Insurance Company v. Norton
96 U.S. 234 (1877)

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U.S. Supreme Court

Insurance Company v. Norton, 96 U.S. 234 (1877)

Insurance Company v. Norton

96 U.S. 234

Syllabus

1. An insurance company may waive any condition of a policy inserted therein for its benefit.

2. As the company may at any time, at its option, give authority to its agents to make agreements or to waive forfeitures, it is not bound to act upon the declaration in its policy that they have no such authority.

3. Whether it has or has not exercised that option is a fact provable by either written evidence or by parol.

4. As denoting the power given by an insurance company to a local agent, evidence is admissible as to its practice in allowing him to extend the time for the payment of premiums and premium notes, and the jury, upon such evidence, may find whether he was authorized to make such an extension and, if so, whether it was in fact made in the case on trial.

5. In this case, the Court holds that the fact that the premium note was already past due when the agreement to extend it was made is not sufficient to prevent that agreement from operating as a waiver of the forfeiture.

This action was brought by Phoebe A. Norton on a policy of insurance, issued by the Knickerbocker Life Insurance Company of New York, on the life of Jesse O. Norton, for the benefit of his wife and children. The original policy was dated April 20, 1867, and, being partly destroyed by fire, was reissued in April, 1874. The premium was $385, payable annually on the twentieth day of April in each year, and the

Page 96 U. S. 235

policy, amongst other things, contained the following condition:

"Second, if the said premium shall not be paid on or before twelve o'clock noon, on the day or days above mentioned for the payment thereof, at the office of the company in the City of New York (unless otherwise expressly agreed in writing), or to agents when they produce receipts signed by the president or secretary, or if the principal of or interest upon any note or other obligation given for the premium upon said policy shall not be paid at the time the same shall become due and payable, then and in every such case the company shall not be liable to pay the sum assured or any part thereof, and said policy shall cease and be null and void, without notice to any party or parties interested herein, except that the stipulation for a new policy, as hereinbefore provided, shall remain in force."

"Third, in case a loan of or credit for a portion of said premium shall be made on this policy, said policy shall be subject to all of the terms and conditions expressed in the acknowledgment or obligation given for such loan or credit, and to the payment of interest thereon in advance, and said loan or credit shall be a just counterclaim against any amount which shall become due and payable on the policy, and shall be deducted therefrom."

By an endorsement on the policy, it was declared that "agents of the company are not authorized to make, alter, or abrogate contracts, or waive forfeitures."

The insured died on the 3d of August, 1875, and the company refused to pay the insurance on the ground that the policy was forfeited by reason of the nonpayment of certain notes given for the last premium, which was due April 20, 1875. It was conceded that all the other premiums had been paid.

The declaration, besides a special count on the policy, contained the ordinary money counts. The defendant pleaded the general issue and specially, that the premium notes were not paid at maturity and that the policy thereby became forfeited. The plaintiff replied first that the agent of the defendant at Chicago, regularly authorized by the defendant so to do, extended the time of payment of the first note, which became due on the 20th of June, to the 20th of July, when she tendered the amount thereof to the agent, who refused to receive

Page 96 U. S. 236

the same, and that she also tendered the amount of the second note at its maturity, which was likewise refused; secondly that after the maturity of the first note, the agent of the defendant, regularly authorized so to do, waived all advantages the company might have claimed because of its nonpayment at maturity and extended the time of payment, as before stated, with an averment of tender and refusal. The defendant, by way of rejoinder, denied that it had extended the time of payment or that it had waived any advantages as alleged. This was the issue at the trial.

It appeared on the trial that the premium in question was settled by the payment of $50 in cash, and the balance in two promissory notes given by Jesse O. Norton to the insurance company, payable respectively in two and three months and maturing one on the 20th of June, the other on the 20th of July, 1875. Each note contained a clause, declaring that if it were not paid at maturity the policy would be void, this being the usual form of premium notes.

On the issue as to extension of time on the notes and the authority of the agent to grant it, the plaintiff produced three witnesses: Randall, agent of the company down to March, 1874; Frary, his successor, who was agent at the time in question; and Martin Norton, son of the insured, who acted in behalf of his father in reference to the alleged extension and to the tender of payment.

The testimony of these witnesses tended to show that formerly the company had allowed their agent to extend time on premium notes for a period of ninety days; that this indulgence was afterwards reduced to sixty days and then to thirty, and that at the period in question the agent was required, as a general thing, to return the notes in his hands if not paid by the 15th of the month following that in which they became due.

As to what took place with reference to the notes in question, there is some conflict in testimony between Martin Norton and the agent, Frary. The former testified in substance that he called on the agent in behalf of his father in June, 1875, a few days after the first note became due, and told him that his father wished it extended for thirty days, to which the agent agreed, his answer being, "All right." That he called again

Page 96 U. S. 237

on or about the 8th of July to request an extension of the other note, which would become due on the 20th of that month, and a further extension of the first note to the 10th of August. That the agent said he would have to write to the company about this. That on the 13th he called again and told the agent that his father had concluded to pay both notes, and the agent gave him the figures showing what was due on them. That he called again on the 15th, prepared to pay the notes, when he was informed by the agent that he could not receive the money, having received orders from the company to return all the papers to New York, and he had done so. That he then made a legal tender of the amount due on the first note, which was refused. Frary testified that he had no recollection of the first interview or of agreeing to extend the first note. As to the rest, they did not materially differ.

In addition to the testimony relating to the general practice of the agents in granting extensions of time for the payment of premium notes, evidence was given tending to show that Norton, the insured, had usually received more or less indulgence of that kind.

The counsel for the defendant moved to strike out the testimony touching the usages of the company as to nonpayment of prior premium notes by Norton and prior indulgence thereon to him as incompetent and in conflict with the terms of the policy and as showing no authority in Frary to give the alleged extension, which was without consideration if made, and after the forfeiture had occurred.

The counsel for the defendant also moved to strike out that portion of Martin Norton's testimony relative to an agreement for an extension of the premium notes, such agreement being without authority on the part of the agent, &c. The court overruled the latter motion and, as to the first, directed the jury to disregard so much of Randall's testimony as tended to show the conduct of the defendant and plaintiff in regard to former payments, but allowed to stand so much of Randall's and Frary's testimony as tended to show the powers of the agents in reference to giving extensions on premiums or premium notes. This ruling was excepted to.

In charging the jury, the court left it to them to say from

Page 96 U. S. 238

the evidence whether the agent of the defendant had power to waive a strict compliance with the terms of the agreement as to the time of paying the notes given for the premium, and if he had such power, whether such a waiver was in fact made; if it was, and if the insured offered to pay the notes within the time to which they were extended and the company refused to receive payment, that then the plaintiff was entitled to recover. The jury were further instructed that the power vested in Randall, the previous agent, was only pertinent as it tended to throw light on the powers vested in his successor, Frary. The defendant's counsel excepted to the charge and submitted several instructions, the purport of them being in substance that in view of the express provisions of the policy, the evidence was utterly irrelevant and incompetent to show any authority in the agent to grant any indulgence as to the time of paying the notes, and to waive the forfeiture incurred by their nonpayment at maturity or to show that any valid and legal extension was in fact granted or that the forfeiture of the policy was waived.

These instructions were refused. There was a judgment for the plaintiff, whereupon the company sued out this writ of error.

Page 96 U. S. 239

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