered and accepted during the lifetime of the Insured.

* * *

'The Company's Agents have no authority to alter or amend this Policy, to accept premiums in arrears, or to extend the due date of any premium.'

Neither plaintiff nor insured read the application or the receipt.

Insured had elected to pay his premiums annually. The First annual premium was $136.20. Defendant does not accept premiums of less than $5, and does not accept premiums on ordinary life policies, such as the one in question, on any basis except annual, semiannual, quarterly, or monthly. The amount paid by insured would not have kept his policy in force for one month, since the monthly premium would have been $12.10.

Mr. Crump delivered the application signed by J. R. Bailey and the initial deposit of $8.25 to the district office of defendant out of which he worked. This initial deposit was placed in the district office 'suspense account.' A medical examination was arranged by Mr. Crump and the application was processed and sent from the district office to the home office of defendant.

The application was received by the home office and took the usual course of all applications. It was approved and a policy was issued on September 22, 1949. The anniversary[35 TENNAPP 581] date of the policy for the collection of premiums, the running of the incontestable provisions, and the maturity of the endowment provisions was September 22d. The home office prepared a card for this policy showing the dates on which premiums would become due and sent a duplicate of this card together with the policy to the district office.

On September 23, 1949, the policy was handed to Mr. Crump for the purpose of delivering it to insured. Mr. Crump was given an official receipt which would be given by him to insured when the first full premium was collected. He was also given a voucher of $61.29 for his commission.

J. R. Bailey was killed by accident on October 1, 1949, before this policy was delivered to him. The only payment which was made on the first premium prior to his death was the initial payment of $8.25. After Mr. Bailey's death defendant tendered this initial payment to plaintiff who refused to accept it. This initial payment remained in the district office. It was never sent to the home office because the transaction was never completed by delivery of the policy to insured and by collection of the balance of the first premium.

Plaintiff tendered the balance of the first annual premium on this policy to defendant after the death of her husband and this tender was refused by defendant.

Mr. J. M. Crump, who obtained the application in this case, was a soliciting agent for ordinary life insurance policies for defendant with authority to take applications, arrange for medical examinations, deliver the policies, and accept the premiums. He was not an officer of the company. He...

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