Court Opinion

ID: 4006567
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:07:26.36026+00
Date Added: 2024-06-11T07:44:30.626562
License: Public Domain

We cannot invoke the provisions of the policy contract as determining what the agent for the life insurance company could and could not do by way of waiving the payment of the first premium for several reasons that seem to me to be quite clear.
In the first place, there is our statute, Code 33-7-13, which provides that any person who shall solicit an application for insurance shall, in any controversy between the company issuing the policy, and the assured or his beneficiary, "be regarded as the agent of the company and not the agent of the assured." (Emphasis supplied.) In construing a similar statute of the State of Iowa which, however, contained the additional language "anything in the application or policy to the contrary notwithstanding," [since the parties cannot contract contrary *Page 410 
to the provisions of the statute, this added provision, it is thought, does not control the question of interpreting the statute. Atlantic Coast Line Railroad Company v. RiversideMills, 219 U.S. 186, 31 S. Ct. 164, 55 L. Ed. 167, 31 L.R.A. (N.S.) 7] the Supreme Court of the United States in the case of Continental Life Insurance Company v. Chamberlain,132 U.S. 304, 10 S. Ct. 87, 33 L. Ed. 341, held that the insured had a right to rely upon the assurances of an agent concerning the question of what would be regarded as "other insurance" under the terms of the policy. The headnotes of the case read as follows:
      (1) That a person procuring an application for life insurance in that State became by the force of the statute the agent of the company in that act, and could not be converted into the agent of the assured by any provision in the application;
      (2) That, if he filled up the application (which he was not bound to do) or made representations or gave advice as to the character of the answers to be given by the applicant, his acts in these respects were the acts of the insurer;
      (3) That a 'provision and requirement' (printed on the back of the policy issued on the application), that none of its terms could be modified or forfeitures waived except by an agreement in writing signed by the president or secretary, 'whose authority for this purpose will not be delegated' did not change the relation established by the statute of Iowa between the solicitor and the insured."
The Supreme Court reached the same conclusion concerning the same statute in the case of McMaster v. New York Life InsuranceCompany, 183 U.S. 25, 22 S. Ct. 10, 46 L. Ed. 64. In that case the insured had asked the soliciting agent who delivered the policy to him if the policy would be effective, counting the thirty days of grace, for thirteen months from the date of delivery (December 26, 1893) by reason of the payment of the first year's premium. The agent had agreed with him *Page 411 
that it would be. To the contrary of this understanding, the policy contract was dated December 18, 1893, and expressly provided that the annual premium should be paid on the twelfth of December of each year. The insured died January 18, 1895, which was beyond the grace period of one month after day on which the second annual premium was due (December 12, 1894), but was within thirteen months from the delivery date (December 26, 1893) from which the agent had agreed with the insured that the thirteen months of insurance period would run and also within thirteen months from the date of the policy (December 18, 1893). In spite of the express requirement of the policy contract that an additional annual premium should be paid upon the twelfth day of December, 1894, with one month of grace thereafter, the Supreme Court held that the beneficiary could show by parol that the actual agreement had with the agent was to the contrary and a recovery under the policy was sustained. It is true that the first annual premium had been paid, but it seems to me that the principle declared under the Iowa statute governs the case at bar.
In sustaining the Carmack Amendment to the Interstate Commerce Act and making it control the question of agency between the shipper and the initial carrier notwithstanding stipulations in the contract of carriage represented by the bill of lading to the contrary, the Supreme Court declared that there was no such thing as absolute freedom of contract and sustained the legislative power to regulate contracts which are reasonably calculated to injuriously affect public interests.Atlantic Coast Line Railroad Company v. Riverside Mills,219 U.S. 186, 31 S. Ct. 164, 55 L. Ed. 167, 31 L.R.A. (N.S.) 7.
So that I do not believe our statute is merely declaratory of common law but am of the opinion that it vitally affects the decision of the question before us. To say that the statute is merely declaratory of common law, it seems to me, leaves the question of agency just where it was before the statute and robs the latter of all force. That was not the legislative intent. *Page 412 
Furthermore, those cases which restrict the power of an agent in accordance with the terms of a written contract do so upon the theory that parol evidence may not be taken to contradict or vary the terms of a written contract. They, therefore, presuppose the existence of an effective and subsisting contract in writing. If there has been no actual contract in writing, then there is no basis for invoking the parol evidence rule, so-called. In this case our concern is to determine whether the contract of insurance ever came into existence. If the contract is once established then the parol evidence rule may be invoked, but the contract must become effective first. Until the contract does come into effect its stipulations restricting the power of an agent are not binding upon the parties thereto and the power of the agent can be otherwise arrived at and may be explained by parol evidence. So that when we invoke the stipulations of the policy contract as restricting the power of the agent, we admit that the policy contract has become effective as between the parties. If this policy contract did come into effect as between the parties, then according to its terms it could be lapsed only upon failure to pay four consecutive weeks' premiums. It could not be lapsed for failure to pay the initial premium.
It is argued that the company received nothing at all for its policy and for that reason that the policy contract should not be regarded as in effect. It may be true that the company got nothing in cash, but it received and accepted the insured's binding promise to pay. Even under the strict terms of the policy, there is no provision for forfeiture on account of the non-payment of a single premium. Neither is there an express provision in the contract which makes the payment of the first premium a condition precedent to its becoming effective. There is simply the provision that all premiums shall be paid in advance and that upon failure to pay premiums for four consecutive weeks the policy contract shall be forfeited. In other words, the failure to pay in advance does not forfeit the contract unless persisted in for a period of four weeks, although the policy provides that all *Page 413 
premiums shall be paid in advance.
But let us consider the result to the insured in the event that the theory of the defendant is accepted. The policy contract was left with the insured, fully executed by the counter-signature of the local agent, as was the usual receipt book with these premiums entered in it. It is said that the agent agreed to advance the first week's premium himself and to return and get it from the insured later. The agent testified that he tried several times thereafter to get this premium payment from the insured but could at no time find her. He claims that he left the policy contracts with the insured merely for examination, but this is totally inconsistent with his claim that he was trying to collect the full premiumsfrom the date of the delivery of the policies. Of course, the only possible theory upon which the company would be entitled to collect premiums from the date of delivery of the policies would be on the basis that the insurance went into effect atthat time. But the company now says that although they, through their agent, were trying to collect from this insured premiums covering the period from the date of delivery, the policy contracts did not go into effect at that time, and would only have gone into effect from and after the time that the first premium was actually paid. In other words, if this insured had been a week late in paying the first premium she would not have been insured for the first week, and yet she would have beenpaying for that week's coverage. It seems to me plain that the matter of non-payment is by no means conclusive, because while the company contends that it got nothing from the insured in exchange for its contract, it does so upon a theory which, if applicable, would have required the insured to pay the company for a coverage she did not receive.
I have already pointed out that the terms of the policy of insurance cannot avail for the purpose of preventing that contract from coming into effect as between the parties, and that once in effect there is no forfeiture provision for default in less than four weeks' premiums. I have pointed out furthermore that our statute makes *Page 414 
the soliciting agent the agent of the insurance company in all matters leading up to the effectiveness of the insurance contract, and specifically provides that the agent shall not be regarded as the agent of the insured. Were it not for the statute, we would have to determine from all of the circumstances just what the powers of this agent were in the negotiations leading up to the effectiveness of the policy contract. But the very purpose of the statute is to settle the troublesome question of agency, and to prevent imposition upon persons who are not familiar with its intricacies. The modern trend is to throw around contracts of insurance and their negotiation the atmosphere of a public interest. When this agent told Mrs. Meadows that he would advance the first week's premium and that she could pay him later it may be true that the arrangement, in so far as the actual payment is concerned, was a private arrangement between her and him, but if that is so it is likewise true that he was representing to Mrs. Meadows, if not by express language, then certainly by the strongest sort of implication, that that arrangement would be satisfactory to the insurance company. In making this representation he was acting as the agent of the insurance company by virtue of the terms of our statute, whether we would be justified in so holding in the absence of statute or not. His knowledge was the knowledge of the insurance company, and it seems to me that on this basis the acquiescence and approval of the insurance company is inescapable. Mrs. Meadows plainly was expected to pay later the premium for the week immediately following the date of delivery. Unless the company, acting through its agent, intended to take something from her for nothing, the policy must have gone into effect upon delivery. If it did go into effect upon delivery, then there is no theory upon which it can be treated as not in effect at the time of Mrs. Meadows' death, because, as has been pointed out, there is no provision for forfeiture for less than four consecutive weeks' non-payment of premiums.
For the reasons set forth, I think that there is no question but that the judgment should be affirmed. *Page 415