English v. National Cas. Co.
| Decision Date | 23 April 1941 |
| Docket Number | 28389. |
| Citation | 34 N.E.2d 31,138 Ohio St. 166 |
| Parties | ENGLISH v. NATIONAL CASUALTY CO. |
| Court | Ohio Supreme Court |
Syllabus by the Court.
1. The receipt and retention of consideration, with knowledge that conditions precedent in a contract have been broken constitute a waiver of such conditions so as to withdraw them from the terms of the contract.
2. Where an insurance company, at the time it renews an accident insurance policy for an additional year, has knowledge of existing facts which would invalidate the insurance contract from the time of its renewal, the acceptance of a renewal premium on such renewal contract and the delivery of a renewal receipt will constitute a waiver of the right of such company to avoid the policy on account of such invalidating facts.
3. Where an insurance company has knowledge of the fact that the insured is beyond the inhibited age expressed in its accident insurance policy at the time the policy is renewed for an additional year, but continues to treat the contract as of binding force by accepting and retaining a renewal premium from the insured until after he suffers an accident within the terms and the coverage of such policy the right of forfeiture on account of the age of the insured is waived.
Appeal from Court of Appeals, Cuyahoga County.
The National Casualty Company, a Michigan insurance corporation, the insurer, on April 27, 1937, issued to Harry English, the insured, an automobile accident insurance policy for which he paid the insurer the sum of $12.50, representing the annual premium. By the terms of the policy, the insurer agreed to pay the insured certain indemnities in case of disability from bodily injury while operating, driving, riding in or cranking an automobile during the period from April 27, 1937, to April 27, 1938. Paragraph 20 of the 'standard provisions' of the policy in question was as follows:
The original application for the policy in question disclosed that the insured was born March 4, 1873, and would become 65 years of age on March 4, 1938. On March 16, 1938, insured paid the insurer a further premium of $12.50 and the insurer on that date issued to him its official renewal receipt by the terms of which the insurer agreed to renew and continue in force the automobile accident insurance policy until April 27, 1939, subject to the conditions of the policy.
On July 9, 1938, while driving his automobile, insured received a bodily injury within the coverage of the policy. On July 16, 1938, insured notified the insurer of his injuries and in due time made proof of his claim. On December 23, 1938, the claim was rejected. The insured at no time made a request for the return of the premium for the policy year beginning April 27, 1938, but on December 23, 1938, the insurer tendered the insured a check for $14.35, apparently to cover premiums paid for the period beyond March 4, 1938, but the check was not cashed.
The insured brought suit in the Municipal Court of Cleveland to recover on the policy of insurance, alleging in his amended petition that 'in consideration of a further premium of twelve dollars and fifty cents ($12.50) [paid] to defendant by plaintiff, there was issued to him an official renewal receipt by the terms of which defendant agreed to renew and continue in force until the 27th day of April 1939 said automobile accident policy of insurance.' The insurer's answer 'admits that said policy was renewed on March 16, 1938, for a further premium of $12.50 as alleged in the amended petition.'
A jury was waived and trial was had to the court on an agreed statement of facts, resulting in a judgment for the insurer. The case was appealed on questions of law to the Court of Appeals which affirmed the judgment of the Municipal Court, one judge dissenting. The case is now in this court for review by reason of the allowance of a motion to certify the record.
White & Mierke, of Cleveland, for appellant.
Flynn & Benesh, of Cleveland, for appellee.
The question presented by the record may be stated as follows: Is the insurer estopped to deny liability under its insurance policy, because it issued the same with full and actual knowledge that the insured was, at the time the renewal premium on such policy was received and receipt issued, then beyond the age of 65 years; and because with such knowledge it retained such premium until after the insured, within the period covered by the premium, sustained personal injuries which were within the coverage and indemnity terms of the policy?
There is no question of concealment, misrepresentation or fraud on the part of either the insurer or the insured involved in this case. Both were fully conversant with all the facts as set up in the application and policy when the latter was first issued.
No waiver of condition as to age of the insured was necessary when the policy originally went into operation, because the insured did not arrive at the age limit until March 4, 1938. But since the insured had already reached the age limit on March 4, 1938, Before the beginning of the renewal year of the policy on April 27, 1938, it required a waiver of the condition as to the age of the insured before the policy could go into effect for the second year. On no theory could the insurer accept the payment of premium and issue a renewal receipt for the year commencing after the insured had reached the age of 65 years, except by waiving the condition with reference to age. By this course of conduct, the insurer, having full knowledge of the facts, in effect said to the insured that the policy should go into effect notwithstanding the insured was then over 65 years of age.
The fundamental principles of the law of contracts solve this problem. There was no mistake or dispute as to the facts, and the parties were under the mutual duty to deal honestly with them. The insurance company which received the premium affirmed equally with the insured, the existence of a contract of insurance in return for the premium paid. The insured, by paying the premium in reliance on the mutually-assumed fact that a contract of insurance thereby came into existence, did an act detrimental to himself, but for such assumed fact. Hence, as between the parties, the fact--the existence of the insurance contract--must thereafter be conclusively held to be as thus mutually affirmed.
A party to a contract who, after discovery or knowledge of facts which would entitle him to rescind, treats the contract as a subsisting obligation and leads the other party to believe the contract is still in effect, waives...
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