Opinion
No. 4130.
May 25, 1929. Rehearing Denied June 17, 1929.
Appeal from the District Court of the United States for the Eastern District of Wisconsin.
Action by Victor H. Baker against the New York Life Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.
The appeal is from a judgment upon an insurance policy on the life of appellee's wife. The application for the policy was originally dated May 22, 1925, and was procured by two of appellant's agents, one from Berlin, Wis., where the applicant resided, and the other from Milwaukee. The application was on the form provided by the company, with provision for double indemnity benefit (double in case of death wholly from accidental cause). In the application, under the heading "Date policy as of," are printed "date of this application," and "date policy is written," with direction to strike out one. Both were stricken out, and in the place was written June 1st.
After the application was sent in it was returned for applicant's corrected signature, and upon being re-signed by her the date of the application was changed to May 29, and date for policy to June 15. While the face of the application states that the contemplated insurance is on the "ordinary life plan," it appears from uncontradicted evidence that it was further to be upon a so-called "salary savings insurance plan for employees," which is sometimes called "group insurance."
The applicant and eight others who were then employed by the Berlin Glove Company, of Berlin, Wis., constituted a group who, by arrangement among themselves and their employer and the insurance company, authorized the employer to deduct severally from their wages, on the 15th of each month, the stipulated monthly premiums, for remittance by the employer to the insurer. Each of the group signed in duplicate an agreement or order to that effect upon blanks provided by appellant and having thereon the written approval of the employer, and by the printed terms of the blank one was to be retained by the employer and the other sent to the insurer, which was done.
Shortly before June 15 the applicant left her employment. Her husband, the appellee, went to appellant's Berlin agent for the purpose of paying the first premium. He was told by the agent he might pay it by his check either to the insurance company or to the employer, and he made the check to the employer and handed it to this same agent, who accepted it and at once took it to the employer. About June 20 appellee and his wife started on a vacation trip, and on June 27 she was suddenly and accidentally killed. Shortly thereafter the employer forwarded to appellant the amount of the deductions for payment of these policies, including the one in question. The employer's check for the premium on this policy was at once returned, on the stated ground that this insurance never was in force.
In the application was printed the following clause: "It is mutually agreed as follows: 1. That the insurance hereby applied for shall not take effect unless and until the policy is delivered to and received by the applicant and the first premium thereon paid in full during his lifetime, and then only if the applicant has not consulted or been treated by any physician since his medical examination; * * *"
It appears that under date of June 22 the home (New York) office of the company executed the policy for this insurance, and deposited it in the mail, addressed to its Milwaukee branch office, where it was received June 25 and at once turned over to the Milwaukee agent who had helped secure the application.
With the insurer's printed letter of transmission of the policy there was a printed direction to the agent that it was sent for delivery and collection of premium, subject to requirements noted and to company's rules; and, if not delivered within one month, it was to be returned for cancellation. There was also printed thereon notice to the agent delivering the policy, purporting to be copy of article 16 of instructions to agents, which provided that a policy must not be delivered if any change has occurred in the health or the occupation of the applicant, or if he has consulted or been treated by a physician since the date of his medical examination; and that in such case the agent must at once return the policy to the branch office with full particulars and await further instructions. There was no evidence that between her medical examination and her death applicant had consulted or been treated by a physician, or that there was any change in her health, or in her occupation, save that she had ceased her said employment.
The Milwaukee agent who received the policy did not transmit its physical possession to the applicant, nor to any one for her.
Bert Vandervelde, of Milwaukee, Wis., for appellant.
H.A. Sawyer, of Milwaukee, Wis., and M.J. Paul, of Berlin, Wis., for appellee.
Before ALSCHULER and PAGE, Circuit Judges, and LUSE, District Judge.
No contention was or is made, nor properly could be, that the first premium was not paid prior to the death. It is appellant's contention and defense that the insurance never became effective because the policy was never delivered to or received by the applicant in her lifetime, and it is this question, arising under the quite exceptional circumstances here presented, which must determine the rights of the parties.
The contract, as it was evidently understood by the company in preparing the policy, while apparently written upon an ordinary life form, was issued for the brief term of one month, ending July 15. The fixing between the parties of June 15 to be the date as of which the policy was to take effect was evidently not a haphazard matter. It was first fixed at June 1, but when delay of about a week developed in the application, through error in its first signature, the beginning date of the policy was extended to June 15. This may be regarded as indicating the company's estimate of the time which, in its experience, would be required to determine whether or not it would accept the risk. The payment as made and accepted purported to be for coverage for one month from June 15; and while it cannot be said that the company was bound before manifesting its acceptance of the risk, even though it was some days after June 15, when once its acceptance is manifested it should not lightly be concluded that thereafter the coverage would be yet further delayed, and the time for which the premium was paid still further permitted to expire, before any consideration moves to the applicant through the attaching of the insurance. If here the insurance had not attached before the time of the death, then two-fifths of the entire period for which the policy was written and paid for would have expired without any benefit or consideration therefor moving to the applicant.
We are of the opinion that where a policy of this nature was contemplated, with so brief an initial term, the written specification of June 15 as the commencement date is so far inconsistent with the printed provisions respecting delivery of the policy as to neutralize any of such provisions which would prevent the attachment of the policy as an obligation of the insurer, for any time after it had manifested its acceptance of the risk by signing and mailing the policy. Hagan v. Scottish Union National Ins. Co., 186 U.S. 423, 22 S. Ct. 862, 46 L. Ed. 1229. If in these circumstances this were not so, then the provision of the policy for its effectiveness as of June 15 would have been of no practical value to the applicant.
On the question of delivery it is practically conceded that unconditional delivery to the agent for delivery to the applicant would be sufficient delivery to comply with the terms of the agreement that the insurance shall not take effect until the policy is delivered to and received by the applicant. The contention is vigorously made that it was not unconditionally delivered to the agent, but that the stated directions to the agent limited the agent's authority to deliver until they were complied with. The conditions stated in the printed letter accompanying the policy, whereunder the policy was not to be delivered to the applicant, are: "If any change whatever has occurred in the health or occupation of the applicant, or if he has consulted or been treated by a physician since the date of his medical examination." There was also a provision for delivery on collection of the premium, but, the premium having theretofore been paid, this has no bearing.
What is said respecting change of health or of occupation of the applicant appears for the first time in the transaction in this letter of the company to the agent. The application contains nothing upon this subject, and the applicant was not bound by instructions to the agent which raise conditions that did not enter into the contract. If the company otherwise accepted the risk, the premium being paid, it could not thereafter escape the binding force of the contract by reason alone of change in the health or the occupation of the applicant.
Apart from the delivery of policy and payment of premium, the only condition for which the application made provision was consultation of or treatment by a physician since the medical examination. If it appeared that since the medical examination the applicant consulted or was treated by a physician, this would be a matter of defense, to be so alleged, and to be established by evidence. But no such defense has been made, and the record is barren of any evidence to establish it. With the premium paid, and with no fact to support the only other contractual ground for withholding delivery of the policy after acceptance of the risk, the mailing of this policy to the agent for delivery to applicant must be regarded as unconditional.
We believe the case fairly falls within the authorities holding that there is sufficient delivery of the policy to the insured in the acceptance of the risk as manifested by the company's preparing and executing and mailing the policy to its agent for delivery to the applicant for the insurance, notwithstanding the application provides that the policy shall not be effective until delivered to and received by the applicant. N.Y. Life Ins. Co. v. Rutherford (C.C.A.) 284 F. 707; Unterharnscheidt v. Missouri State Life Ins. Co., 160 Iowa 223, 138 N.W. 459, 45 L.R.A. (N.S.) 743, and the citations to be found in those opinions; Cooley's Briefs on Insurance, vol. 1, 640, and citations therein.
At the time the policy was executed and deposited in the mail, there was absolutely no condition left to be performed by the applicant — not even any obligation on her part to supply proof that she had not consulted or been treated by a physician since her examination; and she had every right to expect that the insurance would be effective from a time not later than such definite manifestation of the insurer's acceptance of the risk as here appears.
The judgment is affirmed.