Appeal from Circuit Court, Marion County. Jena V. Schlegel, Judge.
William B. Wyllie, Salem, argued the cause and filed a brief for appellants.
Thomas B. Brand, Salem, argued the cause for respondent. With him on the brief were Brand, Lee & Ferris, Salem.
Plaintiff brought this action against its agents for damages it sustained as a result of the agents' conduct, which was allegedly in violation of the insurance company's orders and instructions to defendants. The alleged violation bound the insurance company to a contract of insurance on which it had to pay a claim of $8,781.55. The defendant Enger is a licensed insurance agent in Oregon and an officer and employee of defendant Enger Insurance Company, Inc.
The case was tried before the court without a jury. The trial court found generally in favor of plaintiff and entered judgment accordingly. Defendants appeal.
The facts of the case are somewhat complicated and there is inconsistency in the testimony. The trial judge found for plaintiff, and we must view the evidence in a light most favorable to plaintiff. McPherson v. Cochran, 243 Or 399, 401, 414 P2d 321 (1966). Kenneth Burke, a 72-year-old driver, procured an automobile liability insurance policy from plaintiff, Mission Insurance Company, through its agents, the defendants. Burke's policy expired on June
6, 1970. In order to renew the insurance policy, plaintiff required Burke to undergo a physical examination.
The evidence shows that the standard practice of plaintiff was to require a physical examination of each insured, who is 65 years of age or older, at regular intervals for the purpose of determining insurability. Plaintiff's regulations and internal office practice were to withhold from issuing or renewing a policy prior to its receipt of a completed physician's statement when one was required. However, Mr. Abbott, plaintiff's general manager in Oregon, testified that he had authorized the renewal of policies prior to the receipt of the required physician's statement, but that such practice was limited to instances where an agent would specifically request renewal of a policy and the insured had made a definite appointment for the required physical examination on a specific date in the near future. Mr. Abbott further testified that this exception was normally made only for policy-holders on whom Mission had previous medical reports. He also testified that plaintiff instructed its agents on the procedure for renewal of policies through its manual and through news bulletins.
Prior to June 6, 1970, plaintiff sent the renewal application and physician's statement to defendants and directed defendants to obtain the physician's statement from Burke as a condition to the renewal of Burke's policy. Enger stated that he received the renewal application and the physician's statement from Mission and sent both documents to Burke. However, Enger also stated that it was possible that the physician's statement was never sent to Burke. Even more surprising is Enger's testimony that he did not notice that a physician's statement was
required when he returned the signed renewal application to plaintiff, despite the clear notation that the renewal was "subject to acceptable physician's statement" and despite Enger's testimony that he saw that phrase when he first received the application from plaintiff and when Burke signed the application.
Burke, the insured, testified that he had not received the renewal application nor the physician's statement from defendants and that he simply went to defendants' office to renew his policy on or about June 5, 1970. Burke stated that when he personally appeared at defendants' office to renew his policy, no one informed him of the need for a medical examination or that a medical examination was required as a condition to the renewal of his policy. Burke signed the renewal application form at defendants' office and paid a premium of $62, which was accepted by defendants.
On June 6, 1970, Burke's policy expired. Sixteen days later, on June 22, 1970, Burke was involved in a minor accident. Both defendants and plaintiff were notified of this accident. After receiving notice of the accident, plaintiff notified defendants by memorandum dated July 1, 1970, that plaintiff did not have an application for renewal nor proof of renewal (a renewal certificate) of Burke's policy in its files. In response to this memorandum, defendant Enger sent a photostatic copy of the renewal application in his files and a copy of his ledger card to plaintiff, showing that defendants had received $62 from Burke as premium. The original renewal application signed by Burke was never located.
On July 7, 1970, Mr. Abbott, plaintiff's general manager, notified ...