Summers v. Mutual Life Insurance Company of New York

• Decision Date: 28 March 1904
• Citation: 12 Wyo. 369,75 P. 937
• Parties: SUMMERS v. MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
• Court: Wyoming Supreme Court

75 P. 937

12 Wyo. 369

SUMMERS v. MUTUAL LIFE INSURANCE COMPANY OF NEW YORK

Supreme Court of Wyoming

March 28, 1904

ERROR to the District Court, Uinta County, HON. DAVID H. CRAIG Judge.

William M. Summers brought this action against the Mutual Life Insurance Company of New York. A demurrer was sustained to an amended petition, and the plaintiff refusing to further plead, judgment was rendered in favor of defendant for costs. Plaintiff instituted proceedings in error. The facts are stated in the opinion.

Reversed.

J. H Ryckman, for plaintiff in error.

Parol contracts of insurance are valid. (Ellis v. Ins Co., 50 N.Y. 402; Trustees, &c., v. Ins. Co., 19 N.Y. 305; Ins. Co. v. Ins. Co., 19 How., 318; Potter v. Ins. Co., 63 F. 382; Worth v. Ins Co., 64 Mo. App., 583; Hicks v. Assurance Co., 162 N.Y. 284; Newark Mach. Co. v. Ins. Co., 50 O. St., 549; Ruggles v. Ins. Co., 114 N.Y. 415; Ins. Co. v. Shaw, 94 U.S. 574.)

Whether this is a parol contract of insurance, or a contract to issue a certain kind of a policy, is immaterial. The plaintiff may either bring a suit for specific performance or for damages for breach of the contract. He has chosen to do the latter. (Ins. Co. v. Ins. Co., 7 Bush., 81; Ins. Co. v. Colt, 20 Wall., 560.) And a parol contract of insurance is like any other contract and governed by the same rules; if one party denies the contract or refuses to perform, the other may take him at his word and bring his action for damages. (Angell v. Ins. Co., 59 N.Y. 171; Hubbell v. Ins. Co., 100 N.Y. 41; Ins. Co. v. Shaw, 94 U.S. 574.)

A petition setting up a parol contract to insure plaintiff's life, and to issue a policy in accordance with said contract, and alleging the payment by plaintiff to the defendant of the first annual premium, and the breach of such contract, and claiming damages therefor, states a legal cause of action. (Humphry v. Ins. Co. (15 Blatch.), 35 Fed. Cas., 6874.)

The authority of the agents to make such a contract as is alleged cannot be raised by a general demurrer to the petition. "No case can be found which holds that where the agent * * * takes the property of one and gives it to his principal, the principal is not liable for such property or its value." (Min. Co. v. Min. Co., 11 Colo. 223; Brown v. Ins. Co., 165 Mass. 565; Austrian v. Springer, 94 Mich. 343; Ins. Co. v. Wilkinson, 13 Wall., 234; Sawyer v. Equitable Co., 42 F. 30; La Marche v. Ins. Co., 58 P. 1053; O'Brien v. Ben. Soc., 22 N. E., 954; Maxson v. Llewelyn, 54 P. 732; 1 Black Com., 431; R. Co. v. Dunn, 19 O. St., 162; Ayers v. Ins. Co., 17 Ia. 176; Moir v. Hopkins, 16 Ill. 313; Ins. Co. v. Minch, 53 N.Y. 144; Ins. Co. v. Cellerd, 38 N. J. L., 480; Root v. French, 13 Wend., 570; Walsh v. Ins. Co., 73 N.Y. 5; Ins. Co. v. Gorman, 40 S. W., 571; Mathers v. Ins. Co., 11 L. R. A., 83; Halloway v. Griffith, 32 Ia. 409; Day v. Ins. Co., 29 A. R., 694; McKee v. Ins. Co., 75 A. Dec., 129; Masterson v. Mayor, 42 A. Dec., 48; R. R. Co. v. Richardson, 135 Mass. 473; Philpot v. Taylor, 75 Ill. 309; Bennett v. Lockwood, 20 Wend., 223; Kaiser v. New Orleans, 17 La. Ann., 178; Lightbody v. Ins. Co., 23 Wend., 18; Lister v. Allen, 31 Md. 543; 100 A. Dec., 78; Carmichael v. Buck, 70 A. Dec., 227; Newman v. Smith, 18 P. 792; Ins. Co. v. Neiberger, 74 Mo. 167; 3 Pars. Con., 167; Cooley Torts (2d Ed.), 105; Rich v. R. R. Co., 87 N.Y. 382; Crater v. Benninger, 38 N. J. L., 513; Bank v. Williams, 63 P. 744; Church v. Beach, 26 Conn. 355; Welch v. Durand, 36 Conn. 182; 4 A. R., 55; Anson Cont. (2d Am. Ed.), 406.)

"Every consideration of public policy demands that insurance companies should be required to deal with their customers with entire fairness and frankness." (Brink v. Ins. Co., 8 N. Y., 113.)

T. S. Taliaferro, Jr., and John W. Lacey, for defendant in error.

It is clear from the authorities cited by counsel and from innumerable others which might be cited to the same purport, that a contract of insurance may exist in parol and be shown by parol, and that the policy is merely an evidence of the contract of insurance. (Newark Machine Co. v. Kenton Insurance Co., 50 O. St., 549; Ruggles v. Insurance Co., 114 N.Y. 415; Insurance Co. v. Shaw, 94 U.S. 574; Ins. Co. v. Kuessner (Ill.), 45 N. E., 540.)

In each of the cases cited the parol contract of insurance was enforced after a loss had occurred, and the enforcement was upon the ground that the insurance itself was in force upon the parol contract to issue a policy. There is the same right of action as if the policy had issued. (Sproul v. Assur. Co. (Or.), 54 P. 180; Ins. Co. v. Stone (Kan.), 58 P. 986.)

This action is not an equitable one for specific performance, but is an action at law for damages. It becomes, therefore, important for us to consider what damages may be recoverable in such a case. In a loose way it has been sometimes said that in case of a failure to issue a policy when a clear parol contract has been made agreeing to issue such policy, and, in case, further, that a loss has actually occurred after the execution of the parol contract, an action may be sustained for the failure to issue the policy. In all such cases, however, the damages recovered have been for the loss sustained just as though a policy had in fact issued. (See Hicks v. Assur. Co. (N. Y.), 56 N. E., 743; Humphrey v. Ins. Co., 12 Fed. Cases, No. 6874.)

Under the averments of the amended petition the action is an action upon the policy as if issued. But the plaintiff has suffered no loss against which the policy insured him; therefore, he has sustained no damages which can be recovered. He had at all times a clear and specific contract of insurance which was applicable to him and which insured his life in the same manner as if the policy had actually issued. Now, when seven years have expired, with but a single payment of premium, with the policy long since, under the terms pleaded, lapsed, the plaintiff comes into court without having suffered any loss whatever and brings not an action for specific performance to compel us to give him his evidence of his contract, but with an action for damages when he has sustained none, since we had carried his risk in as broad and ample a manner as we had agreed and were at all times during the period covered by the payments so far made bound to stand responsible for a loss sustained within the policy. And by his silence he admits that the demands which he had made upon us for a policy were made just before bringing his action, seven years after the parol contract of insurance, when he had failed to make any of the annual payments required under the terms of the agreement, and likewise by his silence admits that his demand for a return of his premiums paid was made just before the bringing of the action. And this without any averment that the company in carrying his risk had failed to earn the premium paid. By this silence the plaintiff admits that the full premium paid had been earned by the company in carrying plaintiff's risks. The whole failure alleged against the defendant was a failure to give to the plaintiff the written evidences of the contract between the parties, the contract itself being at all times in full force and available to the plaintiff as broadly as if the written evidences had been delivered to him. Moreover, in this case, even if the plaintiff had suffered a loss, it is not averred that there was any difficulty whatever in proving the terms of this contract. Indeed, plaintiff sets forth the contract very explicitly and is himself a witness capable of proving its terms, and it is not shown that the defendant ever denied these terms. Therefore, even if the plaintiff had suffered loss, he would, so far as this petition discloses, have had no difficulty in requiring us to make good the loss, no difficulty in proving very clearly his contract. In every aspect of the case, then, as a suit for damages upon the contract or for its breach, within the principles laid down even by the authorities of the plaintiff, there were no damages which he could recover, and hence no cause of action.

Even if demand for the policy had been made within a short time after the consummation of the oral agreement, and if upon such demand the defendant failed and refused to deliver the policy, then, under the averments in this petition, if an action could be maintained at all at law when no loss had occurred from such failure to deliver the policy, the damages would be only nominal, because the measure of damages would be in that case the amount of loss sustained by the plaintiff under the policy.

The plaintiff's position will not be in any wise improved by any consideration of the principles of rescission. In the absence of an averment that the contract was upon the plaintiff's part rescinded, this court cannot find that it was so rescinded. It is true that the plaintiff avers that at some time not stated, which means seven years after the consummation of the agreement, he demanded the repayment to him of the $ 454, but this averment does not amount to an averment of rescission--first, because it is not shown that he offered to release the defendant from its agreement and burden of carrying his risk; second, because the defendant had already carried his risk, and, so far as the petition shows, had carried it for seven years, although the plaintiff had made but a single one of the premium payments and by his contract, as he sets it forth, had agreed to pay an equal amount annually. There is no averment that the payment of the single premium would carry the risk beyond the first year and there is certainly no presumption that it would carry it beyond the seven years. It is certain that the defendant earned something by carrying the risk of the plaintiff, as the petition...