French v. Franklin Life Ins. Co.

• Decision Date: 27 July 1942
• Parties: James Lawrence French, Respondent, v. The Franklin Life Insurance Company, a Corporation, Appellant
• Court: Missouri Court of Appeals

164 S.W.2d 90

237 Mo.App. 696

James Lawrence French, Respondent, v. The Franklin Life Insurance Company, a Corporation, Appellant

Court of Appeals of Missouri, Springfield District

July 27, 1942

Appeal from the Circuit Court of Greene County, Division Number Two Hon. Warren L. White, Judge.

Reversed and remanded (with directions).

C Wallace Walter and Mann & Mann for appellant.

(1) Under the terms and provisions of the policy of life insurance in question, the policy lapsed upon failure of payment of the premium due September 24, 1940, which payment the plaintiff admits was not made before the expiration of the grace period for such payment. Darby v. Northwestern Mut. Life Ins. Co., 293 Mo. 1, 239 S.W. 68; Lee v Mo. State Life Ins. Co., 303 Mo. 492, 261 S.W. 83; Serabian v. Met. Life Ins. Co., 17 S.W.2d 646. (2) There was no duty on the part of the defendant to give the plaintiff any notice as to the dates on which the premium payments were to become due or as to the expiration of the grace periods for such payments, as there was no provision in the policy of insurance whereby the defendant was required or agreed to give any such notice to the plaintiff. Dougherty v. Mutual Life Ins. Co. of N. Y., 226 Mo.App. 570, 44 S.W.2d 206; Spears v. Independent Order of Foresters, 107 S.W.2d 126; Thomas v. N. Y. Life Ins. Co., 81 F.2d 614; Thompson v. Knickerbocker Life Ins. Co., 14 Otto (104 U.S.) 252, 26 L.Ed. 765. (3) A soliciting agent of an insurance company, whose authority is limited to the solicitation for and delivery of policies and the collection of premiums, as distinguished from a general agent, has no power to waive any condition of the insurance policy subsequent to its delivery. Agent Lloyd was, therefore, under the terms of his contract with the defendant and by reason of the provisions and limitations of the policy, without authority to waive any of the provisions of the policy of life insurance in question, or to estop the defendant by his conduct in reminding plaintiff of the dates of expiration of the grace periods for premium payments. Mitchell v. Met. Life Ins. Co., 116 S.W.2d 186; Grady v. John Hancock Mut. Life Ins. Co., 150 S.W.2d 574; Clark v. J. Hancock M. L. I. Co., 230 Mo.App. 593, 58 S.W.2d 484; Bennett v. Royal Mutual Life Ins. Co., 232 Mo.App. 1027, 112 S.W.2d 134; Gibson v. Texas Prudential Ins. Co., 229 Mo.App. 867, 86 S.W.2d 400; Longley v. Met. Life Ins. Co. of N. Y., 48 S.W.2d 285; Rhodus v. Life Ins. Co., 156 Mo.App. 281, 137 S.W. 907; 32 C. J. 1065, 1067; 5 Cooley's Brief on Ins. (2 Ed.), pp. 3986, 3992; Byrne v. Prudential Ins. Co. of America, 88 S.W.2d 344; Raker v. Service Life Ins. Co., 226 Mo.App. 1223, 49 S.W.2d 285. (4) There is a line of cases in Missouri holding that an agent of an insurance company may by his acts or representations waive provisions of an insurance policy or estop the company to assert forfeiture of the policy, but in each of those cases the agent had authority to make contracts of insurance, issue policies or do such other acts as to make him the alter ego of the company. This line of cases is clearly inapplicable to the case at bar. (5) The burden of proof rests upon plaintiff to show that an act of an agent is within his express authority or within that which is fairly implied by the authority given. Bennett v. Royal Mutual Life Ins. Co., supra; Grady v. John Hancock Mut. Life Ins. Co., supra; Johnson v. Hurley, 115 Mo. 513, 22 S.W. 492; Gibson v. Texas Prudential Ins. Co., supra; 2 C. J. 926. (6) One dealing with an agent is put upon inquiry as to the scope of his powers and must use reasonable diligence to ascertain whether the agent acts within the scope of his power. The apparent authority of an agent does not extend beyond that which an ordinarily prudent person dealing with him might in good faith have the right to assume that the agent possesses. Patterson v. Prudential Ins. Co., 23 S.W.2d 198; Grady v. John Hancock Mut. Life Ins. Co., supra; 2 Am. Jur., 76; 2 Couch Cyclopedia of Ins. Law, sec. 514, p. 1470. (7) As the policy in question provides: "Only the president or secretary has power in behalf of the company (and then only in writing) to make or modify this or any contract of insurance, or to extend the time for paying any premium, and the company shall not be bound by any promise or representation heretofore or hereafter given by any agent or person other than the above," the plaintiff was conclusively presumed to show that the conduct of Agent Lloyd was not binding on the defendant unless brought to its knowledge and ratified by it. 29 Am. Jur. 334; Longley v. Met. Life Ins. Co. of N. Y., supra; Grady v. John Hancock Mut. Life Ins. Co., supra. (8) Even assuming for the purpose of this point, that Agent Lloyd was acting within the scope of his authority in customarily contacting plaintiff and reminding him as to the dates of expiration of the grace periods for premium payments, and even assuming further that the plaintiff may have relied as a reasonably prudent person on such personal notice as he alleges and that the defendant was bound thereby, the duty to give such notice was not an absolute one. Agent Lloyd made every reasonable effort to contact the plaintiff for the purpose of reminding the plaintiff at the place and in the manner in which he had done theretofore. The custom, if one were created, to remind the plaintiff personally or by telephone, could not be extended beyond the actual conduct of Agent Lloyd in so reminding him at his office, and if any duty were created by reason of such conduct it was fully complied with and satisfied, even though the plaintiff did not actually receive such reminder. (9) As there was no proof of the authority, either actual or apparent, of Agent Lloyd to bind the defendant by his conduct contrary to the provisions of the policy in question, the evidence of his conduct in reminding plaintiff of the expiration of the grace periods was inadmissible, irrelevant and incompetent and the admission of same was reversible error. See cases under (3), (5), (6), and (7).

James H. Keet for respondent.

(1) Courts look with great disfavor upon forfeitures and will seize upon even the slightest evidence in order to avoid them. A presumption exists in favor of a chancellor's finding and it is given weight and consideration. N. Y Life Ins. Co. v. Eggleston, 6 Otto (96 U.S.) 572, 24 L.Ed. 841; Carpenter v. St. Joe Life Ins. Co., 246 S.W. 623; 4 C. J. 897; Schrader v. Westford Ave. Bank, 156 S.W.2d 753. (2) The defendant's course of dealing with the plaintiff induced the latter honestly and reasonably to believe that the nonforfeiture clause would not be insisted upon, but that notice would precede the insistence on forfeiture, and in consequence he was put off his guard, and therefore the defendant owed him a duty to give him the usual and promised personal notice, and since it was not given, nor timely notice of its discontinuance, nonpayment may not be insisted upon as a ground for forfeiture, even though the place for and the amount of payment was certain. Mo. Cattle Loan Co. v. Great So. Life Ins. Co., 330 Mo. 988, 52 S.W.2d 1; 3 Couch, Cyclopedia of Insurance Law, sec. 668, p. 2196; Feld v. Continental Cas. Co., 122 P.2d 513. (3) The defendant's sending written notices is not material in view of the facts. Siebert v. Supreme Council, 23 Mo.App. 268; 3 Couch, op. cit., sec. 672, pp. 2202, 2209. (4) Agent Lloyd's attempts to contact the plaintiff did not satisfy the defendant's duty to give notice, because they were not reasonable and because, under the facts in this case, the defendant owed an absolute duty to give him notice. Siebert v. Supreme Council, supra; 3 Couch, op. cit., sec. 673, pp. 2214, 2215. (5) Defendant's course of dealing was sufficient as a custom to lead plaintiff to believe reasonably that notice would precede forfeiture. Mo. Cattle Loan Co. v. Great So. Life Ins. Co., supra; Goedecke v. Met. Life Ins. Co., 30 Mo.App. 601; Thompson v. St. L. Mut. Life Ins. Co., 52 Mo. 469; McMahon v. Maccabees, 151 Mo. 522, 52 S.W. 584; Hanley v. Life Ass'n of Am., 69 Mo. 380; Bergamann v. St. Louis Life Ins. Co., 2 Mo.App. 262; Wright v. Met. Life Ins. Co., 221 S.W. 383. (6) Defendant is bound by agent Lloyd's conduct because: (a) It knew of and encouraged it and impliedly consented to it by giving him the authority which it did. Woolfolk v. Home Ins. Co., 202 S.W. 627. (b) The knowledge and encouragement of it by agent Cowden, in view of his broad authority, bound the defendant. 3 Couch, op. cit., sec. 506, pp. 1443, 1446; McDonald v. Eq. Life Assur. Soc., 185 Iowa 1008, 169 N.W. 352; Limbaugh v. Monarch Life Ins. Co., 84 S.W.2d 208; Gibson v. Tex. Prud. Ins. Co., 229 Mo.App. 867, 86 S.W.2d 400; Kelso v. Lincoln Nat. Life Ins. Co., 51 S.W.2d 203; Block v. U.S. Fid. & Guaranty Co., 316 Mo. 278, 290 S.W. 429. (c) Lloyd had apparent authority to bind the defendant. 2 Couch, op. cit., sec. 506, p. 1443; Madsen v. Prud. Ins. Co. of Am., 185 S.W. 1168; Thelen v. Met. Life Ins. Co., 2 F.Supp. 404; Shook v. Mut. Fire Ins. Co., 154 Mo.App. 394, 134 S.W. 489; Woolfolk v. Home Ins. Co., supra; Green v. Am. Life & Acc. Ins. Co., 93 S.W.2d 1119; 32 C. J. 1331. (7) The cases relied upon by the defendant to show that Lloyd did not have apparent authority to bind it in this case are distinguishable since in them the agent's authority was not as broad as Lloyd's, and the acts involved did not involve an estoppel after the execution of the policy, this latter distinction being a vital one, and especially true where the acts were not (as Lloyd's were) in aid of the policy as written. Longley v. Met. Ins. Co., 48 S.W.2d 74; Brabham v. Pioneer Life Ins. Co., 253 S.W. 787; Carpenter v. St. Joe Life Ins. Co., 246 S.W. 623; Greenwood v. N. Y. Life...