1. (a) An application for insurance is a mere offer on the part of the applicant to purchase a contract as described therein; it has no binding effect until it is accepted by the company.
(b) Mere prepayment of premiums along with the submission of the application does not bring a contract of insurance into existence or create any liability on the part of the company beyond a return of the premium, until and unless the application is accepted.
2. (a) Whether a binding contract existed is a question of law. Testimony of the proposed beneficiary in the policy applied for that the soliciting agent of an insurance company had informed her that the applicant "was insured" and that the "company would pay" the benefits is inadmissible to prove either that the contract existed or what action the company would take in a consideration of her claim. Nor does that testimony of the agent himself to the same effect have any probative value.
George F. Sasser made application September 17, 1962, to Coastal States Life Insurance Company for a policy of life insurance with triple indemnity in the event of accidental death. Tendered with the application was his check for $8.24 representing the first month's premium. In the application and above the applicant's signature was the provision: "I hereby declare and agree . . . 2. That no liability shall exist unless and until the policy applied for has been delivered to and accepted by me and the first premium paid while I am in good health and free from injury; except that if the full first premium is paid on this date and if the policy is issued as applied for the insurance shall take effect from this date or subsequent medical examination except that the Company's liability shall be limited to $50,000.00 prior to delivery of the policy; 3. Any statement made by or to anyone shall not be binding on the Company unless entered herein or submitted in writing to the Company with this application . . . I have paid undersigned Agent $8.24 and hold receipt for this amount." (Emphasis supplied.)
The application was forwarded by mail from the agent in Augusta to the home office of the company in Atlanta, and was received there at 9 a.m. September 19. Upon receipt of the application it was referred to the underwriting department for investigation and evaluation, looking to the issuance of the policy. However, certain information came to the attention of the underwriters concerning the personal habits of the applicant and the application was never approved or accepted. They did make a determination that if a policy were to issued to Sasser it would, because of the information brought to their attention, be at a premium rate of $10.45 per month.
In the early hours of September 19, at about 12:58 a.m., Sasser was killed in an automobile collision. His mother, who would have been the beneficiary in the policy issued, made claim for the triple indemnity payment that would have been provided under the policy applied for, if issued, and supplied the requisite proof of death. The company refunded the premium, denied liability, and refused payment, whereupon Mrs. Sasser brought suit to recover the triple indemnity benefits, and for damages and attorney's fees for alleged bad faith of the company in refusing payment. The company moved for summary judgment, supporting its motion with an affidavit of the manager of the underwriting department that the application, when considered, had been declined. Requests for admissions were made upon the company by the plaintiff, which were duly answered. Plaintiff then moved for summary judgment on the question of liability and submitted affidavits of herself and of the agent who had taken the application for the insurance.
Upon a consideration of the two motions, all pleadings and affidavits submitted, the company's motion was sustained and a summary judgment granted in its favor. Plaintiff now appeals, enumerating as error the sustaining of the company's motion and the denial of her own.
1. (a) "An application for insurance is a mere offer," (Fort Valley Coca-Cola Bottling Co. v. Lumbermen's Mut. Cas. Co., 69 Ga. App. 120
. (1) (24 SE2d 846
)), and the company is free to accept or reject it. Boswell v. Gulf Life Ins. Co., 197 Ga. 269
, 272 (29 SE2d 71
). Unless the offer is accepted by the company no contract ever comes into existence and no liability can arise. "The intention of the parties to a life insurance contract controls as it does in other contracts, and we think it was the intention of the parties here for the insurance in question to become effective from the date of the binder receipt, upon the approval of the application therein referred to, for this is exactly what the binder receipt states." (Emphasis supplied.) National Life &c. Co. v. Moore, 83 Ga. App. 289
, 292 (63 SE2d 447
). "So long as the application is not acted upon by the company, no contract of insurance is consummated, and where the applicant dies before the acceptance of his application, the company has incurred no liability. Maddox v. Life & Casualty Ins. Co. of Tenn., 79 Ga. App. 164 (53 SE2d 235)
." Paulk v. State Mut. Life Ins. Co., 85 Ga. App. 413 (69 SE2d 777)
. "So long as the application is not acted upon by the insurance company, of course no contract has been consummated; and if the applicant should die before the acceptance of his application, the company has incurred no liability." New York Life Ins. Co. v. Babcock, 104 Ga. 67
, 70 (30 SE 273
). "This offer to take [a policy of insurance by the applicant] would not alone make a contract; but the insurance company's issuance of the policy in response thereto would complete it; for, in this view, it is easy to see that the minds of the parties would [then] meet upon the necessary elements of the contract, namely, . . . the subject-matter, . . . the risk insured against . . . duration of the risk, . . . amount of the indemnity, . . . the premium . . ." (Emphasis supplied.) Todd v. German-American Ins. Co., 2 Ga. App. 789
, 794 (2) (59 SE 94
"The insurance company might have been willing to insure the stock of goods and ten bales of hay for a certain premium, and yet unwilling, for the same premium, to insure the same goods if it had known that sixty bales of hay were stored in the building." Alston v. Greenwich Ins. Co., 100 Ga. 282, 285 (29 SE 266). And so here, the company may have been willing to insure the applicant's life at a premium of $8.24 per month, but upon learning of his disposition to drink intoxicants it was unwilling to insure him under the contract applied for less than $10.45 per month. There was never a meeting of the minds on the matter of the premium. Cf. Golden v. National Life &c. Ins. Co., 189 Ga. 79, 84 (2) (5 SE2d 198).
"The time when an insurance policy shall become effective is an essential element of the contract, and the parties may fix a future date upon which is shall become effective." Pendley v. Union Bankers Ins. Co., 99 Ga. App. 189 (4)
, 190 (107 SE2d 910
). Here it was to become effective, by the terms of the application, only "if the policy is issued as applied for." The application was never accepted or approved and no policy of any kind was ever issued.
(b) The mere prepayment of premiums with the application does not bring into existence a contract or impose liability beyond a return of the premium paid. "Where, pending mere negotiations for a policy of insurance, the person on whose life it might or might not have been written dies, the company is not liable on the proposed policy simply because it accepted premiums in advance on the supposition that the policy would be issued. Fowler v. Preferred Accident Ins. Co., 100 Ga. 330 (2) (28 SE 398); N. Y. Life Ins. Co. v. Babcock, 104 Ga. 67 (1) (30 SE 273, 42 LRA 88, 69 ASR 134); Taylor Lmbr. Co. v. Clark Lmbr. Co., 33 Ga. App. 815 (3) (127 SE 905), and citations." McGlothin v. U. S. Nat. Life &c. Co., 36 Ga. App. 325 (3) (136 SE 535). "The acceptance of premiums pending negotiations for the issuance of a policy of life insurance will not bind the company." John Hancock Mut. Life Ins. Co. v. Ludwick, 45 Ga. App. 631 (3) (165 SE 918).
Though no delay in taking action upon the application is charged in this case (Agent Jenkins testified that it "usually took from seven to fourteen days to receive back a policy after application was made"), if it had appeared the situation would not be changed. Smith v. Metropolitan Life Ins. Co., 76 Ga. App. 229, 231 (45 SE2d 471). The point of the matter is that until the company has acted upon the application, accepting the offer therein, there is no contract.
2. (a) In her affidavit, submitted in connection with her motion for summary judgment, plaintiff asserted that shortly after her son's death the agent who took the application from him "informed me that my son was insured with the company which would pay triple the amount of the policy." In the affidavit of the agent he asserted that "around the office it was considered that Mary Sasser's claim was valid and that George Sasser was insured." These statements have no probative value. They are at best legal conclusions as to whether a binding contract had existed, and as to this neither of the affiants could testify. Travelers Ins. Co. v. Thornton, 119 Ga. 455 (1) (46 SE 678)
; Wells v. Metropolitan Life Ins. Co., 107 Ga. App. 826
, 834 (131 SE2d 634
No verbal assurance of the agent to the applicant or to the proposed beneficiary that the applicant was insured from the date of the application could bind the company or constitute a contract of insurance. Fowler v. Preferred Accident Ins. Co., 100 Ga. 300 (2), supra. The application itself provided that no statement made by anyone should bind the company unless in writing and submitted to the company with the application. This was a valid and binding provision. Athens Mutual Ins. Co. v. Evans, 132 Ga. 703 (2, 3) (64 SE 993); Mitchiner v. Union Central Life Ins. Co., 185 Ga. 194 (194 SE 530). It was unambiguous, and parol evidence as to what the agent may have said at the time it was signed was inadmissible. Wheeler v. Fidelity & Cas. Co., 129 Ga. 237, 240 (58 SE 709); Reliance Life Ins. Co. v. Hightower, 148 Ga. 843 (98 SE 469). Unauthorized statements of the agent could not bind the principal unless they were ratified. Phoenix Ins. Co. v. Gray, 107 Ga. 110 (4) (32 SE 948).
(b) The agent also, in his affidavit, asserted that "I figured him a good risk," and "in my opinion George Sasser was a very good risk and there was nothing on which the company could have refused his application as he met all the requirements." A mere soliciting agent has no authority to bind the underwriting department of the company, whose duty it is to evaluate applications and risks, as to whether any particular risk is good or bad. Code 4-302; Cotton States Life Ins. Co. v. Scurry, 50 Ga. 48. And see Code 56-2420. He was in no better position to testify on this matter than he was as to the legal effect of the submission of the application. His evidence in this respect was purely opinion, unsupported by any fact. Code 38-1708. "[A] non-expert witness can not give his opinion unless he also gives the fact or facts upon which he bases his opinion." Alabama Great Southern R. Co. v. Brown, 140 Ga. 792, 797 (79 SE 1113). But if this had not ben true, the evidence would not have been sufficient to bring into existence a contract of insurance between the applicant and the company. That could not happen until the company accepted and approved the application--even though the applicant may have been a perfectly good risk.
The pleadings with the evidence submitted demanded a finding that no contract of insurance existed and the grant of a summary judgment on motion of the defendant company was proper.