
    Andrew Langdon, Respondent, v. The Northwestern Mutual Life Insurance Company, Appellant.
    Fourth Department,.
    December 28, 1906.
    Insurance — when agent's estimate of sums receivable on tontine policy not binding On the insurer. .
    ' Under a tontine policy of life insurance the amount of surplus to be applied to any particular policy is uncertain by the very nature of such insurance, and a , holder of such policy is presumed to know that-the amount o.f surplus receivable at its maturity cannot he known in advance.
    Hence, the written statement of a sub-agent of the insurer given to one applying for insurance; and outlining various options and the amount of surplus payable thereunder must be considered as a mere estimate and does not'constitute, a " contract binding upon the insurer. ■ .
    The contract of insurance under such circumstances is made up of the-application and the policy issued thereon, and such contract; not the Agent’s estimate, is controlling as to the amount receivable at maturity, .
    Appeal by the- defendant, The Northwestern Mutual Life Insurance Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Erie on the 30th day of June, 1906, upon the decision of the court, rendered after a trial at the Erie Special Term, decreeing the plaintiff to be.entitled to a paid-up life insurance policy of the defendant company for the sum of $30,000, and to recover the sum of $29,601.76 damages and costs.
    The action was commenced on the 16th day of June, 1904, to obtain practically the relief which was awarded by the judgment.
    The sub-agent of the defendant insurance company delivered to the plaintiff, who was applying for a policy of life insurance"on the tontine plan, a typewritten paper entitled “ Special contract,” stating the -amount receivable under the'policy and certain options available to the insured at the maturity of the policy, and the amounts the insured would receive under such options.
    
      Allan McCulloh, George H. Noyes and Tracy C. Becker of counsel, for the appellant.
    
      James McCormick Mitchell and Edward H. Letchworth of counsel, for the respondent.
   McLennan, P. J.:

We are satisfied that the facts found by the learned trial court are practically correct,, and, therefore, need not be repeated in this opinion. Upon such facts the question is presented, may a sub-agent of a life insurance company, in direct violation of his instructions in that regard, make a contract binding upon such company, which is in one or more of its essential features at variance with the terms of a contract resulting from the application of the insured made in the usual form, and the policy issued in response to or in accordance with such application ? And especially where the contract issued in pursuance of such application was accepted and retained by the applicant without objection for eleven years and where concededly the alleged contract, resulting independent of the application and the policy issued thereon, was not brought to" the attention of the insurance company during such period.

. We conclude under the evidence and circumstances disclosed in. this case that the paper, Exhibit A, should be regarded to be simply an estimate or representation as to what the policy solicited would yield in case the annual premiums were paid in full and in ease the insured survived the fifteen-year tontine period. Wé think it should not he held that the- alleged contract, Exhibit A, superseded the application for insurance and the policy issued in pursuance thereof and'gave to the insured a definite and fixed amount of surplus irrespective of the provisions contained. in the policy. Such a construction would work an injustice to the-other parties-to the tontine plan. The whole scope and purpose of such semi-tontine policy is such that-the amount, of surplus, to be applied to any particular policy is uncertain, and upon the face of -the alleged special agreement he knew the amount of surplus was uncertain and was simply án estimate of what such policy would be worth at the end of the tontine period.

But wholly independent of that consideration, the plaintiff made an application for insurance in the defendant company in ,tlie regular and ordinary way. In and by such.application he stated in substance that he understood “that no statements, representations or information: made or given by or to the person soliciting or taking this'application for' á policy, or to any other person, shall be binding on the company, or- in any manner affect its rights, Unless such statements, representations or. information bé reduced to writing, and presented to the officers of the company at the'home office in this application.” lié received and accepted á policy upon which was indorsed : -“ Agents ar.e not authorized to waive forfeitures, or to make, alter or discharge contracts.” - Yet, notwithstanding his answer in the application and notwithstanding the receipt by him-of a policy issued pursuant to the application made by him, and upon' which was indorsed the statement above quoted, it is Urged that such application and policy do not control and'govern the rights •of the parties, but rather that they are to be ascertained by virtue of the alleged “'special contract” delivered to the insured by the sub-agent. The rights of the parties should,be determined under and .by virtue of the application'for insurance made by the plaintiff, which is clear and unambiguous, and the policy issued in pursuance thereof, which was received .and accepted by the plaintiff and retained by liim for a period of at least eleven years without complaint.

It is apparent upon the face of Exhibit A that it was in effect only a prospectus, a statement of the great results which might happen in case insurance in the defendant company was applied for, one of the statements being that said policy in the Northwestern will return double the annual cash dividends of any other company writing this kind of policy.” Another" of the statements was to the effect that “ the options at the termination of the accumulative period cannot fail to meet the circumstances of the insured.” In addition it is apparent that the plaintiff knew or must be presumed to have known that under the terms of the semi-tontine .policy the amount of"surplus could not have been known in advance and could not have been thus agreed to be paid without doing injustice to others in such class. If the sub-agent in the case at bar was authorized under the circumstances to make a binding contract compelling the defendant to pay a.fixed sum of $25,810.80 as the surplus belonging to him as one of the semi-tontine class of the defendant, he" could as well have guaranteed an amount of surplus to the plaintiff sufficient to absorb the entire sum applicable to the persons so interested in said class. The respondent’s contention is in effect that a "sub-agent of an insurance company in violation of his instructions may make a contract without the knowledge of the. insurance company which will prevent such company from carrying out its agreement with a class which it has undertaken to insure. , In other words, an insurance company agrees under the tontine plan of insurance, which is well .recognized, that all persons who become parties to such plan of insurance may enjoy and participate in the fruits of the same, provided they survive the tontine period. The contention of the respondent practically abrogates such rule by suggesting that a sub-agent of such company may make a contract in violation of his authority and instructions, which shall take the place of the application made by the insured in the ordinary way and of the policy of insurance issued thereon. The sub-agent Whitney, as found by the trial court, had no authority to make Exhibit A, as between himself and the defendant. We think there is nothing in the evidence to indicate that he had implied authority to make the alleged contract in question, Exhibit A. Assuming that he had authority to make a contract in that regard, the evidence conclusively shows that the figures inserted therein were a matter of computation and were not such as were definitely authorized by the defendant. Clearly Exhibit A was a prospectus or .a representation as to what an application fan a policy in the defendant company would produce. The trial court has found that no fraud was perpetrated in making, such representations and has not found that there, was any mutual mistake as to the facts. Therefore, we must assume that the application for a policy and the policy issued thereon constituted the contract between thé parties, into which all prior negotiations and agreements were merged.

It is considered that,there was.no consideration for the “special contract ” claimed to have been issued by the defendant; also that whatever the nature of the agreement, it was merged in and superseded by the contract evidenced by the application for and the policy issued in pursuance thereof, and, therefore, that such contract, to wit, that constituted by the application and policy, was not modified or changed because of any other alleged arrangement or agreement. We are constrained to hold that the application for the policy in this case and the policy issued in response to such application, constituted the contract or agreement between the parties and absolutely determined their rights, irrespective of Exhibit A.

It follows that the judgment appealed from should be modified so as to provide that the amount of surplus which the plaintiff is entitled to recover is the sum of $14,609.34, with interest, thereon from the 28th day of February, 1904, and that the judgment as so modified should be affirmed, with costs in the courts below and of this appeal to the appellant. •

All concurredKruse,- J., not sitting.

Judgment modified in accordance with opinion, and as thus modified affirmed, with costs of this appeal to "the appellant.  