Rustin v. Prudential Ins. Co. , 27 Ohio App. 466 ( 1928 )

The parties occupy the same positions in this court as they did in the court of common pleas.

The plaintiff in error is the duly appointed and qualified executor of the estate of Rosie S. Smith, who died in the city of Akron on September 19, 1925. Several years before her death she took out two industrial insurance policies with the defendant company, the first one being for the sum of $124, dated February 20, 1899, and the second for the sum of $80, and dated July 13, 1914. She did not designate a beneficiary in either of said policies.

In the petition the plaintiff alleged, in addition to his qualifications as executor, that the policies issued by the defendant were in full force and effect at decedent's death, that he furnished proper proof of decedent's death to the defendant, and that he demanded payment of the amount due upon both policies.

The defendant in its answer admitted that the policies were in full force and effect, as claimed by the plaintiff, but asserted that, under the "facility of payment" clause contained in each of the policies, it had paid the avails of the first policy to one Sallie Minnier, a niece of decedent, for moneys expended by her for and on behalf of decedent during decedent's lifetime.

In the evidence offered by him the plaintiff established that he had delivered to one of the Akron agents of the defendant a proof of death of said decedent, a copy of his appointment as executor of her estate, and a copy of her will — all within two or three days after her death, and subsequent to a conversation held by him with one of the Akron agents of said defendant.

The evidence further shows that after said conversation, plaintiff contracted an expense for the burial of said decedent in a sum in excess of $200. The evidence further shows that plaintiff received from defendant, subsequent to these events, by mail, in an envelope bearing a Newark, N.J., postmark of March 10, 1926, at which point is located the home office of the defendant company, a card addressed to him at his Akron address, bearing the following notations:

"The Prudential Insurance Company of America.

"On the life of 1 Rose Smith 3/1.

Face of policy ................ $204. Additional benefit ............ ----- ------- Total ..................... $243.56 Prems. paid in advance ........ .80 Amount of check ............... $244.36

"Special Notice. — The above claim has been approved for the amount specified. If check is not delivered promptly, or if there has been any deduction or charges made for adjusting this claim by any representative of the company, please notify us at once."

At the conclusion of the plaintiff's case, such as he was permitted by the trial court to make, upon defendant's motion and over the objection of the plaintiff the trial court directed a verdict in favor of said defendant.

When the defendant made this motion, it came within the rule announced in Ellis Morton v. Ohio Life Ins. Trust Co., 4 Ohio St. 628, 64 Am. Dec., 610, as follows:

"Such a motion involves an admission of all the facts, which the evidence in any degree tends to prove, and presents only a question of law, whether each fact, indispensable to the right of action, and put in issue by the pleadings, has been supported by some evidence.

"If it has, the motion must be denied; as no finding of facts by the court, or weighing of the evidence, is permitted."

By the admissions which the defendant made, in contemplation of law, by said motion, the plaintiff had established that he was the duly appointed and qualified executor of decedent's estate, that he had made proper proof of decedent's death, that the amount due upon both policies was in the sum of $244.36, that the defendant company admitted that the claim had been approved for the amount specified, that he had been recognized as the proper claimant for the same, and that a check for said amount had been made out for him and would be promptly delivered.

These admissions brought the plaintiff within the first clause of the policy hereinafter quoted, and established plaintiff's case, and put the defendant upon proof to overcome the same, and it was prejudicial error for the trial court to direct a verdict in favor of the defendant.

The "facility of payment" clause, relied upon by the defendant to justify its payment to Sallie Minnier, is contained in the second paragraph of the conditions and agreements written upon the back of the first policy. The first paragraph on the face of said policy is as follows:

"In consideration of the application for this policy, which is hereby made part of this contract, and of the weekly premium hereinafter stated, which, it is agreed, shall be paid to the company or to its authorized representative on or before every Monday during the continuance of this contract, the Prudential Insurance Company of America agrees to pay, at its home office in the city of Newark, N.J., unto the executors, administrators, or assigns of the person named as the insured in this policy, unless settlement shall be made under the provisions of article second on the back hereof, the amount of benefit provided in the schedule herein contained and any additions thereto, within 24 hours after acceptance at its said office of satisfactory proof of the death of the insured during the continuance of this policy, which is issued and accepted subject to the conditions and agreements printed on the back hereof, which are hereby referred to and made part of this contract."

The facility of payment clause reads as follows:

"The company may make any payment provided for in this policy to any relative by blood or connection by marriage of the insured, or to any other person appearing to said company to be equitably entitled to the same by reason of having incurred expense in any way on behalf of the insured, for his or her burial or for any other purpose, and the production by the company of a receipt signed by any or either of said persons or of other sufficient proof of such payment to any or either of them shall be conclusive evidence that such benefits have been paid to the person or persons entitled thereto, and that all claims under this policy have been fully satisfied."

In his reply plaintiff relied upon an estoppel to overcome the defense of payment made by said company to said niece of the proceeds of said first policy, the company having admitted liability and made payment to the plaintiff of the amount due upon the other.

In the trial, the plaintiff attempted to prove, in his case in chief, although out of order, this estoppel by certain facts — being substantially that immediately after decedent's death he went to the office of defendant company, in Akron, and informed the agent there in charge of the death of the said decedent, and that the agent told him to proceed with the funeral and that the company would later pay him the amount due upon both policies; that, in reliance upon this assurance of said agent, the plaintiff contracted undertaker's bills; and that said company, in disregard of the promises of its said agent, paid the proceeds of the first policy to another.

The plaintiff was prevented from proving these essential facts of his alleged estoppel by the objection of the defendant's counsel, and in each instance the plaintiff took his exception to the ruling of the court, and the bill of exceptions shows, in part, what he expected to prove to sustain his estoppel. These objections, as shown by the record, were not made or sustained upon the ground that the plaintiff was prematurely attempting to prove the estoppel set up in the reply, but upon the theory that defendant could not be estopped from exercising its rights to make selection, as provided in the facility of payment clause. Although prevented from showing all of the essential facts claimed by him, the plaintiff was permitted to show some of them, which, in addition to the card sent him by defendant, tend to prove the estoppel claimed by him.

The only witness offered was the plaintiff, and after he had been examined and then cross-examined the plaintiff rested his case. Thereupon, over the objection and exception of the plaintiff, the defendant was permitted to recall the plaintiff, further cross-examine him, and have him identify certain exhibits of the defendant, and then, over the objection and exception of the plaintiff, the defendant was permitted to offer each of the exhibits, six in number, in evidence.

The trial court committed serious error, prejudicial to the plaintiff, in permitting, in effect, the defendant to open plaintiff's case after he had rested, in allowing said defendant to offer evidence as part of plaintiff's case, which was purely defensive, and then in considering this evidence in passing upon defendant's motion for a directed verdict in its favor. Of course, the court was incompetent to reopen plaintiff's case over his objection and permit this evidence to be offered.

The defendant claims that under the facility of payment clause, hereinbefore referred to, it had the right to make the payment that, upon the further cross-examination of plaintiff, and by the receipt admitted in evidence, being Defendant's Exhibit No. 5, is shown to have been made.

The facility of payment clauses, contained in industrial insurance policies of different companies, are substantially the same and have been before the federal and state courts in a great many instances, and there does not seem to be much conflict in the decisions construing these clauses. One of the cases cited in defendant's brief, and relied upon by it, is the following:

"1. Rights conferred upon a life insurance company by the terms of the policy to make selection of the person equitably entitled to receive the proceeds of the policy cannot be limited by the designation of a beneficiary.

"2. A life insurance company is not estopped from making distributions and payment, under the terms of the policy, to the person equitably entitled to the proceeds thereof, by having notice of the existence of a will, and the designation therein of an executrix (citing American Secur. T. Co. v. Prudential Ins.Co., 16 App. D.C., 319.)

"3. Fraud of a life insurance company which can defeat a settlement of a policy with a person whom the company finds equitably entitled to the fund, under authority given therefor, by the terms of the policy, must consist of some act not left to the company's discretion, such as the payment of only a portion of the amount due, or payment to a stranger not included in one of the classes of persons who may be equitably entitled to the proceeds under the terms of the policy.

"4. Where an insurance company in good faith finds a person equitably entitled to the fund, who belongs to one of the classes specifically mentioned for that purpose in the policy, and makes payment accordingly, the decision is final, and not subject to review by the court; since to reverse it would be equivalent to making a new contract for the parties." Prudential Ins. Co. v.Brock, 48 App. D.C., 4, L.R.A. 1918E, 489.

The plaintiff concedes to the defendant, under this policy containing the facility of payment clause, the right to make payment to the person equitably entitled to receive the proceeds of the policy when the rights of others have not intervened, but he claims that if he had been permitted by the trial court to introduce all of his evidence he would have shown that the defendant did make an election, as permitted by the policy, but designated the plaintiff as the one to whom it would make payment of the proceeds of both of said policies, and that, relying upon said designation and election by the company, the plaintiff contracted debts for the burial of said decedent, which he would not otherwise have done.

In our opinion the trial court, for the reasons assigned by it for so doing, committed prejudicial error in refusing to permit the plaintiff to prove the estoppel he claimed to have, because if he had proved his estoppel the defendant could not then have made its second election, to his injury. This principle of estoppel is fully recognized in the following cases:

"1. When an insurance policy provides that the company may pay the proceeds thereof to any person appearing to the company to be equitably entitled to the same by reason of having incurred expenses on behalf of the insured, such proceeds go to the estate of the deceased where the company fails to dispose of the same as provided in said policy; but where such company has caused an undertaker to bury the deceased, upon the faith of the provision of such policy, the proceeds thereof, to the extent of the funeral expenses of the insured, should be paid to such undertaker." Metropolitan Life Ins. Co. v. Johnson, 121 Ill. App. 257.

"An insurance company, through its agent, at the time of delivering to an illiterate woman policies of insurance upon the life of her daughter, represented to her that as she was a blood relative of the insured she would be the beneficiary if she continued to hold the policies and pay the premiums up to the time of the insured's death. * * *

"Held, * * * That the representation to the mother of the insured operated as a present election by the company to exercise in her favor the option given to it by the provision of the policies above recited." Shea v. U.S. Industrial Ins. Co.,23 A.D. 53, 48 N.Y.S., 548.

For the reasons stated, the judgment of the court of common pleas is reversed and the cause remanded, with instructions to try the issues made in the pleadings in accordance with the rules of procedure prescribed by the Civil Code of this state.

Judgment reversed and cause remanded.

WASHBURN, P.J., and FUNK, J., concur.