McCain v. Hartford Live Stock Ins. Co.

• Decision Date: 25 November 1925
• Docket Number: 425.
• Citation: 130 S.E. 186,190 N.C. 549
• Parties: MCCAIN v. HARTFORD LIVE STOCK INS. CO.
• Court: North Carolina Supreme Court

130 S.E. 186

190 N.C. 549

MCCAIN v. HARTFORD LIVE STOCK INS. CO.

No. 425.

Supreme Court of North Carolina

November 25, 1925

Appeal from Superior Court, Union County; Bryson, Judge.

Action by J. W. McCain against the Hartford Live Stock Insurance Company. From a judgment of nonsuit, plaintiff appeals. Affirmed.

Provisions in application for insurance are part of policy.

This action was instituted in the court of a justice of the peace to recover $100 on account of the death of a mule alleged to have been insured by defendant. The defendant entered a general denial.

The evidence for plaintiff tended to show: That plaintiff received by mail a policy of insurance. This policy describes one mare mule named Kit, 3 years old, used for farming valued at $100. The policy states that "it does hereby insure J. W. McCain, of Waxhaw, N. C., from the 28th day of July, 1924, at noon," and it is recited also that this is done "in consideration of the statements, agreements and warranties contained in the application, or applications upon which this policy is based, and which are hereby referred to and made a part of this contract." That the mule was on plaintiff's farm near Waxhaw, in the charge of Azariah Clifton, plaintiff's tenant. The mule died during the morning of July 29th. That plaintiff had not then received the policy, but that it reached him by mail on the morning of July 31st. That plaintiff immediately sent check for premium, giving notice of the death of the mule. That plaintiff was local agent of defendant, and that defendant had a state agent at High Point. The letter returning plaintiff's check says:

"In view of the fact that this policy was written in this office on the 28th day of July, it could not have possibly been delivered by the time this mule died. You are advised that the company can admit of no liability whatsoever. We will consider that no insurance has been in effect at all and the entire premium will be returned,"

--with a request for return of the policy. Plaintiff refused to return the policy, advising that he considered his claim legal and would contend for it. Plaintiff's checks covering premium on this policy were all returned to him. There was no "binder" given; no agent had the right to write a "binder." Plaintiff admitted that his application contained the following:

"It is agreed that this insurance shall not be in force or effect until and unless this application shall be accepted and favorably passed upon by the above-named insurance company, policy of insurance issued by said company, and the premium paid thereon, and policy delivered to me while the animal or animals covered by said policy is in good health and entirely free from sickness or injury."

The application for policy was received by defendant July 26, 1924. The policy provides that it shall "not be binding until countersigned by the general agent or other duly authorized representative of the company at High Point, N. C." It was countersigned by Mendenhall, agent at High Point, N. C., on July 30, 1924.

H. B. Adams, of Waxhaw, for appellant.

Myers & Snerly, of Chicago, Ill., and John C. Sikes, of Monroe, for appellee.

VARSER J.

The defendant submits several contentions that the judgment of nonsuit is correct. We need only consider one of these, to wit, the provision in the contract that the policy does not cover animals not in good health and entirely free from sickness or injury when the policy is delivered to plaintiff. The policy makes the application, and its provisions are a part of the policy itself. It is therefore just as much a part thereof as if written in the policy. Bobbitt v. Ins. Co., 66 N.C. 70, 8 Am. Rep. 494; Ormond v. Ins. Co., 96 N.C. 158, 1 S.E. 796; Cuthbertson v. Ins. Co., 96 N.C. 480, 486, 2 S.E. 258; Fuller v. Knights of Pythias, 129 N.C. 319, 40 S.E. 65, 85 Am. St. Rep. 744; Heilig v. Ins. Co., 162 N.C. 521, 77 S.E. 997; Schas v. Ins. Co., 166 N.C. 55, 62, 81 S.E. 1014; Sheldon v. Ins. Co., 22 Conn. 235, 58 Am. Dec. 420; Lee v. Ins. Co., 203 Mass. 299, 89 N.E. 529, 17 Ann. Cas. 236; Duncan v. Ins. Co., 6 Wend. (N. Y.) 488, 22 Am. Dec. 539.

The delivery of the policy is admitted by plaintiff to have been July 31, 1924, "in the morning mail." The mule had been dead two days.

The plaintiff is a subagent of the defendant. It is a fair inference from his evidence that he is a man of intelligence, active and prompt in business, and fully capable of understanding all provisions of the application and policy of insurance. The contract is what the parties agreed, and not what either party thought. Brunhild v. Freeman, 77 N.C. 128; Elliott Bldg. Co. v. City of Greensboro, 190 N.C. 501, 130 S.E. 200.

Rules of construction are only aids in interpreting contracts that are either ambiguous or not clearly plain in meaning, either from the terms of the contract itself, or from the facts to which it is to be applied. When such a situation is presented, the terms of the contract are construed against him who prepared it, the insurer, and in favor of the insured. Kendrick v. Ins. Co., 124 N.C. 315, 320, 32 S.E. 728, 70 Am. St. Rep. 592; Bank v. Ins. Co., 95 U.S. 673, 24 L.Ed. 563; Grabbs v. Ins. Ass'n, 125 N.C. 389, 34 S.E. 503; Bank v. Fidelity Co., 128 N.C. 366, 38 S.E. 908, 83 Am. St. Rep. 682; Rayburn v. Casualty Co., 138 N.C. 379, 50 S.E. 762, 107 Am. St. Rep. 548; Bray v. Ins. Co., 139 N.C. 390, 51 S.E. 922; Jones v. Casualty Co., 140 N.C. 262, 52 S.E. 578, 5 L. R. A. (N. S.) 932, 111 Am. St. Rep. 843: East Carolina Ry. Co. v. Maryland Casualty Co., 145 N.C. 114, 58 S.E. 906; Arnold v. Indemnity Co., 152 N.C. 232, 67 S.E. 574; Higson v. Ins. Co., 152 N.C. 206, 67 S.E. 509; Powell v. North State Life Ins. Co., 153 N.C. 124, 69 S.E. 12; Penn v. Standard Life Ins. Co., 160 N.C. 399, 76 S.E. 262, 42 L. R. A. (N. S.) 597. This applies also to standard policies. Gazzam v. Ins. Co., 155 N.C. 330, 71 S.E. 434, Ann. Cas. 1912C, 362; Collins v. U.S. Cas. Co., 172 N.C. 543, 90 S.E. 585; Lyons v. Grand Lodge, 172 N.C. 408, 90 S.E. 423; Moore v. Gen. Accident Corp., 173 N.C. 532, 92 S.E. 362; Am. Trust Co. v. Ins. Co., 173 N.C. 558, 92 S.E. 706; Smith v. National Fire Ins. Co., 175 N.C. 314, 95 S.E. 562; Ocean Accident Corp. v. Piedmont Ry. Co., 179 N.C. 402, 102 S.E. 636.

An insurance policy is only a contract, and is interpreted by the rules of interpretation applicable to other written contracts, and the intention of the parties is the object to be attained. Crowell v. Maryland Motor Car Ins. Co., 169 N.C. 35, 85 S.E. 37, Ann. Cas. 1917D, 50.

When clearly and unambiguously expressed, it does not require construction, and its words will be taken in the plain and ordinary sense. Crowell v. Ins. Co., supra; Bray v. Ins. Co., supra; Ry. Co. v. Maryland Casualty Co., supra; Duran v. Ins. Co., 63 Vt. 437, 22 A. 530, 13 L. R. A. 637, 25 Am. St. Rep. 773; Vance on Insurance, 593; Power Co. v. Casualty Co., 188 N.C. 597, 600, 125 S.E. 123.

The provision in the policy, that the insurance shall not be in force or take effect unless the policy is delivered to the plaintiff while the animal covered by the policy is in good health and entirely free from sickness or injury, is not in conflict with the other provisions of the policy. That the animal described in the policy shall be in good health at the time of its delivery is a condition precedent to the right of the plaintiff to recover. Whitley v. Ins. Co., 71 N.C. 480; Ormond v. Ins. Co., 96 N.C. 158, 1 S.E. 796; Ross v. Ins. Co., 124 N.C. 395, 32 S.E. 733; Ray v. Ins. Co., 126 N.C. 166, 35 S.E. 246; Perry v. Ins. Co., 150 N.C. 143, 63 S.E. 679.

It is admitted in the instant case that the mule described in the policy died before the policy was countersigned at High Point, by the agent Mendenhall, and two days before the policy was sent through the mail to the plaintiff, defendant's subagent at Waxhaw, N.C. As soon as defendant's agent at High Point was informed by plaintiff that the mule had died on July 29th, the check sent for the premium was returned and a return of the policy was requested. It is clear that the minds of the parties never met upon a contract of insurance on the life of the mule in controversy. Railroad v. Casualty Co., supra; Power Co. v. Casualty Co., supra; Paine v. Pacific Mut. Life Ins. Co., 51 F. 689, 2 C. C. A. 459; Misselhorn v. Mut. Reserve Fund Life Ass'n (C. C.) 30 F. 545; Reserve Loan Life Ins. Co. v. Hockett, 35 Ind.App. 89, 73 N.E. 842; Piedmont & Arlington Life Ins. Co. v. Ewing, 92 U.S. 377, 23 L.Ed. 610; McClave v. Mut. Reserve Life Ass'n, 55 N. J. Law, 187, 26 A. 78; Smith v. Commonwealth Life Ins. Co., 157 Ky. 146, 162 S.W. 779; Dumas v. Northwestern National Ins. Co., 12 App. D. C. 245, 40 L. R. A. 358; National Life Ins. Co. v. Jackson, 161 Ark. 597, 256 S.W. 378; Life & Casualty Ins. Co. v. King, 137 Tenn. 685, 195 S.W. 585.

In Fox v. Volunteer Life Ins. Co., 185 N.C. 121, 116 S.E. 266, this court allowed the case to be submitted to the jury because it was not an action on the policy which had not been delivered, but an action in tort for a negligent failure to deliver the policy. Plaintiff's cause...