New York Life Ins. Co. v. Levy's Adm'r

• Citation: 122 Ky. 457,92 S.W. 325
• Parties: NEW YORK LIFE INS. CO. v. LEVY'S ADM'R.
• Decision Date: 23 March 1906
• Court: Court of Appeals of Kentucky

92 S.W. 325

122 Ky. 457

NEW YORK LIFE INS. CO. v. LEVY'S ADM'R.

Court of Appeals of Kentucky.

March 23, 1906

Appeal from Circuit Court, Henderson County.

"To be officially reported."

Action by Moses Levy's administrator against the New York Life Insurance Company. From a judgment for plaintiff, defendant appeals. Reversed.

Clay &amp Clay, James H. McIntosh, and Yeaman & Yeaman, for appellant.

Dorsey & Stanley, for appellee.

BARKER J.

On the 30th day of December, 1903, Moses Levy, a citizen of Henderson county, Ky. made written application to the New York Life Insurance Company for $10,000 of insurance on his life, to be written in two policies of $5,000 each. This proposal for insurance was made through the company's agent, William Egard, who forwarded it to the main office in New York City. No cash premium was paid at the time of the application, but it is claimed that subsequently, on January 20, 1904, about the hour of noon, at the solicitation of the agent, William Egard, the applicant gave to him a check payable to the company, for $776.90, being the cash premium for one year's insurance for the amount applied for. At 11:45 p. m. of that day the applicant suddenly died. On the 19th of January, 1904, the company rejected the application for $10,000 of insurance, but approved it for $5,000, and in pursuance of this action wrote out a policy for this sum on the life of the applicant conforming in all respects to his application, except in the amount of the policy and the annual premium therefor. This policy was issued on the 20th of January, and mailed to the company's agent at Henderson, Ky. where it was received on the 23d of January, and, although the agent knew of the death of Levy, he delivered it to Leon Levy, his son. The company did not receive notice of the death of Moses Levy until the 28th of January, 1904, and, in ignorance of this fact, on the 26th of January receded from its former determination to insure him for only $5,000, and issued a second policy, in all substantial respects similar to the first, and forwarded it to its agent at Henderson. This, although received by Egard, was not delivered because of a telegram prohibiting his so doing; the company having in the meantime learned of the death of the applicant.

Leon Levy, the son of the applicant, was duly appointed and qualified as the administrator of his father's estate, and having made demand for payment of the whole amount of the insurance applied for, and being refused by the company, he instituted this action to recover the full sum of $10,000, alleging in his petition, among other things, the following: "The plaintiff further states that on the 30th day of December, 1903, the decedent, Moses Levy, and the defendant entered into a contract of life insurance, by the terms of which the defendant agreed to and did insure the life of decedent and agreed to pay his administrator the sum of ten thousand dollars. The plaintiff further states that the said Moses Levy on the 30th day of December, 1903, at the instance and request of William Egard, an agent of the defendant, made a written application to the defendant for the sum of $10,000 insurance on his life. Said application was prepared by said agent and accepted by said company, and is now in the possession of defendant, and cannot be filed herewith. Said insurance was, by the terms of said application, and by the agreement between said decedent and the defendant, to be divided into two policies of five thousand dollars each, which the defendant agreed to issue to said Moses Levy, and under their said agreement said policies were to be incontestable and nonforfeitable for any cause, and were to relate back to and be in force from the date of said application, which was the 30th day of December, 1903. It was also agreed by and between said decedent and said defendant, when the said application was made, viz., on the 30th day of December, 1903, in consideration, that said decedent would pay to the defendant the sum of $776.90, which sum he did pay on the morning of the 20th day of January, 1904, and the further consideration that said Moses Levy would pay to the defendant a like sum of $776.90 on the 30th day of December each year thereafter during the life of said Levy, the defendant agreed to pay to the administrator of said Moses Levy, immediately upon the proof of his death, the sum of ten thousand dollars ($10,000). It was also agreed, at the time of making said application between said Moses Levy and the defendant, that as soon as the first premium was paid, which was in fact on the morning of January 20, 1904, that the said insurance should be incontestable and nonforfeitable for any cause, and should relate back to the date of said application, and be in force and effect from the date of said application, which was December 30, 1903. It was further agreed by the said decedent and the defendant that if, for any cause, the defendant should refuse to issue both or either of said policies, then the insurance as agreed upon should be in force and effect until the decedent was notified of such refusal on the part of the defendant, and the premiums should then be returned to said Levy by the defendant, and said Levy was not notified of such refusal, nor was the premium returned to him." The defendant company filed an answer, denying all of the material allegations of the petition, including that of the payment of the premium by the applicant. Upon trial of the case, after all the evidence was in, the court awarded the defendant company a peremptory instruction to the jury to find for it on the second policy, and the jury, under the instructions of the court, found for the plaintiff (appellee) for the sum of $5,000, being the amount of the first policy, which had been delivered by the agent to him. From the judgments based upon these verdicts, the insurance company is here on direct, and the administrator has prosecuted a cross, appeal.

The trial court was evidently of opinion that the issuance of the first policy of $5,000 was an acceptance pro tanto of the applicant's proposal to the company for insurance in the sum of $10,000, and therefore it became bound for the sum of $5,000, provided Moses Levy had paid over to Egard on the 20th of January the sum of $776.90 as a year's premium on the proposed insurance, as claimed by his administrator to have been done. This position, it seems to us, is not only unsound as a proposition of law, but in effect ignores the uncontradicted fact, shown by the appellee's own evidence, that the appellant company rejected the proposal for $10,000 insurance on the 19th day of January, 1904, which was the day before it is claimed that the premium was paid by the applicant, and thereby ended all contractual relations pending between the parties at that time. An application for insurance in no wise differs in principle from any other proposal to contract, and must, in order to bind the parties, be assented to in terms as broad and comprehensive as the proposition made.

On this subject Parsons in his work on Contracts (volume 1, 475) thus states the rule: "There is no contract unless the parties thereto assent, and they must assent to the same thing, in the same sense. *** It becomes a contract only when the proposition is met by an acceptance which corresponds with it entirely and adequately." At star page 476, the author says: "Many cases turn upon the question whether this assent to the proposition was entire and adequate. The principle may be stated thus: The assent must comprehend the whole of the proposition, it must be exactly equal to its extent and provisions, and it must not qualify them by any new matter. Thus an offer to sell a certain thing, on certain terms, may be met by the answer, 'I will take that thing on those terms,' or by an answer which means this, however it may be expressed; and if the proposition be in the form of a question, as, 'I will sell you so and so; will you buy?' the whole of this meaning may be conveyed by the word 'yes,' or any other simply affirmative answer. And thus a legal contract is completed. But there are cases where the answer, either in words or in effect, departs from the proposition, or varies the terms of the order, or substitutes for the contract tendered one more satisfactory to the respondent. The respondent is at liberty to accept wholly, or to reject wholly, but one of these things he must do, for if he answers, not rejecting, but proposing to accept under some modifications, this is a rejection of the offer. The party making the offer may renew it; but the party receiving it cannot reply, accepting with modifications, and when these are rejected again reply, accepting generally, and upon his acceptance claim the right of holding the other to his first offer."

In Page on Contracts, vol. 1, §§ 45, 46, it is said:

"Sec. 45. The acceptance must, furthermore, correspond to the offer at every point, leaving nothing open for future negotiations. An attempted acceptance, which leaves open the adjustment of the price, or the ascertainment of the capacity of the ship chartered, where that is a material term of the offer, or the time of delivery or of payment or an acceptance as to the price only, is without validity.

"Sec. 46. An attempted acceptance which seeks to modify one or more terms of the offer is of no legal effect as an acceptance. It is really a rejection of the offer, and a counter proposition in lieu of the original offer, and must be accepted by the party making the original offer in order to constitute an agreement. ***"

In the leading case in the Supreme Court of the United States ( Eliason v. Henshaw, 4 Wheat., at page 228, 4 L.Ed 556) Justice Washington states the principle here involved...