Williams v. Empire Mut. Annuity & Life Ins. Co.
| Decision Date | 28 September 1910 |
| Docket Number | 2,077. |
| Citation | 68 S.E. 1082,8 Ga.App. 303 |
| Parties | WILLIAMS v. EMPIRE MUT. ANNUITY & LIFE INS. CO. |
| Court | Georgia Court of Appeals |
Syllabus by the Court.
If a policy of life insurance, which on its face acknowledges the receipt of the first premium, is (without fraud, accident, or mistake) delivered to the insured by the company or its authorized agent, and the first premium is not in fact paid in cash, it will be conclusively presumed that the company intended to waive the payment of the first premium in cash and to extend credit to the insured. But the acknowledgment of the receipt of the premium, as contained in the face of the policy, may be explained by showing that contemporaneously with the delivery of the policy, the insured executed his promissory note, payable to the company for the premium, and that, by the terms of the policy failure to pay the premium note at maturity would forfeit the policy. In such a case the insurance would become effective upon the delivery of the policy, subject to forfeiture for breach of the condition subsequent, namely, the nonpayment of the note; but, like other forfeitures for failure to comply with condition subsequent, the company may waive the forfeiture arising from failure to pay the note.
Where in such a case, the company takes a note for the premium, and it is provided in the policy that if the note is not paid at maturity the policy shall be void, but the note represents the premium for an entire year, the company, by insisting upon the payment of the note in full after its maturity, will be held to have waived its right to forfeit the insurance during the year, especially where the note is an interest-bearing obligation. The law, following equity, will not allow the company either to collect or to assert its right to collect a full year's premium out of the insured, and yet declare the policy void at an earlier date.
Where, however, a company allows a policy acknowledging receipt of the first premium to be delivered to the insured by its agent, under an arrangement whereby the company extends the credit for the insurance premium to the agent, and the agent, to protect himself, taker from the insured a promissory note, under seal, payable to the agent personally, the company will not be allowed to declare the policy forfeited for the nonpayment of the note given by the insured to the agent, under a clause in the policy which provides that if a note be taken for the premium, and the note be not paid at maturity, the policy shall be void, although the agent transferred the note of the insured to the company in payment or as security for the company's account against the agent for the amount of the premium.
(a) Where a sealed instrument is payable to a designated person, it is not permissible to show by aliunde testimony that in the transaction the payee was acting as agent for a third person, so as to make the liability of the payor a liability to that third person, instead of a liability to the person designated as payee.
It is error to give an instruction which is wholly irrelevant to the issues between the parties and unsupported by the evidence. Proof that a notice was sent to the insured calling upon him to pay a premium, or notifying him when the next premium is due, may be admitted, to show a waiver of forfeiture on the part of the insurance company, even though it does not appear that the insured actually received such notice.
The agent of a corporation primarily is not incompetent to testify as a witness in behalf of the corporation concerning communications between himself, as such agent, and another, since deceased, whose assignee or transferee is the opposite party to the case, even though such latter party be insane.
A person not a party to the suit, but who is interested in its result, is not competent to testify as to transactions or communications with an insane or deceased person in an action brought by the assignee or transferee of the insane or deceased person, although, as agent of the corporation, he might be generally competent as a witness, if he were not personally interested in the result of the suit.
A forfeiture occurs, if it results at all, immediately upon a breach of the condition of the contract on which it is based; and, forfeitures not being favored in law, a waiver of the forfeiture once made cannot be recalled. The demand for payment in full of a future premium subsequent to the breach of a condition which would have entitled the insurer to insist upon forfeiture of the contract will be held to be waiver of the forfeiture, and be treated as an acknowledgment that the delinquent policy holder is still entitled to the benefits conferred by his contract.
In case a note is accepted in payment of the premium upon a policy of insurance, and in the policy it is stipulated that failure to pay such note at maturity will void the contract, the retention of the note and an attempt to collect it in full after its maturity is a waiver of the right of forfeiture. An insurance company which takes a note for a premium may, upon default in the payment of the note, forfeit the policy of insurance, if the contract so stipulates; but it cannot forfeit the policy and collect the entire note.
If the agent of the insurance company, who is not authorized to accept anything but cash in payment of a premium, takes a note for the first premium, and thereby becomes personally liable to the company for the cash, and the company holds him individually responsible for the amount of the premium, the nonpayment of the note does not forfeit the policy. An insurance company has the right to accept the assumption of personal liability on the part of its agents in lieu of the payment of a premium in behalf of another, to the same extent that it must look to its authorized agent to deliver or pay over to the company premiums actually paid to him in cash. An insurance company, in the absence of any provision to the contrary in its charter, may extend credit in the payment of insurance premiums, and such credit may be extended to an agent, who has assumed the payment of a premium in behalf of the insured.
Error from City Court of Atlanta; H. M. Reid, Judge.
Action by George W. Williams, guardian, against the Empire Mutual Annuity & Life Insurance Company. Judgment for defendant, and plaintiff brings error. Reversed.
Hines & Jordan, for plaintiff in error.
Maynard & Hooper and Perry S. Pearson, for defendant in error.
1. William Harrison Williams secured a policy of insurance with the Empire Life Insurance Company, dated August 5, 1905, and was given a receipt for the first annual premium on the policy, which stipulated that the regular premium up to the 5th day of August, 1906, was paid. The receipt contained a stipulation that, to be valid, it must be signed by the president or secretary and countersigned by an authorized agent of the company. It was countersigned on August 9, 1905, by Langford, Jones & Co., agents. The date upon which the secretary signed the receipt does not appear. On August 3, 1905, William H. Williams executed and delivered a note for $39.70, payable to the order of Langford, Jones & Co. This note was not paid at its maturity on December 1, 1906. Thereafter it was sent to the Bank of Soperton for collection, and was in the hands of this bank at the time that Williams, the insured, met his death, in the latter part of July, 1906. George W. Williams, as guardian for Roy Williams, the beneficiary of the policy, who was a brother of the insured, and who is non compos mentis, brought suit upon the contract of insurance. The insurance company defended upon the ground that the first annual premium was never paid by the insured, or by any one for him; that a note was given for the first annual premium, which was never paid, and that by the terms of the policy the failure to pay the note at maturity operated to forfeit the policy; and that, on account of the forfeiture, the policy was not in force at the time of the death of William Harrison Williams, the insured. The company admitted a prima facie case in behalf of the plaintiff, and took upon itself the burden of establishing its freedom from liability. The jury found in favor of the defendant, and the plaintiff excepts to the judgment refusing a new trial.
The first question which arises in the case is the determination of the relation which the receipt bears to the policy. Is it independent of or a part of the contract of insurance? The view of the other members of the court on this question is stated in the first headnote; personally, the writer goes further. Nothing is better settled than that receipts generally are subject to explanation or denial as evidence of payment, and that parol evidence is competent for this purpose. If the receipt in this case cannot be considered a part of the contract, then the instruction of the judge, of which complaint is made, was correct, because no one is estopped by a receipt, for it is such a writing as is subject to be varied or explained by the party executing it. But inasmuch as the payment of the first premium is an essential prerequisite to the creation of a contract of insurance, and the defendant admits in its answer that the contract was entered into and executed as alleged by the plaintiff, it seems to me that the receipt becomes a part of the contract. As such, it is not subject to be varied by parol, and consequently I think that the judge erred in charging the jury that they were to determine whether or not the first premium was in fact paid. Of course, the antecedent evidence upon that subject was inadmissible; but that point is not made in the first...
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