Morgan v. Royal Ben. Soc'y

• Decision Date: 18 November 1914
• Docket Number: (No. 330.)
• Citation: 167 N.C. 262,83 S.E. 479
• Court: North Carolina Supreme Court
• Parties: MORGAN. v. ROYAL BEN. SOCIETY et al.

83 S.E. 479

167 N.C. 262

MORGAN.

v.ROYAL BEN. SOCIETY et al.

(No. 330.)

Supreme Court of North Carolina.

Nov. 18, 1914.

1. Insurance (§ 695*)—Fraternal Insurance—Local Agents—Power of.

A mere local agent of a mutual benefit insurance company cannot bind the insurer by declarations obviously without the scope of her authority.

[Ed. Note.—For other cases, see Insurance, Cent. Dig. § 1836; Dec. Dig. § 695.*]

2. Evidence (§ 318*)—Declarations—Admissibility.

A letter by a local agent of a fraternal insurer, telling the beneficiary of a policy what the general manager had told her, is not admissible against the insurer, being hearsay.

[Ed. Note.—For other cases, see Evidence, Cent. Dig. §§ 1193-1200; Dec. Dig. § 318.*]

3. Evidence (§ 266*)—Declarations—Admissibility.

Declarations by third persons, made after the commencement of the controversy, are inad-

*For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexesmissible against a party, being res inter alios acta.

[Ed. Note.—For other cases, see Evidence, Cent. Dig. §§ 1051, 1052, 1054-1056, 1058-1060; Dec. Dig. § 266.*]

4. Insurance (§ 695*)—Fraternal Insurance—Declarations of Agent.

After the death of the insured declarations by the insurer's agent as to its liability are not binding on the insurer.

[Ed. Note.—For other cases, see Insurance, Cent. Dig, § 1836; Dec. Dig. 695.*]

5. Appeal and Error (§1177*)—Determination—Reversal.

Where the lower court admitted and acted upon incompetent testimony a judgment for plaintiff will not be reversed on appeal without remand, but plaintiff will be awarded a new trial; for had the testimony been rejected, he might have substituted competent evidence.

[Ed. Note.—For other cases, see Appeal and Error, Cent. Dig. §§ 4597-4604, 4606-4610; Dec. Dig. § 1177.*]

6. Justices of the Peace (§ 174*)—Appeal— Parties.

Upon appeal by one of two defendants, against whom judgment in an action for a debt of less than $200 was rendered in justice court, it was improper for the superior court, which did not have original jurisdiction, on plaintiff's motion, to make the defendant, who did not appeal, a party, where his presence was unnecessary to fix the liability of the other.

[Ed. Note.—For other cases, see Justices of the Peace, Cent. Dig. §§ 665-693; Dec. Dig. § 174.*]

Appeal from Superior Court, Forsyth County; Devin, Judge.

Action by Leonard S. Morgan against the Royal Benefit Society and Royal Fraternal Association. From a judgment for plaintiff upon appeal of the action to the circuit court, the last-named defendant appeals. Reversed and remanded for new trial.

This action was brought to charge the defendant Royal Fraternal Association with the payment of a policy of insurance issued by its codefendant, Royal Benefit Society, on the life of Sarah C. Morgan for the benefit, at her death, of her son, Leonard Morgan. The Royal Benefit Society is a corporation of the District of Columbia, and in 1910 was doing an insurance business in North Carolina, issuing policies to its members. ' The Royal Benefit Society issued a policy of insurance No. 58343 on the life of Sarah C. Morgan, payable at her death to her son, Leonard Morgan. The license of the Royal Benefit Society was revoked by the Insurance Commissioner of North Carolina on May 14, 1910, which prevented said company from writing any new insurance after that date. Lucy F. Ragsdale was the local agent of the Royal Benefit Society in the city of Winston-Salem, N. C. On the 2d day of June, 1910, the Royal Fraternal Association was organized and chartered as an insurance company by the Secretary of State for North Carolina, with its principal place of business at Charlotte, N. C. It began business August 1, 1910, issuing its first policy of insurance on said date. The Royal Fraternal As sociation was an insurance company conducted under the lodge plan. Its members were required to make application to said company for insurance, submit to a medical examination, and if said examination was satisfactory, the said company then issued a policy of insurance, which was different from that issued by the Royal Benefit Society to the applicant Lucy F. Ragsdale was licensed as the local agent of the Royal Fraternal Association to solicit business for said company in the city of Winston on the 16th day of June, 1910. She sent all moneys collected for the Royal Benefit Society direct to Washington, D. C, and none of it went to the Royal Fraternal Association in Charlotte, N. C, as defendant contends, but plaintiff says that $1.25 found its way into the coffers of the association at Charlotte, N. C, of which C. B. Bailey was the general manager. The Fraternal Association was organized in June, 1910, and issued its first policy August, 1, 1910. Sarah C. Morgan was sick in April, 1910, and continued sick until her death, July 2, 1910, which occurred one month before the Royal Fraternal Association began business. The plaintiff brought suit before a justice of the peace against both defendants on the policy issued by the Royal Benefit Society. It is not contended by the plaintiff that the Royal Fraternal Association ever issued any policy to Sarah C. Morgan, or that she ever made application for an insurance policy to said company. Judgment was rendered by the justice 6f the peace in favor of the plaintiff against the Royal Benefit Society, and dismissed as to the Royal Fraternal Association. The plaintiff appealed from the judgment of the justice of the peace as to the Royal Fraternal Association. There was no appeal as to the Royal Benefit Society. In the superior court an order was made permitting a summons to issue to the Royal Benefit Society to make it a party defendant to said action. The defendant Royal Fraternal Association objected to this order, for the reason that the suit was on contract and the amount less than $200, and that the superior court had no jurisdiction, and excepted when the objection was overruled. Verdict and judgment for plaintiff, and defendant appealed.

Hastings & Whicker, of Winston-Salem, and E. R. Preston, of Charlotte, for appellant.

Alexander, Parrish & Korner, of Winston-Salem, for appellee.

WALKER, J. (after stating the facts as above). The ground of this action is that the license of the Royal Benefit Society to do business in this state, it being a foreign corporation with place of business in Washington, D. C., had been revoked by the Insurance Commissioner of this state, and thereafter the other company or association had been chartered and organized for the

*For other cases see same topic and section NUMBER, in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexespurpose of taking over and carrying the outstanding policies of the banished society.

The plaintiff offered testimony which, if competent, had some tendency, perhaps, to show the above relation between the two associations, and, as a part of such testimony, he introduced the following letter from Lucy P. Ragsdale, who had been a local agent at Winston-Salem, N. C., of the Royal Benefit Society to Leonard Morgan, the beneficiary of the policy issued by it to his mother:

"Winston-Salem, N. C, September 26, '1910.

"Mr. Morgan—Dear Sir: Yours of today received. In regard to the death of your mother, will say that I have just returned from home office and investigated the matter, and I find that your mother was perfectly square on books and did not owe one penny. Nolas told me that you said the company wrote you that she had not paid, but that is a mistake. The general manager told me to say to you that you should get every penny of that money if he could possibly make the home office in Washington pay it, and if they did not pay it he would pay it out of that office; said rest assured that you would get it. I have been working very hard for that claim, and I am going to see that you get it.

"Hope you and Susie are well. "Respt., Mrs. L. F. Ragsdale.'

That letter was dated after the death of Sarah O. Morgan, which occurred on July 2, 1910, more than two months before. Defendant objected to the admission of this letter as evidence, and duly excepted when its objection was overruled and the letter was admitted by the court and read in evidence. The court erred in admitting the letter of Lucy P. Ragsdale. It was incompetent on several grounds: (1) As the declaration of an agent offered to bind her principal, when she had no authority, by virtue of her position as local agent or otherwise, to make it in behalf of her principal; (2) it was rank hearsay, or the unsworn statement of a third person as to a material fact in the case, that is, as to what she had heard another person say; (3) it was res inter alios acta; and (4) it was the declaration of an agent after the fact, to wit, the death of the policy holder, which is not admissible against the principal, and is therefore forbidden by the rule of evidence upon which the following cases were decided: Southerland v. Railroad Co., 106 N. C. 100, 18 S. E 189; Rumbough v. Improvement Co., 112 N. C. 751, 17 S. E. 536, 34 Am. St. Rep. 528; Egerton v. Railroad Co., 115 N. C. 645, 20 S. E. 184; Williams v. Telephone Co., 116 N. C. 558. 21 S. E. 298; Darlington v. Telegraph Co., 127 N. C. 448, 37 S. E. 479; Summerrow v. Baruch, 128 N. C. 202, 38 S. E. 861: Lyman v. Railroad Co., 132 N. C. 721, 44 S. E. 550; and Younce v. Lumber Co., 155 N. C. 239, 71 S. E. 329, Ann. Cas. 1912C, 107 In the Rumbough Case, the court thus stated the rule:

"Officers of corporations, from the highest to the lowest, are only the agents of such corporations. What acts they...