Murphy v. S. Life Ins. Co.

• Citation: 62 Tenn. 440
• Parties: Dora Murphy v. The Southern Life Insurance Company.
• Decision Date: 31 December 1874
• Court: Supreme Court of Tennessee

62 Tenn. 440

Dora Murphy

v.The Southern Life Insurance Company.

Supreme Court of Tennessee.

December Term, 1874.

FROM DAVIDSON.

Appeal from the Chancery Court. E. H. EAST, Chancellor.

N. & ED. BAXTER for the Company.

ALEXANDER CAMPBELL for Murphy.

NICHOLSON, C. J., delivered the opinion of the Court.

This case was determined in the Chancery Court, at Nashville, upon an agreed state of facts made up in pursuance of the Statute. The question involved is, whether the Insurance Company is responsible to complainant for the amount of a policy issued to Barney Murphy on the 11th of March, 1867. The policy was issued, insuring the life of Barney Murphy for the use of his wife, Dora, and children, in the amount of $1,000, for the term of his natural life.

It is expressed in the face of the policy, that it was issued in consideration “of the sum of $24.72, to them in hand paid by Dora Murphy, wife of Barney Murphy, and of the sum of____dollars and_____cents, to be paid on or before the ____day of ______next, and note at twelve months from the date thereof, for $16.48, with interest paid in advance, and of the annual premium of $41.20, to be paid on or before the 11th of March (or half, or quarter yearly, in advance, with interest) two-fifths of said note paid, as aforesaid, in every year, during the continuance of this policy.”

It is also recited in the policy, that “it is also understood and agreed, by the assured to be the true intent and meaning hereof, that, in case the said premium shall not be paid on or before the day hereinbefore mentioned for the payment thereof, then, in any such case, the said Company shall not be liable for the payment of the sum assured, or any part thereof; and this policy shall cease and determine. And it is further agreed, that, in every case where the policy shall cease, or become, or be, null and void, all previous payments made thereon shall be forfeited to the said company.”

The facts agreed on are as follows: Barney Murphy died on the 25th of January, 1870. The premium for the first and second years of the policy was duly paid, but for the third year, when the assured died, it had not all been paid, but paid only in part, to-wit: $11. This sum was paid to W. Matt Brown, who, at the time, was the local agent of the Company at Nashville, where the policy was issued, and where Murphy lived and died. Brown, from time to time, called upon Murphy to pay the balance of the premium, but he failed to do it. It is agreed that Brown did not pay the $11 over to the Company, but this was unknown to Murphy; also, that at the time of the payment of the $11, he told Murphy that if he did not pay the balance, the policy would be forfeited. It was further agreed, that a circular issued by the Company in 1868, was received by Murphy, and that Brown gave Murphy a receipt for the $11. This receipt, however, is not in the record, nor is there any proof as to its date or its terms. In the circular referred to, dated, “Office Southern Life Insurance Company, Memphis, Tennessee, ______, 1868,” the following passages occur:

“Persons who wish to guard against contingencies to which all are liable, by getting a policy of insurance, are referred to the agent of the Company, if one has been appointed in your neighborhood.”

“All policies non-forfeited after the second annual payment.”

It may be inferred from a notice exhibited in the agreed state of facts, that it was the habit of the Company to issue from its office at Memphis, a notice to each person assured, notifying him in advance, of the amount of cash premium, and when to be paid, and the amount of the premium note.

It appears further, from another exhibit, that the office at Memphis prepared receipts, stating the amount received from the assured for premium on policy, giving its number and amount insured to the end of the next year. These receipts were sent to the local agents in advance of the day for payment, regularly signed by the Secretary at Memphis, as of the date of the payment, but with this condition annexed: “Not binding until the amount is paid on this receipt, countersigned by W. Matt Brown, agent at Nashville.”

These were all the facts submitted to the Chancellor. He was of opinion that complainant was not entitled to recover, and decreed accordingly. From this decree complainant has appealed.

The first inquiry that presents itself is, how did Brown and Murphy understand the transaction between them, when Murphy paid and Brown received the $11? It does not appear when this transaction occurred, but we may safely assume that it was either on the 11th of March, 1869, when the premium was payable, or after that time.

When the payment of $11 was made and receipted for, Brown told Murphy that “if he did not pay the balance, the policy would be forfeited.” It is clear that Brown did not consider the policy already forfeited, but his understanding was, that, whether it would or would not be forfeited, depended upon the future payment of the balance of the premium. That this was his understanding is made clearer by the fact that, from time to time, afterwards, he called upon Murphy for the balance. The understanding, then, of Brown and Murphy was, that Brown had a right to keep the policy alive after the 11th of March, 1868, by accepting $11 of the premium, and collecting the balance afterwards. In other words the transaction shows that Brown understood himself as having the right to waive the forfeiture arising from non-payment of the premium, by receiving payment of a part and making the forfeiture depend upon the payment or non-payment of the balance of the premium. Hence we see that Brown, regarding the question of forfeiture as superseded, retained the $11, but made no return of it to the office at Memphis, and no report of the transaction, so far as we can see, but from time to time, demanded of Murphy the balance. Before the expiration of the year Murphy died. Upon this view of the transaction between Brown and Murphy, the next inquiry is, was Brown authorized to waive the forfeiture, and by so doing, to bind the Company upon the policy? The character and extent of Brown's agency is necessarily involved in this inquiry.

We have been furnished with the written opinion of the Chancellor in the case, and we find that he considered the case of Bouton v. The American Mutual Life Insurance Company, 25 Conn., 342, as conclusive of the question in this case. The case of Bouton v. The American Mutual Life Insurance Company was an action at law, determined in 1857. The policy sued on was, in its main features, similar to that in the case before us, except that the testimonium clause was as follows: “In witness whereof, the said American Mutual Life Insurance Company have, by their President and Secretary, signed this contract, this 25th of February, 1851, but the same shall not be binding until countersigned by W. W. Webb, agent, and delivered, and the advance premium paid.” The advance premium was payable on the first of July, 1852, but was not paid until after that time. It was paid to W. W. Webb. The Court below instructed the jury, that if the premium was paid to and received by Webb, as agent of the defendants, in good faith, though the sum was paid after the 1st of January, 1852, they would find for plaintiff. Storrs, C. J., delivered the opinion of the Supreme Court. After laying down the doctrine, that, where policies of insurance contained a provision that if the advance was not paid on the day designated, the policy should be forfeited; as the provision was inserted for the benefit of the insurers, it was only void at their election, and therefore, that they might waive a strict...