Reese v. Fidelity Mut. Life Ass'n
| Decision Date | 10 July 1900 |
| Citation | 36 S.E. 637,111 Ga. 482 |
| Parties | REESE v. FIDELITY MUT. LIFE ASS'N. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
1. Where the application for a policy of life insurance and the policy itself both stipulated, in effect, that the policy should not become binding on the association issuing it until the first premium had been actually received by the association or its authorized agent during the good health of the applicant, and that no agent of the association should have power to make, alter, or discharge contracts or grant credit, and that no alteration of the terms of the contract should be valid unless such alteration should be in writing and be signed by the president of the association held, that the actual payment of the first premium during the good health of the applicant was a condition precedent to the liability of the association, and that no agent of the association could waive such condition.
2. Delivery is essential to the validity of a promissory note.
Error from city court of Atlanta; H. M. Reid, Judge.
Action by Lucy L. Reese against the Fidelity Mutual Life Association. Judgment for defendant, and plaintiff brings error. Affirmed.
The following is the official report:
Mrs Lucy L. Reese sued the Fidelity Mutual Life Association to recover the amount of a policy issued by the defendant company upon the life of her husband, T. B. Reese. Upon the trial the evidence submitted in behalf of the plaintiff was in brief, as follows: T. B. Reese applied to the defendant company for a policy of insurance on his life for $2,000 in favor of his wife, Lucy L. Reese. The written application which was signed by him contained the following stipulations: On September 8, 1894, the association issued a policy, as applied for, containing stipulations similar to those set out in the application, and in terms making the application a part of the policy, a copy of the application being attached thereto. The policy was sent to W. M. Reese, a soliciting agent of the association and a brother of T. B. Reese, at Thomasville, Ga., who received it about the 13th day of the same month. T. B. Reese was then living at New Holland Springs, Ga. On the 15th of the same month, W. M. Reese, in pursuance of an agreement with S. A. Loyless, state agent of the association, executed his promissory note for the amount of the first premium due on the policy, payable to Loyless or order, and on the same date signed a receipt to T. B. Reese for the premium. This note was never delivered to Loyless, nor was he ever notified of its execution, so far as the evidence shows, but it was retained by W. M. Reese, who intended forwarding it soon, with some other papers, to Loyless. W. M. Reese kept the receipt and the insurance policy for his brother. It appeared that T. B. Reese was in good health until the 16th or 17th of September, when he was taken sick and continued ill until his death, which occurred on the night of the 26th of September. On the 25th of September, J. A. Linton, the father-in-law of T. B. Reese, received a telegram from his daughter, Mrs. Reese, announcing the illness of her husband and requesting him to come to New Holland Springs. Linton showed this telegram to W. M. Reese, who thereupon told him about T. B. Reese's insurance policy. Linton then paid to W. M. Reese the amount of the first premium, and W. M. Reese destroyed the note which he had executed to Loyless, and which he had held up to that time. Linton took the policy and receipt, and had them in his possession at the time of the death of T. B. Reese. Some weeks after the death of T. B. Reese, Charles G. Beck, state agent of the defendant association, made a demand upon the plaintiff for the insurance policy, giving as a reason for demanding the policy that the company would never pay it, and tendered her the premium that had been paid. Upon this evidence the court granted a nonsuit, and the plaintiff excepted.
King & Spalding and J. T. Pendleton, for plaintiff in error.
Hamilton Douglas, D. S. Craig, and J. E. Bond, for defendant in error.
In the written application which was signed by the applicant, he expressly agreed that it should be the sole basis of the contract with the insurance association, if a policy should be issued thereon, and that the policy should not become binding on the association until the first payment due upon it had been actually received by the association or its authorized agent during the good health of the applicant. The policy likewise contained the stipulation that it should not be binding until delivered during the good health of the applicant, and until the first payment due thereon had been made, and recited that the application, a copy of which was attached, was made part thereof. It is clear from these explicit and unambiguous terms of the contract between the applicant and the association that the latter merely entered into an executory agreement, the performance of which absolutely depended upon the contingency that the first premium on the policy should be actually paid during the applicant's good health. This prerequisite had to be complied with before the policy could become effectual. In Ormond v. Association, 96 N.C. 158, 1 S.E. 796, it was decided that, "where an application for a life insurance policy declares on its face that the payment of the premium is a condition precedent to the issuing of the policy, the policy is not in force until the premium is actually paid." And in Oliver v. Insurance Co. (Va.) 33 S.E. 536, the court held that "an applicant's express agreement in his written application that the policy should not take effect until the first premium was paid, and the policy delivered during his continuance in good health, created a condition precedent to the company's liability." The contract, as expressed in the application and the policy, established the respective rights and obligations of the parties; and this court has no power to alter its provisions, and to declare a liability under a state of facts which the parties never agreed should fix it. As was said by Mr. Justice Little in Lippman v. Insurance Co., 108 Ga. 391, 33 S.E. 897, "A contract of insurance is governed by the same rules of interpretation as extend to other contracts, and, when parties incorporate terms or stipulations in their contracts, it is not the province of the court to extend or enlarge them, but, in construing them, to give expression to the true intent of the parties, and in so doing the language used is the best criterion of intention."
The controlling question in this case is, did the applicant comply with the essential condition upon which the association's liability depended; in other words, was the first premium actually paid during his good health? Counsel for plaintiff in error contended here, in argument and by brief, that "the execution by W. M. Reese of his note to the defendant's agent, Loyless, in pursuance of his previous agreement with the company through Loyless, was a good payment of the premium." The applicant, it appears was in good health at the date of this note, and, if it amounted to a payment of the first premium, then the policy became binding on the association. Even if Loyless, whose powers to bind the association were not otherwise indicated than by being denominated its "state agent," had been vested with authority to alter the terms of the contract, so as to accept the note of W. M. Reese, the soliciting agent, in lieu of cash, for the first premium, we do not think the note claimed to have been executed in this case would have constituted a payment. The proof was to the effect that the note was filled out and signed by W. M. Reese on September 15th; that he kept it in his possession for about 10 days, intending to forward it to Loyless with some other premiums; that it was...
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