Union Life Ins. Co. v. Burk
| Decision Date | 17 July 1948 |
| Docket Number | No. 3576.,3576. |
| Citation | 169 F.2d 235 |
| Parties | UNION LIFE INS. CO. v. BURK. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Pearce Rodey, of Albuquerque, N. M. (Rodey, Dickason & Sloan, Frank M. Mims, and Jackson G. Akin, all of Alburquerque, N. M., on the brief), for appellant.
Otto Smith, of Clovis, N. M. (Fred E. Dennis and Lynell G. Skarda, both of Clovis, N. M., on the brief), for appellee.
Before PHILLIPS, BRATTON, and HUXMAN, Circuit Judges.
The Union Life Insurance Company, herein called the Company, has appealed from a judgment holding it liable to the beneficiary for the benefits of ten separate policies of insurance on the life of Donald G. Burk, herein called the insured, in the total sum of $10,000.
On August 14, 1943, the Union Life Insurance Company issued ten separate policies of insurance on the life of Donald G. Burk in the total sum of $10,000, in each instance naming the appellee, Dorothy V. Burk, as beneficiary. The insured was killed while piloting a privately owned plane and while not a fare-paying passenger on a commercial airline flying on a regularly scheduled route between definitely established airports. The policies contained a provision entitled "Modifications"1 to the effect that no person except the president, vice president, secretary or assistant secretary of the company had power on behalf of the company to change, modify or waive the provisions of the insured's contract, and that the evidence of anyone claiming such power other than the designated persons must be in writing. It also contained a provision entitled "Limitations Due to War and Aviation Hazards",2 which excluded from the coverage of the policies death resulting from an act of war outside the United States and death resulting from service, travel or flight in any kind of aircraft, or while descending therefrom, except as a farepaying passenger on a commercial airline flying on a regularly scheduled route between definitely established airports.
On or about October 1, 1945, the company sent to all of its policyholders a notice3 informing them that the war clause in the outstanding policies, with the exception of that portion thereof relating to aviation risks, was removed and would be interpreted as being automatically cancelled as of October 1, 1945. At about the same time, the company also sent to each of its agents a notice,4 stating that on all policies issued on or after October 1, 1945, the limitation due to war and aviation hazards would be removed and that individual attention would be given to applications where possible aviation hazard was present. This letter also contained the statement that the war clause in outstanding policies would be automatically removed as of October 1, 1945, with the exception of that part thereof relating to aviation risks.
E. L. Holley was the manager and special representative of the company at Clovis, New Mexico. Both his manager and special representative contract contained substantially the same provisions providing that:
The special representative contract contained the provision that:
"The Agent shall have no power or authority other than as herein expressly granted."
F. O. Burk, the father of the insured, the insured, and Holley all were engaged in private aviation as pilots. They were acquainted with each other and all three flew from the Clovis Air Field. Holley did not write these contracts of insurance. F. O. Burk testified that during the latter part of October, 1945, he had a conversation with Holley at the Clovis Airport concerning the elimination of the aviation clause from his own policies as well as from the policies of the insured, both in the company as well as in other insurance companies; that about a week later he took all of his own policies, as well as the insured's policies, to Holley's office for the purpose of having the aviation clause removed. He testified that they examined the policies and that Holley advised him as to which ones it would be necessary for him to send in to the respective companies to have the aviation clause removed; that Holley advised him that the aviation clause had been removed from the policies in question; that Holley informed him that no additional premium would be required on the insured's policies in the company because of his aviation activities. He also testified that he received a copy of the letter sent to all policyholders and that he did not think that it removed the aviation clause from the policies but that he only read a portion of the letter. He further testified that from his conversation with Holley he was led to believe that the aviation clause had been removed from the policies in question and that he relied on Holley's statements. After this conversation with Holley he took all of the policies in question in this litigation home with him and took no further action with respect thereto.
Holley testified in substance that Burk came to his office with these policies, as well as with other policies, and that he showed Burk a policy that was issued by the company after October 1, 1945, which contained a rubber stamp impression cancelling paragraph nine, and informed Burk that the aviation clause in these policies had been cancelled; that Burk informed him that if the aviation clause was not eliminated the policies were to be sent in to procure a cancellation of the aviation hazard clause. He further testified that he informed Burk that no additional premium was due by virtue of the elimination of the aviation hazard clause. Holley did not intend to state that this clause in these policies had been removed by specific action nor did Burk so understand him. Both understood that what Holley meant to convey was that the notice to the policy-holders and the letter of instruction to the agents automatically effected a cancellation of these clauses in the old policies.
The contracts in question are New Mexico contracts and are controlled by the laws and decisions of that State.5 By the laws of New Mexico, a provision in an insurance policy providing that no person except designated individuals shall have power to waive contractual provisions is binding and renders ineffective any action on the part of others purporting to waive or to modify policy provisions.6
The trial court correctly found that the notice to the policyholders and the letter to the agents did not automatically eliminate the aviation clause from the policies in question; that Holley was not authorized by the company to waive these provisions of the policy and that he did not purport to have...
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