Cranston v. West Coast Life Ins.

Mr. Justice Bean

delivered the opinion of the court.

1. A detailed statement of the facts and circumstances occurring on the first trial may be found in the former opinion, and it is unnecessary to detail the same matters here. The assignments of error raise three principal questions for review in this court.

First. That the court erred in refusing to grant the defendant’s motion for a judgment of nonsuit. The main question is whether or not the defendant waived the following conditions contained in the application which was incorporated into the policy of insurance:

“I hereby agree as follows: That if this application is accepted, the policy issued hereunder shall not take effect until the first premium shall have been paid and accepted by said company or its authorized agent and such policy delivered to and accepted by me while I am in good health. * * ”

And also the following statements indorsed upon the policy:

“All premiums on this policy are due and payable at the home office of the company in the City of San Francisco, but may be paid to agents of the company producing receipts signed by the president or a vice-president, secretary, or assistant secretary, and countersigned by such agents. * * Only the president, or a vice-president, together with the secretary or assistant secretary (and they only in writing signed by them) have power on behalf of the company to issue permits, or make or modify this or any contract, or extend the time for making any premium payment, and the company shall not be bound by any promise or representation heretofore or hereafter given by any person other than the above-named officers, and by them only in writing and signed conjointly as stated.”

It is contended by tbe plaintiff tbat tbe condition precedent of paying tbe premium was waived by tbe delivery of tbe promissory note of "Walter A. Cranston to Waite Tburston, tbe soliciting agent, and bis acceptance of it, and tbe subsequent delivery of tbe policy of insurance by bim to Cranston, and tbat sucb action by tbe agents of tbe defendant company was ratified by tbe latter by delivering tbe policy and charging tbe premium to H. T. Booth, tbe general agent. However it may be as to tbe knowledge of tbe company in regard to tbe acceptance of tbe promissory note, it is clear tbat it forwarded tbe policy of insurance 'to its general ag*ent for delivery to tbe assured. Tbe jury were warranted in finding tbat tbe company thereby impliedly authorized tbe general agent to make satisfactory arrangements in regard to tbe payment of tbe premium, and trusted to bim to do so, and tbat tbe action of tbe agent was ratified by tbe delivery of tbe policy and allowing tbe same to be retained by tbe assured from September 1, 1910, until bis death, January 31, 1911.

H. T. Booth, tbe general agent of tbe company, was called as a witness by tbe plaintiff, and testified, in substance, tbat be received tbe policy by mail tbe last of August, and forwarded it to Waite Tburston, with a transmittal letter to tbe effect tbat tbe policy was inclosed for delivery to tbe insured, -for collection of tbe premium in due course, and for tbe remittance of tbe same; that be remembered no special instructions; tbat Waite Tburston remained around for six weeks or two months, collected a number of premiums that tbe company did not get, and left tbe country; tbat they bad never been able to locate bim; tbat be knew of tbe note after Tburston bad left; tbat be then made it bis business to try and trace tbe note, and found that it had been sold; that he sometimes sent receipts with a policy for delivery, and sometimes did not. He further testified:

“I had an accruing interest in the business done in the State of Oregon and this necessitated, frequently, there was certain charges against it and in due course of time they adopted a credit account of premiums and the premium of Walter A. Cranston became charged to me.”

That he had no correspondence with the company in regard to the policy before the death of Walter A. Cranston. That the company made no objection to the policy being out, because they had the premium charged to him. That he awaited Cranston’s pleasure until after the latter became of age, and the next information that he received was that Cranston was dead. That he did not send a receipt with the policy. On cross-examination he stated that the charge was absolute when the policy was retained in the hand of Cranston more than 60 or 90 days. That under the practice if a policy was not delivered and was returned with the premium receipt to the company, the charge against the general agent would be canceled.

Mr. Julian Sonntag, secretary and treasurer of the company, who resided in San Francisco, was asked to state in his deposition what action was taken by the West Coast Life Insurance Company as a result of the receipt of the application of Walter A. Cranston for a policy. He answered:

“We executed policy No. 5557, and on or about September 2, 1910, sent it to H. T. Booth, oiir general agent at Portland, for delivery. * *

“Q. State what instructions, if any, were given by you to the said H. T. Booth in regard to the delivery of said policy and said receipt to the said Walter A. Cranston.

“A. No specific instructions other than the general instructions, with which Mr. Booth was very familiar, that the policy and receipt were not to be delivered until satisfactory arrangements for the payment of the premium had been made. * *

“Q. Explain the system, or manner of doing business under which this company acts in relation with its state agents so far as making charges against them for premiums on policies of insurance is concerned, when said policies and the accompanying official receipts for the payment of the first premiums have been delivered by the company to a state agent.

“A. When a policy and premium receipt are sent to an agent, an entry is made in the company’s books to that effect, and said entry remains unchanged until the company receives the premium, either through the agent or from the insured, when the account is given credit therefor. This procedure is called ‘charging the agent’s account,’ and is for the purpose of keeping track of policies and receipts issued. If the premium be not paid and the receipt be returned to this office, the entry is canceled, the policy of course not being in effect. * *

“Q. State briefly the policy of the company in regard to accepting anything other than a cash payment for the insured for premiums, and its policy in regard to permitting its agents to accept in payment of premiums anything other than cash.

“A. The company itself accepts nothing but cash payments from its agents for premiums; what arrangements the agent may make under his contract with the company with the insured the company does not inquire into,. and has no means of knowing; any other settlement for the premium than cash is upon the agent’s own responsibility.”

Mr. Sonntag also testified that the company dealt through the general agent, Booth, who was authorized •to employ subagents. He stated that Booth “was not authorized to deliver the policy until the payment of the premium. What the agent accepted in payment of the premium was a matter between the agent and the insured of which the company could have and did have no knowledge.” To the question, “Was he authorized to take the note of Walter A. Cranston or the note of any person in lieu of cash payment for said first premium?” he answered: “Not on behalf of the company. The company recognizes nothing but cash payments, and if the agent accepted a note in lieu thereof it was on his own responsibility, and was his personal private business.” On cross-examination he testified that he never called on Cranston for this premium; that he wrote to Booth about it and other premiums, and kept the policy alive; that the regulations as to charging the agent were not in writing; that that was the practice of the company.

On December 19, 1910, Walter A. Cranston wrote to the defendant as follows:

^ “Keating, Oreg., Dec. 19, 1910.

“West Coast Life Insurance Co.

“Gentlemen: I am a minor under age and my guardian objects to me taking out a policy and will not let me have the money to pay the note, but if you will wait until January 12, 1911, I will be of age and can pay it then. Yours truly,

“Walter Cranston.”

We look through the record in vain for any evidence that Walter A. Cranston repudiated the policy or note, either before or after he became of age. His letter in regard to waiting until he would be of age, and that he could then pay it, can be construed only as a request for time to make payment. The statement of the secretary and treasurer of the company that any other settlement for the premium than cash is upon tlie agent’s own responsibility, taken with the allegations of the answer noted above, tended to show, and the jury were warranted in concluding therefrom, that the general agent of the company was authorized to accept property or promissory notes in payment of the premium, he and his bondsmen being responsible to the company for a payment in cash of the amount so accepted; that such authority was implied when the company forwarded the policy to its general agent for delivery. The soliciting agent, Thurston, was responsible to the general agent, H. T. Booth. The company did not deal with the subagents. It appears that Booth forwarded the policy to Thurston for unconditional delivery to Cranston, which delivery was made. The policy remained in Cranston’s possession without any claim on the part of the company that it should be canceled until after the death of the insured, on January 31, 1911. After proof was made the company forwarded a check to a bank at Baker for payment of the claim. Afterward the check was recalled at the instigation of its general agent Booth, on account of a failure of the subagent to make proper returns of the collection, for in effect Thurston had collected the premium by ■ negotiating and receiving money upon the note, a large part of which, as a matter of fact, belonged to him.

It was stated by Mr. Justice McBride, in Francis v. Mutual Life Ins. Co., 55 Or. 280, at page 288 (106 Pac. 323, at page 326), as follows: of these great insurance companies have become such a part of our business life that judicial notice should be taken of the custom, generally in vogue among them, of forwarding a policy upon its final approval and execution to some agent in the vicinity of the residence of the applicant, for delivery to him: Miller v. Northwestern Mutual Life Ins. Co., 111 Fed. 465 [49 C. C. A. 330]. * * Where a company receives an application for insurance, acts upon it, signs and seals a policy, complete in form, and forwards it to its agent for delivery to the person insured, the policy is deemed to have been issued from the date of its deposit in the mails” (citing numerous authorities).

“It was conceded on the trial that a policy, regular in form, was actually signed by the company and sent by mail to its office in Seattle. In the absence of evidence of any other motive, the natural inference from this act would be that it was sent there for the purpose of being delivered to the deceased. The operations

From the execution of the policy in question and the forwarding of the same to its general agent for delivery, as explained by the evidence, the jury were warranted in finding that the company authorized its general agent to deliver the policy to the assured upon arrangements being made for a payment of the premium satisfactory to the agent, and that Booth by forwarding the policy to his subagent authorized the unconditional delivery thereof to Cranston.

The defects in the former trial, as indicated by the opinion of the court discussing the same, were cured upon the second trial. The evidence upon the points in question was sufficient to go to the jury. There was no error in denying the motion for a nonsuit.

2. The ratification of an unauthorized act of an agent must be found in the intention of the principal, either express or implied, to ratify: 31 Cyc. 1260. In most cases it is this intention, as manifested by the principal’s acts and statements, rather than by his profession as to ratification, that must determine whether the principal had a legal intent to ratify; Forsyth v. Day, 46 Me. 176; Oregon Ry. Co. v. Oregon, R. & N. Co., 28 Fed. (C. C.) 505. The circumstances may be such that the law will recognize a constructive intention to ratify where none was actually intended: Smith v. Fletcher, 75 Minn. 189 (77 N. W. 800); St. Louis Gunning Adv. Co. v. Wanamaker & Brown, 115 Mo. App. 270 (90 S. W. 737).

3, 4. The jury might fairly have concluded that the insurance company, by permitting the policy of insurance to be retained by the assured for some months, by “keeping it alive” (in the language of the officer of the company), and by executing and forwarding the draft to the bank, thereby accepting the benefits of the transaction conducted by and through its agent, acquiesced in and ratified whatever the agent had done in the matter; that the real controversy was between the company and its general agent on account of the acts of the subagent whom the general agent had appointed and for whom he was responsible; that these matters were not the faults of Walter A. Cranston. Ratification takes place when one person adopts a contract made for him and in his name, which was not binding upon him because the person who made it was not authorized to do so. Ratification is a question of fact, and in a great majority of instances turns on the conduct of the principal in relation to the alleged contract, or the subject of it, from which his purpose and intention in regard thereto may be reasonably inferred: Story, Agency (9 ed.), § 253 et seq.; Baker v. Seaweard, 63 Or. 350 (127 Pac. 961).

5. Deliberate and continued action of the principal, with a knowledge of the facts, consistent with an intention to adopt the contract, or inconsistent with a contrary intention, is sufficient evidence of ratification: Oregon Ry. Co. v. Oregon R. & N. Co., 28 Fed. (C. C.) 505.

6, 7. Whenever a principal accepts the benefits of his agent’s nnanthorized acts with knowledge of all the material facts, he ratified the same. Silent acquiescence with full knowledge of the material facts may amount to a ratification if continued for an unreasonable length of time, and third persons have acted in reliance upon and have been prejudiced by such acquiescence, especially where an agent, not a stranger, has exceeded his authority: 1 Elliott, Contracts, § 459.

8. In many cases a ratification will be inferred from the mere habits of dealing between the parties: Story, Agency, (9 ed.), § 260. Hence, the policy of the company in dealing with its general agent in the matter of premiums had an important bearing upon the question at issue. The custom in vogue, as shown by the evidence, left ample opportunity for the agent to accept promissory notes for premiums; he becoming liable to the company for its share thereof. There was nothing 'strange or novel about the transaction.

9, 10. The question arises as to what were the material facts of which the company must have had knowledge, or an opportunity of acquiring knowledge, as a foundation for a ratification. They were that the policy of insurance had been delivered to Walter A. Cranston and payment of the premium made to the general agent of the company, or to a subagent authorized by him. Under the evidence in the case the manner of making such payment, whether with' farm produce or negotiable paper, was not of vital consequence. The evidence tends to show that the company was content to look to its agent for the cash. The plaintiff was required to show that the company had knowledge of the facts constituting the transaction. If the officers of the company had an opportunity to inform themselves of the facts and circumstances of the delivery of the policy and the arrangement as to the premium, and failed to do so, it would be equivalent to such knowledge: Reinhard, Agency, § 140.

“Where the owner of real estate makes a power of attorney to an agent to sell the land of the owner, but does not by such power of attorney authorize the agent to make conveyance thereof, and the agent, in excess of his authority, makes such a conveyance thereof, as well as sale, the principal, upon being informed, may reject such sale; but if he approves what has been done in his name, and accepts notes and mortgage given by the purchaser, and insists upon their payment after being informed of the conveyance, he thereby ratifies the conveyance and the effect of the power of attorney to convey as executed by the agent”: Reinhard, § 141.

The officers of the defendant company surely had ample opportunity and time to inform themselves as to the matter of the collection of the premiums. They never by letter of inquiry or in any manner questioned the transaction. They allowed the policy to be outstanding and kept it alive until after the death of the assured.

11. It is urged by the learned counsel for defendant that as the authority of its agent was in writing the ratification must also be in writing (citing Slotboom v. Simpson Lumber Co., 67 Or. 516, 135 Pac. 889). That rule obtains where the statute requires the authority of an agent to be in writing, and is not applicable to the facts in the. case at bar. The authorities above referred to so indicate.

The main purpose of the clause in the application that the policy issued should not take effect until the “first premium shall have been paid” and the policy delivered and accepted by the assured while in good health was apparently to guard against a claim that there was a contract of insurance prior to the issuance of the policy. When the policy was issued and delivered, it was a circumstance that strongly indicated to the jury that the premium had been paid, or that satisfactory arrangements had been made therefor. The following authorities are instructive, and apply with much force to the facts in this case: In Sheldon v. Atlantic Fire & Marine Ins. Co., 26 N. Y. 460 (84 Am. Dec. 213), it is said:

“A general agent of the insurer may waive a condition in the policy that no insurance should be considered as binding until actual payment of the premium. ’ ’

In Goit v. National Protection Ins. Co., 25 Barb. (N. Y.) 189,191, it is stated:

“It is a well-settled maxim that a party may waive the benefit of any condition or provision made in his behalf, no matter in what manner it may have been made or secured. * * • It extends to all provisions, even constitutional and statutory, as well as conventional. The law will not compel a man to insist upon any benefit or advantage secured to him individually. Hence it was the privilege of the insurers in this case, if they elected so to do, to waive the condition making the actual payment of the premium a condition precedent to the binding efficacy of any insurance, as it was a provision inserted for their benefit, and in which they alone were interested.”

See, also, Lawrence v. Penn Mutual Life Ins. Co., 113 La. 87 (36 South. 898, 1 Ann. Cas. 965); Carson v. Jersey City Ins. Co., 43 N. J. Law, 300 (39 Am. Rep. 584).

12. The second and third questions raised by the defendant are that the court erred in instructing the jury as to what acts would constitute a ratification by the company of the unauthorized acceptance by Thurs-ton of the promissory note of Walter Cranston, and the delivery of the policy to him without the prior payment of the premium thereon, and that the instructions were inconsistent. Over the objection and exception of the defendant the court instructed the jury to the effect that the burden of proof was upon the plaintiff to show that it was agreed and understood by and between the said Thurston and the insured that the note was to be received and accepted as and for complete payment and satisfaction of the premium, in place of payment in the manner required and specified in the policy, and further to show that Thurston was in fact authorized by the company so to do, or that after full knowledge and understanding of the transaction the company ratified it. The court further instructed the jury that there was no competent proof that Thurston had authority to receive the note or bind his principal, and therefore whether or not the company became bound thereby depended wholly upon whether the evidence showed that the company thereafter ratified the act with full knowledge thereof. The court instructed the jury as follows :

“Plaintiff also alleges that the defendant substituted and accepted the liability of its general agent Booth for the liability of said Cranston for said premium, and that the company thereby ratified the acts of the soliciting agent and waived performance of the conditions expressed in the policy and the application. This is also denied by the defendant, and this puts upon plaintiff the burden of proof thereof. As to this feature, you are instructed that if you find from the evidence this said contract or understanding was had between said general agent Booth and the company, and that after acceptance of the application for the insurance the company did charge said Booth with said premium, and accepted his credit and held him liable therefor, in place of Cranston, and with that understanding caused the policy to be delivered to Cranston, the insured, that would constitute a ratification binding upon the company independent of whatever authority Thurston may have had at the time he received the note; but, on the other hand, merely keeping an account with the general agent without any understanding that the company did in fact accept his credit and his liability in lieu of Cranston would not constitute such ratification. ’ ’

If the instructions given brought the issues within too narrow limits, this was favorable to the defendant. Taken all together, the charge was under the evidence and circumstances of the case fair to the defendant.

"We find no error in the record to sustain a reversal. The judgment of the lower court is affirmed. ,

Affirmed. Rehearing Denied.