National Life Ins. Co. of U.S. of America v. Reedy

Decision Date13 October 1927
Docket Number6 Div. 930
Citation115 So. 8,217 Ala. 114
CourtAlabama Supreme Court

Rehearing Denied Jan. 12, 1928

Appeal from Circuit Court, Walker County; R.L. Blanton, Judge.

Action on a policy of life insurance by Eugene L. Reedy and Sam Alread, as administrators of the estate of Wilson B. Reedy deceased, against the National Life Insurance Company of the United States of America. From a judgment for plaintiffs defendant appeals. Affirmed.

Percy Benners & Burr, of Birmingham, for appellant.

Sowell & Gunn, of Jasper, and Z.P. Shepherd, of Carbon Hill, for appellees.


The suit was upon a policy of life insurance. The trial was had on counts 4, 5, and 6. Defendant pleaded the general issue and in short by consent, etc.

The general agent, Foster, was, for many purposes, the alter ego of the company in this state and with authority to bind the principal by certain contracts within the scope of his agency and conduct of that business. Sections 7209, 8353, Code of 1923; Sun Ins. Office of London v. Mitchell, 186 Ala. 420, 426, 65 So. 143; Pacific Mut. Life Ins. Co. v. Hayes, 202 Ala. 450, 453, 80 So. 834; Southern States Fire Insurance Company v. Kronenberg, 199 Ala. 164, 74 So. 63; Insurance Co. of North America v. Williams, 200 Ala. 681, 77 So. 159. The trilateral contract between Wright, soliciting agent, Foster, the general agent, and the National Life Insurance Company of the United States of America, contains, among other things, the following statements:

"The general agent does hereby appoint the said party of the second part his agent for the purpose of procuring for him applications for insurance in the National Life Insurance Company of the United States of America, hereinafter referred to as the company, on the lives of individuals, and forwarding same to the general agent for approval or disapproval by the company, and 'for collecting and forthwith forwarding first-year premiums, as shall be directed by the general agent or the company, in accordance with the terms and conditions of this contract, and for no other purpose whatsoever.' Under no circumstances whatever shall a policy be delivered unless the first premium shall have been duly settled during the applicant's good health. The agent is not authorized to accept anything but cash in payment of a premium. He may, however, accept a note, the giving of which note, shall be deemed to be an individual transaction between himself and the policyholder, and the agent shall immediately become liable to the general agent for the premium, which liability shall be settled the same as though cash had been paid, within such time or in such manner as may be prescribed by the rules of the general agent or the company. ***
"The agent agrees to devote his entire time, talents and energies to the service of the general agent and the company and act exclusively for them, and also to obey and observe the rules and regulations of the company and instructions of the general agent, and, in consideration of said agreements by the agent, the general agent agrees to allow him the following compensation."

Its secret terms were binding upon the parties and not upon the insured without notice thereof--this business policy of secrecy as to its effect is declared in section 16, the same "be considered confidential" and under penalty of forfeiture that under no circumstances shall the soliciting agent divulge "the terms thereof to any person or persons." The record fails to disclose the fact that the insured knew of any provision of that agency contract or any limitation contained therein. Manhattan Life Ins. Co. v. Parker, 204 Ala. 313, 85 So. 298.

A general agent, with authority to issue and consummate contracts of insurance, in the absence of notice to the contrary, has the authority to bind the company by his acts done within the ordinary scope and limits of such insurance business and his agency, to the extent of a recognized waiver of the express conditions of the policy which would, in the absence of such waiver, operate as a forfeiture. 32 C.J. § 583, p. 1328; Georgia Home Ins. Co. v. Allen, 119 Ala. 436, 24 So. 399; Cowart v. Capital City Ins. Co., 114 Ala. 356, 22 So. 574; Pope v. Glens Falls Ins. Co., 130 Ala. 356, 30 So. 496; U.S. Life Ins. Co. v. Lesser, 126 Ala. 568, 587, 28 So. 646; Southern States Fire Ins. Co. v. Kronenberg, 199 Ala. 164, 74 So. 63; Tedder v. Home Ins. Co., 212 Ala. 624, 103 So. 674; Manhattan Life Ins. Co. v. Parker, 204 Ala. 313, 85 So. 298; Pacific Mut. Life Ins. Co. v. Hayes, 202 Ala. 450, 80 So. 834.

The question of fact, whether the general agent Foster authorized the local agent, Wright, to collect the past-due premium, within the period of the 30 days' grace stipulated by the terms of the policy, was disputed by the tendencies of the evidence, and such a question was properly left to the jury. Stark & Oldham Bros. Lumber Co. v. Burford, 215 Ala. 68, 109 So. 148; McMillan v. Aiken, 205 Ala. 35, 88 So. 135; Brown v. Mobile Elec. Co., 207 Ala. 61, 91 So. 802; Scrimscher v. House, 207 Ala. 334, 92 So. 448; Pacific Mut. Life Ins. Co. v. Hayes, 202 Ala. 450, 452, 80 So. 834.

This question of authority resolves itself into the further inquiries, Did Wright have the express authority to collect the premium in question (Pacific Mut. Life Ins. Co. v. Hayes, 202 Ala. 450, 80 So. 834),

or had he the implied authority to that action by the conduct of the company's business toward the assured Reedy after the policy issued, so to induce the latter to the honest and well-founded belief that Wright was authorized to collect of him the premium that was due? The jury, within its province, found such disputed issue with the plaintiffs' intestate.

There is a clause in the policy to the effect that premiums are payable at the home office, unless "accepted elsewhere if paid to an agent in exchange for a receipt signed by the president, vice president, secretary, or actuary, and countersigned by the agent designated thereon." The receipt in evidence showed that it was to be countersigned by Sterling J. Foster, general agent, Age-Herald Building, Birmingham, Ala.

Appellant says the premium due November 1, 1924, was not paid according to the foregoing provision of the insurance contract, and that a forfeiture was created that was not waived before death; appellees reply to this with the admission of nonpayment at the home office, nor to an agent in exchange for the duly signed receipt of that company, but further say that Reedy paid that premium within the time of grace allowed to Mr. Wright, who had the authority to collect in the premises without exchange of said company's receipt, or that the conduct of the company's business with him by and through its authorized agent, after issue of the policy, was sufficient to induce him to the reasonable and honest belief that Wright was authorized to collect said premium then due, and he so paid within the period of grace allowed.

The provisions of the trilateral contract, requiring that the local agent devote his time and energies "to the service of the general agent and the company" and to observe the rules and regulations of the company "and instructions of the general agent," were binding upon that local agent, if he was specifically or unequivocally requested by the general agent to collect that premium of the assured without having in his possession the company's receipt conditioned on its being countersigned by Foster. The further provision of that contract, that the local agent should not receive any moneys due or to become due to the general agent unless authorized in writing or in exchange for a conditional receipt, was satisfied by the tendency of evidence that Foster wrote to Wright requesting him to collect said premium.

There was no evidence that insured had knowledge or notice of any secret and limited instructions to the contrary. The evidence of Mrs. Wilson and Mr. Wright, and the denials relating thereto, by Foster, and the company's other evidence, as to this controverted question of fact, presented a jury question. Such a status has been adverted to by the Chief Justice in U.S. Life Ins. Co. v. Lesser, 126 Ala. 568, 580, 28 So. 646, 650, saying:

"The question to which the argument of the counsel for the appellant has been mainly directed is whether, in the presence of the condition of the policy 'that no person, other than the president, together with the secretary or actuary, shall have power to alter or waive any contract or condition on behalf of the company,' it was competent for the plaintiff to show that an agent or agents of the appellant, in whose acts neither of these officers participated, had waived the payment of the premium at the time appointed by their acts and conduct superinducing nonpayment, the breach of the condition insisted on as cause of forfeiture. The validity of the condition, and that of it the plaintiff had knowledge prior to the alleged waiver is not disputed; nor can it be doubted that the condition was intended to restrain, and to give notice of the restriction

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