Martin v. Provident Life & Acc. Ins. Co.

• Decision Date: 08 March 1932
• Citation: 47 S.W.2d 524,242 Ky. 667
• Parties: MARTIN v. PROVIDENT LIFE & ACCIDENT INS. CO.
• Court: Kentucky Court of Appeals

47 S.W.2d 524

242 Ky. 667

MARTIN v. PROVIDENT LIFE & ACCIDENT INS. CO.

Court of Appeals of Kentucky

March 8, 1932

Appeal from Circuit Court, Whitley County.

Action by Bert Martin against the Provident Life & Accident Insurance Company. From a judgment dismissing the action, the plaintiff appeals.

Reversed with directions.

R. L Pope, of Knoxville, Tenn., and C. B. Upton, of Williamsburg for appellant.

Tye, Siler, Gillis & Siler, of Williamsburg, for appellee.

WILLIS J.

Bert Martin instituted an action against the Provident Life & Accident Insurance Company to recover $2,000 upon an accident insurance policy for the loss of his foot. The defendant admitted liability for $1,002.20, but sought to avoid further liability under a provision of the policy which reduced the indemnity if the insured obtained similar insurance in another company without giving written notice thereof to the defendant. The insurance in that event was limited to such portion of the indemnity promised as it bore to the total amount of insurance carried, and for a return of such part of the premium paid as exceeded the proper amount due for the reduced indemnity. It was alleged in the answer that Martin had procured another accident policy for like amount without giving written notice to the defendant company which operated to reduce the insurance under the present policy to $1,000. The sum of $2.20 was the excess of premium collected and which was to be returned. The company by its answer admitted liability for $1,002.20. By the reply an estoppel was interposed, in substance, that Martin had informed the general agent of the defendant company of the additional insurance, who had agreed to notify the company, and, relying upon that agreement with the agent, Martin had not given the written notice required by the conditions contained in the policy. In avoidance of the matters of estoppel pleaded, the company set up certain standard terms of the policy by which the authority of the agent was restricted. One provision was that no agent had any authority to change the policy, or to waive any of its stipulations. The other pleadings filed require no special mention. The case was tried before a jury, and, at the conclusion of the plaintiff's evidence, a peremptory instruction was given to find a verdict for the defendant. The plaintiff has prosecuted an appeal from the judgment dismissing his action.

It is not disputed that a provision of the policy required notice in writing of any additional insurance, and, if not given, the amount of insurance was reduced proportionately to the total insurance carried. It is admitted that no written notice was given. But it is argued that the insurance company was estopped to invoke that defense. Assuming, without deciding, that the agent in question was authorized to represent the company in the matter of waiving the written notice, we proceed at once to a consideration of the evidence.

The testimony of the plaintiff did not sustain the broad allegations of his pleadings. He testified that before obtaining the additional insurance he discussed the matter with the local agent who advised him to notify the company in which he proposed to take additional insurance, and, if it accepted the application, to advise him and he would notify his company "if he thought it was necessary." The statement is repeated several times that the agent said he would notify his company if he thought it was necessary. Martin testified further that, if he had not been so advised by the agent, he would have dropped the additional policy. Martin did not state that he was prevented from giving the written notice required by the policy, but he left the matter entirely to the judgment of the agent. Martin was aware of the provision in the policy which required him to give written notice if he took out additional insurance. He had read his policy and was familiar with its terms. He testified that he had read enough of his contract to know what it required respecting additional insurance and he deemed it sufficient simply to advise the agent. It does not appear that the agent advised the company, or that he made any promise in respect to the matter. He was the agent of the company for the purpose of taking applications for insurance, which were mailed to the home office at Chattanooga, Tenn. The policy sued upon was mailed to Martin. In view of the equivocal statements attributed to the agent, Martin was not justified in assuming that the provision of his policy respecting written notice of additional insurance had been waived. South v. Phila. F. & M. Ins. Co., 217 Ky. 612, 290 S.W. 493.

The point is made that the agent was informed of the additional insurance, and the company still continued to collect premiums on the face of the policy. The principle that knowledge of the agent is knowledge of the company is invoked, and such conduct of the company after the agent was advised of the fact that additional insurance had been taken is sought to be made the predicate of a waiver by the company, or of an estoppel against it. The principles stated may be conceded. Niagara Fire Ins. Co. v. Johnson, 231 Ky. 430, 21 S.W.2d 794; Continental Ins. Co. v. Simpson, 220 Ky. 168, 294 S.W. 1048; Glens Falls Ins. Co. v. Elliott, 223 Ky. 205, 3 S.W.2d 219; Phoenix Ins. Co. v. Spiers & Thomas, 87 Ky. 285, 8 S.W. 453, 10 Ky. Law Rep. 254; Hurst Home Ins. Co. v. Ledford, 207 Ky. 212, 268 S.W. 1090; Northwestern Nat. Ins. Co. v. Avant, 132 Ky. 106, 116 S.W. 274; Rogers v. Farmers' Mutual Aid Ass'n, 106 Ky. 371, 50 S.W. 543, 20 Ky. Law Rep. 1925; London & Lancashire Ins. Co. v. Gerteisen, 106 Ky. 815, 51 S.W. 617, 21 Ky. Law Rep. 471; Continental Ins. Co. v. Turner, 222 Ky. 608, 1 S.W.2d 1063; Westchester Fire Ins. Co. v. Wilson, 220 Ky. 142, 294 S.W. 1059; Owens v. National Life & Accident Co., 234 Ky. 788, 29 S.W.2d 557; Germania Ins. Co. v. Ashby, 112 Ky. 303, 65 S.W. 611, 23 Ky. Law Rep. 1564, 99 Am. St. Rep. 295; White Plains Coal Co. v. Teague, 163 Ky. 110, 173 S.W. 360.

It is a general rule of the law of agency that a principal is affected with constructive knowledge, regardless of his actual knowledge, of all material facts of which the agent received notice or acquired knowledge while acting in the course of his employment and within the apparent scope of his authority, even though the agent may fail to inform his principal thereof. 2 C.J. § 542, p. 859. The rule is not applicable, however, unless the notice has reference to the business in which the agent is engaged under authority from the principal, and is pertinent to matters coming within the purview of such authority. 2 C.J. § 544, p. 863; Levi v. Gonzenbach, 236 Ky. 586, 33 S.W.2d 657. In all other instances it is essential that the agent shall actually advise the principal. German Ins. Co. v. Goodfriend, 97 S.W. 1098, 30 Ky. Law Rep. 218; Tate v. Ill. Cen. R. R. Co., 81 S.W. 256, 26 Ky. Law Rep. 309, 341. The reason upon which the rule rests is that the agent is presumed to advise his principal of matters which he is under a duty to disclose, and which his principal has a right to know (Harrington v. U. S., 11 Wall. 356, 20 L.Ed. 167; Day v. Exchange Bank, 117 Ky. 357, 78 S.W. 132, 25 Ky. Law Rep. 1449), although some authorities assert that the principle is one of substantive law based upon a fiction of the legal identity of the principal and the agent ( Hall, etc., Machine Co. v. Haley Furniture Co., 174 Ala. 190, 56 So. 726, L. R. A. 1918B, 924).

But even in those cases the fiction of legal identity prevails only while the agent is acting for his principal and within the apparent scope of his authority as agent.

When the circumstances are such as to raise a clear presumption that the agent will not transmit his knowledge to his principal, the rule that notice to the agent binds the principal does not apply. 2 C.J. § 549, p. 868; Sebald v. Citizens Dep. Bank, 105 S.W. 130, 31 Ky. Law Rep. 1244, 14 L. R. A. (N. S.) 376.

Of course, if the party dealing with the agent is not advised of the circumstances that render inapplicable the usual presumption which attributes to the principal the knowledge of the agent respecting matters involved in the business in hand, he is unaffected by such circumstances. Armstrong...