McNaughton v. Des Moines Life Insurance

140 Wis. 214 | Wis. | 1909

Maeshall, J.

Respondent’s counsel make the point that the contract which accompanied the policy was an evasion of the anti-rebate law, rendering the credit which assured applied on his quarterly payment ineffectual, thus leaving him in default and causing a lapse of the policy. The trial court does not appear to have passed on that question, but if counsel be right, the fact, in one aspect of the case, must render the judgment right even if the court below was wrong as to the particular matters complained of by appellant.

It was held in Urwan v. N. W. Nat. L. Ins. Co. 125 Wis. 349, 103 N. W. 1102, that a transaction, somewhat similar to that which occurred in this case, pursuant to an agreement on the part of the insurance company indicating that the ostensible purpose was not the real one, but was to rebate the regular cost of the insurance as an inducement to taking out the same, was unenforceable. It must be noted that there was proof in that instance, indicating the intention of the parties, other than the mere production of an agency contract, as in this case referring to an application not offered in evidence that might explain the transaction. There is no connection here, on the face of the papers, between the agency contract and the policy, except the mere fact that the two writings were made at the same time. In the Urwan Case the payments agreed to be made to the so-called agent were fixed in amount and the policy premiums were to be like-wisé, as the company represented. That was quite significant as showing that the real purpose was to rebate the latter without any equivalent consideration. There were other circumstances in proof showing conclusively that such was the mutual intention. In this case there was an entire absence of such proof, while the agency contract provided for compensation contingent upon the business written in this state, and the consideration to be rendered therefor may well be presumed to have been specified in the application referred to in the writing, which, as before indicated, was not produced in evidence. Under the circumstances there is room only for suspicion that the purpose of the transaction was to evade the anti-rebate law. Contractual transactions are not to be avoided in favor of one of the parties who seeks to escape his obligations, on mere suspicion. The court will not presume from circumstances which are consistent or inconsistent, according to the viewpoint from which they are measured, with violation of a penal statute, that such violation occurred in the particular case, without sufficient corroborating evidence to establish it to a reasonable certainty. While courts should firmly enforce the policy of the law against rebating they should not go so far as to cast the burden of proof upon a policy-holder to show that there was no such violation, upon the company involved seeking to escape its obligation on the theory that it is a lawbreaker.

There is a further reason why respondent cannot invoke the anti-rebate law to defeat the policy claim in this case. In Laun v. Pac. Hub. L. Ins. Co. 131 Wis. 555, 111 N. W. 660, it was held that an executed agreement for rebate of a policy premium, while constituting ground for punishing the rebater as the statute provides, does not render the policy void; — that the latter purpose was not within the fair meaning of the statute; and that the rule of Urwan v. N. W. Nat. L. Ins. Co., supra, goes no further, as to -the rights of a policy-holder, than to render executory agreements for the rebating of premiums not specified in the policy unenforceable. As we view this case, if the purpose of the agency agreement. -was to rebate the premiums specified on the face of the policy, it was fully executed as to the premium in question and until the policy matured.

As indicated in the statement, before the first premium 'became páyable after the assured received his first credit upon the agency contract, he was duly notified thereof, and ■of such credit. As between the parties, bn the face of the record, when that premium fell due June 15, 1904, respondent owed the assured $13.23 as a credit on such contract, payable July 15th thereafter, or within the time such premium was payable by addition of the trifling sum of fifty cents as a penalty for not making payment at the precise due date. Previous to such date, as appears, respondent notified the assured of how it proposed to treat the agency credit by sending him a notice of the premium, applying thereon such credit. Erom that circumstance the assured had a right to assume that such credits in the future would be likewise treated. The respondent was precluded by the plainest principles of estoppel from claiming to the contrary to the prejudice of the assured, as to any subsequent payment, made before it gave the assured notice of a change of its position.

When the next annual payment came due, subject to the Tight of making quarterly payments, respondent gave the assured the usual premium notice, applying the agency credit as before. Then for the first time, and after the quarterly payment was made with the credit and cash, and after the time for payment without incurring the aforesaid penalty of fifty cents, the assured was notified that:

“In cases where the premiums are paid quarterly, one fourth of the apportionment is credited upon each quarterly payment. Therefore, it will be necessary for you to send us $10.95 additional in order to receive full credit for the current quarterly under the policy referred to.”

That was an entire change of front, as the assured had a right to view the matter.

There was nothing in the writing indicating how the agency credit should he applied or that the same should he applied at all. The communication quoted involved a suggestion that the company asserted a right to hold the balance of the agency credit and apply the same in $3.65 credit in-stalments on quarterly policy premiums as they fell due during the year, while the agreement was for payment of the entire amount by July 15, 1905. The assured had a right to assume that the mere use of the $14.60 for the thirty days, amounting to about seven cents, was not considered by respondent of any consequence and that it would waive the precise due date of the credit as before. Moreover, in calling for the additional payment of $10.95 after the penalty was incurred, such penalty was waived. So1 on July 15th thereafter, by respondent’s conduct, it was permissible for the assured to pay the additional $10.95, the precise amount then due of the agency credit in any view of the case, and •save a forfeiture, and he may well have assumed it would be then used to save the policy from lapsing according to the well-established rule that it is the duty of an insurance company to apply dues from it to an assured, presently payable, upon his premium likewise payable, if necessary to prevent a forfeiture, especially where, from previous transactions between the parties, the assured has a right to rely upon such application being made.

The contention of appellant’s counsel on the point last discussed we regard as sound and abundantly supported in principle by authorities cited to our attention and many others. Hull v. N. W. Mut. L. Ins. Co. 39 Wis. 897; Matlack v. Bank, 180 Pa. St. 360, 386, 36 Atl. 1082; Van Norman v. N. W. Mut. L. Ins. Co. 51 Minn. 57, 52 N. W. 988; Girard L. Ins., A. & T. Co. v. Mut. L. Ins. Co. 97 Pa. St. 15; Chicago L. Ins. Co. v. Warner, 80 Ill. 410; Ins. Co. v. Butcher, 95 U. S. 269, 272; Northwestern Mut. L. Ins. Co. v. Ross, 63 Ga. 199; Northwestern Mut. L. Ins. Co. v. Fort’s Adm’r, 82 Ky. 269; Franklin L. Ins. Co. v. Wallace, 98 Ind. 7; Northwestern Mut. L. Ins. Co. v. Little, 56 Ind. 504.

It would be useless to argue that application of the agency credit was not in fact made, therefore the agreement to pay the'same was executory, and within the condemnation of the Laun Case because, primarily, as we have seen, it was not established that the agency agreement was a rebating contract; secondarily, because the application was in fact made, as the assured had a right to assume when the premium notice' was sent; and, thirdly, since in any event it was the duty of the respondent to make the application, on or before July 15, 1905, the assured had a right to assume that such application would be made if necessary to save his policy, and the court in such a case must treat that which ought to have been done as having been done.

But it is insisted, on respondent’s part, that, by the assured applying for reinstatement of the policy, treating the same as having lapsed, and being reinstated accordingly, there was conclusive acquiescence in the claim of respondent in that regard. On that Teeter v. United L. Ins. Asso. 159 N. M. 411, 416, 54 N. E. 72, is relied on. It is the opinion of the court that the rule there adopted is somewhat harsh and carries the doctrine of loss of rights by mere waiver rather to the limit, if not beyond, its boundaries as laid down by this court in Pabst B. Co. v. Milwaukee, 126 Wis. 110, 105 N. W. 563.

There can be no waiver without at least implied intent to^ waive based on knowledge, actual or constructive, of the facts. Where the reasonable inference from the whole situation between parties in contractual relations, is that one of them with knowledge, actual or constructive, has waived or abandoned a claim of right, and the other, relying thereon, has acted accordingly, generally speaking, an effectual intent to waive is implied “regardless of whether there was an actual or expressed intent to waive, or even if there was an actual but undisclosed intention to the contrary,” whether there is any element of estoppel, strictly so called, or not. Sncli is the doctrine of mere waiver as approved in the Pdbst B. Go. Case. Whenever a case falls clearly within that principle it mnst be held to be governed thereby. Those arising under insurance contracts cannot be excepted, neither can an exception be made because, merely, of apparent hardship in the particular instance. Departure from that would turn judicial administration into the uncertain field of mere arbitration.

It may be that Teeter v. United L. Ins. Asso., supra, is within the principle of waiver above indicated. Certain it is that the learned court in pronouncing judgment thought so. The opinion of the court here is that the case goes a little too far and yet has some distinguishing characteristics from the one in hand, tending to locate the latter outside the principle under discussion if the former is within it. In the one there was good ground on the company’s part for claiming a forfeiture, as the assured must have known, while here the assured had no good reason to think respondent’s position was tenable. In the Hew York case the assured may well have supposed, the mere shadowy chance he had for maintaining that his policy was in force notwithstanding the claimed default, was of too little consequence to warrant insisting upon it, while here the facts are so plainly conclusive in favor of the position that no lapse had in fact occurred, that it seems the assured could not have intended to waive the certainty for the uncertain outcome of an application for reinstatement, but rather thought he might well avoid a troublesome controversy with respondent by going through the form of complying with its demand without prejudice to his rights, even if the application for reinstatement should be denied, since no pecuniary penalty was involved, as seems to have been the case. Moreover the letter of the assured accompanying the application for reinstatement, shows upon its face that he recited in such application that the policy had lapsed, using the printed form supplied by respondent, because the latter had so stated in its communication to him in such a way as to lead to the belief that by the terms of the agency contract he had no right to deduct from the quarterly payment but one fourth of the agency apportionment. He said in such letter:

“I am very sorry to cause you all this trouble but I must have misunderstood my contract. I understood from my policy that I can pay my premiums quarterly if I wish the rate to be $41.35. My contract states that my commissions are payable within thirty days of the anniversary of the date of the policy.” (Meaning evidently contract.) “I deducted the total amount ($14.60) after reading this.”

Thus the application for reinstatement was made, supposing, as respondent well knew from its attitude, that he had misunderstood the contract. Its letter inferentially stated that the agency apportionment for any year, by the contract, was so payable as to render the whole or only a quarter applicable upon a single premium payment, according as the assured should decide to pay annually or quarterly, which was not the case. This rather rebuts the idea of acquiescence and intention to waive with knowledge, actual or constructive, of the facts.

Without further discussion of the question of waiver, it is the opinion of the court that the law on that subject is in favor of appellant. Such being the case, all questions as to reinstatement of the policy, which were resolved in respondent’s favor by court and jury, resulting in the judgment complained of, are immaterial. That leads to the result that, on the undisputed evidence, judgment should have been given for plaintiff as demanded in the complaint upon the motion which was in effect made therefor notwithstanding the verdict, and the case must now take the course which it ought to have taken.

By the Court. — The judgment'is reversed, and the cause remanded with directions to render judgment in accordance with this opinion.