Standard Life Ins. Co. of Indiana v. Veal
| Decision Date | 09 November 1977 |
| Docket Number | No. 49430,49430 |
| Parties | STANDARD LIFE INSURANCE COMPANY OF INDIANA v. Eugene VEAL. |
| Court | Mississippi Supreme Court |
Butler, Snow, O'Mara, Stevens & Cannada, Junior O'Mara, Jackson, for appellant.
Merrida P. Coxwell, Jackson, for appellee.
Before PATTERSON, C. J., and SUGG and WALKER, JJ.
SUGG, Justice, for the Court:
This appeal and cross appeal comes from the Circuit Court of the First Judicial District of Hinds County. Eugene Veal, plaintiff, sued Standard Life Insurance Company of Indiana, defendant, for breach of contract for failing to pay the face value of a decreasing term life insurance policy in the initial amount of $1,008. The jury awarded plaintiff damages in the amount of $26,008, $1,008 actual damages and $25,000 punitive damages.
Defendant assigns the following errors on direct appeal:
1. The lower court erred in refusing to direct the jury to return a verdict in favor of appellant.
2. The lower court erred in refusing to instruct the jury they could not return a verdict against appellant for punitive damages.
3. The lower court erred in instructing the jury with regard to construction of the insurance policy.
4. The lower court erred in overruling appellant's motion for new trial, in particular, that the amount of the verdict of the jury was excessive.
Plaintiff cross appealed and assigned as error the action of the trial court in setting aside a default judgment rendered in his favor in the amount of $51,008.
On July 23, 1973 plaintiff executed a brokerage contract with Ades Finance Company, a licensed broker under the small loan privilege act, to negotiate a loan for him. The face amount of the loan was $1,008 from which various charges were deducted as set forth in the following summary:
Face Amount of Loan $1,008.00
Less Deductions
--------------------------
Discount to Ades Finance
Co. $ 79.12
Service charge to lender 342.83
Accident and health
insurance premium 38.30
Credit Life Ins. premium 30.24 490.49
-------------------
Balance disbursed to Veal $ 517.51
The indebtedness was to be repaid in thirty-six monthly installments of $28 each with the first installment due on August 23, 1973. When the brokerage contract was entered into, Ades Finance Company, acting as agent for defendant, issued a decreasing term life insurance policy on the lives of plaintiff and his wife, Jessie Lee Veal. The policy also insured plaintiff against physical disability.
Defendant entered into a contract on February 21, 1973 with Moses Ades, doing business as Ades Finance Company whereby defendant agreed to insure obligors upon payment of the premium specified therein. The contract contained the following provisions:
Each obligor of the Creditor Policyholder (except if either the principal obligor or spouse is past age 65, neither is eligible) in the following classes of indebtedness shall be eligible for insurance hereunder:
'Insured obligor' as used herein means the principal or first signatory on a contract of indebtedness and his or her spouse by marriage not dissolved by a divorce or legal separation at the inception of the debt. In the case of a single person, 'insured obligor' means the signatory on a contract of indebtedness.
If any premium is received for insurance on an obligor who is not eligible under the terms of this policy, the liability of the Company shall be limited to a refund of the premium to the Creditor Policyholder and any insurance charge to the obligor for such insurance will be paid by the Creditor Policyholder to the obligor or credited to his account.
Insurance shall become effective on the lives of all eligible obligors of the Creditor Policyholder whose names are reported to the Company under the terms and conditions hereinafter provided. The insurance with respect to any insured obligor shall automatically terminate (1) by renewal, refinancing, or repossession of the collateral for the indebtedness in connection with which the insurance was issued; (2) upon discharge of such indebtedness by payments by or on behalf of the obligor to the Creditor Policyholder; (3) by the indebtedness or any portion thereof being charged or required to be charged off by the laws applicable to the Creditor Policyholder; (4) by the expiration of the term of said indebtedness.
This is joint life insurance coverage and will pay only one death benefit. If a death benefit is paid as a result of the death of the insured obligor or the spouse no insurance will thereafter be in effect as to such obligor. Should the death of the insured obligor and the spouse occur simultaneously, one death benefit will be paid for the insured obligor only.
Each obligor insured hereunder shall be insured concurrently with the effective date of the indebtedness in connection with which the insurance is granted, and during the term of the indebtedness shall be insured for the amount necessary at any time to discharge the indebtedness, unless the initial indebtedness exceeds $10,000.00.
Individual certificates will be furnished by the Company to the Creditor Policyholder and the Creditor Policyholder shall deliver with each obligation a certificate describing the coverage. If the certificate is not delivered upon the inception of indebtedness, the Creditor Policyholder shall furnish a notice of proposed insurance and the certificate shall be delivered within thirty days of the inception of the indebtedness.
As authorized by the contract, Ades issued a certificate of insurance to plaintiff upon the inception of the indebtedness which contained the following provisions:
Jessie Lee Veal died August 5, 1973 and proof of death was filed with defendant in accordance with the terms of the policy. On October 15, 1973 defendant wrote Ades that the death claim of Jessie Lee Veal would not be honored. Defendant stated in its letter the following We regret we cannot honor this claim since Jessie's name did not appear on the debt instrument; so she had no insurable interest, and there was no debtor- creditor relationship.
On October 24, 1973 plaintiff's attorney wrote defendant requesting them to review the claim and forward their check without further legal proceedings. No reply was made to this letter so on November 30, 1973 plaintiff's attorney wrote defendant stating that it would be necessary to file suit unless they received a check in payment of the claim. Defendant replied on December 4, 1973 that they did not find the letter dated October 24. Defendant enclosed a copy of their letter to Ades dated October 15, 1973 and stated that the letter to Ades, "explains the position our company has decided upon relative to the policy that was issued." Plaintiff then filed his declaration on March 20, 1974.
After suit was filed defendant's House Counsel received a copy of the declaration and reached the conclusion that defendant was not liable, but after considering the claim from an economic standpoint, recommended that the company pay $1,008, the face amount of the policy. The offer was made to one of the attorneys representing the plaintiff who stated that he would talk with plaintiff and get back in touch with defendant's House Counsel. Plaintiff's attorney did not call defendant's House Counsel so in about a week the offer was repeated to plaintiff's attorney who informed the House Counsel that he was not interested in any settlement. Plaintiff testified that he was never told that defendant had offered to pay the $1,008.
Defendant argues, in support of its first assignment of error, that it was entitled to a directed verdict on the question of liability under the insurance policy for two reasons: (1) plaintiff did not have the right to bring the action because he was not named as a beneficiary, and (2) no premium was paid for coverage on the life of plaintiff's wife.
Defendant's contention that plaintiff is precluded from recovering on the policy because he is not a beneficiary does not dispute the legitimacy of the claim, but simply raises the question of the standing of the plaintiff to maintain the action. Defendant's argument is based on the following provisions of the policy:
Beneficiary: Benefits payable under this certificate shall be paid to the Creditor Policyholder, or at its direction to any subsidiary, affiliate, or other creditor to whom the Creditor Policyholder may have transferred title to the indebtedness, as irrevocable Credit Beneficiary, as its interest may appear. Such amount shall be applied...
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