Riordan v. Equitable Life Assurance Society of United States

• Decision Date: 05 October 1918
• Citation: 175 P. 586,31 Idaho 657
• Parties: MELISSA H. RIORDAN, Respondent, v. EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a Corporation, Appellant
• Court: Idaho Supreme Court

175 P. 586

31 Idaho 657

MELISSA H. RIORDAN, Respondent, v. EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a Corporation, Appellant

Supreme Court of Idaho

October 5, 1918

INSURANCE-EVIDENCE-WAIVER.

1. The issuance of a policy of insurance differing in terms and rate of premium from the one applied for constitutes a rejection of the application and a counter offer by the company requiring acceptance before a valid contract is made.

2. Held, that there was substantial evidence to support the finding of the jury that the policy was accepted by the applicant.

3. Where at the time of making application for a policy of insurance a sufficient amount is paid to the company to cover the first premium and a policy is issued not as applied for but on a different plan and at a higher rate of premium which policy acknowledges receipt of the first premium as of the date when paid and is offered to and accepted by the applicant, the company waives an agreement in the application that the policy shall not take effect until the first premium has been paid during the good health of the applicant.

[As to waiver of conditions in insurance policy by insurer's failure to inquire into existing facts, see note in Ann.Cas 1917B, 500]

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Charles P. McCarthy, Judge.

Action to recover on insurance policy. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs awarded to respondent.

Richards & Haga and McKeen F. Morrow, for Appellant.

An application for insurance is not itself a contract, but is a mere proposal which requires acceptance to make it available as a contract, and such acceptance must be a complete and precise adoption of the application, or there is no contract. (Dorman v. Connecticut Fire Ins. Co., 41 Okla. 509 139 P. 262, 51 L. R. A., N. S., 873; McFarlane v. Wadhams, 165 F. 987; Kennedy v. Mutual Ben. Life Ins. Co., 205 F. 677; People's Ins. Co. v. Paddon, 8 Ill.App. 447.)

Where an insurance company issues a policy which does not entirely and adequately correspond to the application, or imposes any additional conditions upon the applicant, the transaction amounts to a rejection of the original proposition and the making of a counter offer or proposal which cannot become a contract until submitted to the applicant and accepted by him in accordance with the terms of the counter offer as a substitute for the contract he sought to enter into. (New York Life Ins. Co. v. Levy, 122 Ky. 457, 92 S.W. 325, 5 L. R. A., N. S., 739, and note; Mohrstadt v. Mutual Life Ins. Co., 115 F. 81, 52 C. C. A. 675; Mutual Life Ins. Co. v. Young, 90 U.S. 85, 23 L.Ed. 152; Travis v. Nederland Life Ins. Co., 104 F. 486, 43 C. C. A. 653; Myers v. Keystone etc. Ins. Co., 27 Pa. 268, 67 Am. Dec. 462; Stephens v. Capital Ins. Co., 87 Iowa 283, 54 N.W. 139; Aetna Life Ins. Co. v. Hocker, 39 Tex. Civ. 330, 89 S.W. 26; Wood v. Brotherhood, etc., 148 Iowa 400, 126 N.W. 949; Michigan Pipe Co. v. Michigan F. & M. Co., 92 Mich. 482, 52 N.W. 1070, 20 L. R. A. 277; Rushing v. Manhattan Life Ins. Co., 224 F. 74, 139 C. C. A. 520.)

The instructions to appellant's agent not to deliver this policy except during applicant's good health were not only limitations on the scope and extent of his agency which respondent was bound to know, but were conditions of the offer, and a binding contract could not be made on any other conditions. (Schwartz v. Germania Ins. Co., 18 Gil. 404, 18 Minn. 448, 21 Minn. 215; McNicol v. New York Life Ins. Co., 149 F. 141, 79 C. C. A. 11; Drago v. Prudential Ins. Co., 184 Ill.App. 618; John Hancock Mut. Life Ins. Co. v. McClure, 218 F. 597, 134 C. C. A. 355; Hoyt v. Mutual Ben. Life Ins. Co., 98 Mass. 539; Markey v. Mutual Benefit Life Co., 103 Mass. 78, 118 Mass. 178, 126 Mass. 158.)

Persons dealing with an agent are bound to ascertain both the fact of the agency and the nature and extent of his authority, and limitations on such authority cannot be rendered ineffective by the agent's silence concerning them, or the other party's failure to inquire. (1 Mechem, Agency, secs. 743, 750; Mitrovich v. Fresno Fruit Packing Co., 123 Cal. 379, 55 P. 1064.)

Where an insurance policy is placed in the hands of an agent for delivery upon the performance of certain conditions, such as payment of the premium, the continuance of the life or health of the insured, or the countersigning of the policy, the contract cannot take effect until the condition is performed. (25 Cyc. 718; Neff v. Metropolitan Life Ins. Co., 39 Ind.App. 250, 73 N.E. 1041; Bowen v. Prudential Ins. Co., 178 Mich. 63, 144 N.W. 543, 51 L. R. A., N. S., 587; Michigan Mut. Life Ins. Co. v. Thompson, 44 Ind.App. 180, 86 N.E. 503, 505; Thompson v. Michigan Mut. Life Ins. Co., 56 Ind.App. 502, 105 N.E. 780; Badger v. American etc. Ins. Co., 103 Mass. 244, 4 Am. Rep. 547; John Hancock Mut. Life Ins. Co. v. McClure, 218 F. 597, 134 C. C. A. 355.)

A change in the condition of an applicant's health prior to the final consummation of the contract avoids the contract in the absence of a waiver after a full disclosure of the facts. (John Hancock Mut. Life Ins. Co. v. McClure, supra; Piedmont etc. Life Ins. Co. v. Ewing, 92 U.S. 377, 23 L.Ed. 610; Equitable Life Assur. Soc. v. McElroy, 83 F. 631, 28 C. C. A. 365; Cable v. United States Life Ins. Co., 111 F. 19, 49 C. C. A. 216; McLanahan v. Universal Ins. Co., 1 Pet. (26 U.S.) 170, 7 L.Ed. 98; British etc. Ins. Co. v. Great Western Co., 38 L. J. Ch., N. S., 314; Traill v. Baring, 33 L. J. Ch. 521.)

An attempt to accept an offer in any other manner than that indicated by the offer is ineffectual. (1 Elliott, Contracts, sec. 29; Eliason v. Henshaw, 4 Wheat. (17 U.S.) 225, 4 L.Ed. 556.)

At the time of the alleged acceptance of the policy in behalf of Riordan his condition had changed materially, and inasmuch as he was then on his deathbed, no contract of insurance could be consummated without a full and frank disclosure of his actual condition. (Rathbun v. New York Life Ins. Co., 30 Idaho 34, 165 P. 997.)

The special finding of the jury that Riordan was in insurable health on July 23d was against law. (Rathbun v. New York Life Ins. Co., supra; Rasicot v. Royal Neighbors, 18 Idaho 85, 138 Am. St. 180, 108 P. 1048, 29 L. R. A., N. S., 433; Sovereign Camp v. Jackson (Okl.), 157 P. 92, L. R. A. 1916F, 166; note to Roe v. National Life Ins. Assn., 17 L. R. A., N. S., 1145; note to Connecticut Gen. Life Ins. Co. v. Mullen, 43 L. R. A., N. S., 726.)

Charles M. Kahn, for Respondent.

The acceptance of a policy requires no particular formality and depends to a great extent upon the facts and circumstances of the individual case. (May on Insurance, sec. 53; Eames v. Home Ins. Co., 94 U.S. 621, 24 L.Ed. 298.)

The general effect of an acceptance of the policy tendered is to complete the contract and to render it binding on the parties. (1 Cooley's Ins. Briefs, p. 458; Joyce on Ins., sec. 55.)

"After an unqualified acceptance of a policy there is a binding contract and both the insured and the company are bound by the terms of the policy, in the absence of fraud or mistake, even though the policy varies from the application." (25 Cyc. 723.)

After this acceptance, an actual, manual, physical delivery of the policy was not necessary. (1 Cooley's Ins. Briefs, p. 446; Dargan v. Equitable Life Assur. Society, 71 S.C. 356, 51 S.E. 125.)

"In the absence of a condition that delivery can be made only while in good health, mere private instructions, not known to the applicant, that the agent shall not deliver policies unless the insured is in good health, do not affect the insured's right to the policy." (1 Cooley's Ins. Briefs, p. 451; Bacon on Insurance, sec. 153; Clement on Ins., p. 452; Elliott on Contracts, sec. 4164.)

"The powers of the agent are prima facie coextensive with the business intrusted to his care, and will not be narrowed by limitations not communicated to the person with whom he deals." (Union Mut. Life Ins. Co. v. Wilkinson, 80 U.S. 222, 223, 20 L.Ed. 617, 623; Hall v. Union Central Life Ins. Co., 23 Wash. 610, 83 Am. St. 844, 63 P. 505, 51 L. R. A. 288; Relief Fire Ins. Co. v. Shaw, 94 U.S. 574, 577, 24 L.Ed. 291, 293; Taylor v. Aetna Life Ins. Co., 13 Gray (Mass.), 434; Fried v. Royal Ins. Co., 50 N.Y. 243, 247; La Grone v. Timmerman, 46 S.C. 372, 24 S.E. 290, 299; Mississippi Valley Life Ins. Co. v. Neyland, 9 Bush (72 Ky.), 430, 437; Going v. Mutual Benefit Life Ins. Co., 58 S.C. 201, 36 S.E. 556; New York Life Ins. Co. v. Fletcher, 117 U.S. 519, 6 S.Ct. 837, 29 L.Ed. 934; Kimbro v. New York Life Ins. Co., 134 Iowa 84, 108 N.W. 1025, 12 L. R. A., N. S., 421; Bruner v. Brotherhood of American Yeomen, 136 Iowa 612, 111 N.W. 977; Carter v. Bankers' Life Ins. Co., 83 Neb. 810, 120 N.W. 455; Currie v. Continental Casualty Co., 147 Iowa 281, 140 Am. St. 300, 126 N.W. 164, 165.)

The appellate court will not disturb a verdict of the jury on conflicting evidence. (Jensen v. Bumgarner, 28 Idaho 706, 156 P. 114.)

RICE, J. Budge, C. J., and Morgan, J., concur.

OPINION

RICE, J.

On May 19, 1914, John E. Riordan made application to the Equitable Life Assurance Society of the United States, through C. F. Kutnewsky, the society's agency manager for Idaho, for a policy of insurance on his life in the amount of $ 2,000 on the ordinary life plan, the annual premium for which was fixed at $ 87.08. The application contained the following provision:

"I hereby agree that the policy issued hereon shall not take effect until the first premium has been paid during my good health."

At the same time he paid the agent in cash $ 261.24 for the first three annual premiums, and received the following receipt therefor:

"Received of John E. Riordan...