Court Opinion

ID: 9444894
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:15:31.367952+00
Date Added: 2024-06-11T17:30:03.495403
License: Public Domain

R. DORSEY WATKINS, District Judge
(dissenting).
As I am deeply concerned with the effects of the majority opinion as a precedent, I feel constrained to dissent, and to state briefly my reasons. So far as possible, I will avoid any restatement of facts.
The policy in suit contained the following provisions, among others:
“Premiums. This policy shall not take effect until the first premium shall have been paid in cash and the contract delivered and accepted during the lifetime of the Insured « * * »
“Entire Contract * * * Only the President, a Vice-President, Secretary, and Assistant Secretary, Actuary or Treasurer has power on behalf of the Company to make or modify this contract.
* * * *
“The Company’s agents have no authority to alter or amend this Pol*332icy, to accept premiums in arrears, or to extend the due date of any premium.”
The first premium on “this policy” was $122.31. Only $99.00 had been paid. The policy itself, in addition to requiring prepayment, recognizes the difference between delivery and acceptance, and requires both as conditions precedent. The policy in question was never actually delivered.
These provisions seem to me to have been deliberately designed to prevent the possibility of recovery in a case such as this, and to be adequate for that purpose. Their validity has been frequently upheld. Ray v. Security Trust & Life Insurance Co., 1900, 126 N.C. 166, 35 S.E. 246; Whitley v. Peidmont & Arlington Life Insurance Co., 1874, 71 N.C. 480; Ormond v. Fidelity Life Association, 1887, 96 N.C. 158,1 S.E. 796; Sturgill v. New York Life Insurance Co., 1927, 195 N.C. 34, 141 S.E. 280; North Carolina Bank & Trust Co. v. Pilot Life Insurance Co., 1934, 206 N.C. 460, 174 S.E. 298; Curtis v. Prudential Insurance Co., 4 Cir., 1932, 55 F.2d 97.
In the Curtis case, where the policy requirements as to conditions precedent were less stringent than those of the policy in suit, the same contentions of a “constructive delivery of the policy or a waiver of delivery, and the first premium having been paid or waived” were advanced, but rejected, 55 F.2d at page 99. Judge Northcott at some length pointed out the impracticality of binding insurance companies “by every act or statement of a local agent; especially one whose duty is mainly that of soliciting or collecting.” The reasoning and result in the Curtis case were expressly approved in the Pilot case. I am therefore at a loss to understand how there is any problem under Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188.
In nevertheless allowing recovery, the majority relies upon certain propositions of law, and characterizations of fact.
Law
A. Constructive delivery. Hardy v. Aetna Life Insurance Co., 1911, 154 N.C. 430, 70 S.E. 828; Waters v. Security Life & Annuity Co., 1907, 144 N.C. 663, 57 S.E. 437; Dawson v. Concordia Fire Insurance Co., 192 N.C. 312, 135 S.E. 34, and Roberta Mfg. Co. v. Royal Exchange Assurance Co., 161 N.C. 88, 76 S.E. 865, are cited as holding that delivery is largely a matter of intention and that physical possession of the policy is not essential. As I read these cases, none of them supports the conclusion that there was a constructive delivery in this case.
In Hardy, supra, the jury found in answer to a specific issue that the policies were issued to the insured. The evidence conclusively showed that the insured had signed assignments; the policies and assignments were sent to the company, and then physically “delivered” to the assignee.
In the Waters case, the quotation in the majority opinion shows that there had been an unconditional (not a constructive) delivery. The language omitted from the body of the majority quotation is:
“Accordingly, a binding acceptance can be, and frequently is, indicated by the mailing of a letter in due course containing an unconditional acceptance, or by sending a policy to an agent with instructions for unconditional delivery, where there .is no contravening stipulation in the contract itself.” (Emphasis supplied.)
What the court had to decide in the Waters case was whether, where the insured returned to the company a validly issued policy, with a “proposal to cancel”, there had been an acceptance of this proposal by the company. The point involved was clearly summarized by the Court (57 S.E. at page 440-441):
“If, therefore, the intestate, acting under an erroneous impression, sent the contract back to the company with the statement that it was *333not the policy he ordered, and he did not intend to pay the notes, the company could have made this proposition a binding contract by an unconditional acceptance signified in some definite manner; but, until they did this, the act of the intestate in sending back the policy was nothing more than a proposal to cancel, and, if he died before acceptance, the negotiation was off, and the contract of insurance remained.”
The Dawson case holds (135 S.E. at page 35):
“A policy of insurance, in form as required by statute, may be delivered upon condition that it shall not become effective until the happening of some subsequent event. ‘In such cases, the policy is of no binding effect until the condition is fulfilled.’ ”
The Roberta case (76 S.E. at page 868) recognized that there was to be delivery after acceptance.
The majority, as well as the District Judge below, cite National Life & Accident Co. v. Holbrook, 5 Cir., 1939, 100 F.2d 780, as similar to this case on the question of delivery. The majority in the Holbrook case do not so describe their decision. They expressly state that the only question was one of acceptance, and that therefore it was unnecessary to consider “whether manual tradition was necessary for delivery, or if it could be accomplished by an intention, coupled with appropriate conduct, to have the agent retain possession of the policy for the insured until it came manually into his possession.” (100 F.2d at page 783).
These five cases are in no way factually comparable with the case on appeal, and certainly appear to be no authority for a finding of constructive delivery. As above noted, this court, on the other hand, in the past, has expressly refused to permit a claim of constructive delivery to be made in the face of policy prohibitions. Curtis v. Prudential Insurance Co. of America, 4 Cir., 1932, 55 F.2d 97, approved, North Carolina Bank & Trust Co. v. Pilot Life Insurance Co., 1934, 206 N.C. 460, 174 S.E. 298.
B. Waiver of prepayment of premium. Having found a constructive delivery, the majority then find that such delivery constituted a waiver of the policy requirement of prepayment of the first premium. Grier v. Mutual Life Insurance Co., 1903, 132 N.C. 542, 44 S.E. 28, relied upon by the majority, was a case in which there had been an actual delivery, and a tender in cash of the first premium. The court expressly raised the question (44 S.E. at page 29), whether a contract would have existed in the absence of actual delivery. Pender v. North State Life Insurance Co., 1913, 163 N.C. 98, 79 S.E. 293, expressly limits waiver of prepayment of premiums to conduct of the company, or of an agent having authority to execute and issue contracts, and even then only in the case of an “absolute delivery”. This is clearly stated as follows (79 S.E. at page 295):
“The doctrine is clearly stated in Yance on Insurance, at page 178: ‘Even though the parties have expressly agreed that the contract shall not be deemed complete until payment of the premium in cash and in full, this stipulation may be waived by the insurer or any of its agents having competent authority. As a general rule, any agent having power to execute and issue contracts on behalf of the insurer has power to waive a condition of prepayment. And an absolute delivery of the policy by such an agent, without payment of the premium, under such circumstances as will justify an inference that credit is to be given, will constitute a waiver of a condition of prepayment.’ ”
Foscue v. Greensboro Mutual Life Insurance Co., 1928, 196 N.C. 139, 144 S.E. 689 and Burch v. Provident Life & Accident Insurance Co., 1931, 201 N.C. 720, 161 S.E. 313, cited by the majority as apparently holding that a soliciting agent, such as Ware, can waive written conditions and requirements connected with the inception of the insurance contract and payment of the first premium, *334were not so construed by the North Carolina courts.
In North Carolina Bank & Trust Co. v. Pilot Life Insurance Co., 1934, 206 N.E. 460, 174 S.E. 298, 300, the exact question posed, and answered in the negative was:
“Can a soliciting agent of a life insurance company deliver a policy and waive the payment of the first premium or extend credit for the payment thereof when both the application and the policy provide that the contract of insurance shall not become effective until the first premium has been paid; and, further, that only an executive officer as specified shall have authority to alter or modify the contract?”
The court in the Pilot case referred to Foscue and Burch as holding, (174 S.E. at page 300):
“the local or soliciting agents as such have no authority to extend credit to the insured in the payment of premiums or waive the payments provided in the policy or extend the time of payment thereof. * * * ”
On the law I would hold that the policy required an actual delivery; that there had been no delivery of the policy, constructive or otherwise; that prepayment in full of the first premium was required, and there was no payment in full or waiver thereof; and that Ware, a soliciting agent, had no authority to waive any of the provisions of the policy.
Facts.
A. Waiver as to prepayment of first premium. The majority three times refers to the fact that in transmitting the policy with the higher rates to Ware, the company did not in so many words instruct Ware that he was not to deliver the policy until Gurley had paid the remaining portion of the premium; i. e., had paid the first premium in full. From this is imported a waiver of the policy terms.
I do not understand how the failure of a principal, in each piece of correspondence with an agent, to repeat the caution that the agent is expected to perform his duty, can be construed as a waiver of the right of the principal to the performance of such duty. The policy called for prepayment in cash, and for delivery and acceptance during the lifetime of the insured. The receipt accompanying the policy, to be countersigned by the agent, was for the full premium of $122.31. In this I see no evidence of waiver, but on the contrary, every indication that the company expected Ware to abide by the policy provisions.
For waiver, it would be necessary for the company to advise Ware that despite the requirements of the policy and receipt, he could ignore them, and do something they did not authorize. There is no such evidence. To convert failure expressly to forbid a breach of duty into an authorization of such breach is a tour de force that does not carry persuasion.
B. Absence of tender of return of premium. In partial support of its conclusion, the majority asserts that the company had had the use of Gurley’s money, and had never tendered it back. If such were in fact the case, I would still be unable to see how this met the requirements of payment in full, and delivery. To me, $99.00, even if on deposit with the company, is not $122.31. The company did not treat the $99.00 as free funds or as premium on an issued policy. The testimony is unchallenged that the $99.00 was deposited and held in the suspense file “pending the final acceptance and delivery of the policy”; it was never transmitted to the Home Office; no reserve was ever set up against the policy; the policy was treated as “an outstanding untaken policy and shown in our suspense file as such”.1
As to the question of tender back of the $99.00 to Gurley when he initially refused to accept the policy with the higher premium rate, there are two con*335siderations. First, the receipt given Gurley for the $99.00 contained a provision that this amount “shall be refunded upon request if the application is denied or if a policy is issued other than as applied for and is not accepted by the applicant.” (Emphasis supplied.) Here, Gurley applied for standard rating with waiver of premiums, and refused to accept the policy written at B rates and without waiver of premiums. There is no evidence of a request by Gurley for the return of the $99.00, or of any refusal.
Secondly, only if “tender” is used by the majority in the most technical form of actual production of the $99.00 in cash in Gurley’s presence (see 86 C.J.S., Tender, § 30; cf. Bane v. Atlantic Coast Line Railroad Co., 171 N.C. 328, 88 S.E. 477) can it be said that there was no tender. Ware said he could give Gurley back the money, and Gurley said he wanted the policy.2
C. Acceptance by Gurley. The majority states that in his telephone conversation with Ware on September 18, 1952, Gurley “accepted the policy as it was”; that he “accepted the policy as written.” The policy “as written” called for prepayment in full of the first premium, which admittedly was not made; and delivery during his lifetime. The policy itself as “accepted” required prepayment in cash, delivery and acceptance, during the lifetime of the insured.
In Ray v. Security Trust & Life Insurance Co., 1900, 126 N.C. 166, 35 S.E. 246, the company had received an application, replied that it had been approved and a policy was being issued; and sent the policy to its agent, who had not manually delivered it. The premium was $33.80, of which $23.40 had been paid. Plaintiff contended that there had been a meeting of the minds, and that a contract existed. The court pointed out that the policy contained a provision that “no insurance shall be in force until the delivery of the policy to, and payment of the first premium * * * ”, and said, in language peculiarly applicable here, (126 N.C. at page 169, 35 S.E. at page 247):
“Of course, the minds of the contracting parties met as effectually on this provision as on any other part.”
Gurley did not accept a policy; he accepted the policy, with its concomitant rights — and conditions precedent.
In my opinion the judgment of the District Court should be reversed, and judgment entered for the appellant-defendant.

. Compare this positive evidence of nonwaiver with the majority’s inference from a negative.

. Appellee’s testimony was as follows:
“I know that Mr. Ware had asked him if he wanted his money back some time in August and Mr. Gurley had said no.”
“Was that your statement at the time?
“A. What I meant was that he had never really pushed him to return the money, because he wanted to deliver the policy and I know my liusband W'anted the policy,
“Q. But yon say Mr. Ware offered to give him his money back?
“A. lie said ‘I can give you your money back, I don’t want to, I want you to take the policy.’ and Mr. Gurley said, ‘I want the policy’. That is right.”