Title: Dixie Life & Accident Insurance Co. v. Hamm

State: arkansas

Issuer: Arkansas Supreme Court

Document:

344 S.W.2d 601 (1961) DIXIE LIFE & ACCIDENT INSURANCE CO., Appellant, v. Bobby L. HAMM, Appellee. No. 5-2323. Supreme Court of Arkansas. March 27, 1961. Yingling, Henry & Boyett, Searcy, Moses, McClellan, Arnold, Owen & McDermott, James R. Howard and E. M. Arnold, Little Rock, for appellant. Lightle & Tedder, Searcy, for appellee. HARRIS, Chief Justice. This is an appeal from a judgment entered in favor of Bobby L. Hamm against the Dixie Life and Accident Insurance Company. The judgment was for $2,997, together with statutory penalty and an attorney's fee of $400. The company issued to appellee the following policies: on January 28, 1957, Policy No. D-02236, providing a daily room benefit of $10, together with certain other specified hospital expense *602 benefits, and hereinafter referred to as the "D" policy; on February 15, 1957, Policy No. R-01677, providing a daily hospital room benefit in the amount of $10, and on February 26, 1958, policy No. R-02601, providing a daily room benefit of $5.00.[1] The initial premium on these policies, and subsequent premiums up until December, 1958, were paid to the company by the parents of appellee. On March 21, 1959, appellee was seriously injured in an automobile accident, and was confined to the Davis Hospital in Pine Bluff for 52 days. Subsequent hospitalization was required at the Davis Hospital, Arkansas Baptist Hospital in Little Rock, and Porter Rodgers Hospital in Searcy.[2] When payment under the policies was demanded, the company denied liability on the ground that premiums due in December, 1958, had not been paid, and the policies had accordingly lapsed. Suit was instituted by Hamm, and the cause was tried on July 18, 1960. Appellee and his mother were the only witnesses. Hamm first testified about the accident, and his stay in the hospital. Relative to the policies, he testified that he was a student in college at the time they were taken out, but was subsequently employed as a teacher at Arkansas A & M College in Monticello; that his parents had paid the initial premium on the policies, and that he left it to them to pay subsequent premiums; that he came home one weekend, early in January, and paid his mother something over $20 for the premium due in December, 1958. (All of the policies allowed a 31-day grace period for payment of premiums, which had the effect of prolonging the time until the latter part of January, 1959.) Mr. Hamm testified that he did not know how the policy premiums had been paid prior to that time, nor did he, of his own knowledge, know whether the policies were in force at that time. The witness testified that the money was given, to his mother in cash, but he did not recall the day of the week, day of the month, or denomination of the currency; nor did his mother give him a receipt. Mrs. Elizabeth Branscum, mother of appellee, was employed as an insurance salesman by the defendant company. Her contract with the company simply provides that she is appointed "to sell Hospitalization: forms D and R." The applications, according to her testimony, were written by her or her husband, signed by Mrs. Branscum for her son, and all premiums were paid by one of the parents. According to her evidence, her son paid her $24 in cash at her home, in January, 1959, the proper amount due for the quarterly premium on the policies, and which would have extended the coverage until the last of March, 1960. Admittedly, Mrs. Branscum never did send this money to the company. At the conclusion of appellee's proof, appellant moved for an instructed verdict on all the policies. This motion was denied. Appellant then moved for an instructed verdict insofar as the "D" policy was concerned. This motion was likewise denied. The company declined to offer testimony, and appellee moved for an instructed verdict. Both sides then joined in asking that the case be withdrawn from the jury and tried by the court. The jury was dismissed, and the court entered judgment as set out in paragraph one. For reversal, appellant urges first, that the trial court should have directed a verdict for it, and secondly, the court erred in allowing penalty and attorneys' fees to appellee inasmuch as appellee did not recover the amount demanded in his complaint or amended complaint. Under the view we take, the second point becomes moot. Unquestionably, the policies had lapsed unless the payment of currency by *603 the son to his mother prevented such lapse. Appellant contends that Mrs. Branscum was only a soliciting agent, and was without authority to accept the premium payment in January. 44 C.J.S. Insurance § 152, p. 824, states that: This last apparently refers to collecting the initial premium, and delivering the policy. Appellee argues there is no evidence in the record limiting Mrs. Branscum's authority to that of a soliciting agent. We do not agree. Certainly she was not a general agent. 29 American Jurisprudence, § 151, p. 550, defines general agents as follows: Section 152 defines special agents: We think it clear that under her contract with the company, Mrs. Branscum was no more than a soliciting agent, and as such, acted as a special agent with limited authority. Appellee asserts that in the absence of notice to the contrary, one dealing with an admitted agent has the right to presume that he is a general agent, and acting within the scope of his authority. This assertion is erroneous. In National Life & Accident Ins. Co. v. Broyles, 197 Ark. 113, 122 S.W.2d 603, 604, this Court, in quoting from an earlier case, said: This holding has been reiterated several times. Couch on Insurance, 2d Edition, Vol. 3, § 26:70, p. 547, states: The "R" policies provide, in part 6, section 3: Accordingly, in the "D" policy, the insured had notice in the contract itself that the premiums were payable at the home office of the company, and he is precluded from recovery under our holding in Gordon v. New York Life Ins. Co., 187 Ark. 515, 60 S.W.2d 907. In that case, Gordon purchased a policy from one Fiser, the local resident agent of the New York Life Insurance Company. Fiser solicited the application, obtained the policy, delivered same to Gordon, and collected the first premium. Within the 30-day period of grace, Gordon paid Fiser the next premium due, and received Fiser's personal receipt for same. The policy contained a provision similar to that of the "D" policy here under discussion. The opinion recites some of Fiser's activities as an agent of the New York Life Insurance Company, and there was testimony that Fiser had been collecting premiums for the company. The money wras not sent in to the company office. This Court sustained the action of the trial court in directing a verdict for the insurance company, stating: The principles of law cite4 in the Broyles case, and from Couch, equally apply to the "R" policies, though we thoroughly agree with the general comment in Vol. 85 A.L. R, p. 749, under the heading, "Person to Whom Payment of Insurance Premium May be Made So As To Charge Insurer." Therein, it is stated: Likewise, in 14 Appleman Ins. L. & P., § 7984, p. 229: *605 "An agency to deliver policies does not necessarily imply power to collect premiums, and the extent of agency in that respect must be determined by the particular circumstances and relations between the parties. To establish that an agent outside the home office of an insurance company had authority to accept renewal premiums on behalf of the company, it has been stated that it must be proved either that such agent had actual authority or apparent authority by the company representing and holding out such agent as having such authority, and that the insured knew of and relied on the representations. The fact that the insured had been in the habit of making payment to another who turned them over to the proper person does not establish such authority in the first recipient. * *" Let us proceed to apply these principles of law to the facts in the instant litigation. In the first place, it is at once obvious that appellee did not rely upon any apparent authority of his mother to collect premiums, since he had never paid a premium prior to January, did not know how the policy premiums had been paid, and did not even know whether the policies were in effect at that time. It is equally evident that no attempt was made to ascertain the authority of his mother to accept premiums. As stated, the record shows that Mrs. Branscum had never before collected any premiums from her son, and there is nothing in the transcript to indicate that she ever collected premiums from anyone in behalf of the company. There is no evidence that the company had represented, or held out, to appellee, or anyone else, that she did have such authority. As indicated in the citations herein, an entirely different question would be presented had Mrs. Branscum sent the premium to the company. Summarizing, we conclude that there was no substantial evidence that Mrs. Branscum had authority to collect premiums, and no substantial evidence of acts committed by appellant, upon which appellee could, or did, rely, that would justify a finding that the company was estopped to deny that payment had been made to the proper person. Reversed and dismissed. [1] The "D" policy room benefit is without limitation as to the number of days. The "R" policies provide reimbursement for room expense for a period not to exceed 100 days. [2] Appellant company does not question the amount of the hospital bills; it simply denies liability in any respect.