Causey v. Gulf Life Insurance Co.

1. "An unauthorized act or transaction by an agent in excess of his authority becomes binding and obligatory upon his principal, if the latter, with knowledge of the facts, receives and retains the benefit thereof, since such acceptance of the benefit amounts to an implied ratification of such act, whether the principal intends thereby to ratify it or not." Kelly v. Carolina Life Insurance Co., 48 Ga. App. 106 (171 S.E. 847).

2. "While ratification of an unauthorized act of an agent is not to be presumed, the acts of a principal are to be liberally construed in favor of an adoption of the acts of the agent, and when the unauthorized act of the agent is done in the execution of power conferred, but in excess or misuse thereof, a presumption of ratification readily arises from slight acts of confirmation, or from mere silence, or acquiescence, or where the principal receives and holds the fruits of the agent's act. 2 C. J. §§ 657, 658." Kelly v. Carolina Life Insurance Co., supra.

3. "While an insurance agent is without authority to bind his principal by any waiver of the terms of the policy after a forfeiture has already taken place, . . yet a forfeiture of the policy for nonpayment of a premium when due is waived by an unconditional acceptance of payment of the premium by the principal after such default." Kelly v. Carolina Life Insurance Co., supra.

4. The petition alleged facts, which, if proved would warrant submitting to a jury the question whether the receipt and holding of the past-due premiums, together with the premiums for advance payments from January 29, until after the death of the insured on February 9, amounted to a waiver of the requirement as to proofs of insurability, and was a ratification of the acts of the collecting agent in receiving the past-due and future premiums.

DECIDED MARCH 15, 1940. REHEARING DENIED MARCH 23, 1940. Exceptions are taken to the sustaining of a motion to strike a petition which alleged that the defendant issued an insurance policy on the life of an insured. The premiums thereon were payable weekly and the receipt therefor was entered on the receipt book belonging to the policy. Premiums were paid thereon up to November 29, 1937, when the agent was taken sick and failed to call for the premiums, although this fact did not relieve the insured from the duty of making payments when due. The policy lapsed at the expiration of the grace period, December 27, 1937. On January 29, 1938, Morris, the defendant's agent, who had been sick, and who was authorized to collect premiums and receipt therefor, came to the insured's home and collected $5.35, representing approximately 12 weekly premiums, which was sufficient to pay up said policy for three weeks in advance of that date. At the same time said agent filled out an application for reinstatement and the insured signed the same. At the time the insured was ill, and the agent filling out the application knew of such fact. On February 7, 1938, another agent of the defendant, one Bolton, came to the insured's home and claimed that the agent, Morris, had turned over to him only $4.35 instead of $5.40, and demanded of the insured $1.05 in addition, which amount was immediately paid. Bolton requested petitioner to deliver to him the policy and receipt book which he did. Bolton turned over this money to the Atlanta office of the defendant, together with the application for reinstatement, which application was never sent to the defendant's home office in Jacksonville, Florida. On February 9, 1938, the insured died.

The petition alleged that such conduct on the part of the defendant waived the requirements of the policy providing for revival upon evidence of insurability. The policy provided: "Should this policy become void in consequence of nonpayment of premium, it may be revived upon payment of all premiums in arrears and the presentation of evidence of insurability satisfactory to the company." It further provided: "No person except the president, secretary or assistant secretary, has power to modify, or, in the event of lapse, to reinstate this policy or to extend the time of the payment of the premium. No agent has power on behalf of the company to waive any forfeiture." It was further alleged that the company retained the premiums paid until after the death of the insured, when it offered to return the premiums paid to the beneficiary who brings this action. It was alleged that such conduct waived the requirement as to proof of insurability and reinstated the policy.

"In the absence, however, of controlling statutory contract, or charter provision, or by-law, the general rule is that an insurer which receives, accepts, and retains past-due premiums, assessments, or dues, paid subsequent to the due date and the expiration of the days of grace, if any, renews the contract and waives the forfeiture for nonpayment, provided such acceptance is unconditional and the facts are known, since an insurer which accepts past-due premiums or assessments, in violation of its own regulations, can not invoke the same in order to avoid liability." 3 Couch Ins. Law, 2271, § 687. In Piedmont Arlington Life Insurance Co. v. Lester, 59 Ga. 812 (3) it was stated: "Although a life policy contained a provision that it was to be void on failure of insured to pay interest on premiums at the times when due, and that agents were not authorized `to make, alter, or discharge contracts, or waive forfeitures,' yet, if after an installment had become due, the agent had notice that insured was sick, and afterwards received the money and transmitted it to the company, which received it, the company thereby waived the forfeiture." Massachusetts Benefit LifeAssociation v. Robinson, 104 Ga. 256 (3) (30 S.E. 918, 42 L.R.A. 261); Neal v. Gray, 124 Ga. 510 (52 S.E. 622);Kelly v. Carolina Life Insurance Co., 48 Ga. App. 106 (171 S.E. 847); Georgia Masonic Mutual Life Insurance Co. v.Gibson, 52 Ga. 640 (3); Supreme Lodge Knights of Pythias v. Few, 138 Ga. 778, 784 (76 S.E. 91); 4 Cooley's Briefs on Insurance, 3796. The agent who collected the premiums was authorized under the policy to collect them. The company evidently received them, for it is alleged that it offered to return them after the death of the insured. "The effect of a reinstatement is not, generally, the making of a new contract, but it merely cancels the forfeiture, leaving the original contract in force." 4 Cooley's Briefs on Insurance, 3800. Under the terms of the policy and the allegations of the petition the policy had automatically lapsed because of nonpayment of premiums on December 27. While the agent authorized to collect premiums had no authority to waive such a forfeiture, his acceptance of past-due premiums and collection of premiums which were paid on the policy in advance, and the transmission of this money to the company, may have amounted to a waiver as is alleged in the petition, and as such certainly prevented the petition from being subject to general demurrer. The principles governing this case are well stated in Kelly v.Carolina Life Insurance Co., supra. See also Union CentralLife Insurance Co. v. Merrell, 52 Ga. App. 831, 834 (184 S.E. 655).

We think the court erred in sustaining the motion to strike.

Judgment reversed. MacIntyre, J., concurs.