Cranston v. West Coast Life Ins. Co.

• Decision Date: 30 June 1914
• Parties: CRANSTON v. WEST COAST LIFE INS. CO. [d]
• Court: Oregon Supreme Court

142 P. 762

72 Or. 116

CRANSTON v. WEST COAST LIFE INS. CO. ^[d]

Supreme Court of Oregon

June 30, 1914

In Banc.

Appeal from Circuit Court, Baker County; Gustav Anderson, Judge.

Action by Irene M. Cranston against the West Coast Life Insurance Company. From a judgment for plaintiff, defendant appeals. Affirmed.

This is an action by Irene M. Cranston as the beneficiary named in the policy of insurance written by the West Coast Life Insurance Company on the life of Walter A. Cranston deceased, husband of the plaintiff. The trial of this cause in the lower court resulted in a verdict for the plaintiff on which a judgment was entered, from which the defendant appeals. This is the second appeal in this case. A judgment for the plaintiff entered upon a directed verdict at the first trial of the case was reversed by this court. See Cranston v. West Coast Life Ins. Co., 63 Or. 427 128 P. 427. The plaintiff in her original complaint alleged that under the contract of insurance between Walter A Cranston and the defendant company the former had performed all the conditions therein contained on his part to be performed. The evidence introduced at the first trial, tending to show a waiver of the conditions precedent by the defendant company, was not accepted as sustaining the allegations of the original complaint setting forth performance by Cranston. Upon the second trial, the plaintiff in her amended complaint set forth a cause of action which recognized certain conditions precedent in the policy of insurance, the nonperformance of which by Cranston the plaintiff alleged had been waived by the defendant company, and, further, that certain unauthorized acts of the agents of the company resulted in a contract of insurance coming into existence between the company and Cranston, by reason of the subsequent ratification of such acts by the company, in the following manner: Waite Thurston, agent of the company, who solicited the application for the insurance, accepted from Walter A. Cranston his negotiable promissory note in the principal sum of $27.95, payable to the order of Waite Thurston 60 days after date, in full payment and satisfaction of the first premium, and in consideration of the issuance of the policy of insurance. Thereafter, on September 1, 1910, the defendant in consideration thereof executed, transmitted, and delivered to its general agent at Portland, Or., who, in turn, transmitted to its soliciting agent Waite Thurston of Baker City, Or., the policy of insurance on the life of Walter A. Cranston, in the sum of $1,000, payable to plaintiff after notice and proof of the death of the insured. The defendant delivered the policy of insurance to Cranston, and charged to the account of H. T. Booth, its general agent, the amount of the premium, $27.95, thereby substituting the liability of the agent for that of the insured. The defendant, in its answer to the amended pleading, denies all the facts showing its liability. In paragraph 6 the defendant admits that on or about the 24th day of August, 1910, one Waite Thurston received and accepted from Walter A. Cranston, his written negotiable promissory note in the principal sum of $27.95, due 60 days after date, payable to Waite Thurston or to his order, and admits, further, that said promissory note was thereafter negotiated by Thurston, before the same was due, to innocent holders thereof for value. The defendant denies paragraph 7 of the amended complaint, except only that it admits that it executed and issued the policy of insurance in controversy in this case on the life of Walter A. Cranston in favor of the plaintiff as beneficiary, and delivered it to H. T. Booth, general agent, by placing the same in the United States mails. A denial is contained in the ninth paragraph of the answer, except that the defendant admits that, in accordance with its rules and customs, its general agents were responsible to it for all premiums received by them on behalf of the company, and that the general agents were required to remit to the defendant company at stated intervals moneys received by them and due and payable, and that such general agents were and are required to furnish and keep in force a good and sufficient bond for the faithful performance of their duties. The defendant avers that any pretended payment of said permium on said policy of insurance by said Walter A. Cranston to Waite Thurston by delivering to him the promissory note alleged in plaintiff's complaint was wholly without effect and null and void, and was not such a payment of the premium on the policy of insurance as was by the terms and conditions thereof made a condition precedent to the policy of insurance becoming operative and valid; that the defendant company at no time had any knowledge of the fact that the policy of insurance had been delivered to Walter A. Cranston, or that he in pretended payment of the first premium thereon had delivered to Thurston the promissory note alleged in the plaintiff's complaint until long after the death of the assured, and until the respective rights and liabilities of the plaintiff herein and the defendant had become vested and fixed thereby. The reply put in issue the new matter contained in the answer. At the close of the plaintiff's case the defendant's counsel moved the court for a judgment of nonsuit, which was denied. The defendant assigns this as error.

Burnett and Moore, JJ., dissenting.

Alfred A. Hampson, of Portland (Holman & Hampson, of Portland, and McColloch & McColloch, of Baker, on the brief), for appellant. M. D. Clifford, of Baker (Clifford & Correll, of Baker, on the brief), for respondent.

BEAN, J. (after stating the facts as above).

A detailed statement of the facts and circumstances occurring on the first trial may be found in the former opinion, and it is unnecessary to detail the same matters here. The assignments of error raise three principal questions for review in this court. First. That the court erred in refusing to grant the defendant's motion for a judgment of nonsuit. The main question is whether or not the defendant waived the following conditions contained in the application which was incorporated into the policy of insurance:

"I hereby agree as follows: That if this application is accepted, the policy issued hereunder shall not take effect until the first premium shall have been paid and accepted by said company or its authorized agent and such policy delivered to and accepted by me while I am in good health. * * *"

And also the following statements indorsed upon the policy:

"All premiums on this policy are due and payable at the home office of the company in the city of San Francisco, but may be paid to agents of the company producing receipts signed by the president or a vice president, secretary, or assistant secretary, and countersigned by such agents. * * * Only the president, or a vice president, together with the secretary or assistant secretary (and they only in writing signed by them) have power on behalf of the company to issue permits, or make or modify this or any contract, or extend the time for making any premium payment, and the company shall not be bound by any promise or representation heretofore or hereafter given by any person other than the above-named officers, and by them only in writing and signed conjointly as stated."

It is contended by the plaintiff that the condition precedent of paying the premium was waived by the delivery of the promissory note of Walter A. Cranston to Waite Thurston the soliciting agent, and his acceptance of it, and the subsequent delivery of the policy of insurance by him to Cranston, and that such action by the agents of the defendant company was ratified by the latter by delivering the policy and charging the premium to H. T. Booth, the general agent. However it may be as to the knowledge of the company in regard to the acceptance of the promissory note, it is clear that it forwarded the policy of insurance to its general agent for delivery to the assured. The jury were warranted in finding that the company thereby impliedly authorized the general agent to make satisfactory arrangements in regard to the payment of the premium, and trusted to him to do so, and that the action of the agent was ratified by the delivery of the policy and allowing the same to be retained by the assured from September 1, 1910, until his death, January 31, 1911.

H. T. Booth, the general agent of the company, was called as a witness by the plaintiff, and testified, in substance, that he received the policy by mail the last of August, and forwarded it to Waite Thurston, with a transmittal letter to the effect that the policy was inclosed for delivery to the insured, for collection of the premium in due course, and for the remittance of the same; that he remembered no special instructions; that Waite Thurston remained around for six weeks or two months, collected a number of premiums that the company did not get, and left the country; that they had never been able to locate him; that he knew of the note after Thurston had left; that he then made it his business to try and trace the note, and found that it had been sold; that he sometimes sent receipts with a policy for delivery, and sometimes did not. He further testified:

"I had an accruing interest in the business done in the state of Oregon and this necessitated, frequently, there was certain charges against it and in due course of time they adopted a credit account of premiums and the premium of Walter A. Cranston became charged to me."

That he had no correspondence with the company in regard to the policy before the death of Walter A. Cranston. That the company made no objection to the policy being out, because they had the premium charged to him. That h...