Robbins v. National Life & Acc. Ins. Co.

• Decision Date: 15 March 1968
• Docket Number: No. 36734,36734
• Citation: 157 N.W.2d 188,182 Neb. 749
• Parties: Octa ROBBINS, Appellant, v. NATIONAL LIFE AND ACCIDENT INSURANCE COMPANY, a Corporation et al., Appellees.
• Court: Nebraska Supreme Court

Page 188

157 N.W.2d 188

182 Neb. 749

Octa ROBBINS, Appellant, v. NATIONAL LIFE AND ACCIDENT INSURANCE COMPANY, a Corporation et al., Appellees.

No. 36734.

Supreme Court of Nebraska.

March 15, 1968.

Syllabus by the Court

1. Where a question in a application for reinstatement of an insurance policy calls for an answer peculiarly within the knowledge of the applicant, an untrue answer relating to a matter material to the risk and relied upon by the insurer to his injury, if timely advantage is taken thereof by the insurer, will void the policy.

2. Notice to the agent is notice to the principal, where such notice is received by the agent while acting within the scope of his authority.

3. An insurance agent, empowered to solicit applications for insurance and to receive payments of the premiums, binds the company by knowledge acquired in and about the preparation of the application and by representations made to the insured in so doing. The same rule applies where the agent obtains an application for reinstatement.

4. Information coming to a soliciting agent or a premium collector after the issuance of a policy or a reinstatement of a lapsed policy for nonpayment of premiums, in which he participated, is not imputable to his principal.

5. Ordinarily an estoppel or waiver must be pleaded by the party invoking it, but when the facts showing an estoppel or waiver are within the issues made by the pleadings and the evidence thereof is admissible for any purpose, it is not necessary that the estoppel or waiver shall be specifically pleaded.

6. An estoppel to assert a lapse of a policy of insurance for nonpayment of premiums cannot be successfully asserted unless an established custom by the insurer inconsistent with the policy is shown, upon which the insured relied to his injury, and that it would be inequitable under the circumstances to enforce the provisions of the contract providing for the lapse of the policy for nonpayment of the premium.

7. Applications for reinstatement of a policy of insurance after a lapse of the policy for nonpayment of premiums, are not required to be attached to the original policy, unless so provided by the policy, in order to constitute a basis for fraud in procuring a reinstatement.

Leslie D. Carter, Edward A. Mullery, Omaha, for appellant.

Crossman, Barton & Norris, Omaha, for appellees.

Heard before WHITE, C.J., and CARTER, SPENCER, ROSLAUGH, SMITH, McCOWN and NEWTON, JJ.

CARTER, Justice.

This is an action to reform a policy of life insurance together with certain applications for reinstatement and an application for a change in the type of the policy. The action having been brought subsequent to the death of the insured, the plaintiff, in addition to reformation, seeks a money judgment for the amount due thereunder after reformation together with costs and attorney's fees. The trial court found for the defendant and dismissed the action. The plaintiff has appealed.

On November 1, 1963, the defendant, The National Life and Accident Insurance Company, issued a policy of life insurance to Nathelee R. Morgan in which the plaintiff, Octa R. Robbins, the mother of the insured, was the named beneficiary. Nathelee died on February 27, 1966, a claim for the proceeds of the policy was duly made, and payment declined on the basis of the fraud of the insured in obtaining reinstatements after the policy had lapsed for nonpayment of premiums and in an application for a change in the type of the policy. The evidence shows that the policy was reinstated three times, July 11, 1964, September 19, 1964, and October 26, 1964, after it had lapsed for nonpayment of premiums. The application for the change in the type of policy was also filed on October 26, 1964, and a supplemental agreement, pursuant thereto, was issued by the insurance company and attached to the original policy.

The insurance company filed its amended answer and corss-petition, alleging that the insurance policy lapsed on the three occasions mentioned for nonpayment of premiums; that Nathelee filled out and signed applications for reinstatement on each of the three occasions; that certain answers as to her condition of health contained in the applications for reinstatement were false; that Nathelee knew such answers were false; that the answers were relied on by the insurance company; and that the insurance company would not have reinstated the policy if the questions had been truly answered. The insurance company alleged that it tendered a refund of premiums paid on the policy, which tender was refused. The insurance company prayed for a judgment that the policy was never reinstated, that the reinstatements were void, and that the policy be canceled and held to be of no force and effect.

It is contended by the plaintiff that the agent of the insurance company had knowledge of the physical condition of the insured at the time the applications for reinstatement and the application for a different type of policy were taken, that the knowledge of the agent constituted knowledge by the insurance company, and that the insurance company is estopped to assert a lack of knowledge of the alleged fraud. The following rule is relied upon in support of this theory: "* * * It being within the scope of his agency to collect premiums, it must be held that his knowledge was the knowledge of his principal, and hence, when he collected premiums, and paid them to appellant, with knowledge of the facts, such knowledge must be imputed to it." Arendt v. North American Life Ins. Co., 107 Neb. 716, 187 N.W. 65. See, also, 3 Couch on Insurance 2d, s. 26:132, p. 655; Waters v. Nebraska Mut. Ins. Co., 108 Neb. 1, 187 N.W. 125; Ross v. First American Ins. Co., 125 Neb. 329, 250 N.W. 75. But information coming to a soliciting agent or a premium collector after the issuance of a policy or a reinstatement of a lapsed policy for nonpayment of premiums, in which he participated, is not imputable to his principal. Kurg Park Amusement Co. v. New York Underwriters Ins. Co., 129 Neb. 239, 261 N.W. 364. See, also, 3 Couch on Insurance 2d, s. 26:132, p. 655.

Plaintiff testified that from November 1, 1963, the date of the policy, to March 1964, Fred Fox, an insurance salesman and collection agent for the insurance company, called at her home on numerous occasions. She testified that he came there to collect premiums on insurance policies held by Nathelee, herself, and a grandson. Nathelee was residing with her during the period involved in this litigation. Nathelee was employed as a waitress and was not always there. She said that his frequent visitations were made to collect premiums and to solicit additional insurance from her and her relatives. These visitations continued into March 1964. She informed Fox that Nathelee was in the hospital in January 1964 and that Fox visited her in the hospital at that time. She said that Fox visited her both as an insurance agent and as a friend before and after Nathelee's death. She said, also, that Fox said that if Nathelee was unable to pay the premium, he would pay it for her. Plaintiff said that she saw Fox four times from April 1 to July 11, 1964, and that he was visiting just as a friend. Premiums were paid by Nathelee until June 1964, when the policy lapsed for the first time. One Julian Riviera came to plaintiff's home in July 1964, about a reinstatement of the policy. Riviera handled all the reinstatements. She did not inform Riviera that Nathelee had had an operation, nor did she inform him that the operation was a hysterectomy induced by a malignant tumor, known to the medical profession as a squamous cell intraepithelial carcinoma of the cervix of the uterus, which we shall hereafter refer to as a cancer.

Fox testified that he was a staff manager for the insurance company on November 1, 1963, and that he sold the original insurance policy to Nathelee on that date. As staff manager he had supervision over several specific areas. He or the agent assigned to the area in which Nathelee resided collected the monthly premiums. He testified that he did not know of the lapse in premium payments or the reinstatement on July 11, 1964. He said he did not know of the subsequent lapses or reinstatements, or the application for change of policy. He denied that he ever offered or agreed to pay any default in the payment of premiums for Nathelee. He said he did not visit plaintiff or Nathelee very often. He testified that he did visit Nathelee in the hospital in January 1964, but did not discover the reason for the hospitalization. He made no inquiry because the policy was in force and had never been in default of premium payments to that time. He said that prior to the time of the first default and application for reinstatement, he was succeeded as staff manager for the area by Riviera and that the latter had the sole handling of the collections, reinstatements, and the change in policy terms without any knowledge on his part.

Riviera testified that he was employed by the insurance company in 1958 and had continued in its employ until ...