National Life Accident Ins. Co. v. McGhee ( 1939 )

We have again examined the instruction of the court to the effect that by a failure of the insurer to act with due diligence and dispatch in that respect, "the policy may become revived impliedly as a matter of law."

The contract provision was: "* * * Policies having lapsed may be revived at the option of the Company upon written application of the Insured showing satisfactory evidence of insurability, and upon payment of all premiums in arrears; provided that the Company's consent to such revival shall appear by endorsement in the space provided, and that there shall be no liability whatever under this contract for any disability or accidental death or any specific losses mentioned in Schedule A resulting from an accident occurring or illness contracted or commencing prior to the date of the revival endorsement hereon as aforesaid."

In Vol. 6 of Couch's Cyclopedia of Insurance Law, § 1375, p. 4940, it is declared on authorities from this state, as follows: "* * * the acceptance of premiums after default, amounting to a waiver of the default, does not create a new contract, but merely continues the binding effect of the original policy. (Pacific M. L. Ins. Co. v. Hayes, 202 Ala. 450,80 So. 834.) However, the insured may waive his right to reinstatement, which would arise from compliance with the conditions in the policy, and contract for a new policy with different conditions. (Mutual L. Ins. Co. v. Lovejoy, 203 Ala. 452,83 So. 591.) Similarly, stipulations as to mode of revival and the limitations upon its effect are for the protection of the insurer, and may be waived, either expressly or by implication. (Life Casualty Co. v. Street, 213 Ala. 588,105 So. 672, holding that, where the contract does not require execution of a revival by an executive officer at the home office, a local agent has power so to act as to bind the company.) For instance, undue delay in acting upon an application for revival, or failure to communicate to the insured the fact of the rejection of his application, may amount to a waiver of formal requirements and operate as an effective revival. (Life Casualty Co. v. Street, 213 Ala. 588, 105 So. 672.)" (Parenthesis supplied from notes.)

In Life Casualty Co. of Tennessee v. Street, 213 Ala. 588,105 So. 672, 674, Mr. Justice Somerville for this court declared: "It was evidently contemplated that applications for revival of lapsed policies should be made to the company through the medium of its local agents, and an application to the agent is in legal effect an application to the company. Hence the authorities have soundly held that undue delay in acting upon the application, or failure to communicate to the insured the fact of the rejection of his application, may amount to a waiver of formal requirements, and operate as an effective revival."

The charge being there considered was:

" 'If you are reasonably satisfied by the evidence that the plaintiff tendered the defendant all that it was due under the policy, which is made the basis of this suit, and such tender was made after such policy was revived, if the same was revived, and defendant refused to accept such tender, then the plaintiff was not under any duty to continue to remake such tender.'

"* * * What facts may constitute a revival of the policy; and what facts show a sufficient tender of premium dues. This criticism is, we think, well-founded. The trial judge should have explained to the jury what facts would constitute a revival of the policy, and also should have explained the requirements for a sufficient tender. The effect of the charge was to leave both questions to the determination of the jury, unaided by definition or explanation. * * *."

See 12 Alabama Digest Insurance, page 391, 365 et seq; American Life Ins. Co. v. Renfroe, 232 Ala. 619, 168 So. 871.

In 105 A.L.R. page 486, on the many authorities cited, it is stated: "It is usually held that unreasonable delay by an insurer in approving or rejecting an application for reinstatement of a lapsed policy operates as a waiver of the insured's right to declare a forfeiture of the policy; and where loss occurs after the lapse of a reasonable period of time for the consideration of a reinstatement application, but before formal acceptance or rejection thereof, in legal effect a reinstatement has taken place and the beneficiary may recover on the policy." Lechler v. Montana Life Ins. Co., 48 N.D. 644,186 N.W. 271, 23 A.L.R. page 1193; 37 C.J. 500.

It would appear that the better view of the authorities supports the correctness of the charge of the trial court, which, on original hearing, was held to be error without injury. That is to say, under this contract of insurance, and the provisions for reinstatement thereof, the evidence supporting the due or timely action of assured thereunder, and the payment of and receipt therefor by the company of all premiums due to that date of application, the questions of fact presented were for the jury. The court duly and correctly instructed the jury as to the issues involved, as we have indicated, in the excerpt from the court's oral charge set out in original opinion.

It results, therefore, that as the rulings in the original opinion are correct, the application for rehearing is overruled.

Application for rehearing overruled.

ANDERSON, C. J., and BROWN and FOSTER, JJ., concur.