North American Accident Insurance v. Plummer

Parke, J., delivered the opinion of the Court. Mamie S. Plummer brought an action against the North American Accident Insurance Company on an insurance policy, issued on February 13th, 1931, by the defendant to Seibert C. Plummer, husband of the plaintiff, whereby the defendant agreed with the husband to pay to the plaintiff the sum of $1,000 if her husband’s death should ⁶⁷³ occur within the coverage of the policy. The husband was killed on July 8th, 1933, as a result of an accident which happened while he was driving his automobile on a highway. The plaintiff obtained a judgment, and the appeal of the defendant is based upon the rulings of the court on the evidence and the prayers.

The principal question raised is the refusal to grant an instruction to the effect that the plaintiff was not entitled to recover, on the theory that the policy had lapsed at the time of the accident through a failure to pay to the company the renewal premium. The Philadelphia Record, a newspaper, and the North American Accident Insurance Company, an assurer, were engaged for some time in a joint effort to obtain a subscription for the newspaper published by the Philadelphia Record in combination with a taking of a contract of insurance with the insurance company. In this enterprise, the Philadelphia Record and one John T. Hall were the agents of the insurance company from February 13th, 1931, to October 1st, 1933. The newspaper company was a general supervisory agent of the insurance company for the purpose of soliciting insurance and collecting the premiums in connection with the contemporaneous securing of subscriptions to its newspaper.

Hall was one of the field agents to solicit subscriptions to the newspaper, in combination with the securing of accident and life insurance from the subscribers, and to collect and remit to the newspaper company the premiums on the original and renewal policies, as well as the money received for the subscriptions to newspapers. As a result of the solicitation of Hall, the husband subscribed, in February, 1931, for the newspaper for one year, and took out the original policy of insurance on which the plaintiff based her action to recover as the beneficiary of the assured in the event of his death. The policy insured the husband for a period of twelve months from noon of Friday, the 13th of February, 1931, subject to the limitations and conditions therein contained against death or disability resulting from bod ⁶⁷⁴ ily injuries effected through external, violent, and accidental means during the term of the policy, and sustained by the assured by the wrecking or disablement of a private automobile of the exclusively pleasure type, provided that the assured was not, at the time of the accident, operating such automobile for transporting merchandise for a business purpose. In the event of the death of the assured, the sum of $1,000 was payable to his wife.

The consideration for the policy was the payment of the premium of one dollar, and the contract provided that the policy might, with the consent of the company, be renewed for the same premium and for the same period of time by the payment in advance of the premium of one dollar. It was, however, further provided that “a receipt signed by the Secretary and countersigned by a licensed agent of the Company shall be the only evidence binding upon the Company of the payment of a renewal premium.” The other provisions of the contract of insurance which relate to the question at bar are that no agent had authority to change the policy or waive any of its provisions; and that if a default be made in the payment of the agreed premium, the subsequent acceptance of a premium by the company or by any of its duly authorized agents shall reinstate the policy, but only to cover loss resulting from accidental injury thereafter sustained. There was testimony on the part of the plaintiff tending to prove that the policy was attempted to be renewed for the second year by the assured sending the premium to the newspaper company by a check, dated February 15th, 1932, and drawn to its order, in the sum of one dollar. The plaintiff testified that this check was paid after having been negotiated for the payment of the premium on the insurance for the second year, but there is no evidence either that the husband received, or the insurance company issued, a receipt signed by the secretary and countersigned by a licensed agent of the company.

There was further testimony to the effect that the agent Hall received from the husband the sum of two dollars ⁶⁷⁵ in February, 1983. One dollar was on account of the subscription to the Philadelphia Record, and the agent testified that he forthwith remitted this sum to the newspaper company, but forgot to pay the dollar received for the renewal premium on the insurance policy. On the day that the assured was killed, Hall called to see the widow as a matter of courtesy, and inquired if there was anything that he could do, and was informed that a report had been made to the insurance company of the death. Shortly after this Hall testified that he had received a notice from the office of the newspaper that the records showed that the policy had not been renewed in 1932, but that the plaintiff claimed to have a receipt for the payment of the premium on the policy for 1983.

Following this communication, Hall then sent, on August 7th, 1938, to the newspaper company the premium which is claimed to have been paid in February, 1933. The newspaper company returned to the plaintiff, on September 7th, 1983, the dollar remitted, with the statement that the policy had expired for nonpayment of the premium due February 13th, 1982, and cannot be renewed at such a late date. Hall’s testimony is that the premium was collected by him about February 14th, 1933; but the plaintiff testified that she found a receipt among her husband’s papers, dated February 1st, and produced the paper, which, however, is undated. The receipt is headed by the bare name of the newspaper, and below are the words, “Received of S. G. Plummer $1.00,” followed by two lines for his address, and immediately below is written, “From Feb. 15/33 to Feb. 15/34,” and then, on the next line and in the lower right corner, appears the signature of “John T. Hall, Clerk.” There is nothing in the form or words of this receipt to indicate whether it was given for a payment on a subscription for the newspaper or for a renewal premium on the insurance policy.

The original policy ran for the period of twelve months from noon, the 18th of February, 1931, and therefore yearly renewals of the policy would likewise run from the anniversary date mentioned, so the bare term, “From Feb. 15/38 to ⁶⁷⁶ Feb. 15/34,” does not coincide with a renewed annual term of the policy. The witness Hall, however, testified that this receipt was given for a renewal of the original policy and that, at the time the payment was made, he used the form of receipt offered in evidence, instead of the different original form, because at the time he did not have the original form of receipt. When asked if the plaintiff had a receipt for the renewal premium, signed by the secretary of the insurance company, and countersigned by a licensed agent of the company, the plaintiff admitted that she did not have such a receipt; and the defendant’s testimony was that such a receipt had never been issued to the assured. The other testimony on the part of the plaintiff was that at the time of his death the assured was driving an automobile of the exclusively pleasure type, and that he had been killed about 8 o’clock in the morning, approximately ten minutes after he had left his home for a destination unknown to his wife.

On cross-examination, the plaintiff testified that the assured was a farmer, and kept a herd of eighteen cows and had a milk route in a town called “Charlestown”; that the milk was delivered in bottles, which had white paper caps upon which the assured’s name was printed, and that there were other automobiles at the house for the delivery of milk; and that the plaintiff knew that her husband served certain persons regularly with milk in the morning of every day and that she did not know who had delivered milk to the customers on her husband’s route on the day of the accident. A witness on the part of the plaintiff, who went to the scene at once after the crash, examined the automobile and saw cottage cheese and milk in the automobile, and found there a number of bottles full of milk. The testimony on the part of the defendant is to the same effect, except that it amplified the evidence on this point by the proof that the milk bottles had been carried in wire containers made for the purpose of holding bottles, and that the assured had made daily deliveries of cottage cheese and milk, and what remained after his customers had been served was daily delivered to a local merchant. ⁶⁷⁷ On the part of the defendant it was shown that the newspaper company had kept the records of the transaction, and that the policy had expired in February, 1932, as the payments received did not cover a renewal of the policy, but were credits in part on the price of subscription for the newspaper. Disregarding the question of whether the assured was driving his private automobile of the exclusively pleasure type while transporting merchandise for a business purpose within the exception of the policy, the fundamental inquiry presented by the record is: Was the policy operative when the husband of the plaintiff was killed?

On the assumption that the policy was in force by renewal continuously to its anniversary date, February 13th, 1933, and that the premium was paid to the agent Hall, the proof is clear that the premium received was not paid by the agent to the newspaper company as the agent of the insurance company until after the death of the assured, when the liability, if any, of the insurance carrier would have arisen; and that, without remitting the amount to its principal, the newspaper company returned to the beneficiary under the policy the premium thus received before any prejudicial change had been occasioned the beneficiary by its delay of one month in making a refund of the payment. Bower & Kaufman v. Bothwell, 152 Md. 392, 397 , 136 A. 892 . So, the question ultimately is: Was the soliciting agent authorized to receive the premium; and, if so, bind, by the mere receipt, the insurance company from the time of the payment, as effectually as if the payment had been tendered and accepted by the insurance company? In the consideration of this problem it must be borne in mind that the assured was charged with the knowledge, imparted by the policy, that no agent had authority to change the policy or to waive any of its provisions, and that no change in the policy should be valid unless approved by an executive officer of the company and such approval indorsed thereon.

Similarly, knowledge was imputed to the assured of the provision in the policy that a ⁶⁷⁸ renewal receipt, signed by the secretary and countersigned by a licensed agent of the company, should.be the only evidence binding upon the company of the payment of a renewal premium (a). While knowledge of these stipulations, as well as all others, is ascribed to the assured, and while the particular stipulations mentioned are neither illegal nor against public policy, and are binding upon the assured as notice of the extent of the agent’s powers, (b), yet such stipulations are not conclusively binding, because the relationship between the assurer and its agents, is neither created nor determined by the policy, but arises, continues, and ends independent of the terms of the policy. The relationship, therefore, is extrinsic to the policy, and, if different, may be shown by parol evidence. Richards, Law of Insurance (4th Ed.), secs. 146, 145;