Reliance Life Ins. Co. v. Hightower
| Decision Date | 24 February 1919 |
| Docket Number | 832. |
| Parties | RELIANCE LIFE INS. CO. v. HIGHTOWER. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
An insurance company may limit the power of its agent, and when notice that the agent's power is limited is brought home to the insured in such manner as would put a prudent man on his guard, the insured relies at his peril on any act of the agent in excess of his power.
(a) The insured is bound by plain and unambiguous limitations upon the power of the agent contained in his policy.
(b) Where the application for a policy of life insurance and the policy itself stipulate that the insurance shall not become effective until the first premium shall have been actually paid while the applicant is in good health, and that agents are not authorized to modify the policy or extend time for paying a premium, the actual payment of the first premium during the good health of the applicant is a condition precedent to the liability of the insurer; and a local agent of the company could not waive such condition.
(c) The formal acknowledgment of the receipt of the first premium in a policy of life insurance containing the provisions above stated is not conclusive of payment, so as to estop the company from denying the validity of the policy, except in a case of due or unconditional delivery of the policy by the company.
Certified Questions from Court of Appeals.
Action by Mamie Hightower against the Reliance Life Insurance Company. Judgment for plaintiff, and defendant brings error and the Court of Appeals certifies questions. Questions answered.
Dorsey Brewster, Howell & Heyman, of Atlanta, and C. N. King, of Chatsworth, for plaintiff in error.
Bryan Jordan & Middlebrooks and Leo Sudderth, all of Atlanta, for defendant in error.
The certified questions, which are sufficiently indicated herein are based upon the following facts gathered from the questions: An application for life insurance, signed by the applicant, contained a provision as follows:
And it recited:
"The payment of the first annual premium being [is] hereby acknowledged."
The insurance company, with knowledge that the first annual premium had not in fact been paid, issued the policy and sent it to the company's state agency, which in turn forwarded it to the local agent for delivery to the applicant. The local agent made manual delivery of the policy upon the promise of a third person to pay to the local agent the first annual premium; the third person accepting the note of the applicant for the amount of the premium. The premium was not actually paid by the third person until after the death of the applicant; no demand for payment having been made upon him while the applicant lived. After the death of the applicant the first premium was paid to the local agent, and (less the commission of that agent) was forwarded to the state agency, which retained the amount so received, without an offer to return it, until after suit on the policy, when the company in its plea tendered the amount so received by its state agency to the plaintiff, the beneficiary named in the policy.
Applying to the facts above stated the principles recognized in Reese v. Fidelity Mutual Life Association, 111 Ga 482, 36 S.E. 637, it must be ruled: (1) It was within the power of the insurance company, as between itself and its agent, to define and limit the powers of the latter. Limitations upon the power of the agent affect all third persons dealing with him who have knowledge or notice thereof, and any notice of limitations upon the agent's power which a prudent man is bound to regard is the equivalent of knowledge to the insured; (2) the stipulation in the signed application that the insurance "shall not take effect until the first premium shall have been actually paid while I am in good health," coupled with the words in the policy, "Agents are not authorized to modify this policy or to extend the time for paying a premium," were sufficient to charge the applicant with notice that he was dealing with a special agent with limited powers; (3) the actual payment of the first premium during the good health of the applicant was a condition precedent to liability under the policy, and the agent of the company could not waive such condition. We do not overlook the fact that conclusions different from those stated above, upon the facts given, have been reached by many courts. According to the view held by these courts, such condition in the application and policy will be deemed to have been intended to apply only to matters arising after the issuing of the policy, or, in all events,...
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