that the proceeds of his life insurance made payable to them shall not be liable to seizure or appropriation for the satisfaction of the claims of creditors. In New York and Wisconsin the courts have construed such statutes as meaning that the wife is prohibited altogether from assigning her interest; while in other states - Arkansas, Kentucky, Maryland, and Missouri - similar statutes were construed as not precluding such an assignment. By subsequent enactment, however, the New York law now provides that "a policy of insurance on the life of any person for the benefit of a married woman, is also assignable and may be surrendered to the company issuing the same, by her, or her legal representative, with the written consent of the assured."

Assignment of the Policy by the Assignee - A Policy of Life Insurance Is Not a Negotiable Instrument.— Although an assignee cannot, in the absence of an agreement to the contrary, sell or surrender the policy without giving the insured a reasonable opportunity to redeem it, he may, under proper circumstances, reassign the policy to another. Thus, in Corcoran v. Mutual Life Insurance Company, it was held that where a policy was given as collateral security for the payment of a note, the holder has the right to assign the same to the indorsee of the note, who will then be entitled to hold the policy as security for the note.

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But a life-insurance policy is not to be regarded as a negotiable instrument, as is exemplified by the case of Brown v. Equitable Life Assurance Society. Here the insured assigned a policy as security for a debt, and the assignee subsequently assigned the same to a bank as security for another loan. The court held that despite the absoluteness of the form of assignment, "the bank took the policy subject to the equities existing in favor of the insured, unless the conduct of the latter was such as to create an estoppel." According to the facts of the case the insured had neglected to

4 183 Pa. 443, 39 Atl. 50, 1898.

575 Minn. 412, 1899.

pay premiums for eleven years, and during that period had made no effort to recover the policy. These circumstances, together with the fact that the bank kept the policy from lapsing by paying the premiums itself, caused the court to hold that the insured was prevented from claiming any rights under the policy as against either the first assignee or the bank.

CHAPTER XXXII

THE LAW PERTAINING TO THE AGENT 1

Life insurance being written almost exclusively by corporations, in most instances transacting business in many states, the agent is a necessary factor in the successful prosecution of the business. It is also apparent that if the agent is to perform properly the duties connected with the solicitation of business on behalf of his employer he must be given a certain amount of authority. To govern his relations with the company and the public, there was to begin with the general law of agency. But there has since developed a large body of statute and court law dealing with insurance agents in particular, and it is from this law that we are able to comprehend the status of the life-insurance agent.

It is a general rule of law that the position of agent carries with it authority to do and say those things and use those means which are appropriate to the proper fulfillment of the services which he is employed to render. Almost invariably the company gives its agents a written commission defining their authority. But the absence of such written authority does not relieve the company of responsibility for the conduct of those who are in reality its agents, because to hold otherwise would enable the insurer at any time to avoid all responsibility for the misconduct or errors of its agents by simply sending them into the field without written authority. Agency is a fact depending on circumstances independent of any provisions that may exist in the policy or application, and

1 The law pertaining to agency in life insurance being in part the same as that relating to agency in fire insurance, about onethird of this chapter is a duplication of the chapter on Agency" in the author's book, Property Insurance.

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in cases where the question has come up for decision the courts have outlined the evidence that may be considered as proof establishing the fact and character of the agency. This evidence may consist of an express contract between the company and agent, as already stated, or a recognition by the company that a certain person is its agent. Again, the fact and character of the agency may be shown by the possession of certain papers or by other evidence from which agency may be legally inferred. It is important, however, to note that the insured must not presume the existence of the agency relationship, but must satisfy himself of it and the extent of its character by some tangible evidence.

State Statutes Regulating Agents.- Practically all the states have seen fit to enact laws which define the meaning of the term "agent," regulate the appointment and licensing of agents, and prohibit on their part various kinds of misconduct. The statute law relating to these three subjects may briefly be summarized as follows:

Definition of the term "agent." It was at one time the practice of certain companies to employ agents without written agreements and to provide in their contracts or application forms that "as regards all matters pertaining to the application, the person soliciting the insurance is expressly agreed to be the agent of the insured." Such a practice manifestly afforded abundant opportunity to the company to resist many claims by simply considering the solicitor the agent of the insured, thus placing all responsibility for the agent's misconduct or error upon the insured. To preclude such treatment to policyholders the several states soon found it necessary to enact statutes which defined the term "agent with particular reference to the insurance business. Such statutes are held by the courts to control the situation, and thus overcome the evils formerly connected with stipulations in the policy or application which declared the solicitor to be the agent of the insured as regards all matters relating to the application for a policy. A few states even provide by statute that notice to the agent as to the health, habits, or occupa

tion of the insured shall be deemed notice to the company. In the great majority of states a solicitor of life insurance is expressly declared by statute to be the agent of the insurance company and not of the insured. The law of Pennsylvania, which will serve as an example, provides that “an agent is a person, firm or corporation authorized in writing by a company to solicit or countersign or issue policies of insurance on its behalf." A considerable number of the states have formulated the law to the effect that any person soliciting insurance, or performing any act in relation thereto shall be deemed the agent of the company, anything in the policy to the contrary notwithstanding.

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Attention should be called to the distinction, although of much less importance in life insurance than in fire and other forms of property insurance, which the laws of many states make between insurance agents and brokers. As distinguished from an agent a broker is usually defined "to be a person, not an officer or agent of the company interested, who, for compensation, acts or aids in any manner in obtaining insurance for a person other than himself." There has always been much disagreement between the court decisions in the different states as to the legal position which the insurance broker bears to the insured. In some of the states the courts declare him to be the agent of the party paying him for his services, but this rule necessarily involves uncertainty unless the courts fix the ownership of the fund from which the broker is compensated. Other state courts have declared the broker to be the agent of the insurer as regards the payment of the premium and the delivery of the policy, but to be the agent of the insured in all other matters relating to the insurance. For the greater protection of the insured various states have also seen fit to pass laws which make the broker the agent of the company for certain purposes and the agent of the insured for others. In the great majority of states, however, an insurance broker is regarded as the agent of the insured in all matters. Where the broker is thus declared not to be an agent of the company, it is important for the insured to bear