Marquet v. Ætna Life Ins. Co.

• Decision Date: 04 October 1913
• Parties: MARQUET v. ÆTNA LIFE INS. CO.
• Court: Tennessee Supreme Court

Page 733

159 S.W. 733

MARQUET v. ÆTNA LIFE INS. CO.

Supreme Court of Tennessee.

October 4, 1913.

Appeal from Chancery Court, Hamilton County; T. M. McConnell, Chancellor.

Action by Rebecca L. Marquet against the Ætna Life Insurance Company. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

Pritchard, Allison & Lynch, of Chattanooga, for appellant. Sizer, Chambliss & Chambliss, of Chattanooga, for appellee.

BUCHANAN, J.

This suit is based upon an insurance contract. The breach relied on is the failure to pay $2,000, the amount of the policy, upon proofs of death of the insured.

The defenses are two: First, that the payee or beneficiary in the policy sued on, at the date of its issuance, had no insurable interest in the life of the insured, and the contract sued on is therefore a wagering one and unenforceable; second, that the proofs do not show the death of the insured, and therefore no breach is shown justifying a recovery.

There was a decree below for $2,132.50 and costs, from which the insurance company appealed, and has here assigned errors based on the defenses above.

At the time of the issuance of the policy sued on, complainant was the lawful wife of Gus Marquet, and his was the life insured. The policy was issued April 7, 1893, and soon thereafter it was delivered to complainant, who paid all premiums which became due upon it after its issuance. Three years and over after its issuance on, to wit, April 21, 1898, at the suit of complainant, she was granted an absolute divorce from Gus Marquet by the Chancery Court of Hamilton county upon the ground of habitual drunkenness by Gus Marquet after his marriage to her, failure by him to provide for her and her children by him, etc. There followed an entire estrangement between Gus Marquet and complainant and her children. The latter were two sons, respectively, about 21 and 20 years of age, and a daughter about 18 years old at the time of the divorce. The children were in sympathy with the mother in that suit.

Prior to the divorce, for many years, the home of the family and of Gus Marquet had been in Chattanooga, Tenn., but soon after the divorce, or during the years 1898 or 1899, he left Chattanooga, and took up his residence at Oakdale, Tenn., where he remained until about the year 1900, when he left Oakdale for a trip to New Orleans, and has not, as complainant insists, been heard from directly since that time, except through a letter supposed to have been from him, addressed to one of his nephews residing in Chattanooga in the year 1904. By one rumor he is said to have been seen in Detroit, Mich., by another in Memphis, Tenn., but the persons said to have seen him are not examined as witnesses; nor do the dates appear when they claim to have seen him.

The policy in suit, by its terms, was to live for a period of 10 years from its date, in consideration of a fixed semiannual premium to be paid the company. But it provided that at its expiration it might be renewed by the issuance of a new policy, as follows:

"Sec. 2. At the expiration of the term of ten years under this policy and others of a similar form which may be issued to succeed it, said company will issue a new one of an equal amount without medical re-examination, subject to the premium for the age then attained by the insured, providing such expiring policy is returned to the office of the company for this purpose before its expiration, and the surplus under the latter will be applied toward reducing the premium in the new one to the rate charged in the first policy; but, should such surplus be insufficient to reduce the premium to said rate, it shall be optional with the insured to pay the premium required for the said new policy after the surplus from the expiring one has been applied, or reduce the amount of the insurance and continue previous payments. The said new policy will be dated and the first premium thereon become due at the expiration of the term of the last preceding policy, and will be written for a term of ten years from such date, unless the insured has attained the age of seventy, in which case the new policy will be written for the remainder of life."

The policy sued on was never renewed by the issuance of a new one, as provided by section 2 above set out, but on the last day of its life as originally written, its life was prolonged or extended by agreement between complainant and the company by attaching to the policy sued on and originally issued what is called a "rider" signed by one of the officers of the company, thereunto authorized in the following words and figures:

                "Form No. 222
                           "M. G. Burkeley, Pres
                "J. L. English,           H. W. St. John
                       Secy.                    Actuary
                "Frank Bushnell,          C. E. Gilbert
                       Agency Secy.             Ass't Sec'y.
                     "Ætna Life Insurance Company.
                                "Hartford, Conn. April 7, 1903.
                

"Renewable-Term Policy No. 216,338, issued by the Ætna Life Insurance Company, on the life of Gus Marquet, having this day completed a term of ten years, and the surplus existing under it having been found sufficient to reduce the tabular premium for the present age during the ensuing term of ten years to the amount named as premium in said policy, therefore it is unnecessary to return said policy for the issue of a new policy until the expiration of ten years from the date of this instrument, provided the premium expressed in said policy continues to be paid in each and every year before five o'clock p. m. of the days therein named for such payment, and that all the other conditions, provisions, and requirements of said policy continue in force.

                              "J. L. English, Secretary.
                  "Nash."
                

If there had been a renewal under section 2, the old policy would have been returned to the office of the company before its expiration, to the end that the company might issue a new one. This was not done. Complainant retained the old policy, and the company sent the rider to be attached to the old policy. Moreover, by the plain terms of the rider, the company waives the return of the old policy, and prolongs its life, or makes it the measure of rights between complainant and the company for 10 years from the date when it would otherwise have expired. The legal effect of the rider was to make the original policy operative for 20 instead of 10 years from its date.

A question much similar in some respects to the one here was presented to this court in First National Bank v. Guaranty Co., 110 Tenn. 25, 75 S. W. 1080, 100 Am. St. Rep. 765, where it was said:

"Now, it is true that the renewal certificate is a new contract, but it is only a new contract as respects time; that is to say, it extends the idemnity provided by the old contract to a new period of time — May 1, 1899, to May 1, 1900. The parties themselves understood there was only one bond and one penalty."

The question in the present case is clearly distinguishable from that presented to the court in Life Insurance Co. v. Galbraith, 115 Tenn. 471, 91 S. W. 204. There the Insurance Company defended upon the ground that the insured had made fraudulent misrepresentations in respect of his health, in an application to the company to reinstate a policy which had lapsed on account of his failure to pay a premium, and this court held:

"By his failure to comply with the condition upon which it could be kept alive he has ipso facto forfeited all rights under the policy. As to him, it is as if it had never been written. If any benefit accrue to him therefrom, it must be revitalized, and this can be done only with the consent of the company. When it is done, then it becomes a new assurance — a new contract — as if the policy then was for the first time issued," etc.

But in the present case, there was no forfeiture during the first 10 years of the policy sued on. All the premiums called for by it were paid at maturity; and out of these a surplus was created in favor of the beneficiary sufficient to reduce the premium required by the company during the second term of 10 years, even considering the 10 years increase in the age of the insured, to the same amount, semiannually, as was required during the first 10-year period.

Upon the issuance of the policy for the first 10-year period, the complainant, then being the wife of the insured, had an insurable interest in his life. Husband and wife, beyond all question under the authorities, have each a reciprocal insurable interest in the life of the other. Conn. Mutual Life Ins. Co. v. Schaefer, 94 U. S. 457, 24 L. Ed. 251; Cooley's Briefs on the Law of Insurance, 185, and cases cited.

The policy as originally issued was payable to complainant, or, in the event of her death before that of the insured, to his heirs, executors, administrators, or assigns; and, under it, her rights were so far vested that they could not, during her life, be divested without her consent. Gosling v. Caldwell, 69 Tenn. (1 Lea) 455, 27 Am. Rep. 774; Trust Co. v. Bank, 123 Tenn. 625, 134 S. W. 311.

Though the insurance evidenced by the policy had been originally accomplished by a contract between the company and Gus Marquet, yet it is clear upon this record that he, she, and the company regarded that transaction as a settlement upon his wife of the proceeds of that contract whatsoever they might be, for he delivered the policy to his wife; she paid the premiums upon it; and the company, with knowledge of the facts, by the extension contract, treated with and recognized her as having the sole jus disponendi of the surplus which had been created by the payments she had made during the first 10-year term. The company was clearly well warranted in so treating with her....