
    ANDREW KNAUER, and KATIE, his wife, Respondents, v. THE GLOBE MUTUAL LIFE INSURANCE COMPANY, Appellant.
    I. Contract.
    
    1. Rescission or Repudiation of, for Fraud.
    (a) Laches in discovering fraud, when not imputed.
    
    1. Policy of life insurance.—When a holder of a policy is induced to surrender it, and accept another in its place, upon false representations as to the terms of the new policy, and as to their effect being more favorable to the assured than the terms of the old one, laches will not be imputed to him from his not reading the new policy and discovering that it did not correspond with the representations, for a period of five years, the new policy being so obscure in its terms as that only experts in insurance matters could understand it.
    II. Corporation.
    
    1. Officer as Agent.
    (a) Authority to bind corporation by his representations.—Prima facie evidence of.
    
    1. An officer made certain representations to a dealer with the corporation, in its office, the officer and dealer being engaged in the business of the corporation, and the representations having reference to its business, and being designed to produce an act by the dealer beneficial to the corporation, and the dealer did the act which was subsequently accepted by and acted on by the corporation ;
    
      Reid,
    
    That there was prima facie evidence (there being no other proof as to the extent of the officer’s authority) of authority in the officer to bind the corporation by his representations.
    Before Sedgwick, Ch. J., Freedman and Russell, JJ.
    
      Decided December 4, 1882.
    Appeal from a judgment entered after a trial at special term.
    In May, 1870, the plaintiff, Andrew Knauer, took - from the defendant an endowment insurance policy guaranteeing the payment of the sum of $2,000 at the end of fifteen years from the date thereof to him, or, in case of his prior death, to his wife, Katie Knauer. The premium upon this policy was $139.38 per annum, payable in quarterly installments. He paid the premiums up to and including the quarterly premium due January 27, 1874. In October, 1873, when Knauer was paying his premium at the defendant’s office, the cashier solicited him to exchange the policy he held for a .new policy, upon a plan which he represented to be more favorable than the terms of the policy Knauer then had. The cashier represented that the new policy would cost $30 a year less, that it would be payable a year sooner, to wit, 1884, and that in case of his death his wife would receive $2,000, as on the former policy, and in case he survived until 1884, he would himself receive the amount of $2,000 instead of having to pay another premium and waiting until 1885 for his $2,000.
    The cashier also offered to allow two years’ premium on the new policy without any cash payment, saying that the company had lowered its rates since the time when Knauer was first insured.
    The plaintiff did not exchange policies at that time, but did in January, 1874, the same representations being made to him by the cashier. Knauer received the new policy and paid premiums thereon in 1876 and 1878, $109.82 each.
    The new policy differed from the old one in the following particulars:
    1. The first policy entitled the holder to dividends during its progress. Knauer had received several. The new policy entitled him to dividends only at the end of the term in case he should then be living and should have continued to pay, otherwise he forfeited the dividends.
    2. The first policy entitled him, at any time after two annual premiums had been paid, to receive a paid-up policy for a proportionate amount of the sum insured, viz., 2-15th, 3-15th, &c., according to the number of annual premiums paid. The new policy did not give him that benefit, but was absolutely forfeitable, together with all the premiums paid thereon, in case of failure to pay.
    3. The first policy guaranteed the payment of $2,000 at the maturity thereof. The second policy guaranteed him only the payment of the net value of the policy.
    This net value was represented to the plaintiff by the cashier as meaning the same thing—that is, that the policy-holder would get $2,000 at the end of the time.
    According to the plaintiff’s witnesses on trial the words “net value” in the new policy substantially meant that the policy-holder would receive nothing. According to the defendant’s witnesses they meant that he would receive $600 or over.
    The plaintiff Knauer is a German, speaking but not reading English very well. The phraseology of the second policy issued to him was. such that only an expert in insurance matters could understand and interpret it. The plaintiff did not become aware of the difference between his first and second policy until •January, 1878, when he submitted it to an expert, who explained it to him, whereupon he brought this action, offering to surrender up the second policy and claiming the surrender value of the old policy at the time it was surrendered and the amount he had paid in premiums upon the new, with interest, &c.
    The plaintiffs had judgment below, and defendant now brings this appeal.
    
      Sewell & Pierce, attorneys, and Robert Sewell, of counsel, for appellant, urged :
    I. The cause of action, if Knauer ever possessed any, has been lost by the lapse of time and his own negligence. This is an application to rescind the contract made between him and the company. It is not sought to reform the contract; in. that case far greater laches will be overlooked (Jennings v. Broughton, 5 D. G. M. & G. 126; Story Eq. Jur. 200 a ; Atwood v. Small, 6 Clark & F. 232; Benedict v. Bank, 4 Daly, 171; Scholey v. Worcester, 4 Hun, 302 ; Fitzhugh v. Sackett, 50 N. Y. 699 ; Ross v. Tillotson, 6 Hun, 280 ; North v. Case, 42 N. Y. 362 ; affirming 2 Lans. 264 ; Hay v. Star Fire Ins. Co., 77 N. Y. 240 ; 1 Story Jur. § 776 ; 1 Fonb. Eq. ch. 62, § 2; Bidwell v. Astor Ins. Co., 16 N. Y. 263).
    II. The simple fact that the capacity of this plaintiff is less than that of another person, is no reason for setting aside his contracts (Mann n. Bellerty, 21 Ver. 326). Nor is the mere fact that a contract is hard and unconscionable, sufficient reason in law or equity to set it aside (Willis v. Jannegan, 2 Atk. 251; Warner v. Davids, 1 Woodb. & M. 203). The court of chancery is not the guardian of any but idiots, insane people, and others who are laboring under legal and physical disabilities. And this man of sound mind, of full age, with his eyes open, and understanding the English language, must be held to the same rule that governs other contracting parties, and if he enters into a contract which is improvident, he should not, for the mere reason that it is improvident, be permitted to rescind it. But, it is submitted, that the proof shows that the contract is not hard or unconscionable, and that, therefore, there does not exist even that reason for attempting to set it aside (Blackford v. Christian, 1 Knapp, 77 ; Stevens v. Mayor, 46 J. & S. 295).
    III. The acts of the agent who made the representations to the plaintiff were wholly unauthorized by the defendant, and there is no evidence tending to show that the company ever had any knowledge of those representations, or ever adopted or ratified them. (See Stringham v. St. Nicholas Ins. Co., 4 Abb. Ct. App. Dec. 315). To establish a ratification by a principal of an unauthorized act of his agent, it must appear that the principal acted with knowledge of the facts; he cannot be held to have ratified acts which did not come to his knowledge (Ritch v. Smith, 82 N. Y. 627 ; Bannon v. Warfield, 42 Md. 22 ; Adams Express Co. v. Trego, 35 Md. 47; Hardeman v. Ford, 12 Ga. 205 ; Billings v. Morrow, 7 Cal. 171; P. & S. R. R. Co. v. Gazzam, 32 Pa. 340; Kerr v. Sharp, 83 Ill. 199 ; .Combs v. Scott, 12 Allen, 493 ; Com. Bank v. Jones, 18 Tex. 811; Lewis v. Read, 13 M. & W. 834 ; Freeman v. Rosher, 13 Q. B. 780).
    IV. The learned judge at special term erred in finding that policy Ho. 31,850 (the second policy), was a term policy upon which the reserve accumulations during said years would never exceed the sum of twenty-five dollars, and that the value of said policy Ho. 31,850, at the expiration of the said term (said Knauer being then living), would be nothing.' .
    
      James P. Albright, attorney, and of counsel for respondents, among other things, urged :
    I. The issuance of the new policy shows that the company ratified the acts of its cashier, done in its own office, and behind its own counters.
    II. There has been no laches on the part of the plaintiffs, for the action was begun immediately upon the discovery of the fraudulent character of the new policy (Rohrschneider v. Knickerbocker Life, 76 N. Y. 216 ; Hay v. Star Fire Ins. Co., 77 N. Y. 240).
   By the Court.—Horace Russell, J.

The grounds urged before us for the reversal of this judgment were (1) that the judge at special term misconceived the meaning of the second policy issued; (2) that the plaintiff, if he ever had any cause of action, had lost it by his own laches ; and (3) that the representations of the cashier were not binding upon the defendant, he having no authority to make them, and the defendant never having ratified them.

1. As the first objection is to a conclusion of fact rather than of law, it is only necessary to say that there is evidence to support the finding below, and, indeed, the witness relied on by the defendant testified that the policy was capable of the interpretation put upon it by the plaintiff’s witnesses, although that was .not the interpretation he put upon it or which was put upon it by the defendant.

2. The judge below having by his finding determined that the plaintiff was guilty of no laches such as should prevent the granting of the relief demanded, we see no reason for disturbing the finding, which was discretionary (Hay v. Star Fire Ins. Co., 77 N. Y. 235). Indeed, it may well be doubted whether the plaintiff had not the statutory time within which to bring his action, viz., six years (Code, § 382., subd. 5), and so, whether it could be held that any action brought within that time should fail because of laches (Matter of Man. Savings Ins., 82 N. Y. 142). The fact that the second policy was obscure in its terms, so much so that only experts in insurance matters could understand it, takes this out of that class of cases where courts of equity have refused to relieve a party who by the exercise of ordinary diligence, and by such an examination as a prudent person ought to have made, might have discovered the falsity of the represen tat ions.

3. As to the cashier’s authority to make the representations so as to bind the defendant, there was no other evidence than that he, when receiving premiums from the plaintiff, urged the plaintiff to make the surrender of his first policy, making the representations relied on, and the defendant thereafter issued to the plaintiff the new policy. The cashier acted as the agent of the defendant in that transaction, whether within the scope of his ordinary employment or not. There was no evidence offered on the part of the defendant that his action was not within the scope of his ordinary employment, and the company ratified his act by issuing the new policy. These facts were sufficient, in our judgment, in the absence of any contradiction, to justify the judge below in holding that the cashier was the defendant’s agent, and that the defendant was bound by and responsible for his misrepresentations.

The judgment was right, and should be affirmed, with costs.

Sedgwick, Ch. J., and Freedman, J., concurred.  