Cauthen v. Metropolitan Life Ins. Co.

• Decision Date: 02 February 1939
• Docket Number: 14813.
• Citation: 1 S.E.2d 147,189 S.C. 356
• Parties: CAUTHEN v. METROPOLITAN LIFE INS. CO.
• Court: South Carolina Supreme Court

1 S.E.2d 147

189 S.C. 356

CAUTHEN v. METROPOLITAN LIFE INS. CO.

No. 14813.

Supreme Court of South Carolina

February 2, 1939

Carlisle Brown & Carlisle, of Spartanburg, and W. Clarkson McDow of Rock Hill, for appellant.

W M. Wilson, of Charleston, and Finley & Spratt, of York for respondent.

FISHBURNE Justice.

The respondent sued to recover the sum of $2,000 and interest, alleged to be due her as beneficiary under an insurance policy issued February 23, 1927, by the appellant on the life of her husband, Minor C. Cauthen, who died April 26, 1936. The policy was written for $2,500, but the complaint alleged and the proof established that the insured had borrowed $500 on the policy during his life, and had not repaid the same.

The appellant admitted the issuance of the policy sued on, but defended on the ground that the policy had lapsed and become void for non-payment of the quarterly premium of $26.85 which fell due August 23, 1935. There was a verdict and judgment in favor of the respondent. The appellant brings the cause to this Court upon exceptions assigning error to the lower Court in the admission of certain evidence, and in overruling its motions for a nonsuit, directed verdict, and new trial; and complains of instructions given to the jury.

While the action brought was based upon the $2,500 policy referred to, it is also necessary to refer to another policy for $1,100, issued by the appellant on the life of Minor C. Cauthen in February, 1927, payable to respondent as beneficiary. This latter policy also lapsed for non-payment of the quarterly premium of $10.01, which fell due on September 15, 1935. At the time this policy lapsed it had a cash surrender value of $500, and there was a loan against it of $500, previously made to the insured. Upon proof of the death of the insured the company paid to the beneficiary the $1100 policy, with interest, less the loan, and at the same time tendered to her the sum of $20.14, which she refused to accept, and to which reference will hereafter be made.

Upon the trial, the respondent contended that the $2,500 policy either became reinstated or the company had waived forfeiture, and that the policy was in force at the death of the insured. She asserted that the assistant district manager, whose office is at Rock Hill, had led her to believe that both policies had been reinstated, and were in force; that she had acted upon this belief, and that the company was estopped from claiming otherwise.

The appellant contended that both policies had lapsed for non-payment of premiums, but that the insured shortly prior to his death had signed an application for reinstatement of the $1,100 policy, had furnished a certificate of health showing his insurability, and had paid the amount of overdue premiums necessary for its reinstatement. It is conceded that although this application for reinstatement of the $1,100 policy had not been finally acted upon by the company at the time of the death of the insured, the company paid the balance due thereon to the beneficiary. The appellant further contended that its agent was without power to create any liability on its part as to the $2,500 policy, or to bind the company by waiver of the forfeiture in view of the limitations placed on his authority by Clause 8 of the policy.

Mr. C. T. Bush was the appellant's manager and agent at Rock Hill, where the respondent lived, and all premiums which were paid on these policies were handled through his office from June, 1934, to the date of insured's death in 1936. The facts show that Mr. Bush was not a general agent. His duties were those of a soliciting and collecting agent.

Mrs. Cauthen, the respondent, had the policies in her possession and personally attended to the payment of all premiums paid on the two policies. In the course of the years each of these policies had lapsed, and had been reinstated several times. Having the policies in her charge, the respondent had gone through the process of reinstatement each time with the appellant through its agent. She was familiar with the prescribed and accustomed procedure: the printed application, the evidence of insurability, the payment of overdue premium with interest, and the approval by the company. The evidence discloses no single deviation from this well trodden path.

After the lapse of the $1,100 policy for non-payment of the quarterly premium due on September 15, 1935, and the lapse of the $2,500 policy for non-payment of the quarterly premium due on August 23, 1935, she says that she requested Mr. Bush to see if both policies could be again reinstated. That acting upon her request he obtained the necessary information and later told her that both policies could be reinstated for $15.33, which she paid. That shortly after this, he informed her that an additional amount of $4.81 was necessary for reinstatement of the $1,100 policy, making a total of $20.14 for both policies. She received a receipt for this latter amount from Mr. Bush, in which it was specifically stated that it was applicable to the $1,100 policy. The amount of $15.33 was not paid directly to Mr. Bush, but it was left for him at his office with another agent unacquainted with the matter, who gave her a receipt merely reciting that it was for M. C. Cauthen, the insured, and without referring to either policy.

Mr. Bush testified that he forwarded the two amounts referred to, together with a certificate of health and a signed application for reinstatement of the $1,100 policy, to the District Office at Spartanburg, and that the transaction related solely to the reinstatement of the $1,100 policy. The record indisputably shows that it required exactly $20.14 to reinstate the $1,100 policy. But the respondent says that Mr. Bush personally assured her more than once that this amount would reinstate both policies, and that, after receiving it, he told her that both policies were in force. This he categorically denies. No application for the reinstatement of the $2,500 was ever signed. The respondent states that the only application given her by Mr. Bush had to do with the $1,100 policy, and this she had her husband sign. She relied, she says, upon his positive statement that the $20.14 given to him would reinstate both policies, although she expressed surprise, from her previous experience, that it could be done for so little.

The primary question raised by this appeal is, Did Bush have authority as an agent of the company to waive the forfeiture of the $2,500 policy sued on?

With reference to reinstatement, the policy carried this provision: "If this Policy shall lapse in consequence of default in payment of any premium, it may be reinstated at any time, unless the Cash Surrender Value has been paid or the non-participating Paid-up Insurance period has expired, upon the production of evidence of insurability satisfactory to the Company and the payment of all overdue premiums with interest at six per centum per annum to the date of reinstatement. Any loan which existed at date of default, together with interest at the same rate to the date of reinstatement, may be either repaid in cash, or, if not in excess of the cash value at date of reinstatement, continued as an indebtedness for which this Policy shall be security."

By Clause 8 of the policy it is provided: "No agent is authorized to waive forfeitures, to alter or amend this policy, to accept premiums in arrears, or to extend the due date of any premium."

Under sections 7970 and 7971, 1932 Code, any one "who solicits insurance in behalf of any insurance company not organized under or incorporated by the laws of this State, or who takes or transmits other than for himself any application for insurance or any policy of insurance to or from such company, or who *** gives notice that he will receive or transmit the same, or who shall *** receive, collect, or transmit any premium of insurance, *** or do or perform any other act or thing in the making or the consummating of any contract of insurance for or with any such company, other than for himself ***, shall be held to be acting as the agent of the company for which this act is done or the risk is taken."

While these laws determine who shall be deemed an agent of the insurer in these particulars, they do not prohibit insurance companies who necessarily have to transact their business through agents, from limiting or restricting the power of such agents. Rabb v. New York Life Ins. Co., 108 S.C. 137, 93 S.E. 711; Rowe v. United States Industrial Life Ins. Co., 90 S.C. 168, 72 S.E. 1018; Hyder v. Metropolitan Life Ins. Co., 183 S.C. 98, 190 S.E. 239, 243.

In the last cited case, Hyder v. Metropolitan, we quoted with approval the following rule from 32 C.J., Page 1064, Sec. 141: "While restrictions or limitations of which insured has no notice are not binding on him, he cannot hold the company bound by the acts, contracts, or representations of an agent, whether general or special, which are beyond the scope of such agent's authority as are known either actually or circumstantially to him."

The same principle is well stated in Parsons v. Federal Realty Corporation, infra: "While the public have a right to rely upon the statutory agent's apparent authority arising from the fact of the agency itself imputed to him by the statute, to do any act in the course of his agency which he undertakes to do of a character usually performed through agents, and that persons dealing with such statutory agent are not bound to inquire as to his special powers to act in a particular transaction wherein he undertakes to act for the company, unless the circumstances are such as to put them upon inquiry as to a limitation on the agent's power to act in the special instance, nevertheless,...