Busby v. North America Life Insurance

Alvey, J., delivered the opinion of the Court. This was an action on a policy of insurance, taken on the life of John R. Busby, by and for the benefit of his wife, Mary C. Busby. In the course of the trial below, several exceptions were taken by the appellant; some to rulings upon questions as to the admissibility of evidence, and others as to rulings with respect to prayers which were offered by the parties for instructions to the jury. The policy sued on was issued in 1889, by the appellee, an insurance company located and doing business in the city of New York, having a branch office in the city of Baltimore.

Its branch office was in charge of a general agent, who does not appear to have had any authority to issue policies in the name of the appellee, but he received applications for policies, and received from the home office in New York, executed policies, to be delivered to the parties insured; and he was authorized to receive premiums upon delivery of policies, and renewal premiums upon delivery of receipts executed and furnished from the home office. The contract between the appellant and appellee, which is evidenced by the policy, was made directly between the parties thereto, without reference to the authority of the agent. Among the terms and stipulations of the policy, and with reference to which the contract was made, are the following : ” And it is also understood and agreed by the assured, that in case the said premium shall not be paid on or before the date hereinbefore mentioned for the payment thereof, then, and in every such case, the said company ⁵⁷⁸ shall not he liable for the payment of the snm assured, or any part thereof, and this policy shall cease and determine.” “ The premiums are always due on the several days stipulated in the policy, and all risk to the company commences at the time of the actual payment of the first premium, without regard to the date of the policy, (unless otherwise stipulated in the policy,) and continues until the day named in the policy for the payment of the next premium, at 12 o’clock, noon, (or within thirty days thereafter,) and no longer. No premium will be received by the company, continuing any risk, after the day named in the policy for the payment of such premium, or within thirty days thereof, unless the insured is in perfect health, and the risk continued at the entire option of the company ; and no payment of premium is binding on the company, unless the same is acknowledged by a printed receipt signed by an officer of the company.

All receipts of the company at any time for premiums past-due, except as above, are viewed by the parties in interest as acts of courtesy of the company, and in no case to be considered a precedent, or a waiver of the forfeiture of the policy, according to the conditions expressed therein.” Premiums had all been paid and receipted for, until that due on the 20th of June, 1812 ; and this last premium was paid to the general agent in Baltimore, on the 28th of June, 1812, and, at the time, a receipt in the usual form given, as of the date of the 21st of June, 1812. The amount of the premium thus received by the agent was remitted by him to the appellee on or about the 1st of July following, in the regular course of business, without any communication, however, of the fact that it had been received of the appellant after the time when it was due by the terms of the policy'. The husband of the appellant, on whose life the policy was issued, died on the 14th of July, 1812. The receipt furnished the appellant on payment of the last premium, on the 28th of June, 1812, was signed by ⁵⁷⁹ the proper officer of the appellee, and countersigned by the general agent in Baltimore, in the usual form.

It was the habit of the appellee to send such receipts to the general agent, partly filled up and signed by the proper officer, a month or more prior to the times when premiums became due on policies within the agency, to he countersigned by the general agent, and delivered to policy-holders on payment of their premiums. The policy, by the non-payment of the premium at the time it was due, having lapsed and become forfeited, the main question on the trial was, whether the forfeiture had been waived and the policy revived. In the course of the trial, the appellant proposed to prove that there existed an usage among all general agents of foreign insurance companies doing business in the city of Baltimore, and in this State generally, and among domestic insurance companies, to accept premiuinns after the time when they become due and payable by the terms of the policies, and to deliver to the policy-holders the receipts of the companies therefor, as of the date when the premiums were due; and also proposed to prove that it had been the usage of the appellee for more than ten years past to authorize, by parol license, its general agents in the State of Missouri, to receive, after they became due, premiums, and renewal premiums, on its policies issued to parties in that State, and to furnish such agents with receipts to he delivered to the policy-holders, dated as of the time when the premiums became due, and that such usage was general and universal with the appellee’s agents in that State, with the knowledge and approval of the appellee. This proffer on the part of the appellant was rejected by the Court below, and such rejection forms the subject of the first three hills of exception taken by the appellant.

That the Court below was right in rejecting the proposed evidence, we think is clear beyond all doubt. The policy itself, as we have seen, contained expressed provisions upon ⁵⁸⁰ the subject, not only as to what was required to be done by the policy-holder, but the consequence of failure to observe the express stipulations therein in respect to the non-payment of the premium at the time when due. To have allowed the proposed evidence to be given in this case, would have violated a well established rule upon the subject, which is, that such evidence of usage can never be received, if it be repugnant to or inconsistent with the terms of the contract ; for otherwise it would not go to interpret and explain, but to contradict what the parties have reduced to writing as the evidence of their agreement. And in order to establish an inconsistency between the written contract of the parties and the usage or custom offered to be proved, it is not necessary that the former should in' express terms exclude the latter; but if it appear from the instrument, either expressly or by implication, that the parties did not mean to be governed by usage, no evidence respecting it can be received.

Omissions may be supplied, in some cases, by the introduction of such proof, but it cannot prevail over or nullify the express provisions and stipulations of the contract. It can only be admitted either as an aid to interpretation where the meaning of the terms of the contract is equivocal or obscure, or to add some incident consistent with the terms of the contract, but about which the parties are silent. Appleman vs. Fisher, 34 Md., 553 ; Thompson vs. Riggs, 5 Wall., 663 ; Howell vs. The Knickerbocker Life Ins. Co., 44 N. Y., 216 ; 2 Taylor’s Ev., sec. 1075.

But, besides the objection that the proposed evidence would contradict the express stipulations of the parties, it was objectionable on other grounds. It was not proposed to show that the usage had reference to policies containing stipulations like the one before us, or' within what time, after the premiums became due by the terms of the policies, they were, by the usage, receivable; nor was it proposed to be shown that the appellant had knowledge of, ⁵⁸¹ or was in the least influenced by, or that she relied on the existence of such usage. And as to the existence of the usage in the State of Missouri, authorized by the appellee to be observed by its agents, that manifestly can have nothing to do with this case. By the very terms of the policy sued on, the appellant expressly stipulated that it should be at the option of the appellee whether any premium should be received after the time designated for its payment; and that all receipts of premiums at any time past-due, except as provided in the policy, were to be viewed by the parties in interest as acts of courtesy of the company, and in no case to be considered as precedents, or waiver of the forfeiture of the policy, according to its express conditions.

Ko matter, therefore, in what number of instances the appellee may have exercised its option to receive past-due premiums, such acts would neither constitute an usage, nor make precedents that would conclude it, and justify the appellant in the non-observance of the express requirement of the policy with respect to the payment of the premium. We think, therefore, that there was no error in the Court’s ruling on the first three exceptions of the appellant. The fourth exception taken by the appellant was to allowing the appellee to read in evidence to the jury the contract between the appellee and its agent Snell, whereby the powers and duties of the latter were defined. In allowing the reading of this paper, we think the Court committed no error.

It was one of the modes of proving the extent of the agent’s authority, and is always allowed, where there is a question whether a particular act is within the powers and authority delegated to the agent. 2 Greenl. Ev., secs. 61 and 63. It is true, the appellant was in no manner concluded by such contract between principal and agent; but the question to be investigated was, whether the act of the agent was within the scope of his authority, and that being the nature of the question, it ⁵⁸² was competent to the appellee, on its part, to show what authority over the subject had been conferred upon the agent; and the authority being in writing, the rules of evidence required the production of the writing before other evidence upon the subject could have been offered by the appellee. On the other hand, the appellant was bound by no such rule.

She was at liberty to rely either upon the express delegation of authority, or upon the authority as it might be inferred from the habit and course of dealing between the parties, or upon the subsequent ratification and adoption of the act of the agent by the principal. Having thus disposed of the exceptions relating to questions of evidence, we come now to the prayers for instruction to the jury, which were offered and ruled upon at the trial. ■ All those on the part of the appellant were rejected, while on the part of the appellee there is a single prayer in the record, by the granting of which the Court instructed the jury that the policy sued on had become lapsed or forfeited by the non-payment of the premium as required by the terms of the contract, and that there was no legal evidence in the case from which they could find that the policy was ever revived, or the forfeiture thereof waived by the appellee, and therefore their verdict should be for the appellee, which wag rendered accordingly. It is obvious, if this instruction be correct, it renders altogether unnecessary an examination of the several prayers of the appellant; and therefore we shall first examine into the correctness of the instruction given by the Court at the request of the appellee. That the policy had lapsed or become forfeited, by the non-payment of the premium, as required, is not a controverted question in the case.

That is conceded. But whether, upon the facts of the case, taking all those in favor of the appellant as true, and making the most favorable deductions therefrom, the general agent of the appellee had authority, by receiving the over-due premium from ⁵⁸³ the appellant, after the lapse of the policy, to revive the policy so as to bind the appellee; or whether, by the receipt of the premium by the agent, and its transmission by him to the appellee, and its retention, under all the circumstances of the case, the appellee is to be taken as having adopted or ratified the act of the agent, and thus waived the forfeiture and revived the policy, are the questions to be determined under the instruction given by the Court. 1. The policy of insurance constituted the contract between the parties; and, as we have seen, that instrument expressly provided that in case the premium was not paid at the time when due by the terms of the policy, the appellee should not be liable, and the policy should cease and determine. Upon default, therefore, in the payment of the premium, as required by the terms of the policy, that instrument became a nullity, and was no longer of any effect whatever ; and it could only be revived and the risk resumed, at the option of the appellee.

Mow, it is not pretended that the general agent in charge of the branch office in Baltimore, had any power to conclude contracts of insurance and to issue policies in the name of the appellee;