Travis v. Nederland Life Ins. Co.

• Decision Date: 15 October 1900
• Docket Number: 1,380.
• Citation: 104 F. 486
• Parties: TRAVIS v. NEDERLAND LIFE INS. CO., Limited.
• Court: U.S. Court of Appeals — Eighth Circuit

104 F. 486

TRAVIS v. NEDERLAND LIFE INS. CO., Limited.

No. 1,380.

United States Court of Appeals, Eighth Circuit.

October 15, 1900

T. D Healy (A. N. Botsford, M. F. Healy, J. W. McGrath, and Eugene Bryan, on the brief), for plaintiff in error.

N. T Guernsey (H. T. Granger, on the brief), for defendant in error.

This was an action upon a policy of insurance of $3,000 on the life of Edward M. Travis for the benefit of his wife, Olive M. Travis, the plaintiff in error, and the defense was that no contract of insurance was ever consummated. There was a trial to a jury, and at the close of the evidence the court instructed them to return a verdict for the defendant upon this state of facts: The Nederland Life Insurance Company, Limited, the defendant in error, was a foreign corporation engaged in the business of life insurance. L. L. Duboureq, whose office was in New York City, was the president of its United States branch, and the only person in this country authorized to accept applications for insurance or to issue policies on its account. Edward Ferguson, whose office was in the city of Chicago, was the manager of its Western department. Leisander & Love were its general agents under Ferguson for the state of Iowa, with authority to procure applications for policies of insurance and to discharge the duties which usually devolve upon managers of agencies, and James H. B. Woodroffe was a soliciting agent under them. On November 11, 1896, Woodroffe obtained from Edward M. Travis his written application to the defendant for a policy of insurance of $3,000 on his life for the benefit of his wife, the plaintiff, and his promissory notes for the amount of the first annual premium. Woodroffe mailed this application and these notes to Leisander & Love at Des Moines, Iowa, who forwarded the application by mail to Edward Ferguson at Chicago, used the notes as collateral to a loan which they obtained for themselves from a bank, and reported that the premium was paid. Ferguson mailed the application to Duboureq in New York for his acceptance or rejection. Travis was a medical examiner for the defendant in the town where he lived, and on November 12, 1896, the day after his application, he wrote to Leisander & Love that they should not send his policy to him if the company was to have another medical examiner, one McGrath, in his town, and its agent was to turn over examinations to the latter, as he had been doing. McGrath was at this time and continued throughout to be a medical examiner of the defendant in the town where Travis resided. On November 18, 1896, Travis wrote Ferguson at Chicago, and directed him not to send his policy if the company was to have two medical examiners in his town. This letter was referred by Ferguson to Leisander & Love, who, on November 20, 1896, wrote Travis to the effect that the company still had, and would continue to have, two medical examiners in his town, and that it would divide its business equally between them. This correspondence was not communicated to Mr. Duboureq prior to November 27, 1896, and on that day, in ignorance of the facts which it discloses, he approved the original application, and issued a policy in accordance with its terms, which was sent to Travis, and was received by him on December 3, 1896. On December 8, 1896, he returned this policy to Leisander & Love in a letter in which he stated that the reason for his action was that the company had two medical examiners in his town. There was further correspondence and subsequent conversations, but the contractual relations of Travis and the company remained in the same condition in which they were left on December 8, 1896, until he was drowned, on March 9, 1897. Counsel for plaintiff in error claim that upon this state of facts a contract was established, and the plaintiff should have recovered.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge, after stating the case as above, .

Propositions, negotiations, correspondence, conversations do not make a contract unless the minds of the parties meet upon the same stipulations and they consent to comply with them. Until this has been done, either party has the right to withdraw or to modify his proposition, to make new conditions or proposals, or to retire absolutely from the negotiations. The addition of a new term or condition to an earlier proposal before the latter has been accepted is the withdrawal of the earlier proposition, and the submission of a new proposal of which the new condition or term is a part. From the time the new condition is submitted the earlier proposition is withdrawn, and it is no longer open to acceptance or rejection by the party to whom it was presented.

An application for life insurance is not a contract. It is only a proposal to contract on certain terms which the company to which it is presented is at perfect liberty to accept or to reject. It does not in any way bind the company to accept the risk proposed, to make the contract requested, or to issue a policy. Nor does it in any way bind the applicant to take the policy, to make the contract he proposed, or to pay the premium until his proposal has been accepted by the company and its policy has been issued. Until the meeting of the minds of the parties upon the terms of the same agreement is effected by an acceptance of the proposition contained in the application or of some other proposition, each party is entirely free from contractual obligations. The applicant may withdraw his application and refuse to take insurance on any terms. He may modify his proposal, may affix additional conditions or terms to it, or may make an entirely new proposition, while the company may refuse to entertain any proposition, or may reject that presented and submit a substitute. Nor is the freedom of the parties to retire from the negotiations or to modify their proposals, at any time before some proposition has been agreed upon by both, ever lost or affected by the fact that the applicant accompanies his proposal or application with a promise to pay the premium in the form of promissory notes, or even by an actual payment thereof. Until his application is accepted, such a promise or payment is conditional upon the acceptance, and his application is still no more than a...