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

• Decision Date: 09 October 1905
• Docket Number: 2,026.
• Citation: 141 F. 339
• Parties: PAYNE V. MUTUAL LIFE INS. CO. OF NEW YORK.
• Court: U.S. Court of Appeals — Eighth Circuit

141 F. 339

PAYNE V. MUTUAL LIFE INS. CO. OF NEW YORK.

No. 2,026.

United States Court of Appeals, Eighth Circuit.

October 9, 1905

E. B Critchlow (H. P. Henderson, Frank Pierce, and W. J. Barrette on the brief), for plaintiff in error.

Edward M. Allison, Jr. (Geo. Sutherland and Waldemar Van Cott, on the brief), for defendant in error.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

ADAMS Circuit Judge.

This was an action on a policy of life insurance for $10,000 alleged to have been executed and delivered on December 28 1901, by the defendant, a corporation of the state of New York, to Harriet A. Payne, a citizen of the state of Utah, insuring her life for the benefit of her personal representatives. The execution and transmission of the policy to one Rulon S. Wells, the general manager of the company for the state of Utah; the receipt by the company from its soliciting agent of the net premium, that is to say, the premium as fixed by the policy, less the agent's commission for the first year; and the death of the insured within the year-- are admitted by the company. The defense is that the policy was not a contract, but was the result of a scheme entered into between the soliciting agent and the insured to deceive the company by making it falsely appear that the soliciting agent had secured a larger amount of insurance than any other agent in the state of Utah, and for that reason would be entitled to a certain prize which the company had offered to agents in that state. Certain issues of fact were tendered by the defendant in its answer, upon which the case went to trial in the court below. These were that it was understood and agreed between the soliciting agent and the insured at the time the policy was applied for that the insured should not pay, or be in any manner liable for the payment of, either the first or subsequently maturing premiums on the policy; that the policy, when issued by the company at its home office in New York and forwarded to its general manager in Utah for delivery, should never be in fact delivered to the insured, but should be held by the agent for the ultimate purpose of securing a prize, and then allowed to lapse; and that the insured, or her estate, should never have any interest in the policy, but as to them the same should be void and of no effect. The case was tried below on these issues, and at the conclusion of all the evidence, upon motion of defendant's counsel, the learned trial judge instructed the jury to return a verdict for the defendant, which was accordingly done.

The main ground urged for a reversal of the judgment rendered on the verdict is that the court erred in not leaving the issues to the jury for determination. To this we will first give attention. It is a settled law, that:

'When the evidence given at the trial with all inferences that the jury could justifiably draw from it is insufficient to support a verdict for plaintiff, so that such a verdict, if returned, must be set aside, the court is not bound to submit the case to the jury, but may direct a verdict for the defendant. ' Louisville, etc., Railroad Co. v. Woodson, 134 U.S. 614, 621, 10 Sup.Ct. 628, 33 L.Ed. 1032.

The principle last announced is fully recognized and has been expressed in various ways, such as:

'Where the evidence is undisputed or is of such a conclusive character that the court, in the exercise of a sound judicial discretion, would be compelled to set aside a verdict in opposition to it, the court may direct a verdict. ' Marande v. Texas & Pacific Railway Co., 184 U.S. 173, 191, 22 Sup.Ct. 340, 46 L.Ed. 487. See, also, Delaware, etc., Railroad v. Converse, 139 U.S. 469, 11 Sup.Ct. 569, 35 L.Ed. 213.

The general rule is clear, and it now becomes necessary to examine the record with a view of ascertaining whether there is any substantial evidence upon which the jury, in the exercise of its proper function, might have found for the plaintiff on the issues presented in the case.

Certain facts are undisputed. The policy was issued by the company at its home office in New York and transmitted to Rulon S. Wells, the general manager of defendant, in Salt Lake City. Pursuant to an established custom of business, he delivered the policy to one E. L. Chesney, the agent who originally solicited it, with the intent and purpose that he should deliver it to the insured and collect the first year's premium. This premium, as stated in the policy, is $378.70. Of this sum the soliciting agent at the time was entitled, for his commission and some special bonus, to $284.02, leaving $94.68 as the net premium due the company on this policy. In due time after receiving the policy Chesney paid the general manager the net premium of $94.68 due the company, and this ended the transaction so far as the company was concerned. It had issued its policy and delivered it to Chesney for delivery by him to the insured and collection of the premium. The premium due the company had been paid.

In dealing with his sub or soliciting agents General Manager Wells observed a common practice of requiring the soliciting agents to do a cash business with the company, but permitted them to make such arrangements for the payment of first premiums by the insured as suited the convenience of both, whether by way of taking notes or extending time of payment of the whole or any part of the premium. The general manager in his testimony admits that it was common practice to have notes taken by soliciting agents in payment of first premiums, in his office, not for collection exactly, but as collateral security for the payment of advances made to soliciting agents. He says he frequently turned over the notes to the soliciting agent who deposited them for collection by him; that they remained the property of the agent at all times, subject to the payment of the agent's account. He further says, in substance, that the first year's premium on the policy in question was settled, so far as the company was concerned, by cash paid by Chesney, and that the note taken by Chesney was not turned in to him; that after Chesney had made the payment of $94.68, the net premium due the company on the policy in suit, the company had no further claim against anyone for the first premium. It may therefore confidently be assumed that the company was well aware of the fact that in the usual course of business Chesney might take the note of Mrs. Payne for the whole or part of her first year's premium, and might make any other arrangement with her concerning the matter which he desired to do, provided, only, he paid the company, through its general manager, the net amount due it as the first premium on the policy.

Now what did Chesney do? He testifies, in substance, that he first broached the question of Mrs. Payne taking a policy in his company, on December 28, 1901; that he made arrangement with her husband the day before to have her come from Syracuse, her home, to Salt Lake City on the next day, and when she arrived there his account of what occurred is as follows: 'I told her that there was a contest on for a prize of a gold watch, to be given to the agent writing the most business, taking in the most applications and paying for them, and up to that time I thought I was in the lead and had secured the watch, but found that I was behind and wanted to know if she would be examined, so that I could present the application and get the watch, and she was inclined not to be examined. * * * She said she did not want to, because she did not have any money to pay and did not want any insurance to pay for. I told her it would not be necessary to pay out anything, as I would pay out the money to be paid; that it was a favor from her to me, that I might win the watch; and that there would not be anything needed down. * * * Well, she argued for quite a long while. I don't remember the whole of the conversation, but finally she said she would be examined upon that basis that she did not have to pay any money.'

Witness Chesney further testified, in substance, that he then, December 28, 1901, wrote the application; that Mrs. Payne never paid anything to him for the insurance; that Mr. and Mrs. Payne never gave him any note for the premium; that he never had any conversation with her about the premium or about the cost of the policy. His testimony makes a clear showing that the taking of the policy by the insured was a mere favor to him to aid him in his contest.

But this is not all the evidence. Mr. Payne, the husband of the insured, testifies in answer to questions as follows:

'Q. What did he (Chesney) say to you and to your wife? A. Well, he wanted me to let her take insurance out. I told him I did not feel able for to take one out on her now; that I wanted to wait and see how we came out with the salt. We had not yet raised our crop of salt. Q. What answer was made to that, or what did he (Chesney) say? A. Well, it went on for a while, and he kept after us for us to take a policy out-- for her to take a policy out. Q. During what period of the year? A. Well, that is from about May, I should judge, last of May right along up to the time she did take one out. Q. What did you say to him, if anything, definitely about what would be done in the way of taking out insurance for her with regard to the salt crop or prospect of it? A.

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