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District Court of Appeal, First District, Division 2, California.


Civ. 12635.

Decided: May 29, 1944

Keesling & Keil, of San Francisco, for appellant. Nathan G. Gray, of Berkeley, for respondents.

In a trial by a jury the plaintiffs had a verdict for the sum of $3000 based upon a policy of insurance on the life of F. C. Gleed, deceased. The plaintiff Gleed was the widow and the plaintiff Boggs was an assignee of deceased.

The appeal from the judgment is based upon the ground that the policy lapsed prior to the death of the insured because of nonpayment of the premium then due. The respondents defend the judgment on the ground that time of payment under the strict terms of the policy was waived, and that defendant is estopped from contesting the policy on that ground.

The contested policy was issued on May 12, 1936, through one Hansen, a duly authorized soliciting agent, and by him delivered to the insured. Thereafter, until the death of the insured, Mrs. Boggs paid all the premiums to Hansen––sometimes in cash and sometimes by her personal check. For each payment Mrs. Boggs received a receipt signed “Edward F. Hansen, Agent,” and containing the policy number and the amount received. On June 12, 1942, in accordance with her usual custom, Mrs. Boggs gave to Hansen her check drawn in his name to cover the premim due on May 12, 1942. Hansen deposited the check in his own bank and drew his check in the name of appellant which was deposited for collection by appellant and returned unpaid because of insufficient funds in the Hansen account. On June 18 the appellant notified Hansen that his check had been dishonored, and that the company would hold it until it received a new remittance. On the same day appellant mailed a letter to the insured advising him that the policy had lapsed and requesting an application for reinstatement. The insured died early the following morning and this letter was found unopened in his home.

Appellant now contends that Hansen was not its agent, but that he was acting in the capacity of broker for Mrs. Boggs, that the express terms of the policy permitted payments of premiums to be made “to an authorized agent of the Company only in exchange for the Company's receipt therefor signed by the President or the Secretary,” that the check of Hansen was received for collection only, and did not constitute a payment of the premium. The respondents refer to the license of the Insurance Commissioner of this State under which, at the request of the appellant, Hansen was appointed and authorized to act as an agent for appellant with all the powers conferred by the laws of this state. The respondents also rely upon the defense of waiver and estoppel and, since this is determinative of the appeal, we will confine our discussion to that issue with the observation that the question of Hansen's status as broker or agent was a question of fact for the jury, that we find no evidence that he at any time acted as a broker for the insured, and that there is evidence both ways as to his status as broker or agent in his dealings with Mrs. Boggs.

On the issue of waiver and estoppel the evidence is that for a period of six years all premiums had been paid by Mrs. Boggs to Hansen, either in cash or by her personal check, and that no one of these payments was exchanged for the company's receipt signed by the president or secretary as required in the policy. It is also in evidence that each and all of these payments were made in this manner while the insured was in default, and in many cases after the period of grace had expired. During this period of six years eighteen separate premiums became due. Fourteen of these were accepted by appellant after the period of grace had expired. In only one instance––September, 1940––the appellant demanded and received an application for reinstatement.

In Huber v. New York Life Ins. Co., 18 Cal.App.2d 269, 274, 63 P.2d 318, 320, which is a case similar to this in many respects, the district court of appeal said: “In the absence of fraud, where a party makes an effort to transmit his premium in time, it seems to us that substantial objection should be required to defeat it as a payment when there are acts or conduct on the part of the Insurance Company which would induce the insured to omit to follow the strict letter of the policy * * *.”

In Page v. Washington Mut. Life Ass'n, 20 Cal.2d 234, 239, 125 P.2d 20, 23, the supreme court said: “It is clear that a past course of conduct of acceptance by the insurer of payments of premiums after the grace period may establish a waiver by the insurer of the right to declare a forfeiture for failure to pay premiums exactly at the stipulated time, or the insurer may be said to be estopped to assert the forfeiture where the insured may be said to have been reasonably led to believe that payments made within a reasonable time after the grace period would be acceptable. Nelson v. National Guaranty Life Co., 131 Cal.App. 669, 21 F.2d 1022; Vinther v. Sunset Mut. Life Ins. Co., 11 Cal.App.2d 118, 53 P.2d 182; Turner v. Redwood Mut. Life Ass'n, 13 Cal.App.2d 573, 57 P.2d 222.” To the same effect is Bryson v. National Travelers Cas.Co., 206 Cal. 475, 479, 274 P. 957.

Upon these authorities we conclude that the course of conduct in relation to the payments of premiums running over a period of six years was such that the respondents were entitled to assume that the terms of the policy need not be adhered to strictly, and that the appellant was estopped from insisting upon a strict compliance with those terms until it had given the respondents reasonable notice of its change in policy.

The judgment is affirmed.

NOURSE, Presiding Justice.