## Facts

- John Hancock Mutual Life Insurance Company issued two $400 life insurance policies on Anna Bible’s life, naming her husband, Wacil Bible, as beneficiary.
- At issuance, Anna Bible was confined at Hudson River State Hospital and suffered from manic depressive psychosis.
- The insurer’s agent went to the hospital, procured Anna Bible’s signatures on the applications, delivered the policies at the hospital in her husband’s presence, and collected the first and subsequent weekly premiums at the hospital for about three months; later premiums were collected by another agent.
- Anna Bible died about one year and eight months after policy delivery; the beneficiary submitted proof of death reflecting her health condition at and before delivery.
- The insurer denied liability based on two conditions: (1) the policy would not take effect unless, on its date, the insured was alive and in sound health; and (2) the policy would be void if, within two years before its date, the insured had attended a hospital or been treated by a physician for a serious disease unless specifically waived by an endorsement signed by a designated officer.
- The policies also stated that no waiver or modification was valid unless signed by specified officers, and that no other person could waive forfeiture.
- No officer-signed waiver endorsement appeared in the policy; the insurance application was not attached to the policy.

## Issues

1. Whether the insurer was barred by waiver or estoppel from relying on “sound health” and prior hospitalization conditions when its agent solicited the insurance in the hospital, delivered the policies, and accepted premiums with knowledge of the insured’s condition.
2. Whether policy language limiting agents’ authority prevented waiver or estoppel based on the agent’s conduct.
3. Whether failure to attach the application to the policy, as required by New York Insurance Law § 58, limited the insurer’s defenses tied to the application.

## Decision

- The trial court submitted waiver/estoppel to the jury based on the agent’s knowledge and premium collections; the jury found for the beneficiary.
- The Appellate Division affirmed.
- The New York Court of Appeals affirmed, holding the insurer could not avoid liability by invoking the health and hospitalization conditions under these circumstances.

## Legal Principles

- An insurer may be found to have waived policy conditions, or be estopped from asserting them, when its agent has knowledge of facts constituting a breach and the insurer issues the policy and accepts premiums despite that knowledge.
- An agent’s knowledge acquired while acting within the scope of the insurer’s business is imputable to the insurer for purposes of waiver and estoppel.
- Contract clauses restricting agents’ authority to waive conditions do not necessarily defeat waiver or estoppel where the insurer’s own course of dealing—through its agents—creates reasonable reliance and the insurer retains premiums with knowledge of disqualifying facts.
- When a statute requires that an application be attached to the policy as a condition to relying on it, failure to attach may preclude defenses grounded in statements in the application.

## Conclusion

Because the insurer’s agent solicited and consummated the transaction in a state hospital and the company accepted premiums with imputed knowledge of the insured’s hospitalization and condition, the insurer was barred by waiver or estoppel from enforcing the “sound health” and hospital-attendance conditions to deny coverage.


Bible v. John Hancock Mut. Life Ins. Co., 256 N.Y. 458, 176 N.E. 838 (N.Y. 1931)