
    Union Central Life Insurance Co. v. Hook.
    ' Life insurance■ — Action for recovery on written contract — Inadmissibility of statements of agent — To vary contract — Presumption of knowledge, by insured, of provisions of policy — Insured cannot recover on verbal modification by agent, when.
    
    1. In an action to recover on a written contract for life insurance and upon an alleged subsequent verbal modification of the same, statements and representations made Ey the agent who solicited the policy, prior to and contemporaneous with the issue of the policy, are inadmissible to vary, in any respect, the terms of the written policy. In the absence of proof of fraud or mistake, such statements and representations are merged in the written contract.
    2. Where a life insurance policy has been accepted by the insured, and the policy has been in the possession of the insured for nine years, and he has paid nine annual premiums thereon, he will be conclusively presumed to have knowledge of all the stipulations and provisions of the policy.
    3. When such policy provided that the contract of insurance is ■ completely set forth in the policy and application and that none of its terms can be modified, except by an agreement in writing signed by the president, vice-president or secretary, and also that no agent has authority to extend or postpone the time of payment of any premium or note, the insured can not recover on a verbal modification of the terms of the policy made by an agent of the insurance company, extending the policy one year and waiving the payment of an annual premium, in the absence of such knowledge and acts by the insurance company as would estop it from alleging in defense the provisions of the policy.
    (Decided March 20, 1900.)
    Error to the Circuit Court of Knox County.
    The second amended petition, upon which the issues were finally made, alleged that on or about February 15, 1880, the defendant issued a policy on the life of the plaintiff for two thousand dollars “payable ten years after date, or to-wit, on or about the 15th day of February, 1890;” that the consideration was “the sum of $1,472 in ten equal annual installments of $147.20 each, in advance;” that after nine payments had been made, and shortly before the tenth became due, a certain modification of the policy was agreed upon “with the defendant through its agent, W. E. Hoyer,” thus: Hook agreeing to extend his policy one year, until February 15, 1891, and to give his note, maturing on that date, for $282.79 (the amount of two premiums, a tenth and eleventh, discounted for cash); and agent Hoyer agreeing to “waive the payment of the tenth annual premium” and agreeing further, that the note itself need not be paid at all, but should be deducted from the face of the policy, both note and policy maturing at the same time; and both agreeing that the policy should be held by the defendant as collateral to the note, “and that the amount for which said note was given, should be treated and regarded as a loan by the defendant to plaintiff, on said policy of insurance as then modified.”
    Plaintiff alleged that he survived the date of the maturity of his policy as modified, February 15, 1891, and asked judgment for its amount less the amount of the note, with interest from that date.
    The answer was a general denial.
    The plaintiff went to trial and concluded his testimony without offering the policy itself in evidence, persisting in the face of objection from the defendant, in introducing testimony designed to establish a parol contract of insurance, and resting his case on that.
    Other facts appear in the opinion. The verdict was for the plaintiff. Motion for a new trial by the defendant was overruled and judgment was rendered for the plaintiff, in the common pleas court, which was affirmed by the circuit court.
    
      Cooper & Moore; Maxwell & Ramsey and Robert Ramsey, for plaintiff in error-
    
      I. There was a failure of proof in two respects: The alleged policy was not proved, and the real policy was not shown to have matured.
    The petition counted deliberately and unequivocally upon a written agreement to pay $2,000.00 in ten years. The answer responded fully to that alleged cause of action when it denied the existence of such a contract. Its existence or non existence was the sole issue in the case; the only issue upon which the defense went to trial; the only issue which it submitted to the jury. It offered the policy, moved to exclude all parol testimony tending to vary its terms, demanded a peremptory charge to the jury and rested. No amendment was offered by the plaintiff. The defendant was entitled to judgment for failure of proof, Sec. 5296 Rev. St.; Dean v. Yates, 22 Ohio St., 388; Hill v. Supervisors, 21 Ohio St., 621; Thatcher v. Heisey, 10 Ohio St., 668; R. R. Co. v. Ward, 1 Bull., 332; Ins. Co. v. Osborn, 9 So. Rep., 869; Cremer v. Miller, 57 N. W., 318; Shomo v. Ransom, 18 S. E. 534.
    II. There was a fatal variance between the pleadings and the proof as to the nature of the contract.
    It is conceded that plaintiff is not entitled to recover upon the policy. He secured his judgment on the theory of a verbal contract. Having counted upon a policy or written contract, he can not in law recover upon a verbal contract, even though one exist. The variance between pleading and proof would be material. Stull v. Wilcox, 2 Ohio St., 569; Steiner v. Hellman, 40 N. Y. S., 36; King v. Faist, 37 N. E., 456; Wisbey v. Boyee, 27 S. W., 590.
    
      III. There was neither allegation nor , proof of any other contract of insurance than that evidenced by the policy.
    IV. All antecedent parol negotiations merged in the policy. Richards on Insurance, 81; Ins. Co. v. Lyman, 15 Wall., 664; Ins. Co. v. Mowry, 96 U. S., 547; Fowler v. Ins. Co., 116 N. Y., 389; Thompson 
      v. Ins. Co., 104 U. S., 252; Ins. Co. v. Cohwning, 28 S. W., 117.
    Y. The statement of the agent was merely a speculation as to the future earning capacity of the policy, upon which no rights could be predicted.
    This suit is prosecuted because the plaintiff believes that sanguine assurances of that kind are actionable. But they are not. Armstrong v. Karstner, 47 Ohio St., 276; Saunders v. McClintock, 46 Mo. App., 216; Kosselbery v. Walton, 40 Ill. App., 626.
    VI. There was no authority in the agent for the alleged subsequent modification of the policy. McMillen v. Ins. Co., 24 Ohio St., 67.
    The authority to do the particular thing ascribed to agent Hoyer in this case, is still less to be presumed, since it is an act forbidden by the statute. Sec. 3631-4 Rev. St.
    VII. The testimony does not establish the alleged subsequent modification. Ins. Co. v. Reed, 33 Ohio St., 283; Upton v. Triblecock, 91 U. S., 45; Fish v.Clelland, 33 Ill., 237.
    
      Gritchfield & Devin; W. L. McElroy and J. B. Waight, for defendant in error.
    The statement so persistently repeated in the brief of counsel for plaintiff in error, that the cause of action set forth in the second amended petition was upon a written policy of insurance alone, is a mistake; the cause of action was upon a written policy of insurance and a subsequent- verbal agreement, made by the general agent, Hoyer, in reference thereto, making the date of maturity, that in the written policy was indefinite as to time, certain and definite.
    The statements of Godman at the time the policy was delivered as to when it would mature, are not material in this case, except as showing a reason and consideration for the agreement with Hoyer'. These statements, however, are certainly competent. Ins. Co. v. Walwrath, 17 C. C., 509; 9 Circ. Dec., 699.
    While preliminary verbal negotiations may become merged in the writing, subsequent verbal modifications of the written agreement do not. As to the claim that the alleged verbal agreement of Hoyer does not bind the company because of provisions in the policy, and in the note given, as to his authority; in the first place Hoyer was the general agent of the company, and as such had authority to bind them by such an agreement. Ins. Co. v. Eshelman, 30 Ohio St., 647; Mechem on Agency, Sec. 931; Am and Eng. Ency. of Law, Vol. 11 page 281, note 3.
    As to the right of the agent to make a verbal contract of insurance under the law, we call attenion to the fact that section 3631-4 R. S. on this subject was not passed until April 10. 1899, after the verbal contract was made in this case. Vol. 89, O. L., page 220. It is certainly settled in Ohio that a valid contract of insurance may be made by parole when not forbidden by statute, and it was not forbidden by statute February 13, 1889. Machine Co. v. Ins. Co., 50 Ohio St., 549.
   Davis, J.

The parties to this action entered into a written contract for insurance upon the life of the defendant in error. This contract, or policy, was delivered to the insured and was in his possession for nine years, at the end of which time the insured borrowed of the insurer the equivalent of two annual premiums, and gave therefor what is termed a collateral loan note, and deposited the policy with the insurance company as collateral security upon such loan. Thereafter and until the trial of this action in the court of common pleas the policy was in the possession of the insurance company. On the trial in the court of common pleas the. counsel for the plaintiff, before the first witness was called, stated that a demand had been made on the defendant for this life insurance policy which had been disregarded by the defendant. The counsel for the insurance compnay denied this statement. The plaintiff had requested a copy of all instruments of writing “in the possession or control of defendant which it intends to offer in evidence at the trial of this cause.” The defendant disclaimed any intention of offering the policy in evidence, apparently on the theory that it was incumbent on the plaintiff to do so, but then and there produced and made a tender of the papers to be used on the trial, including the policy issued to the plaintiff. This was a compliance with the request which was made of the defendant, and affords no excuse to the plaintiff for not introducing the written contract between the parties. The plaintiff did not then, nor at any time, offer the policy in evidence. At the close of the trial, it was offered in evidence by the defendant, and was read to the jury.

The policy does not provide for payment at any definite time, but is payable at the death of the assured, or at any time when the premiums paid on said policy, together with the equitable proportion of the company’s surplus contributed by and belonging thereto, losses and expenses being deducted, shall equal the amount insured, with certain provisos.

The plaintiff sought to maintain the issues on his part, by testimony entirely outside of the written contract of insurance, chiefly the testimony of himself and his wife, of statements made prior to the issue of the policy by the agent who solicited the insurance, and as to the alleged subsequent verbal agreement. At every step the defendant’s counsel objected and excepted to the admission of this parol proof of the terms of the contract, because the policy itself was in court and at the command of the plaintiff ; and finally, having themselves put the policy in evidence, they asked the court to rule out all parol testimony, in whatever form, relating to the contract of insurance. The court refused to exclude the evidence, and the defendant excepted.

The plaintiff: having based his cause of action on the written policy and the alleged modification of it, could not prevail in his action without putting the policy in evidence. Much less could he contradict its express terms by parol testimony, as he did do. Assuming that the statements of the soliciting agent in regard to the time when the policy would mature, were made as claimed, they were merged in the written contract which was afterwards accepted and held by the insured for nine years without objection, .and, if they were any more than mere opinions, they were palpably variant from the terms of the subsequent writing. It was, therefore, clearly incompetent to qualify the written contract in that way, so as to make it payable definitely at the end of ten years. 2 Jones E vidence, Sec. 437.

. At the time this contract was made, a verbal contract of insurance was valid in this state; but it never was the adjudged law that when a written contract of insurance had been made and was in existence, another and different parol version of the same contract could be made the ground of action and recovery; and yet that seems to be just what was attempted here, although the plaintiff had expressly based his cause of action on the written policy and a subsequent verbal modification of it. It was not to support the verbal agreement subsequent to the policy that the conversations of. the soliciting agent were offered. This testimony was apparently intended to vary the terms of the written policy as to the time of payment, or, whatever was the pretext or intention, that was the effect of it. Therefore, all of that testimony was inadmissible. It "was prejudicial because it tended to persuade the jury that there had actually been a subsequent agreement, as claimed, to extend the time of payment from ten years to eleven years; although no definite time of maturity is named in the policy itself, or in the collateral loan note given by the plaintiff at the time of the alleged subsequent verbal agreement.

The policy, as already mentioned, was accepted by the insured and he paid the premiums on it for nine years, retaining possession of the document during the whole time and until he surrendered it as collateral security upon his loan. Under such circumstances the presumption is conclusive, in the absence of fraud and mistake, that he knew the contents of the instrument. 1 Jones Ev., Sec. 22. And he is conclusively bound by the terms of the policy, whether he has read it or not. Allen v. Ins. Co., 123 N. Y., 6; Walsh v. Ins. Co., 73 N. Y., 5; Ins. Co. v. Buffum, 115 Mass., 313. The policy contained the following stipulation:

“This policy is issued, and accepted, upon the express conditions and agreements contained upon the back hereof, which are made part hereof, and which are to be used and referred to in order to explain the rights and obligations of the parties hereto in all cases not herein specially provided for, and which explain the rights and obligations of the parties hereto as fully as if they were recited at length over the signatures hereto affixed.”

The following are among the conditions and agreements referred to in the clause just quoted:

“Third — That the premiums shall be paid on or before the days upon which they become due, at the office of said company in the city of Cincinnati, or to the duly authorized agent of the company holding a receipt therefor, and producing same, signed by the president, vice-president or secretary, and that all notes given the company as á lien upon this policy, or in settlement for premiums, or part premiums, shall be paid at maturity, no agent having authority to extend or postpone the time of payment of any premium or note.

“Tenth — That upon the violation of the foregoing conditions, or any of them, this policy shall be null and void, and all payments made thereon and also all accrued surplus or profits, shall be forfeited to said company.

“Eleventh — That the contract of insurance between the parties hereto is completely set forth in this policy, and the application therefor, and none of its terms can loe modified, nor any forfeiture under it waived, except by an agreement in writing signed by the president, vice-president, or secretary, whose authority for this purpose shall not be delegated.”

From these provisions it is apparent that it was stipulated between the parties:

That premiums shall be paid on or before the day on which they become due. 2. That all notes given the company as a lien upon the policy, or in settlement for premiums, shall be paid at maturity. 3. That no agent has authority to extend or postpone the time of payment of any premium or note. 4. That upon the violation of the foregoing conditions, or any of them, the policy shall be null and void, and all payments made thereon, and also all .accrued surplus or profits, shall be forfeited to said company. 5. That the contract of insurance between the parties is completely set forth in this policy and the application therefor. 6. That none of its terms can be modified, nor any forfeiture under it waived, except by an agreement in writing. 7. That such an agreement shall be signed by the president, vice-president or secretary, whose authority for this purpose shall not be delegated.

These stipulations excluded the possibility of an existence of a binding verbal contract, such as is alleged by the plaintiff. By his expressed agreement he has made it impossible to modify the terms of the policy by a verbal agreement, or by a writing, unless it should be signed by the president, vice-president or secretary of the company. Union Mutual Life Ins. Co. v. McMillen, 24 Ohio St., 80.

We do not decide that there might not be an estoppel by conduct, notwithstanding such an agreement. But that case does not arise here. The loan of the amount of the two annual premiums, the acceptance of the loan note and the policy as collateral security therefor, and the giving of the receipts for the premiums with the condition that “this payment * * * if made by note, the non-payment of the note at maturity will void the policy,” does not make such a case. It might be otherwise if the policy were, as alleged by the plaintiff, payable in ten years, but it is not so payable; and for anything that appears it may not have become payable in fifteen years. So that acceptance of the premiums for the tenth and eleventh years affords no presumption of an agreement to extend the payment from ten to eleven years, because that transaction was entirely consistent with the terms of the policy.

All of the parol testimony, therefore, relating to this alleged verbal agreement was incompetent ; and for the same reasons the charge of the court was erroneous, in so far as it related to the authority of an agent of the insurance company, whether it be construed as referring to the agent who solicited the policy, or the agent who made the alleged verbal modification ; and also the instruction that a verbal agreement by which the policy was to become due and payable at the time of the payment of the last yearly payment as extended, being made by a mere agent of the company, was binding on the company. Upon the competent evidence in this case the judgment ought to have been for the defendant. It follows that the judgment of the circuit court and the judgment of the court of common pleas must be

reversed.

Minshall, J.,

dissents from the last proposition of the syllabus, and from the reversal of the judgment.  