Stark v. Pioneer Casualty Co.

CRAIG, J. In an action for damages by an applicant for insurance, judgment was rendered against the casualty company and its agent, from which the company appealed.

The action was predicated upon negligence of the agent of the defendant company in withholding the application and premium delivered to him for transmission to his principal. That the agent solicited and obtained the same, to insure against injury through accidental means while driving or riding in an automobile, and that they were not forwarded, nor a policy issued, the parties agree. The applicant learned such fact only after demand was made for the insurance following an accident.

The first ground assigned for reversal arises from rulings adversely to the defendants upon demurrer to the amended complaint and objections to the evidence. It is contended that since the agent’s authority was limited to soliciting and receiving the application and premium, and such application being merely an offer from which no contract could be implied until accepted, and a policy had been issued and delivered, no liability could arise. We think from the nature of the case that any issue as to a contractual relation was excluded by failure to furnish insurance to one permitted and entitled to rely thereon, without notice of rejection or of failure to perform the duty for which a consideration had been received by the agent. There was undisputed evidence of the applicant’s desire for insurance, of agency, the solicitation therefor, representations upon which the applicant was led to rely, and that she was thus precluded from obtaining insurance elsewhere. Authorities are cited wherein applicants for insurance were held not entitled to recover upon contract. (National Union Fire Ins. Co. v. School District, 122 Ark. 179 [182 S. W. 547, L. R. A. 1916D, 238].) No language tending to inform the applicant that she was not insured when the premium was paid is to be found in the receipt given her. It stated: “Received of Grace Stark an application for a Pioneer Automobile Accident Policy and' the sum of Fifteen Dollars in payment of the annual premium. Should the application be declined, I agree to refund the above amount to applicant. Please notify the Pioneer Casualty Company, Home Office, 1310 Detweiler Building, Los Angeles, California, should the policy not be received within twenty (20) days [580]from date hereof. (Signed) Edward E. W. Shiels, Agent.” It is established by cases wherein the rule was applicable as here that: “Insurance companies are held, in law, to a broader legal responsibility than are parties to purely private contracts or transactions. This is based upon the fact that those companies act under franchises from the state, and the policy of the state in granting such franchises proceeds upon the theory that it is in the interest of the public to the end that indemnity upon specific contingencies should be provided those who are eligible and desire it, and for their protection the state regulates, inspects and supervises their business. An insurance company having solicited and obtained applications for insurance and having received payment of the fees or premium exacted, is bound, either to furnish the indemnity the state has authorized them to furnish or decline to do so within such reasonable time as will enable them to act intelligently and advisedly thereon.” (Columbian Nat. L. Ins. Co. v. Lemmons, 96 Okl. 228 [222 Pac. 255]; Dyer v. Missouri L. Ins. Co., 132 Wash. 378 [232 Pac. 346]; Security Ins. Co. v. Cameron, 85 Okl. 171 [205 Pac. 151, 27 A. L. R. 444].) It has been said that an applicant having paid the premium to an agent, and the company having received its share thereof and assumed the duty of returning the same on rejection of the application, the applicant did all required of him, and having received no notice of adverse action on his application, he might assume after several months that it had been accepted. (Great Southern Life Ins. Co. v. Dolen, (Tex. Civ. App.) 239 S. W. 236.) Since the agent herein received the application and premium, it must be assumed, and is not denied, that respondent relied upon its delivery to the insurer, appellant herein, and the parties stipulated that had said application been presented a policy would have been issued in about five days. Fraud cannot be presumed, and was eliminated by the trial court upon the evidence before it. Mere delay in passing upon an application cannot be construed as an acceptance which will support an action ex contractu; but the applicant will not be charged with the same degree of diligence as an insurer organized for profit, and the latter may be held liable for actual damage not exceeding the amount of insurance purchased if it be shown to have delayed notice of rejection, and may not complain of inexcusable delay because of its