Arneberg v. Continental Casualty Co.

178 Wis. 428 | Wis. | 1922

Owen, J.

There is no evidence to justify a contention that the occupation of the insured was different on the day of the accident than it was at the time of making the application. In fact, we do not understand that the defendant seriously contends that there was any change in the occupation of the insured during the time that the policy was in force. It is rather the contention of the defendant that the occupation was not properly classified; that it should have been classified in accordance with its manual, that is, “Superintendent in woods, not foreman, D 4 medium.”' It seems apparent to us that this classification does not properly describe the occupation in which the insured was engaged. He was not a superintendent in the woods. The duties of his employment with the Heineman Lumber Company required him to make logging contracts and to see that work went forward under the contracts. ITe had no power to direct the method of performing the work. He had no power to hire or discharge men or to direct their activities. It was his duty, as we understand it, to keep in touch with the progress made and see that the contracts were performed. This did not constitute him a “superintendent in woods” within the meaning of that classification. There is no other classification in the manual that can be construed as covering the occupation in which the insured was engaged. The classification of the insured, “Lumberman, office and traveling duties,” was therefore a special classification made by the company, which the trial court found, and with which we agree, more nearly described the occupation in which the insured was engaged than any classification specified in the manual. There is no justification in the evidence for a finding that the insured in any manner or degree misrepresented his occupation to the agent. The agent was an intimate acquaintance- and associate of the insured and hacl a thorough knowledge and understanding of the business in which he was engaged. These facts bring the case squarely within the authority of Warren v. Globe I. Co. 170 Wis. 600, 176 N. W. 73, where, under similar circtunstanc.es, the company was held bound by the classification.

We think, too, that the principle of estoppel is applicable to a situation such as this, and the company should not be heard to challenge a classification made by its agent with full knowledge of the business or occupation in which the insured is engaged. It is quite generally if not universally heldn that where the insurer’s agent fills out the application for an insurance policy, knowing or having been properly informed by the applicant of facts demanded by questions therein, mistakes in the application as to such facts do not avoid the policy. May v. Buckeye Mut. Ins. Co. 25 Wis. 291; Dunbar v. Phenix Ins. Co. 72 Wis. 492, 40 N. W. 386; Mechler v. Phœnix Ins. Co. 38 Wis. 665; Johnston v. Northwestern L. S. Ins. Co. 94 Wis. 117, 68 N. W. 868; Union Mut. Ins. Co. v. Wilkinson, 80 U. S. 222; 2 Joyce, Insurance (2d ed.) § 472 et seq. See, also, cases collated in note to be found in 16 L. R. A. n. s. 1233, where the rule is stated in this language: “If the company’s agent, in preparing the application, either by neglect, mistake, or fraud, without the knowledge of the insured, inserts false answers therein, when correct replies were given by insured to the questions asked, the prevailing rule is that the fairlt of the agent must be borne by the company which sends him forth.” The rule is based on the principle that under such circumstances the agent is the agent of the company and not that of the insured, and that where the insured fully and fairly states the facts, the agent who translates such facts into the succinct phrasing of insurance parlance acts as the agent of the company. The reason for the rule is well stated in 2 American Leading Cases (5th ed.) 917, in the following language, which is frequently found quoted with approval:

“By the interested or officious zeal of the agents employed by the insurance companies, in the wish to outbid each other and procure customers, they not unfrequently mislead the insured by a false or erroneous statement of what the application should contain, or, taking the preparation of it into their own hands, procure his signature by an assurance thht it is properly drawn and will meet the requirements of the policy. . . . The better opinion seems to be that when this course is pursued the description of the risk should, though nominally proceeding from the insured, be regarded as the act of the insurers.”

It is quite generally held that by reason of this principle accident insurance policies are not void because the agent who filled out the application did not properly classify the applicant’s occupation. 1 Corp. Jur. 436, and cases cited. Accident insurance companies, however, urge that the rule should not be applied where, under the terms of an accident insurance policy, the insured is entitled to the amount of indemnity which the premium paid by him will purchase in the occupation in which he is actually engaged, where his occupation is mistakenly classified in the application or in the policy. In other words, it is urged that the policy should be held void pro ianto though not in toto. Two courts have apparently adopted this rule. Employers’ L. Assur. Corp. v. Back, 102 Fed. 229; Bothell v. Nat. Cas. Co. 59 Wash. 209, 109 Pac. 590. In the latter case it is said in effect that the rule secures to the insured all to' which he is entitled and protects the insurance company from the dishonesty of its agents. However wholesome or desirable such a rule may be, we do not appreciate the logic upon which it is based. We can discover no ground for the distinction which is necessary to render an insurance policy void pro tanto but not void in toto where the agent of the insurance company errs in the classification of the insured’s occupation. If the act of the agent under such circumstances is the act of the insurance company, then his error is the error of the company, and the company should be responsible for the consequences thereof. Upon what principle can the insured be penalized for the consequences of a misclassification where he is in no sense responsible therefor? It is well known that accident insurance companies designate all human activities under a relatively few classifications. They furnish their agents a manual of instruction which enables them to' classify a given occupation according to the intent and purpose of the company. When an applicant states to the agent the facts concerning his employment or occupation he has done all that should be required of him. He does not possess the knowledge requisite to enable him to designate his occupation in conformity to classifications which have been prescribe^ by the company. That is a function which must be performed by the company upon information furnished by the applicant, and when such information is truthfully given the company should ,be held bound by its own classification. When the insurance company delivers its policy to the insured the latter should have some assurance that he has purchased the protection which is held out by the terms of the policy. It may be his desire to purchase a certain amount of insurance. He may feel that a given amount of indemnity is essential to him in the emergencies covered by his policy. If the policy delivered does not furnish that indemnity he should not be lulled into the belief that it does. Fie should be given an opportunity to purchase the amount which he feels is necessary for him to have. Again, one may be willing to pay so much and no more for a given indemnity. This was true with the insured in this case, as indicated by Chilsen’s letter to the Neckerman Agency. Whén the insured pays his premium and receives a policy promising him a certain amount of indemnity, no just principle will permit the company to modify or discount the amount of such indemnity promised because of an error made by its agent in classifying the occupation of the insured.

But it is unnecessary to dwell upon the morality of the principle. The great weight of authority holds that the agent who fills out an insurance application in obedience to correct information supplied by the applicant acts as the agent of the company and not as the agent of the insured. Mistakes made by him do not void the policy, because he is the agent of the company and his mistakes are the mistakes of the company. To hold that the policy may be void pro tanto though not in toto is to make a distinction that cannot be supported either upon reason or authority. This, it seems to us, is the effect of the decisions in Travelers Ins. Co. v. Snowden, 60 Neb. 263, 83 N. W. 66, and Pacific Mut. L. Ins. Co. v. Snowden, 58 Fed. 342. It was distinctly so held in Carpenter v. American Acc. Co. 46 S. C. 541, 24 S. E. 500, and in Parker v. North American Acc. Ins. Co. 79 W. Va. 576, 92 S. E. 88, L. R. A. 1917D, 1174. We hold that where an applicant for accident insurance fully and fairly states his occupation to an agent of the company who fills in the blank and classifies such occupation, and a policy is issued thereon binding the company to pay certain indemnity based upon such classification, the company is bound thereby, and cannot reduce the indemnity by showing that there was a misclassification.

There remains one other point to be treated. The insurance policy contained this provision:'

“If the insured shall carry with another company, corporation, association or society other insurance covering the same loss without giving written notice to the company, then in that case the company shall be liable only for such portion of the indemnity promised as the said indemnity bears to the total amount of like indemnity in all policies covering such loss, and for the return of such part of the premium paid as shall exceed the pro rata for the indemnity thus determined.”

Before trial the defendant moved to amend its answer for the purpose of alleging that in August, 1915, the insured procured from the Northwestern Mutual Life Insurance Company a policy of $5,000 which provided that in case of his death by accident or otherwise said Northwestern Mutual Life Insurance Company would pay the beneficiary therein named, the plaintiff in this action, the sum of $5,000, and that such policy was in full force at the time of his death. The court denied the motion. This is assigned as error. The contention of appellant is that the policy issued by the Northwestern Mutual Life Insurance Company was for the same loss covered by the accident insurance policy sued upon, and that defendant is liable only for such portion of the indemnity promised in i'ts policy as the said indemnity bears to the total amount of like indemnity in all policies covering such loss. While both policies furnished indemnity in case of accidental death, they were not alike in any other provision. The Northwestern Mutual Life Insurance Company policy provided indemnity in case of death from whatever cause. This of course included death by accident. It is well understood that death benefit is not the dominant feature of an accident insurance policy. The dominant feature of that kind of a policy is indemnity for loss of time resulting from accident-. These two policies overlap only in the one contingency — accidental death. In no other respect are they alike and in no other respect did they cover the same loss. That the defendant company had in mind insurance similar to that covered by its own policy is indicated by questions propounded by the application, where the insured was required to state whether he had any insurance against accident or sickness in other companies or associations, and whether he had any accident or sickness insurance in this company. We think these questions indicate that the company considered it material whether the applicant was carrying other insurance against accident or sickness, and that it intended to provide that in case the insured carried other insurance against accident or sickness then it would be liable only for. its proportion of the indemnity. The applicant was required to state in his application that he at that time had no such insurance, and in the policy it was provided that if at any future time the insured should procure such insurance without giving written notice to the company, the company would be liable only for its pro rata proportion of the indemnity promised. It is plain to our minds that these policies did not cover the same loss within the meaning of the provision of defendant’s policy, and that the court properly denied the motion to permit the amendment.

By the Court. — Judgment affirmed.