Newman v. John Hancock Mutual Life Insurance

The plaintiff, now Vera Newman, was formerly the wife of Joplin W. Moad, she having married Newman subsequent to the death of Moad. The petition in this case is based on a policy of life insurance issued by the defendant for $2000, and plaintiff asserts in the petition that the policy was in full force at the death of her former husband, and that the defendant has refused to pay. The answer of the defendant admits the issuance of the policy as of September 5, 1911, for $2000, and pleads that in August, 1914, the assured borrowed the sum of $80. Further answering the defendant alleges that the policy was to be paid only in the event that the premium of $58.14 be paid each year for twenty years, or until the death of the assured, and that the last premium paid on the policy was for the period to September 5, 1915, after which time no premiums were paid on the policy or contract and that thereafter the assured was in default.

The policy contained the ordinary loan provision and provided that any time within five years from default of payment of such premium the policy may be reinstated upon production of evidence of insurability satisfactory to the company and approved at its Home Office, and upon payment, or reinstatement of any indebtedness to the Company hereon or secured hereby, and payment of arrears of premium with interest at the rate of five per centum per annum. The policy also provided that after three full annual premiums have been paid thereon, then in case of default in the payment of any subsequent premium or instalment, continued after the days of grace, then without action on the part of the holder, the policy will be continued for its value in participating paid-up life insurance which will have a yearly increasing surrender value.

We think this is a sufficient statement of the terms of the policy to decide the point presented here on appeal.

The policy was introduced in evidence by the plaintiff, which in its opening paragraph provided:

"In consideration of the representations in the application herefor, which is copied herein and hereby made a part hereof, and of the premium of fifty-eight and 14/100 dollars to be paid on delivery of this policy," and etc. The application is made a part of the policy, and in the statements made to the agent there was the following: "I wish to pay the premium annually in the amount of $58.14."

Dr. J.H. Simmons was placed on the stand by the plaintiff and testified that he was the agent who wrote this insurance and delivered the policy, and he testified that the insured paid him the annual premium on the policy in full when it was delivered.

A number of receipts for quarterly payments were introduced by the plaintiff, the first dated July 5, 1912, reciting that it was equivalent of one-fourth of the annual premium due June 5, 1912; then follows receipts for quarterly payments due September 5, 1912, December 5, 1912, and other receipts showing quarterly payments made on this policy up to 1915. These receipts were evidently introduced by plaintiff to show that the company received these payments after they had become due, and after the days of grace in a number of instances, for the purpose of showing that the company had waived the provision as to the due date of the receipt. A letter was then introduced by the plaintiff from the General Agent of the Company at St. Louis, dated October 30, 1915, in which is acknowledged a health certificate signed by the insured together with a check for the amount due on the quarterly payment, less dividend, and stated to the insured that the Company declined to reinstate the policy without a medical certificate on the enclosed form which was furnished, and in that letter mentioned four doctors to whom the insured could go to receive this medical certificate. The insured, so far as the record shows, took no action to secure this medical certificate. On December 30, 1915, a letter was written by the General Agent in which the insured was told that the check for the quarterly payment which had been held by the company awaiting his medical certificate was returned because the Company had failed to receive satisfactory evidence of insurability, and advised him that the policy lapsed for non-payment of amount due September 5, 1915. On January 6, 1916, the plaintiff received a letter from the General Agent stating that his policy had been cancelled for non-payment of premium and interest on loan, and there was a cash surrender value coming to him which the Company would pay if he would furnish receipt signed by himself and wife, acknowledged before a Notary Public. Evidently no attention was paid to this letter by the insured. Then on March 6, 1916, the General Agent wrote to Dr. Hawkins, attorney for the deceased, stating that on repayment of the $80 loan and $2.34 interest there would be a paid-up insurance policy issued, payable at the death of the insured, for $366. No action was taken on this letter. Then on March 30, 1916, the General Agent wrote the insured calling attention to the letter of January 6, 1916, enclosing him an endorsement on the policy showing that it was paid-up insurance for $124 together with the loan certificate and advising him to take care of this policy, that it would be required in case he decided to surrender for cash or in the event of a claim. A line was drawn through the figures $2000, the original amount of the policy, and the endorsement placed thereon showed that it was a policy in force for $124. Nothing further was done and the insured died in August, 1918. No further instalments of premium were paid or offered to be paid, and the insured retained the policy with the endorsement on it without any apparent objection or approval.

The trial court sustained a demurrer to the evidence, and after taking the proper steps the plaintiff has brought the appeal here from the judgment entered in favor of the defendant. Respondent undertakes to uphold the judgment of the trial court and relies principally on the case of Cooper v. N.Y. Life Ins. Co., 211 S.W. 548, which holds, under facts somewhat similar to this case, that where the insured, with a policy and loan provision such as we have, had defaulted in the payment of a premium and acquiesced in the action of the company in issuing him a paid-up policy of insurance which had been originally issued for $2000 was bound by the course that the Company took under the provisions of the policy, and this although there was a statute in Missouri forbidding the forfeiture of a policy where a certain number of payments had been made.

We would regard this case as being absolutely binding on us here and would sustain the trial court's action in sustaining the demurrer to the evidence were it admitted, as it was apparently done in that case, that there had been a default in the payment of premium at the time the Company took the action it did in demanding a certificate of insurability, and failing to get that issued a policy for $124. In the case at bar, however, there is some evidence which would sustain a finding that the insured was not in arrears in the payment of instalments at the time the Company declared his policy forfeited and placed the endorsement thereon and sent it to the insured. That evidence consists, first, of the statement in the initial clause of the policy heretofore set out. It is further evidenced by the fact that in the application the assured elected to pay the premium in annual payments, and the agent who delivered him the policy positively asserts that on the delivery of the policy the insured paid him the first annual premium, which would be $58.14. If that amount was paid, and in the face of this evidence we cannot say that it was not, then the insured was not in arrears at the time the Company was claiming that he was and at the time they took the action to forfeit the policy on the claim that he was in arrears. The Cooper case (211 S.W. 548) merely holds that while a Company cannot under the statute forfeit a policy for non-payment of instalments after a certain number have been paid, yet the assured and the insurer may contract that such statute shall not take effect; and there being nothing unlawful in such contract, when the parties acted on the contract and the assured acquiesced in that action for three years, he nor his beneficiary will be permitted to recover because of the statute. In our policy, as there was in that, there is no provision in the loan agreement or in the policy that permits the company to forfeit the policy where the premiums have been paid up, and if it were admitted that the premiums were paid up no court in the land would hold that the company had rightfully forfeited for non-payment of premiums, and no amount of acquiescence on the part of the assured would render such action valid. We believe that had the assured and the insurer been mutually mistaken as to the amount that had been paid by the assured and had entered into a contract reducing this policy from $2000 to $124, on a showing by the assured of such mutual mistake and of such payment he could set aside the contract made because of failure of consideration and because of mutual mistake, and certainly no acquiescence or waiver on the part of the assured could make any stronger contract than a new one entered into under mistaken facts. Neither would the assured be estopped if the money had been paid to the Insurance Company because it could not have been injured, having received the money.

It has been decided in this State in two cases, one that of Wayland v. Western Life Indemnity Co., 166 Mo. App. 221,148 S.W. 626, and Johnson v. Hartford Life Ins. Co., 166 Mo. App. 261,148 S.W. 631, that where an insurer wrongfully attempts to forfeit a policy, the failure of the assured to continue to pay premiums or to offer to pay them will not bar recovery. We, therefore, think that the law which is to govern this case, as we construe the cases heretofore cited, is that if in fact the assured was in arrears when the defendant was demanding the medical certificate and satisfactory evidence of insurability, then under the Cooper case the plaintiff cannot recover. On the other hand, if the assured had paid a sufficient amount of money by his first payment and his subsequent quarterly instalments so as to make him not in arrears on September 5, 1915, the date the assurer was claiming his payment was due, then the company, in taking the action it did, wrongfully breached the contract of life insurance. Its demand for satisfactory evidence of insurability was such that it showed the assured that unless that was furnished the defendant intended to forfeit the policy for $2000. He, under the decisions quoted, was thereby relieved of making any further payments and his beneficiary may recover if in fact he was not in arrears in payment of instalments or premiums when the policy was forfeited by the defendant. We admit that the evidence tends strongly to show that the assured had never paid the original $58.14 on the issuance of the policy because he began to pay quarterly payments before the first year was up and continued to pay quarterly payments thereafter, and tendered the last quarterly payment for the time the defendant was claiming that he was in arrears. This court cannot say, in the face of the testimony of the agent who delivered the policy, that the first year's premium of $58.14 was not paid on the delivery of the policy. That is a question of fact to be determined by the trier of fact. We are of the opinion, therefore, that the trial court erred in sustaining a demurrer to the evidence, and for the reasons herein stated the judgment is reversed and the cause remanded. Cox, P.J., andBradley, J., concur.