Western Empire Life Ins. Co. v. Wash

• Decision Date: 11 April 1966
• Docket Number: No. 21188,21188
• Citation: 412 P.2d 910
• Parties: WESTERN EMPIRE LIFE INSURANCE COMPANY, an insurance corporation, Plaintiff in Error, v. Albert W. WASH and Mildred Wash, Defendants in Error.
• Court: Colorado Supreme Court

Page 910

412 P.2d 910

159 Colo. 523

WESTERN EMPIRE LIFE INSURANCE COMPANY, an insurance

corporation, Plaintiff in Error, v. Albert W. WASH and Mildred Wash, Defendants in Error.

No. 21188.

Supreme Court of Colorado, In Department.

April 11, 1966.

Morris Rutland, Denver, for plaintiff in error.

Fugate, Mitchem & Hoffman, Denver, for defendants in error.

MOORE, Justice.

The parties will be referred to as they appeared in the trial court where plaintiff in error was defendant and defendants in error were plaintiffs.

It is alleged in the complaint that the plaintiffs are the parents of one Walter L. Wash and are the named beneficiaries in a life insurance policy in the amount of $10,000.00 issued by the defendant on the life of Walter; that monthly premiums were paid on the policy; that Walter died; that proof of death was made; and that their demand for payment of the $10,000.00 due under the policy was refused by the defendant.

In its answer defendant admits that plaintiffs are beneficiaries and that Walter L. Wash died; denies that the policy was of any legal effect; that the amount of the policy is $10,000.00; and that the policy was in full force and effect at the time of the death of Walter.

In the second defense it is alleged that no contract of insurance was ever entered into; that the application as submitted provided for an annual premium of $425.70 and for a waiver of premium at an additional rate of $7.90; that the defendant refused to accept the offer of the insured as contained in his application, and increased the annual premium by $45 to a total of $470.70 and declined to issue a waiver of premium; and that defendant declined the insured's application and rated him up because of his hazardous occupation. It was further alleged that the following provision was contained in the application which was signed by the decedent:

'Any change as to face amount, premium, classification, plan of insurance, or benefits of this application shall be recorded in the space provided for Home Office Endorsement and any policy issued me on the basis of such change shall not take effect until the change made hereon has been approved in writing by me.'

It was also asserted in the second defense that the changes above noted were never approved by the insured in writing; that on the contrary they were disapproved by him; that the offer of the insured as contained in the application was never accepted by the defendant; and that the counter-offer of the defendant was never accepted by the insured and no contract resulted.

The third defense refers to a conditional receipt issued by a representative of the defendant, which contains the following:

'The insurance applied for shall become effective * * * provided that duly authorized officers of the company at its Home Office shall be satisfied * * * the life proposed for insurance was acceptable under the rules, limits, and standards of the company for the amount and plan applied for and at the premium stated in this receipt.'

It further alleges that the defendant did not accept the insurance applied for but changed the plan which in turn was never accepted by the insured, and that no contract resulted.

The fourth defense sets up a material fraudulent misrepresentation in that the application states: 'Dated at Denver, Colorado,' whereas in truth and in fact it was signed and entered into in Kansas City, Missouri; and that if the defendant had known the application was written in Missouri it would have rejected it because the defendant is not authorized to do business in Missouri and would be subject to losing its license.

The fifth defense states that the defendant's agent, Neill, had no authority to accept an application in Missouri.

The sixth defense alleges that the wife of the agent Neill is a first cousin of one of the plaintiffs, and that the agent conspired with the plaintiff to falsify the application; and that the defendant would not have accepted the premium if it had known of the false matters.

The seventh defense was amended and appears at folios 36 to 38. It alleges that defendant returned the premiums previously received.

The eighth defense sets forth a request by the insured to reduce the policy from $10,000 to $5,000.

The ninth defense states that the plaintiffs brought suit against the defendant in Missouri and that the United States Court of Appeals for the 8th Circuit (298 F.2d 374) determined that the agent Neill had no authority to bind the defendant; and that the matter of the agent's authority is res adjudicata.

The tenth defense alleges that at no time did the insured pay the premium required.

At the conclusion of the trial, which was to the court without a jury, findings were made on issues of fact in favor of the plaintiffs, and judgment entered against the defendant for the sum of $10,000.00 less $8.76 due from the deceased by way of adjustment of premium.

The main thrust of the argument for reversal of the judgment is stated in the Summary of Argument as follows:

'A. No contract resulted and the policy issued hereunder never became effective; the decedent made an offer as contained in the application; the offer (application) was never accepted by the defendant; the defendant made a counter offer by increasing the premiums and changing the plan of insurance, which was never accepted by the decedent.

'B. The trial court erred in finding that the defendant 'tacitly agreed.' It was up to the decedent to accept the counter offer of the defendant, which the decedent did not do. The trial court seems to imply some kind of a waiver, but waiver, which is an affirmative defense, was not pleaded or argued. On the facts there was no waiver or estoppel by the defendant.

'C. The insurance policy by its terms required the payment of the first premium stated therein. The same was not paid and the policy therefore never became effective.'

On behalf of the plaintiffs it is argued that the judgment should be affirmed for the following reasons:

'A. As a consequence of the actions by the defendant's agent and by the company itself, payment of the additional amount of the rated up premium herein involved and written approval by the insured of the changes made by the defendant in the application were waived, and the defendant is estopped to deny that a contract of insurance became effective. The defendant's agent Neill, acting within his apparent authority prior to receiving notification that his letter of resignation had been...