Harnickell v. N. Y. Life Insurance — 19 N.Y. St. Rep. 98

Majority

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Albert G. Harnickell, Resp’t, v. N. Y. Life Insurance Company, App’lt.^[1]

(Court of Appeals,

Filed November 27, 1888.)

Headnote

1. Insurance (life)—Conditional delivery of policy binds company— Condition precedent.

Ad ageut of the defendant entered into an agreement with the plaintiff by which twoi policies, subsequently issued by the defendant, were to.be accepted by the'plaintiff only upon condition that certain other policies, then delivered by the plaintiff to the agent, should be surrendered by. him to the companies issuing them and their surrender value in cash paid to him, or paid up policies given in exchange therefor in either case in amounts satisfactory to the plaintiff. Held, that this was. a condition precedent to the full delivery and acceptance of these policies issued by the

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defendant, and that until such condition precedent was complied with or waived, no fully executed and valid contract of insurance existed "between these parties.

2. Same—Contract of insurance—Construction of.

The meaning of the arrangement was that the contract should not exist until the agent had brought about tbe exchange. There was not a contract entered into with a provision that it should cease to hind in case the agent failed to redeem his promise in the future, hut the contract was not to become binding in any event until tbe condition was performed by the agent, and upon its performance, and not until then, was the contract to become effective.

3. Same—Want of authority of agent does not affect.

It was wholly unimportant whether the agent had any power from the company to make a conditional delivery or not. * * The plaintiff had power to attach such condition as he chose to the acceptance of the policies, and if the agent of the company had no power to make conditional delivery to the plaintiff, the result would he that no contract was ever made, and no absolute acceptance ever had.

4. Instrument not under seal can be received conditionally.

A party has the right to conditionally receive an instrument not under seal.

Appeal from a judgment of the supreme court, general term, first department, reversing a judgment rendered in favor of the defendant at New York county special term and ordering a new trial.

The plaintiff in the year 1885 was the owner of several policies of insurance issued upon his life by several different companies for a total of $35,500. Some of these were payable to his widow and minor children.

One M. L. Hamlin, who was what is termed a special agent of the New York Life Insurance Company, came to the plaintiff in the winter or spring of that year and desired him to take some insurance upon his life in that company. The plaintiff stated to him that he was insured for a sufficient amount and did not wish double insurance, whereupon Mr. Hamlin gave him estimates in regard to policies in his company, their cost, value, etc., and the negotiations finally culminated in an agreement between the plaintiff and the agent, that the agent should take the policies which the plaintiff already had to the other companies and obtain the amount-of their surrender value in cash, or paid up policies therefor, to an amount in either case which should be satisfactory to the plaintiff, and upon the accomplishment of this the plaintiff would take two policies in the defendant company for $25,000 each, upon terms agreed upon between him and the agent.

Pursuant to this verbal understanding, the plaintiff signed an application for such policies to the defendant, the agent agreeing to abate largely in the amount of the premiums due thereon, and also that notes instead of cash should be paid by the plaintiff therefor. The application was sent on

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to the company as signed by the plaintiff, and in due time two policies of insurance were presented to him by the company through its agent Mr. Hamlin. Up to this time the evidence is uncontradicted that the policies in the defendant company were only to be taken out by the plaintiff and received by him upon the successful negotiation by the-defendant’s agent with the other companies in which the-plaintiff had policies for the payment of the surrender value of such policies in cash, or the issuing of paid up policies therefor, the amount in either event to be satisfactory to the plaintiff.

Before these negotiations were carried through in regard to the disposition of the policies which the plaintiff already had in the other companies, and after he had signed an application which had been sent to the home office, and after the agent had received back the policies in the defendant company, Mr. Hamlin called upon the plaintiff for the purpose of carrying out the negotiations and brought to him the two policies for $25,000 each, issued by the defendant company. The plaintiff finally accepted the policies under an agreement entered into between him and Mr. Hamlin as the_ agent of the defendant, and signed by them respectively, which agreement is as follows:

"New York, May 8, 1885.

“ To M. L. Hamlin, Special Agent of the New York Life Insurance Company:

‘‘Dear Sir,—I have received from you policies Nos. 204,233, for $25,000, and 204,234, for $25,000, and have given promises of payment for the premiums thereon, less rebate allowed, viz.........$ 539 13

My two notes.............. 1,600 00-

Checque.................. 17 37

---- $2,156 50

I hand you herewith together

5 policies endowments in Provident Co... $5,500 00

2 “ life in Provident Co.......... 10,000 00

1 “ “in Equitable............... 5.000 00

3 “ “ in Mutual Benefit.......... 10,000 00

1 “ in U. S. L. Co............. 5.000 00

which it is understood is all the policies I have now in force besides those of your company above mentioned, and from which I want to realize a satisfactory amount in cash, and, if not obtainable, then paid-up policies; and, if nothing satisfactory to me can bo obtained, then, I understand, that my old policies shall be left in force, and the above new ones in your company, if found by me necessary to

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wait, or omit taking them, can be returned to you and my above promises returned to me.

“ Yours truly,

“A. G. A. HARNICKELL,

“M. L. HAMLIN.”

The agent failed to accomplish. the surrender of any of these policies or the giving in exchange therefor paid up. policies upon any terms satisfactory to the plaintiff, and indeed in regard to some of the policies they could not- be surrendered or exchanged without the consent of the plaintiff’s wife and minor children, unless pursuant to the provisions of the statute.

. The notes given by the plaintiff to the agent were by him forwarded to the home office and the account of such plaintiff with the company defendant was credited with the receipt thereof, a check for $17.37 being retained by the agent.

The agent failing to obtain payment of the surrender value, or paid up policies in exchange for the plaintiff’s policies, the plaintiff finally refused to continue negotiations any longer and refused to accept or retain the policies which had been delivered to him conditionally, and on the 6th of August, 1885, he wrote a letter to the company defendant and to the defendant Hamlin as its agent, in which he stated the terms upon which the policies had been received by him and the other policies in other companies given up by him to Mr. Hamlin, and in which, after stating that they had wholly failed to effect a surrender of 'his policies upon terms satisfactory to him, or to effect any surrender at all, and had returned him such policies, he therefore notified them that he availed himself of the option reserved in his letter of the eighth of May and returned the policies to the defendant and requested it to return to him his two notes for $800 each and his check for, $17.37. This letter was duly received by the defendant.

At the time these policies issued by the defendant were brought and given to the plaintiff, he had had no communication concerning such policies with the company defend-) ant, except through its agent, Mr. Hamlin. Nor did he subsequent to that time have any communication with thej company defendant, until he returned the policies to it enclosed in the letter of the 6th of August, 1885. In each of these policies were the following provisions: “ Inasmuch as; only the officers at the home'office of the'company, in the' city of New York, have authority to determine whether or not a policy shall issue on any application, and as they act -on the written statements and representations made in the application for this policy, it is expressly understood and

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agreed that no information, statements or representations, made or given, by or to the person soliciting or taking the application for this policy, or to any other person, shall be binding on the company, or in any manner affect its rights, unless such information, statements or representations, have been reduced to writing and presented to the officers of the company at the home office, in the application referred to.

.No agent has power in behalf of the company, to make or modify this or any contract of insurance, to extend the time for paying a premium, to issue a permit for residence, travel or occupation, or to bind the company by making any promise or receiving any representation or information, íhis power can be exercised only by the president, vice-president or actuary of the company, and will not be delegated.”

The defendant corporation refused to surrender the notes above mentioned or accept the policies sent back by the plaintiff, but claimed that by delivering to the plaintiff through their agent the two policies and the receipt by the company through such agent, of the plaintiff’s notes, that a valid contract of insurance was entered into between the parties, evidenced by the contents of the application, signed by the plaintiff and by the policies issued thereon by the defendant, and that as they were wholly ignorant of any arrangement of the nature claimed by the plaintiff to have been made between him and' Mr. Hamlin, that they were not affected therewith in any manner, and that by reason of the provisions in regard to the limitation of the power of their agent, as contained in the above extracts from the policies, the plaintiff had no cause of complaint against the company, but must look to the agent as an individual, for the fulfillment of the arrangment made with him in regard to the policies. Thereupon the plaintiff commenced this action to have it adjudged that he had the right to return the two policies of insurance issued by the defendant to him and obtain the surrender to him by the defendant of the two notes and check given by. him. The defendant set up in answer the facts substantially above set forth. The action came on for trial at a special term of the .supreme court, and resulted in a dismissal of the complaint, upon the merits as to the defendant, the insurance company, the other defendant, the agent Hamlin, although served with process,-having made default.

The plaintiff appealed to the general term, which court reversed the judgment of the special term and granted a new trial, and from the order granting such new trial, the defendant appeals here, giving the usual stipulation for judgment absolute, in case such order should be affirmed.

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Wm. B. Hornblower, for appl't John M. Bowers, for resp’t.

There was no contradictory evidence in this case. At its close, the plaintiff requested the court to find the following fact: “That a delivery of the said policies was accepted hy the said plaintiff upon the terms and conditions shown in the agreement signed by the said plaintiff and the said Hamlin, a correct copy of which is attached to the complaint in this action marked ‘A,’ and also to these findings.” The court refused to make such finding, and the plaintiff excepted. If the finding asked for was material, and based upon sufficient and uncontradicted evidence, the request should have been granted, and a failure to grant it was error for which the judgment should be reversed.

We think the fact was material and was based upon sufficient and uncontradicted evidence. It thus appears that an agent of the defendant enters into an arrangement with the plaintiff by which the two policies subsequently issued by the defendant were to be accepted by the plaintiff only upon condition that certain other policies then delivered by the plaintiff to the agent should be surrendered by him to the companies issuing them, and their surrender value in cash paid to him or paid up policies given in exchange therefor, in either case in amounts satisfactory to the plaintiff. This we think was clearly a condition precedent to the full delivery and acceptance of these policies issued by the defendant, and until such condition precedent was complied with or waived, no fully executed and valid contract of insurance existed between these parties

Ho question of right to conditionally receive an instrument, not under seal, by a party thereto, can be successfully raised. Benton v. Martin, 52 H. Y., 570, decides this proposition, and leaves it unnecessary for us to discuss the abstract question as to whether there is or is not a good reason for the distinction between the case of a sealed and an unsealed instrument in this respect.

The provisions contained in the policies which are above quoted, relate to the policies themselves after they should become executed instruments between the parties. All negotiations had before such event, and all parol agreements between the assured and the agent of the defendant, would have been merged in the contract evidenced by the policies themselves, had the negotiations been carried out as intended, and such policies been absolutely delivered to and accepted by the plaintiff. Hence any oral representation or statements made by the agent of the company and not contained in the contract of insurance would have formed no part thereof and could not have been insisted upon by the plaintiff as against the defendant company. Such are the cases which have been cited by the learned counsel for the defendant in relation to the absolute merger of all previous

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negotiations between the agent and the insured in the written contract of insurance.

The learned counsel for the defendant claims that the condition referred to, assuming it to have been made, was a condition subsequent, and that at all events a condition subsequent would be invalid as against the contract evidenced by the policies. He says the contract entered into was to cease to be of any effect in casé Hamlin did not obtain the surrender or exchange of the plaintiff’s policies in ■the other companies. We think that instead of the contract ceasing to be of any effect in case Hamlin failed to accomplish the surrender, the plain meaning was that the contract should not exist .until Hamlin had brought about the exchange. In other words, there was not a contract entered into with a provision that it should cease to bind in case Hamlin failed to redeem his promise in the future, but the contract was not to become binding in any event until the condition was performed by Hamlin. And upon its performance, and not until then, was the contract to become effective.

We think, with the learned court below, that it is wholly unimportant whether Hamlin had any power from the company to make a conditional delivery or not. The .plaintiff had power to attach such conditions as he chose to the acceptance of the policies, and if the agent of the company had no power to make conditional delivery to the plaintiff, the result would still be that no contract was ever made and no absolute acceptance ever had. It cannot be argued for one moment that an absolute delivery of a paper is made to an individual who has power to and does refuse to accept it, except upon condition, because the person who assumed to make the delivery was an agent who had no authority from his principal to make a conditional delivery.

Nor do we think that any inconvenience, at least of much weight, will follow the result of holding that an individual can refuse to accept a policy of insurance from a corporation except upon the performance of some condition precedent under an arrangement made between him and an agent of the company which arrangement the agent fails to communicate to the corporation. Insurance companies may with entire propriety provide in the same manner as the defendant provided in the policies in question, in cases where the contract of insurance becomes executed. There it is highly necessary and important for the company to know exactly how far they are bound, and the entire nature of the contract which has been made between them and the assured. But an agreement between an individual and the agent of a company by which no acceptance of the policy is to be made except upon conditions relating to the

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same, and an agreement to hold the policy until thé performance of those conditions, or a failure to perform, cannot, as we think, result in any serious inconvenience to the' company. But whether that is so or not cannot alter the right of an individual to refuse to be bound by a policy of insurance until he has absolutely received and accepted it.

We think the order of the general term was right and should be affirmed, and judgment absolute granted against the defendant, with costs.

All concur.