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Life Acc. Ins. Co. v. Ruble

Supreme Court of Mississippi, Division B
Apr 6, 1931
160 Miss. 206 (Miss. 1931)


No. 29280.

April 6, 1931.

1. INSURANCE. General agent of insurance company, in consideration of writing insurance, had authority to bind company by agreement that premiums might be paid by discharging board bill owed by subordinate agent to insured ( Code 1930, section 5196).

Under section 5196, Code of 1930, a general agent of an insurance company authorized to accept premiums and deliver policies on behalf of the company may make an agreement binding upon the company in consideration of writing of insurance to pay a debt owed by an agent of the company for board during the existence of the agency.

2. INSURANCE. Act of agent of insurance company within line of its powers binds company ( Code 1930, section 5196).

Section 5196, Code of 1930, is broader in its scope than the general law of principal and agent and makes the act of the agent within the line of his powers the act of the company.

3. CONTRACTS. It is not contrary to public policy for corporation to contract to pay expenses of agents employed in developing its business.

It is not contrary to public policy of this state for any corporation to make contracts to pay the expenses of agents employed by them in the development of their business.

APPEAL from circuit court of Harrison county; HON.W.A. WHITE, Judge.

Gardner, Brown Backstrom, of Gulfport, for appellant.

Section 2615 of the Code of 1906 (Section 5873 of Hemingway's Code of 1927) does not enlarge the powers and authority of insurance agents beyond that conferred by law on agents of other persons and corporations and beyond the powers and authority conferred by the appellant on its agents.

The powers possessed by agents of insurance companies, like those of any other corporation or of an individual principal are to be interpreted in accordance with the general law of agencies. No other or different rule is to be applied to a contract of insurance than is applied to other contracts. The agent of an insurance company possesses such powers only as have been conferred verbally or by the instrument of authorization, or such as third persons had a right to assume that he possesses under the circumstances of each particular case.

Life Insurance Co. v. Bouldin, 100 Miss. 660, 56 So. 609; New York Life Insurance Company v. O'Dom, 100 Miss. 219, 56 So. 379.

An agent who is empowered to issue policies and make contracts of insurance is the general agent of the company, and, being a general agent, can waive conditions and forfeitures, and do any other thing which his principal can do.

Insurance Company v. Sorsby, 60 Miss. 14; New York Life Ins. Co. v. O'Dom, 100 Miss. 219, 56 So. 379.

A soliciting agent for a life insurance company is without authority to write policies or bind the company by its terms or alter them, and is merely a special agent, whose authority is entirely dissimilar from that of fire insurance agents.

Continental Casualty Company v. Hall, 118 Miss. 871, 80 So. 335.

While an insurance agent, with full authority, may, under many circumstances waive performance of conditions precedent, yet no case has been found where a confessedly unwarranted assumption of authority was first held to be conferred through acquiescence, and then an unauthorized waiver by the self-constituted agent was declared obligatory upon the principal, who, admittedly, had never heard of, or acquiesced in the waiver.

Co-operative Life Association v. McConnico, 53 Miss. 233.

In the absence of provisions in the policy or contract of insurance permitting payment in some other manner, premiums are payable in cash, and an agent has no implied authority to accept payments except in cash.

32 C.J. 1201; Hoffman v. John Hancock Mutual Life Ins. Co., 92 U.S. 161, 23 L.Ed. 539; Batson v. Fidelity Mutual Life Ins. Co., 155 Ala. 265, 46 So. 578, 130 Am. St. Rep. 21.

An insurance agent has no apparent authority to cancel his own indebtedness to another in payment of a premium due on an insurance policy by the latter to the insurance company represented by the agent; that where such an understanding is entered into, but no remittance is made by the agent to the insurance company, and no actual tender of cash is made by the insured to the agent of the insurance company, no valid payment of the premium can be predicated thereon.

Briggs v. Collins, 167 S.W. 114, L.R.A. 1918A, 686 and note; Forebee v. North Carolina Mutual Home Insurance Co., 68 N.C. 11; Sullivan v. Germainia Life Insurance Co., 15 Mont. 522, 39 P. 724; Lycoming Fire Insurance Co. v. Storrs, 97 Pa. 354; Folb v. Fireman's Insurance Co., 133 N.C. 179, 45 S.E. 547; Mutual Benefit Life Insurance Co. v. Nicoll, 9 Ky. Law Rep. 713; Mutual Life Insurance Co. v. Davidge, 51 Tex. 244; Merchants Manufacturers Insurance Co. v. Baker, 4 Nebr. 384, 94 N.W. 627; Clingerman v. Pleasant, 18 Pa. Co. Ct. 203; Haupt v. Cravens, 56 Tex. Civ. App. 253, 120 S.W. 540; Hawley v. Michigan Mutual Life Insurance Co., 92 Iowa 593, 61 N.W. 201; Allen v. Metropolitan Life Insurance Co., 229 N.W. 879.

In all of the cases examined by us we can find no warrant for holding that a principal can be bound by the unauthorized acts of his agent, and known to the party dealing with the agent, to be in direct violation of the instructions of the principal.

Mississippi Electric Company v. Hartford Fire Insurance Company, 105 Miss. 767, 63 So. 231.

While the knowledge of an agent is ordinarily imputed and charged to his principal, it appears to be well established at the present day that there is an exception to the imputation of notice from the agent to the principal in cases of such conduct on the part of the agent as to raise a clear presumption that he would not communicate the fact in controversy; as where the agent, acting nominally as such is in reality acting in his own or another's interest, and adversely to that of his principal; or where the communication of such a fact would necessarily prevent the consummation of a fraudulent scheme which the agent was engaged in perpetrating.

Atlantic, etc., Bank v. Harris, 118 Mass. 147; Loring v. Brodie, 134 Mass. 453; Innerarity v. Merchants, etc., Bank, 139 Mass. 332, 52 Am. Rep. 710; Dilloway v. Butler, 135 Mass. 479; Atlantic Cotton Mills v. Indian Orchards Mills, 147 Mass. 268; Allen v. South Boston R.R. Co., 150 Mass. 206, 15 Am. St. Rep. 185; 31 Cyc. 1595; Scott County Milling Company v. Powers, 112 Miss. 798, 73 So. 792; Cooper v. Robertson Investment Co., 117 Miss. 108, 77 So. 953; Sims v. Kline, 139 Miss. 246, 104 So. 85.

A corporation is trustee for its creditors. Where a transfer of its property is made without valid consideration, the creditors may pursue the property, and force the assignee thereby to account for it.

Wright v. Petrie, S. M. Ch. 282.

Where a contract is secured by an agent and forwarded to his principal for his approval with a provision therein that the written contract embodied the entire contract, the principal cannot be bound by any representation made by the agent in securing the contract.

J.B. Colt Company v. Odom, 136 Miss. 651, 101 So. 853.

Jno. A. Sykes, of Gulfport, for appellee.

This case is governed by Section 5873, Hemingway's 1927 Code; now appearing as Section 5196, Code 1930, as construed by this court in the following cases.

Rivara v. Ins. Co., 62 Miss. 723; Ins. Co. v. Farnsworth, 72 Miss. 555, 17 So. 445; Mitchell v. Ins. Co., 72 Miss. 53, 18 So. 86; Ins. Co. v. Stevens, 93 Miss. 439, 46 So. 247; Ins. Co. v. Stewart, 30 So. 755; Assur. Co. v. Phelps, 77 Miss. 625, 27 So. 744; Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 613; Drug Co. v. Ins. Co., 115 Miss. 333, 75 So. 768; Ins. Co. v. Smith, 117 Miss. 327, 78 So. 289; Stewart v. Coleman, 120 Miss. 28, 81 So. 655; Ins. Co. v. Vaughn, 125 Miss. 383, 88 So. 11; Ins. Co. v. Clark, 122 So. 553; Ins. Co. v. Kemp, 124 So. 63.

Section 5873, Hemingway's 1927 Code, Section 5196, Code of 1930, is to the effect that every person who (a) solicits insurance, (b) takes or transmits applications, (c) or receives or delivers policies of insurance; or (e) does or performs any other act or thing in the making or consummation of the contract shall be held to be the agent of the company.

Conditions in the policy may be waived by the agent.

Insurance Company v. Vaughn, 88 So. 12; Rivara v. Ins. Co., 62 Miss. 723; Ins. Co. v. Farnsworth, 72 Miss. 555, 17 So. 445.

Knowledge of the agent is knowledge of the principal.

Insurance Company v. Clark, 122 So. 553; Mitchell v. Ins. Co., 72 Miss. 53, 18 So. 86; Ins. Co. v. Stevens, 93 Miss. 439, 46 So. 247; Ins. Co. v. Stewart, 30 So. 755; Assur. Co. v. Phelps, 77 Miss. 625, 27 So. 744; Drug Co. v. Ins. Co., 115 Miss. 333, 75 So. 768; Ins. Co. v. Smith, 117 Miss. 327, 78 So. 289; Ins. Co. v. Kemp, 124 So. 63.

An agent delivering the policy is the agent of the company for that purpose. Under our statute, the contract becomes a Mississippi contract, and the provisions and rules, or instructions to the agent in conflict with the statute will not be allowed to prevail.

The act of the agent in delivering the policy in violation of the provisions in the application and in the policy is the act of the principal. Under our statute, the soliciting agent stands in the shoes of the principal.

Stewart v. Coleman, 120 Miss. 21, 81 So. 653; Ins. Co. v. Bouldin, 100 Miss. 660, 56 So. 63.

Where, however, it appears that the parties intended to substitute the agent as the insurer's debtor for the premium, a charge therefore against him by the company has been held to operate as a payment as between the company and the insured.

Fidelity, etc., Co. v. Willey, 25 C.C.A. 592; Bang v. Ins. Co., Fed. Cas. No. 838; Williams v. Life Ins. Co., 8 Ga. App. 303, 68 S.E. 1082; Perea v. Ins. Co., 15 N.M. 399, 110 P. 559; Buckley v. Ins. Co., 188 N.Y. 399, 12 L.R.A. (N.S.) 889; Train v. Ins. Co., 62 N.Y. 598; Lebanon, etc., Ins. Co. v. Hoover, 113 Pa. 591, 57 Am. Rep. 511; Ins. Banking Co. v. Tegier, 90 Va. 277, 18 S.E. 195; White v. Ins. Co., 120 Mass. 330; Elkins v. Ins. Co., 113 Pa. 386, 6 A. 224.

The appellee sued the appellant for the face value of a policy issued upon his minor son. It appears that the policy was issued under the following circumstances: One Mr. Knight was agent of the Interstate Life Accident Insurance Company and was boarding with the appellee. He fell behind with his board, and, being financially embarrassed, asked Mr. Ruble about taking some insurance upon his wife and children and applying the amount which he owed to the payment of the premiums. There was an agreement that such policies would be issued on the wife and children, the children being two boys. Mr. J.L. Muskelly was state agent or manager for the district composing the state of Mississippi, and had general powers to receive and receipt for premiums and to deliver policies. He came to the boarding house of appellee, and, according to the testimony of appellee, Knight, Ruble, and Muskelly went into a room and discussed the matter of paying the premiums from the amount owed Ruble by Knight. Knight asked Mr. Muskelly if he would agree to credit Ruble with the amount Knight owed him and pay the premiums upon the policies, and charge him (Knight) on the books of the company with this debt; this Muskelly agreed to do, according to Ruble's testimony, and the first annual premium on the two policies on the life of the sons of Ruble was actually paid by Muskelly to the company at its home office.

According to the plaintiff's testimony after this agreement was entered into and the policies delivered and the first year's premium had expired, he received a notice that the second annual premium was due, but ignored it, stating that he was depending upon the agreement with Mr. Muskelly and upon him attending to it. The notice seems to have been sent from the home office at Chattanooga, as it was customary to send out the notice of premiums from the home office, but upon such notice it was stipulated that the premium could be paid to Muskelly, and Muskelly frequently did receive the premiums and receipt for them. Subsequent to the giving of this second annual notice, a notice of cancellation was sent from the home office to Mr. Ruble, and this was likewise ignored. According to the proof the annual premiums upon the two policies on the sons amounted to thirty-eight dollars and some cents. The policy on the life of the wife was never issued, as she did not stand the required medical examination and was rejected. The amount owed by Knight to Ruble was ninety-nine dollars and some cents, which plaintiff's testimony shows was the amount that Muskelly agreed to charge to Knight on the books of the company and credit to the account of Ruble on the premiums. Subsequent to this agreement and the issuance of the policies, Knight and his wife and children continued to board with Ruble, and, according to the plaintiff's testimony, became indebted to him and owed him additional board bill. Likewise other agents soliciting insurance for the appellant boarded with Ruble and failed to pay a part of the bills made for board. After the second premium was due and after the notice, above mentioned, of cancellation of the policies, one of the sons of the appellant was injured by an automobile and died from the injuries; demand was made for the amount of the policy and was refused.

Mr. Muskelly, the state agent, testified that he was the district agent, the district at the time being composed of the state of Mississippi, and that he had authority to deliver policies and collect premiums and account for the company in this state in that regard, and had under him certain assistants and agents soliciting insurance in the state on behalf of the company. He testified to agreeing to pay the premiums on the policies and charge the account to Knight on the books of the company at Jackson, but denied that the agreement covered anything except the first annual premiums on the policies, which premiums he paid to the home office and charged Knight, but that Knight had never paid them. Subsequent to these happenings Knight ceased to be an employee of the company.

It is contended by the appellant that the agreement testified to by Ruble, the plaintiff, conceding it to be true, does not bind the company, and that the policies had lapsed and no liability existed thereunder at the time of the death of the son of the plaintiff. The court below submitted the question to the jury as to whether or not Muskelly was the general agent of the company in the state, and the jury found for the plaintiff, finding, in effect, that he was such general state agent.

It is argued that the act of Muskelly in making the agreement was beyond the scope of his powers as agent, and that the effect of section 5196, Code of 1930, is not to broaden the authority of the general agent or manager in the state in that regard; that premiums can only be paid in money, and that an agent cannot make an agreement to receive anything other than money in payment of the premiums so as to bind the company. The decisions of this court have made an agent the alter ego of the company within the scope of his authority. Under the statute an agent within the field of his employment and agency becomes the general agent of the company as to the things he is employed to do. Hartford Fire Insurance Co. v. Clark, 154 Miss. 418, 122 So. 551; Lamar Life Insurance Co. v. Kemp, 154 Miss. 890, 124 So. 62; New York Life Insurance Co. v. Smith, 129 Miss. 544, 91 So. 456; Agricultural Insurance Co. v. Anderson, 120 Miss. 278, 82 So. 146; Stewart v. Coleman Co., 120 Miss. 28, 81 So. 653.

As an insurance company to build up and extend its business must employ agents to represent it, and can only act through agents, we see no reason why the company could not enter into a contract to finance its agents and to make agreements to pay their expenses or to assume indebtedness by their agents when it thought proper to do so to keep the agent in the service and continue in the effort to build up its business. We think the consideration, accepting the plaintiff's version of the transaction, was sufficient to bind the company. The company, in effect, agreed to pay Knight's debt to Ruble in consideration of Ruble taking out insurance with the company and limiting the amount to be paid to Ruble for Knight's debt to the premiums upon such policies as were issued to Ruble. A transaction of this kind does not violate the statute of frauds and is predicated upon a sufficient consideration to bind the company. It is well known that insurance or other corporations must have agents to promote and stimulate and develop their business. A large part of the profit of the insurance business is upon the payment of subsequent premiums from that first paid in soliciting the policy. There is necessarily more expense attached to securing the first premium and procuring the insurance than there is involved in keeping up a policy after it is once issued. Ordinarily the insured or beneficiary continues to pay the premium merely upon notice, no personal visitation or solicitation being required. In order to secure business upon which there would be continual annual payments of premiums the company might agree, in order to keep their agent in good standing, to pay his expense accounts. There is nothing in public policy that would prohibit the doing so. The organizing of a new business or the extending of an old one into new territory may require an expenditure of more money than the receipt in the first premiums there amount to. The company has a right to take such risk and to make such contracts as it deems proper as a business proposition so to do.

The insurance company, having made Muskelly its agent for the district composing the state of Mississippi, and giving him power to deliver policies and accept premiums in this state, made him an agent within the meaning of the statute above cited and Muskelly's agreement in reference to the said matter is as effective and binding as if made by the home officers of the company.

We find no reversible error, and the judgment will be affirmed.


Summaries of

Life Acc. Ins. Co. v. Ruble

Supreme Court of Mississippi, Division B
Apr 6, 1931
160 Miss. 206 (Miss. 1931)
Case details for

Life Acc. Ins. Co. v. Ruble

Case Details


Court:Supreme Court of Mississippi, Division B

Date published: Apr 6, 1931


160 Miss. 206 (Miss. 1931)
133 So. 223

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