Equitable Life Assur. Soc. of U.S. v. Pool

This action was instituted by appellee against appellant in the circuit court of Miller County, seeking recovery upon a certain policy of insurance of date December 27, 1926. Appellee alleged that, during the effectiveness of said policy, he was totally and permanently disabled prior to attaining the age of 60 years, and that appellant was due him under said contract the sum of $10 per month for the balance of his life; he further alleged that, by the terms of said contract of insurance, appellant agreed to waive all future premiums after total and permanent disability suffered; that appellant had breached its contract by failing and refusing to pay monthly installments on and after April 10, 1933; and by then and there demanding payment of the June, 1933, premium and by thereafter, on July 27, 1933, asserting and declaring a forfeiture of said policy for nonpayment of the June, 1933, premium.

Appellant answered the complaint and denied liability because of total and permanent disability, and its prayer was that the complaint be dismissed and that it have judgment for its costs.

The testimony introduced upon trial tended to establish the following facts:

That appellee suffered total and permanent disability prior to January 1, 1932, which was recognized by appellant by making monthly payments according to the terms of the policy up to and until April, 1933; that on the 10th day of April, 1933, appellant notified appellee that on and after that date it would discontinue payments upon the total and permanent disability clause of said policy of insurance and that it would not waive the payment of premium on said policy which would mature June 27, 1933. Appellee refused to pay the June, 1933, premium on said policy, and thereafter, on July 27, 1933, appellant notified appellee that his policy of insurance had lapsed because of nonpayment of the June, 1933, premium, and thereafter this suit was instituted.

But two contentions are urged upon us by appellant for reversal: first, that, under the facts and circumstances here presented, appellant did not renounce or repudiate its contract, therefore its liability is limited to monthly payments as they accrue according to the terms of the policy; secondly, that the verdict of the jury and judgment of the court are excessive.

Adverting to the first contention, it may be said that, according to the uncontradicted evidence, appellant, through its local agent, on July 27, 1933, notified appellee that his policy of insurance had lapsed for nonpayment of premium on or prior to that date. This assumed position by appellant was an unequivocal renunciation and repudiation of its contract of insurance. This exact question was so decided by us in Aetna Life Ins. Co. v. Phifer,160 Ark. 98, 254 S.W. 335. In the Phifer case, just cited, the insurance company wrote Phifer a letter in which it stated:

"It also appears from our records that this insurance lapsed by reason of the nonpayment of the November 17, 1921, premium, and is being continued on the extension feature. By referring to the permanent disability clause, it will be noted that, in order for it to be effective, all premiums should have been paid."

In disposing of the contention there made as here, we said: "This evinced an intention on the part of appellant not to be bound by the terms of the contract, and was equivalent to a renunciation thereof. It stated in express words that the policy had lapsed. This denial of liability justified appellee, who was not in default, in treating the contract as breached and suing for gross damages, which he did."

It therefore certainly appears that the facts of the instant case come squarely within the rule as announced in the Phifer case and must be governed by it.

Appellant contends, however, that the rule as announced in the Phifer case has been modified or impaired by the doctrine as announced in the more recent case of Mutual Life Ins. Co. v. Marsh, 186 Ark. 861, 52 S.W.2d 433, and that the facts and circumstances of the instant case fall within the rule as announced in the Marsh case. To this we cannot agree. The disposition of the Marsh case was bottomed upon Richards' Law of Insurance, 4th Edition, and we quoted from 342 thereof in part as follows: "And if with knowledge of the facts (referring to facts in reference to the breach of contract by the insurer) the insured elects to continue with the contract, he cannot subsequently exercise a second and inconsistent election to treat it as abrogated." In application of the rule of law thus stated to the facts as they appeared in the Marsh case, we stated: "In the instant case there was not a refusal to carry out the contract and a renunciation of the agreement, but, in the course of the correspondence between the parties, when default was first made in the payment, there was simply the contention that, under the existing facts, the insured for the time being was no longer entitled to the monthly benefits. Recognizing that there had been no repudiation of the contract, appellee paid the premium January 25, 1932, and testified that the policy was still in effect, and in his complaint alleged that the contract had been put in force in January, 1922, and had remained in full force and effect thereafter, and was in full force and effect at the time of the filing of the suit. The appellant, in its answer, expressly disavowed any repudiation, but affirmed the contract, and merely contended that under its terms the appellee was not entitled to the monthly benefits. This makes this case unlike that of Aetna Life Ins. Co. v. Phifer, 160 Ark. 98, 254 S.W. 335, relied upon by appellee. In that case the plaintiff was allowed to recover the present value of the future benefit installments because the court found that there had been a total repudiation of the contract in that the insurer, by letter, had in express words denied liability on the claim that the policy had lapsed. The court said: ``This letter evinced an intention on the part of the appellant not to be bound by the terms of the contract, and was equivalent to a renunciation thereof.'"

Thus it appears that the Marsh case was decided and disposed of upon the principle of estoppel. Marsh paid the January, 1932, premium upon his policy at a time when he had full knowledge that the insurer was denying liability for monthly installments. Marsh, by voluntarily paying the January, 1932, premium on his policy of insurance, thereby elected to waive the insurance company's breach of the insurance contract in failing to pay the monthly installments. As thus construed, the Marsh case is sound in principle and does not conflict with the rule as announced in the Phifer case and the many other cases decided by us upon this subject.

It is not necessary to undertake a defense of the doctrine as announced in the Phifer case, but in passing it may be said that it is supported by the great weight of American authority. Richards' Law of Insurance, expressly so states, and this authority was cited with approval by us in the Marsh case. Not only is a renunciation or repudiation of the contract inferred from the unlawful or unwarranted lapse of the policy, but the refusal of the insurance company to accept a premium thereon when due is a renunciation of the contract. Richards' Law of Insurance states the principle as follows:

"Especially is the rule clear where the insurer not only repudiates the contract by his declaration that he will not pay in the future, but also violates a present obligation under the contract by refusing to accept a premium when due."

Sometime subsequent to the Marsh case we again reviewed the authorities on this question, and expressly held that, where the insurer denies liability for disability benefits on the ground that the policy lapsed for default in payment of premiums, such renunciation of the contract authorized the insured to sue for gross damages and recover the present value of future installments. This holding gave full effect to the doctrine as announced in the Phifer case and other cases on the subject and clearly evinces the intentions of the court to adhere to its previous holding. Aetna Life Ins. Co. v. Davis, 187 Ark. 398,60 S.W.2d 912. The unlawful and unwarranted demand for payment of premiums when none is due in fact and the lapse of the policy on refusal to pay such demand is equally as reprehensible as the refusal to accept a premium when due and lapse the policy because thereof.

Appellant's second contention, that the verdict of the jury and the judgment of the court are excessive, is bottomed upon the argument that appellee, having been determined totally and permanently disabled, cannot be presumed to live the full expected time as measured by the American Experience Table of Mortality. This experience table of mortality was introduced in evidence along with other facts and circumstances as tending to show appellee's expectancy of life, and we have many times held this table competent testimony. In addition to this table, Dr. Tyson, a witness for appellee, testified that appellee's injuries would not necessarily shorten his life, and this evidence was corroborated by Dr. Kitchens. From the testimony thus adduced, the jury determined that appellee would live out the usual expectancy of life, and this finding of fact is supported by the evidence. Under long established rules of this court, we cannot substitute our judgment for that of the jury.

No error appearing, the judgment is affirmed.

SMITH, McHANEY and BUTLER, JJ., dissent.