Court Opinion

ID: 6696733
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:53:53.529831+00
Date Added: 2024-06-11T16:01:16.374340
License: Public Domain

Stacy, I.,
dissenting: Tbe parties have deliberately contracted against tbe very contingency which has happened here. In tbe written application, signed by tbe plaintiff’s intestate, appear tbe following stipulations:
*1311. “I -hereby agree that this application (parts 1 and 2), and the policy, when issued, including a copy of this application annexed thereto, or endorsed thereon, shall constitute the entire contract between the parties hereto.”
2. “That the policy hereby applied for shall not take effect unless and until it shall have been issued and delivered to me and the premium thereon paid to the company, or its authorized agent, during my lifetime and good health.”
It is conceded that under this second provision no contract of insurance was ever effected. Plaintiff’s intestate was never under any binding obligation to accept the insurance. He was at liberty to revoke his application and to reject the policy at any time prior to its delivery, or tender thereof. In my judgment, the plaintiff is not entitled to recover. Ray v. Ins. Co., 126 N. C., 166. See, also, Roe v. Ins. Asso., 17 L. R. A. (N. S.), 1144, and note; National Union Fire Ins. Co. v. School District, 122 Ark., 179; L. R. A., 1916 D, 238; Meyer v. Central States Life Ins. Co., 103 Neb., 640; Bradley, Admr., v. Fed. Life Ins. Co., 295 Ill., 381; 15 A. L. R., 1021.
The plaintiff’s intestate elected to enter into this very kind of an agreement, and there is a well known distinction between obligations imposed by law and those created by express contract. Where the rights of the parties are fixed by agreement, the law will uphold such rights. Clancy v. Overman, 18 N. C., 402. Suppose it had been stipulated, in the present application, that the insurance applied for should not take effect until sixty days thereafter, and then only upon condition of the applicant’s continued good health. Clearly the insurance company would have incurred no liability had the applicant died during the 60-day period. What is the difference between the supposed case and the case at bar? It was agreed that the policy should not take effect unless and until it was issued and delivered and the premium paid thereon during the lifetime and good health of the applicant. The condition upon which the' contract of insurance was to take effect never occurred; hence, no insurance was ever effected. This much is conceded, but it is said that the policy could have been delivered before the applicant’s sickness and death, and that it was the duty of the agent to do so. The defendant replies to this by saying that the agent would have delivered the policy but for the applicant’s sickness and death, and that there was no obligation resting upon him to deliver it at' any particular time. Both the applicant and the agent, with knowledge of the provisions of the contract, were simply waiting a convenient time for its delivery, when the applicant’s sickness and death prevented the consummation of the contract. The defendant has breached no legal duty which it owed *132to tbe plaintiff, and for wbicb an action in tort may be maintained. See note, 9 Ann. Cas., p. 225.
I have examined every authority cited in tbe opinion of tbe Court, and many more, but I am unable to find any decision to sustain a recovery upon facts similar to those now before us. It will be observed that in those eases recognizing a right of recovery in an action of tort for negligent delay in passing upon the application, or failing for an unreasonable length of time to forward application with medical report for acceptance or rejection, an advance premium was paid by the applicant, or notes given therefor, and the insurance company was therefore under a legal obligation to act promptly and without any unreasonable delay. The applicant, after paying the first premium, had a right to rely upon the assurance that his application would be accepted or that he would be promptly notified in case of its rejection. But this is not our case. Plaintiff's intestate knew that the insurance was not to become effective until the policy was delivered and the premium paid by him. The very last case cited in the opinion of the Court, Waters v. Annuity Co., 144 N. C., 663, calls attention to this distinction: “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.” (Italics added.) Here there was a contravening stipulation in the contract.
And, speaking to the importance of this provision, in Ray v. Ins. Co., 126 N. C., 169, Faircloth, C. J., used the following language: “So we have an agreement with an important provision or condition attached, fixing an event on the happening of which the contract shall become operative. Of course, the minds of the contracting parties met as effectually on this provision as on any other part. This proposition was made by the applicant and accepted by the defendant. How is the applicant to escape the force of this provision? The proviso is not unreasonable. There is nothing in it illegal, nor does it contravene any feature of public policy. The proviso or condition is important to both parties. The applicant wants certainty and desires a certain day, when the agreement becomes absolute, and is stripped of all doubt. The defendant wants protection against unforeseen trouble that may arise after approval of the application and before delivery of the policy. A change of habits and impairment of health may intervene, and misrepresentations in the application may be discovered. • These possibilities are understood by the parties, and they would make the subject unfit for insurance. Against these, the proviso affords protection; and to remove all doubt, it is provided that, until the policy is delivered, there is no *133insurance in force.” To like effect is the decision in Ross v. Ins. Co., 124 N. C., 395.
One further observation and I am done. The following is taken from the opinion of the Court: “The defendant had a form of receipt attached to its application for advance payment of premium, and it was stipulated therein that the insurance was effective from the date of the approval of the 'application from the defendant’s medical director. The agent elected to waive the advance payment on the premium, and stated that the premium was to be paid on delivery of the policy. The defendant accepted the application-and issued its policy with knowledge of the waiver and stipulation. That is, it agreed .that the insurance was to be effective from the date of the approval of the application by its medical director, but that the premium need not be paid until the policy was delivered.”
If this be the law, why isn’t the plaintiff entitled to recover on the ■ policy? The Court is here talking about a blank form of receipt that was never filled out. The applicant had the option and the election to make an advance payment of premium with the application so that the insurance would be effective from the date of approval of the application by the defendant’s medical director, but this was not done in the instant case. Plaintiff’s intestate elected not to make any advance payment of premium and elected not to apply for a policy effective from the date of approval of the application by the defendant’s medical director, but he elected to make application for insurance with the provision that the premium was not to be paid until the policy was delivered and the premium paid by him during his lifetime and in good health. There certainly was no waiver of any payment of any premium by the agent of the company or by the company itself. The plaintiff’s intestate elected not to make any advance payment as he had the option and the right to do, but he voluntarily chose and elected the other kind of insurance on which the premium was payable on delivery of the policy, and on which date the policy was to become effective.
I think the judgment of nonsuit should be upheld. The policy was never delivered; no premium was ever paid; it would be unjust and inequitable, under the facts and circumstances of this case, to permit a ■ recovery against the insurance company.