Ætna Life Ins. Co. v. American Zinc, Lead & Smelting Co.

• Citation: 154 S.W. 827,169 Mo. App. 550
• Court: Court of Appeal of Missouri (US)
• Decision Date: 03 March 1913
• Parties: ÆTNA LIFE INS. CO. v. AMERICAN ZINC, LEAD & SMELTING CO.

154 S.W. 827

169 Mo. App. 550

ÆTNA LIFE INS. CO. v. AMERICAN ZINC, LEAD & SMELTING CO.

Springfield Court of Appeals. Missouri.

March 3, 1913.

Rehearing Denied March 27, 1913.

1. INSURANCE (§ 244) — CANCELLATION OF POLICY—SHORT TERMS RATES.

An insurance policy for 12 months, which contained a special written provision under the head "Monthly Adjustment of Premium, $50 deposit," providing that on a certain date in each month the assured should state to the company the amount of wages paid, and pay the amount of premium due at the rates named in the policy, was a contract for a year; and the special written provision did not give the assured the right to cancel the policy without paying a higher rate provided by a printed table in the policy for short terms on cancellation by the assured; written and printed terms in insurance contracts being construed together, unless the written and printed terms conflict, when the written portion will prevail over the printed part or ambiguities appear, in which case the construction is adverse to the insurer.

2. REFORMATION OF INSTRUMENTS (§ 45) — CONTRACT OF INSURANCE—EVIDENCE.

In an action for a portion of an insurance premium, evidence held insufficient to warrant the reformation of a contract of insurance on the ground that the insurer agreed orally that the insured could cancel the policy without paying a higher rate provided for in the policy for short terms, and that such was intended to be the contract.

3. REFORMATION OF INSTRUMENTS (§ 47)— PLEADING—RELIEF.

In an action on contract, where the defense pleaded is that there was a mistake in that the written contract did not state the true agreement, the court need not actually reform the instrument, but may give the defendant relief as though the contract stood corrected.

4. REFORMATION OF INSTRUMENTS (§ 45)— MISTAKE—BURDEN OF PROOF—SUFFICIENCY OF EVIDENCE.

The burden of proof is on a person attempting to reform a written instrument on the ground of mistake to clearly and convincingly show such mistake.

5. INSURANCE (§ 129)—AGENCY—CONTRACTS —AUTHORITY.

A mere solicitor of insurance has no power to contract that an assured under a contract for a year could cancel the same without becoming liable for the higher rates provided in the policy for short terms.

6. REFORMATION OF INSTRUMENTS (§ 41)— TERMS OF ALLEGED AGREEMENT—PROOF.

In order to reform a mistake in an insurance policy, the terms of the alleged intended agreement must be shown, so that, where it is contended that the policy was to be the same as a prior policy in another company, the terms of such prior policy must be shown.

7. REFORMATION OF INSTRUMENTS (§ 25)— ERROR IN POLICY—DUTY OF ASSURED TO EXAMINE.

It is the duty of an assured to examine his policy, and, if it does not contain the contract agreed on, to notify the company and take steps to correct it; and his failure to do so is to be considered on the question of mistake justifying reformation.

8. INSURANCE (§ 186)—ACCEPTANCE OF PREMIUM —ESTOPPEL.

Where a policy of insurance for a year contains a table of rates to be paid for shorter terms than a year, the acceptance of the monthly premiums at the cheaper rate for the year's contract does not estop the insurer from suing for the difference between the lower and the higher rate on cancellation of the policy by the assured.

9. INSURANCE (§ 244) — CANCELLATION BY ASSURED — SUFFICIENCY OF GROUNDS — THREATS.

A threat by an insurance adjuster that, if the business of "snitch lawyers," who were bringing many annoying suits for personal injuries, did not stop, he would recommend a cancellation of assured's policy did not justify a cancellation by the assured without paying the higher rate provided therein for short terms.

Appeal from Circuit Court, Jasper County; Joseph D. Perkins, Judge.

Action by the Ætna Life Insurance Company against the American Zinc, Lead & Smelting Company. Judgment for plaintiff for less than the claim, and it appeals. Reversed.

Spencer, Grayston & Spencer, of Joplin, for appellant. Thomas & Hackney, of Joplin, for respondent.

STURGIS, J.

This suit is for a balance upon a premium for liability insurance written by the plaintiff, and covering defendant's mining operations in Jasper county. The policy in question is dated December 30, 1909, and was canceled by the defendant on May 2, 1910. The rate of the premium was 4 per cent. of the amount of wages expended by the defendant to its employés, provided the policy was not canceled by the assured before the end of the policy period of one year, during which the policy would otherwise remain in force. The policy contained a provision for cancellation by either party; but, if canceled by the assured, the premium would be considerably greater than 4 per cent. of the wages paid during the time the policy had run. The policy contained what is termed a "short rate" table, showing the amount to be paid provided the policy is canceled before expiration.

The policy was continued in force 122 days, and, according to the short rate table, the premium for 122 days is 50 2/3 per cent. of the annual premium. The petition recites, and the evidence shows, that the defendant paid the premium for the period the policy was in force at the regular rate of 4 per cent., which will hereafter be denominated the "long rate," meaning thereby the rate which would be paid in case the policy continued for the full policy period. The petition alleges, and the defendant concedes, that it did not pay the premium for the time the policy was in force at the short rate, and that, if plaintiff is entitled to collect the premium according to the short rate table, it is entitled to recover the sum of $2,985.07, which represents the difference between the short rate and the long rate for the period of 122 days, during which the policy was in force.

The defenses disclosed by the answer are: (1) That the real agreement between the parties was that plaintiff would insure defendant from month to month, and that a special provision was inserted in the policy, giving, or intending to give, the defendant the right to cancel the policy at any time at the long rate, and exempting it from the short rate provisions of the policy; (2) that if the special provision inserted in the policy did not have this effect, then the court should reform the contract so as to express the real agreement of the parties; (3) that defendant had paid, and plaintiff received, the premium at the long rate for the time during which the policy was in effect, and this was a settlement of the amount due; (4) that plaintiff had itself threatened to cancel the policy, and that this gave the defendant the right to do so, without being subject to the short rate provision. The court after hearing the evidence held that the plaintiff was not entitled to collect at the short rate, but that the payments made by the defendant, by reason of an error in the calculation, was $20 less than the amount of premium earned at the long rate, and, the parties having agreed as to the amount of this error, entered judgment for plaintiff in the sum of $20.

The finding and judgment of the court does not clearly indicate on what ground the court denied the plaintiff the right to recover on the short rate basis. It will be necessary, therefore, for this court to determine whether or not the judgment can be sustained on any theory presented by the pleadings and evidence.

1. It is first necessary to determine whether the policy contract, as written, permits the assured to cancel the policy without paying the short rate premium.

The construction of contracts of insurance are not materially different from other contracts. Renshaw v. Insurance Co., 103 Mo. 595, 600, 15 S. W. 945, 23 Am. St. Rep. 904; Hoover v. Insurance Co., 93 Mo. App. 111, 118, 69 S. W. 42; Renn. v. Supreme Lodge, 83 Mo. App. 442, 446. Effect must be given, if possible, to all parts of the policy, both printed and written. No part of the policy is to be rejected as insensible or inoperative if a rational or intelligent meaning can be given to it, consistent with the general design and object of the whole instrument. 16 Amer. & Eng. Ency. Law (2d Ed.) 864. This in no way conflicts with the principle invoked by defendant that special written portions of the policy prevail over the general printed portions. 1 May, Insurance (3d Ed.) § 177; 16 Amer. & Eng. Ency. Law (2d Ed.) 864; Moore v. Perpetual Insurance Company, 16 Mo. 98; Gunther v. Liverpool Ins. Co. (C. C.) 34 Fed. 501. Nor with the principle that, where the contract is of doubtful or ambiguous meaning, it will be construed most strongly against the insurer. 16 Ency. of Law (2d Ed.) 863; Canning Co. v. Guaranty Co., 154 Mo. App. 327, 334, 133 S. W. 664; Mathews v. Modern Woodmen, 236 Mo. 326, 342, 139 S. W. 151, Ann. Cas. 1912D, 483; La Force v. Insurance Co., 43 Mo. App. 518; 1 May, Insurance (3d Ed.) § 175.

The application of the principles last mentioned presupposes that the policy contains clauses conflicting and not reconcilable with each other, or that the policy or some clause of the same is ambiguous and reasonably susceptible of more than one construction. Where the meaning and effect of an insurance contract is clear, it will be enforced as written. Banta v. Casualty Co., 134 Mo. App. 222, 226, 113 S. W. 1140; Carr v. Pacific Insurance Co., 100 Mo. App. 602, 609, 75 S. W. 180. Applying these principles to the policy in question, it will be found that there is no conflict between the different clauses, and that all may be read and construed together as one consistent whole.

The policy contract is made on a printed form which contemplates a definite policy period, as for instance a year, and an estimated single premium covering that period. The regular form of the policy (without the additions hereinafter mentioned) provides indemnity against loss from claims arising from bodily injuries and death suffered by employés of the...