Hill v. Philadelphia Life Ins. Co.

• Decision Date: 15 October 1929
• Docket Number: No. 2874.,2874.
• Citation: 35 F.2d 132
• Parties: HILL v. PHILADELPHIA LIFE INS. CO.
• Court: U.S. Court of Appeals — Fourth Circuit

35 F.2d 132 (1929)

HILL v. PHILADELPHIA LIFE INS. CO.

No. 2874.

Circuit Court of Appeals, Fourth Circuit.

October 15, 1929.

John M. Robinson, of Charlotte, N. C. (C. A. Cochran, of Charlotte, N. C., on the brief), for appellant.

Edward J. Boughton, of Philadelphia, Pa. (J. C. M. Vann, of Monroe, N. C., on the brief), for appellee.

Before NORTHCOTT, Circuit Judge, and GRONER and SOPER, District Judges.

SOPER, District Judge.

An action at law was brought below by the beneficiary of a life insurance policy which contained a provision that the payment of an installment of a premium would not maintain the policy in force beyond the date when the next installment should become payable, and that the failure to pay any premium or note when due would forfeit the policy. A note of the insured for part of the second annual premium was overdue and owing when the insured died, but the evidence showed that, before the note was due, an agent of the company agreed with the beneficiary to extend the time for payment of the note to a date subsequent to the death of the insured. This agent, however, was not one of certain named executive officers, to wit, the president, vice president, secretary, treasurer, actuary, or comptroller, to whom the power to extend the time for paying a premium or to accept any note in payment thereof was expressly restricted by the provisions of the policy. The District Judge, being therefore of the opinion that the agreement for the extension of the note was invalid, directed a verdict for the defendant. The question for decision is whether, by reason of the agent's agreement and other evidence presently to be discussed, the company was estopped to deny the agent's authority, or had waived the right to insist upon a forfeiture of the policy.

On July 26, 1926, the company insured the life of M. Lomax Hill in the sum of $5,000, payable upon his death to his wife for an annual premium of $167.65. On or about September 2, 1926, the policy was delivered to the insured, who paid $25 in cash on account of the first premium and executed two promissory notes dated September 2, 1926, one for the sum of $70, payable 30 days from date, and the other for the sum of $72.65, payable 60 days from date. The notes were made payable to the order of the Gordon Insurance & Investment Company located at Monroe, N. C., which was the manager of the southeastern department of the insurance company. The policy called for the payment of the first premium in advance, as the insured knew, and the taking of the notes was a matter of personal accommodation, which enabled the agent, W. S. Pemberton, who sold the policy, and his superior, C. Y. Coley, a supervisor of agents, to pay the premium in cash to the company. Neither the company nor its manager in this territory had knowledge that the first premium was not paid in cash. The notes were paid on December 1, 1926, and across the face thereof Coley wrote that they were paid in full.

The second annual premium became due on July 26, 1927. Under the terms of the policy, a period of 30 days' grace was allowed. On August 26, 1927, the insured paid $50 cash on account of the premium to W. E. Brown, cashier of the manager of the southeastern department of the company, and at the same time delivered to Brown, in order to secure an extension for the payment of the balance of the premium, two promissory notes, each for the sum of $52.17, one payable on October 26, 1927, and the other payable on January 26, 1928. The latter contained the following recitals and agreements:

"This note is given and accepted in part payment of the premium due on above date, on my Policy No. 90479.

"It is understood and agreed to by me that, if this note is not paid at its maturity, or at the expiration of any period to which it shall have been extended, no days of grace being allowed for the payment thereof, the said Insurance Contract No. 90479 shall lapse, and all further liability of said Philadelphia Life Insurance Co. on account of said Contract shall immediately cease and determine, subject to the privileges and provisions therein stated, and that the money which has been paid on account of the premium or premiums, for the balance of which this note is given, shall be forfeited to the Company. No personal liability accrues under this note and in event of nonpayment the sole remedies of the Company shall be as stated herein.

"M. Lomax Hill.

"No. 90479 Due Jan. 26, 1928.

"The company is authorized to insert number of policy."

On October 25, 1927, the insured paid Brown $52 on account of the first note, and the company received and retained this amount, but the second note was not paid on January 26, 1928, when it was due. The beneficiary testified that about the middle of January, 1928, she saw Coley, and stated that she was unable at that time to pay the second note, and inquired whether he would hold the note until the 1st of March, which he agreed to do. In the interval, to wit, on February 24, 1928, the insured died, and the company refused to pay the insurance on the ground that the policy had been forfeited by the failure to pay the premium note when due.

C. Y. Coley, with whom the beneficiary made the agreement to extend the note, was not one of the executive officers of the company named in the policy. He was an employee of the Gordon Insurance & Investment Company, the above-named manager of the southeastern department of the company. He had the supervision of from four to eight insurance agents, covering the territory of Charlotte, Concord, and Gastonia, N. C., and had charge of the manager's office at Charlotte. He had authority to canvass insurance applications. His other duties and activities were described by Pemberton, who testified that he reported to the Charlotte office every day where he saw Coley, and that he was acquainted with the routine of the office during the period from July to October, 1926. Coley supervised the agents, received and delivered policies, collected premiums, and answered the correspondence of the company. It was the custom in this territory for the insured to give notes in part payment of premiums subsequent to the first premium. Coley would receive these notes from the insured in the first instance and send them to the manager at Monroe. Some fifteen days before the notes became due, they were returned to Coley for collection. Whenever possible, he would collect the cash, but, if he could not get the cash, he would usually accept renewal notes. Sometimes he would accept payment of the premium notes after they were due and would make remittances to the manager. In such cases he would not allow an indulgence for so long a period as two or three months, but would...