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part cash and a note for the balance as a full cash settlement required to make the insurance effective from the approval of the application, as the words "cash" and "note" have entirely different meanings, and are not used synonymously in insurance terminology; "cash" meaning current money in hand, or money paid down, and "note" a written promise to pay

money.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Cash; Note.]

8. Insurance 137 (4)-Agent may take note, or cash, or both, in payment of premium, unless authority limited.

Where an insurance agent has authority to solicit applications for insurance, and to conduct the negotiations on the part of the company in closing up an insurance contract, he may accept notes, or cash, or both, in payment of premiums, unless his authority is limited as to the time and mode of payment.

9. Insurance 137 (4)-Application and premium receipt held to provide two methods of paying premium and effectuating contract.

A life insurance application providing that the insurance should not be in effect until the premium had been paid in full in cash and the policy delivered, and that payment with the application was made subject to the conditions in an attached receipt, and the receipt containing blanks for the acknowledgment of the receipt of cash or notes, and providing that, if a full cash settlement had been made with the application, the insurance would be in foree from the date of the approval of the application by the medical director, specified two modes for the payment of premiums, under one of which the premium must be paid in cash and the insurance would then become effective on approval of the application, and under the other the premium might be paid in cash or notes, and the insurance would be effective only on delivery of the policy.

Appeal from Circuit Court, Clay County; R. H. Dudley, Judge.

Action by A. R. Jenkins, administrator, against the International Life Insurance Company. From a judgment for defendant, plaintiff appeals. Affirmed.

the sum mentioned, and for penalty, attorney's fees, and costs.

The appellee answered, denying all the material allegations of the complaint. It tendered to appellant a note executed by M. E. Jenkins and the cash paid by him. The policy and application were introduced in evidence by the appellant. The application signed by appellant was dated February 21, 1920. It contained, among others, the following provisions:

"(3) The insurance herein applied for shall not be in effect until the premium has been paid in full in cash and the policy delivered to me during my good health.

"(4) If the premium be paid with this application, such payment is made subject to the conditions in the receipt hereto attached."

The receipt attached to the application is as follows:

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"Received from an application for insurance on h- life for $ on the plan; also dollars in cash, and note for $- - due premium on said insurance, provided a policy -, to be applied in payment of of insurance upon such application is issued by the company. If full cash settlement required has been made with the application, the insurance will be in force from date of approval of the completed application by the company's medical director. If said application is not approved by the company, the settlement herein acknowledged will be returned by me forthwith, upon surrender of this re

ceipt.

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On the back of the receipt is the following: "The agent is not authorized to give this height and weight indicated in the table below, receipt to persons exceeding the limits of

or to those who have been rejected by another

W. E. Spence, of Piggott, and Oliver & company, or who are not in good health." Oliver, of Corning, for appellant.

M. P. Huddleston, of Paragould, and Chas. G. Revelle, of St. Louis, Mo., for appellee.

WOOD, J. This is an action brought by the appellant, as administrator of the estate of M. E. Jenkins, against the appellee on a contract of insurance on the life of M. E. Jenkins, made payable to his estate. The appellant set up the policy and alleged that it insured the life of M. E. Jenkins for the sum of $3,000. He alleged the death of of $3,000. He alleged the death of M. E. Jenkins, the compliance with the terms of the policy on his part, the refusal of the appellee to pay, and prayed judgment for

The application contained blanks to be filled out by the soliciting agent of the appellee, one of which required him to show how, if at all, the first premium had been settled. This was filled out, and showed that the premium had been settled by note. The application was approved by the appellee's medical director on March 4th. Among the provisions of the policy are the following:

sured it takes effect as of the 4th day of March. "After the delivery of this policy to the in1920. This contract of insurance shall not be deemed to have been made until the first premium is paid, and the policy delivered during the lifetime and good health of the insured."

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(232 S.W.)

97 Ark. 576, 134 S. W. 1189, 1199, 32 L. R. A. (N. S.) 825; Oak Leaf Mill Co. v. Cooper, 103 Ark. 79, 146 S. W. 130; Etna Ins. Co. v. Short, 124 Ark. 505, 187 S. W. 657.

[2, 3] There was no completed contract of insurance under those provisions of the application and the policy to the effect that the insurance shall not be in force until the payment of the premium and the delivery of the policy while the assured was in good health. The general' doctrine is that contracts of insurance may be made by parol, and, such being the case, of course, delivery of the policy is not essential to the completion of the contract of insurance, and where the minds of the insured and the insurer for a valuable consideration have met upon all the terms of the contract the contract is complete and enforceable, even though it was intend

E. R. Winton testified that he was the the part of the appellee to the testimony adsoliciting agent of the appellee and took the duced in evidence by the appellant, we will application of M. E. Jenkins. When an ap- treat the complaint as amended to declare plicant made settlement of the premium wit- upon an oral contract of insurance such as ness signed the receipt and gave it to the appellant contends was evidenced by the applicant. In this case Jenkins made settle- documentary and oral testimony in the case. ment by paying 71 cents in cash and execut- Bank v. Burton, 67 Ark. 426, 55 S. W. 483; ing his note payable to witness for the sum Wrought Iron Range Co. v. Young, 85 Ark. of $100. Witness accepted that in full set- 217, 107 S. W. 674; Griffin v. Anderson-Tulley tlement. Witness did not detach the receipt | Co., 91 Ark. 292, 121 S. W. 297, 134 Am. St. from the application and give it to Jenkins, Rep. 73; Pulaski Gaslight Co. v. McClintock, because they were in a hurry. The witness accepted the note unconditionally, just like he would have accepted the cash. After witness received the policy, he did not see Jenkins again before his death. When witness received the policy for delivery, it was accompanied by a letter which instructed witness to deliver the policy only during the lifetime and continued good health of the applicant, and that the signature of the applicant must be obtained showing that he was in good health. Witness never delivered the policy nor collected the note. Witness offered to return the note and the 71 cents to the administrator, and he refused it. Witness returned the policy to the company on March 19th. The policy sent witness for delivery was the kind of policy applied for by Jenkins. On behalf of the appellee Anthony Gazerted by the parties to be evidenced by a policy, testified that he was the manager of the policy department, which has jurisdiction over applications and the writing of policies. Appellee had a form letter, "7-B," one of which was sent to appellee's agent, Winton, on or about the 6th of March, 1920, together with the policy on the life of Jenkins. The records would usually show if this letter had been returned. Witness had made a careful search for it and could not find it. Winton was recalled by the appellant, and stated in addition to his former testimony that Form B referred to, and which he received with the policy, was a kind of receipt showing that the applicant for insurance had received the policy, and that he was in good health and had had no sickness since his examination. The applicant had to state in this form letter that neither he nor any of his family had had influenza since his examination. It instruced witness not to deliver the policy, unless witness first obtained the signature of Jenkins to the receipt Form 7-B.

At the conclusion of the testimony the court, at the request of the appellee, instructed a verdict in its favor. Judgment was rendered in favor of the appellee, dismissing appellant's complaint, and for costs, and from that judgment is this appeal.

but which because of some fortuity was not delivered before the death of the insured. Mutual Life Ins. Co. v. Parrish, 66 Ark. 612, 52 S. W. 438; 1 Cooley's Briefs, 442 (a), 395 (d), 396, and cases cited in note; Etna Life ins. Co. v. Short, 124 Ark. supra; 25 Cyc. 716 (a). But, of course, the parties may agree as a condition precedent to a complete and enforceable contract of insurance, not only that there shall be a delivery of the policy, but also a delivery while the insured is in good health. McCully, Adm'r, v. Phonix Life Ins. Co., 18 W. Va. 782; Kohen v. Mutual Reserve Fund Life Ass'n (C. C.) 28 Fed. 705; 1 Cooley's Briefs, 444, 445, and other cases there cited. See Nat. Life Ass'n v. Speer, 111 Ark. 173, 163 S. W. 1188.

[4] The liability or nonliability of the appellee turns upon the meaning of the following clause in the receipt, to wit:

"If full cash settlement required has been made with the application, the insurance will be in force from date of approval of the completed application by the company's medical director."

It is the usual, and so far as we know the universal, practice of life insurance companies not to issue policies of insurance, [1] The appellant contends that the con- except upon approval of the application tract of insurance upon which he bases his therefor by a medical examiner or director, action was consummated upon the approval as the case may be. The issuance of the of the application by the company's medical policy on the 5th of March upon precisely director and became a complete and binding the terms called for in the application, and, contract without the issuance and delivery as shown by the recitals in the policy, for of the policy. As there was no objection on the premium mentioned therein, and which

policy was to take effect when delivered as of the 4th day of March, were facts tending to prove that the completed application was approved by the company's medical director. The policy was registered and secured as required by the insurance department of Missouri. It occurs to us that these facts raised a presumption, and were sufficient to constitute, at least, a prima facie showing, that the completed application had been approved by the company's medical director. These facts made a case for the jury on that issue, and shifted the burden to the appellee to show to the contrary. In Grier v. Mutual Life Ins. Co. of New York, 132 N. C. 542, 44 S. E. 28, it is held:

"The issuance of the policy is acceptance of the application and should be based upon the status at the time the application is made."

The undisputed testimony shows that the appellee's agent. accepted a promissory note of $100 and 71 cents in cash in settlement of the first premium, "just like he would have accepted the cash."

[5] The only remaining inquiry, therefore, is: Was appellee's agent authorized to accept part cash and a promissory note for the balance in full cash settlement of the premium as required by the above clause of the receipt? The application and the receipt each contain provisions which show that the receipt must be considered in connection with and as a part of the application. The application contained the following provision: "If the premium be paid with this application, such payment is made subject to the conditions in the receipt hereto attached."

cash in the payment of premiums." 2 Cooley's Briefs on the Law of Insurance, p. 96, and cases cited.

To so construe the words "full cash settlement" would obliterate all distinction between the word "cash," as it is defined by lexicographers and commonly understood and the word "note," or any other property that the agent might see proper to accept as cash in settlement of the premium. Such interpretation would also destroy the difference in meaning between the words "cash" and "note" appearing in the receipt. These words have an entirely different meaning, and as used in the receipt were intended to perform an entirely different function. "Cash" is "current money in hand-money paid down.". "Note" is "a written promise to pay money." Webster's New International and Funk & Wagnall's Dicts. If the words "cash" and "note" do not have a different signification as used in the receipt, then it was wholly unnecessary to use the word "cash" at all in the clause under review, because "full settlement" would have embraced either a "cash" settlement, or a settlement by "note," or both. "A note is an agreement to pay money; it cannot be treated as cash." Pierce v. Bryant et al., 5 Allen (Mass.) 91-93; State Bank of Trenton v. Coxe, 8 N. J. Law, 172, 14 Am. Dec. 417; Dazet et al. v. Landry et al., 21 Nev. 291, 30 Pac. 1064.

In insurance terminology the words "cash" and "note" are not used synonymously, and where these words are used in insurance contracts or negotiations they should be given effect according to their ordinary meaning. The authority of the agent in this case must be determined by the terms of the receipt,

The receipt contained the following pro- as he had no authority to bind the company vision:

"No conditions or agreements other than those printed herein and in the application shall be binding."

[6, 7] The policy, having been issued and sent to the appellee's agent to be delivered on certain conditions, was also competent evidence, and its provisions in regard to the payment of the first premium should also be considered in connection with the above provisions of the application and receipt to determine the meaning of the clause in the receipt quoted. After considering the various provisions of the application, the policy, the receipt, and the oral testimony of the appellee's agent who conducted the negotiations for the appellee, we have reached the conclusion that the agent had no authority to accept a promissory note as "cash" in compliance with the "full cash settlement" required by the above clause to make a complete and binding oral contract of in

surance.

"The fact that an agent has authority to collect premiums does not imply that he has authority to accept property or anything but

to a contract of insurance contrary to the express terms of the receipt. Therefore, if the word "cash" in the clause under review means "cash" and not "note," the settlement of the premium in the manner disclosed by this record was ultra vires. State ex rel. Farmers' Mutual Life Ins. Co. of Nebraska v. Moore, Auditor, 48 Neb. 870, 67 N. W. 876; Hoffman v. Hancock Mutual Life Ins. Co., 92 U. S. 161-164, 23 L. Ed. 539.

In Dunham v. Morse, 158 Mass. 132, 32 N. E. 1116, 35 Am. St. Rep. 473, A., in order to obtain insurance upon his life at once, instead of waiting for the action of the insurance company on his application, gave a promissory note for the amount of the premium payable to B., an agent of the company, who signed and delivered to A. a contract purporting to give such insurance, which was expressed to be subject to certain conditions printed on the back, one of which was that the contract was not valid unless the premium was "actually paid in cash." B. tendered the policy to A., but the latter would not receive it and repudiated the contract. tract. In an action by B. against A. upon the note, the court held that the note was

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(232 S.W.)

without consideration. Among other things the company's medical director, regardless the court said: of whether the policy had been issued and delivered or not.

"If this premium was not paid in cash, the contract of insurance was not binding on the company. ** The insurance company had no knowledge that the defendant had not paid his premium in cash, and did not waive the condition printed on the back of the contract. They might be willing to allow their agent to bind them by a contract if he received the premium in cash, even though he was permitted to deposit it in his own bank account, when they would not be willing to be bound on his promise to pay them if he had no cash, but only a promissory note, as his reliance for the means of performing his promise."

. In Mutual Reserve Fund Life Ass'n v. Simmons, 107 Fed. 418-424, 46 C. C. A. 393, 399, it is said:

"Aside from any statutory regulations, a life insurance corporation has a direct interest in maintaining the solvency of its agents, through whom large sums are often transmitted to or from it. It has, therefore, a direct interest in prohibiting them from involving themselves by incautious credits for amounts for which they (the agents) are responsible in cash, and from loading themselves with invaluable assets with reference to any sum for which they must account."

By the one method, which we will call the "first," the premium must be paid "in full in cash" and the policy must be delivered while the applicant is in good health. But the first part of the receipt shows that the agent is authorized to waive the full payment in cash and to accept in payment of the premium part cash and a note for the residue. Where the agent and the applicant adopt this, the first method, if the company issues the policy and same is delivered to the assured, it will be conclusively presumed, in the absence of fraud, that the requirement of full "cash" payment was waived, and that the policy was delivered during the good health of the applicant, the insurance will then be in full force and effect from the date of the policy. Grier v. Mutual Life Ins. Co., supra; Kendrick v. Ins. Co., 124 N. C. 315, 32 S. E. 728, 70 Am. St. Rep. 592. See Home Fire Ins. Co. v. Stancell, 94 Ark. 578, 127 S. W. 966; American Trust Co. v. Life Ins. Co. of Virginia, 173 N. C. 558, 92 S. E. 706.

By the other, the "second" method, there must be a full "cash" settlement of the premium with the application. If there is, and the company's medical director approves the completed application, then the insurance takes effect and becomes a completed contract as of the date of such approval. It will be observed that the word "cash" has the same signification, whether the "first" or "second" method be adopted, and there is

[8] Where an insurance agent has authority to solicit applications for insurance, and to conduct the negotiations on the part of the company in closing up an insurance contract, unless such agent's authority is limited as to the time and mode of payment of premiums, he may accept notes or cash or both. "When no special mode of payment is stip-no conflict between the provisions of the apulated for, any mode of payment, which is accepted without objection on the part of the insurers or their agent, will suffice." 2 May on Insurance, § 345; 1 Joyce on the Law of Insurance, 80 (a), p. 293, and cases cited in notes.

plication, the policy, and the receipt concerning the payment of the premium.

We are not confronted with any issue of waiver, or estoppel by course of conduct on the part of appellee, because there is no evidence upon which to predicate such issues. Under the first method above outlined, while the premium was paid, there was no delivery of the policy and hence no completed contract of insurance. Under the second meth

[9] Now, when the provisions of the application, the policy, and the receipt in re gard to the payment of premiums are considered, it is clear that two modes were speci-od, while there was evidence tending to prove tied for the payment of premiums. By the one method there is no completed contract of insurance until the premium is paid in cash in full, or by cash and note, and until the policy has been issued and delivered while the applicant is in good health. By the other method, the one adopted by the agent and the applicant in this case, the insurance took effect immediately upon the approval of the completed application by

that the completed application was approved by the appellee's medical director, there was no "cash" payment of the premium, and hence no completed contract. Therefore the appellee is not liable, either under the allegations of the original complaint or the complaint treated as amended to conform to the proof.

The judgment of the trial court so holding was correct; and it is affirmed.

(149 Ark. 270) form such duty or not, and also assumed the ARKANSAS SHORTLEAF LUMBER CO. v. risk of obvious defects. WILKINSON. (No. 56.)

(Supreme Court of Arkansas. June 20, 1921.) I. Trial 243-Instructions in servant's personal injury action held inconsistent and misleading.

In a servant's personal injury action, bottomed on master's alleged negligence in failing to have lumber properly, inspected, such duty devolving on another servant, and that he negligently failed to discharge that duty, resulting in a splinter hitting plaintiff's eye, where the master defended on the ground that it was plaintiff's duty to inspect the lumber himself, and the testimony warranted submitting the issues to the jury, and the court instructed that the jury should not single out any one instruction, but consider all together as the law of the case, there must be a reversal, where the whole charge was not harmonious and consistent, but calculated to mislead the jury.

2. Trial 253(4)-Instruction on master's duty held erroneous, because ignoring inspection by servant.

In a servant's action for injury to an eye from a splinter, alleged to be due to master's negligence in failing to inspect lumber to be handled by the servant, an instruction that it was the master's duty to protect the servant from danger while in performance of his duty, and if negligent in inspecting the lumber the master was liable, if such was the proximate cause of injury, was erroneous, because wholly ignoring the master's contention that it was the injured servant's duty to inspect the lumber himself.

3. Master and servant 291 (7)-Failure to instruct on assumption of risk held error.

In a ripsawyer's action for injuries by a flying splinter from a board, where there was evidence that it was the plaintiff's duty to inspect the lumber himself, it was error not to instruct as to such theory, and if the plaintiff's failure to inspect resulted in the injury he assumed the risk, and the master was not liable. 4. Trial 241-Instruction quoting statute, correct as abstract proposition of law, held erroneous, because without hypothetical statements showing application.

6. Master and servant 291 (12)-Instruction held erroneous in placing burden of proof on master.

In an action for injury to a ripsawyer, whose eye was struck by a splinter from defective lumber, an instruction placing the burden on defendant to show that the plaintiff did not know and appreciate the danger held erroneous; the proof showing that he was an experienced employee of mature years.

7. Master and servant 217 (29)-Risk of discoverable defect in lumber assumed, though another workman neglected duty to inspect.

If a ripsawyer, injured when a splinter from a defective board struck his eye, knew the. board was defective, or the defect was so obvious that with ordinary care he must have known it, he assumed the risk, even if another workman neglected his duty to inspect the board.

1

Appeal from Circuit Court, Grant County; W. H. Evans, Judge.

Action by B. G. Wilkinson against the Arkansas Shortleaf Lumber Company for personal injuries. Verdict and judgment for plaintiff, and defendant appeals. Reversed and remanded for new trial.

Danaher & Danaher, of Pine Bluff, for appellant.

T. N. Nall, of Sheridan, and Rowell & Alexander, of Pine Bluff, for appellee.

WOOD, J. The appellant is a Missouri corporation operating sawmills in the state of Arkansas. Appellee was in its employ in the capacity of a "ripsawyer." The appellee's duties required him to take from a table near by boards of lumber that had been placed thereon and to feed these boards to the ripsaw; that is, to push the boards against the saw, in order to rip them into narrow boards. When the saw thus passed through the boards, they were taken out by an employee at the other end, who was called the "tailer." The boards handled by the endless appellee were first conveyed on chains from the downstairs of the plant, and as they reached the second floor they were taken off the conveyors by a negro employee, called a "passer" or "puller," and were placed on a table to be handled by the appellee. it lee. On the 30th of March, 1920, about 2 o'clock p. m., the appellee had pushed a board to the saw, and was standing with another board ready to go through, when the saw clicked and a splinter flew out, striking the appellee in the left eye and severely injuring him.

In a servant's action against a master for personal injuries, an instruction which is a literal copy of Crawford & Moses' Dig. § 7144, is correct as an abstract proposition of law; but it was error to give it without hypothetical statements showing how it would be applicable to the facts developed, for thus given it was misleading, and tantamount to a peremptory instruction for the servant and in conflict with other instructions.

5. Master and servant 217 (7)-Risk of discoverable defects in lumber assumed.

If it was the duty of the injured ripsawyer to himself inspect the lumber, a defect in which caused injury to his eye when struck by a splinter, then he assumed the risk, whether he knew of the danger resulting from failure to per

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The appellee brought this action against the appellant to recover damages for the injury, and he alleged that the injury was caused by the negligence of the agents and

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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