Fay v. Aetna Life Insurance Co.

• Decision Date: 03 July 1916
• Citation: 187 S.W. 861,268 Mo. 373
• Parties: NELLIE FAY v. AETNA LIFE INSURANCE COMPANY, Appellant
• Court: Missouri Supreme Court

187 S.W. 861

268 Mo. 373

NELLIE FAY v. AETNA LIFE INSURANCE COMPANY, Appellant

Supreme Court of Missouri, First Division

July 3, 1916

Appeal from Jackson Circuit Court. -- Hon. William C. Thomas, Judge.

Affirmed.

J. C Rosenberger, Rollin E. Talbert and F. R. Wolfers for appellant.

(1) By the terms of the policy the relation of passenger and carrier must have existed to entitle plaintiff to double benefits and the insured, having at imminent risk of his life attempted to board this elevated car after the carrier had closed the door and started the car and after the carrier had thereby signified that no passengers would be accepted, could not thereby make himself a passenger and plaintiff was not entitled to recover. Schepers v. Depot Co., 126 Mo.App. 665; Mathews v. Metropolitan, 156 Mo.App 715; Anable v. Casualty Co., 73 N. J. L. 320, 74 N J. L. 686; Wallace v Liability Co., 26 Ont. L. 10; Banta v. Casualty Co., 134 Mo.App. 222; Overbeck v. Insurance Co., 94 Mo.App. 453; Life Ins. Co. v. Vandecar, 86 F. 282. (2) Sec. 7086, R. S. 1909, providing penalties against insurance companies in certain cases is highly penal and should be strictly construed. Shoe Co. v. Assurance Co., 178 S.W. 246; Mears Mining Co. v. Casualty Co., 162 Mo.App. 193; Casualty Co. v. Dorrough, 107 F. 393; Insurance Co. v. Ford, 131 S.W. 306; Insurance Co. v. Stancell, 127 S.W. 968. (3) By the terms of the statute the company cannot be penalized unless "it appear from the evidence" that the company "vexatiously refused to pay" and the company's refusal, to be "vexatious," must be "without reasonable or probable cause" for making a defense. The production by the company of substantial evidence to sustain its defense was a complete vindication of its good faith. Sec. 7068, R. S. 1909; Blackwell v. Insurance Co., 80 Mo.App. 78; Weston v. Insurance Co., 191 Mo.App. 282; Rogers v. Insurance Co., 157 Mo.App. 671; Shoe Co. v. Assurance Co., 178 S.W. 246; Insurance Co. v. Sheppard, 85 Ga. 764. (4) The statute is aimed at frivolous defenses against just claims and not against companies which resort to the courts to protect themselves from claims against which they may have an honest and substantial defense. Authorities supra. (5) Where there is no evidence entitling plaintiff to recover the insurance or where the evidence on the merits greatly preponderates in favor of the company, the question of penalties is out of the case, and the trial court should not submit such question to the jury. Shoe Co. v. Assurance Co., 178 S.W. 246; Rogers v. Insurance Co., 157 Mo.App. 671; Weston v. Insurance Co., 191 Mo.App. 282; Insurance Co. v. Sheppard, 85 Ga. 764; Renfro v. Insurance Co., 148 Mo.App. 258; Kahn v. Insurance Co., 187 Mo.App. 219. (6) The whole test of the good faith of the company's refusal is the strength or weakness of its case as presented at the trial and it is erroneous to receive extrinsic and collateral evidence disconnected with the merits, directed solely to the issue of vexatious refusal. This is mere "side-wind evidence" preventing a fair trial. Insurance Co. v. Sheppard, 85 Ga. 764; Waddle v. Insurance Co., 184 Mo.App. 576; and authorities supra. (7) The court by receiving illegal, extrinsic and collateral evidence offered under the guise of proving vexatious refusal to pay frustrated a fair trial and enabled plaintiff to collect insurance to which she was not entitled, and a penalty besides. Insurance Co. v. Sheppard, 85 Ga. 764; and authorities supra. (8) The erroneous reception in evidence of the ex parte affidavits contained in the proofs of death, also the abandoned answer and motion of defendant, which were part of the court files, also the plaintiff's release and the circumstances of its execution, and in permitting plaintiff's attorney to make wholesale and unfounded charges of fraud and bad faith created such atmosphere of hostility toward the defendant as to destroy its defense and prevent a fair trial, and was the procuring cause of the verdict in its entirety. The reception of such collateral and extrinsic evidence was a great abuse and perversion of the statute in question and was error. Insurance Co. v. Sheppard, 85 Ga. 764; Waddle v. Insurance Co., 184 Mo.App. 576. (9) It is error to receive in evidence court files in the cause as evidence of bad faith on the part of the company. Waddle v. Insurance Co., 184 Mo.App. 576. (10) The withdrawal of the release as a defense by the filing of amended pleadings had no tendency to prove that defendant did not have a good and valid defense, and it was error to receive in evidence said court files for any such purpose. Authorities above. (11) The court erred in giving Instruction No. 2 for the plaintiff. Anable v. Casualty Co., 73 N. J. L. 320, 74 N. J. L. 686.

T. J. Madden and Bird & Pope for respondent.

GRAVES, P. J. Bond, J., concurs in result.

OPINION

GRAVES, P. J.

Plaintiff is the widow of William H. Fay, deceased. Defendant issued to Fay an accident insurance policy on January 17, 1907. This policy was for $ 5000 and issued for one year, but was kept in force to the time of Fay's accidental death, January 10, 1912, by annual renewals thereof. The policy provided for accumulations, and by a "rider" or subsequent agreement entered into by the company, at the date of Fay's death the policy would and did amount to $ 7500.

The policy was payable to plaintiff, and for the accidental death of her husband, she under the terms of the policy as modified by this subsequent agreement or rider of date February 12, 1907, was entitled to $ 7500. In this policy was a double liability clause, which entitled plaintiff to recover double the amount, if Fay was accidentally killed whilst a passenger "in or on any railway passenger car propelled by mechanical power." This clause as originally found said nothing about a passenger riding upon the steps or platform of a car. The defendant, still bidding for business, in June 1910, broadened this double liability clause of its contract, so that thereafter the policy of Fay had incorporated therein the following:

"Double Indemnities.

"7. If such injuries are sustained by means as aforesaid while the insured is a passenger in or on a public conveyance provided by a common carrier for passenger service (including platform, steps or running-board of railway or street railway cars), . . . the amount to be paid under sections 1, 5 and 6 should be double the sum otherwise payable for such injuries."

So that, in the language of the distinguished counsel for appellant, as found in the brief:

"On January 10, 1912, the date of insured's death, the amount of his policy had increased from $ 5000 to $ 7500 through continuous renewal, in case of his death from ordinary accident, and to $ 15,000 in case the injuries were sustained by him 'while the insured is a passenger in or on a public conveyance provided by a common carrier for passenger service, including platform, steps or running-board of railway or street railway cars.'"

This amendment to the original policy (in insurance language called a "rider") was not found by Mrs. Fay when she came to adjust the matter with defendant. It was not with the policy, but was afterward found in some of Mr. Fay's private papers at his office. Mrs. Fay, through her counsel, settled with defendant for $ 7500, and gave defendant a receipt in full for all liability, without the knowledge of the existence of this supplemental agreement, or rider of June, 1910, by which the terms of the policy were amended as aforesaid. Shortly after the settlement this rider or amendment to the policy was discovered, and plaintiff demanded of defendant the additional sum of $ 7500, on the theory that deceased was a passenger upon the steps of a Metropolitan Street Railway car at the time of his accidental death. The defendant declined to pay this additional sum, and the instant suit followed. It should be noted that this change in the double liability clause, as above indicated, was one being made on policies generally by defendant, and defendant had full knowledge of this amendment to the policy, when it settled with Mrs. Fay for $ 7500.

The course of the pleadings may be of importance. Counsel for appellant has thus described the various steps in the pleadings, before issue was finally made:

"In her petition (1) plaintiff pleads the provisions of the double-indemnity clause which limits its benefits to accidental injuries sustained 'while the insured is a passenger' and alleges (2) that William H. Fay was accidentally killed by falling from a street railway car of the Kansas City Elevated Railway Company 'on which he was a passenger;' (3) alleges that thereby the company became liable to her for $ 15,000 'but said defendant instead of paying to this plaintiff the sum of $ 15,000, to which she was entitled, paid her only the sum of $ 7500, instead of said full amount of $ 15,000.'"

To this petition, defendant pleaded in bar of plaintiff's action, the settlement and release executed by her in consideration of $ 7500, and as a further defense denied that Fay, the insured, was a passenger on the street car or that the plaintiff was entitled to any double indemnity or that defendant was in any way indebted to the plaintiff.

Thereupon plaintiff filed an amended petition with substantially the same allegations, but adding the allegation that "defendant has vexatiously refused to pay the additional sum of $ 7500 to this plaintiff," and prays judgment for $ 7500 and interest, and also for $ 750 damages as a penalty for said vexatious refusal of defendant to pay plaintiff said $ 7500, and for the further sum of $ 2500 as attorney's fees.

To this petition defendant filed its former answer.

Thereupon, plaintiff filed her reply charging in...