Mutual Life Ins. Co. of New York v. Shoemake

• Decision Date: 11 July 1921
• Docket Number: 21855
• Citation: 126 Miss. 497,89 So. 154
• Court: Mississippi Supreme Court
• Parties: MUTUAL LIFE INS. CO. OF NEW YORK v. SHOEMAKE

89 So. 154

126 Miss. 497

MUTUAL LIFE INS. CO. OF NEW YORK v. SHOEMAKE

No. 21855

Supreme Court of Mississippi

July 11, 1921

1. INSURANCE. When contract of insurance consummated stated.

In the absence of an agreement to the contrary, the acceptance of an application for insurance, when communicated to the insured consummates the contract, without an actual delivery of the policy; but, if the application expressly provides that the policy shall not become effective unless and until delivered and received by the insured while in good health, the contract will not be consummated until the policy is so delivered and received.

2 INSURANCE. Delivery of policy to agent for delivery to insured not a delivery, where agent refuses to deliver to insured while sick.

Where the application for insurance provides that the policy shall not become effective unless and until delivered to and received by the insured while in good health, the policy although executed by the insurer and delivered to its agent for delivery to the insured, does not become effective, if the agent declined to deliver it when called for, and the insured is then sick at a hospital, under the treatment of a physician, and the insurer's general instructions to its agent were not to deliver policies unless the applicant is in good health, and in case of change in the applicant's health to return the policy to the insurer, with a statement of facts, for instructions as to whether delivery should be made, and, if so, upon what conditions.

ANDERSON J., dissenting.

HON. J. D. FATHEREE, Judge.

APPEAL from circuit court of Wayne county, HON. J. D. FATHEREE, Judge.

Action by Belva Lottie Shoemake against the Mutual Life Insurance Company of New York. Judgment for plaintiff, and defendant appeals. Reversed and rendered.

Reversed.

Fulton Thompson, J. Harvey Thompson and Robert H. Thompson, for appellant.

We affirm the following propositions upon the undisputed facts of the case; appellant is not liable: (1) Because the policies were never actually delivered to the applicant during his lifetime and good health, as required by the terms of the application before any liability could attach, nor was there a constructive delivery because the applicant was not entitled to delivery without payment of the premium for the first policy years. (2) There was no acceptance or reception of the policy, either actual or implied, by the applicant who never saw the policies or either of them. Reception and acceptance by the applicant are likewise conditions precedent to any liability under the terms of the application. (3) The premium for the first policy year was never paid and this payment was also required before any liability could arise, both under the terms of the application and by virtue of the instructions to agents by the company, shown by the rules.

Actual delivery to applicant essential to liability. 1 Joyce on Insurance, sec. 98; 1 Bacon Benefit Societies (3 Ed.), sec. 272; May on Insurance (4 Ed.), sec. 60; Yount v. Prudential Ins. Co., 179 S.W. 749; McCully v. Phoenix Mut. Life Ins. Co., 18 W.Va. 782; Snediker v. Metropolitan Life Ins. Co., 169 S.W. 570; New York Life Ins. Co. v. Manning, 142 N.Y.S. 1132; Lasch v. New York Ins. Co., 155 N.Y.S. 225; Bowen v. Prudential Ins. Co., 51 L. R. A. (N. S.) 587; s. c. 144 N.W. 543; John Hancock Mutual Life Ins. Co. v. McClure, 218 F. 597; Porter v. Gen. Acc. Fire & Life Assur. Corp., 30 Cal.App. 198; McNicol v. New York Life Ins. Co., 149 F. 141; Union Cent. Life Ins. Co. v. Pauly, 8 Ind.App. 85; s. c. 35 N.E. 190; New York Life Ins. Co. v. McIntosh, 41 So. 381; s. c. 86 Miss. 236; Hawley v. Michigan Mut. Life Ins. Co., 92 Iowa 593.

Decisions holding the acceptance of an application consummates a contract not applicable to the case at bar. The cases holding that the acceptance of an application consummates a contract, are all cases of unconditional acceptance, where there are no provisions in the application, or policy, or elsewhere, conditioning or qualifying the acceptance, or where such condition had been complied with. Such are the following and other cases relied upon by appellee in the circuit court: Kimbro v. N. Y. Life Ins. Co., 121 L. R. A. (N. S.) 421; Cooper v. Pacific Mutual Ins. Co., 8 Am. Rep. 705; Commercial Ins. Co. v. McIntosh, 41 So. 381; s. c. 86 Miss. 236; Alabama Life Ins. Co. v. Herron, 56 Miss. 643; McMaster v. New York Life Ins. Co. (U. S. Sup. Ct.), 46 L.Ed. 61; Unterharnscheidt v. Missouri State Life Ins. Co., 45 L. R. A. (N. S.) 743.

Soliciting agents are without power to change the terms or make a contract of insurance. A soliciting agent has no power to change the terms of or make a contract of insurance, and limitations of agents' powers contained in the contract are binding on the applicant. Truly v. Mutual Life Ins. Co., 66 So. 970; s. c. 108 Miss. 453; Insurance Co. v. O'Don, 100 Miss. 219; Lasch v. New York Ins. Co., 155 N.Y. 255; National Union Fire Ins. Co. v. School Dist., 182 S.W. 547; Porter v. Gen. Acc. Fire & Life Ins. Co., 157 P. 825; Russell v. Prudential Ins. Co., 176 N.Y. 178; McNicol v. N. Y. Life Ins. Co., 149 F. 141.

Instructions to agents have probative force to show that a contract was not consummated although not communicated to applicant. Instructions given by the company to its agents regarding delivery of the policy are admissible in evidence, though not communicated to the applicant. They are not admitted for the purpose of varying a written contract, but to show that no contract was ever consummated. Brago v. Prudential Ins. Co., 184 Ill.App. 618; John Hancock Mutual Ins. Co. v. McClure, 218 F. 597; McCully v. Phoenix Mut. Life Ins. Co., 18 W.Va. 782.

The approval of an application and the writing of a policy do not necessarily prove a complete contract of insurance, but as a rule the policy must be accepted by the applicant. 25 Cyc. 722; Hoghen v. Metropolitan Life Ins. Co., 69 Conn. 503; Jones v. Gilbert, 93 Ga. 604; Russel v. Prudential Ins. Co., 176 N.Y. 178; McNicol v. N. Y. Life Ins. Co., 149 F. 141.

Stevens & Heidelberg, for appellee.

We submit that if the insured was in good health, within the meaning of the terms in the policy, at the time the tender of the premiums was made by his brother-in-law, Mr. Holston, to the agent at Laurel, then that the delivery of said policies became and was completed, even though it might be true that the paper upon which they were written was never in fact handed to or accepted by the insured. Counsel for appellant argue very strenuously in their brief that an actual delivery of the paper upon which the policy is written is essential to the completion of the contract of insurance. However, we submit that in this they are mistaken. This exact proposition has been passed upon by our own supreme court in the case of Alabama Gold Life Ins. Co. v. Herron, 56 Miss. 645; New York Life Ins. Co. v. Babcock, 104 Ga. 67; Am. St. Rep. 134.

One of the very latest cases on this point is that of Chapman v. Mutual Life Ins. Co. of New York, 83 So. 887; 1 Joyce on Insurance, page 428, 462; Yonge v. Equitable Life Assur. Soc. (C. C.), 30 F. 902; Mutual Life Ins. Co. v. Reid, 21 Colo.App. 143, 121 P. 132; 63 L. R. A. 740; 23 L. R. A. (N. S.) 969; 52 L. R. A. (N. S.) 276; 14 R. C. L. 899; Going v. Mutual Benefit Life Ins. Co., 36 S.E. 556.

Counsel for appellant rely on this point on the case of McKenzie v. The Northwestern Mutual Life Insurance Co., 105 S.E. 720, wherein the supreme court of Georgia held that a tender of the first premium during the last illness of the insured did not in that case complete a delivery of the policy. However, the court based its reason for so holding, not on the fact that an actual delivery of the policy was necessary nor an actual receipt of the money by the agent of the insurance company necessary, but it held that the delivery was not complete for the reason that the applicant's condition of robust health and probable long life had changed to one of dangerous illness and imminent death. In other words, in the McKenzie case above cited the court held that the tender of the premium during the last illness of the insured did not complete the execution of the contract for the reason that at the time the tender was made and the policy demanded, the insured was not in good health. 25 Cyc. 725, citing Going v. Mutual Benefit Life Ins. Co., 36 S.E. 556.

The next question involved in the case, as we see it, is whether or not the insured was in good health at the time of the tender of the premium and demand of the policy by Mr. Holston. If he was in good health within the meaning of that term as used in the policy, then unquestionably the contract of insurance was completed when the tender of the premium was made, and upon the death of the insured the beneficiary named in the policy became and was entitled to recover the full amount thereof. What is the meaning of good health as used in a policy of life insurance? It does not mean a state of absolute perfection. If it did, none of us would ever be eligible for life insurance.

Slight troubles, temporary and light illness, infrequent and light attacks of illness, not of such a character as to produce bodily infirmity or serious impairment or derangement of vital organs, do not disprove the warranty of good health. In other words, the term "good health" when used in a policy of life insurance means that the applicant has no grave, important or serious disease, and is free from any ailment that seriously affects the general soundness and healthfulness of the system." 4 Words and Phrases, 312 citing Barnes v. Fidelity Mutual Life Ass'n, 43 A. 341, 342, 191 Pa. 618, 45 L. R. A. 264 (citing 3 Joyce, Ins. 2004); Goucher v. Northwestern Traveling Men's Ass'n (U....