Court Opinion

ID: 4006564
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:07:26.342219+00
Date Added: 2024-06-11T07:44:30.531925
License: Public Domain

This is an action on a two hundred and fifty dollar industrial life insurance policy issued November 13, 1933, by Peoples Life Insurance Company, defendant, on the life of Mae Meadows. The beneficiary under the policy is the plaintiff, William E. Meadows, husband of the insured. She died December 2, 1933.
The court directed a verdict for the defendant and entered judgment of nil capiat against the plaintiff, and of this he is here complaining on writ of error.
On the solicitation of an agent of the defendant at the Meadows home in the City of Charleston, November 1, *Page 405 
1933, Mae Meadows signed applications for insurance on her own life and on the life of each of her four children. The premiums were to be nineteen cents a week on the woman's policy and forty-two cents weekly on the children's policies. The latter policies do not concern us in this controversy.
As to the Mae Meadows policy there is no claim by the plaintiff that any premium subsequent to the first was paid, it being urged that under the four-weeks' grace period provided by the policy, it was in force and binding on the defendant when the insured died.
The sharp controversy of fact which this record presents revolves around the initial weekly premium of nineteen cents on the Mae Meadows policy.
The policy was delivered to the insured at her home twelve days after she had made application therefor. The plaintiff contends and undertook to prove that the policy was delivered to his wife by an agent of the defendant under an arrangement between her and the agent whereby he was to pay the first premium to the company and she was to reimburse him within a few days when her husband should receive his semi-monthly pay. In support of his proposition that there was such extension of credit by the agent to the insured, the plaintiff called as a witness a young woman, living in the Meadows home, who testified that she heard the initial conversation between Mae Meadows and the agent, and that he then told the applicant he would pay the first premium for her and she could repay him.
The defendant's agent and an associate who was with him at the Meadows home testified that the plaintiff's said witness was not present when they had their conversation with Mae Meadows; that a woman (maybe the witness) came into the house after they had concluded their business with Mrs. Meadows and as they were leaving. The company asserts that the agent would have had no right to extend credit even if he had desired to do so, but it says that he did not attempt it. Sustaining the defendant's contention that the agent did not extend credit to Mae Meadows nor promise to pay the initial *Page 406 
premium for her, the two witnesses for the defendant testified that no such undertaking was entered into, and that later, the policy was delivered on condition that she and her husband examine it and determine whether or not she desired to accept the same, and, if she did, she should pay the agent before the policy took effect.
At the conclusion of the introduction of testimony, on agreement of counsel for both parties, before the case was submitted to the jury for general verdict, the court requested the jury to answer the following interrogatory: "Does the jury find from the evidence that credit was extended to Mrs. Mae Meadows by Everett Lee, agent for the defendant for the first week's premium on the policy in issue; or does the jury find that the said Everett Lee delivered said policy to Mrs. Mae Meadows conditionally on the terms that it was not to become effective until she paid the first week's premium on said policy?" Upon deliberation on the question, the jury made this answer: "We, the jury, find from the evidence that credit was extended to Mrs. Mae Meadows by Everett Lee, agent for the defendant, for the first week's premium on the policy in issue."
After the jury had made to the court its answer to the interrogatory, each party moved for a directed verdict. The court overruled the plaintiff's motion, and sustained the defendant's. The jury responded: "We, the jury, at the direction of the Court, find for the defendant."
In the light of the conflicting testimony, we must accept as conclusive the jury's finding that the agent of the company extended credit to the insured for the first week's premium, and that the policy was not delivered to her on the condition that it was not to become effective until she paid the first week's premium.
What was the effect of the extension of such credit? The answer lies in the overshadowing fact that the policy, fully executed, was delivered to the insured by an authorized agent of the defendant and remained in her possession. This was not consistent with the defendant's present contention that the policy was delivered on approval. It tends to open the way to great uncertainty for *Page 407 
an insurance company to take the position that an executed and delivered policy is not binding on the insurer, because of a collateral oral agreement involving a contingency. The mere statement of the proposition carries disfavor thereto.
It may be true, as was testified by the agent in this case, that it is against the rules of the defendant for an agent to extend credit to a policy-holder, but the same agent admitted that occasionally policies are left with insured persons, who are regarded all right, and the unpaid premiums carried for collection. Though such procedure is irregular, the policy-holder or his beneficiary is not the one who should suffer therefrom so long as such practice is not expressly inhibited by the policy and it is possible for an agent to deliver an executed policy and interpose his financial obligation between the insured and the company. When the obligation of the insured is in this manner underwritten for him, he may very well consider that so far as the first premium is concerned, he has complied with the stipulation on the face of the policy requiring premiums to be paid in advance. And then, too, under circumstances like these, such requirement may be deemed waived on the part of the insurer. "An express provision in a policy of life insurance that the insurer shall not be liable thereon until the premium is actually paid, may be waived by the unconditional delivery of the policy to the insured as a complete and executed contract under an express or implied agreement to give credit for the premium, or for a part thereof, and in such case the insurer is liable in case of the death of the insured before the expiration of the time given for payment." Goodbar v. Life Ins. Co., 89 W. Va. 221,108 S.E. 896.
There are many cases along this line. Reference is here made to some of them. Their backgrounds of fact are comparable to the fact-basis of the case at bar, and the general priniciple of law underlying all of them is the same as that which is herein applied.
"Upon the question of law whether or not the taking of a note constitutes a payment, it is well settled by the *Page 408 
weight of authority that an agent of a life company, who is intrusted with the business of closing the contract by delivering the policy, has an implied authority to determine how the premium then due shall be paid, whether in cash, or, as is sometimes done, by giving credit, in which case the agent becomes the creditor of the insured, and the debtor of the insurer. In that event, though the agent should subsequently default, and the premium should never reach the company, the policy would still be binding." Conservative Life Ins. Co. v.Condos, 24 Ohio App. 504, 157 N.E. 306. Likewise, illustrative of this principle, are the following cases: Wright v. Life Ins.Co., 165 S.C. 190, 163 S.E. 133; National City Bank v. LifeIns. Co., 332 Mo. 182, 57 S.W.2d 1066; New York LifeIns. Co. v. McJunkin, 227 Ala. 228, 149 So. 663; Harlow v.North American Acc. Ins. Co., 162 Wash. 423, 298 P. 724. Consider, also, Eagan v. Fire  Marine Ins. Co., 10 W. Va. 583,588, and Croft v. Fire Ins. Co., 40 W. Va. 508, Syl. 6, 21 S.E. 854, 52 Am. St. Rep. 902 — fire insurance cases.
Nor is there here involved any violation of the policy's inhibition against alteration of the terms thereof by an agent of the insurer. These restraints, in the very nature of things, are for the purpose of governing conduct after the policy has come into the possession of the insurer. Such was the factual background of the fire insurance case of Morgan v. AmericanCent. Ins. Co., 80 W. Va. 1, 92 S.E. 84, L.R.A. 1917D, 1049. The action was by one who had acquired the policy by assignment before property loss by fire. The assignment had not received the formal written consent of a representative of the insurer as required by the policy, though plaintiff's evidence disclosed that an agent had verbally approved the assignment. Right of recovery by the plaintiff was denied by this court. For general discussion of the proposition that the modern trend is to treat policy restrictions as applying to acts subsequent to delivery of policy, see II Couch on Insurance, sec. 522 (b). Before delivery to him of a policy, an insured stands solely on his application for the insurance, and presumably, is not *Page 409 
advised of the terms of the policy.
In the case at bar, however, if it be considered that the insured must have known of the provision of the policy requiring premiums to be paid in advance, her conduct should be considered as an attempt of compliance with such provision, as to the first premium, by employing the financial resources of the agent to tide her over a lean place in her financial set-up. The agent remained the representative of the company, and, when he delivered the policy, he delivered it for the company. "Any person who shall solicit an application for insurance shall, in any controversy between the assured or his beneficiary and the company issuing any policy upon such application, be regarded as the agent of the company and not the agent of the assured." Code, 33-7-13.
These considerations lead us to the conclusion that, in the light of the jury's special finding, the trial court was in error in directing a verdict for the defendant. Therefore, we reverse the judgment, set aside the verdict and remand the case to the trial court for further proceedings.
Reversed; remanded.