Morford v. Calif. West. States Life Co.

• Decision Date: 20 May 1941
• Citation: 166 Or. 575,113 P.2d 629
• Parties: MORFORD <I>v.</I> CALIFORNIA WESTERN STATES LIFE INSURANCE CO.
• Court: Oregon Supreme Court

166 Or. 575

113 P.2d 629

MORFORD

v. CALIFORNIA WESTERN STATES LIFE INSURANCE CO.

Supreme Court of Oregon.

Argued February 27, 1941.

Reversed May 20, 1941.

Rehearing denied June 17, 1941.

Insurance — Contract — Meeting of minds

1. Where application for life policy provided that policy would not take effect until received by applicant and until first premium was paid and required that changes must be agreed to in writing by applicant, and applicant died before paying any cash or receiving policy, which was mailed to insurer's agent for purpose of obtaining applicant's acceptance of changes, there was no meeting of minds of parties upon provisions of policy.

Evidence — Insurance — Statements to agent

2. In suit on life policy containing provision required by statute that policy should constitute entire contract between the parties, oral statements made by applicant to insurer's local agent were inadmissible, where there was no ambiguity in the written application.

Insurance — Offer — Counter offer

3. Where application for life insurance asked for specific insurance with alternative statement that, if unavailable, any other insurance would be ratified, a policy issued calling for a different type of occupational benefits was a counter offer which required acceptance by applicant to be effective as an insurance contract.

Contracts — Construction

4. All provisions of a written instrument will be harmonized if possible, and later clause will be treated as controlling upon a prior clause on the same subject.

Insurance — Application in the alternative

5. Where application for life insurance provided that, in case of insurer's unwillingness to issue policy applied for, application should be for a policy on the plan, with additional benefits at premium rates corresponding with company's valuation of risk, subsequent provision requiring applicant's agreement to any change in plan of insurance constituted an exception to prior provision.

Insurance — Delivery of policy

6. Where applicant must do something further before becoming entitled to policy, mere mailing of policy by insurer to local agent with instructions to require applicant to take course required of him before delivery of policy does not constitute constructive "delivery" of the policy.

Insurance — Contract — Offer and acceptance

7. To establish an insurance contract without more than the original offer and acceptance, the acceptance must be of the terms offered, especially where application expressly provides basis on which insurance is to be effected.

Insurance — Contract — Offer and acceptance

8. Where insurer replies to application by proposing different terms or by sending policy differing in essential terms from that applied for, no contract is made until the counter proposition or policy has been accepted by applicant, even though insurer retains premium pending action by applicant.

Insurance — Prepayment of premium

9. Prepayment of premium alone will not effect an insurance contract where insurer has submitted a counter proposition which has not been accepted by the applicant.

Insurance — Delivery of policy

10. The delivery of an insurance contract to agent is not of itself sufficient to make him an agent of the insured, where some condition precedent must first be fulfilled.

Insurance — Payment of premium

11. Where applicant at time of making application for life insurance executed note to local agent who sent note to insurer's general office, but applicant did not know what amount of quarterly payment would be, note could not be considered as payment of quarterly premium.

Insurance — Note as payment

12. Where insurer, upon receiving note executed to local agent by applicant at time of making application for life insurance, registered the note and thereafter returned it to the beneficiary canceled, insurer did not thereby accept it as a cash payment of premium.

Estoppel — Waiver

13. "Waiver" is a relinquishment of a known right.

Insurance — Waiver

14. Where applicant for life insurance was never informed of changes made by insurer in sending to local agent a policy different from that applied for, applicant could not have "waived" rights under provisions of application that policy would not become effective until applicant had consented to changes.

Insurance — Delivery of policy

15. Where application for life insurance required applicant's consent to any changes in plan of insurance, and provided that

insurance could not take effect until policy was received by applicant, and applicant died before receipt of policy which differed from that applied for, but which prior to applicant's death had been mailed to insurer's local agent with direction that applicant's consent to changes be procured, there was no "delivery" of policy and insurance did not become effective.

                  What amounts to "delivery" or "actual delivery" to insured
                note, 53 A.L.R. 492. See, also, 29 Am. Jur. 164
                  37 C.J., Life Insurance, § 76
                

Before KELLY, Chief Justice, and BELT, BAILEY, LUSK, RAND and ROSSMAN, Associate Justices.

Appeal from Circuit Court, Multnomah County.

J.T. BRAND, Judge.

Action by Etta B. Morford against the California Western States Life Insurance Company to recover upon a life insurance policy. Judgment for plaintiff and defendant appeals.

REVERSED. REHEARING DENIED.

Charles T. Haas, of Portland (Haas & Schwabe, of Portland, on the brief), for appellant.

Nicholas Jaureguy, of Portland (Cake, Jaureguy & Tooze and V.E. Harr, all of Portland, on the brief), for respondent.

KELLY, C.J.

The crucial question in this case is whether, under the circumstances, as disclosed by the testimony, a delivery to insured of the policy of insurance may be said to have been made.

The policy was placed in the mail at Sacramento, California, September 27, 1934, postage paid and addressed to the Portland, Oregon, office of defendant insurance company. Accompanying it was the following letter on the stationery of defendant:

                                             "September 27, 1934
                  Mr. J.F. Howell:           Re: Benn M. Morford
                                             Pol. #339352
                

We enclose herewith policy of above number, which has been issued as follows:

Plan of insurance Ordinary Life (Endowment at 85), with combination accident and Accident Income.

Policy receipts enclosed should be signed before delivery of this policy, one to be inserted in the policy, the other to be returned returned to the Home Office for file.

                                                  Very truly yours
                                                  Walter C. Kennedy
                  WCK:AR                          Chief Underwriter
                  c.c. Mr. G.E. Drummond
                  c.c. Miss Hazel Bryson"
                

Accompanying said policy and letter were duplicate blank receipts in form as follows:

                                     "Policy Receipt
                                                   Date ____
                

California-Western States Life Ins. Co. Sacramento, California.

                  Gentlemen:                 Re: Policy No. 339352
                

I acknowledge receipt of the above numbered policy and hereby agree to the changes made by you in Additions or Amendments in my application for said policy, as shown by the photographic copy of the application contained in said policy.

                  ________________________       _______________________
                          Witness                      Insured."
                

Mr. J.F. Howell was the local agent of defendant and the person who secured Mr. Morford's application.

At noon on September 28, 1934, the insured Benn M. Morford died without having seen or received the policy in suit.

Plaintiff relies upon the rule that where an application for life insurance has been made and a policy issued in accordance with the terms of such application, there being nothing further to be done than to deliver the policy; under those circumstances, depositing the policy in the mail addressed to the agent of the insurance company with instructions by the company to its agent to deliver it unconditionally to the insured, constitutes a delivery to the insured even though the insured never actually receives it.

Defendant claims that in the case at bar, the policy which was issued did not conform to the terms of the application; that by the terms of the application no change could be made as to amount, classification, plan of insurance, or benefits, unless agreed to in writing by defendant; and that the policy was to have been delivered to the applicant only in the event he signed the receipt agreeing to the changes made.

The application, as executed by Mr. Morford, asked for a $2500 policy known as ordinary life (E 85) with premium waiver, total disability and combination accident. This was applied for in questions 10 and 11.

Such a policy, while effective, in the event of the death of insured, would require the payment to the beneficiary of the principal sum thereof, and in addition thereto, in case of the accidental death of insured, or in case of certain other accidents to insured, would require the payment of certain other amounts. Besides the foregoing, such a policy would provide that, in case of certain total disability therein specified, there would be a waiver by the insurance company of the payment by insured of additional premiums.

The policy issued by the insurance company was a $2500 ordinary life insurance policy with accident income, for a limited period; but without premium waiver in case of total disability. This policy comprises three separate documents, but, for brevity, we treat it as one policy.

1. If, when the application was made, there was a meeting of the minds upon the essential provisions of the policy actually issued, nothing more would need to be done by the applicant, except to pay the required quarterly premium.

The application contains the following provision, the same being the final provision of paragraph 10 therein:

"Notice — It is agreed that if the company is unwilling to issue a policy on the basis applied for, or at the Company's published premium rate...