Harlow v. North American Acc. Ins. Co.

• Decision Date: 04 May 1931
• Docket Number: 22502.
• Citation: 298 P. 724,162 Wash. 423
• Parties: HARLOW v. NORTH AMERICAN ACC. INS. CO.
• Court: Washington Supreme Court

298 P. 724

162 Wash. 423

HARLOW v. NORTH AMERICAN ACC. INS. CO.

No. 22502.

Supreme Court of Washington

May 4, 1931

Department 2.

Appeal from Superior Court, Spokane County; Joseph B. Lindsley Judge.

Action by Mrs. Winnie Harlow against the North American Accident Insurance Company. Judgment for plaintiff, and defendant appeals.

Affirmed.

E. H Belden, of Spokane, for appellant.

P. C Shine, of Spokane, for respondent.

BEELER J.

We shall refer to the defendant as the company and to the insured as Hart.

The plaintiff, as beneficiary named in an accident and sickness insurance policy, brought this action upon the policy. The case came on for trial before the court and a jury. At the conclusion of the introduction of the evidence the court instructed the jury to return a verdict for the plaintiff in the sum of $1,000, the amount stated in the policy. Thereafter the company filed a motion for judgment non obstante veredicto, or, in the alternative, for a new trial. This motion was overruled and judgment entered in favor of the plaintiff. The company has appealed.

The facts are: The company is an insurance corporation organized under the laws of the state of Illinois, and is authorized to issue accident and sickness insurance policies. It maintains its principal place of business at Chicago, and has a branch office located at Denver, Colo. Prior to and on February 16, 1928, one J. T. Luther was the company's agent at Denver, and P. F. Vaughn was one of its solicitors working through the office of the Luther agency. Prior to and on February 16, Hart, a nephew of the plaintiff, a farm hand, was employed on a ranch near Denver, and on that day Vaughn procured his signature to an application blank for accident and sickness insurance and collected only $2 of the premium from him, which was turned over to the Luther agency. The premium on this policy for one year was $10. At the foot of the application blank, below the applicant's signature, was printed the following:

'Important Notice

'All premiums are made payable in advance. Agent must collect the premium with the application.'

This application was delivered by the so-licitor to the Luther agency and by it forwarded to the home office at Chicago. Thereupon the company issued the policy and mailed it to the Denver office. This policy was dated February 25, 1928, and countersigned by the Luther agency, and in part provides: 'The company in consideration of the statements in the application therefor, a copy of which is endorsed upon and made a part of this contract, and the payment of the premium, of ten (10) Dollars, hereby insures Bud C. Hart, * * * for the term of one year, etc.' (Italics ours).

On March 16, 1928, the solicitor again interviewed Hart and collected the further sum of $3, which was applied on the premium, and issued and delivered to Hart the following receipt:

'North American Accident Insurance Company

'General Offices Rookery Building, Chicago.

'March 16, 1928.

'Received of Bud C. Hart an application for a 10 dollar policy series _____ in the North American Accident Insurance Company, and the sum of Five Dollars ($5.00) being payment in advance of _____ month's premium on Policy so applied for.

'Applicant will please notify the Company at Chicago, Illinois, should the Policy not be received within twenty days from date hereon.

'J. F. Luther Agency,

'506 Patterson Bldg. Denver Colo.

'P. F. Vaughn, Agent.

'Form 662.'

On March 19, 1928, Hart lost his life in a fire at Denver.

The company disclaimed liability because the premium had not been paid in full, and that the policy had not been delivered to Hart. Thereafter suit was brought. The cause was tried to the court and a jury. At the conclusion of the testimony the court instructed the jury to return a verdict for the plaintiff on the theory that there was no disputed question of fact, and that the questions involved were those of law. It may be said parenthetically that the evidence is comparatively brief, being limited, except for the formal proof on the part of the beneficiary, to the testimony of Vaughn and Luther, witnesses on behalf of the company, taken on written interrogatories. Respondent submitted no cross-interrogatories. The facts above detailed are established by the testimony of the company's two witnesses.

Thus it will be seen there was no manual delivery of the policy to Hart prior to his death. The question then is: 'Was there constructive delivery? In Frye v. Prudential Insurance Co., 157 Wash. 88, 288 P. 262, 263, the facts and questions involved were very similar to the facts and questions in the instant case, except that the facts here are more favorable to the insured than in the Frye Case. Here the insured had paid one-half of the premium, $2 on February 16, and $3 on March 16, which was delivered to and accepted by the local agency at Denver. In the Frye Case no portion of the premium had been paid. Furthermore, in the Frye Case the application provided that the policy should not take effect until 'received' by the insured. The application here contained no such provision. Here, as in the Frye Case, the application provided that 'all premiums should be paid in advance.' Here, as in the Frye Case, the agent had authority to take applications, deliver policies, and collect premiums. Here, as in the Frye Case, the company forwarded the policy from its home office to its agents, but placed no restrictions or conditions as to when the policy should be delivered. Here, as in the Frye Case, the company claimed nonliability because the premium had not been paid in full, nor the policy delivered.

In passing on the question in the Frye Case, we held that the mailing of the policy from the insurer's home office to the local office for the purpose of delivery constituted constructive delivery. The rule in regard to such delivery, as quoted in the Frye Case, supra, is well stated in 14 R. C. L. p. 898: 'It is the intention of the parties and not the manual possession of a policy that determines whether there has been a delivery thereof. There must be an intention to part with the control of the instrument and to place it in the power of the insured or some person acting for him. Manual delivery to the insured in person is not necessary, nor is the fact that a policy has been turned over to the insured conclusive on the question of delivery. This matter of delivery is largely one of intent, and the physical act of turning over the policy is open to explanation by parol evidence. The deposit of an insurance policy in the mails, addressed to the insured, is a delivery to him and the same is true of the mailing or otherwise delivering the policy to the agent of the insurer with unconditional instructions to deliver the same to the insured, though it is otherwise where the instructions to the agent are conditional.' See authorities cited in the Frye Case, supra. pra.

In the case of N. Pelaggi & Co. v. Orient Ins. Co., 102 Vt. 384, 148 A. 869, 871, general agents representing several fire insurance companies issued a policy in the defendant's company covering plaintiff's property. A fire occurred before the policy was delivered. The question raised was substantially identical to the question here presented. The policy had not been delivered nor the premium paid. The court held: 'The defendant says it cannot be held, because (1) its policy was not delivered until after the fire. * * * In support of the first of these propositions, the defendants points to the fact that its policy never left the desk in McAllister & Kent's [the agents] office. That a fire insurance policy must be delivered before it becomes effective may be assumed. Though we find no occasion to consider the question of delivery apart from that of cancellation, we may say in passing that it does not take much to establish a delivery of an insurance policy. Manual delivery is not indispensable. It is a question of intention largely. If a policy is written under an agreement therefor, and is complete and ready for delivery, so that nothing remains to be done but pass it over to the insured, though it remains in the hands of the insurer's agent, a constructive delivery results, which satisfies the rule. In such a case, the insurance agent is deemed to hold the policy for the insured. Porter v. Mutual Life Ins. Co., 70 Vt. 504, 508, 41 A. 970; Stephenson v. Allison, 165 Ala. 238, 51 So. 622, 138 Am. St. Rep. 26, and interesting and instructive note on page 29.' To the same effect see Drucker v. Dutcher, 33 Ohio App. 253, 169 N.E. 311.

The next question presented is: Did the company and its agents waive the terms and conditions of the application and impliedly extend credit to the insured for the unpaid balance of the premium?

The premium on this policy was $10. When the company's agent collected $2 of the premium he waived the terms and conditions of the application; the Luther agency did likewise when it accepted the application and forwarded it to the home office in Chicago; the company waived the terms by accepting the application and issuing and forwarding the policy to its local agent at Denver; the local agency at Denver again waived the terms of the application when it gave te policy to its solicitor, Vaughn, for purposes of delivery. Furthermore, the policy acknowledged full payment of the premium. The policy was placed in the mail and sent to the Denver office without any restrictions or conditions as to when delivery should be made. Courts generally hold that a condition in an application or policy requiring full payment of the premium before the policy takes effect may be waived.

'An insurance company may waive any condition of a policy inserted therein for its benefit.' Knickerbocker L ...