Long v. Monarch Accident Ins. Co.

• Decision Date: 02 February 1929
• Docket Number: No. 2789.,2789.
• Citation: 30 F.2d 929
• Parties: LONG v. MONARCH ACCIDENT INS. CO. OF SPRINGFIELD, MASS.
• Court: U.S. Court of Appeals — Fourth Circuit

30 F.2d 929 (1929)

LONG v. MONARCH ACCIDENT INS. CO. OF SPRINGFIELD, MASS.

No. 2789.

Circuit Court of Appeals, Fourth Circuit.

February 2, 1929.

L. D. Lide, of Marion, S. C. (Joe P. Lane and W. C. Moore, both of Dillon, S. C., on the brief), for appellant.

J. B. Gibson, of Dillon, S. C. (Gibson & Muller, of Dillon, S. C., on the brief), for appellee.

Before PARKER and NORTHCOTT, Circuit Judges, and WILLIAM C. COLEMAN, District Judge.

WILLIAM C. COLEMAN, District Judge.

This is an appeal from a judgment of the District Court for the Eastern District of South Carolina in a suit on a policy of health and accident insurance issued to the husband of the appellant (hereinafter called the plaintiff) by the Monarch Accident Insurance Company of Springfield, Mass., appellee (hereinafter called the Company). The suit was originally brought in the court of common pleas for Dillon county, S. C., and from there removed to the United States Court, where, the case being tried before a jury, at the close of its testimony, the Company moved for a directed verdict in its favor except as to the sum of $25, as to which it consented to a verdict for the plaintiff. The motion was granted, and it is from this action of the lower court in directing a verdict that this appeal is taken.

There are six assignments of error. The first three raise the question whether the trial court erred in directing a verdict for the Company as to the death benefit under the policy, since, as claimed, it was indebted at the time to the plaintiff in a sum sufficient to pay the overdue quarterly premium on the policy, and thereby to avoid a forfeiture of the policy which it was required to do as a matter of law; or whether the court should at least have submitted to the jury the question as to whether any such amount was then due and owing. The three remaining assignments of error question the correctness of the court's ruling in limiting to $25 plaintiff's right to recover sick benefits.

The material facts are as follows: On November 15, 1926, the Company issued to plaintiff's husband, who was engaged in the grocery business, a health and accident insurance policy with plaintiff as beneficiary, in consideration of an annual premium of $65, payable in quarterly installments of $16.25 on the 1st days of November, March, June, and September. The principal sum of the policy was $5,000, the weekly accident indemnity $25, and a similar weekly indemnity for sickness. When the insured should reach the age of 50, an increase in the quarterly premium was provided for. The policy contained, among others, the usual standard provisions. Such provisions as are pertinent to the issues raised are hereinafter quoted.

The advance premium and that due March 1, 1927, were paid, but none others. On April 29, 1927, notice of sickness for one week was given to the Company at its home office. Thereupon blank proofs of illness, to be executed by the insured and his attending physician, were duly forwarded, were executed, mailed back to the Company, and received on May 20th. These showed that the insured had been suffering from "weakness, adrenal, insufficiency, complications and hypotension," and that he had been treated by another physician for previous similar attacks. On May 25th, the Company wrote to both the insured and his physician asking for further information respecting the illness, but the insured replied, resenting the request, and saying he had no further information to give. Additional letters were written on June 3d, July 26th, and August 5th by the Company to the physician whom the insured stated had attended him during the previous attacks, in an endeavor to get additional information. Meanwhile, a notice that the insurance premium was due on June 1, 1927, had been mailed to him, and the premium not being paid when due, a letter, dated June 1st, was sent to the insured, stating that his policy had lapsed because of default in premium payment, and urging him to reinstate the policy by paying the premium. On July 12th the insured was injured in an automobile accident on a public highway near Sumter, S. C., as a result of which he died the following day.

On July 25th plaintiff's counsel wrote to the Company asking for blank proof of death, to which letter the Company, on July 29th, replied, advising that the policy had lapsed because of failure to pay the premium and denied liability. Thereupon counsel for plaintiff contended that there was no lapse because of the fact that her husband had filed a claim for sick benefits in an amount sufficient to cover the overdue premium. The Company admitted the filing of the claim, but took the position that it had never been able to get information sufficient to enable it to establish the time of the origin of the illness, essential under the sickness indemnity clause (hereinafter quoted); that it had never admitted indebtedness in any amount under the policy; and that thus there could be no offset for sick benefits against the premium. Suit was brought for $5,233.75, with interest from July 12, 1927; $5,000 being claimed as a result of the accidental death of the insured, the balance for sick benefits.

Taking up the question raised by the first three assignments of error, we find no error by the trial court in directing a verdict for the defendant. The contract for insurance was made in South Carolina, when the policy was there issued to the insured, upon payment of the initial premium. Northwestern Mut. Life Insurance Co. v. McCue, 223 U. S. 234, 32 S. Ct. 220, 56 L. Ed. 419, 38 L. R. A. (N. S.) 57. It is, however, to be construed by the general commercial law as enforced by the federal courts, which are free to exercise their own judgment, independently of state decisions. Carpenter v. Providence Washington Insurance Co., 16 Pet. 495, 511, 10 L. Ed. 1044. We start with the general principle that in the absence of special agreement, failure to pay an insurance premium when due ipso facto forfeits the policy. New York Life Insurance Co. v. Statham et al., 93 U. S. 24, 23 L. Ed. 789; Klein v. Insurance Co., 104 U. S. 88, 26 L. Ed. 662; Thompson v. Insurance Co., 104 U. S. 252, 26 L. Ed. 765; Iowa Life Insurance Co. v. Lewis, 187 U. S. 335, 23 S. Ct. 126, 47 L. Ed. 204. Moreover, the policy...