PAINE

v.

PACIFIC MUT. LIFE INS. CO.

689

PAINE ". PACIFIC

MUT.

LIFE INS.

Co.

(OireuU Oourt of Appeals, Eighth. Circuit. August 9, 1892.)

No. 119.

1.

LIFE INSUBANOE-ApPLIOATION-PRES1J1llPTlONS.

Where an application for life insurance has been made to an insurance solicitor, but the applicant dies before a policy is issued, and none in fact is ever issued, the presumption is that there was no contract of insurance, and no purpose to contract, otherwise than by a policy made and delivered upon simultaneous payment of the 'premium.

2.

SAME.

This presumption is rendered conclusive where the application provides that it is agreetl, and understood that only the home oftice of the company h811 to \leterll)ine whether a policy shall issue on tbe application, and that,. tbere shall be rio contract nntil a policy is issued and delivered and the first premium paid, while the applicant Is living, and in the same condition of health described in the application.

8;,S.ME-POWEBS 0:1' LOCAL AGEN'l.

In view of such provisions, there is no room for the application of the rule that , tbepowers of a local agent of a corporation are sometimes measured, not by bis actual; but by bis apparent, authority; and it is immaterial that such to take, Or does take, a portion of the first premium in trade from the applicant's store.. ' " The death of the applicant before his application reaches tbe home office revokes the' otl'er to become insured, as well as destroys the subject of the insurance, and renders the making of the proposed contract impossible.
OF APPLICANT BEFORE AOOEPTANCE. .

4"

,

5.

SA.ME-AoOilPTANCE-NoTICE.

. Th\!, approval of the application by tbe company's medical director before receiving of the applicant's death, even if it amounts to a determination to accept ,the' same, does not complete the contract, when such acceptance 1& never communicated to the applicant's personal representative.

Appeal from the Circuit Court of the United States for the District of Nebraska. In Equity. Suit by IraT. Paine, as administrator of the estate of Forrest LI Kendall, against the Pacific Mutual Life Insurance Company of California; Decree dismissing the bill. Complainant appeals. Affirmed. Statement by SANBORN, Circuit Judge: This was an appeal from a decree of the circuit court for the district of Nebraska, dismissing the bill of appellant to enforce specific performanceof a contract which the bill alleged the appellee made with Forrest L. Kelldallon May 29, 1890, to insure his life for 810;000, and to recover of the; appellee for his death that amount, less a few dollars of unpaid premium. The answer denied that such a contract was made, and the court below, after hearing the cause on the pleadings and proofs, dismissed the bill. From the pleadiilgs and proofs the following facts appear: The complainant WQ;S the administrator of the estate of Forrest L. Kendall, and the defendant was a corporation organized under the laws of California, and authorized to insure lives in the state of Nebraska. Its bome office and principal place of bnsiness was in San Francisco, Cal. One Limback was the agent of the defendant at Grand Island, in v.51F.no.1l-44

690

, 'JI'JllDEB.\L: UPOBTlCB,vo1.51.,' '"

Nebraska, to solicit applications and collect premiums, but without authority to make,' or to :agree: toniake,contra.cts of·.l,nsurance for the defendant. On May 29, 1890, he solicited and obtained from Kendall his applidlltitin1tQ the defendant, in writing andprirttrfor:'Ai policy of insurance on his life. This application was signed by Kendall, and contained the following stipulations: "Do you understand and agr",e .that only the officllrs of. thl'.home office have authority. to whether or not a policy shall issue on.any appUilation, sndthatthey act oolyon the statement. and representations In the no repres6litations. or information made or given by or to the person soliciting or taking this applicsti@ policy. or to any other person, shall be binding on the company. or in any manner affect, its· rights,. unless suell ,statements, representations, or information be " g.;a,nd thea,ffi, cers of com,pa,ny a.t the hO.me office in; ap,pU'catlou ? l':es.' * ,,Aud it IS agreed. that there shall be nocontra.e:t of. insurance until a poliey Shall have been issued: and deli vered by the said company, and the first premium thereon paid, while the perlion for living and, in the same, condi,tiOll of health de_pplication ,tbat, if aaid policy be agreemenf4. and warrantiel! .contained shall constitute a, part of the the contract of·lusUl;ance. ",ben made,shall be held and construed at all times and places to have been made in the city of San Francisco. in thestllte,l?Sqalifqrnia; ..;[·.'·J?ollcytobij'datM the llrst day of June. 1890. (All as ,o.f the first <iaY . Qf eaQh ruqnth.) · · * It is agreed thati tbe·!oregoingetatementsandanswers, as well as all others made or to be made to the company's medical examiner or solicit.. iogagent,'llre' "IiVananted to be true. and are offered to thecoqIpany as a con,shall not take effect shall hl1 ve beeD paid during the,li(e and good health '?t thepereon beJ:eiil proposed for insurance." ;.:WhEln be obtl\ined the agent,' Lbnbaok, agreed to take $10 of the first quarterly premiuin in trade at Kendall'estore,. 'and after. Kendall'a death he did. get ,fJ;om ,tht:store,' on! :tbis acconnt, a ,box of cigars·. Kendall agreed to,paythe,balance ofthispremhtm, $59.90, -w:ben the policy!was The application was,forwarded to the home office. On June 3, 1890, Kendall' was drowned. On June 6, 1890, the application first defeJlQant'sboIiYle office, and oJ) June 7 it approved by.fts medical diof On Jgne9, .1890, defendant leamedof h,iS,<leath,andl'efusedtoi/lsue a :policy,Qn, June 30, compilliq-.nt $59;90toJ:i,imback.iq of the 'first qUijirterly premjum, to and .offered to pay .10tocomplainant,.wbich he refused to accept. IJwtW8$ then , ,': ' 'i.l: ;p. IV. and p. irOX: 'e.ppeUq.nt. ' OMrleB O. Whedon, for appellee. ' " ! :Before CA,J.,DWBLL sud SA,NiBQBN, J apd SamA8.District

Ji414ge.

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after

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faqt,l' ,..'abovCt. delivered

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.

PAINE V·. PA()IFIC HUT. LIFE. INS. CO.

691

·c The court below found that the defendant company never made 'any contract to insure the life of Kendall, and on this ground dismissed this hill. The complainant assigns this finding /lnd decree as error, and the only question to be considered is whether or not the proofs fairly established such a contract,for, if they did,the bill should not have been dismissed, but a decree should have been rendered for the complainant for the relief he sought. On May 29, 1890, Kendall made his written application to defendant for insurance, and caused it to be forwarded toits home office, where alone it could be accepted or rejected. On June 3, 1890, he was drowned. On June 6, 1890, the defendant first received the application at its home office. On June 7, 1890, its medical director, in ignorance of Kendall's death, approved the application. Kendall knew the application could be accepted and a contract of insurance made by the officers of defendant at its home office only. The material facts in this case are. undisputed, and the evidence calls for no comment. There is neither doubt nor difficulty as to the rules To discuss them would be futile, for of law applicable to these they are riot debatable; they are founded in reason, settled by long lines of and conclusively demonstrate that there cOllld have been no contract by this defendant, under the facts of this case, to insure the life of the decedent.· Ample reason for this will appear from the bare statemt'Dt of some of these rules. As no policy was issued, and the cnstom of insurance companies is to issue a policy ",hen a contract of life insurance is made, the presumption is that on May 29, 1890, when the application was signed,'there were negotiations, but no contract, and no purpose to contract otherwise than by a policy made and delivered upon simultaneous payment ofpremiul1l. Heiman v. InsumnceCo.,17 Minn. 153, 157, (Gil. 127;) Markey v; Insurance Co., 103 Mass, 92; In$Urance Co. v. Kennedy, 6 Bush, 450. The provisions of the application that the decedent understood and agreed that only the officers of the home office of the de:endantcompany had authority to determine whether or not a policy should issue on any application, that he agreed that there should be no contract of insurance until a policy should have been issued and delivered by the company, and the first premium thereon pnid, while he was living and in the same condition of health described in the application, and that the statements in the application were true, and were otlered to the compnny as a consideration for the contract) which should not take effect until the first premium should have been paici during his life and good health, make conclusive this legal presumption, and establish the fact that by thi:} transaction of Muy 29, 1890, and the delivery of the application to the local agent of the com pany, the decedent merely made a proposal to become insured by the defendant company, which could not become a contllaet' until it was 'accepted by the officers of the ,defendant at .the home'· office in San F·rancisco. Ta,yloe v. Insumnce Co., \:l How. 390; 1nmrdnce 00. v. Young's Adm'r, 23 Wall. 85',106; I'fUtli,rance Co. v. Ewingl;'92 8.377 ,381.

692

FEDERAL REPORTER,

voL 51.

'> 'Th»re, is no room here for the application of the rule lll'at:as to third persons the power of the local agent of a corporation is sometimes. mea· sured,not hy his actual, but by his apparent, authority, because the deoedent in his application stated and agreed that he knew that no one @ut, ;the officers at the home office could accept his application or make aoontract to insure him. That the application provided that the date of th6policy should be June 1, 1890, when it also provided that all po!ic,ies should be dated the first of some month, is immaterial, in view of the fact that the decedent twice expressly stipulated in this application that the contract of insurallceshould not take effect until the first .premiumwas paid and the policy delivered during the life and good health of the, applicant. That the local agent agreed to take, or did take, $10 of the first premium of $69. 90 in trade from decedent's store in. no way modified, or affected the positive and' clearly expressed terms of this proposahrelative to the time when, apd the conditions1uponwhich, the contTact ishould take effect. There is noroarn. for the application of the rule that,where the pre_ of the premium is a condition precedent to the delivery ofa policy" an agent authorized to collect it may sometimes give credit, and , thereby waive the condition, because ,the time never came ',when the or payable, and no credit was given, no waiver made. The death of Kendall on June 3, 1890, before the application had reached defendant's home office, revoked his offer to become insured by theflefendant company, which was 'contained in this application, and rendered the making of the proposed contract of insurance impossible. An offeris revoked by the death of the proposer, or by the death of the party to whom the offer is made before acceptance. "The continuance of ao',offer is in the nature of its constant repetition, which necessarily requires some one capable of making a repetition. Obviously, tbis can no more be; done by a dead man than a contract can in the first instance be made'bya dead man." Pratt v. Trustees, 93 Ill. 475, 479; Dickinson v. Dodds, L. R. 2 Ch. Div. 463, 475; Phippsv. Jones, 20 Pa. St. 260, 264; Wallace v. ,Town.send, 43 Ohio St. 537, 3 N. E. Rep. 601. Conceding that the defendant could and did determine to accept the applicatioo on June 7, 1890, one day after its receipt and four days after the death ;of Kendall, still such acceptance and the contract, if so made, were void, because the life that was the su bject-matter of the contract was not then: in existence. The first party to this proposed contract .was second,.the defendant; the subject-ulatter of the contract, KendilJll1s.life.' The contract was not made, in any event, before June 7th, when'defendant's medical director approverl the application, and at that time tIle ,first party to it was dead, and its subject-matter.did not exist. Neither party would have knowinglyrnade an contract regardinga life that was not in being. Parties make no contract where the thing' which they to exist, and the existence of which· was indispensable.,to. the their, contrMt, had no existence. Franklin v. Long, 7 Gill. & J. 407, 419; GibBOn v. Pelkie,37 Mich. 380; Strick-

CLAFLINtI. BENNETT.

693

land v. Turner, 7 Exch. 208, 219;CQuturier 'If, HatHM,5 H. L. Cas. 673, 682; Clifford v. Watts, L. R. 5 C. P. 577; Hazard v. Insurance Co., 1 Sum. 218, 226; Insurance Co. v. Ewing, 92 U. S. 38!. Conceding that the action of the medical director hi approving the application on June 7th, in ignorance of the applicant's death, was a determination to accept the application by the defendant, still there was no contract, because no notice of the acceptance of the application was in any way communicated to the applicant or his representatives. The acceptance of an offer not communicated to the proposer does not make a contract. Jenness v. Iron Co., 53 Me. 20, 23; McCulloch v. Insurance Co., 1 Pick. 278; Thayer v. Insurance Co., 10 Pick; 325, 331; Borland v. Guffey, 1 Grant Cas. Beckwith v. Cheever, 21 N. H. 41,44; Dun,. ron v. 13 S. C. 94, 96; White v.Corlies, 46 N. Y.467. Conceding that the application was accepted on June 7, 1890, by the defendant, it expressly provided that the contract of insurance should take effect and be in force only upon compliance with three conditions that a policy should be delivered, thatit should be deprecedent, livered duririg the life and good health of the applicant, and that the premium should be paid when the policy was delivered. .These eonditions were never complied with. The vital, indispensable condition Was that the policy should be delivered and take effect during the life and good health of the applicant; but that life had ended, that applicant was no more, and that condition could never be complied with, and therefore the contract could never take effect. Eliason v. Henshaw, 4 Wheat. 227, 229; Carr v. Duval, 14 Pet. 77,81. There is no view of the facts or the law under which it can be found that there was a contract between the decedent and the defendant company in this case, and the decree below is affirmed, with costs.

CLAFLIN

et al.

tI. BENNETT et

al., (McCoy et at, Interveners.)

(OirouU Court, N. D.

nunoUl. June 18, 1892.)

L

ATTORNBY '\10) CLIENT-FEEa-LIEN ON JUDGHlCNT.

Where the amount due on a judgment recovered for the purohase price of prop erty sold by plaintiff to defendant is paid into a court of equity for distributioll., plaintiff's attorney!! are entitled to receive therefrom the money due them froID plaintiff for meritorious services rendered by them to him in other suits' gr6wing out of said purcllase, where such services were rendered, with the expectation that they would be paid for out of the proceeds of such judgment.
CO:l!'STITUTBS-EvlDENOB.

Proof that two men owned a ranch and herd of cattle jointly, that they managed t.he ranch· together, rendered accounts in their joint selves. as a cOlUpany, is sutllcient to show that they were oopartners, Bltllough t.hey had no articles or agreement of oopartnership.· :. .,, . .'. . .LSUl:Ia....SETTLBMlCNT BlCTWBBN PARTNBRS-RIGHTS OP CRlCDtTORS. . A sett,lement between copartners, which determines their respective interesw In · certain partnership ,fund, iaconolusive &I to the rights of their cinidJ.torsto that fnnd. . . , . ..'.

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