Court Opinion

ID: 6905323
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:59:23.71491+00
Date Added: 2024-06-11T16:06:19.449410
License: Public Domain

Mr. Justice Burnett
delivered the following specially concurring opinion:
This is an action to recover upon two insurance policies, in one of which the plaintiff herself is the beneficiary and in the other the assignee of the beneficiary. The question for decision is the same in both causes of action; hence they will be treated together. The transaction was initiated by the written application of the insured, James M. French, husband of the plaintiff, in which occurs the following clause :
“I hereby agree that the statements herein contained together with the statements made by me to the medical examiner and contained in part two of this application are hereby warranted to be true, full and correct as facts, and that this application together with the policy which may be issued, shall constitute the contract between me and the company.”
It is admitted by the pleadings that a policy was issued containing the following matter:
*433- “This policy shall not take effect until the first premium shall have been actually paid during the good health of the insured. No premium after the first shall be considered paid unless a receipt shall be given therefor, signed by the president, a vice-president, or secretary, and countersigned by an agent authorized to receive such premium, nor shall any premium payment have the effect to continue this policy in force longer than for the period covered by such payment, except as otherwise provided herein. Agents are not authorized to make, alter or discharge contracts, or to waive forfeitures, or to waive or postpone payment of premiums.
“Should default be made in the payment of any premium within three years from the date hereof, this policy shall cease and determine, and, unless reinstated, all payments hereon shall remain the property of the company. The first year’s insurance hereunder is term insurance, and shall be valued as such.
“A grace of thirty-one days, during which the policy shall remain in full force, will be allowed in the payment of all premiums, except the first, subject to an interest charge of not to exceed six per cent per annum. ’ ’
There is no question about the payment of the initial premium. The dispute arises about the second one due March 11, 1913, and the plaintiff claims that her husband paid it by the delivery to the company of the instrument here quoted:
“$170.13. Portland, Oregon, April 10, 1913.
“On the 15th day of July, 1913, without grace, for value received, I promise to pay to the order of Columbia Life & Trust Company, at its office, in the city of Portland, Oregon, one hundred seventy and 13/100 dollars in TJ. S. gold coin, with interest thereon in like gold coin at the rate of six (6) per cent per annum, from the 11th day of March, 1913, until paid.
“This note is given on account of the renewal premium for the period of 12 months ending on the 11th *434day of March, 1914, on policy No. 6551, issued to me by said Columbia Life & Trust Company.
“If this note is not paid, principal and interest, at the maturity thereof, said policy shall thereupon and on the 15th day of July, 1913, without notice or other action by said Columbia Life & Trust Company, lapse and become of no further force or effect; and thereupon this note shall, without notice or other action by said Columbia Life & Trust Company, immediately become due and payable, to the extent of so much thereof as may be required to cover the pro rata premium of the insurance under said policy to the date of such cancellation thereof.
“[Signed] James M. French.”
She avers that this was received by the company and the following receipt issued therefor:
“Columbia Life & Trust Company, “Portland, Oregon.
“No. 1695.
“Premium for one year $170.13, subject to note given in payment hereof.
“Premium as above received this 10th day of April, 1913.
“T. H. Richey.
“Received the annual premium due March 11, 1913, as per statement in the margin hereof, on policy No. 6551 insuring the life of James M. French. This receipt must be countersigned before delivery by T. H. Richey.
“M. M. Johnson,
“Secretary.”
For convenience the instrument executed by French and quoted above will be called a note. It is stated by both parties that this so-called note was not paid. Indeed, the plaintiff tenders with her complaint for the first time the full principal and interest thereof. It is alleged by the plaintiff and denied by the defendant that the latter extended the time of payment. The assured died December 19,1913. The company denied *435liability on the policy on the ground that it had lapsed; and the plaintiff, alleging the execution of the various papers mentioned and making the tender noted above, demanded judgment for the balance of the face of the policy, after deducting the amount of the note. After some denials, the substance of the answer is that the note mentioned, so executed and delivered, was not to be payment of the premium then due, but that the defendant agreed to keep the policy of insurance in force until July 15, 19.13, and thereafter for the current contract year, provided that the note was paid at maturity, and that afterward, it not' having been liquidated, the company notified the assured that his policy had lapsed. The reply quotes some correspondence with the officers of the defendant and makes some denials of the new matter in the answer. The result of a jury trial was a directed verdict for the defendant, upon which a judgment was rendered in its favor, and the plaintiff appeals.
From the complaint it is manifest that the assured did not fulfill the terms of the policy, and that if the plaintiff would prevail in this litigation, she must prove something else as the ground of her recovery. Although she is a beneficiary, she cannot take more than her husband provided for her by his contract of insurance and other transactions with the defendant. During the life of the policy she had interest enough therein as beneficiary to keep the insurance in force by paying the premium; but, in the present juncture, in the absence of any action on her part, her rights cannot arise above their source, namely, the action of her husband. As stated, in the complaint, the defendant is a corporation organized under the laws of the State of Oregon. It is said in Section 6691, L. O. L., that:
*436“From the first meeting of the directors, the powérs vested in the corporation are exercised by them, ,or by . their officers or agents under their direction, except as otherwise specially provided in this chapter.”
It is not pretended anywhere in the pleadings or evidence that any action whatever was taken by the directors in relation to the matter in question. In law, the board is the person of the corporation, and the authority of agents and officers must be traced to and be shown to originate in its action. On the face of the documents offered in evidence, as well as by the testimony, all the transactions took place with agents of the company. It is a well-settled principle that one dealing with the agent of another does so at his own peril, and that it is incumbent upon him to prove, either the actual authority of the representative, or that the latter acted within the apparent sanction given him by his supposed principal. The phase of acting within the ostensible authority of the agent disappears, and cannot affect the case in the face of actual knowledge on the part of one seeking to charge the corporation that the agent was without authority to do the act upon which the moving party relies: Roberts v. Lombard, 78 Or. 100 (152 Pac. 499); City of Portland v. American Surety Co., 79 Or. 38 (153 Pac. 786). The insured stipulated by his application that it, together with the policy to be issued, should constitute the contract between himself and the company. He accepted the policy upon which the plaintiff relies and which contains this clause:
“Agents are not authorized to make, alter or discharge contracts, or to waive forfeitures, or to waive or postpone payment of premiums.”
Above all this, Section 4632, L. O. L., referring to life insurance companies, says:
*437“No life insurance company or any of its representatives doing business in this state shall make or permit any distinction or discrimination in favor of individuals between insurants of the same class and equal expectation of life in the amount of payment of premiums or rates charged for any of its policies of life or endowment insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes; nor shall any such company or any representative thereof make any contract of insurance, or agreement as to such contract, other than as plainly expressed in the policy issued thereon; nor shall any such company or representative pay or allow, or offer to pay or allow, as inducement to insurance, any rebate of premiums payable on the policy, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement not specified in the policy contract of insurance. Every officer or agent of any such corporation who shall violate any of the provisions of this section shall be deemed guilty of a misdemeanor and shall be fined in any sum not exceeding $500 or imprisoned in the county jail not exceeding six months or both at the discretion of the court, with revocation of his license to do business in this state.”
The note mentioned was plainly an agreement as to the contract of insurance other than that expressed in the policy. The insured was charged with the knowledge of this law forbidding such a stipulation. By the terms of his own contract, he knew that no agent had any power to alter, discharge or waive any provision of the policy. There is nothing whatever in that instrument authorizing the acceptance of anything except money in settlement of the premiums, and it is plainly said that if default should be made in such payments within three years from the date of the policy, it should cease and determine. The law and the words of the contract of insurance could not *438be plainer, and both concur in condemnation of such a compact. The plaintiff is compelled to rely upon a contract evidenced by the so-called note, which she knew by the terms of the policy and by the statute the agents with whom she dealt had no authority whatever to make. Under these circumstances, disclosed by the record without dispute, the matter of apparent authority does not arise in this case, and the transaction outside of the policy give the plaintiff no ground of recovery.
The scope of this statute and the reason of the rule it establishes is wider than the contention between the immediate parties before us. It declares a principle of public policy in this state regulating all life insurance, and putting that business on a sound financial basis. Like laws governing banks and other moneyed institutions, it aims to weed out unsound insurance. It is in the interest of not only any particular individual, but also of the general public, and it is in that light that the statute must be construed. . It is. on a parity with the provisions requiring such concerns to invest their capital in certain kinds of securities as in Section 4610, L. O. L., or compelling them to specify in their policies the amount and manner of payment of benefits as stated by Section 4629. The section under consideration specifically forbids distinction or discrimination in any of the terms and conditions of the stipulations an insurer makes. It goes further, and requires all the contract of insurance to be plainly “expressed in the policy,” and under criminal penalty explicitly interdicts any other “agreement as to such contract.” The original policy requires actual payment of a money premium in default of which the insurance lapses. Jones and Brown, insuring with the company, have thus liquidated the required fee for *439their insurance, yet the plaintiff here would enforce a discrimination in her favor to the extent of making an unfulfilled collateral agreement a substitute for payment, all in defiance of the law prohibiting that' very thing.
It is argued that the policy does not state that it shall be forfeited for default in meeting a premium note at maturity. With equal force it may be said that it is not provided in the policy that any such instrument as the plaintiff relies upon shall be accepted as payment of a premium. The contract is equally obligatory upon both parties to it, and under the plain mandate of the law each of them must find relief only in the terms of the original policy. Upon the collection of premiums alone can any insurance institution expect to pay its obligations or do business at all without impairment of its capital and ultimate insolvency. The matter involved is not altogether the case of the French insurance. It affects everyone holding a policy in the defendant company. If would-be beneficiaries can force upon it dishonored paper as payment, or if it, however willing, may be permitted even to accept such a substitute, other policies it has issued will be impaired. The application of the doctrine for which the plaintiff contends will depreciate the value of every policy in this state, notwithstanding the careful legislation designed to strengthen insurance. Once the door is open to such a notion, the security of the frugal policy-holder who pays will be frittered away and wildcat insurance will be enthroned. While it may not be unlawful to insure people on the basis of taking notes for overdue premiums, yet the command of the law is that provisions to that end must be incorporated in the policy, so that those who contract for insurance may know in advance that the company *440proposes to do a credit business, and thus more certainly estimate its reliability as a financial institution. In tbe absence of anything in the policy permitting such a substitute for payment as the one. here put forward, it was the duty of the court sua sponte to decline to enforce it, as in a ease where any other unlawful stipulation is presented for judicial sanction.
Passing this for the moment, it is well settled that a note is not payment unless there is an agreement that it should be so accepted: Black v. Sippy, 15 Or. 574 (16 Pac. 418); Johnston v. Barrills, 27 Or. 251 (41 Pac. 656, 50 Am. St. Rep. 717); Schreyer v. Turner Flouring Co., 29 Or. 1 (43 Pac. 719); Kiernan v. Kratz, 42 Or. 474 (69 Pac. 1027, 70 Pac. 506); Stringham v. Mutual Ins. Co., 44 Or. 447 (75 Pac. 822). It is contended, however, that the assured was under no Obligation to pay any premium, and hence that he was not compelled to give the note. If anything, this proves too much, for if the defendant had undertaken to collect the note from him by action at its maturity, he could have defended against it for at least partial failure of consideration. But we are not left without evidence of the intent of the parties in the execution and reception of the note. They themselves put into that instrument the conditions governing their stipulation, conceding that authority existed for making the same. It is plainly written there that:
“If this note is not paid, principal and interest, at the maturity thereof, said policy shall thereupon and on the 15th day of July, 1913, without notice or other action by said Columbia Life & Trust Company, lapse and become of no further force or effect.”
It is true by the terms of that instrument the company retained the right to collect the pro rata premium to the date of cancellation, but even this clause signed *441by the assured contemplates that the policy should then and there terminate. That reservation refers only to the premium earned by the company on the insurance up to the date of the cancellation of the policy. The receipt mentioned imparts no vitality to the plaintiff’s case, for it refers to the note, and the two must be construed together.
The plaintiff must rely on the so-called note if she recovers at all. She cannot take the part favorable to her and ignore the other conditions therein expressed. That instrument either affected the policy or it did not. If not, it is conceded that she has no standing in court; for the only pretense of compliance with the contract of insurance must be worked out through the note. If the policy was affected by it in respect to payment of the premium or otherwise, it must be according to all the conditions of the note, and not by part of them to the exclusion of others. It is primary learning that one who would rely upon an executory contract must allege and prove compliance with it on his part, and confessedly there was no semblance of performance of what was to be done by the assured under the terms of the note. Arnold v. Empire etc. Life Ins. Co., 3 Gra. App. 685 (60 S. E. 470), is a precedent cited and strongly relied upon by the plaintiff. It is distinguishable from the instant case by the fact that the company credited on the notes dividends earned by the policy. Expressly upon that feature the court held that the company was estopped to deny liability. Yet even under those circumstances the opinion contains this language:
“The company might have declared the policy avoided for the nonpayment of the first note at its maturity, and as it might still have held the insured as maker of the note for the proportionate part thereof equal to the portion of the premium for 1903, which *442accrued up to the date of the maturity of the note this would not of itself have shown that the company waived its right to forfeit the policy, or that it had not availed itself of that right.”
Here the plaintiff herself shows that the defendant occupies exactly the position thus outlined by the Georgia court; and not only so, but she also sets out in her reply the letter of the defendant written to the assured November 12, 1913, distinctly notifying him that his policies had lapsed. How this can be tortured' into a waiver passes the most technical special pleading.
Again, in Arnold v. Empire Ins. Co., supra, there is this excerpt from Insurance Co. v. Eggleston, 96 U. S. 577, 24 L. Ed. 841:
“Any agreement, declaration, or course of action on the part of an insurance company, which leads a party insured honestly to believe that by conforming thereto, a forfeiture of his policy will not be incurred, followed by due conformity on his part, will and ought to estop the company from insisting upon the forfeiture, though it might be claimed under the express letter of the contract.”
The dominant idea in the rule thus stated is that the assured himself, as well as the company, must comply with the new contract or arrangement into which he has been led by the insurer if the latter is to be estopped thereby; for it is elementary that estoppels must be mutually binding upon both parties.
Summers v. Des Moines Ins. Co., 116 Iowa, 593 (88 N. W. 326), is cited in opposition to the views here expressed. That case depended upon a peculiar Iowa statute (Code, § 1741), as follows:
“All insurance companies or associations shall, upon the issue or renewal of any policy, attach to such policy, or indorse thereon, a true copy of any applica*443tion or representation of the assured which, by the terms of such policy, are made a part thereof, or of the contract of insurance, or referred to therein, or which may in any manner affect the validity of such policy. The omission so to do shall not render the policy invalid, but if any company or association neglects to comply with the requirements of this section it shall be forever precluded from pleading, alleging or proving any such application or representations, or any part thereof, or falsity thereof, or any parts thereof, in any action upon such policy, and the plaintiff in any such action shall not be required, in order to recover against such company or association, either to plead or prove such application or representation, but may do so at his option.”
This enactment is not like ours. It does not forbid the making of any contract relating to the insurance involved. It only prevents the company from pleading or proving such a contract unless it is attached to or indorsed upon the original policy. The case is not in any wise an authority under our statute, which absolutely forbids the making of any agreement concerning insurance outside the policy itself. The same may be said of Lewis v. Insurance Co., 71 Iowa, 97 (32 N. W. 190), reported on second appeal in 80 Iowa, 259 (45 N. W. 749), Provident Sav. Life Assur. Soc. v. Puryear, 109 Ky. 381 (59 S. W. 15), Considine v. Mutual Life Ins. Co., 165 Mass. 462 (43 N. E. 201), and New Era Life Assn. v. Musser, 120 Pa. 384 (14 Atl. 155). They are all illustrative of statutory regulations similar to that of Iowa quoted above. Bowyer v. Continental Casualty Co., 72 W. Va. 333 (78 S. E. 1000), enforces a similar statute, to the extent that an application, not copied into or attached to the policy issued upon it, although referred to in the policy as a basis thereof, could not be received in evidence to vary or affect the terms of the contract of insurance itself, *444although the court said it would have been admissible at common law for that purpose. Applying the doctrine of that case to the present contention, it is plain that the other party to the contract, the plaintiff here, has no right under our statute to rely upon or offer in evidence an outside agreement to supplement or vary the original policy. It is idle to say that where one party to the policy is forbidden by law to make a contract of a certain kind, the other party to the same convention can make such an agreement and enforce it against the person forbidden to agree to the same. Yet this is the essence of the plaintiff’s contention when tested by the statute. It is unthinkable that one party to an agreement may contract one way while the other cannot. Bank v. Hume, 128 U. S. 195 (32 L. Ed. 370, 9 Sup. Ct. Rep. 41), merely holds, what no one disputes, that the beneficiary has a vested interest in the policy when it is issued of which he cannot be deprived without his consent; and, further, not applicable to his case, that it is not fraud upon his creditors for a husband to insure his own life, making his wife the beneficiary. As supporting the contention of the plaintiff, an excerpt is taken from Mutual Life Ins. Co.v. Kelly, 114 Fed. 268, 274 (52 C.C.A. 154, 160), to the effect that the wife beneficiary has a certain vested interest in the policy immediately upon its issue. The opinion, however, continues in this language :
“But this well-recognized principle falls far short of sustaining plaintiff’s contention in this case. The question still remains, With what rights was she vested? This obviously depends upon the terms and conditions of the contract creating them. The husband assumed to act as her agent in the negotiation of a contract intended to be beneficial to her. He gave a consideration therefor, consisting partly of certain *445executory promises. He secured the promise from the insurance company to pay money to the wife, in case of his death, by promising that such death should not, for two years at least, be the result of his own act, sane or insane. All this was so done as to disclose a clear intention on the part of both that no risk against such death should be assumed by the company. The wife, by asserting a claim on the policy, ratifies and affirms the contract as made by her agent, and that, too, subject to all its terms and conditions. She cannot avail herself of the promise to pay her the amount of the policy, and simultaneously repudiate the promise made by her husband, which was given to the insurer as a consideration for its undertaking. Neither can she enlarge the obligation of the insurer beyond the scope of that undertaken by it.”
In the instant case the beneficiary herself, the plaintiff here, did nothing whatever in the matter involved. All that was done was performed for her by her husband, upon whose actions alone she must stand or fall. She is compelled, under the very nature of the case, to rely upon the so-called note. She cannot take parts of this instrument which are favorable to herself and reject the rest of his written stipulation. She must take the good with the bad if she would act at all. This principle is stated in Guaranty Trust Co. v. Dinwiddie, 79 Or. 653 (156 Pac. 279), in Department No. 2 of this court, in which Mr. Chief Justice Moore and Justices Bean, Harris and the writer concurred. The principle is controlling here.
The quintessence of the case is that the plaintiff is relying upon a contract, not contained in the policy, which the assured knew the agents had no authority to make, forbidden, as it was, by the policy itself and by the statute; and, further, that even this invalid outside agreement has never been performed by the assured, nor anyone else on his behalf. No sophistry *446can make the fact otherwise, nor dispense with the legal rule that if a party would recover upon a contract, he must show compliance therewith on his own part or legal excuse for not so doing. The plaintiff has not shown this.
The judgment should be affirmed.