Floars v. Aetna Life Ins. Co.

• Decision Date: 03 April 1907
• Citation: 56 S.E. 915,144 N.C. 232
• Parties: FLOARS v. AETNA LIFE INS. CO.
• Court: North Carolina Supreme Court

56 S.E. 915

144 N.C. 232

FLOARS v. AETNA LIFE INS. CO.

Supreme Court of North Carolina

April 3, 1907

Appeal from Superior Court, Wayne County; Webb, Judge.

Action by J. W. Floars against the Aetna Life Insurance Company. From a judgment in favor of defendant, plaintiff appeals. Affirmed.

Where one applied for an accident policy, relying on the representation of an agent who had no authority to issue a policy that the policy would give indemnity equal to one-third of its face for the loss of an eye, and received a policy which gave only a weekly indemnity for loss of time in case of the loss of an eye, but failed to examine it for three months, he is not entitled to a reformation of the policy on the ground of mistake, and recovery of one-third of its face on the loss of an eye at the end of that time.

Plaintiff testified, in substance: That on _______ day of September 1904, in Fremont, N. C., at the instance of one Bridgers, a soliciting agent of the company, plaintiff signed an application for an accident insurance policy in defendant company, on the representation of the agent that for the premium agreed upon the policy applied for would confer on plaintiff, in case of total loss of one eye, the right to recover one-third of the face of his policy, which was to be $1,000. That some time after signing application an accident policy was forwarded to plaintiff from Goldsboro, N. C signed by M. G. Bulkey, president, and Walter E. Faxon secretary, of defendant company, and purporting to be countersigned at Greensboro, N. C., by Wm. B. Merrimon general agent of the company. That on receipt of the policy plaintiff put same away without reading it; and about three months thereafter, plaintiff, having suffered the total loss of one eye made the formal application for payment of the third, but it was found that the policy held by him did not, for such loss, provide for payment of one-third of its face, to wit, $333.33 1/3, but stipulated only for a current indemnity for time lost, amounting to $15, which company had tendered and still offers to pay. That company had sent witness a check for the $15, and plaintiff had returned same. That they again sent check for this amount, which plaintiff refused to accept, but held check, which is still uncashed. Plaintiff further testified that he thought the policy held by him was the one he had bought, but found that it was not the one he had bought; that Mr. Bridgers, the agent, thought that he was selling witness the policy which would give him an indemnity of one-third of its face in the event of the total loss of one eye; and that plaintiff would not have taken the policy unless he had thought it was like Mr. Bulkey said. These facts are substantially set forth in the pleadings. The policy sent up as an exhibit contains numerous provisions stipulating for current indemnity for certain classes of injuries and absolute indemnity for others; but does not contain a stipulation for absolute indemnity to amount to one-third face value in case of loss of one eye. Defendant offered no testimony.

At the close of the evidence the court having intimated an opinion that on the testimony, if believed, plaintiff could not recover, plaintiff excepted, and, in deference to such adverse intimation, submitted to a nonsuit and appealed.

Aycock & Daniels, for appellant.

Dortch & Barham, for appellee.

HOKE, J. (after stating the case).

It seems to be well established that in the absence of some statutory inhibition an oral contract of insurance, or to insure, will be upheld if otherwise binding; except, as suggested by one author, in the case of guaranty insurance. Vance on Insurance, 148; Beach on Insurance, vol. 1, § 438, note 2. And further, that the enactment of a statute which establishes a standard form for a policy, the statute being only affirmative in its terms, will not invalidate an oral contract. Hicks v. Ins. Co., 162 N.Y. 284, 56 N.E. 743, 48 L. R. A. 424. This, and other decisions also, hold that in making a valid oral contract of insurance general in its terms, the law will read into the contract the standard policy as fixed by the statute, and that, in order to recover on such a policy, the claimant must comply with the necessary and material requirements of such a policy or establish a waiver thereof on the part of the company. While these principles are very generally admitted, it is also accepted doctrine that when the parties have bargained together touching a contract of insurance and reached an agreement, and in carrying out, or in the effort to carry out, the agreement, a formal written policy is delivered and accepted, the written policy, while it remains unaltered, will constitute the contract between the parties, and all prior parol agreements will be merged in the written instrument; nor will evidence be received of prior parol inducements and assurances to contradict or vary the written policy while it so stands as embodying the contract between the parties.

Like other written contracts, it may be set aside or corrected for fraud or for mutual mistake; but, until this is done, the written policy is conclusively presumed to express the contract it purports to contain. Vance on Insurance, pp. 163 348; Beach's Laws of Insurance, vol. 1, § § 495, 496; Insurance Co. v. Mowry, 96 U.S. 547, 24 L.Ed. 674. In the citations from Vance just made, at page 163, the author says: "When the contract of insurance is finally complete, it is customarily embodied in a formal written instrument, termed a ""policy." This instrument merges all prior or cotemporaneous parol agreements touching the transactions; and upon accepting it, the insured is conclusively presumed, in the absence of fraud, to have given his assent to all of its terms." And on page 348 he says: "The rule that all prior parol agreements are merged in a subsequent written contract touching the same subject-matter is now too well established to need the support of cited authority. Therefore, when a policy of insurance, properly executed, is offered by the insurer and accepted by the insured as the evidence of their contract, it must be conclusively presumed to contain all the terms of the agreement for insurance by which the parties intend to be bound. If any previous agreement of the parties shall be omitted from the policy, or any term not theretofore considered added to it, the parties are necessarily presumed to have adopted the contract as written as the final form of their binding agreement." The same author, referring to a decision of the Supreme Court of the United States in McMaster v. New York Life Ins. Co., 183 U.S. 25, 22 S.Ct. 10, 46 L.Ed. 64, which might be construed as militating to some extent against the position maintained by the author, says: "It is true, as has been heretofore explained, that there is a tendency on the part of some courts, in effect, to enforce the equitable remedy of reformation in actions at law upon insurance contracts, when the equitable position of the insured is unusually strong, as when the Supreme Court of the United States held in McMaster v. New York Life Ins....