Whipple v. Prudential Ins. Co. of America

• Decision Date: 04 December 1917
• Parties: WHIPPLE v. PRUDENTIAL INS. CO. OF AMERICA.
• Court: New York Court of Appeals Court of Appeals

222 N.Y. 39

118 N.E. 211

WHIPPLE

v.PRUDENTIAL INS. CO. OF AMERICA.

Court of Appeals of New York.

Dec. 4, 1917.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Ida R. Whipple against the Prudential Insurance Company of America. From a judgment of the Appellate Division of the Supreme Court in the First Judicial Department (165 App. Div. 984,150 N. Y. Supp. 1118) affirming a judgment in favor of defendant entered upon a dismissal of the complaint at trial term, plaintiff appeals. Reversed.

The nature of the action and the facts, so far as material, are stated in the opinion.

J. M. Richardson Lyeth, of New York City, for appellant.

Alfred M. Bailey, of New York City, for respondent.

COLLIN, J.

The action is to recover the sum payable to the plaintiff by a policy issued by the defendant May 22, 1912, insuring the life of Clayton J. Whipple, the husband of the plaintiff. It is defended upon the ground that the policy was inchoate and ineffective, because the first premium had not been paid at the time of the death of the insured. The plaintiff by pleading and proof averred that the defendant waived its right that the policy should not take effect until the first premium was paid in full. At the close of the plaintiff's evidence, the trial court granted the motion of the defendant that the complaint be dismissed on the ground that a cause of action had not been proved, and gave the plaintiff an exception. The judgment of the Trial Term was affirmed by the Appellate Division by a divided vote.

The application of the insured for the policy contained this statement:

‘I hereby declare that all the statements and answers made or to be made to the company's medical examiner shall constitute the application and become a part of the contract of insurance hereby applied for, and it is further agreed that the policy herein applied for shall be accepted subject to the privileges and provisions therein contained, and said policy shall not take effect until the same shall be issued and delivered by the said company, and the first premium paid thereon in full, while my health is in the same condition as described in this application.’

This application was accepted, and the policy was issued and delivered to the defendant. The first premium had not been paid in full at the time of the death of the applicant on July 15, 1912. The policy provided that:

The defendant, ‘in consideration of the application for this policy, which is hereby made a part of this contract, a copy of which application is attached hereto, and of the payment, in the manner specified, of the premium herein stated, hereby insures the life of the’ insured as stated therein.

It also contained the provision:

‘No condition, provision, or privilege of this policy can be waived or modified in any case except by an indorsement hereon signed by the president, one of the vice presidents, the secretary, one of the assistant secretaries, the actuary, the associate actuary, or one of the assistant actuaries. No modification or change shall be made in this policy except such as is in accordance with the law of the state in which the same is issued. No agent has power in behalf of the company to make or modify this or any other contract of insurance, to extend the time for paying a premium, to waive any forfeiture, or to bind the company by making any promise, or making or receiving any representation or information.’

There is neither proof nor claim by the plaintiff that the right of the defendant that the policy should not take effect until the first premium was paid thereon in full was waived in accordance with any stipulation of the provision. The defendant asserts and argues that consequently there could have been no legal waiver of the right. Therein it errs.

[1] The following reasoning is sound, impeccable, and established in this jurisdiction: The application is a proposition or request for the contract of insurance between the applicant and the company, the statements of which upon its acceptance by the company bind the applicant and create correlative rights to the company. The company may relinquish or waive any of those rights.

[2] The obligations or rights of the applicant or of the company arising through the application and its acceptance cannot be restricted or affected by any provision of the policy, as a contract, until the policy has taken effect and become a contract between the parties. The provision of the policy last quoted by us or an analogous provision of a policy has no contractual restrictive power in or upon the right or freedom of the company to waive the stipulation that the policy shall not take effect until the first premium is paid in full, because it is not until the waiver has been made (the premium remaining unpaid) that the policy becomes a contract between the parties or binding, as a whole or as to individual provisions, as a contract, upon the insured. McClelland v. Mutual Life Ins. Co., 217 N. Y. 336, 111 N. E. 1062;Stewart v. Union Mutual Life Ins. Co., 155 N. Y. 257, 49 N. E. 876,42 L. R. A. 147;Skinner v. Norman, 165 N. Y. 565, 59 N. E. 309,80 Am. St. Rep. 776;Berry v. American Central Ins. Co., 132 N. Y. 49, 58,30 N. E. 254,28 Am. St. Rep. 548;Ames v. Manhattan Life Ins. Co., 40 App. Div. 465,58 N. Y. Supp. 244, affirmed upon opinion of court below, 167 N. Y. 584, 60 N. E. 1106;Russell v. Prudential Ins. Co. of America, 176 N. Y. 178, 68 N. E. 252,98 Am. St. Rep. 656;Walsh v. Hartford Fire Ins. Co., 73 N. Y. 5;Wood v. American Fire Ins. Co., 149 N. Y. 382, 44 N. E. 80,52 Am. St. Rep. 733;Haight v. Continental Ins. Co., 92 N. Y. 51. The defendant urges that we decided in Russell v. Prudential Ins. Co., 176 N. Y. 178, 68 N. E. 252,98 Am. St. Rep. 656, that the stipulation in the application could be waived only by the representatives of the company designated and in the manner prescribed in the provisions of the policy last above quoted. We did not so decide. The crucial point in the Russell Case was that the trial justice erred in holding that, as a matter of law, under the evidence there, the general agent, Tennant, was authorized to waive the right of the defendant to deem the policy ineffective until the payment of the first premium. We said:

‘The defendant contended [at the trial] that, if there was any evidence that Tennant had apparent authority to put the policy in force and waive its express conditions, and any evidence of estoppel, the questions were for the jury, but the court adhered to its view that it was a question of law upon the contract of insurance.’

And again:

‘In the case at bar there is no evidence of a course of business between the company and the insured, nor was it shown that the general agent had power to waive payment of the first premium. On the contrary, the plaintiff put in evidence the contract between the company and its general agent, which showed, affirmatively, that he possessed no such power.’

There was no legal evidence of a waiver, because there was no legal finding that Tennant had the authority to waive, and hence no question of waiver before us. Therefore the controlling question in...