Travelers Ins. Co. v. Taliaferro

• Citation: 54 P.2d 1069,176 Okla. 242,1935 OK 1091
• Decision Date: 05 November 1935
• Docket Number: Case Number: 24917
• Parties: TRAVELERS INS. CO. v. TALIAFERRO, Adm'r, et al.
• Court: Supreme Court of Oklahoma

1935 OK 1091

54 P.2d 1069

176 Okla. 242

TRAVELERS INS. CO. v. TALIAFERRO, Adm'r, et al.

Case Number: 24917

Supreme Court of Oklahoma

Decided: November 5, 1935

Syllabus

¶0 1. Insurance--Company not Required to Accept Application From All Parties Eligible.

An insurance company, in the absence of statute, is not required to accept all applications for insurance from parties who may be eligible therefor.

2. Same--Company not Required by Statute to Act Upon Application.

No specific statutory duty rests upon an insurance company in this state to act upon an application for insurance coming into its hands.

3. Same--Duty to Act With Diligence Upon Application Dependent on Contractual Relationship.

The duty of an insurance company to act with reasonable diligence upon an application for insurance arises only out of contractual relationship existing between the applicant and the company.

4 Same--Implied Promise to Act Within Reasonable Time Upon Application Accompanied by Premium -- Applicant's Cause of Action for Breach of Implied Promise or in Tort for Negligence.

Where an insurance company receives an application for insurance, together with the premium thereon, an implied promise is thereby created on the part of the company to act upon said application within a reasonable time, and the company may be held liable in damages for breach of such implied promise, or the applicant may waive the contract and sue in tort for negligence on the part of the company in its failure to act within a reasonable time.

5. Torts--Essential Allegations of Petition.

A petition in a tort action, in order to be sufficient in the face of a general demurrer, must allege the existence of a legal duty on the part of the defendant toward the plaintiff, a breach of that duty and an injury to plaintiff resulting from such breach.

6. Same--Insurance--Insufficiency of Petition in Tort Action Against Insurance Company for Negligent Delay in Action Upon Application.

Petition in a tort action against an insurance company for negligence in failing to act within a reasonable time upon an application for insurance is fatally defective when said petition fails to allege facts showing the existence of contractual relationship between the parties.

Appeal from District Court, Marshall County; Porter Newman, Judge.

Action by John A. Taliaferro and others against the Travelers Insurance Company. Judgment for plaintiffs, and defendant appealed. Reversed, and remanded, with instructions.

Reuel W. Little and Randolph, Hayer, Shirk & Bridges, for plaintiff in error.

Don Welch, for defendants in error.

GIBSON, J.

¶1 The plaintiff in error will be referred to herein as defendant, and the defendants in error as plaintiffs.

¶2 Plaintiffs commenced this action in the district court of Marshall county to recover damages suffered by reason of the alleged negligence of defendant in delaying action for an unreasonable length of time on plaintiff's application for a policy of workmen's compensation insurance. From a verdict and judgment in favor of plaintiffs, the defendant has appealed.

¶3 The pertinent allegations of the petition, for the purposes of the appeal, are as follows: On June 10, 1931, the plaintiffs presented to the defendant's agent at Madill their application for the insurance in question. The application was immediately forwarded to the defendant's state agent at Oklahoma City; that thereupon it became and was the duty of the defendant to pass on said risk promptly and determine for itself whether it would or would not write said policy of insurance, and promptly notify the plaintiffs of its action thereon; but that, notwithstanding such duty, it negligently and carelessly and in total disregard of its duty toward the plaintiffs, held said application in its office without taking any action thereon, and without notifying the plaintiffs in any manner as to its determination that it would or would not act thereon for a period of more than ten days and until after the 20th day of June, 1931, which delay was for an unreasonable length of time. It is further alleged that on said 20th day of June one of the plaintiffs' workmen was injured in the course of his employment and as a result plaintiffs were compelled to pay out the sum of $ 1,197.70; that if defendant had rejected plaintiffs' application within a reasonable length of time. they would hare been able to procure other insurance elsewhere prior to the said injury as aforesaid, and that by reason of such negligence and carelessness and breach of duty of defendant toward plaintiffs, the plaintiffs have become liable to pay out the sum as alleged.

¶4 It is further alleged that the "plaintiffs were at all times ready, able, and willing to pay the premium therefor, but no request for the payment thereof was made to them."

¶5 A demurrer to the petition was overruled. and this ruling of the court, among other alleged errors, is assigned here for review.

¶6 This is an action ex delicto. No recovery is sought upon contract. The theory is negligence in the performance of an alleged legal duty.

¶7 Defendant says the petition is fatally defective in that it contains no sufficient allegation of the existence of a legal duty on the part of the defendant toward the plaintiffs. If no legal duty is pleaded, we must agree with defendant that the petition wholly fails to state a cause of action. 62 C. J. 1150, sec. 62.

¶8 Plaintiffs allege they submitted their application for an insurance policy to the defendant, and that "the plaintiffs were at all times ready, able, and willing to pay the premium therefor, but no request for the payment thereof was made to them." and defendant received the application.

¶9 Did this state of facts produce a legal obligation on the part of the defendant? Plaintiffs affirm that it did, and that such a rule has been recognized and adopted by this court in Security Ins. Co. v. Career eh, 85 Okla. 171, 205 P. 151, and Columbian National Life Ins. Co. v. Lemmons, 96 Okla. 228, 222 P. 255. (See, also, Brown v. Missouri State Life Ins. Co., 124 Okla. 155, 254 P. 7.) The decision in the Cameron Case was the first in this state dealing with an action ex delicto arising out of un insurance company's action in its acceptance or rejection of an application for an insurance policy. The second paragraph of the syllabus of that case follows:

"Insurance companies are held, in law, to a broader legal responsibility than are parties to purely private contracts or transactions This is based upon the fact that those companies act under franchise from the state, and the policy of the state in granting such franchises proceeds upon the theory that it is in the interest of the public to the end that indemnity upon specific contingencies should be provided those who are eligible and desire it, and for their protection the state regulates, inspects, and supervises their business. An insurance company, having solicited and obtained applications for insurance, and having received payment of the fees or premiums exacted, they are bound either to furnish the indemnity the state has authorized them to furnish or decline so to do within such reasonable time as will enable them to act intelligently and advisedly thereon or suffer the consequences flowing from their neglect so to do."

¶10 To the same effect is the fifth paragraph of the...