KENNEDY v. OCCIDENTAL LIFE INS CO (1941)

This appeal was taken by plaintiff and appellant from a judgment entered in favor of defendant and respondent, after a directed verdict.

On April 25, 1935, Archibald Reid Van Antwerp took out a five-year, convertible, non-participating, term policy of insurance with respondent, for the sum of $5,000, payable to his wife, Theza Van Antwerp, if living, otherwise to his son, Alan Van Antwerp. The policy called for a quarterly payment of premium, amounting to $21.50 each quarter, payable on the 25th day of July, October, January and April of each year. The policy provided for a period of thirty-one days' grace before lapsing. All premiums were paid up to and including that which fell due on October 25, 1938, but the premium falling due on January 25, 1939, was not paid, or attempted to be paid, until March 31, 1939, under circumstances which will hereafter be detailed. The undisputed evidence shows that at least one notice was sent Mr. Van Antwerp from the head office of the insurance company at Los Angeles, calling attention to the fact that the final date of payment of premium was February 25, 1939, and also a letter under date of March 31, 1939, calling attention to the fact that the policy had lapsed. On March 21, 1939, Delford Hale, an insurance agent who had secured this policy for Mr. Van Antwerp, called upon him to take steps to be reinstated. The agent at that time prepared an application and health certificate for reinstatement of the policy, but there is a conflict in the evidence as to whether it was signed by Van Antwerp on that day, or on March 31, 1939. Mr. Van Antwerp did not have the money to pay the premium, but said he would have it about April 1st, and Delford Hale agreed to advance it for him. Again there is a conflict in the evidence as to whether this understanding was reached on March 21 or March 31, 1939. On March 31, 1939, Delford Hale drew his check in favor of the respondent insurance company, covering the amount of the premium due, and left it at the Fresno office of respondent, at about 4 p.m. of that day, and it was mailed to the head office at Los Angeles between 4:30 and 5 p.m. the same day. It was received at the Los Angeles office of respondent on April 1, 1939, the exact hour not being determined.

On the morning of April 1, 1939, Van Antwerp was found dead in his bed. He was last seen alive at 8 p.m. the evening before. The body was found between 4 and 7 o'clock in the morning, according to the testimony of the witnesses. He was lying on the top of the covers, wearing house slippers and fully clothed, with the exception of his shirt, which was off. When found, he had been dead for several hours. He was survived by both beneficiaries under the policy.

Under date of April 7, 1939, respondent drew its check in favor of Theza Van Antwerp for the refund of the premium forwarded March 31, 1939, which it was stipulated was tendered her.

Mrs. Van Antwerp died August 31, 1939. Thereafter Lawrence Kennedy was appointed administrator with the will annexed, of her estate, and guardian of John Alan Van Antwerp, the son, who at the time of the trial was a minor of the age of twenty years. Kennedy thereupon instituted this suit, both as administrator and guardian.

A jury was empaneled to try the case, and at the close of the evidence, respondent moved for a directed verdict in its favor. This motion was granted, and the court directed the jury to bring in a verdict for defendant, which was done.

Trial courts have full power, in a proper case, to direct the jury to render a verdict in favor of defendant, where there is no substantial evidence tending to prove all the controverted facts necessary to establish the plaintiff's case. It is not necessary that there should be an absence of conflict in the evidence, but if there be a conflict, it must not be a substantial one. The motion can be granted only when disregarding conflicting evidence and giving to plaintiff's evidence all the value to which it is legally entitled, and indulging in every legitimate inference which may be drawn from that evidence, the result is a determination that there is no evidence of sufficient substantiality to support a verdict in favor of plaintiff, if such a verdict were given. Estate of Baldwin, 162 Cal. 471, 123 P. 267; Estate of Sharon, 179 Cal. 447, 177 P. 283; Estate of Flood, 217 Cal. 763, 21 P.2d 579; Robbiano v. Bovet, 218 Cal. 589, 24 P.2d 466; Walters v. Bank of America, etc., Ass'n, 9 Cal.2d 46, 69 P.2d 839, 110 A.L.R. 1259; Engstrom v. Auburn Auto Sales Corp., 11 Cal.2d 64, 77 P.2d 1059.

It is contended by appellant that there was substantial evidence that the policy involved in this action was reinstated by Delford Hale, the agent of respondent, and that therefore the motion for the directed verdict should not have been granted. With this contention the court cannot agree.

An agent has such authority as the principal, actually or ostensibly, confers upon him. Sec. 2315, Civ.Code. Actual authority is such as a principal intentionally confers upon the agent, or intentionally confers upon the agent, or intentionally, or by want of ordinary care, allows the agent to believe himself to possess. Sec. 2316, Civ.Code. Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess. Sec. 2317, Civ.Code.

There is no evidence in the case that Delford Hale had any actual authority to renew or reinstate this policy of insurance for respondent. The only evidence upon this point is his positive testimony that he did not have any such authority. To create an ostensible authority, two essential features are necessary. The third person must believe that the agent had authority, and such belief must be generated by some act, or neglect, of the person to be held. Allen v. San Francisco Wholesale Dairy Produce Exchange, 59 Cal.App. 93, 210 P. 41; Walsh v. American Trust Co., 7 Cal.App.2d 654, 47 P.2d 323. The application for reinstatement and health certificate dated March 21, 1939, and signed by Mr. Van Antwerp, contained these statements:

“I hereby make application to the Occidental Life Insurance Company for reinstatement of above policy. * I hereby declare and agree that I have read the questions, statements, and answers, in this application and certificate, that they are complete and true, that they refer to the Insured under the above policy and may be relied on by the Company, and that no information acquired by any representative of the Company shall bind the Company unless it shall have been set out in writing herein. I further agree that all statements and answers in this application and certificate and in the application for the above policy shall be taken as the basis of the reinstatement, delivery, addition, change or issuance of the insurance applied for above, and that in no event shall the same become effective unless and until this application and certificate is approved at the Home Office of the Company and the full amount due is paid during the lifetime and good health of the Insured.

“I have paid $21.61 in connection with this application and certificate. The Company is authorized and directed to retain this amount, depositing or cashing any check or draft, without prejudice to its right to disapprove this application or certificate.” (Italics ours.)

Could it be said that Mr. Van Antwerp believed that Delford Hale had authority to, and was reinstating him, when he knew that the document he was signing was an application for reinstatement, and where it stated “that in no event shall the same become effective unless and until this application and certificate is approved at the Home Office of the Company”, and “the Company is authorized and directed to retain this amount, depositing or cashing any check or draft, without prejudice to its right to disapprove this application or certificate”? We think not. Again, what evidence is there in the record to show that that belief, if it did exist, was generated by any act or neglect of respondent? We find none. In addition to the statements above quoted from the application for reinstatement, the policy, which Mr. Van Antwerp held, provided that, “Premiums must be paid at the Home Office of the Company unless otherwise provided, and in any case only in exchange for an official receipt, signed by the secretary and countersigned by the person to whom payment is made.” That reinstatement could be made “upon the Insured furnishing evidence of insurability, satisfactory to the Company”. And also, “This contract cannot be varied or altered, nor its applications or conditions waived or extended in any respect, except by written agreement of the Company, signed by two of the following officers, viz: The President, a Vice President, Secretary and Actuary.”

The evidence shows, without conflict, that Delford Hale had no authority, either actual or ostensible, to reinstate Van Antwerp under the policy, and it therefore becomes immaterial, whether the application for reinstatement and health certificate was signed March 21, or March 31, 1939, or whether the promise of the agent to advance the amount of the premium was made on either of those two days. The promise to advance the money was a personal matter between the agent and insured, and certainly in no way bound the respondent.

We will now consider the effect of the signing and mailing of the application for reinstatement, and health certificate, with the premium, and as to whether that operated as a reinstatement of the lapsed policy, or whether there remained something to be done by respondent, before the lapsed policy became reinstated. Appellant cites a number of authorities in support of his position, that the rights of the insured to reinstatement must be governed by the original policy of insurance, and cannot be varied by the application for reinstatement. While we have heretofore discussed the provisions of the application for reinstatement, under the head of ostensible agency, in determining whether the insured believed, or had reason to believe, that the agent had power to reinstate him, we shall, in considering this phase of the case, confine ourselves solely to the provisions of the policy itself. The policy contained this provision:

“Should this policy lapse by reason of any default, it may be reinstated at any time within five years from the date of default, upon the Insured furnishing evidence of insurability satisfactory to the Company, and upon payment of all over-due premiums, and upon payment or reinstatement of any indebtedness under the policy at the date of default, with interest on such over-due premiums and indebtedness at a rate not to exceed six per cent. per annum from date of default.” (Italics ours.)

Counsel on both sides have shown great diligence and research in presenting to the court all cases which might have a bearing on the controversy here involved. But we believe the case of Greenberg v. Continental Casualty Co., 24 Cal.App.2d 506, 75 P.2d 644, 645, is decisive of the issue before us. In that case the insured sent his premium in three days after the expiration of the days of grace. This premium was returned with the statement that the policy had lapsed. The insured thereupon mailed to the company an application for reinstatement, accompanied by an affidavit of his physician, as to his good health, and tendered the defaulted premium. The application for reinstatement was rejected by the company. Action was then brought by the insured for breach of contract, to reinstate the policy. Judgment went for defendant, which judgment was affirmed by the higher court. The policy of insurance in that case contained the same identical words as the policy now before us, that, in order to be reinstated, the insured must furnish “evidence of insurability satisfactory to the Company”. It was there said:

“No question of public policy or valid statutory regulation is involved. The law applicable to the disputed questions is solely the law of contracts, and in that connection it is elementary that parties to a contract are entitled to have the agreement enforced according to its terms. * Conceding, but only for the purpose of analysis, that the meaning of the word ‘insurability’ is uncertain, nevertheless the contracting parties agreed, as the memorandum of their agreement clearly and unequivocally reveals, that the evidence of such ‘insurability’ must be ‘satisfactory to the company.’ By agreement of the parties to the contract the right and responsibility of determining the question as to whether the ‘evidence of insurability’ was satisfactory, was imposed upon and vested in one of the parties to the agreement. * The contract in question clearly provides, as above stated, that what shall constitute ‘satisfactory evidence’ is a question for the company to determine. It is purely a private matter addressed to the discretion of those officers of the company charged with the responsibility of determining such question, and is in no sense that judicial discretion which appellate courts have the authority to review. In the final analysis, whatever the word ‘insurability’ means, the contract provides that the evidence thereof must be ‘satisfactory to the company.’ That question having been determined by virtue of and according to the clear and unequivocal terms of the agreement, there is nothing, under the circumstances presented herein, for judicial determination.”

The case of Broughton v. Equitable Life Assurance Society, 5 Cir., 71 F.2d 821, 823, is almost identical with the one now before us. The policy in that case contained the same identical wording excepting that the word “Society” was used instead of “Company”. It was there said: “After the policy lapsed, the insured was not entitled to have it reinstated by merely executing a health certificate, although on a form sent him for that purpose, and tendering the premium. The contract plainly provided that the evidence of good health should be satisfactory to the company. Until evidence of insurability was furnished and accepted the policy was not reinstated.”

In the case before us the application for reinstatement and the health certificate was not received by the company until after the death of the insured, was never acted upon, and the lapsed policy was never reinstated.

The judgment appealed from is affirmed.

KLETTE, Justice, pro tem.

We concur: BARNARD, P.J.; GRIFFIN, J.