
    STATE LIFE INS CO v RITZI
    Ohio Appeals, 7th Dist, Mahoning Co
    Decided March 31, 1931
    Kennedy, Manchester, Ford, Bennett & Powers, Youngstown, for Ins Co.
    Henderson & Haynes, Youngstown, for Ritzi.
   PARR, J:

It is suggested that the claim was first made in this Court by the Insurance Comr pany that the first annual premium had not been paid. In the court below the Insurance Company filed its answer, which was concluded by a general denial, and it is urged that the Company would have no right under such answer to tender the defense which it tendered upon the trial below; That is to say, the non-payment of the first annual premium as a condition precedent to effectuating the policy of insurance.

That does not new become important, for the reason that upon the trial below testimony was offered concerning the non payment of the premium. Objection was made, which the trial court sustained, but later, as disclosed by the Record, testimony was offered and received concerning payment, so that issue now becomes unimportant. It leaves the remaining and important issue in this case as to whether or. not the agent,

P. M. Moore, had the right to make the settlement which he made with Ritzi, the assured, accept one hundred dollars in cash and receive the note of the assured for $1148.75.

It will be recalled that the Insurance Company sent the policy which in and of its own terms admits the payment of the first year’s premium. That would be upon the assumption that at the time of the delivery of the policy payment had been made. Accompanying the policy was the receipt before mentioned, and which was delivered by Moore to Ritzi. It is in due form and for the full amount, $1248.75, signed, as above stated, by the Secretary of the Company, but it had to be counter-signed by Moore, the agent, which was done when the policy was delivered, which was on the 19th day of June, and not until December 9th, 1929, did the Insurance Company make any question about the payment of the premium. At that time the Assistant General Counsel for the Company, and after demand had been made by Ritzi for the payment of the disability installments, wrote him that payment was refused; that his policy was void, and tendered back to Ritzi the $1248.75, which, it will be recalled, was the full amount of the first annual premium. This insurance policy was for the sum of twenty five thousand dollars, carrying a double liability clause in case the assured was killed by an accident. That part of the policy, of course, is not in question here. There was the additional disability insurance provided for in this policy, and the controversy here relates only to the disability insurance. So that the Insurance Company, whatever the situation may have been, waited from June until December 9th, 1929, to disavow the validity of the insurance policy. It waited until after Mr. Ritzi had suffered from his operation and his alleged consequent arthritic condition which followed, and until notified that disability installments would be claimed, before it made any question with anyone with reference to the validity of the policy. It becomes readily apparent that the important question here is whether or not F. M. Moore, as agent for the Company, had a right to deliver this policy and receive the first annual premium upon the terms which were made in the settlement, to-wit, the receipt of $100.00 in cash and the note for $1148.75. If the agent had that authority, the Company whs bound. If he did not, of course it would not be so.

A case which is of interest in this connection, and perhaps it is necessary to only have in mind for consideration the Ohio cases upon this subject, is Machine Company v Insurance Company, 50 Oh St, 558. In the opinion of the court by 'Williams, J, it is said:

^‘The only other ground upon which it is claimed the defendant is not liable is, that the premium was not paid until after the loss occurred.”

That is not the situation in this case. If the premium was paid, it was paid before the illness of Ritzi. It is further observed that:

“Murphy was the duly commissioned agent of the defendant, authorized to make contracts of insurance, collect premiums, and issue and renew policies; and, to that end, was furnished by the defendant with printed forms of policies, signed in blank by the president, and secretary of the company, to enable him, without conference with them, to countersign and issue the policies in behalf of the company. It is well settled that such an agent is the general agent of the company, and may, in his dealings with those he insures, waive payment in cash, of the premiums, and, indeed, any of the conditions of the policy except when a restriction upon his authority is in some way brought to the knowledge of the insured.”

In the instant case no knowledge whatsoever of any restriction on Moore’s authority was brought home to Ritzi. He was permitted to believe that Moore had full authority in this matter, because months before he had closed this transaction with Moore, received the receipt, executed his note, and never until the end of that year did the Insurance Company complain. Continuing, it is said that:

“In a recent and valuable work on insurance it is said that a fire policy does not ordinarily make the payment of the premium a condition precedent to the validity of the contract, and a general agent may of course extend credit to the insured, or not, as he chooses.”

But, what is the difference? In the instant case this policy provided for payment of the annual premium at the time, of the delivery of the policy. It likewise provided within and of itself a receipt for that annual premium, leading the assured to believe that the transaction with the agent was valid and effective. It is said further that:

“The general custom where credit is given, is for the agent to do so on his own responsibility. But in case the agent should make default in accounting to 'the company, the policy will nevertheless be valid. And though the policy provide that it sljall not take effect until the premium is paid in cash, the general agent has power to waive the premium, and will be held to have waived it if he delivers the policy without enforcing payment. Richards on Insurance, Section 95. And in Section 93 of the same work, that author says: “An agent of a life company who is intrusted with, the business of closing the contract by delivering the policy is held to have an implied authority to determine how the premium then due shall be paid, whether by cash, or, as is sometimes done, by giving credit, in which case the agent becomes the creditor of the insured, and the debtor of .insurer. In that event, though the agent subsequently defaulted and the money never reached the company, the policy would still be binding. By the weight of authority the agent is held to have this discretionary power, although the policy in terms denies it; but this is based upon his possession of the document for purposes of delivery, and his instructions to deliver it, and consequently his power does not extend to subsequent premiums or premium notes.’ ■ Bodine v Insurance Company, 51 N. Y., 117. The authorities on this subject are extensively collected in that very convenient and almost indispensable work, The American and English Encyclopedia of Law, Vol 11, page 333. The waiver of the payment of the premium in cash, is an act within the exercise of the agent’s general authority to issue policies and collect the premiums, and such waiver may be either express or implied.”

What has just been read would be sufficiently determinative of the important issue here, but an additional case, and which directly reflects upon this issue, is that of Smith v Savings Life Assurance Society, 8 O. F. D. 417. The first proposition of the syllabus is upon the proposition and in harmony with that which has just been read from the opinion of Williams, J, in the case to which reference is above made.

It is not now necessary nor would it be profitable to continue this discussion further. It is worthy of note that the opinion in the case in the 3 Ohio Fed. Dec., is by the late Chief Justice Taft when a member of the Circuit Court of Appeals of the United States. It is a well reasoned and able opinion, as might be expected under the circumstances, and adheres to the principles laid down by Williams, J., in the 50th Ohio State case.

Without further" discussion, it is quite sufficient to say that for the reasons given the judgment in the instant case is affirmed.

ROBERTS and POLLOCK, JJ, concur.  