136 OZARK MUTUAL • LIFE ASS 'N V. DILLARD. [169 OZARK MUTUAL LIFE A SSOCIATION V. DILLARD. Opinion delivered Jane 29,4925. 1. INSURANCE—CANCELLATION OF POLICY—RECOVERY OF ASSESSMENTS. -L -Where a benefit certificate is cancelled for Misstatement in ' the application as te the age of the-insured, the assessments paid . may be recovered if the misstatement was made in good 'faith and without fraud. , EVIDENCE—HEARSAY.—In an .action by a beneficiary , to recover assessments paid on a cancelled benefit certificate, a written statement of insured as to ber age, offered by the defendant on the issue whether' her age was intentionally misrepresented . in 'the applioationjor the certificate was properly excluded as hearsay; insured not being a party, nor representing the beneficiary as his age ‘ n 's t in making the.statement. INsuRANCE—AuTHORITv OF AGENT.—An, insurance company is ,not bound by statements made by ' an agent, unless he '.Was authorized to make them or they were within the -scepe -of hiS authority. . 4. • ' PRINCIPAL AND AGENT—APPARENT AUTHORITY OF AGENT.-Apparent authority in an akent is such authorify as the principal knowingly permits the agent to assume or which he holds the agent out as possessing such authority as he appears to have by ,reason of the the authority which he has; such authority ai a reasonably prudent- person, using diligence and iliscretMri, in view of the principal's conduct, would naturally suppose the agent to possess. . , • :.% , Appeal from 'Marion Circuit Court; VIII: Shinn; Judge; affirmed.
ARK.] OZARK, MUTUAL LIFE Ass'x v. Du.4.4Ro. 1:37 Piplaa.ce,Freclerick, for appellant. J. H. Black, for appellee. _WOOD, J. This is an action, by the . appellee against the. appellant to . recover assessments paid by . the appelT lee on., two policies or ,membership certineates . issued . by the appellant to . Martha Baker, .in which. the appellee was . named asbeneficiary. The appellee alleged that he had . paid in premiums , on . the ., policies the Sum of $20, and that the' aPPellant Caneelled the policies after. 'Stich preminnls had been paid and when the policies were ' . of the Value ' of $1,000 . •, ' The appellant's Principal . defense , Was that the. appellee, forfeited hiS 'right's , under the policies . by „Abe non-payment. of the . Prerniums and assessments as they were, due according . te the terms . of the contract of .instirance, and, further; that aPpellee had . perpetrated a wilful. frand ,uPon , the; aPnellant at the time of:the application for the , pOlicieS' . .by . "* . Stating that ,*the aSSured, • . M • artha •• Bak .e • r, Was fift-. nine ' years old, whereas . she Was at thc . time more than,- sixty; years of age, and therefore beynnd_the: age limit of: insurance fiXed . bY' the laws„of tlie aPpellant company... . . „The appellee . testified. identify.ing the policies .about which there .. is. no Aispute.. He stated that he had . kept the .assessments ;paid on. , the policies until the appellant , turned, them . down face to face. - He had been paying the assessments for something . like . seven years. .He_ had -1-Ten paying on matnrad policies_Tor fant_..years -0-ne Mr. Van Wagner came out to appellee's place and did business with appellee's son. He made a ,settleinent , with him and wrote him a check for $1,000. yan'Wagner said that ., lie had inVestigated witness' policies and found that ,. Mrs..Baker was older . than . she was listed. WitnesS remarked, "I reckon I will get . my assessment money," and Wagner said, "Yes,. sir ;: you will get_it .as soon, as I get back to Mena," It . wns on that occa,signi that witness quit paTing. Witness- paid until . he was turned -down.. He had never asked for nn assessment
138 OZARK MUTUAL LIFE ALSS'N v. DILLARD [169 that witness didn't pay. The' assessments witness had paid amounted to about $220. On cross-examination witnes g stated, among other things, that he was suing to recover the assessinents, and not claiming under the policies at all. He further testified that he didn't know what :position Wagner held with the appellant. He had been over there to settle with Witness' son on a policy, and wrote out his check for $1,000, His business over there was to ,. settle UP with witness' son, and Wagner probably came to see witness too. Witness had written the eoinpany and asked if his . half-sister were dead, .and Wagner said he had looked her uP and she Wasn't dead, but found that she wa's over age, and he Would cancel the policies. WitnesS had not heard froth her and - thought she might be dead, and so had witness,' daughter to write to see if she was dead. After Wagner came . oV'er there, the conVersation took place as before related by Witness. Wag-ner said he was going to cancel the policies and Would not receive any More premiums Witness had Paid eVery inonth from'the time the policies were taken out up :to the time the policies were canceled and had never paid any after that becanse Wagner said he would' not receive it, and that he Would . serid witneSs his assessments When he returned to the office. After Wagnerleft he wrote back a letter to the witne§s telling him to keep quiet albout it—that there was some fraud M it, and that witness had better keep quiet. If Wagner had not told witness that, witness would haVe been paying the assessments yet. Roy. Dillard testified that he was the son of the appellee and was Present when Van Wagner came and made a settlement with the apPellee on a claim. At that time Wagner made a settlement with the witness, and paid witness $1,000. Witness heard the conversation between Wagner and the appellee with reference to the insurance policies that appellee held. Over the objection of appellant, Wagner told the appel-
ARK.] OZARK MUTUAL LIFE ASS 'N v. DILLARD.. 139 lee that Martha Baker was too old to carry policies, .and appellee said he _guessed he could get his . money -back, and!Wagner said, ."Yes." Be told witness that he was an agent of the company. Witness didn't know whether he - was .or not at the time, but found out that he was before Wagner left, as he made a settlement -with witness for the company and gave witness a.- check for $1,000. In the conversation .with witness' father, the appellee . , Wagner, told the appellee that: he could not make any more _payments; that he would turn . them down . and . told appellee to tell them-,to send his assessment money in and to . do it right , now. Wagner said, that he would send the assessment money to appellee as seon as he got back to Mena. Witness further stated that the check given him by Wagner in settlement of wit: ness' claim, against the company was paid. , Two other witnesses . testified for the appellee, and they corroborated , substantially the testimony of the appellee and his son as to the conversation between . appellee and Van Wagner'. • , Van Wagner, testified as . a witness for the.appellant that he . had been in the employ of the appellant in its clerical department since 1917. He was sent out occasionally to settle policy _losses if it became necessary.- He went to . the appellee's place in 1922 to settle a loss with . appellee's ,son, Roy, Dillard,,who had a policy with the company.. The president,' vice-president and secre-, _ tary of the company . told witness that they wanted him to settle the loss . with ItOy, and they had been getting several letters from the appellee-with reference to Mrs. Martha Baker. The last letter stated that she was dead. They took it up and found Martha Baker at , dasa. :Witness went down to Casa to, find where Martha Baker was and found her at , Cotton Plant. She was getting her mail 'as Mrs. Adams, -and not -as Mrs.. Baker, so while . witness was over -dere he got to make a settlement and didn't know that Roy Dillard lived with ale appellee , until he got there. When he got to appellee's place, he
140 OZARK MUTUAL LIFE ASS 'N 7). DILLARD. [169- asked for Roy Dilhard, and the 'appellee came up . and' introdueed witness to Roy. Witness then told -appellee that:he had , been, by and had seen Mrs: Baker, that appellee had been writing to the company about. Witness told appellee that he had got a statement from Mrs: Baker, and that she was very muci-v alive. Witness' finally•said to appellee that he didn't come to see:him, and had no bUsiness with him; that he had come to See Roy Dillard. Witness Stated that he had no authority from the company to cancel the policies; that the coMpany had' not authorized the policies to be cancelled; that the board of directors only had that anthority, and witness was not a member of that -hoard.• The appellant offered to prove by this witness a statement furnished ' witness by Mrs. Martha Baker, written out and purtiorting to be' duly signed by Martha Baker by her mark, dated September 8, 1923, to the effect that she was a girl at least thirteen years old at the beginning of the civil war. The court refused to allow , such statement to be read to the jury, to whiCh ruling . the appellant duly excepted. ' The witness denied that any stich conversation took place between hiin and the appellee as testified to by appellee and-his witnesSes.. Witness further testified on cross-exathination that.when he was' in the office of 'appellant he Wrote policies; that thafivaS -about all there was tO do. He had nothing to do With faking in the mOney. That was the dirty-Of the seCietarY. Witness was-not an -Officer of the coinijany, but was an employee , and waS acting in that capacity when he went up to Settle with Roy Dillard: Witness.' didn't ansWer the correspondence for the coMpany. ness waS asked: . "Do- they take up settlements with you and confer with you about it?" He answered, "NO, sir, they send me out with instructions and_ I ,do it." Qties.: "They took' up the Roy Dillard- matter with you?'" Ans.: "They took it up with (him and then -sent:- me to look after it." 'WitnesS further testified that Roy Dillard: had a claim against the appellant for $2,000.
ARK.] OZARK MUTUAL LIFE ASS''N v. DILLARD. 141. Witness was acting under, the instructions of appellant when he made the settlement with Roy, Dillard., - Appellant asked the .court , to instruct the, jury Jo, return a verdict in, .its . favor, which, prayer ,the , court refused and to which ruling the appellant duly excepted. The court, on its own motion gave to the jury two instructions, only one of which we deem it necessary to set No; 2 is as follows , : . "yOu; are- instruCted that, ,unless you find frorn a preponderance of the evidence Oiat the plaintiff, J. 11 : Dillard, paid all assessments due by him or Mrs. Martha Baker, to whom the , policies -in this cage were issued, Of Which either of them had notice, yen will return your verdict for .the defendant." The jury returned a verdict in favor of the appellee , in the sum of $220, and from a judgment entered: ,hig favor ,for that sum is this appeal. 1. In DeLoach v. Ozark Mutual Life A.§soeicciioli;• I 4 148 Ark. 414, we deClared the law to be that :a 'PecoVery cannot be 'had where , the certificate Of 'insurance- was obtained"by' actual - fraud,' that is, where there was a wilful purpose to deceive on .the' part Of the insnred or the applicant, but that preiniumts MaY I be- reCoVered: in all other cases. Here, the' coUrt, in an instruction given, at the irig tance of the aPpellant, 'told the . 'jrY. , in effect, that, if the age of Mrs. Martha Baker, the as.suted, over sixty years at date enhe' apPlication fOr member:- ship in the ag Sociatien, :they should 6a for' the Opel: lant, unless theY further found from the 'evidence,that her' -- age wag not hlrelesslY, orrknowingly in the application: - other -Words, if 'Mrs:'Baler was over sixty years -of age at the ;time of her -a_fiptiCation 5 , • and it was wilfullY, negligently . or knowingly 'inigstated that she was under sixty years of age, then theveidict should be in favor of' the appellant. It will Ilni g 'be seen that the instructions: of the court were more' faVOtable to the appellant than it was entitled -to, under tbe doctrine announced in DeLoach v. Ozark Mutual Life Association, supra; Lincoln Reserve rife Ns. Ce; v.' Smithy '134. Ark. 245. /
142 OZARK MUTUAL LIFE ASS 'N v. DILLARD. [169 The law on this subject was correctly announced in the instruction No. 1 given by the court on its own motion in which the court told the jury that, if the application of Mrs. Baker was made in good faith and the first premium paid by her, and all the other premiums were paid bY the appellee, Dillard, the contract Was a valid one, and Dilliard would be authorized to recover, unless there was a fraud in the representation as to Mrs. Baker's age. The issue as to whether or not the certificates were issued through fraud perpetrated upon the appellant by the appellee was submitted under instructions that certainly were not prejudicial to the appellant, and of which it therefore has no right to complain. 2. The court did not eri in refusing to allow the appellant to read in evidence the statement of Mrs. Martha Baker made to . appellant's agent, reduced to writing and purporting to be signed by Mrs. Baker. Mrs. Baker was not a party to the action, nor is she a. party in interest, and most assuredly she was not representing the appellee as his agent in making the statement. L-incoln Reserve Life NS. CO . v. Smith, supra. Therefore, the purported statement was but the baldest hear-sar, and under no rule of evidence was the same admissible. Mrs . . Baker was living, and her testimony, if, thought to he competent and relevant to the issue involved, could have been adduced in some of the methods authorized by the rules for the production of evidence. 3. The principal and only serious question in the case is whether or not there was any testimony to support the • verdict on the issue of whether or not the a p pellee was entitled to recover on the alleged promise of the appellant, through its agent, Wagner, to cancel the certificates and return to the appellee the assessments or premiums that had been paid by him. This issue was submitted to the jury by the court's instruction No. 2, set out above. The phraseology of this instruction was not as clear as it should have been,
ARK.] OZARK MUTUAL LIFE Ass 'N v. DILLARD. 1:43 but there WAs only a general objection to it, and, when taken in connection with instruction i\To. 8 given at the instanCe of the appellant, it could not have confused and Misled the jury. . By .these instructions the jury was told; in substance, that, unless Wagner was the agent of aPpellant and had authority to make the statements which the appellee and his witnesses attributed to hini , concerning the cancellation of the certificates and the return to the appellee of the assessments paid by him, and acted within the scope of such authority, then the appellant would •not be bound by such statement, and , the verdict , should be in favor of the appellant. These instruCtions, I wbten taken.together, sufficiently declare thelaw in conformity with many decisions of this court upon the question as to whether' or not Wagner was the agent of the appellant and whether . or -not he had authority to enter into a' contract 'with appellee to cancel the cei;tificateS and, return the :amount of the assessments which had,been paid by the appellee as set up in his complaint, and whether or , not- he acted within the scope of his authorit y. See AndersoV, 2Tully Co., v. Gillett Lbr. Co., 155 Ark. 224; Oliver Cov;structime Co. v. Erbacker, 150 Ark. 549, and cases there cited. • It is an exceedingly close question as to 'whether Wagner,.the employee Of the appellant, had authority to make the contract alleged. The testimony is abundant that Wagner assumed the authority to make the contract alleged, but of course the appellant was Mit bound by any assumption of authority by him. Howeve „ r , his testimony shows that he was' authorized by the appellant in certain cases and under certain cireumstances to make settlements for the appellant. He Was out on a mission of that character, as shown by the testimony of both the appellee and the app ellant. when the alleged contract was entered into upon which appellee predicates his right to recover. Wagner settled a claim with the appellee's son. The appellee's testimony tended to prove that, after this visit and alleged agreement, the
444 OZARK MUTUAL LIFE Ass 'N V. DILLARD. [169 appellant did not give , him any.further notice of the due dates of assessments which it had done up to that time Appellee , had paid every month from the, , time the policies were taken out until the time of the alleged agreement with , Wagner. ; The testimony of the secretary of the apPellant direCtly controVerts the above testimony of the appellee; but. this 'conflict made an issue fOr the . jurY. If the appellant, after the alleged . contract between , appellee and' Wagner in September,- ceased to give 'the apPellee notice of the date *hen assessments Were due,Twhich 'the jury had a right to find from the teStimohy Wa8 alaet, then this Was a circumstance tending to prOve that the appellant had clothed Wagnei With the authority te make the contract, and that it was treat--frig such contract as : valid and binding. The cireum-stanceS as disclosed . by the testiniony of appellee's witnesses,. and alsd of :appellant 's witnesSes,. were sufficient .:make, it an : issue of fact . as 'to' whether' oi not the dppellairt:thad clothed 'Wagner with aPParent 'authority to make the contract.r This court haS:oft6n approveetthe .4tatement of thelaw as tO t aPparent adliority announced in.2" C: J..573, as 'follows': "APparent atthority in an ag rdnt'is , snch authority as' the 'principal knowingly Permits the.agenteto assume, or which he holds the agent -out,as possessing; such authority aS he appearS te have by reason of the actual authority which he ,bas; stich authority as a reasonably priident man, using diligence and discretion, in view of the principal's conduct...would -naturally suppose the agent to possess." Pieree v _Fioretti, .140 Ark. 306-313. • t, , There is no .reversible error in the reCord, and the judgment ,must therefore be affirmed: It is so ordered.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.