S. W. 978; Moreland vs. Union Central Life Insurance Co. 104 Ky. 129, 46 S. W. 516, 20 Ky. Law Rep. 432; Walls vs. Home Insurance Co. of N. Y., 114 Ky. 611, 71 S. W. 650, 24 Ky. Law Rep. 1452, 102 Am. St. Rep. 298; Moore vs. Continental Insurance Co., 107 Ky. 273, 53 S. W. 652, 2 Ky. Law Rep. 977. The doctrine of these cases is based on the fact that in each instance the company showed an unequivocal election to treat the policy as a subsisting obligation. On the other hand, in the case of Continental Insurance Co. of N. Y. vs. Peden, 145 Ky. 775, 141 S. W. 43, the company notified appellee that his policy had elapsed by reason of the nonpayment of the premium note. At the same time it reminded him of the fact that, if he wished to revive his insurance, he would have to pay the note. There was no unconditional demand for payment, but merely a notice or request to pay in the event the insured desired to revive the insurance. It was held that such request did not constitute a waiver. It has likewise been held in a number of cases that the right to enforce a forfeiture for nonpayment of a premium or a premium note is not waived by mere silence or inaction on the part of the company. Franklin Ins. Co. vs. McAfee, 90 S. W. 216, 28 Ky. Law Rep. 676; Manhattan Life vs. Savage, 63 S. W. 278, 23 Ky. Law Rep. 483; Crutchfield vs. Union Central, 113 Ky. 53, 67 S. W. 67, 23 Ky. Law Rep. 2300; N. Y. Life vs. Warren Deposit Bank, 75 S. W. 234, 25 Ky. Law Rep. 325; Manhattan Life vs. Pentecost, 105 Ky. 642, 49 S. W. 425, 20 Ky. Law Rep. 1442, 1443; Union Central vs. Duvall, 46 S. W. 518, 20 Ky. Law Rep. 441, 443. In the present case it was the duty of the insured to pay the premium promptly, and it was provided in the policy that in the event of nonpayment the policy should automatically lapse and be converted into paid-up insurance. The policy did not require affirmative action on the part of either the company or the insured. All that it is claimed that the insurer did was to retain the note and the policy. The company made no demand on the insured for the payment of the premium note past due or the indebtedness on the policy. It remained silent and inactive. In our opinion, this did not constitute a waiver of the provision with reference to paid-up insurance. Nor can we see how the indorsement made on the policy after the insured's death affects the question one way or another. Unless there was a waiver of the provision by the company, the rights of the parties were fixed by the contract. No indorsement on the policy was necessary to give effect to its provisions. It neither added to nor substracted from the rights of the parties. It follows that the court erred in sustaining the demurrer to defendant's answer. We have considered this case from the standpoint of the sufficiency of the answer as amended. Other questions are discussed by plaintiff; but, in view of the fact that they are not presented by the pleadings, we deem it unnecessary to consider them. Judgment reversed, and cause remanded for proceedings consistent with this opinion. SUPREME COURT OF NORTH CAROLINA. GARDNER vs. NORTH STATE MUT. LIFE INS. CO.* 1. INSURANCE-BINDING SLIP-EFFECT. The binding slip issued on an application for insurance is a mere written memorandum of the most important terms of a preliminary contract of insurance, intended to give temporary protection pending the investigation of the risk by the insurer, or until the issue of a formal policy, and is subject to all the conditions of the contemplated policy, even though it may never issue. (For other cases, see Insurance, Cent. Dig. § 210; Dec. Dig. § 132.) 2. INSURANCE-BINDING SLIP-EFFECT. When properly issued on an application for insurance, a binding slip protects the applicant against the contingency of sickness between its date and the delivery of the policy, if the application is accepted; but, if not, the binding slip ceases eo instanti to have any effect. (For other cases, see Insurance, Cent. Dig. § 210; Dec. Dig. § 132.) 3. EVIDENCE-PAROL EVIDENCE-INSURANCE POLICY-FALSIFICATION. In a suit on a life policy, the insurer may show that the manual delivery of the policy was conditional, or it may prove fraud or other equitable matter to show that it never took effect as a contract; but, when the policy is once delivered and becomes effective, statements therein which, if falsified, will affect its continued validity cannot be contradicted with a view to avoid the insurance. (For other cases, see Evidence, Cent. Dig. §§ 1818-1824; Dec. Dig. § 405.) 4. INSURANCE-LIFE POLICY-FALSE REPRESENTATIONS. Where an applicant for insurance falsely represented that he had not been intimately associated with any one suffering from any transmissible disease within the past year, such representation being material vitiated the so-called binding receipt, and the policy subsequently issued thereon, unless the insurer waived the same with full knowledge of the facts. (For other cases, see Insurance, Cent. Dig. § 678; Dec. Dig. § 299.) * Decision rendered, Oct. 29, 1913. 79 S. E. Rep. 806. 5. INSURANCE-FALSE REPRESENTATIONS-MATERIALITY. Every fact which is untruly stated or wrongfully suppressed in an application for insurance must be regarded as material, if the knowledge or ignorance of it would naturally and reasonably influence the judgment of the underwriter in making the contract at all, or in estimating the degree or character of the risk or in fixing the premium. (For other cases, see Insurance, Cent. Dig. § 548; Dec. Dig. § 255.) 6. INSURANCE-APPLICATION-REPRESENTATIONS. Where, in an application for insurance, a fact is subsequently inquired about, or a question is so framed as to call for a true statement of such fact, or to elicit the information desired, the applicant is required to make a full and fair disclosure thereof, or at least a substantial one. (For other cases, see Insurance, Cent. Dig. §§ 538-542; Dec. Dig. § 253.) 7. INSURANCE FALSE REPRESENTATIONS - STATUTES CONSTRUCTION. Revisal 1905, § 4808, declares that all statements in an application for insurance shall be construed as representations merely, and not as warranties, and that no representation, unless material or fraudulent shall prevent a recovery. Held, that a material misrepresentation under such section will avoid a policy, if it is calculated to influence the insurer in making the contract, or in estimating the degree or character of the risk, or in fixing the premium, if it is without knowledge of the falsity thereof. (For other cases, see Insurance, Cent. Dig. §§ 540, 549; Dec. Dig. § 256.) 8. INSURANCE - FALSE KNOWLEDGE. REPRESENTATIONS WAIVER Where insured in his application falsely stated that he had not been intimately associated with any one suffering from any transmissible disease within the past year, when in fact he had nursed his wife and child through typhoid fever, of which disease he subsequently died, the insurer could not have waived such misrepresentation in the absence of a showing that it had knowledge thereof. (For other cases, see Insurance, Cent. Dig. §§ 942, 966, 967, 975-997; Dec. Dig. § 377.) on 9. INSURANCE-FRAUD-PARTICIPATION BY AGENT. Where the agent of an insurance company wrongfully delivers a policy with knowledge of a materially false representation therein which it was issued, he ceases in that transaction to represent the company, and acts in his individual capacity, participating in the fraud of insured, which vitiates the policy. (For other cases, see Insurance, Cent. Dig. §§ 968-997; Dec. Dig. § 378.) 10. INSURANCE DELIVERY FAITHLESS AGENT -KNOWLEDGE-IMPUTATION TO INSURER. POLICY Where an insurance agent, faithless to his trust, delivers a policy to insured with knowledge that insured is then suffering from his last illness, and has made a material misrepresentation in the application, the agent's knowledge will not be imputed to insurer. (For other cases, see Insurance, Cent. Dig. §§ 968-997; Dec. Dig. § 378.) Appeal from Superior Court, Edgecombe County; Cline, Judge. Action by Eula B. Gardner against the North State Mutual Life Insurance Company. Judgment for defendant and plaintiff appeals. Reversed. This is an action to recover the amount of an insurance policy, alleged to have been issued by the defendant in March, 1912, on the life of John B. Gardner, in favor of the plaintiff, who was his wife. John B. Gardner died in March, 1912, shortly after he made his application for insurance, and the policy was delivered to him by defendant's local agent during his last illness; he being then sick with typhoid fever, which caused his death. The application contained a representation by him that he had not been intimately associated with any one suffering from any transmissible disease within the year before his death. At the time of the application, and after the examination of the applicant by a physician, said agent issued what is called in the case a "binding receipt," one of the provisions of which is the following: "In the event this policy shall be approved by the medical director of the company, then the insurance applied for shall be deemed to relate back to and be in force from and after the date of this receipt, but not otherAnd also the following provision: "That the company shall not incur any liability under this application unless the policy has been issued, delivered, and paid for while I am in good. health." The issues and answers thereto by the jury will disclose the nature of the controversy, and sufficiently present the question upon which the opinion of the court rests. They are as follows: "(1) Did John B. Gardner represent in his application. for insurance that he had not, at the time of his application, been intimately associated with any one suffering wth any transmissible disease within the past year? A. Yes. (2) Had said Gardner, within the year prior to his application, been intimately associated with any one suffering with any transmissible disease? A. Yes. (3) Was said representation material to a contract of insurance between the said Gardner and the defendant? A. Yes. (4) Was the said Gardner sick with typhoid fever at the time. that the policy in question was left with him by B. H. Howle? A. Yes. (5) Did the defendant manager at Rocky Mount (V. T. Lamb) ratify the act of Howle in issuing the 'binding receipt' and the delivery of the policy in pursuance thereof? A. Yes. (6) Did the policy in question, at the time it was left with said Gardner by said Howle, become a consummated contract of insurance between the defendant and the insured? A. Yes. (7) In what amount, if anything, is the defendant indebted to the plaintiff? A. $1,000." The court set aside the verdict upon the sixth and seventh issues, and, having given judgment for the defendant upon those which remained, the plaintiff appealed, reserving her exceptions. E. B. Grantham and F. S. Spruill, both of Rocky Mount, for Appellant. Rouse & Land, of Kingston, for Appellee. WALKER, J. [1] This case has not been tried upon the real and decisive issue raised by the pleadings; but we will consider this question presently and in its order. A careful review of the evidence, the course of the trial and development of the case, the charge of the court and the issues, leads us to conclude that the jury disobeyed the instructions upon the sixth issue, and it may be clearly inferred that the trial judge set aside the verdict as to the sixth and seventh issues because of this fact. The jury were charged that, if it was found from the evidence the representation in the application mentioned in the first three issues was material, they should answer the sixth issue, "No," or, if they found that the agent of defendant, V. T. Lamb, did not ratify the "binding receipt" (if it was void), and that John B. Gardner was sick with typhoid fever when he received the policy, they should answer the sixth issue, "No," even though they found that the representation was not material. This instruction was not followed by the jury. The false and material representation has something to do with the "binding receipt" and to the extent hereinafter indicated. The effect of the "binding receipt" was correctly stated by Judge Cline, and it is thus defined in Vance on Insurance, p. 160: "The binding slip is merely a written memorandum of the most important terms of a preliminary contract of insurance intended to give temporary protection pending the investigation of the risk by the insurer, or until the issue of a formal policy. By intendment it is subject to all the conditions in the policy to be issued. These informal writings are but incomplete and temporary contracts-memoranda given in aid of parol agreements. Such memoranda usually fix all the essential provisions that are variable; but they are not ordinarily intended to include all the terms of the agreement, and always look to the formal policy that is expected subsequently to issue for a complete statement of the contract made. Hence, as heretofore stated the contract evidenced by the binding slip is subject to all the conditions of the contemplated policy, even though it may never issue, and the same is true of other informal written contracts." Lipman vs. Insurance Co., 121 N. Y. 454, 24 N. E. 699, 8 L. R. A. 719. In what has been said or what will hereinafter be said, it must not be understood that we are deciding whether, where a "binding slip" has been delivered to the applicant, the company, in the event of his death or illness occurring subsequently, but before the acceptance of the application, can arbitrarily or even unreasonably reject it or withhold its approval or the approval of the medical director, and thereby avoid its liability, under the clause in the binding slip requiring the approval of the application by the medical director of the company before the insurance shall take effect. This course was taken in Grier vs. Insurance Co., 132 N. C. 542, 44 S. E. 28; the policies having been delivered |