MUTUAL LIFE INS. CO. OF NEW YORK v. LOGAN, 87 F. 637

MORROW, Circuit Judge, after stating the case as above, delivered the opinion of the court. The assignments of error are 32 in number. The errors claimed relate to admission and rejection of evidence, refusal to instruct the jury to bring in a verdict for (lie defendant, refusal to charge the jury as requested by plaintiff in error, defendant in the court below, and exceptions taken to certain parts of the charge as given. It will be necessary to consider first the alleged errors in admitting or rejecting evidence.

If the court below committed a material error either in the admission or rejection of evidence, it follows that the judgment must be reversed, and a new trial ordered. One of the assignments of error raises the question whether or not the court erred in permitting the witness Lysander S. Logan, the plaintiff in the court below, to answer the following question: “Q. Now, Mr. Logan, did you, subsequent to November, 1893, and, if so, when, have a conversation with Mr. Thomas J. Logan regarding this policy and tills note?” To which the witness answered as follows: “A.

I had a conversation with my father about the first of December, the early part of December, regarding the note and policy.

He told me that he had given his note for the premium on this policy, and it was in the hands of attorneys, and lie wanted to know If 1 could raise the money for him to lift his note; and I told him I could not at that time, and he says, ‘I believe 1 will go to the bank, and get the policy, and see if I can mortgage it for the money to pay the note,’ — -mortgage it to parties there, to see if he could get the money to lift his note with.” In the offer to prove this conversation, the following colloquy occurred between counsel and court.

Counsel for defendant in error said: “I desire to prove by this witness that Thomas J. Logan stated to him that he knew that the policy was in the bank, and that he could go and get it whenever he wanted it. That was subsequent to November 20,1893, in the early part of December, 1893, and Thomas J. Logan did say that he was going to try to get it. I offer to prove that Thomas J.

Logan told this witness that the policy was there; that he could go there, and get it; that the attorney was after him for this note; that he was going to go to one Maley, and borrow the money if he could; if Maley would lend him the money, he was going to mortgage the policy to Maley to secure payment.” Whereupon the court said: “Have you examined to see whether this kind of testimony was admissible under any circumstances?” Whereupon counsel for plaintiff said: “I took it for granted it was, if your honor pleases.” To which the court replied: “If it is a part of the transaction, it is entitled to come in.

I think this testimony had better come in subject to your objection, giving counsel and myself an opportunity to consider the question at a later date in the course of the trial.” Whereupon counsel for the defendant inquired: “You mean both conversations?” To which the court replied: “No; I am not speaking of the other conversation. I am quite clear as to the other conversation, but as to this transaction, this matter, that seems to be in the nature of

an act endeavoring to borrow money.” Whereupon counsel for defendant excepted, on the ground that it was incompetent and immaterial. The court then said: “I will allow this testimony subject to the objection. I wili endeavor to give the jury such directions as I think the case warrants.” As stated above, it does not appear that the court, in its instructions to the jury, again referred to this matter.

We are of the opinion that the admission of this testimony as to the conversation the witness had had with his father at a time subsequent to November 20, 1893, when the alleged delivery of the policy took place, was incompetent and self-serving testimony to show that Thomas J. Logan had accepted and thereby completed the delivery of the policy. In the first place, it was clearly hearsay testimony. The only way in which such testimony would have been admissible, the declarant being dead, was a declaration against interest.

But it does not appear to have been offered as such, although the claim is not made that it would have been competent for that purpose. The conversation cannot, however, be regarded as constituting a declaration against interest, for it was plainly intended as, and its inevitable effect was that of, self-serving testimony.

It is contended that it was, substantially, a declaration against interest, because Logan admitted his liability upon the note, by endeavoring to raise funds to pay it; but it must be observed that, while the statements indicating an admission of liability upon the note would have been properly admissible in an action on the note against Logan or his estate, the present suit is not brought to enforce a liability against him on the note, but is brought by his executor, who is also one of his heirs and legatees under the will, to enforce a liability against the company upon the policy, in which one of the chief questions of fact for the determination of the jury is whether or not the policy was delivered to, and accepted by, Thomas J.

Logan. The court below, however. eAridently considered it as part of the res gestae, and admitted it as such. But it is difficult to see how this conversation could be admitted as a part of the res gest.a Tt took place, according to the witness, about the first part of December, 1893, although the witness does not remember exactly when it occurred. This was at least some 10 days after November 20, 1893, when the alleged delivery of the policy took place.

A declaration, to be admissible as part of the res gestee, must be contemporaneous with it, and so limit, explain, or characterize the fact it assists to constitute as to be in a just sense a part of if, and necessary to its complete understanding. 1 Greenl. Ev. § 110; Wharf. Ev. § 259.

That the conversation held between Logan, the plaintiff in the court below, and his father, and the statements made by the father in the course of such conversation, are not necessary incidents of the litigated act, — that is, whether the contract of insurance was consummated by a delivery of the policy on November 20, 1893, — is too clear for argument. The admission of this testimony must have had some effect on the jury, and, in our opinion, was material error.

The next question for our consideration is whether the court below erred in refusing to instruct the jury to bring in a verdict in favor of the defendant, plaintiff in error here. This alleged error is covered by assignment No. 1. As stated, the only issue in the case was whether the contract of insurance had been consummated. Three questions of fact may be said to arise under this issue:

(1) Did Stinson have the authority to take a note in payment of the premium for the policy? (2)-Did he, in fact, take the note in payment of the premium?

(3) Was there a delivery of the policy to Logan? So far as these questions involve matters of fact, it was, undoubtedly, for the jury to determine them. Smith v. Assurance Soc., 13 C. C. A. 284, 65 Fed. 765. Their verdict, subject to the law as given by the court, is conclusive on this court, especially as the evidence may be said to be contradictory and conflicting. We think there was sufficient evidence to go to the jury, even excluding the evidence which we think the court below improperly admitted.

It may not be of the strongest and most satisfactory character, but still it was sufficient to justify the jury in passing its judgment thereon. Upon the question of delivery,’the case depended very much upon the credence given by the jury to the iesfimony of Baldwin, the cashier of the First National Bank of Prineville, Or., and an intimate friend of the deceased Logan.

Upon the question of law whether or not the taking of a note constitutes a payment, it is well settled by the weight of authority that an agent of a life company, who is intrusted with the business of closing the contract by delivering the policy, has an implied authority to determine how the premium then due shall be paid, whether in cash, or, as is sometimes done, by giving credit, in which case the agent becomes the creditor of the insured, and the debtor of the insurer.

In that event, though tlie agent should subsequently default, and the premium should never reach the company, the policy would still be binding. Richards, Ins. (2d Ed.) § 93; Miller v. Insurance Co., 12 Wall. 285; Ball & S. Wagon Co. v. Aurora F. & M. Ins. Co., 20 Fed. 235; Smith v. Assurance Soc., 13 C. C. A. 284, 65 Fed; 765. The authorities cited by plaintiff in error are not inconsistent with this rule.

While the rule itself is well settled, still an agent must have the authority, either actual or apparent, to take notes in payment of premiums, or the course of business of the company must be such as to warrant an implication of authority. Insurance Co. v. Willets, 24 Mich. 268. Whether or not Stinson possessed this authority, either actually or ostensibly, was, as has been stated, a question of fact.

It appeared, on the one hand, that Stinson had made it a practice of taking notes in payment of premiums, and that the general agents knew this; that they acquiesced in this method of receiving payment, making no serious objection beyond admonishing Stinson to be cautious, as he might involve himself too heavily. On the other hand, Mr. Forbes, one of the general agents, directly contradicted this evidence. It was for the jury to pass upon this conflicting evidence. It is, however, further contended that Stinson was prohibited by a rule of the company from taking notes.

Stinson, in his testimony, made some claim that he was not aware of such a rule; but, however that may be, assuming for the purposes of the case that he did not know of the rule, the fact remains that there was evidence tending to show that the company knew of his frequent violations of the rule, and that it made no objection thereto, beyond advising Stinson to be cautious, as he might involve himself too heavily. It is not claimed that the insured knew of this rule.

He cannot be prejudiced in his rights by the failure of Stinson, on the one hand, to observe a rule of the company, and of the company, on the other hand, to enforce the rule. It must- be deemed that the company, through its general agent, waived the application of the rule in this case. Insurance Co. v. Norton, 96 U. S. 234; Insurance Co. v. Carder, 42 U. S. App. 659, 665, 27 C. C. A. 344, and 82. Fed. 986. We now come to consider the charge of the court to the jury, and its refusal to charge as requested by the plaintiff in error.

The court refused to give the following instruction: “The fact, if it be a fact, that plaintiff, as executor of tbe estate of T. J. Logan, may have allowed tbe note as a claim against tbe estate, and in favor of the National Bank of Commerce, cannot be considered by you. Such action by the executor, if taken, cannot bind the insurance company or add anything to the rights of the plaintiff in this ease,” This, in our opinion, was error. The only issue before the jury was whether or not the contract of insurance was consummated on November 20, 1893.

The mere fact that, long subsequent thereto, the note was allowed as a claim against the estate, cannot be deemed to bind the plaintiff in error in any way, the note not having been presented on behalf of the insurance company. If the contract of insurance was never consummated, if Logan never accepted the policy, the fact that the note, which at the outset he had given to Stinson, was allowed as a claim against his estate, cannot bind the insurance company, nor add anything to the rights of the plaintiff.

We think that the instruction requested should have been given, in view of the evidence presented in the case.

The court, in its charge, instructed the jury as follows: “Now, in determining what was done, or what Logan said or did, yon must take the testimony of witnesses as to what Logan did or said, and not consider the statements contained in the letters that passed from Baldwin to Stinson.” In objecting to this instruction, the following colloquy occurred between the court and counsel for the plaintiff in error: “Judge McArthur: We also except to your honor’s instruction to the jury that the statements m the letters are not to be considered by them as evidence.

The letters of Baldwin to Stinson are not to be considered as evidence in the case.” Whereupon the court, in response to said objection, and before the jury retired, said: “I do not wish to be understood in that way.

I say the statements in the letters of Baldwin to Stinson as to what Logan did are not to be considered, but, instead, Baldwin’s testimony as to what Logan did and said; that they may consider that rather than the statements of Baldwin in his letters as to what Logan said.” Whereupon counsel for defendant replied to the court, in the presence of the jury: “Yes, I understand the court to draw the distinction between the statement in the letter and the statement under oath as evidence; but we consider that the statement in the letter is simply a verbal act, and is the best evidence of what was done, coming so recently after the statements said to have been made by Logan, and are receivable in evidence, and should have full force and effect as a verbal act.” This part of the charge was clearly error.

The jury were told, in effect, that they should consider the testimony of Baldwin in preference to the statements made by him, and contained in his letters to Stinson. But it was for the jury to say which of the statements they preferred to accept. It was'for them to pass upon the credibility of Baldwin’s testimony. They might have considered that the statements contained in his letters to Stinson written at the time were preferable and more truthful than his subsequent testimony.

The significance of this is seen in the fact that in the letters Baldwin stated that Logan refused to take the policy, while in his testimony he swore that Logan never absolutely refused to take the policy, and that, furthermore, he never directed him (Baldwin) to return the policy. This variance was matter for the jury to consider and judge.

It may be that the learned judge felt justified in believing that the testimony of Baldwin was entitled to more credence than the statements contained in his letters to Stinson; but the instruction was couched in such language that it may well be that the jury considered they were bound to give more weight to Baldwin’s testimony than to his statements in the letters. The court should have been careful to distinguish the law from the facts. See Starr v. U. S., 153 U. S. 614, 14 Sup. Ct. 919.

The remaining assignments of error do not, in our opinion, show any error committed by the court in its other instructions to the jury. For the reasons stated above, the judgment will be reversed, and the cause remanded for a new trial.