Gwaltney Et Ux v. Provident Sa

• Decision Date: 11 May 1903
• Citation: 44 S.E. 659,132 N.C. 925
• Court: North Carolina Supreme Court
• Parties: GWALTNEY et ux. v. PROVIDENT SAV. LIFE ASSUR. SOC.

44 S.E. 659

132 N.C. 925

GWALTNEY et ux.

v.PROVIDENT SAV. LIFE ASSUR. SOC.

Supreme Court of North Carolina.

May 11, 1903.

LIFE INSURANCE—FRAUD OF AGENT—RECOVERY OF PREMIUMS—GENERAL AGENT—POWER TO WAIVE CLAUSE IN POLICY—WITNESSES—COMPETENCY—TRANSACTIONS WITH DECEASED AGENT—PAROL EVIDENCE—EXCEPTIONS TO CHARGE.

1. The rule that parol agreements are merged in a written contract has no application whereit is averred that the written contract was by fraud or mistake executed differently from the terms of said agreement.

2. Promise by the general agent of an insurance company that the premiums on plaintiff's policy should not be raised was not an unreasonable one, on which plaintiff should have refused to rely, where the policy itself, which was not on the level premium plan, contained a note that, unless there was an unforeseen mortality, the company expected to maintain the level rate.

3. Code, § 590, which forbids a party to an action testifying as to a personal transaction or communication with a decedent from whom he derives his interest, does not preclude plaintiff suing to recover premiums paid on a life policy, on the ground that he was induced by the fraudulent representations of a deceased agent to accept a policy different from that agreed on, from testifying as to the agreement and conversations had by him with the agent.

4. A general agent of an insurance company can waive any stipulation in the policy, notwithstanding a clause in the policy forbidding it.

¶ 4. See Insurance, vol. 23, Cent. Dig. § 953.

5. Code, § 550, requires each exception to a charge to be "stated separately in articles numbered." Held, that it was not a compliance with the statute to divide a charge into four sections, each containing many propositions and divers paragraphs, and to except seriatim to each of those four subsections of the charge.

6. Where a life policy was wrongfully canceled by the company, the insured was entitled to recover the premiums paid, with interest on each from the date of payment.

Montgomery, J., dissenting.

Appeal from Superior Court, Catawba County; Long, Judge.

Action by W. R. Gwaltney and wife against the Provident Savings Life Assurance Society. Judgment for plaintiffs, and defendant appeals. Affirmed.

Maxwell & Keerans, for appellant.

T. M. Hufham and E. B. Cline, for appellees.

CLARK, C. J. This action was brought to recover the premiums, with interest thereon, paid on a life insurance policy issued to the plaintiff by the defendant in 1899, through its general agent in this state. The complaint alleges that said agent, in soliciting the application, agreed to issue to the plaintiff a level rate policy, whereas the one issued increased the premiums with age. The application on its face is for a policy "upon the annual renewable plan, with surplus applied to keeping premiums level, participating premiums payable quarterly, " and the policy provides for "payment of the annual renewal premium for the actual age attained, in accordance with schedule printed on next page of this policy for each $1,000, except as reduced by the application of the surplus and guaranty fund, " and at the foot of said table in the policy is the following: "Note. Provided the mortality in this society shall be as favorable in the future as it has been in the past in the largest and best of the other companies (thus far it has been more favorable), this insurance will be extended and renewed during the whole expectation or probable lifetime of the insured at the rate of pre mium charged for the first year only of the policy."

There were 13 issues submitted to the jury, which, with the responses thereto, establish the following state of facts: "That one Jones was the general agent in this state of the defendant at the time the application was made and the policy issued; that as such general agent of the defendant, by false and fraudulent representations, he induced the plaintiff to make the application and take out the policy of insurance upon an agreement made at and before the delivery of the policy that the premiums per quarter should be $22.41 for the life of the assured, and no more, and thereby induced the plaintiff to accept the policy; that the application was filled out by the defendant's general agent (Jones), and the plaintiff was induced to accept the policy and pay $22.41 per quarter, and was misled and prevented from examining the terms of the policy at the time of delivery and till demand of increase of premium by reason of false, deceitful, and fraudulent representations of said Jones at and before the delivery of the policy; that the defendant received the premiums from the plaintiff at the rate of $22.41 for nine years, and then demanded an increase of premiums to $28.01 per quarter, which the plaintiff paid, but under protest, for two years, when the amount demanded was raised to $41.73 per quarter, and. upon the plaintiff's refusal to pay the same, the defendant discontinued the policy, and held all the premiums paid to that date; that, after the execution and delivery of the policy, the defendant, through its general agent, agreed to continue the policy upon the payment of $22.41 per quarter during the life of the plaintiff, waiving the provisions in the policy which permitted an increase in the premiums; that the defendant at the time of issuing the policy had notice of the special contract with the plaintiff, made by Jones, that the policy was not issued in accordance with the aforesaid verbal contract with the defendant's general agent; that the increase in rates was contrary to said agreement, though permitted by the terms of the policy, which the plaintiff had retained in his possession from its delivery to him." There were allegations and evidence justifying the above verdict, if the jury believed the evidence.

The defendant objected to the evidence by the plaintiff of the conversations and agreements between him and the defendant's general agent before or cotemporaneous with the delivery of the policy, because such verbal agreements were merged in the written application and policy, and also under the Code, § 590, because the said general agent, Jones, was dead at the time of the trial. The rule that parol agreements are merged in a written contract has no application, when, as here, the allegation is that the written contract was by fraud (or mistake) executed differently from the terms of said agreement Powell v. Heptinstall, 79 N. 0. 207; McLeod v. Bullard, 84 N. C. 527; Bank v. McElwee, 104 N. C. 305, 10 S. E. 295. The plaintiff's testimony is substantially set out in his complaint, which is summarized in the opinion in this case, 130 N. C., at page 630, 41 S. E. 795. It appeared in the plaintiff's evidence (if believed) that the plaintiff was ignorant of the terms and provisions of life insurance policies, and that the agent put him off his guard by agreeing in advance that the policy should be for level premiums, and hence the plaintiff, relying on said agent's representations, did not scrutinize the policy, but the agent handed it to him on the street, when there was no opportunity to examine it, telling him, "Here is your policy, " from which the plaintiff understood it was the policy agreed on. The receipt of the policy under circumstances similar to these, without reading, was held not binding on the assured. Fitchner v. Fidelity Ass'n, 103 Iowa, citing numerous cases, at page 279, 72 N. W. 530; Kister v. Ins. Co. (Pa.) 18 Atl. 447, 5 L. R. A. 646, 15 Am. St. Rep. 696; McMaster v. Ins. Co., 183 U. S. 37, 22 Sup. Ct. 10, 46 L. Ed. 64. A deed under such circumstances can be avoided between the parties. Medlin v. Buford, 115 N. C. 260, 20 S. E. 463. The premiums were collected on the level of $22.41 per quarter for nine years, and not till the plaintiff was too old to obtain insurance in any other company was the premium raised to $28.01, which he paid for two years under protest (thus reserving his rights), and then suddenly the premium was jumped to $41.73 per quarter, being very nearly double the original rate, which the plaintiff testified and the jury find the general agent promised him should not be raised. Such promise was not such an unreasonable one that the plaintiff, as an ordinarily prudent man, should have refused to rely upon it, for the table annexed to the policy and referred to therein contained the note above set out that, unless there was unforeseen mortality, the company expected to maintain the level rate of the first...