State ex rel. Mutual Life Ins. Co. of Baltimore v. Shain

• Decision Date: 12 November 1936
• Citation: 98 S.W.2d 690,339 Mo. 621
• Parties: State of Missouri at the relation of the Mutual Life Insurance Company of Baltimore, Relator, v. Hopkins B. Shain, Robert M. Reynolds and Ewing C. Bland, Judges of the Kansas City Court of Appeals
• Court: Missouri Supreme Court

98 S.W.2d 690

339 Mo. 621

State of Missouri at the relation of the Mutual Life Insurance Company of Baltimore, Relator, v. Hopkins B. Shain, Robert M. Reynolds and Ewing C. Bland, Judges of the Kansas City Court of Appeals

Supreme Court of Missouri

November 12, 1936

Opinion of Kansas City Court of Appeals quashed.

C F. Douglass and McAllister, Humphrey, Pew & Broaddus for relator.

(1) Respondents' opinion sets forth no facts showing waiver by relator and is in conflict with the controlling decisions of this court in the cases of Schwab v. Brotherhood of American Yeomen, 305 Mo. 148, and State ex rel Metropolitan Life Insurance Co. v. Shain, 334 Mo. 385 holding that the intention to waive must plainly appear or else the conduct relied upon as constituting waiver must involve some element of estoppel. (2) Respondents, in holding that relator's retention of the premium for a period of about six months was of itself sufficient to warrant the submission of the question concerning penalties to the jury, failed to follow the controlling decisions of this court in the cases of State ex rel. Continental Life Ins. Co. v. Allen, 303 Mo. 608, and State ex rel. Metropolitan Life Ins. Co. v. Shain, 334 Mo. 385, which hold that relator had a right to rely upon the testimony of its agents that they had tendered the premium to plaintiffs and the tender had been refused, and therefore relator had reasonable ground to believe its defense was meritorious.

Edwards, Thomsen & Johnson for respondents.

(1) Respondent's opinion is not in conflict with the decisions of this court in the cases of Schwab v. Brotherhood of American Yeomen, 305 Mo. 148, 264 S.W. 690, and State ex rel. Metropolitan Life Insurance Co. v. Shain, 334 Mo. 385, 66 S.W.2d 871. (2) Respondents in holding that relator's retention of the premiums for a period of about six months was of itself sufficient to warrant the submission of the question of penalties and attorney's fees to the jury, is not in conflict with the cases of State ex rel. Continental Life Ins. Co. v. Allen, 303 Mo. 608, 262 S.W. 43, and State ex rel. Metropolitan Life Ins. Co. v. Shain, 334 Mo. 385, 66 S.W.2d 871.

Hyde, C. Ferguson and Bradley, CC., concur.

OPINION

HYDE

This is a certiorari proceeding to quash the opinion of the Kansas City Court of Appeals in the case of Raymond W. King et al. v. Mutual Life Insurance Company of Baltimore, 89 S.W.2d 145, because it conflicts with prior controlling decisions of this court. The facts are stated in the opinion of the Kansas City Court of Appeals, as follows:

"The evidence tends to show that plaintiffs husband and wife, at a time not disclosed, obtained from the defendant a policy upon the life of their infant daughter, Helen, in the amount of $ 220; that later, on April 20, 1933, the defendant's agent, Sedoris, and another agent of defendant whose name the plaintiffs did not know, called on plaintiffs at their home and solicited plaintiffs to take another policy upon the life of their said daughter; an application for such other policy was written and signed by plaintiff, Raymond W. King, which, in addition to the usual questions and answers, contained the following: '. . . that no contract for insurance is created by reason of this application, until date of actual delivery of the policy to the insured in person, while in sound health. . . .' Concerning the taking of the application, Mr. King testified:

"'State what conversation you and Mrs. King had with these agents at the time? A. Well, we decided upon a four hundred dollar straight life policy to be paid weekly, ten cents a week, and they wrote this application and they said that in due time they would deliver a policy, so they asked me to pay the two weeks' premium. I says, "Well, I don't usually pay for anything until I get it." They said, "Well, if you will pay that two weeks' premium right now we will put this policy into effect tonight," which I did.'

"Upon receiving the premium, the agent executed to Mr. King a receipt therefor as follows:

"'Received from Mr. King 20 cents, which is a payment on account of application this day made for insurance in the above named Company. No obligation is incurred by the said Company by reason of this payment, unless said application is accepted and a policy delivered to the insured in person, while in sound health, when said payment shall apply to the first premium due after said delivery of the policy. O. C. Sedoris, Agent.'

"Mr. King's testimony concerning the receipt was as follows:

"'Now, when they handed you that plaintiffs' Exhibit 1 (receipt) did you read it? A. Yes, sir. Q. Now, state whether or not you said anything to them about it? A. I said that that receipt says it isn't binding on the company until the policy is delivered. Q. All right, what did they say in return? A. They said they were not bound by that receipt, that if I would pay the twenty cents they would put the policy in force from that day.'

"Plaintiffs' daughter, Helen, died May 1, 1933. In a few days thereafter the defendant, through its agent, paid to plaintiffs the $ 220 policy. At the time payment was made plaintiffs inquired of the agent who made the payment concerning the $ 400 policy. The agent stated that the company would do nothing about it, and advised plaintiffs 'not to go to any expense trying to collect, it would be no use.'

"On May 22, 1933, the plaintiffs, through their attorneys, formally notified defendant's home office of their claim concerning the insurance in the sum of $ 400 and demanded payment of that amount. The defendant in reply quoted the terms of the application and of the receipt, denied liability, except for the return of the premium, but did not offer to return the premium.

"Both of the plaintiffs testified that the defendant had never at any time offered to return the premium which was paid April 20, 1933.

"The evidence of defendant's agent was to the effect that they did not make contract of insurance on April 20; that after the death of plaintiffs' daughter, Helen, tender of the return of premium was made to both Mr. King and Mrs. King and that the tenders were refused.

"In the defendant's answer, which was filed on the day of trial, November 16, 1933, the defendant tendered into court the premium, amounting to twenty cents. The record does not show that the amount of the tender was deposited with the clerk of the court."

The Court of Appeals specifically held that "defendant's agent, Sedoris, did not have authority to make a contract of insurance." Nevertheless the court ruled that plaintiffs could recover thereon, saying:

"The facts favorable to plaintiffs show that in May the defendant knew that plaintiffs claimed its agent had made the alleged contract of insurance and that plaintiffs paid the premium which defendant's agent demanded. The defendant did not offer to return the premium until November 16, the day of trial. These facts authorized the jury to find that the defendant ratified the unauthorized act of its agent and was bound thereby."

It is thus clear that the basis of this decision is that, although defendant's agent had no authority to make the agreement about putting the insurance in force immediately, the company was bound by his unauthorized agreement to do so, because it thereafter ratified it. Does this conflict with the decisions of this court? This question must be decided upon consideration of what this court has held to be the essential elements of ratification. In Scrivner v. American Car & Foundry Co., 330 Mo. 408, 50 S.W.2d 1001, this court, citing many cases, stated elemental principles of ratification, as follows:

"Knowledge by the principal of the unauthorized act done or agreement made by the agent is essential to ratification of such act or agreement. . . . There can be no ratification by a principal of an unauthorized contract of an agent, unless the principal has knowledge of the terms and material facts of the contract. This is settled law in Missouri and in all other jurisdictions."

Acquiescence, by keeping the fruits of a transaction for an unreasonable length of time with such knowledge, might be an implied ratification but certainly no contract can be ratified without knowledge of what it is. In insurance cases, the question of ratification presented is often whether an unauthorized waiver by its agent of certain conditions, which the company has required shall be fulfilled before a contract can be created, has been ratified by the company, so that a contract of insurance has become the valid and binding contract of the company without compliance with the conditions stipulated by it. This is usually referred to as waiver by the company, although it would be more properly called a ratification by the company of an unauthorized waiver by its agent. "Ratification" contemplates "the adoption of a previously formed contract," so that, although unauthorized, it becomes valid. [See 52 C. J. 1145, sec. 1.] "While 'ratification' and 'waiver' may be and are sometimes used interchangeably, nevertheless, strictly speaking, 'ratification' is distinguished from 'waiver,' the latter being defined as the renunciation of some rule which invalidates the contract, but which, having been introduced for the benefit of the contracting party, may be dispensed with at his pleasure." [52 C. J. 1146, sec. 3.] Either "ratification" or "waiver" may be implied from other facts, but in any event knowledge of the facts is just as essential to "waiver" as it is to "ratification." This court has held that "a waiver is an intentional relinquishment of a known right;" and that "even in insurance cases the intention to waive must plainly appear, or else the acts or conduct relied upon as constituting waiver...