Court Opinion

ID: 9642156
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:50:22.487331+00
Date Added: 2024-06-11T18:10:43.862049
License: Public Domain

On Petition for Rehearing.
One of the reasons for a rehearing of this case urged by the insurance company, the defendant, was that this court erroneously held that the issue whether or not the plaintiff, Mrs. Rees, was estopped from recovering in this action, upon which issue evidence had been received from each of the parties during the trial, could not be considered by this court or the court below, because that estoppel had not been pleaded by the defendant. The question thus presented has again been briefed by counsel and considered by the court. The facts which condition the answer to this question are these.
The defendant issued its policy for $4,000 on February 4, 1916, to Charles A. Rees, insuring his life for the benefit of his wife, the plaintiff. On March 5,1917, the plaintiff, Ellen M. Rees, and her husband, Charles A. Rees, made and delivered to the Guaranty State Bank of Muskogee, Okl., a written assignment of this policy “and,” as the assignment reads, “all dividend, benefit, and advantage to be had or derived therefrom.” Mr. Rees died on October 31, 1922. The policy provided that the insured therein, after premiums for two years had been paid, might surrender the policy and receive the surrender value thereof. Pursuant to this provision of the policy the bank about January 12, 1922, presented the policy and the written assignment of Mr. and Mrs. Rees to the defendant, demanded and received from it the surrender value of the policy $769.76, and the bank delivered to the defendant the policy and the assignment.-
The actual transaction, however, between Mr. and Mrs. Rees at the time they made the assignment was claimed by the plaintiff to be a pledge by them of the policy to the bank to secure a debt Mr. Rees owed the bank. But the defendant claimed and still claims that it never had any notice or reasonable cause to believe or suspect that the transaction was a pledge, and not the sale which the written contract evidences, until long after it had paid the surrender value of the policy to the bank, and received therefor the surrender of the policy and the assignment to the bank. If this claim of the defendant was well founded in fact, then there can be no doubt that the plaintiff was estopped from maintaining this action and recovering upon the policy. Barnes v. Union Pacific Ry. Co. (C. C. A.) 54 F. 87, 89; Given v. Times-Republican Prtg. Co. (C. C. A.) 114 F. 92, 94, 95, and eases there cited.
We turn to the averments of the pleadings pertinent to the necessity of pleading this es-toppel. In her complaint the plaintiff alleged the issuance of the policy, the payment of the premiums, the death of Mr. Rees, the proof of his death to the defendant, and her demand for the payment by the insurance company of the $4,000. In her complaint she made no averment concerning her assignment or pledge of the policy. The answer to this complaint by the defendant was that the plaintiff and her husband had made and delivered the written assignment to the bank, that *787the bank had presented to the defendant the policy and the assignment and demanded the surrender value of the policy, and that the defendant had paid that value to the bank and received therefor the surrender of the policy and the written assignment, and that all this had been done before the death of Mr. Rees. To this answer the plaintiff filed her reply. In that reply for the first time she alleged that the transaction between Mr. and Mrs. Rees and the bank at the time they made and delivered their written assignment of the policy was a pledge to secure a debt of Mr. Rees to the bank, and not a sale, as they had represented it to be by their written assignment. She further alleged in her reply that at the time of the surrender of the policy to the defendant by the bank the “defendant knew, or by the exercise of ordinary care would have known, that said bank held said policy of insurance as lienholder only, and that therefore said bank as lienholder had no authority or right to make said surrender of said insurance policy prior to the maturity of said policy by the death of the insured therein.”
(1) By these averments of the reply the plaintiff expressly pleaded a denial of the essential fact of the estoppel, the lack of notice to the defendant or knowledge of the pledge at the time of the surrender of the policy, and thereby expressly tendered the issue to the defendant estoppel vel non, and the defendant by virtue of the statute of Missouri and its mere silence joined that issue, and the estoppel was sufficiently pleaded. That statute declared that “the allegation of new matter in the reply shall be deemed controverted by the adverse party, as upon a direct denial or avoidance.” Revised Statutes of Missouri 1919, § 1256.
(2) It was not necessary in this case for the defendant to plead the estoppel in order to be permitted to prove it, because the pledge was not pleaded by the plaintiff in the complaint, nor until the reply came in, so that the defendant had no opportunity to plead the estoppel. If a party has no opportunity to disclose the estoppel by pleading, he may exhibit the matter thereof in evidence at the trial under any issue which involves the fact. Philadelphia, Wilmington, etc., R. R. Co. v. Howard, 13 How. (54 U. S.) 307, 334, 335, 14 L. Ed. 157; Shelton v. Southern Ry. Co. (D. C.) 255 F. 182, 185; Lord v. Bigelow, 8 Vt. 445, 448; Wood v. Jackson, 8 Wend. (N. Y.) 36, 22 Am. Dec. 603; Babcock v. United Railways Co., 158 Mo. App. 275, 283, 284,138 S. W. 53; Powell v. Tinsley, 137 Mo. App. 551, 559, 560, 119 S. W. 47. In the ease last cited Judge Goode, whose knowledge-of the law and the rules of pleading and practice in Missouri was exceeded by few, if any, said: “Counsel for defendant insists plaintiffs lost the estoppel by not pleading it; but, inasmuch as they had no opportunity to do so, this position is untenable. Their petition stated a cause of action and their evidence sustained it. Defendant answered by a general denial and introduced his mortgage to show he was entitled to keep the property as against plaintiffs. Testimony was introduced by plaintiffs in rebuttal, and without objection, to show defendant was not entitled, because he had declared his mortgage had been satisfied, and on the faith of the declaration plaintiffs had taken their indemnity. As the ease took a course which afforded no opportunity to plead the estoppel, it was available on the evidence. Ess v. Griffith, 139 Mo. 322, 332 [40 S. W. 930] ; Clink v. Thurston, 47 Cal. 21; Foye v. Patch, 132 Mass. 105; Gans v. Insurance Co., 43 Wis. 108 [28 Am. Rep. 535]; Bigelow, Estoppel (5th Ed.) note 3, p. 698.”
(3) Even if, in order to prove that the defendant had any notice or knowledge of or reason to suspect that the transaction between Mr. and Mrs. Rees and the bank was a pledge and not a sale at the time it paid the surrender value to the bank, it was necessary for the defendant to plead that fact, as in our opinion it was not, the averment of the reply quoted cured that defect and rendered such pleading unnecessary. An omission to plead a material fact is cured by the tender of an issue regarding it by the pleading of the opposite party. Texas & N. O. R. R. Co. v. Miller, 221 U. S. 408, 413, 31 S. Ct. 534, 55 L. Ed. 789; Cole v. Ralph, 252 U. S. 286, 290,40 S. Ct. 321, 64 L. Ed. 567; Henry v. Sneed, 99 Mo. 407, 423, 424, 12 S. W. 663, 17 Am. St. Rep. 580; Garth v. Caldwell, 72 Mo. 622, 629, 630; Slack v. Lyon (Mass.) 9 Pick. 62.
(4) The trial of the issues tendered by á pleading, in the absence of a plea, answer or replication which raises them, as though they had been thus pleaded, estops the parties from subsequently denying that the issues were properly made and from taking any advantage of the absence of such plea, answer, or replication. Bank of Havelock v. Western Union Tel. Co. (C. C. A.) 141 F. 522, 528; Keator Lumber Co. v. Thompson, 144 U. S. 434, 437,12 S. Ct. 669, 36 L. Ed. 495; North Chicago St. Ry. Co. v. Burnham (C. C. A.) 102 F. 669, 671; Schuster v. Carson, 28 Neb. 612, 615, 44 N. W. 734; Wright v. Waddell, 89 Iowa, 350, 364, 56 N. W. 650; Anderson v. Independent School District (C. C.) 78 F. 750, 751; Loomis v. Riley, 24 111. 307, 309; Clark v. City of Austin, 38 Minn. 487, 38 N. *788W. 615. And the issue of the estoppel of the plaintiff was tried by the evidence and arguments of counsel on each side in the trial under consideration. The negotiation of the surrender of the policy and the written assignment to the defendant was conducted by letters introduced in evidence between the bank, or its agents in the West, and the officers of the defendant in New York City, and, after the terms were agreed upon in that way, the defendant drew its check in New York, payable to the bank, for the amount of the surrender value of the policy, and mailed it to its local agent in Oklahoma, who delivered it to the bank. On the question of estoppel the defendant introduced in evidence without objection the testimony of its three officers, who conducted and closed the negotiation of the surrender of the policy and the assignment, to the effect that neither of them nor the defendant had any notice or knowledge of the pledge until long after the surrender was made and the surrender value was paid to the bank. On the other hand, the plaintiff, Mrs. Rees, offered evidence, which her counsel claim was competent, to show that the defendant had notice of the pledge through its local agent in Oklahoma. This evidence, to be sure, was strenuously objected to by counsel for the defendant as incompetent; but it was finally admitted over the objections of the defendant, and its counsel took an exception to the ruling. It remained in the ease throughout the trial, and was not withdrawn before it was submitted to the jury.
We will not prolong this opinion to discuss the relevancy and materiality of this evidence introduced by the plaintiff and so strenuously objected to by the defendant, except to call attention, in view of the next trial, to the rule that the proposition that notice to the agent is notice to the principal does not include an agent who does not have the power to act for his principal- with reference to the very subject-matter to which the notice relates, in this ease to the decision whether or not the defendant should make and perform the contract of surrender of the policy for the surrender value thereof. “A principal is not affected with knowledge which the agent acquires while not acting in the course of his employment, or which relates to matters not within the scope of his authority, unless the agent actually communicates his information to the principal.” 2 C. J. 863.
The record, however, discloses the facts which we have recited, and shows that each of the parties to this action introduced evidence and participated in the trial of this issue of estoppel of the plaintiff without objection that it was not pleaded. The briefs, arguments, and authorities of counsel for the plaintiff, not excepting the opinions in Laugh-lin v. Wells (Mo. Sup.) 283 S. W. 990, 992, and Sanders v. Chartrand, 158 Mo. 352, 59 S. W. 95, and in other cases, have received consideration; but, for the reasons which have now been stated, we have concluded that the issue of the estoppel of the plaintiff by her assignment and delivery of the policy to the bank could not lawfully be disregarded in this action by the court below, or by this court, because it was not pleaded.
When at the trial all the evidence had been introduced, when the written requests to charge had been considered and ruled upon, and the judge had charged the jury, he turned to Mr. Clarke, counsel for the plaintiff, and said that, if he had any objections or exceptions, or required any farther charge, he should be glad to have them suggested. Mr. Clarke made a few suggestions and the judge disposed of them. Mr. Sullivan was the attorney of the defendant and the judge then said, “Is there anything on your side, Mr. Sullivan?” Mr. Sullivan took some exceptions to some parts of the charge which the court had given, requested the court to give a certain charge which he declined to give, and then requested him to charge the jury “that the defendant would not be bound, in view of the terms of this assignment, by the state of affairs between Rees and the bank, with respect to the bank’s right to surrender the policy, in the absence of some showing of notice to us that the bank held the policy as collateral security.”
The court refused to give this request, and the defendant’s counsel excepted. This ruling was assigned as error by the defendant. It had the effect of withdrawing from the consideration of the jury and from the trial the issue whether the defendant had any notice or. knowledge of the pledge at the time it bought the surrender of the policy in reliance upon the written assignment, although the court had admitted conflicting evidence on that issue. Counsel for the plaintiff argues that the main issue in the case was whether the transaction between the plaintiff and her husband with the bank was a sale or a pledge, that the issue of notice to and knowledge of the defendant of the pledge when it bought the surrender of the policy was negligible, and that the request to charge came too late. But, in view of the record of the trial, of the conflicting evidence on the question of notice or knowledge of defendant of the pledge, and of the request of the judge to the attorneys, made after the general charge, for further sugges*789tions or requests, this argument has not proved persuasive to our minds. There seems to us to be no logical or lawful way of escape from the conclusion that, in refusing this request of counsel for the defendant, the court fell into a fatal error, which deprived the defendant of a fair trial of its claim of an es-toppel of the plaintiff from maintaining this action.
The judgment below must accordingly be reversed, and the case must be remanded to the court below, with directions to grant a new trial; and it is so ordered.