Opinion
Decided October 22, 1931.
Insurance — Life — Policy void unless delivered to insured while in sound health — Soliciting agent's knowledge waived incorrect answers in application — Insurer bound by agent's failure to report facts — Agent's waiver of misrepresentation not extended to provision voiding policy.
1. Soliciting agent's authority held broad enough to support waiver of incorrect answers in application for life insurance policy as to applicant's health (Section 9407, General Code).
2. Soliciting agent, failing to report to life insurance company known facts contrary to answers in application for policy as to applicant's health, represented company, which was bound by his acts. (Section 9407, General Code).
3. Soliciting agent's waiver of misrepresentations in application for life insurance policy as to insured's health did not extend to provision in policy that it should be void unless delivered to insured while in sound health (Section 9391, General Code).
4. Court of Appeals is bound by Supreme Court's last decision of question, regardless of its previous decisions.
ERROR: Court of Appeals for Franklin county.
Messrs. Vorys, Sater, Seymour Pease, for plaintiff in error.
Mr. Ernest A. Grabiel, for defendant in error.
This is a proceeding in error from a judgment rendered in favor of Josephine Connell, who was the plaintiff in the common pleas court. We refer to the parties as they appeared in the trial court. Plaintiff was the mother of James E. Connell, and the beneficiary of a policy of life insurance issued by defendant company upon her son's life. The policy was issued on November 17, 1928, and the insured died October 15, 1929, of diabetes mellitus. The amended petition of plaintiff set up the issuing of the policy, that it was in full force and effect on the date of the death of James E. Connell, that due notice was given and proof of death made; and that payment was demanded, which was refused. The answer consisted of a first and second defense: It admitted the issuance and delivery of the policy, subject to the conditions therein named; admitted that the plaintiff was the beneficiary, the death of James E. Connell on the date alleged, and the presentation of notice and proof of death; admitted the demand by the beneficiary of the amount claimed to be due and refusal by the company to pay; and further answered by way of general denial.
For a second defense, after adopting the allegations and denials of the first defense, defendant averred that it accepted the application for the life insurance policy according to the terms of the application, and further pleaded a condition in the policy, which reads, in part, as follows: "This policy is void until the same is actually delivered to the insured in person while in sound health, or if the insured dies in consequence of his or her own criminal act."
Defendant further averred that, at the time of the making of the application and the time of the issuing and delivering of the policy, and for a long time prior thereto, James E. Connell was not in sound health, but was suffering from the disease diabetes, by reason of which said disease he afterwards died; that said state of health at the aforesaid times was well known to the plaintiff, and to James E. Connell, but was unknown to defendant or its agents, and was not known to them until after the death of said Connell; and defendant further pleaded a tender of the premiums paid under the policy.
The reply denied that the defendant and its agents were ignorant of the state of health of the insured, as alleged in the answer, and avers that the agent who took the application knew and was informed of the state of health of the injured at the time of the application, and prior thereto; that the agent knew the state of health of the insured when the policy was delivered, and that the defendant, through its agents, had such knowledge; that, by reason of the averments of the reply, the defendant waived the condition of the policy concerning the sound health of the insured, and is therefore estopped from setting up such provision as a defense to this suit.
For the purposes of the determination of the question presented to this court, the facts which the jury was privileged to find may be stated as follows: James E. Connell was seventeen years of age at the time of his application for the policy of insurance under consideration in this case. The application was dated November 6, 1928; the policy issued November 17, 1928. On or about September 1, 1928, the plaintiff had surrendered and cashed a policy of insurance on the life of James E. Connell, carried with the defendant company. The transaction incident to the surrender of the policy was conducted by Homer P. Colflesh, who was a collecting and soliciting agent for defendant company. Early in September, 1928, James E. Connell had been in Grant Hospital for two weeks under treatment for diabetes. Thereafter, until his death, he was under treatment at irregular intervals for this disease, and at the time of signing the application, when the policy was delivered, and continuously thereafter, he was suffering with the disease from which he died. Shortly after cashing in of the policy, Colflesh solicited the plaintiff to make application for another insurance policy on the life of James E. Connell, and on or about October 1, 1928, Colflesh and Robert E. Babcock, an assistant manager of the defendant company at Columbus, again attempted to induce Mrs. Connell to take insurance on the life of her son. She testifies that she told Mr. Colflesh she "wasn't going to take out a policy; that the boy wasn't physically able;" that "he had just come out of the hospital," and that his trouble was "diabetic," and that the boy could not pass a medical examination; that in reply thereto Mr. Colflesh said to her that she would not have to have a doctor's examination of her son; that a policy could be issued without medical examination; that upon this representation she consented to make application for the policy; that the application was made, Colflesh asking her the questions, Babcock writing the answers thereto, and James signing the application after it was completed. The record, though controverted, supports the conclusion that the soliciting agent of the company knew at the time the application was prepared that James Connell had been in the hospital afflicted with diabetes, and that the agent secured this information while acting as agent for the company in the solicitation of the insurance in question, and that there was no collusion between the plaintiff and the agents of the company.
Defendant moved for a directed verdict at the conclusion of plaintiff's case and again at the conclusion of the whole case. It is urged that the court erred in refusing these motions, in refusing to admit certain testimony, and in giving the special charges requested by plaintiff.
Upon the application, the policy as issued, and the evidence, two questions are presented: First. Did the company by the acts of its agents, Colflesh and Babcock, waive material misrepresentation of fact respecting the condition of health of James Connell at the time of and prior to the date of the execution of the application? Second. If such waiver was made, did it extend to and render invalid that clause in the insurance policy which provides: "This policy is void until the same is actually delivered to the insured in person while in sound health * * *."
We are of opinion that the scope of authority of the agent of the defendant company was clearly broad enough to support a waiver of the improper and incorrect answers in the application respecting the state of health of the applicant. Such a determination is within the law enunciated in the first proposition of the syllabus in John Hancock Mutual Life Ins. Co. v. Luzio, 123 Ohio St. 616, 176 N.E. 446: "Under the provisions of Section 9407, General Code, a soliciting agent of a life insurance company becomes the representative of the company only in respect to the particular branch of the business intrusted to him as such agent. His duties consist of soliciting applicants for insurance and reporting to his principal the information which he acquires."
The agent, while acting as solicitor for the insurance policy under consideration, secured information respecting the applicant which was contrary to the answers placed in the application. In failing to report to the company the facts as he knew them he was representing the company, and not the insured or the plaintiff, and the company and not the insured should be bound by his acts.
However, this is but one proposition which it is necessary to find established by the record in order to sustain the judgment of the trial court. It is further necessary to find that the action of the soliciting agent bound the company to a waiver of the express provisions in the insurance contract, that it would be void until the same is actually delivered to the insured while he is in sound health. This the record does not support under the law.
Without regard to the decisions of our Supreme Court heretofore, and authorities elsewhere, we are bound by its last pronouncement in the Luzio case, supra, which was announced since the trial of this case, particularly the first proposition of the syllabus, heretofore quoted, and the fourth proposition as follows:
"4. In the absence of statutory definition the term `agent,' employed in Section 9391, General Code, should be given its legal meaning, as being one who is acting within the scope of his authority in the business entrusted to him by his principal. One who is employed as soliciting agent, whose sole authority is to solicit insurance and to report to his principal the information which the applicant has given him, cannot, without proof of authority so to do, waive a condition in the policy providing that it shall not take effect unless the insured be alive and in sound health at the date of the policy."
The opinion of Judge Jones leaves little doubt of the scope of the syllabus. At page 628 [176 N.E. 451], after quoting from Myers v. John Hancock Mutual Life Ins. Co., 108 Ohio St. 175, 140 N.E. 504, Judge Jones says: "What was said in the Myers case, supra, may be applied to this case. Cugliari was only a soliciting agent. There was no proof that he had any other authority — none to waive material conditions in the policy he sold."
At page 630 [176 N.E. 451], Judge Jones further says: "The policy contained a proviso that it should not take effect unless the insured `shall be alive and in sound health.' Had the insured not been alive, and had the agent known it, can it be claimed that the agent's knowledge would make the company liable? Under the terms of the policies, life and sound health must both subsist before the policies take effect."
We therefore say that the judgment of the trial court was erroneous; that the motion for a directed verdict at the conclusion of all the testimony should have been sustained.
The judgment will therefore be reversed and final judgment entered here for the plaintiff in error.
Judgment reversed.
ALLREAD, P.J., and KUNKLE, J., concur.