Citizens' Nat. Life Ins. Co. v. Murphy

• Decision Date: 28 May 1913
• Citation: 156 S.W. 1069,154 Ky. 88
• Parties: CITIZENS' NAT. LIFE INS. CO. v. MURPHY. d
• Court: Kentucky Court of Appeals

156 S.W. 1069

154 Ky. 88

CITIZENS' NAT. LIFE INS. CO. v. MURPHY. d

Court of Appeals of Kentucky.

May 28, 1913

Appeal from Circuit Court, Boyle County.

Action by the Citizens' National Life Insurance Company against John S. Murphy. Judgment for defendant, and plaintiff appeals. Affirmed.

Bruce &amp Bullitt, of Louisville, and C. C. Fox, of Danville, for appellant.

C. C Bagby, of Danville, and P. M. McRoberts, of Stanford, for appellee.

HOBSON C.J.

The Citizens' National Life Insurance Company brought this suit against John S. Murphy. It alleged in the petition that Murphy on November 26, 1910, executed to R. B. Spurgeon and C. S. Walker a promissory note for $544.18, payable in four months after date, and bearing interest from maturity; that Spurgeon and Walker assigned the note to the plaintiff; that it was executed in settlement of the first premium due by Murphy on policy No. 17,144 issued by the plaintiff on his life; that Spurgeon and Walker acted as the agent of the plaintiff in taking the note; that the policy was issued on November 28, 1910, in accordance with the application made by the defendant, and was tendered to the defendant several times by its agents, Walker and Spurgeon, and that he refused to accept it; that thereafter the plaintiff, on February 9 1911, mailed him the policy at his address, McKinney, Ky. and the policy was received by him through the mail and retained until August 23, 1911, when it was returned to the plaintiff. The policy was made a part of the petition. The application which is attached to the policy was dated November 26, 1910, and among other things contained the following: "No contract of insurance shall be deemed made and no liability on the part of said company shall arise until a policy shall be issued and be delivered to me and the first premium thereon be actually paid, all while I am in good health."

The circuit court sustained the defendant's demurrer to the petition. The plaintiff then filed an amended petition in which it alleged that the application contained this: "I hereby declare and agree that all the foregoing statements and answers *** are offered to the company as a consideration for and as a basis of the contract with said company under my policy issued under this application, which if issued I hereby agree to accept." It alleged that the defendant without any right refused to accept the policy; that it was tendered to him while he was in good health; and that he was still in good health. The circuit court sustained the demurrer to the petition as amended, and the plaintiff declining to plead further, the petition was dismissed. The plaintiff appeals.

The ground of the ruling of the circuit court was that the application of Murphy for insurance was only a proposition from him which might be withdrawn by him at any time before it was accepted and the contract closed; that under the terms of the application the contract was not closed when the company accepted the application and issued the policy; that no contract of insurance was made and no liability existed on the part of the company until the policy was not only issued but delivered to the insured; that up to this time he was at liberty to withdraw his proposition. In Bishop on Contracts, § 325, the rule is thus stated: "Since an offer is not a contract, the party making it may withdraw it at any time before acceptance. Even though it is in writing, and by its terms is to stand open for a specified period, the result is the same. With no money consideration, and no corresponding promise from the person to whom it is made, the promise not to withdraw it has no binding force. If a consideration for the undertaking to leave the offer open is given and accepted, this constitutes of itself a contract, and the offer cannot be withdrawn."

A proposition or offer imposes no obligation on the party making it unless it is accepted by the party to whom it is made, and no obligation is then imposed unless the acceptance closes the contract, so that it is binding upon both parties, for where the promise of one is the consideration of the other, neither party can be bound unless the other is bound. Moxley v. Moxley, 2 Metc. 309; Second National Bank of Ashland v. Rouse, 142 Ky. 612, 134 S.W. 1121.

In New York Life Ins. Co. v. Levy, 122 Ky. 457, 92 S.W 325, 29 Ky. Law Rep. 6, 21, 5 L. R. A. (N. S.) 739, the facts were these: On December 30th Levy applied to the local agent for $10,000 of insurance to be written in two $5,000 policies. On January 20th he paid the first premium. On the day before,...