1. A. took out a policy of insurance upon the life of her
husband. The premium was payable annually on the first day of
November. The policy stipulated for the payment of the amount of
the insurance within sixty days after due notice and proof of the
death of the insured, subject, however, to certain express
conditions. One of these conditions provided that if the premiums
were not paid on or before the days mentioned for their payment,
the company should not be liable for the sum insured, or any part
of it, and that the policy should cease and determine. Another
condition provided that if the insured resided in any part of the
United States south of the 33d degree of north latitude, except in
California, between the 1st of July and the 1st of November,
without the consent of the company previously given in writing, the
policy should be null and void. The policy declared that agents of
the company were not authorized to make, alter, or discharge
contracts or waive forfeitures; but the company, notwithstanding
this provision, sent renewal receipts signed by its secretary, and
their use, when countersigned by its local manager and cashier, was
subject entirely to the judgment of its local agent. It was his
habit to give such receipts whenever the premiums were paid after
the time stipulated. His mode of dealing with persons taking out
policies at the local office, his use of renewal receipts, his
acceptance of premiums after the day on which they were payable,
were all known to the home company, and it retained the premiums
thus received. The insured died at the City of New Orleans on the
11th of November, 1872. Between the 1st of July and the 1st of
November of that year he had resided at that city, which is south
of the 33d degree of north latitude, without the knowledge or the
previous consent in writing of the company; and the annual premium
due at the latter date was not paid until ten days thereafter. A
friend then paid it to the agent, and took from him a renewal
receipt, but made no mention of the residence of the insured, who
died the same day from yellow fever contracted in that district.
The agent, on learning the fact, at once informed the company, and
was immediately instructed by telegraph to tender the premium to
the party paying, and demand the receipt. He did so, but the tender
was not accepted, nor the receipt surrendered.
Held: 1.
that the company, by the agent's receipt of the premium, waived the
forfeiture for nonpayment at the stipulated time, but not the
forfeiture incurred by the residence of
Page 95 U. S. 327
the insured within the prohibited district; 2. that the company,
having promptly tendered the return of the premium and demanded the
surrender of its receipt, was not liable on its policy.
2. A waiver can only be justly claimed by the assured where the
course of dealing by the company has been such as to induce his
action, and the company should be apprised of the facts which
create the forfeiture, and of those which will necessarily
influence its judgment in consenting to waive it.
The Globe Mutual Life Insurance Company of New York, on the 5th
of November, 1869, issued to Eliza Garber a policy of insurance for
$5,000 upon the life of her husband, commencing on the 1st of that
month. The premium was payable annually on the 1st of November. The
policy stipulated for the payment of the amount of the insurance
within sixty days after due notice and proof of the death of the
insured, subject, however, to certain express conditions. One of
these conditions provided that if the premiums were not paid on or
before the days mentioned for their payment, the company should not
be liable for the sum insured or any part of it, and that the
policy should cease and determine. Another condition provided that,
if the insured resided in any part of the United States south of
the 33d degree of north latitude, except in California, between the
1st of July and the 1st of November, without the consent of the
company previously given in writing, the policy should be null and
void. And the policy declared that agents of the company were not
authorized to make, alter, or discharge contracts, or waive
forfeitures.
The insured died at the City of New Orleans on the 11th of
November, 1872. Between the 1st of July and the 1st of November of
that year, he had resided at that city, which is south of the 33d
degree of north latitude, without the previous consent in writing
of the company, and the annual premium due on the first of that
month was not paid on or before that day. Due notice and proof of
his death having been given to the company, and payment by it
refused, suit was brought by Mrs. Garber in the Circuit Court of
St. Louis County, whence it was removed, on the petition of the
company, to the Circuit Court of the United States for the Eastern
District of Missouri. Judgment was rendered for the plaintiff, and
the cause removed here by
Page 95 U. S. 328
writ of error. Mrs. Garber died and Wolff, her executor, was
made the defendant in error.
The other facts are stated in the opinion of the Court.
MR. JUSTICE FIELD delivered the opinion of the Court.
By the residence of the insured within the prohibited district
of country during the period designated in the policy without the
previous consent of the company, and the failure of the assured to
pay the annual premium when it became due, the policy, by its
express terms, was forfeited and the company released from
liability unless the forfeiture was waived by the action of the
company, or of its agents authorized to represent it in that
respect.
The waiver of the forfeiture for the nonpayment of the premium
due on the 1st of November, 1872, is alleged on the ground that the
premium was subsequently paid to an agent of the company, he
delivering its receipt for the same, signed by its secretary, and
countersigned by the manager and cashier of the local office, the
plaintiff contending that the company, by its previous general
course of dealing with its agents, and its practice with respect to
the policy in suit, had authorized the premiums to be paid and the
agent to receive the same after they became due, and thus had
waived any right to a strict compliance with the terms of the
policy as to the payment of premiums.
The waiver of the forfeiture arising from the residence within
the prohibited district between the 1st of July and November
without the previous consent of the company is also alleged from
the subsequent payment of the premium and its receipt by the local
agent, the plaintiff contending that the premium was received with
knowledge by the agent of the previous residence of the insured
within the prohibited district.
It appears from the record that the deceased was taken sick with
the yellow fever at New Orleans on the 6th or 7th of November,
1872, and died on the 11th of the month, between the hours of
eleven and twelve in the forenoon. On the previous day a telegram
was sent by Mrs. Garber from New Orleans to
Page 95 U. S. 329
a gentleman in St. Louis, directing the latter to go to the
agency of the company in that city, at which the policy was issued,
and pay the premium due on the first of the month. Accordingly, on
the following morning, at about nine o'clock, the premium was paid
by this gentleman, and a renewal receipt was thereupon delivered to
him. This renewal receipt was dated in New York, and signed by the
secretary of the company. It not only acknowledged the receipt of
the premium but it continued the policy in force for another year.
The practice of the company was to send to its agents in St. Louis
receipts in this form, signed by its secretary, to be countersigned
by the local manager and cashier before being used. The receipt
given was thus countersigned. The payment was made in the present
case to a boy in the office of the agent, and by him the renewal
receipt was delivered. It was his habit to receive premiums and
deliver the proper renewal receipt in the absence of the agent. In
this case, the money was given by him on the latter's coming to the
office the same morning. The agent credited the amount to the
company in his semi-monthly account transmitted to the home office.
The gentleman who paid the premium was not aware at the time that
the insured was sick, and no inquiries were made by the boy or the
agent as to his health. It is conceded that they had no information
on the subject. A few days afterwards, the agent learned of the
death of the insured and of the sickness which was the immediate
cause of it, and informed the home office. The company at once
telegraphed the agent to return the premium and demand a surrender
of the renewal receipt. The money was accordingly tendered to the
gentleman who paid it and a surrender of the renewal receipt
demanded, but the tender was not received nor the receipt
returned.
The conditions mentioned in the policy could, of course, be
waived by the company either before or after they were broken; they
were inserted for its benefit, and it depended upon its pleasure
whether they should be enforced. The difficulty in this case, and
in nearly all cases where a waiver is alleged in the absence of
written proof of the fact, arises from a consideration of the
effect to be given to the acts of agents of the company in their
dealings with the assured. Of course
Page 95 U. S. 330
such agents, if they bind the company, must have authority to
waive a compliance with the conditions upon a breach of which the
forfeiture is claimed, or to waive the forfeiture when incurred, or
their acts waiving such compliance or forfeiture must be
subsequently approved by the company. The law of agency is the same
whether it be a plied to the act of an agent undertaking to
continue a policy of insurance or to any other act for which his
principal is sought to be held responsible.
The principle that no one shall be permitted to deny that he
intended the natural consequences of his acts when he has induced
others to rely upon them is as applicable to insurance companies as
it is to individuals, and will serve to solve the difficulty
mentioned. This principle is one of sound morals as well as of
sound law, and its enforcement tends to uphold good faith and fair
dealing. If, therefore, the conduct of the company in its dealings
with the assured in this case and with others similarly situated
has been such as to induce a belief that so much of the contract as
provides for a forfeiture if the premium be not paid on the day it
is due would not be enforced if payment were made within a
reasonable period afterwards, the company ought not in common
justice to be permitted to allege such forfeiture against one who
has acted upon the belief and subsequently made the payment. And if
the acts creating such belief were done by the agent and were
subsequently approved by the company, either expressly or by
receiving and retaining the premiums, the same consequences should
follow.
This principle applied to the case at bar will render the
question presented one of easy solution. The company,
notwithstanding the provision in the policy that its agents were
not authorized to waive forfeitures, sent to them renewal receipts
signed by its secretary, to be used when countersigned by its local
manager and cashier, leaving their use subject entirely to the
judgment of the local agent. The propriety of their use, in the
absence of any fraud in the matter, could not afterwards be
questioned by the company. Accompanying these receipts was a
notice, printed on the same paper, that policies which became null
for nonpayment might be renewed at the home office, within a
reasonable time, upon furnishing
Page 95 U. S. 331
satisfactory evidence of good health, such satisfactory evidence
being left to the judgment of the local agent, and the renewal by
the home office consisting of a receipt signed by its secretary,
transmitted to such agent, to be used when countersigned by the
local manager and cashier. It was the habit of the agent to give
such renewal receipts whenever the premiums were paid after the
time stipulated, and his accounts to the home office showed such
subsequent payment. His action in this respect was not questioned
by the company, and the premiums were retained by it without any
pretense that the policies had ceased to be obligatory for want of
punctuality in their payment. The mode of dealing by the agent with
persons taking out policies at the local office, his use of renewal
receipts, his acceptance of premiums after the day on which they
were payable, were all known to the home company, and its retention
of the premiums thus received was an approval of his acts. So far,
then, as the waiver of the forfeiture incurred for nonpayment of
the premiums is concerned, it is clear that the company, by its
course of dealing, had, notwithstanding the provision of the
policy, left the matter to be determined by its local agent, to
whom the renewal receipts were entrusted.
But so far as the forfeiture arose from the residence of the
insured within the prohibited district, the case is different.
There is nothing in the acts of the company which goes to show that
it ever authorized its agents to waive a forfeiture thus incurred
or that it ever knew of any residence of the insured within the
prohibited district until informed of his death there. In every
case where premiums were received after the day they were payable,
the fact that a forfeiture had been incurred was made known to the
company from the date of the payment, and the retention of the
money constituted a waiver of the forfeiture; but no information of
a forfeiture on any other ground was imparted by the date of such
payment. The agent receiving the premium in the case at bar
testified that he knew nothing of the residence of the insured
within the prohibited district during the excepted period, and the
evidence in conflict with his testimony was slight. He knew that
the insured had a place of business there, and that he was
permitted to make occasional visits there within that period,
and
Page 95 U. S. 332
to reside there at other times. Everything produced as evidence
of knowledge of residence within the prescribed district is
consistent with these occasional visits and residence at other
times than during the excepted period. But even if the agent knew
the fact of residence within the excepted period, he could not
waive the forfeiture thus incurred without authority from the
company. The policy declared that he was not authorized to waive
forfeitures, and to the provision effect must be given except so
far as the subsequent acts of the company permitted it to be
disregarded. There is no evidence that the company in any way,
directly or indirectly, sanctioned a disregard of the provision
with reference to any forfeitures except such as occurred from
nonpayment of premiums. As soon as it was informed of the residence
of the insured within the prohibited district, it directed a return
of the premium subsequently paid. It would be against reason to
give to the receipt of the premium by the agent under the
circumstances stated the efficacy claimed. The court, in its
instructions, treated the receipt of the premium by the agent, with
knowledge of the previous residence of the insured within the
prohibited district, if the agent had such knowledge, as itself a
sufficient waiver of the forfeiture incurred, without any evidence
of the action of the company when informed of such residence, and
in this respect we think the court erred. It is essential that the
company should have had some knowledge of the forfeiture before it
can be held to have waived it.
It is true that where an agent is charged with the collection of
premiums upon policies, it will be presumed that he informs the
company of any circumstances coming to his knowledge affecting its
liability, and if subsequently the premiums are received by the
company without objection, any forfeiture incurred will be presumed
to be waived. But here there was no ground for any inference of
this kind from the subsequent action or silence of the company.
There was no evidence of a disregard of the condition as to the
residence of the insured in any previous year, and consequently
there could be no inference of a waiver of its breach from a
subsequent retention of the premium paid. This is a case where
immediate enforcement of the forfeiture incurred was directed when
information
Page 95 U. S. 333
was received that the condition of the policy in that respect
had been broken.
Not only should the company have been informed of the forfeiture
before it could be held by its action to have waived it, but it
should also have been informed of the condition of the health of
the insured at the time the premium was tendered upon the payment
of which the waiver is claimed. The doctrine of waiver, as asserted
against insurance companies to avoid the strict enforcement of
conditions contained in their policies, is only another name for
the doctrine of estoppel. It can only be invoked where the conduct
of the companies has been such as to induce action in reliance upon
it and where it would operate as a fraud upon the assured if they
were afterwards allowed to disavow their conduct and enforce the
conditions. To a just application of this doctrine it is essential
that the company sought to be estopped from denying the waiver
claimed should be apprised of all the facts: of those which create
the forfeiture and of those which will necessarily influence its
judgment in consenting to waive it. The holder of the policy cannot
be permitted to conceal from the company an important fact like
that of the insured's being
in extremis and then to claim
a waiver of the forfeiture created by the act which brought the
insured to that condition. To permit such concealment and yet to
give to the action of the company the same effect as though no
concealment were made would tend to sanction a fraud on the part of
the policyholder, instead of protecting him against the commission
of one by the company.
It follows that the judgment must be reversed and the cause
remanded for a new trial, and it is
So ordered.
