Ætna Life Ins. v. Smith

after stating the case as above, delivered the opinion of the court.

The principal issue in this case which was raised by the pleadings, and concerning which there was most controversy at the trial, was whether the premiums on the two policies in suit that were due on February 16,1894, and were not paid until March 6, 1894, were paid at the latter date in pursuance of an express agreement, between the agent of the company and those who at the time were acting for the insured, that, if it transpired that the latter was not at that time in good health, the premium money so paid should be refunded to the insured, and the'premium or renewal receipts given therefor surrendered to the company. The defendant contended that the premiums were paid in pursuance of such an agreement, the insured being at the time absent from home, and his physical condition being unknown to its agent, while the plaintiff below just as strenuously insisted that the money was accepted by the defendant’s agent at Duluth unconditionally, and that such acceptance operated to renew the policies until February 16,1895, long after the insured died. This issue was fairly submitted to the jury, under appropriate instructions, of which no *443complaint is made; the finding was against the defendant; and it must be taken for granted by this court that there was no express agreement made on March 6, 1894, entitling the defendant company to refund the premiums on that day paid, and to demand the surrender or cancellation of its renewal receipts, if it subsequently ascertained that the insured was not in good health when the premiums were paid. Failing to obtain a favorable verdict on this issue of fact, the defendant now contends that the mere acceptance of the renewal receipts, with the notice indorsed on the back thereof, constituted a guaranty by the insured that he was then in good health, and that, if such was not the ease, the policies were not renewed, and that there can be no recovery thereon. The case is likened by counsel to those in which persons accepting warehouse or express receipts, having statements indorsed thereon showing upon what conditions the property is received, or the terms upon which it will be transported, have been held hound thereby, even without an express oral assent to such terms or conditions. Watkins v. Rymill (1883) 10 Q. B. Div. 178; Duntley v. Railroad (N. H.) 20 Atl. 327; Oppenheimer v. Express Co., 69 Ill. 62, 69; Hart v. Railroad Co., 132 U. S. 342, 5 Sup. Ct. 151. It is questionable, to say the least, whether this latter defense, namely, that the insured guarantied that he was in good health on March 6, 1894, was pleaded in the defendant’s answer, or intended to be pleaded. The portion of the answer which is relied upon as containing in substance such a plea would seem to have been framed for a far different purpose, namely, for the purpose of showing that the defendant’s agent had no power to waive a regulation requiring him to canse policy holders whose premiums were overdue to sign health certificates, as a condition of reinstatement, — that being the usual manner in which a policy holder’s state of health was made known to the company’s agents, — -and that the insured was advised of such want of authority on the part of its agent to dispense with the signing of a health certificate. But, waiving the defendant’s failure to plead specifically that the insured guarantied that he was in good health, and that the guaranty was broken, we think that the defense which is attempted is untenable for other reasons. To establish the existence of a guaranty of good health, reliance is placed on a clause printed on the back of the renewal receipt, quoted above in the statement, which clause, when transposed so as to make its meaning more apparent, reads as follows:

^ “The agent may receive the premium, and the insurance will be revived by the delivery of this receipt within sixty days from the time when said premium became due: provided satisfactory evidence and guaranty is furnished that the person whose life was insured is in good health, and acceptable for new insurance, which guaranty shall be binding- upon the insured and beneficiaries under said policy.”

This clause on the back of the receipt does not say to the insured, as it should have done if the mere delivery and acceptance thereof were intended to bind him by a contract of guaranty, that the acceptance of the receipt by the insured should he construed as a guaranty that he was at the time in good health, and that the policy should not stand renewed unless such was the fact; but it con tains,'rather, a di*444rection to the agent of the company as to the mode and manner of discharging his duty. It required Mm, when a premium was overdue, to obtain satisfactory evidence and a guaranty that the insured was-in good health and acceptable for insurance, before accepting the premium and delivering the receipt. Being, therefore, in the nature of a direction by the insurer to its agent, the law, we think, will not imply a guaranty of good health on the part of the insured from the mere acceptance of the receipt. Even if the language contained in ■the notice on the back-of the receipts was sufficient to give some color to the claim that the mere acceptance thereof by the insured was tantamount to a guaranty of good health, yet inasmuch as the receipts-in question, like the policies in suit, were written bn forms which were-prepared by the defendant company or its legal advisers for use in its daily business, we should esteem it our duty, the intent of the parties not being clear, to resolve any doubt against the company, and to do so in obedience to the well-established rule, that, where contracts are-written on forms which are prepared by the insurer, they are to be interpreted in all cases of doubt or uncertainty in a manner which is-most favorable to the insured. National Bank v. Insurance Co., 95 U. S. 673, 679; Thompson v. Insurance Co., 136 U. S. 287, 297, 10 Sup. Ct. 1019; Insurance Co. v. McConkey, 127 U. S. 661, 666, 8 Sup. Ct. 1360; Indemnity Co. v. Dorgan, 16 U. S. App. 290, 309, 7 C. C. A. 581, 58 Fed. 945; Insurance Co. v. Randolph, 24 C. C. A. 305, 78 Fed. 754, 761, 762.

On the trial in the circuit court the -plaintiff below undertook to-show by proper evidence that while the defendant’s agents were required, by directions contained on the back of' its renewal or premium receipts, to obtain from persons whose premiums were overdue “satisfactory evidence and a guaranty” that such persons were in good health, before accepting their overdue premiums, yet that, in the actual transaction of the company’s business, its agents frequently accepted overdue premiums, and turned them over to the company, without requiring such a guaranty. In other words, the plaintiff undertook to prove that the company’s agents in the state of Minnesota were vested with an authority, to be exercised in their discretion,to accept overdue premiums without a guaranty, and that they exercised that power, doing so in the case at bar. The evidence in support of that contention, stated briefly and in substance, consisted of proof that guaranties of good health, in the case of overdue premiums, were taken on a form prescribed by the company, termed a “health certificate,” which was signed by or in behalf of the insured, and of reports of premium collections made by agents to the home office; which reports showed that, in a good many instances, premiums had' been collected after maturity without exacting such health certificates. It was conceded on the oral argument, as we understand,, that the proof in question was adequate to support the finding that the agents of the defendant company were clothed with the discretionary power above described, and no doubt can well be entertained on that point. It is insisted, however, that the trial court erred in its charge on this issue, in that it instructed the jury, in one part of' its charge, as follows: “The plaintiff is not required to show that the-*445executive officers of the defendant actually knew personally of the practice of its agents in receiving renewal premiums, and delivering renewal receipts therefor, after the same were past due, without requiring evidence and guaranty that the insured persons were then in. good health,” — and that it thereby permitted agents of the company to acquire an enlarged authority, different from that conferred by the company’s renewal receipts, by a mere practice or course of business which was not known to the company’s executive officers. This criticism of the instruction is not tenable, we think, because the trial court immediately explained the meaning of that part of the charge which is last quoted; saying to the jury, in substance, that it meant merely this: That the plaintiff was not required to prove by direct evidence that the executive officers had knowledge of the practice of the company's agents, and that, if the plaintiff ha.d shown that the course of business was such that a reasonably prudent man ought to have known what the practice or course of business on the part of the company’s agents ivas, such evidence was sufficient to warrant a finding that the executive officers did in fact have knowledge of the practice. As thus modified and explained, we think that the instruction given was substantially right. The jury might well be left to infer that the executive officers of the company were acquainted with the practice of its agents, if, in view of the course of dealing and method of transacting business, in the exercise of a reasonable supervision over the company’s affairs, they would have known it.

Complaint is further made by the defendant company that the trial court erred in excluding from the jury a pamphlet entitled “Instructions to Agents,” which purported to have been compiled by it in the year 1891. This pamphlet was attached to a deposition which was read in evidence by the defendant, and was offered, as we shall assume, for the purpose of showing that the printed instructions issued by the defendant to its agents did not permit them to accept overdue premiums without exacting a written certificate or guaranty of good health, signed by the insured. It may be conceded that the pamphlet had a tendency to prove that such were the company’s printed instructions, but there are several reasons, we think, why the exclusion of this pamphlet cannot be regarded as a material error. In the first place, the pamphlet contained the same directions to agents, requiring them to obtain a written guaranty of good health in case of the payment of an overdue premium, that were printed on the back of the renewal receipts- heretofore mentioned, which were already in evidence. The proof therefore was merely cumulative in its character. In the second place, two witnesses testified for the defendant, and without objection, to substantially all the facts which the printed instructions tended to establish. But a more conclusive reason why the exclusion of the pamphlet cannot be regarded as a material error is found in the fact that for the purpose of establishing that the agents of the company had power to accept overdue premiums, in their discretion, without exacting a guaranty of good health, the plaintiff relied exclusively upon proof of their actual practice in that regard, as shown by their reports to the home office, and the pamphlet had no tendency to disprove the practice in question. The defendant *446could not avoid the necessary effect of knowingly permitting its agents, for a considerable period, to accept overdue premiums without taking health certificates, by showing that its printed instructions did not authorize such a practice. Its agents could acquire the power in question by exercising it for a considerable period with the knowledge of the executive officers of the company, as well as by printed or written instructions.

There are some other alleged errors enumerated in the lengthy written argument with which we have been favored by counsel for the defendant company, but the questions of law which they present are subordinate to those heretofore discussed, and are in effect decided by what has already been said. We find no error in the record which would warrant a reversal, and the judgment below is therefore affirmed.