Rayden Engineering Corp. v. Church

• Decision Date: 05 June 1958
• Parties: RAYDEN ENGINEERING CORPORATION v. Frederick C. CHURCH and others.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 57

151 N.E.2d 57

337 Mass. 652

RAYDEN ENGINEERING CORPORATION v. Frederick C. CHURCH and others.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Nov. 6, 1957.

Decided June 5, 1958.

Thomas J. Carens, Boston, Robert J. Sherer, Dorchester, for plaintiff.

Edward C. Park and Charles C. Worth, Boston, for defendants.

Before WILKINS, C. J., and RONAN, SPALDING, WILLIAMS, COUNIHAN, WHITTEMORE and CUTTER, JJ.

WHITTEMORE, Justice.

These are the plaintiff's exceptions to the action of the trial judge in directing verdicts for the defendants on each of the counts of the declaration. The action was in tort and contract against the members of a firm of insurance brokers in Boston, co-partners (hereinafter called the firm), and their employee, one Delamater. The contract counts, 1, 2, and 3 against the firm, and counts 4 and 5 against Delamater, alleged a failure to perform an undertaking to effect, for the plaintiff's benefit, a policy of insurance against accidental death of an employee, one Machinist. Counts 2, 3, and 5 alleged also a breach of an agreement that the coverage would be bound so as to take effect immediately. The counts in tort, count 6 against the firm and count 7 against Delamater, alleged negligence in the performance of the undertaking to effect insurance and also negligent failure to notify the plaintiff that the insurance had not been placed, with loss of the opportunity to place the insurance elsewhere.

The evidence permitted findings of fact as stated in this and following paragraphs. In April and May, 1952, the members of the defendant firm, a general insurance agency, were, through Delamater, acting as agents of the plaintiff to assist in determination of suitable policies for the insurance needs of the plaintiff's newly established business and to place policies. By mid-May, 1952, Delamater had bound several policies for the plaintiff, and had so acted as to give evidence of authority to bind various kinds of policies other than accident policies and to take responsibility for the firm in securing, maintaining, and servicing business. He had such authority in fact. At a conference at the plaintiff's plant in Hingham in mid-May, Fountain and Barnes, two of the three men principally interested in the plaintiff, talked with Delamater about the plaintiff's insurance needs. Barnes, who was the plaintiff's president, stressed their wish to have an accident policy insuring Machinist as a 'key employee' whom it would be hard to replace. Barnes rejected Delamater's suggestion of a life policy because 'it would take too long before they could get it, because he understood he had to be examined and all that, and he wanted something right away quick.' Delamater said 'O.K., if that's what you want.' Barnes said he wanted 'a straight accident policy' payable to the plaintiff in the amount of $50,000; that Machinist drove back and forth to New York by automobile and 'was kind of a reckless driver.' He wanted the policy in case Machinist was killed going back and forth to New York. Delamater said the premium would be between $250 and $300, or $325. Fountain testified: 'We wanted this accident insurance on an annual basis.' Delamater asked Machinist's age (which was fifty years) and his weight. Barnes said the price was all right, to go right ahead with it, and 'put it on right away' as Machinist was making another trip to New York that week end. At some point Machinist came into the office and was introduced to Delamater who asked him no questions but shook hands with him and 'talked to him pleasantly.' After Machinist went out Barnes 'was insistent upon it' and asked, 'Now, is Mr. Machinist covered on this $50,000 policy? ' Delamater answered, 'I will take care of it, it is all set.' Barnes said, 'Are we ready now to operate with our workmen's compensation and other insurance on this plant? Are we ready to go? ' Delamater answered, 'You are all set, you are all covered. You are all set.'

To Delamater a 'straight accident' policy was one which provides accidental benefits only as distinguished from accident and health. At the trial the term 'straight accident' was used to describe a policy with death benefits only.

No application was signed, no premium paid, and no policy received by the plaintiff, and the plaintiff did nothing more about it after the conference.

Machinist was killed in an automobile accident on the night of June 27-28, 1952. A medical examiner's report to a coroner certified that Machinist died after losing control of his automobile and that no other person contributed to his death.

Fountain informed Delamater of Machinist's death by telephone on Jun 30, 1952. Fountain asked if Delamater had the accident policy. It then became known that after the May 12 conference Delamater had taken no steps to obtain the accident policy, because of the pressure of other business, and because, for some of the intervening time, he had been ill. The jury could have found that the defendants did not communicate with the plaintiff about any insurance matters between the mid-May conference and June 30.

There was no direct evidence that Machinist knew of the attempt to place the accident policy; he had, however, 'made remarks around the office that he was worth more dead than alive.'

There is no standard form of accident policy; there are many different terms and conditions of such policies. There is available to brokers and agents a manual with short digests of various accident policies, some nine hundred pages in length, with a new edition each year. The American Casualty Company of Reading, Pennsylvania, with a branch office in Boston (hereinafter called 'American'), offered in 1956 a six months, renewable 'death and dismemberment' policy called a 'tripmaster' with premium of about $150 for a $50,000 policy, which as testified to by one Foster, a general agent for American and one other company and a specialist in accident and health insurance, 'boils down to that wherever you go, whatever you do, you are covered for a specified amount of time up to one hundred eighty days for anything that would happen to you.' '[A]t the end of six months, it would be subject to renewal.' The information required of an applicant for a tripmaster policy in 1956 was his name and address and the name of his beneficiary.

Accident insurance with American could not be bound or made final by brokers or agents but could be purchased and, in emergency, made final by telephone conversation with the accident and health underwriter of American in Boston if the broker had a completed application with all the answers in order and would agree to get the application to the underwriter as quickly as possible, 'so that I wouldn't be compromising myself or the company. * * * A policy similar in its essential to the American's tripmaster providing against accidental death for a period up to one hundred eighty days was on the market available in 1952. We have never insisted upon signed applications on this business. * * * I would prefer it, but it is not required.'

There was no direct evidence of the requirements in 1952 of an application for a tripmaster type policy.

Some, but few, companies write policies providing death benefits alone. Foster knew of none and 'If you place an order [with Foster] for accidental death, what you would be getting would be accidental death and dismemberment.'

Subject to the qualifications aforesaid in respect of the practice and policies of American, all companies writing accident policies covering adult males, other than limited travel policies, require the submission of a signed application containing answers to a number of questions relating to the applicant's health, occupation, or medical, moral or financial record, and there is some delay while the company investigates or considers the risk. Through the defendant firm it 'may take anywhere from a week to sometimes a month to issue an accident policy.' If payment of the first premium accompanies the application, some companies, upon finding the applicant acceptable on the application date, make the policy effective from that date. The defendants, the firm, are agents for seven companies named in the testimony, and also two of their own companies 'and * * * many others.' Some of these companies write accident insurance. On accident insurance, the firm submits the application to the company for approval because underwriting, that is appraisal of the risk, is necessary on such insurance. There was no evidence to show that the defendant firm acted as agents for American.

Some additional facts are mentioned in the following paragraphs.

1. We think the conclusion was not open that Fountain and Barnes could reasonably have understood that Delamater was bindingly undertaking that an accident policy was effective forthwith. We assume that the words 'it is all set' after the inquiry 'Now, is Mr. Machinist covered on this $50,000 policy?' could in some circumstances be deemed the equivalent of 'The requested coverage is forthwith bound.' We assume also that it could have been found that the representatives of the plaintiff were entitled to rely very greatly on statements made by Delamater about insurance, a field in which he was expert and they were not, and in which he sought to be and was their adviser acting for his firm. But what was being discussed was a policy on the life of another, that is, a contract with that other person in respect of the hazards of his existence. It should have been understood, reasonably, that a contract with the employee could not be made without his assent. See Whiting v. Massachusetts Mutual Life Ins. Co., 129 Mass. 240; G.L. (Ter.Ed.) c. 175, § 108, as amended. The great likelihood that the employee would assent and the possibility or probability that Delamater could arrange the necessary details with him, in a very short time, are beside the point. The nature of the contract under discussion...