Eureka-Maryland Assurance Corp. v. Samuel

Collins, J., delivered the opinion of the Court. This is an appeal by Eureka-Maryland Assurance Corporation (Eureka), appellant, from a judgment rendered against it, on a verdict by a jury, in a suit on a life insurance policy in the Superior Court of Baltimore City in favor of Sara S. Samuel, et at., executors under the Last Will and Testament of Albert Herman Samuel, deceased, appellees. This case has been tried twice below, first, before Judge Emory Niles and a jury, resulting in a verdict for the plaintiffs. After that verdict a new trial was granted.

The second trial before Judge Tucker and a jury resulted in a verdict for the plaintiffs. A motion for judgment non obstante veredicto having been overruled and a new trial refused, an appeal is taken to this Court. The Sudbrook Realty and Insurance Agency, Incorporated, of Baltimore City was a general agent for the appellant. One Joseph I. Cohen was a sub-agent acting for that general agent but with his own individual office.

Mr. T. J. Mohan, who was president of the Sudbrook Agency, was also a vice-president of Eureka. Mr. Albert H. Samuel, president of Kingsbury-Samuel Company of Baltimore, signed an application for life insurance with the appellant corporation through Mr. Joseph I. Cohen, its agent, on the 2nd day of March, 1944. ⁶⁰⁶ As a result of that application, on March 22, 1944, a life insurance policy on the life of Albert Herman Samuel in the amount of $10,000 payable to the estate of Samuel was executed by the officials of Eureka. Mr. Cohen, its agent, obtained this policy directly from the appellant corporation. He advised Mr. Samuel that he had the policy and made a luncheon engagement with him at the May Company Lunch Room for Saturday, April 29, 1944.

Mr. Samuel now being deceased, and there being no witnesses present, the only testimony as to what occurred at that luncheon is that of Mr. Cohen, the agent of Eureka, who related substantially the following. Mr. Cohen explained the provisions of the policy to Mr. Samuel and the policy was approved by Samuel, who said: “all right, when can we expect the other two”. The reference to “the other two” was to two other insurance policies which Mr. Samuel’s company was taking through Mr. Cohen in another insurance company, and those policies have nothing to do with this case. Mr. Cohen then testified: “I pointed out to Mr. Samuel that even though he had approved the policy and was satisfied, to make sure that the policy was in effect and there would be no doubt about it, that I would like him to pay me at least some portion of the annual premium; if necessary we could change it to semi-annually, quarterly, or what not, whereupon he gave me some money. * * *” He further said he told Samuel “that the policy was not considered in effect until the applicant had shown that he had definitely made up his mind by paying in some money and urged him to do so.

He laughed and made some remark to the effect that ‘all insurance agents are alike; they are all always drawing up the hearse,’ and he never felt better in his life, but if I wanted it, all right, whereupon he gave this sum of money.” Samuel gave him $100 of which Cohen allocated $70 to this policy. Samuel wanted to know whether that would be sufficient and Cohen assured him that $70 was sufficient to put the policy in force. He gave Samuel the policy and sometime before they separated at luncheon, Samuel said to ⁶⁰⁷ Cohen: “There is no need of me taking this and putting it in my safe deposit box and then in a week or two having to go and get it out and hand it back to you after my lawyer tells me how to change it. Suppose you keep it until we are ready.” Cohen said Samuel “made an appointment with me for the 15th to make those changes and to settle in full on the whole—all of the matters that we had been discussing.” The change in the policy was to have been a change of beneficiary.

After this luncheon meeting Cohen attempted immediately to contact the Sudbrook Agency where the records of payment were kept. It being Saturday afternoon, he was unable to contact anyone there. On Monday morning, May 1, 1944, he telephoned Mr. Kruger, the manager of the Sudbrook Agency, and told him that he had the $70 from Mr. Samuel and asked him how he wanted to handle it because he and Samuel “had it definitely understood” that Cohen had been paid enough money “certainly to put the policy into effect on a quarterly basis”. Cohen said: “I asked him (Kruger) how he wanted me to handle it, that I would get payment for one year on the 15th, and he told me that would be all right, that it would be in effect and that I could settle for one year on the 15th.” He said Kruger told him that it would not be necessary for Samuel to pay any additional money until the 15th of May, 1944, and Kruger assured him that the policy would be in effect and that the simplest way to handle the matter would be to settle for the annual premium on the 15th.

Cohen further testified he was entitled to 60 per cent commission on the first premium and he “invariably” paid the net amount to the insurance company and kept his commission. The annual premium was $535.10. There is no doubt that the $70 paid was sufficient to pay the quarterly premium on the policy, less Cohen’s commission. At one time in his testimony Cohen stated that he did not recall whether he (Cohen) offered definitely to pay the whole premium or not.

He later testified definitely, however, that he told Mr. Kruger he had collected $70, wanted the policy in effect and that ⁶⁰⁸ he was ready to do whatever was necessary to put that policy definitely in effect: He said he told Kruger “if he required either seventy dollars, or if he wanted to change it to a quarterly premium, which is permissible without any'home office formality, or if he wanted the full annual premium or anything like that, it was up to him, I would do whatever was necessary.” He later repeated this testimony in the following' words: “I told him that I had seventy dollars, that I would handle it either as quarterly premium if he wanted to change it that way, or anyway that he wanted. If he insisted on the annual I would send him my check. * * * I phoned the general agent of the Eureka, Mr. Kruger, and explained I had part payment, more than enough for one month, $70.00—in as much as the whole year’s premium was only five hundred and some dollars, seventy dollars was more than enough. * * * I was willing to do it on any basis he wanted. It was enough for the whole monthly premium; it was enough for the quarterly as far as he was concerned.” Paul C. Kruger, the manager of the Sudbrook Realty and Insurance Agency, stated that Cohen called him and told him that he would get the money from the Samuel Company on the 15th of the month. He said there was nothing mentioned about the insurance being in force at any time.

He denied that Cohen told him that it was necessary to put the policy in force immediately and said the first he knew of any payment by Samuel to Cohen was after Samuel’s. death. . Samuel died of a heart attack on May 12, 1944, without paying any money other than the $70 on the insurance policy. Mr. Cohen does not know whether he gave Samuel a receipt for this $70 or not. The insurance company refuses payment of the policy, hence this suit.

In this case the trial judge gave an oral charge to the jury. The appellant claims that the judge erred, after the presentation of evidence, in refusing to instruct the jury that there was no legally sufficient evidence in the case to entitle the plaintiffs to recover. The application ⁶⁰⁹ signed by Samuel contained the following clauses: “2. That except as otherwise stated in the form of receipt hereto attached there shall be no contract of assurance until a policy shall have been issued and delivered to me and the first premium paid thereon during my lifetime and continued good health and that such delivery and payment shall constitute acceptance of the policy as issued ; * * * 4.

That only an Executive Officer of the Corporation has authority to make or alter a contract of assurance or to bind the Corporation by any promise or statement.” The policy of insurance here contained the following provisions: “* * * This Policy shall not take effect unless nor until the first premium shall have been paid during the continued good health of the Assured. * * * Modification. No modification or alteration hereof or endorsement hereon will be valid unless made by the President, a Vice-President, the Secretary or the Actuary of the Corporation, and no other person has power on behalf of the Corporation to make, modify or discharge this Policy contract. Agents have no power to waive or modify any of the terms or conditions of this Policy, or to extend the time for the payment of any premium, or to bind the Corporation by making any promise not contained in this Policy, or by accepting any representation or information not contained in the application for this Policy.” Judge Tucker held that Clause 4, supra, in the application justified the applicant, Samuel, in believing that it referred to the issuance of the policy and alterations in it and promises and statements after its issuance, “and not to the inception of the policy”, and for that reason refused the demurrer prayer. We, however, are of opinion that the language in the application was sufficient to put Samuel on notice that Cohen alone could not make the policy effective without payment of the first premium or change the application from an annual basis to a quarterly basis.

On the other hand there is no doubt that in this State a restriction in an insurance policy, and not in the application for the policy, upon the power of the agent to waive any condition unless ⁶¹⁰ done in a particular manner cannot be deemed to apply to those conditions which relate to the inception of the contract, when it appears that the agent has delivered it and received the premiums with full knowledge of the actual situation existing. Franklin Fire Ins. Co. v. Chicago Ice Co., 36 Md. 102 , 11 Am. Rep. 469 ; Maryland Fire Ins.

Co. v. Gusdorf, 43 Md. 506, 514; Ben Franklin Ins. Co. v. Gillett, 54 Md. 212, 218 ; Continental Ins. Co. v. Ruckman, 127 Ill. 364 , 20 N. E. 77 , 11 Am. St. Rep. 121 ; Hartford Fire Ins.

Co. v. Keating, 86 Md. 130, 147 , 38 A. 29 , 63 Am. St. Rep. 499 . It was said in the case of Bitting v. Home Ins. Co., 161 Md. 56 , at page 61, 155 A. 329 , 332: “And it has repeatedly been held by this court that provisions in a policy which deny to the agent the power to waive any of its conditions have no application to acts done or statements made at its inception (New York Life Ins.

Co. v. Rogers, 156 Md. [88], 92, 143 A. 651 ; Dulany v. Fidelity & Cas. Co., 106 Md. [17], 34, 66 A. 614 ; Forwood v. Prudential Ins. Co., 117 Md. [254], 260, 83 A. 169 ; Hartford Fire Ins. Co. v. Keating, 86 Md. 130 , 38 A. 29 , 63 Am.

St. Rep. 499 ), and in themselves impose no limitation upon the agent’s authority to bind his principal by representations material to the negotiation of the policy madé before the issuance thereof.” See also Rhode Island Insurance Co. v. Phelps, 141 Md. 362, 370 , 118 A. 749 . However, in the instant case, the restriction “that only an Executive Officer of the Corporation has authority to make or alter a contract of assurance or to bind the Corporation by any promise or statement” is contained in the application for the life insurance policy signed by Samuel and accepted by the corporation. Such an application apparently has never before been before this Court for interpretation as herein necessary. In the case of Drilling v. New York Life Ins.

Co., 234 N. Y. 234 , 137 N. E. 314, 315 , (Court of Appeals of New York, November 21, 1922), the application for life insurance contained the provision that the insurance should not take effect unless the first premium was paid and the ⁶¹¹ policy was delivered to and received by the applicant during his life time and good health. It also contained the provision “that only the president, a vice president, a second vice president, a secretary, or the treasurer of the company can make, modify, or discharge contracts, or waive any of the company’s rights or requirements, and that none of these acts can be done by the agent taking this application.” In that case