Clements v. Life Insurance Co., 155 N.C. 57 (1911)

April 26, 1911 · Supreme Court of North Carolina
155 N.C. 57


(Filed 26 April, 1911.)

1. Insurance — Policy — Written Contract — Presumption — Equity— Fraud — Evidence—Proof.

There is a presumption that a written contract of insurance expresses the intention of the parties, and a party who alleges mistake and seeks to reform the contract must overcome it and show mistake by clear, strong and convincing proof.

*582. Insurance — Policy — Written' Contract — Fraud — Misrepresentations — Equity—Correction—Evidence.

A mistake made by one party alone to a contract of insurance will not afford a ground for rectification or correction thereof, though equity will, in a proper case, afford relief by rescinding the contract.

3. Same.

In an action upon a policy of life insurance, when it may fairly be inferred from the evidence that the defendant issued and caused to be delivered to the insured the very policy it was intended he should have, and there is no sufficient evidence that it made any mistake in its terms, there is no equitable ground for reformation or correction.

4. Equity — Relief—Diligence—Rule of Prudent Man.

Equity will not afford relief to one who sleeps upon his rights, or whose condition is traceable only to that want of diligence which may fairly be expected from a reasonable and prudent man; and it requires of one asserting an equity, who was watchful and discovered the wrong, that he be prompt in asserting his rights.

5. Same — Insurance—Policy—Written Contract — Fraud—Misrepresentation — Correction—Cancellation.

An insured who could read and write and who was afforded a fair opportunity to understand his policy, put it in his trunk and kept it there until it would suit his convenience to read it over. After he had read the policy and discovered, or should have discovered, that a provision which induced him to take the policy was missing, he continued to pay the premiums, and brought this action to reform or set aside the policy on the ground that the agent of the company falsely represented that after he had paid the premiums for a certain period he would, in addition to the insurance afforded, be repaid the full amount of the premiums and interest thereon. Held, equity will afford no relief, as the conduct of the insured amounted to an assent to the contract as written and a full acquiescence therein, and any loss he may have suffered was attributable to his own fault.

6. Instructions — Fraud—Verdict — Appeal and Error — Evidence— Nonsuit — Practice.

When, under erroneous instructions of the trial judge upon an issue of fraud raised in an action to set aside a policy of life insurance, the jury has found the issue against the defendant, and there is no evidence of any fraud, viewing the case in its most favorable light to the plaintiff, the error complained of vitiates the entire verdict, and it will be set aside on appeal with directions to dismiss the action upon defendant’s motion to nonsuit made in apt time in the trial court.

*59Appeal by defendant from Daniels, J., at tbe January Term, 1911, of DURHAM.

Tbe facts are sufficiently stated in tbe opinion of tbe Court by Mr. Justice Walker.

Branham & Brawley and Manning & Everett for plaintiff.

Bryant & Brogden for defendant.

Walker, J.

Tbe plaintiff brought this action to recover the amount of premiums paid by him on two insurance policies, with interest. He alleged that an agent of tbe defendant bad represented to him that be was selling policies for tbe defendant, by tbe terms of which bis life would be insured for ten years; that if be died before tbe expiration of tbe ten years, the beneficiaries would receive tbe amount of the policy, but if he lived to the end of tbe insurance period, be could withdraw tbe total amount of premiums paid to tbe company by him, with four per cent interest. After some solicitation, be consented to take tbe policies, and they were sent to him. He put them in bis trunk without reading them, although be could read, and without making any effort to ascertain whether they conformed to tbe representation or agreement of tbe agent. Tbe plaintiff paid tbe premiums regularly, and continued to do so even after be had received information sufficient to put him on bis guard and to notify him that no stipulation for tbe return of tbe premiums and interest was in tbe policy, which was tbe fact. There is a provision for tbe surrender of tbe policy at tbe end of tbe dividend period of ten years and tbe payment to him of tbe entire cash value, that is, bis part of tbe legal reserve computed according to tbe tables of mortality and four per cent interest, together with tbe dividends, or for a settlement with tbe company upon tbe basis of either one of four other options, but none permitting a withdrawal of all premiums paid and interest. Tbe plaintiff appears from bis own evidence, none having been introduced by tbe defendant, to be an intelligent man, fully capable of taking care of himself in any negotiation between him and tbe defendant’s agent, who dealt with him, for tbe purchase of tbe policies. There is absolutely no evidence tending to show that tbe agent attempted to take any advantage *60of him, except in making the false representation or promise, or that he resorted to any trick, device or artifice to prevent his reading the policies, or that he misread them to him or made any false statement about their contents when the policies were delivered. They were left with him at his home by the agent, without a word being said as to their contents. It is true the plaintiff testifies that he was not a good reader, and was not able to make out some words of the policies when he took them from his trunk and attempted to read them afterwards, but he could not say what words they were, and he also stated that he could easily have had them read to him, though he did not ask any one to do so. The defendant, at the close of the evidence, moved to nonsuit the plaintiff. The motion should have been allowed and the refusal of the court to grant it was error.

The defendant’s agent may have made a false promise to the plaintiff, but there is no more than this in the case. There is no element of fraud in the transaction and no case made out for either a rescission or reformation of the contract. “The rule that all prior parol agreements are merged in a subsequent written contract touching the same subject-matter, is now too well established to need the support of cited authority. Therefore, when a policy of insurance, properly executed, is offered by the insurer and accepted by the insured as the evidence of their contract, it must be conclusively presumed to contain all the terms of the agreement for insurance by which the parties intend to be bound. If any previous agreement of the parties shall be omitted from the policy, or any terms not theretofore considered added to it, the parties are necessarily presumed to have adopted the contract as written as the final form of their binding agreement.” Yance on Insurance, p. 348.

In Insurance Co. v. Mowry, 96 U. S., 547, the rule is thus strongly expressed by Justice Field: “The entire engagement of the parties, with all the conditions upon which its fulfilment could be obtained, must be conclusively presumed to be there stated. If, by inadvertence or mistake, provisions were omitted the parties could have had recourse, for a correction of the agreement, to a court of equity, which is competent to give all needful relief in such cases. But until thus corrected the policy *61must be taken as expressing tbe final understanding o£ tbe assured and of tbe insurance company.” There is always a strong presumption in favor of the correctness of tbe instrument as written and executed, for it must be assumed that tbe parties knew what they bad agreed and have chosen fit and proper words to express that agreement in its entirety. In order to overcome this fair presumption, tbe one who alleges that there is a mistake therein and seeks to reform tbe contract, is required to make out bis case by clear, strong and convincing proof, and until this is done, tbe contract must stand and be enforced as it is written. Warehouse Co. v. Ozment, 132 N. C., 839. There is another principle to be considered. If reformation be sought solely on tbe ground of mistake, it must appear that tbe mistake was material and common to both parties. A court cannot make for tbe parties a contract which they did not make and did not intend to make for themselves. A mistake by one party may sometimes be ground for rescission, but not for rectification or correction. Kerr on Insurance, sec. 72, p. 146; Floars v. Insurance Co., 144 N. C., 232. There is no evidence in this case of any mutual mistake. On tbe contrary, it is to be fairly inferred from tbe evidence that tbe defendant issued and caused to be delivered to tbe plaintiff tbe very policy it intended be should have, and there is no sufficient proof, not meaning to pass upon tbe quantum or weight of tbe evidence, that it has made any mistake at all. Tbe facts in this case are similar to those in Cathcart v. Insurance Co., 144 N. C., 623, and our decision must be tbe same as in that case. "We there held that no case bad been shown, either for cancellation or reformation of tbe contract. Frazell v. Insurance Co., 153 N. C., 60. Tbe loss of tbe plaintiff, if any be has sustained, is directly and wholly attributable to gross neglect of bis own interests and to bis supineness when be should have been active and vigilant. Equity will not assist one whose condition is traceable only to that want of diligence which may fairly be expected from a reasonable and prudent person, and even when be is watchful and discovers a wrong practiced upon him, a court of equity requires that be should be prompt in asserting bis claim to relief against it, for it will not aid those who sleep on their *62rights, but only those who are vigilant. Upton v. Tribilcock, 91 U. S., at p. 45. In that case it is said: “That the defendant did not read the charter and by-laws, if such were the fact, was his own fault. It will not do for a man to enter into a contract, and when called upon to respond to its obligations, to say that he did not read it when he signed it, or did not know what it contained. If this were permitted, contracts would not be worth the paper on which they were written. But such is not the law. A contractor must stand by the words of his contract; and, if he will not read what he signs, he alone is responsible for his omission. Jackson v. Croy, 12 Johns., 427; Leis v. Stubbs, 6 Watts., 48; Farly v. Bryant, 32 Me., 474; Coffing v. Taylor, 16 Ill., 457; Slafyton v. Scott, 13 Ves., 427; Alvanly v. Kinnaid, 2 Mac. & G., 7; 29 Beav., 490.”

Applying the foregoing principles to the facts, we find that the plaintiff could easily have ascertained by reading the policies whether the sixth option, upon which he says he relied, had been inserted therein, but instead of doing this, which was his plain duty under the circumstances, he carelessly and without the least regard for his own rights or the protection of his interests, deposited them in his trunk until it suited his convenience to read them, and even after he read them and discovered, or should have discovered, that the provision was missing, he continued to pay the premiums. This was a clear assent on his part to the contract as written, anfi a full acquiescence in its terms. If he has suffered any loss by reason of the fact that the option was not inserted in the policies, it is all his own fault and he must bear the consequences of his own neglect. In Floars v. Insurance Co., 144 N. C., at p. 240, it is said: “There is also strong authority for the position that on the facts of this case the relief sought would not be open to plaintiff even if there had been a mutual mistake in the preliminary bargain, and by persons with full power to contract, for the reason that plaintiff accepted the policy with the alleged stipulation omitted without having read same, and held it without a protest for three months,” citing Upton v. Tribilcock, supra. This case bears no resemblance to Caldwell v. Insurance Co., 140 N. C., 100; Sikes v. Insurance Co., 144 N. C., 626; Sikes v. *63 Insurance Co., 148 N. C., 13; Austin v. Insurance Co., 148 N. C., 24; Whitehurst v. Insurance Co., 149 N. C., 273; Jones v. Insurance Co., 151 N. C., 54; for in those cases it appeared that the agents dealt with illiterate persons of inferior intelligence, and took advantage of the fact by misreading and falsely explaining the policies, by reason of which fraud the plaintiffs were induced to sign contracts they had not made.

The jury have found, under erroneous instructions as to the law, that the plaintiff was defrauded by the defendant’s agent. There was no evidence of any fraud, viewing the case in the most favorable light for the plaintiff. The error of the court vitiates the entire verdict, and it must be set aside, with directions to dismiss the action upon the defendant’s motion to nonsuit.

Action dismissed.