Johnson v. Prudential Life Ins. Co. of America

• Decision Date: 18 January 1927
• Citation: 252 P. 556,120 Or. 353
• Parties: JOHNSON v. PRUDENTIAL LIFE INS. CO. OF AMERICA.
• Court: Oregon Supreme Court

252 P. 556

120 Or. 353

JOHNSON v. PRUDENTIAL LIFE INS. CO. OF AMERICA.

Supreme Court of Oregon

January 18, 1927

Department 1.

Appeal from Circuit Court, Multnomah County; George W. Stapleton Judge.

Action by George H. Johnson against the Prudential Life Insurance Company of America. From a judgment for plaintiff, defendant appeals. Affirmed.

This appeal is from a judgment in favor of the plaintiff for the sum of $1,967.45, the further sum of $500 attorney's fee and the costs and disbursements of the action. In May, 1923 plaintiff applied to the defendant insurance company for a 20-year life insurance policy on each of his two minor sons requesting the company to issue one policy June 20, 1923, and the other policy July 20, 1923. The defendant company issued a policy on the life of Verne Johnson June 20, 1923. The first premium for which was paid July 23, 1923, at the same time the policy on the life of Loyst W. Johnson, the other minor son, was delivered. The first premium was not paid on the life of Loyst W. Johnson at the time it was delivered. The plaintiff claims that the policy was delivered unconditionally and that 30 days' credit was given him in which to pay the first premium. The defendant claims that the policy on the life of Loyst was left for inspection only and denies liability because the first premium was not paid. Loyst was killed in an accident at Metzger Junction on August 10, 1923, within 30 days after the delivery of the policy to the plaintiff. The application for both said policies were identical and contained this sentence:

"I further agree that the policy herein applied for shall be accepted subject to the privileges and provisions therein contained, and that, unless the full first premium is paid by me at the time of making this application, the policy shall not take effect until issued by the company and received by me and the full first premium thereon is paid while my health, habits, and occupation are the same as described in this application."

Both policies also contained the following provisions:

"(a) Payment of Premiums.--This policy is based upon the payment of premiums annually in advance.

"(b) Modification, etc.--No condition, provision, or privilege of this policy can be waived or modified in any case except by an indorsement hereon signed by the president, one of the vice presidents, the secretary, one of the assistant secretaries, the actuary, the associate actuary, or one of the assistant actuaries. No modification or change shall be made in this policy except such as is in accordance with the laws of the state in which the same is issued. No agent has power in behalf of the company to make or modify this or any other contract of insurance, to extend the time for paying a premium, to waive any forfeiture, or to bind the company by making any promise, or by making or receiving any representation or information.

"(c) Entire Contract Contained in This Policy.--This policy, together with the application, a copy of which is attached hereto, contains and constitutes the entire contract between the parties hereto, and all statements made by the insured shall in the absence of fraud be deemed representations and not warranties, and no statement shall avoid the policy or be used as a defense to a claim thereunder unless it be contained in the application for the policy and unless a copy of such application be indorsed upon or attached to the policy when issued."

The instruction to the agents of the defendant contained the following:

"The policy by its terms constitutes the receipt for the first premium; therefore an agent must not allow a policy to pass into the possession of the applicant, unless during the good health of the person insured and within the time allowed by the company for delivery, except that (when necessary) a policy may be left with an applicant for a few days for purpose of inspection, provided the receipt on form 1565 is obtained and filed in the district office. A representative who leaves a policy with the applicant without obtaining completed form 1565 will be held responsible for the amount of the first premium. * * *

"(c) Policies must not be delivered unless premium is actually paid in cash. The company does not under any circumstances recognize premium settlements by note. The acceptance of a note by the agent obligates him to settle at once with the company in cash."

The errors assigned by defendant are eight in number, which may be reduced, however, to the following: First, refusal of the court to strike paragraph 6 of the plaintiff's amended complaint. That paragraph contains the allegation for $500 as reasonable attorney's fee. Second, overruling defendant's demurrer to plaintiff's amended complaint. Third, admitting in the testimony of plaintiff a conversation between him and D. E. Wilson, superintendent of the Portland office of defendant. Fourth, denying defendant's motion for a nonsuit, denying defendant's motion for a directed verdict, and refusing defendant's request for a verdict in its favor. Fifth, instructing the jury to take into consideration the possibility of an appeal in fixing the amount of attorney's fee to be allowed plaintiff. Assigned errors as outlined above, No. 2 and No. 4, together with assigned error in overruling and denying defendant's motion for a new trial, are all addressed to the same legal question and will be treated as one assigned error.

Rand J., dissenting.

E. J. Brazell, of Portland (Brice & Brazell, of Portland, on the brief), for appellant.

Bartlett Cole, of Portland, for respondent.

COSHOW, J. (after stating the facts as above).

The insured, Loyst W. Johnson, died August 10, 1923. The amended complaint was filed on April 29, 1924. The statute (Or. L. § 6355) prescribes that, whenever any suit or action is brought in any court of this state upon any policy of insurance of any kind and nature, the paintiff, in addition to the amount which he may recover, shall be allowed such sum as the court or jury may adjudge to be reasonable attorney's fee in such suit or action, provided that settlement is not made within eight months from the date proof of loss is filed with the company. Proof of loss in this case was filed August 15, 1923, more than eight months prior to the date the amended complaint was filed. The motion to strike paragraph 6 was on the ground that the same is irrelevant and immaterial. No objection was made to allowing the complaint to be amended so as to include the allegation for attorney's fee. That allegation should have been introduced by supplemental plea, but, inasmuch as that question was not raised in the circuit court, it will be ignored here. It is a matter purely of form, not of substance. Walker v. Fireman's Fund Ins. Co., 114 Or. 545, 573, 234 P. 542.

The testimony objected to was to the effect that Mr. Wilson, superintendent at Portland of defendant company, had knowledge of the alleged extension of credit by the agent Seydel. It was contended by the defendant that Mr. Wilson knew nothing of the alleged extension of credit and that Seydel had no authority to extend credit. In the conversation testified to the plaintiff said that Mr. Wilson read to him a letter or part of a letter which he had written to the defendant company from which it could be inferred that Mr. Wilson had knowledge of the extension of credit. That point was directly in issue and the conversation was admissible as tending to support the contention of plaintiff in that regard. A general agent may waive prepayment of the premium. Harrison v. Birrell, 58 Or. 410, 418, 115 P. 141; Francis v. Mutual Life Ins. Co., 55 Or. 280, 106 P. 323; American Employers' Liability Ins. Co. v. Fordyce, 62 Ark. 562, 36 S.W. 1051, 54 Am. St. Rep. 305, 308; Virginia Fire & Marine Ins. Co. v. Richmond Mica Co., 102 Va. 429, 46 S.E. 463, 102 Am. St. Rep. 846 et seq., and other authorities cited below; 32 C.J. 1135, § 242; Joyce on Insurance (2d Ed.) 308, § 86.

Mr. Wilson represented the defendant in this state. The defendant is a corporation having its principal office and place of business in Newark, N. J. The policy involved was written at the office of the company in Newark. The opinion in Hinkson v. Kansas Life Ins. Co., 93 Or. 473, 183 P. 24, criticizes the former opinion of this court expressed in Cranston v. West Coast Life Ins. Co., 72 Or. 116, 130, 142 P. 762, 766, as follows:

"* * * If the officers of the company had an opportunity to inform themselves of the facts and circumstances of the delivery of the policy and the arrangement as to the premium, and

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