Lechler v. Mont. Life Ins. Co. of Helena, Mont.

• Decision Date: 30 December 1921
• Citation: 48 N.D. 644,186 N.W. 271
• Parties: LECHLER v. MONTANA LIFE INS. CO. OF HELENA, MONT.
• Court: North Dakota Supreme Court

48 N.D. 644

186 N.W. 271

LECHLER

v.MONTANA LIFE INS. CO. OF HELENA, MONT.

Supreme Court of North Dakota.

Dec. 1, 1921.

Rehearing Denied Dec. 30, 1921.

Syllabus by the Court.

Action upon an insurance policy. The policy had lapsed for nonpayment of the second premium. Agents of the insurance company solicited reinstatement and obtained the signature of the policy holder to a reinstatement blank, and a note for the premium, giving him assurance at the time that upon receipt of his application and note the policy would be reinstated by the company. Five weeks later the actuary returned the note to the agent who sent it, stating that it could not be received in payment, and suggesting that further attempts be made to secure payment of the premium partly in cash. The policy holder was not notified, and the note was not returned to him. About six weeks later, the policy holder died. It is held:

An agent of an insurance company, with authority to solicit applications for insurance, is the agent of the company within section 6632, C. L. 1913, and not of the insured while soliciting an application for reinstatement.

A clause in an insurance policy, to the effect that it cannot be altered by an agent or its provisions waived, except by written agreement of the company, is for the benefit of the company, and may be waived by it.

Where a policy holder is led honestly to believe that by conforming to certain requirements stated by an agent, his policy will be reinstated, and where he complies with the requirements, and thereafter the company neglects to notify him that his reinstatement application is rejected, it waives the provisions of the policy under which its nonliability might otherwise be asserted.

Where the relations between parties are such that an offeree is under duty to notify the offerer that his proposal is rejected, the failure to communicate the rejection may result in legal assent to the terms of the offer.

Appeal from District Court, Golden Valley County; Thomas H. Pugh, Judge.

Action by Bernard Lechler against the Montana Life Insurance Company of Helena, Mont. Judgment for plaintiff, and defendant appeals. Affirmed.

Robinson and Christianson, JJ., dissenting.O. W. McConnell, of Helena, Mont., and Keohane & Jones and G. J. Oppegard, all of Beach, for appellant.

Simpson & Mackoff, of Dickinson, for respondent.

BIRDZELL, J.

This is an appeal from a judgment in favor of the plaintiff, which was entered on the verdict of a jury. The facts are as follows: The plaintiff is the beneficiary of a life insurance policy issued by the defendant on the life of his uncle, Henry Boerger. The policy was issued on November 17, 1917, in the sum of $5,000. The premiums were payable on November 17th of each year, with the proviso that, after the policy had been in force a year, 31 days of grace would be allowed. The insured paid the first premium by giving a promissory note. When the second premium became due the insurance company sent an official receipt to the Beach State Bank of Beach, N. D., with instructions to deliver it to the insured upon payment of the premium. The insured had notice that the receipt had been sent, but he did not pay the premium to the bank, nor forward it to the company within the grace period, and the policy lapsed, according to its terms, on December 19, 1918. On the 3rd or 4th of February, 1919, James McGowan, a general agent of the defendant company, and James Haigh, an insurance agent of the same company, called at the farm of Henry Boerger, the insured, for the purpose of obtaining payment or renewal of the first premium note. At this time they also obtained the signature of Boerger to an application for reinstatement of the policy; it being agreed that he should give a note for the renewal premium. Two or three days later, Boerger went to the office of Haigh in Beach, and signed a promissory note for the full amount of the second premium, payable to the order of the Montana Life Insurance Company, and due on or before June 17, 1919. In a letter dated February 6, 1919, Haigh forwarded the application for reinstatement, together with the note, to the defendant company at Helena, Mont. It seems that this letter was not received by the company until some two or three weeks later. The body of the letter is as follows:

“Find inclosed reinstatement application of Henry Boerger; also a six months' note for the premium. Mr. Boerger wants to carry this insurance. He had almost a total failure of crop last year, and had planted a large acreage. His plans are to put in a big crop this year.

Mr. Boerger owns an improved 320-acre farm and has a small mortgage on the farm. Trusting with this information before you, you will find it good business and reinstate him, I am, Yours very truly, J. A. Haigh.”

March 13th the defendant company replied to Haigh's letter as follows:

“We have received the application for reinstatement of policy No. 11949, together with note which is returned herewith.

I regret to say, Mr. Haigh, that we are not permitted to accept bank form notes for full first renewal premiums. Would it be possible to handle this note in any other way?

We inclose a company form note which we would be quite willing to consider in this matter if accompanied by a cash deposit of $109.90.

The least amount of cash that I am permitted to accept with a note in extension of the first renewal premium is arrived at by taking the short-term rate which you will find in the rate book at the insured's attained age and multiplying the monthly premium per thousand by the number of thousands of insurance and then by the number of months from the due date of premium to due date of note.

Would it not be possible for Mr. Boerger to borrow locally enough to accept this proposition?

We also inclose blank application for reinstatement because the one which was sent in was filled out, ‘I hereby represent that since the 17th day of November, 1918.’ We would like to say that the reinstatement blank must show his condition since the date of the policy, and not merely since the due date of the premium. In this case, for example, he might have had a serious accident or illness in September, 1918, and in that case the question was correctly answered by him, but the company would not be protected. I know that Mr. McGowan would not have witnessed the application and handled the matter had he had any doubts of the applicant's condition, but the only way we can protect ourselves in case of difficulty and to prevent discrimination is to have every blank properly filled out. A strange examiner coming in would not take Mr. McGowan's signature as meaning what you and I know it does mean.

I hope that you will let me know what you think of this case. It is evidently fine business, and we want it on the books if there is any possible show to get it.

With best wishes, we are,

Very truly yours,

C. E. Herfurth, Actuary.”

This letter was received by Haigh in due course of mail, but its contents were never communicated to Boerger, and the note which Boerger had given was not returned to him. About six weeks later, or April 29th, Boerger died, and the beneficiary brings this action, claiming that the policy was reinstated, or that the defendant is precluded from asserting that it was not reinstated.

The policy provides that if any premium is not paid as provided in the policy, it may be reinstated at any time to its original form and amount on payment of arrears of premiums, with interest at the rate of 6 per cent. per annum, and upon evidence of insurability satisfactory to the company. The principal contention of the appellant is that the agency of McGowan and of Haigh was limited to the solicitation of insurance through original application; that neither of them had any authority to alter the terms of the contract in so far as payment of premiums was concerned; and that, as this limitation of authority appears in the policy itself, the insured was not justified in relying upon any representations made at the time the reinstatement application was taken. The policy provides as follows:

“No agent can make, alter or discharge this policy or extend the time for the payment of premiums, nor can the policy be varied or altered or its conditions waived or extended in any respect, except by the written agreement of the company, signed by the president or secretary, whose authority will not be delegated.”

The agency contract of McGowan is in evidence. In it he is appointed general agent for six counties in western North Dakota, with authority to secure applications for insurance and forward them to the company for approval or disapproval. Haigh was a local agent, whose authority to act for the company is presumably more limited than that of McGowan. The evidence tends to establish that at the time McGowan and Haigh were at Boerger's place for the purpose of securing a settlement of the first premium note they solicited him to apply for reinstatement of his policy, and that in that connection they represented to him that if he would give his note for the premium he would be reinstated. McGowan produced a reinstatement application, which he filled out, and which Boerger signed; McGowan witnessing the application.

[1] In our view of the case it is not necessary to determine whether or not McGowan had authority, either actual or ostensible, to waive the provisions of the contract regarding the payment of premiums. We are of the opinion that he was acting within the scope of his agency in soliciting the reinstatement. This he was doing in the interest of the company, and he had apparently been supplied with blanks to facilitate the transaction of this character of business for it. In transacting it, he was not acting as the agent of Boerger. Our statute provides (section 6632, C. L. 1913):

“Any person who shall solicit an application for insurance upon the life of another shall, in any controversy between the assured or his...