Douglass v. Mut. Ben. Health & Accident Ass'n

• Decision Date: 11 December 1937
• Docket Number: No. 4282.,4282.
• Citation: 42 N.M. 190,76 P.2d 453
• Court: New Mexico Supreme Court
• Parties: DOUGLASSv.MUTUAL BEN. HEALTH & ACCIDENT ASS'N.

42 N.M. 190

76 P.2d 453

DOUGLASS

v.MUTUAL BEN. HEALTH & ACCIDENT ASS'N.

No. 4282.

Supreme Court of New Mexico.

Dec. 11, 1937.Rehearing Denied Feb. 28, 1938.

Appeal from District Court, Union County; Taylor, Judge.

Action by Myrtle Douglass against the Mutual Benefit Health & Accident Association. Judgment for plaintiff, and defendant appeals.

Affirmed.

Defendant's motion for judgment at close of plaintiff's testimony called for a declaration of law on whether there was substantial evidence to support judgment for plaintiff, and admitted all facts which evidence, and all reasonable inferences that could be drawn therefrom, would establish.

Crampton & Robertson, of Raton, for appellant.

F. S. Merriau, of Raton, for appellee.

BRICE, Justice.

From a judgment for $2,500 in favor of appellee (plaintiff below) this appeal is prosecuted. The parties will be designated “plaintiff” and “defendant” as in the district court.

At the close of plaintiff's testimony in the district court, the defendant moved for judgment, which motion was overruled. The defendant announced that it would stand on its motion; thereupon the district court entered judgment for plaintiff.

[1] The findings of the court support the judgment, and if there is substantial evidence to support the findings of the court it must be affirmed. The motion called for a declaration of law on the question of whether there was substantial evidence to support a judgment for plaintiff. It admits all facts which the evidence, and all reasonable inferences that can be drawn therefrom, will establish. Union Bank v. Mandeville, 25 N.M. 387, 183 P. 394.

The court made findings of fact, from which we deduce the following, that we find to be supported by substantial evidence:

On February 19, 1935, defendant was an insurance company and Grover W. Pryor was one of its soliciting agents, authorized to solicit applications for accident insurance, fill out the answers of applicants in the blank applications furnished by defendant, receive and transmit to his principal money paid as premiums, receive from the company a receipt for the premium and the policy, and deliver them to the insured. This seems to be the usual authority of soliciting agents as appears from reported cases.

On February 19, 1935, Joe C. Douglass was solicited by Pryor to take out an accident policy with defendant. In answer to Douglass' questions, Pryor explained generally the terms of the policy and among other things stated in substance that the policy he was soliciting Douglass to take would become effective as soon as the application and premium were received by defendant's general agent in Albuquerque, which would be in about twenty-four hours from the time the application was signed and delivered to him and premium of $6.50 paid to him. Pryor filled out an application on a blank furnished by appellant as Douglass answered the questions printed thereon. After it had been signed, the application was as follows:

“Application for Special Automobile Policy

“1. What is your Name? (Print Name in Full) J. C. Douglass. Sex? Male. Color? White. Age? (Nearest Birthday) 52. Date of Birth? (Month, day, year) 1883, July 28. Height? 6 ft. 2 in. Weight? 175.

“2. What is your address? (Street No.) - (city or town) Grenville, New Mex. (State) -

“3. Have you ever had an application for Life, Health or Accident insurance rejected or policy cancelled? No.

“4. Have you consulted a physician during the past three years? No. If so, for what ? -

“5. What are all the duties in connection with your occupation? Truck driver and farmer.

“6. Whom do you name as beneficiary? Name ? Mrs. Myrtle Douglass. Address: Grenville, New Mex. Relationship? Wife.

“7. Are you sound physically? Yes.

“8. What is the form number of policy applied for? Form 5. What is the premium? $5.00.

“9. Dated at Des Moines, New Mex. this (City or Town and State) 19 day of February, 1935.

“J. C. Douglass

(Signature of Applicant)

“Agent's Name Grover Pryor

“Address Des Moines, New Mexi.

“Policy to be mailed to Agent or to Applicant? Applicant.

“Form 5 Auto.”

Upon the signing of application, Douglass paid Pryor the initial premium amounting to $6.50. Policy Form 5 was a certain form of policy issued by defendant. It is unnecessary to state its terms, as defendant agrees that the judgment is correct if under the facts Douglass was insured by defendant.

The net premium, together with the application, was mailed by Pryor to the defendant at its general office in Albuquerque, N. M., where they were received by the defendant; who, on February 21, 1935, mailed to “Grover Pryor, Agent, Des Moines, New Mexico,” a receipt for the application and premium, to be delivered to Douglass, but which was delivered to the plaintiff after Douglass' death.

On February 23, 1935, Joe C. Douglass was accidentally killed under such circumstances as would, if the policy of insurance he applied for had been in force, have entitled the plaintiff to recover $2,500. The policy was not delivered before or after Douglass' death.

No administration was had on the estate of Joe C. Douglass until in the summer of 1935, when his widow Myrtle Douglass was appointed administratrix of his estate.

On the 2d day of April, 1935, the defendant sent the plaintiff its draft in the amount of $6.50 payable to the order of “Estate of Joe C. Douglass” for the purpose of returning the amount of the premium paid by Douglass for the insurance. Plaintiff received the draft and delivered it to her attorney, who never returned it to the defendant or offered to do so, though it was never cashed. The defendant company retained this money without offer of return, from the 19th day of February, 1935, until the 2d day of April, 1935, when the draft was sent Pryor, payable to the “Estate of Joe C. Douglass.”

A few days after the death of Douglass, the plaintiff, under the direction of defendant's agent Pryor, made out a proof of loss, as though said policy of insurance had been issued, and forwarded the same to defendant. The defendant never denied liability until it mailed to its agent Pryor the draft mentioned, dated April 2d, 1935, payable to Douglass' estate.

The district court found that Pryor stated to Douglass “that if he (Douglass) would sign an application for said insurance, said insurance would be in full force and effect from and after the receipt of said application with the initial premium, by the Albuquerque Agency office of said defendant.”

This finding is attacked upon the ground that there is no substantial evidence to support it. The witness Brown testified substantially to these facts. It is true he also testified on cross examination that the impression Pryor left was that the application would have to be approved by the company, but he does not state that Pryor made any such statement. That finding of the court is supported by substantial evidence.

The court found that Pryor was defendant's agent and that he had apparent authority to make the representations relative to the time when the said policy of insurance would go into effect, and that the decedent had no notice of any limitation upon such power and authority at the time he signed the application; and concluded that his acts were in the scope of his apparent authority and were binding on defendant. Defendant contends that there is no substantial evidence that Pryor was more than a soliciting agent; that as a matter of law a soliciting agent has no authority to bind his principal in this kind of transaction.

Pryor did not testify in the case. It is conceded by plaintiff that he was in fact only a soliciting agent, but this was not known to Douglass.

[2][3][4] In dealing with an agent, one is required to know the agent's authority; for if the mere word of a person could be accepted as either proof of agency or the extent of it, no business could be safely transacted through agents. But when agency is admitted by words or acts, the real authority of such agent is immaterial; the principal is bound by such apparent authority as his words and acts would indicate to a reasonably prudent man that the agent possessed; or, stating it differently, one dealing with a principal through his agent, if using reasonable judgment and discretion himself, may assume and rely upon the agent being clothed with the authority that the words and acts of his principal would naturally and reasonably cause him to believe the agent possessed. The apparent authority of an agent must be determined from the nature of the business entrusted to him, the words, acts, and conduct of the principal, and not from the unratified declarations or acts of the agent.

The general principles of the law on this subject are stated by leading authorities as follows:

“*** Every person is presumed by law to contemplate and intend the natural and proximate results of his own acts, and he cannot avoid them by asserting that he did not really intend or contemplate them. If the principal leads third persons, acting reasonably and in good faith, to believe that his agent possesses a certain authority, then, as to them, the principal will be estopped to deny that the agent does possess it.” 2 Mechem on Agency, § 1722.

“*** The principal cannot, however, expect third persons to have notice of limitations and restrictions, which are in their nature secret and undisclosed. And while, as has been stated, persons dealing with the agent are bound to know the extent of his authority, they may reasonably take the visible and apparent interpretation of that authority by the principal himself as the true one, and as the one by which he chooses to be bound. It is therefore the rule of the law that the rights of third parties, who have reasonably and in good faith relied upon the apparent authority of the agent as previously explained, cannot be prejudiced by secret limitations or restrictions upon it of which they had no notice. ***” 2 Mechem on Agency, § 1723.

“Except for...