Court Opinion

ID: 9676587
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:28:09.657197+00
Date Added: 2024-06-11T18:16:49.663533
License: Public Domain

Beth Gladden Coulson, Judge. Appellant raises four points for reversal of the trial judge’s ruling granting appellee’s motion for a directed verdict. We find none of her arguments persuasive, and we accordingly affirm the decision of the trial court. The nature of the present case makes it necessary to examine the factual background at some length. On October 3, 1983, Bruce Jarsma, a soliciting agent for appellee, Pyramid Life Insurance Company, called upon appellant, Ora Lee Hunt, and her husband, William Hunt, at their home in Little Rock, and persuaded them to purchase term life insurance for members of their immediate family, which included nine children. Appellant also wanted a policy insuring the life of her sister, Dorothy Mae Jones, of Biscoe, Arkansas. It appears that while Jarsma was present appellant phoned her sister for some information which the agent used in preparing the policy. Because appellant is illiterate (although she can sign her own name) she asked her husband to sign her sister’s name on the insurance application form. The application, dated October 3,1983, named appellant as the sole beneficiary. According to the testimony of appellant’s husband, the purpose of the $50,000 policy was to provide funeral expenses in the event of Dorothy Mae Jones’s death. The application form contained various questions relating to the past and present health of the proposed insured, and all were answered in the negative. A policy was issued on October 11,1983, with “Dorothy M. Jones” named as the insured and owner. On February 6, 1984, Dorothy Mae Jones died as a result of cancer of the pancreas. Appellee denied páyment of appellant’s claim based on the health of Dorothy Mae Jones. Appellant filed suit against appellee, alleging breach of contract, bad faith, fraudulent misrepresentation, and violation of the Arkansas Unfair Claims Settlement Act, Ark. Stat. Ann. § 66-3005 et seq. (Repl. 1980, Supp. 1985). Appellant also requested compensatory and punitive damages. At trial, a hearing was conducted in chambers after appellant had rested her case. The trial judge then granted appellee’s motion for a directed verdict on the first count of appellant’s complaint, concerning the alleged breach of contract, but made no ruling on the remaining counts. From that decision, this appeal arises.  In her first point for reversal, appellant contends that the trial judge erred when he granted appellee’s motion for a directed verdict. As a procedural matter, a directed verdict is proper only when the evidence is so insubstantial as to require that a jury verdict for the non-moving party be set aside. Prudential Insurance Co. v. Williams, 15 Ark. App. 94, 689 S.W.2d 590 (1985). To determine, on appeal, the correctness of the trial court’s action regarding a motion for a directed verdict, we view the evidence that is most favorable to the non-moving party and give it the highest probative value, taking into account all reasonable inferences deducible from it. National Security Fire & Casualty Co. v. Williams, 16 Ark. App. 182, 698 S.W.2d 811 (1985).  According the highest probative value to the evidence presented by appellant, we cannot find any substantial evidence tending to establish an issue of fact in appellant’s favor. The controlling law is found at Ark. Stat. Ann. § 66-3206 (Repl. 1980): No life or disability insurance contract upon an individual, except a contract of group life insurance or of group or blanket disability insurance, shall be made or effectuated unless at the time of the making of the contract the individual insured, being of competent legal capacity to contract, applies therefor or has consented thereto in writing. . . [Emphasis added.] This court applied the statutory language to a situation in which an agent had never obtained an insured’s consent or signature in Cableton v. Gulf Life Insurance Co., 12 Ark. App. 257, 674 S.W.2d 951 (1984). We noted the public policy considerations which led to the enactment of the law codified at § 66-3206, quoting from Callicott v. Dixie Life & Accident Insurance Co., 198 Ark. 69, 127 S.W.2d 620 (1939): One who takes out a policy of insurance on the life of his brother without the knowledge or consent of the latter, cannot maintain an action against the company on the policy. 14 R.C.L. 889. It is against public policy to allow one person to have insurance on the life of another without the knowledge of the latter. It is not only the general rule that the consent of the insured must be had, but that is the rule in this jurisdiction, and this case is ruled by the case of Amer. Benefit Life Ins. Ass’n v. Armstrong, 183 Ark. 47, 34 S.W.2d 1082. In commenting on Callicott, we stated: “The passage of Ark. Stat. Ann. § 66-3206 codifies this policy and cannot be circumvented.” 12 Ark. App. at 259.  Appellant asserts that § 66-3206 and Cableton are inapplicable because appellee “ratified the parol agreement.” However, even when the evidence is viewed most favorably to appellant, there is nothing to indicate that appellee was ever informed, by its agent or any other person, that the application had not been signed by the insured. Without such knowledge on appellee’s part, it cannot be said that ratification occurred. Appellant’s contention amounts to an argument that there had been a waiver of requirements by appellee, but, as Cableton emphatically states, the requirements of § 66-3206 “cannot be circumvented.” We pointed in Cableton to Southern Burial Insurance Co. v. Baker, 199 Ark. 468, 134 S.W.2d 1 (1939), where the Arkansas Supreme Court stated its adherence to the policy of non-waiver of statutory law in the following terms: There is no room for construction, nor question of validity raised on this appeal. Truly, if we might say that the parties by their conduct could waive these provisions and their effect in this class of insurance, then there is no reason why the Legislature should have troubled about the enactment of this bit of legislation. 199 Ark. at 473, 134 S.W.2d at 3 quoted at 12 Ark. App. at 259, 674 S.W.2d at 952.  Because of the well established public policy, codified in the statutes and explained in the case law, neither the alleged oral consent of Dorothy Mae Jones nor the purported waiver of requirements of ratification by appellee is effective to negate the mandatory invalidation of life insurance policies issued without an application or consent in writing by the insured. Appellant argues in her second point for reversal that the agent, Bruce Jarsma, had apparent authority to bind appellee to a term life insurance policy on Dorothy Mae Jones. At trial, however, appellee admitted only that Jarsma was a soliciting agent and, as such, had no authority to bind appellee to the issuance of this or any other policy.  It is well settled that the insured or the beneficiary of an insurance policy has the burden of proving coverage. Snow v. Travelers Insurance Co., 12 Ark. App. 240, 674 S.W.2d 943 (1984). Arkansas is one of the states that makes a distinction between the authority of general and special agents of insurance companies. Security Insurance Corp. v. Henley, 19 Ark. App. 299, 720 S.W.2d 328 (1986). A general agent is ordinarily authorized to accept risks, to agree upon the terms of insurance contracts, to issue and renew policies, and to change or modify the terms of existing contracts. A soliciting agent, on the other hand, is ordinarily authorized to sell insurance, to receive applications and to forward them to the company or its general agent, to deliver the policies when issued, and to collect premiums. Holland v. Interstate Fire Insurance Co., 229 Ark. 491, 316 S.W.2d 707 (1958).  Our courts have repeatedly held that a soliciting agent is not invested with the authority to make contracts on behalf of the insurer. American National Insurance Co. v. Laird, 228 Ark. 812, 311 S.W.2d 313 (1958). Notice to a soliciting agent is not notice to the company. A soliciting agent has no authority to waive any of the policy requirements, nor can his knowledge be imputed to the company he represents. Continental Insurance Companies v. Stanley, 263 Ark. 638, 569 S.W.2d 653 (1978). See also Jackson v. Prudential Insurance Co. of America, 736 F.2d 450 (8th Cir. 1984); Ford Life Insurance Co. v. Jones, 262 Ark. 881, 563 S.W.2d 399 (1978); Holland v. Interstate Fire Insurance Co., supra-, Security Insurance Corp. v. Henley, supra. The burden is on the plaintiff to show that a soliciting agent has real or apparent authority to bind his principal by contract. Security Insurance Corp. v. Henley, supra.  The following language, from Latham v. First National Bank of Fort Smith, 92 Ark. 315, 320, 122 S. W. 992, 993 (1909), has often been quoted by our courts in addressing the question of the authority of agents: A principal is not bound by the acts and declarations of an agent beyond the scope of his authority. A person dealing with an agent is bound to ascertain the nature and extent of his authority. No one has the right to trust to the mere presumption of authority, nor to the mere assumption of authority by the agent. See also Jackson v. M.F.A. Mutual Insurance Co., 169 F. Supp. 633 (W.D. Ark. 1958); Dixie Life & Accident Insurance Co. v. Hamm, 233 Ark. 320, 344 S.W.2d 601 (1961).  Appellant asserts that Jarsma had apparent authority to commit “certain acts” on behalf of appellee. The nature of apparent authority was discussed in Mack v. Scott, 230 Ark. 510, 323 S.W.2d 929 (1959): The rule of law appears to be well settled that “The authority of an agent must be shown by positive proof or by circumstances that justify the inference that the principal has assented to the acts of his agent. . . .Apparent authority in an agent is such authority as the principal knowingly permits the agent to assume or which he holds the agent out as possessing; such authority as he appears to have by reason of the actual authority which he has; such authority as a reasonably prudent man, using diligence and discretion, in view of the principal’s conduct, would naturally suppose the agent to possess.” Pierce v. Fioretti, 140 Ark. 306, 215 S.W. 646. See also, Ozark Mutual Life Association v. Dillard, 169 Ark. 136, 273 S.W. 378. 230 Ark. at 514, 323 S.W.2d at 931-932.  Nothing in the record suggests any holding out of authority by appellee with respect to any form of authority of Jarsma to issue the policy in question or to bind appellee to issue the policy. Jarsma’s actions and words in receiving the application and premium presented as evidence by appellant of his apparent authority, simply show him to have been a soliciting agent acting outside the scope of his authority. He therefore had no authority, apparent or otherwise, to bind appellee to the insurance contract on Dorothy Mae Jones.  Appellant’s last two points are related and will be considered together. She argues that evidence of an oral agreement is admissible under conditions when fraud, deceit, or fraudulent misrepresentations are used to secure a written contract and that she presented sufficient evidence for the jury to find fraud, deceit, misrepresentation, bad faith, and breach of contract on counts II and III of her complaint. Appellant cites no authority for her argument concerning the admissibility of evidence of an oral agreement other than the inapposite comment that knowledge on the part of the agent is imputed to the insurer, taken from an incorrect case. An argument unsupported by convincing authority will not be considered on appeal unless it is apparent without further research that it is well taken. McIllwain v. Bank of Harrisburg, 18 Ark. App. 213, 713 S.W.2d 469 (1986). Appellant contends that there was fraud or misrepresentation on the part of the agent because of his “knowing” acceptance of an application not signed by the insured. No evidence was presented, however, to show that Jarsma, any more than appellant or her husband, knew of the statutory requirement that the insured must sign the application. In any event, the non-waivable nature of the requirement rendered the issue moot for submission to a jury. It does not appear, from our review of the record, that appellant carried her burden of proof with respect to the allegations of fraud, misrepresentation, and bad faith.  Since the requirements of Ark. Stat. Ann. § 66-3206 are non-waivable, appellee’s acceptance of premiums does not, contrary to appellant’s assertion, provide a basis for a finding of liability on appellee’s part. Finally, regarding appellant’s argument that appellee engaged in unfair claim settlement practices, under Ark. Stat. Ann. § 66-3005 et seq. (Repl. 1980), it must be noted that, under § 66-3005(a), an insurer must be shown to have committed or performed the prohibited practices “with such frequency as to indicate a general business practice.” Evidence of more than the acts alleged in this one case is required. Aetna Casualty and Surety Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984). Affirmed. Cooper, Jennings, and Mayfield, JJ., dissent.