STANDARD ACCIDENT INS. CO. v. FRIEDENTHAL.

27 P. 88

1 Colo.App. 5

STANDARD ACCIDENT INS. CO.
v.
FRIEDENTHAL.

Court of Appeals of Colorado

June 23, 1891

Appeal
from district court, Chaffee county.

[1
Colo.App. 6] It is alleged that on the 21st day of April,
1886, the appellant issued and delivered to Eugene H. Teats
an accident insurance policy, to be effective for 12 months
from its date, whereby Teats was to receive from the
insurance company $25 a week for loss of time in consequence
of any bodily injury sustained by him during the existence of
such policy, through external, violent, and accidental means,
which should wholly disable him from transacting his business
as a mining superintendent; that on the 26th day of April,
1886, Teats received a bodily injury that entitled him to
such compensation by the terms of the policy of insurance,
and that he was wholly disabled for the period of 13 weeks,
and was entitled to receive the sum of $325; that on the 7th
day of August, 1886, Teats sold, transferred, and assigned
his claim against the appellant to Friedenthal, the appellee.
Friedenthal brought suit for the sum of $325 and costs. The
appellant answered, denying the material allegations in the
complaint, and for further and special answer alleged that
Teats did make application to one A.R. Hoyt, then acting for
an agent of the appellant, as alleged in the complaint; and
that by the terms of the application and [1 Colo.App. 7] the
policy which was issued it was provided that Teats should pay
as a premium to the appellant for the policy, and as a
condition of obtaining it, $37.50. That Teats did not pay the
sum of $37.50 nor any part of it, and that the policy of
insurance was by Hoyt, without any right or authority,
delivered to Teats without the payment of the premium as
required; and that by reason of the failure of Teats to pay
the premium, the appellant was not liable. That after the
accident, and on the 28th day of April, Teats paid to A.R.
Hoyt $10, which Hoyt had no authority to receive, and that at
the time of receiving the injury there was none of the
premium paid; consequently, that the appellant was not liable
upon the policy of
[27 P. 89]
insurance A replication was filed, in which it was denied
that Hoyt, at the time of issuing the policy of insurance,
was acting for an agent of the appellant, and alleging that
Hoyt was the agent of appellant, and had full power and
authority to make contracts for insurance and to issue and
deliver policies of insurance; and that, by virtue of such
agency, he made the contract of insurance and issued the
policy, and signed and executed the same as the agent of the
appellant, and delivered the policy to Teats. Admits that
there was a condition in the policy and in the application to
the effect that Teats should pay $37.50 premium; and admits
that the condition provides that the policy should be void
unless the premium is paid before the injury was received,
but alleges that the agent, Hoyt, waived the condition and
delivered the policy, and expressly agreed with Teats that
the premium should not be paid in cash, and was to be paid at
some subsequent time. That Teats had under his control, as
mining superintendent, a large number of men, whom Hoyt was
desirous of insuring, and solicited Teats to use his
influence with the men to induce them to insure with Hoyt,
and that Teats was to pay $10 in cash at some future time,
and the balance was to be paid in services in soliciting the
insurance of the men; and that he paid $10 to Hoyt as alleged
in the answer. A demurrer was filed to the replication. The
demurrer [1 Colo.App. 8] was overruled. A trial to the court
without a jury. Judgment for the appellant in the sum of
$310. From such judgment this appeal was taken. Testimony was
very brief and uncontradicted. The deposition of Teats was
read, in which he testified to the arrangement and agreement
with Hoyt, by which the condition of the policy was waived,
and the policy was delivered, to be effective and operative
from its date. That he (Teats) was to pay $10, and use his
influence with the men to secure business and insurance for
the company of appellant, and that the contract was that the
premium should be $25, instead of $37.50; that he paid the
$10, but not until after the accident occurred, and that it
was accepted by Hoyt. That within three days after the
accident he furnished appellant proof of the injury as
required by the policy. A copy of the insurance policy was
also put in evidence, signed at the bottom: "A.R. HOYT,
Agent at Leadville, Colorado. C.C. BOWEN, Secretary. D.M.
FERRY, President. Countersigned this 21st day of April, 1886.
A.R. HOYT, Agent." Indorsed upon such policy, among
other conditions, was the following: "The policy shall
not take effect unless the premium is paid prior to the
happening of any accident under which claim is made."
Also a copy of the application in which, among other
statements, occurs the following, which is the only one
necessary to be noticed in this connection: "(9) My
premium for this period is $37.50." Proper proof, as
required by the company, appears to have been made of the
injury and its nature, and the length of time that Teats was
disabled by reason of such accident, accompanied by the
certificate of the attending physician. In the deposition of
Teats it is stated: "An officer of the company from
Detroit, Michigan, also General State Agent Harrison of
Denver, notified me that they would be in Buena Vista to
adjust the claim. They came, and, in the presence of D.C.
Sindlinger, asked me to discount the claim; but no special
amount was offered." The appellant objected to the
reading of this portion of the deposition. It was allowed [1
Colo.App. 9] to be read, and the court reserved the decision
of its admissibility until the final decision of the case.
The overruling of the demurrer to appellee's replication
is assigned for error. Also the overruling of the objection
made to the deposition of the witness Teats, and that the
judgment in favor of appellee and against the appellant was
erroneous.

Patterson
& Thomas, for appellant.

George
K. Hartenstein, for appellee.

REED,
J., (after stating the facts as above.)

There
were no issues of fact to be determined in the case. The
facts appear to have been conceded, at least there was no
serious controversy. The first question arises upon the
pleading. It is claimed that there was a departure, that the
replication set up a new cause of action not embraced in the
complaint, and that the court erred in overruling the
demurrer. I cannot adopt this contention. The contract of
insurance was one of indemnity,--to indemnify the insured to
the extent of $25 a week for all time he should, by accident,
be disabled from performing the duties of a mining
superintendent for the term of one year from date. The
premium expressed in the policy was $37.50. The language of
the policy is "in consideration of the representations
in the application for this policy and of thirty-seven
dollars and fifty hundredths, does hereby insure," etc.
The policy, though not containing a receipt for the $37.50 in
so many words, was signed by the agent, and delivered, and
became the contract of appellant, and the language used,
"in consideration *** and of $37.50 does hereby
insure," etc., imports the payment prior to the delivery
as the consideration for the delivery of the contract to the
insured. When delivered, it became operative, and could only
be impeached by showing that it had been obtained improperly
or fraudulently by the insured in such manner as to negative
the fact of the legal and voluntary [1 Colo.App. 10] delivery
of the policy by the appellant. When delivered and operative,
all that was necessary primarily was to allege the contract
of insurance,--the happening of the contingency whereby the
insurer became liable to pay by reason of the contract, and
the amount of indemnity to which the insured was entitled.
Anything impeaching the validity of the contract should have
been alleged by way of defense. This was attempted, but the
matters set up were not such as impeached the contract,--not
acts of the insured by which the policy was defeated or
improperly obtained, but the alleged improper acts of
appellant's agent, which could not amount to a defense.
Had appellee demurred to the special defenses
[27 P. 90.]
contained in the answer, the demurrer should have prevailed,
but he replied instead. The reply was to matter contained in
the special answer. There was no departure. Applying old
common-law maxims of pleading, that are equally potent under
the Code,--that a bad replication is good enough for a bad
plea, and that the demurrer reaches back to the first faulty
pleading,--I am compelled to hold that the judgment of the
court upon the demurrer was correct. Nor can I adopt the
contention that the court erred in its ruling upon that
portion of the deposition of Teats in regard to an offer to
compromise. It is true that no such evidence is competent,
and, had the case been tried to a jury, appellant might have
been prejudiced by a failure to suppress it; but, having been
tried by a judge familiar with the rules of evidence, the
presumption is that it was wholly disregarded, and the gist
of the contention seems to be, not that the court acted upon
the evidence to the prejudice of the appellant, but that he
failed to state that he had disregarded it. It is alleged in
the answer that Hoyt was not the agent of appellant, but that
he was acting for an agent. No proof was offered upon the
trial in support of the allegation. The agency seems to have
been conceded. As far as the assured was concerned, there was
no question of the agency. Whatever question there may have
been between the agent and his principal, he was allowed to
act as the general agent, not [1 Colo.App. 11] as a solicitor
only of insurance. The policies of the company, executed by
its proper officers, were in his possession to be filled and
countersigned and delivered by him. He was invested by him
principal with all the indicia of a general agent in that
locality, and that was sufficient, as far as third parties
were concerned. It was established by the evidence of Teats
that a special contract was made with him, whereby the cost
of the insurance to him was to be $25, instead of $37.50; $10
of which was to be paid at an early day in money, and the
balance was to be paid at some future date in assisting in
securing insurance upon men in his employ. This contract was
not contradicted by appellant, and is conceded. Had it not
been, Hoyt could have readily denied it.

But one
question remains, was appellant bound by the special contract
of its agent, Hoyt? Or, in other words, could the agent by
such a contract bind his principal, and waive the printed
provisions and stipulations contained in and attached to the
policy? "A person authorized to accept risks, to agree
upon and settle the terms of insurance, and to carry them
into effect by issuing and renewing policies, must be
regarded as a general agent of the company pending
negotiations; *** and the possession of blank policies and
renewal receipts, signed by the president and secretary, is
evidence of such agency." May, Ins. § 126; Pitney v.
Insurance Co., 65 N.Y. 6; Post v. Insurance Co., 43 Barb.
351; Carroll v. Insurance Co., 40 Barb. 292. It is conceded
that no part of the premium was paid until after the insured
received the injury. Two days after the injury was received,
$10 was paid and accepted. It is contended that the clause,
"this policy shall not take effect unless the premium is
paid prior to the happening of any accident under which claim
is made," is controlling, and, it being shown that it
was not complied with, no action could be maintained. Having
found by the authorities above cited that Hoyt was a general
agent, and a contract was made by [1 Colo.App. 12] him to
give time and accept payment in a certain manner, the
contention cannot prevail. To give the provision the
construction claimed in a case like the present, its
illegality would be at once apparent. It is, in any view, of
very doubtful validity, and can only be sustained in cases
where there was no legal delivery of the policy with the
intention of making it operative. In cases where the
possession was obtained by fraud, or for the purpose of
examination, it might be held to be valid. To apply it to
cases where the transaction was consummated and the policy
voluntarily delivered to the insured as evidence of the
insurance, would at once render the illegality apparent. Take
any case where the company insured for a year, for instance,
and delivered its policy, and by a contract payment was not
to be made until the expiration of the year, the insured
would be held liable to pay for the entire time, whether
disabled or not, and, the premium being unpaid, and so to
remain until the expiration of the policy, there would be no
insurance whatever in case of injury, and no consideration
for the premium; consequently, no mutuality of contract.
Contracts of insurance must be regarded and construed like
all other contracts, so, if possible, as to make them mutual,
and effectuate the intention of both parties. While the
insurer should be guarded against fraud and
misrepresentation, the insured should have indemnity, when
guiltless of fraud, upon compliance with the contract as made
by him, and no cunningly devised provision or exception in
the policy should be so construed as to defeat it. I am
clearly of the opinion that the provision requiring payment
of the premium could be and was waived by the agent; also
that the acceptance by the agent of the payment of $10 after
the injury was received was evidence that no default had been
made, and was a recognition of the policy as still in force.
That a general agent can waive any condition inserted in the
provisions of the policy of insurance is established by
numerous authorities. See Putnam v. Insurance Co 4 F. 753;
Ball, etc., Wagon Co. v. Aurora F. & M. Ins. Co., 20
Fed.Rep. [1 Colo.App. 13] 232; Joliffe v. Insurance Co., 39
Wis. 117; Insurance Co. v. Fennell, 49 Ill. 180; Washoe Tool
Manuf'g Co. v. Hibernia F. Ins. Co., 66 N.Y. 613; Boehen
v. Insurance Co., 35 N.Y. 131; Sheldon v. Insurance Co., 26
N.Y. 460; Elkins v. Insurance Co., 113 Pa.St. 386, 6 A. 224.
The judgment of the district court should be affirmed.