Rogers v. Columbian National Life Insurance , 204 Iowa 804 ( 1927 )

I. The quarterly premium due July 24, 1922, was not paid at maturity, or within the 31 days' grace allowed therefor, unless the retention by the defendant of a check therefor, sent to it September 16, 1922, amounted, as plaintiff 1. INSURANCE: claims it did, to payment. On September 16, life 1922, the insured mailed, at Tulsa, Oklahoma, a insurance: letter addressed to the defendant at Boston, premiums: Massachusetts, stating: "Herewith check $22.68 belated quarterly premium policy Number 59914." The receipt of check was drawn upon a bank at Tulsa, Oklahoma, check: in which the insured had sufficient funds for effect. its payment until after his death and the appointment of administrator. The defendant received the letter and check at Boston, September 19, 1922. On September 21, 1922, the defendant, at Boston, Massachusetts, wrote a letter and mailed it, addressed to the insured at Tulsa, Oklahoma, stating:

"We are in receipt of your remittance intended to pay premium due July 24th, but as same was not forwarded until September 21st, it will be necessary for you to sign the enclosed application for reinstatement. If reinstatement is approved, your payment will be accepted."

The insured died at Tulsa, September 24th. Defendant's letter had not come to his knowledge. On October 2, 1922, defendant received a letter from a business associate of the insured's, informing defendant of the death of the insured, and on October 27, 1924, received proofs of death. It is not claimed that the company demanded payment of the check, or treated it as the liability of the insured or of his estate, or that the defendant made any effort to collect it, or did anything evidencing any purpose to accept it in payment of the premium, except (as indicated in the letter of September 21, 1922) if application for reinstatement were made and approved. After the appointment of administrator, defendant offered the check to him, and later offered it to plaintiff. Plaintiff argues that the check was unconditionally tendered; that defendant had no authority to accept it conditionally, or to communicate conditional acceptance by mail; and that the condition expressed in defendant's letter of September 21, 1922, not having come to the knowledge of the insured, cannot operate to impair the retention as an absolute acceptance.

The policy provided that, upon default in payment of premium, the policy should lapse, but might be reinstated on satisfactory evidence of insurability. The insured had, on three previous occasions, defaulted in payment of premiums, and made application for reinstatement, with health certificates, upon which defendant had accepted payment of delinquent premiums and reinstated the policy. Insured could make only tender of the check. He could not require the company to accept it. He knew that the company had not been in the habit of accepting delinquent premiums without satisfactory evidence of insurability. The burden of the argument, on this record, is on the plaintiff, to show not merely a tender of the check, but acceptance. The 2. CONTRACTS: evidence does not show acceptance, but proves proposal and non-acceptance. Rice v. Grand Lodge, A.O.U.W., acceptance: 103 Iowa 643, 647. The parties resided in use of distant cities. The insured communicated his mails: tender by mail, thereby inviting and authorizing effect. a response by mail. Lucas v. Western Union Tel.Co., 131 Iowa 669. There is no merit in the claim that the check was accepted, and paid the delinquent premium. Gould v. EquitableLife Assur. Soc., 231 N.Y. 208 (131 N.E. 892); Nelson v. MutualLife Ins. Co., 58 Mont. 153 (190 P. 927); 37 Corpus Juris 537. See, also, Continental Ins. Co. v. Peden, 145 Ky. 775 (141 S.W. 43); Bank of Commerce v. New York Life Ins. Co., 125 Ga. 552 (54 S.E. 643).

II. On his foregoing contention, the plaintiff had no ground for his objection to evidence of the fact of prior defaults and reinstatements, the receipt of which evidence was without prejudice.

III. Plaintiff urges that defendant was bound to apply the cash value of the policy to the payment of the 3. INSURANCE: premium. He bases this contention upon the life provision of the policy that "any indebtedness insurance: to the company on this policy, including any premiums: unpaid premium or portion thereof for the then default: no current policy year, shall be deducted upon duty to settlement of any claim hereunder. If there be apply any such indebtedness, the cash and loan values surrender will be diminished thereby, and the paid-up or value. extended insurance will be such as may be purchased by the cash value so diminished, such extended insurance to be for an amount equal to the face of the policy less such indebtedness." The policy also provides that the premiums are payable in advance; that 31 days' grace is allowed; that, "upon default in payment of any premium * * * this policy shall lapse, and the company's only liability shall be such, if any, as is hereinafter provided."

The policy also provided that, in the event of lapse after payment of three full premiums:

"The policy shall become effective automatically for paid-up insurance, payable as provided on page one hereof * * * In lieu of said paid-up insurance, the insured, on satisfactory release and surrender of this policy within the days of grace, may procure either the cash value or extended term insurance as similarly stated in the table endorsed hereon."

The policy provided for loan values, also for deferring payment of cash or loan values for 30 days; that, if the insured should die within the month of grace, the unpaid premium for the current policy year might be deducted in settlement. Plaintiff pleads, and defendant admits, a Massachusetts statute to the effect that, after payment of three full premiums:

"The holder thereof, within 30 days after any default in the payment of a subsequent premium, may elect, by a writing filed with the company at its home office, (a) to surrender the policy and * * * receive its value in cash, or (b) take paid-up insurance * * * or (c) have the policy continued in force as extended term insurance from the anniversary date last passed for its face amount, including any outstanding dividend additions and less any indebtedness thereon or secured thereby, * * * If the holder shall not within 30 days from default surrender the policy to the company for cash as provided in option (a), or elect, by a writing filed with the company at its home office, to take extended term insurance as provided in option (c), the insurance will be binding upon the company from the date of default without any further stipulation or act as provided in option (b). The paid-up or extended term insurance granted by the terms of the policy shall have a cash surrender value which shall be its net value less any indebtedness to the company.* * *" General Laws of Massachusetts, 1921, Chapter 175, Section 144.

By the terms of the policy and the Massachusetts statute, the policy lapsed in the lifetime of the insured. The insured did not, by the policy or otherwise, authorize the use of the cash value to pay the delinquent premium, nor was there any demand that it be so used. He did not die within the period of grace. The unpaid premium was not an indebtedness of the insured's to the company, deductible from the cash value. Goodwin v.Massachusetts Mut. Life Ins. Co., 73 N.Y. 480. The check was not accepted or claimed as a liability or debt of the insured's. The company had no authority, and had made no agreement, to use the cash value in payment of the premium. The insured was entitled to paid-up insurance. He made no contrary election. The liability of the company at the date of the death of the insured was for the amount of the paid-up insurance. Tyson v. Equitable Life Assur.Soc., 144 Ga. 729 (87 S.E. 1055).

IV. It is urged that the policy, on default, was voidable only, and not void, and that formal declaration of 4. INSURANCE: forfeiture and notice should be given to the life insured. The defendant is not a mutual benefit insurance: association. There is no provision for mere ipso facto suspension. The provision is positive: lapse of policy: "Upon default in payment of any premium * * * formal this policy shall lapse and the company's only forfeiture liability shall be such, if any, as is unnecessary. hereinafter provided."

Declaration and notice were clearly not contemplated by the contract, and were not required. 32 Corpus Juris 1313; Munger v.Brotherhood of Am. Yeomen, 176 Iowa 291.

V. Plaintiff claims that the insured died before the expiration of the period for election, and that his death operated as an election most favorable to his estate, which would be to take the extended insurance. The language of the policy 5. INSURANCE: is that, in the event of lapse, the policy life should become effective automatically for insurance: paid-up insurance, etc. The Massachusetts premiums: statute above quoted is that the holder may default: elect by writing filed with the company, but "paid-up" that, if he does not, within 30 days from insurance as default, surrender the policy, the insurance automatic will be binding upon the company as paid-up result. insurance. The default occurred when the premium, due July 24, 1922, was not paid within the 31 days' grace, which expired with August 24, 1922. The insured not only did not elect against the automatic result, but after the expiration of grace sent defendant his check for the premium. As previously stated, the policy, at the expiration of grace, and in the lifetime of the insured, became one for the stipulated paid-up insurance. Neither the insured nor the company did anything to change that result.

Plaintiff says that the beneficiary might make election. The policy is treated as belonging to the estate, in accordance apparently with the provision made by it for the case of predecease of the beneficiary. At the time of the death of the insured, the policy had been converted into paid-up insurance.Tyson v. Equitable Life Assur. Soc., 144 Ga. 729 (87 S.E. 1055). The estate had an admitted claim for the paid-up insurance, for which judgment was entered in the lower court.

We may say that, while objection was made to the offer in evidence of the Massachusetts statute, no point is made in argument on such objection, and the case is pleaded by plaintiff on the theory that the statute is applicable.

Plaintiff files motion to strike amendment to abstract. It is overruled.

The judgment is — Affirmed.

EVANS, C.J., and De GRAFF, ALBERT, and KINDIG, JJ., concur.