Crook v. New York Life Insurance

Burke, J., delivered the opinion of the Court. 1. This was an action on a policy of insurance issued on the 17th day of May, 1901, by the Kew York Life Insurance Company on the life of Edward D. Crook, the husband of the appellant, and' payable to her on his death as the beneficiary named therein. Mr. Crook died on December 5, 1907, and this action was commenced on the 11th day of March, 1908. The case was tried in the Superior Court of Baltimore City where a judgment in favor of the defendant for costs was entered, and ²⁷¹ from this judgment Mrs. Crook has prosecuted this appeal In the course of the trial in the lower Court, thirteen exceptions were reserved by the appellant; eleven of these relate to rulings on questions of evidence, and two to rulings with respect to prayers which were offered by the parties for instructions to the jury.

In order that the legal questions raised on the record may be clearly understood, and intelligently disposed of, it is necessary to examine the pleadings to see the precise issues raised thereunder. The declaration contains three counts. The first and second were the common counts, first, for money received by the defendant for the use of the plaintiff; second, for money found to be due by the defendant to the plaintiff on accounts stated between them; and third, a special count on the policy, which alleged the death of the insured; that proofs of his death were duly furnished' to and approved by the defendant; that all premiums were duly paid upon said policy according to its terms; and that the death of the insured was not brought about by any of the causes exempted in the policy. It further alleged that the plaintiff and the insured had obtained a cash loan of $2,500 from the defendant on the 25th of March, 1907, and that the original policy, according to the requirements of the loan agreement, had been put in possession of the defendant; that the defendant refused to pay the plaintiff the amount of the policy (which the declaration stated to be $5,000),- after deducting therefrom the loan mentioned, and that all things had' been done to entitle the plaintiff to receive the money.

Attached to the declaration was an account, which charged the defendant, as of February 6th, 1908, with $5,000, the amount claimed to be due under the policy, and credited it with the sum loaned,—thus leaving $2,500 as a balance due by the defendant to the plaintiff under the policy. Annexed to the declaration was an affidavit under the Act of 1886, Chapter 184. To the first and second counts of the declaration the defendant pleaded the general issue pleas, and for a third plea ²⁷² it alleged that by the terms of the policy sued on and partieularly mentioned in the third' count of the narr, the annual premium of $550.15 was payable on the 5th day of April in each year, but that subsequently on the 4th day of April, 1903, at the request of the insured and Mrs. Crook, the beneficiary, the premiums were made payable on April 5th •and October 5 th in each year, said semi-annual payments being $286.10; it further alleged the making of the loan, as stated in the declaration, and charged that when the semiannual premium of $286.10, due and payable on-October 5, 1907, matured, the insured did not pay said premium, nor did the beneficiary pay the same, and that the policy by reason of said non-payment lapsed, and became null and void, and was never thereafter renewed. These pleas were verified under the Act above mentioned.

The plaintiff joined issue upon the first and second pleas, and for replication to the third plea averred that the insured did pay the premium due and payable on October 5, 1907, and issue was joined upon this replication. Oh the day the ease was taken up for trial, to wit, May 28th,. 1909, the defendant, by leave of the Court, filed an additional plea of tender and payment into Court under Sections 20 and 21 of Article 75, Oode, 1904. The amount paid into Court was $523.98, which the plea averred was sufficient to satisfy the plaintiff’s claim. The plaintiff traversed this plea and issue was joined.

The plaintiff then filed three additional replications to the defendant’s third plea which had set up the non-payment of the premium due October 5, 1907. These replications were first, that the payment of the semi-annual premium of $286.10, due and payable October 5, 1907, when it matured was waived by the defendant; second, that the payment of the semi-annual premium, due and payable October 5, 1907, when it matured was waived by the defendant; third, that the non-performance of the alleged conditions' of the policy as set' forth in said third plea was waived by the defendant. To these additional replications the defendant filed the com ²⁷³ mon traverse upon which issue was joined', and the case proceeded to trial. It thus appears from the pleadings that there was .no dispute that the policy sued on was issued by the defendant and accepted by the plaintiff; that there was no dispute as to the validity of the policy when issued; that originally there was dire and' payable on the 5th day of April in each year, a premium of $550.15; that $2,500 was loaned by the company on the 25th of March, 1907, at the instance of the insured and the beneficiary; that the premiums were subsequently made payable semi-annually on April 5 and October 5, respectively, the half yearly premiums being $286.10.

There was no issue as to the death of the insured, or the cause of death, or the sufficiency of the proofs of death. At an early stage of the trial Mr. John P. Poe, counsel for the defendant, stated to the Court that “the defense simply is; the premium was not paid according to the contract, and the policy thereby lapsed. If we are not sound on that point; that being our only defense, why, of course, our case fails;” We will now take up the rulings of the Court on questions of evidence. These are: (1) The refusal by the Court to allow the plaintiff put in evidence Mr. Crook’s application for insurance made in 1901; (2) His refusal to allow the report of the medical examiner on that application to bé offered in evidence; (3) The cause of Mr. Crook’s death; (4) Its refusal to allow the witness Goldsmith to say what he meant by “liened” and by “his condition,” this witness having previously stated' that the policy was liened on account of the insured’s condition; (5) Its refusal to permit this witness to define a sub-standard policy as distinguished from a regular ten year endowment policy; (6) Or to allow this witness to show that the defendant company refused'to issue to Mr. Crook a standard policy, because of his then com dition; (7) Or to allow him to prove the amount of the premium on a ten year endowment policy for $5,000 on the life of a man forty-five years of age, that being the age of Mr. Crook at the time policy sued on was issued; (8) Or to. ²⁷⁴ permit him to show that there was a difference between the premium on the policy sued on and the standard ten year endowment policy; (9) Or to show that the defendant knew at the time it issued the policy that Mr. Crook had Bright’s disease; (10) Or that the company knew Mr. Crook’s condition at the time it issued the policy; (11) To the action of the Court in striking out certain portions of the testimony of the wtiness Hunter as to the condition of Mr. Crook’s health when the policy was issued, etc. In our opinion, none of this proffered testimony had any relevancy to the issues made by the pleadings, and all of it was properly excluded.

The contract of insurance sued on was issued by .the defendant and accepted by the insured. That contract fixed the rights.and duties of the parties, and these should not be altered, added to, or dispensed with, or modified by any or all of the facts sought to be proved. The contract alone is the measure of the rights and obligations to the parties thereto, and each had a right to stand upon it, and to insist upon the performance of its terms and conditions. It is the duty of the Court to construe written instruments; but when a contract, which the law does not" forbid, has been deliberately and understandingly entered into by parties competent to make it, it is the duty of the Court to uphold it.

The introduction of the collateral and immaterial matters which it was proposed to lay before the jury could only have resulted in misleading them and obscuring the real issues of fact raised by the pleadings for their determination. 2.° We will now consider the main question in this case: was there a waiver by the defendant of the non-payment of the semi-annual premium due and payable October 5, 1907 ' By the true construction of the policy, it was necessary that the insured should pay the premiums according, to its requirements, otherwise the policy would become an automatically paid-up insurance under the non-forfeitable features of the policy. This interpretation results from a consideration- of a number of the provisions of the policy, all of ²⁷⁵ which contemplate the payment of the premium as necessary to prevent the lapsing of the policy. Two of the stipulations of the policy are as follows: (F “If any premium or interest due after the first two insurance years is not duly paid, and if there is an indebtedness to the company, this policy will automatically become a paid-up insurance for an amount payable only in the event of death before the end of the accumulation period, and for an amount of cash payable at the end of the accumulation period only, if the insured is then living, such amounts to bear the same proportion to the amount specified in column 2 and column 3, respectively, of the table on the second page hereof, as any excess of the reserve held' by the company over such indebtedness bears to the reserve itself.” (2) “A grace of one month, during which the policy remains in full force, will be allowed in payment of all premiums, except the first, subject to an interest charge at the rate of five per cent, per annum.” It is admitted that the premium of $286.10 which fell due October 5, 1907, was not paid when due and payable, and that it was not paid within the period of one month from its maturity as provided by the policy. Under these circumstances the policy ceased to remain in full force and became automatically a paid up insurance in accordance with and for an amount to be ascertained under the provisions of the policy first above quoted, unless the defendant waived the non-payment of this premium.

At the conclusion of the whole case the Court instructed the jury by the defendant’s first prayer that the plaintiff had offered no evidence legally sufficient to show that the semiannual premium of $286.10 on the policy sued on, due and payable on October 5, 1907, was paid on that day, or within thirty days thereafter; or that the non-payment of said premium within said period was waived by the defendant, and the policy sued on reinstated by the defendant, and that, accordingly, by the true construction of the policy sued on, the plaintiff is only entitled to recover such sum as the jury ²⁷⁶ shall find to be the surrender value in cash of said’ policy on the day of the death of the assured, Edward D. Crook, to wit, the 5th day of December, 1907, with interest thereon from the 5th day of February, 1908, to the 28th day of May, 1909, and that upon the issues joined on the plea of payment into Court by the defendant, no evidence has been offered legally sufficient to show that such cash surrender value'was more than the sum of $523.98, paid into Court on May 28th, 1909, and that upon said issue the verdict of the jury must be for the -defendant. It is conceded that the premium due October 5, 1907, was not paid, and it is also conceded that the- policy was not reinstated, as asserted in this instruction. The first controverted proposition asserted therein is that the plaintiff had offered no legally sufficient evidence that the - non-paymen i of the premium within the period limited was waived by the defendant. A decision upon this question necessarily involves an examination of all the facts in the record relied on by the plaintiff to show a waiver.

We have examined the record carefully, and we agree with the lower Court that the evidence is not legally sufficient to show a waiver by the defendant. The evidence shows that the defendant’s home office was located in the City of Kew York. It was doing business there, and it had a branch office in Baltimore City which was in charge of William A. Gallagher, agency director, and Joseph K. Knott, cashier. But neither of these persons had authority to issue policies or change, alter, or waive any of their terms or provisions.

Mr. Knott was authorized to receive renewal premiums, and to deliver receipts executed and furnished to him by the home office. Among the terms and stipulations of the policy sued on are the following: (lj “Only the president, a vice-president, the actuary, or the secretary has power on behalf of the company to make or modify this or any contract of insurance, or to extend the time for paying any premium, and the company shall not be bound by any promise or representation heretofore or here ²⁷⁷ after given by any person other than the above.” (2) “Premiums are dne and payable at the home office, unless otherwise agreed in writing, but may be paid to an agent producing receipts signed by one of the above named officers and countersigned by the agent. If any premium is not paid on or before the day when due, or within the month of grace, the liability of the company shall be only as hereinbefore provided for such case.” These provisions constituted a part of the policy, and Mr. and Mrs. Crook were chargeable with notice of them, and it cannot be doubted that under these provisions Mr. Knott, the cashier, had no power or authority to waive any of the provisions of the contract. Mor is it pretended that such authority was ever delegated to him by the defendant, or that there was anything in the course of his dealings between him and the insured to lead to the belief that he had such authority, or that in fact he ever assumed to exercise it.

Under such circumstances, what was said by this Court in Busby v. The North American Life Insurance Company, 40 Md. 583 , is conclusive against any power in Mr. Knott to waive the non-payment of the premium. In that case Judge Alvev said: “The principle seems to be well settled, that where the authority of the agent does not extend' to making a new contract of insurance, he cannot waive a forfeiture and revive a contract that has expired. This question is decided in a well considered case in the Supreme Court of Connecticut, where it was held, in an action on a life policy which declared that it was not to be binding until countersigned by the agent,. and delivered and the advanced premium paid, and these were the only words expressive of the agent’s authority, that he was not authorized to accept a subsequent premium after the time at which the policy expired by reason of the non-payment of such premium at the proper time. Bouton v. The American Mutual Life Insurance Company, 25 Conn. 542 .

The Court, in the course of its opinion in that case, said: 'We think that he (the