insurance it may be read to amount in fact to several contracts, each of which insured an individual officer or director.
The policy indicates that both the corporation and the directors and officers have the status of insureds. It provides that it may be cancelled "by the Company or the assured." That the policy is geared to the number of officers and directors insured, and their identity, is indicated by the provision that any persons who become officers or directors after the policy is issued will be covered by it subject to written advice and the payment of an additional premium if required.
If we were to accept this construction of the policy, each insured would have to be considered a separate principal for the purposes of agency law. Movants' affidavits are uncontroverted that defendant Bevan had no actual authority to answer questions on an insurance application on their behalf as individuals. There would, nevertheless, still remain the question regarding each principal, of whether he was apparently authorized to act when he completed the application. RESTATEMENT, LAW OF AGENCY 2d sec. 257 (1958).
This unresolved factual question alone would be enough to deny summary judgment. However, more fundamental is the fact that movants are by this argument attempting to affirm this contract, not avoid it. Movants cannot have it both ways. They may not in the same breath deny that defendant Bevan had any authority to act, and thus attempt to dissociate themselves from any statements he made in obtaining the policy, while at the same time claim to have a binding policy and seek coverage under it. It is a matter of hornbook law that a contract must be affirmed in its entirety in order to effect its ratification. A principal may not claim the benefits of a contract without accepting the consequences of statements made by his agent, or apparent agent, which induced the contract in the first place. E.g., Newland, Admx. v. Lehigh Valley Railroad Company, 315 Pa. 193, 173 A. 822 (1934); Federal Sales Co. of Philadelphia v. Farrell, 264 Pa. 149, 107 A. 668 (1919); Singer Manufacturing Company v. Christian, 211 Pa. 534, 60 A. 1087 (1905); Kalbach v. Marine Galligan Co., 92 Pa. Sup. 185 (1927); Bowman v. Cochran Coal Company, 77 Pa. Sup. 118 (1921); RESTATEMENT, LAW OF AGENCY 2d sec. 96 (1958). Thus, whether the policy is viewed as one contract with Penn Central as the only party besides plaintiffs, or many individual contracts with each insured a party to one of them, defendant Bevan's actions are of paramount importance in determining whether plaintiffs can rescind this policy.
The final argument in support of this motion is based, movants assert, on the "broad and fundamental teaching" of Layman v. Continental Assurance Company, 416 Pa. 155, 205 A.2d 93 (1964), 430 Pa. 134, 242 A.2d 256 (1968). Layman held that an insurer could not rescind a life insurance policy because of false statements in the application if a copy of the application had not been furnished to the insured or his beneficiary before the insured's death. The Layman case is inapplicable here because its result was based entirely on the construction of a particular statute dealing with life insurance policies. There is no indication that this statutory policy has been extended by the state courts to apply to other situations not covered by statute, so as to constitute "fundamental teaching." Furthermore, the statutory policy in Layman was directed towards affording an opportunity to correct unintentionally made errors. This is distinguishable from the situation in this case where plaintiffs allege that the one who completed the application did so fraudulently.
Motion for summary judgment is denied.
AND NOW, this 16th day of November 1971, it is ORDERED that the motions of the defendants Kattau, Kirk and Annenberg for summary judgment be and they hereby are DENIED.