O'Maley v. Northwestern Mut. Life Ins. Co.

• Decision Date: 25 May 1936
• Parties: LUCIE E. O'MALEY, RESPONDENT, v. THE NORTHWESTERN MUTUAL LIFE INSURANCE CO., APPELLANT
• Court: Kansas Court of Appeals

95 S.W.2d 852

231 Mo.App. 39

LUCIE E. O'MALEY, RESPONDENT, v. THE NORTHWESTERN MUTUAL LIFE INSURANCE CO., APPELLANT

Court of Appeals of Missouri, Kansas City

May 25, 1936

Appeal from the Circuit Court of Jackson County.--Hon. Ben Terte Judge.

AFFIRMED.

Judgment affirmed.

Henry S. Conrad, L. E. Durham, Hale Houts and William J. Carroll for respondent.

P. E Reeder, Leland Hazard, George J. Winger and Winger, Reeder Barker & Hazard for appellant.

OPINION

SHAIN, P. J.

--This is termed an action for damages for breach of contract. On September 13, 1930, the defendant herein issued to George T. O'Maley its policy of life insurance in the amount of $ 10,000 in consideration of an annual premium of $ 498.70.

It stands admitted that O'Maley complied with the terms of the contract up to the time of his death and that due proof of death was made. It is claimed in this action that defendant, in making settlement, wrongfully deducted the principal sum of $ 432.70 and this suit is for the recovery of said alleged amount so claimed to have been deducted with interest from March 2, 1934, at the rate of six per cent, to-wit, for damages in the sum of $ 432.70 and interest and for attorney fees in the sum of $ 250.

It appears that the defendant company issued to George T. O'Maley in his lifetime four other policies, to-wit: On July 8, 1932, a policy for $ 40,000 for consideration of annual premium of $ 2180 payable quarterly (see reported case No. 18637.) On June 29, 1929, a policy for $ 50,000 for consideration of annual premium of $ 1017 payable semi-annually (see reported case No. 18638.) On June 27, 1929, policy for $ 25,000 for consideration of annual premium of $ 1182 payable semi-annually (see reported case No. 18639.) On June 27, 1929, a policy for $ 25,000 for consideration of annual premium of $ 1182 payable semi-annually (see reported case No. 18640).

With the exception of policy for $ 25,000 issued June 27, 1929, (reported case No. 18639) the policies were what is known as "Prepaid."

Five separate suits were brought in the circuit court for damages for alleged breach of contract, each suit based upon a separate policy as indicated by the designated numbers above and cause of action in each is based on an alleged wrongful deduction made by the defendant. In other words, defendant in each instance paid all that the policy called for except the principle amount sued for in each case.

The plaintiff's pleadings in the five cases are identical except as to dates and amounts. In other words, the issue of law in each is the same and the issues of fact are the same with the exception that in case No. 18639, wherein the policy was not what is known as a "Prepaid."

The real issues in all of the five cases are best presented in defendant's answers and the plaintiff's replies and the issues as presented in answer and reply in one case conforms to that in each of the cases except as to an issue presented in case No. 18639, which is not a prepaid policy.

Defendant in its answer filed herein admits its incorporation; admits the issuance of the policy and no question is raised as to the death of insured nor as to proof of loss. The defendant pleaded full settlement and accord in accordance with the terms of the contract.

The defendant pleaded the following, which is shown to be a part of the contract, to-wit: "If the age of the insured has been misstated the amount payable hereunder shall be such as the premium paid would have purchased at the correct age."

It stands admitted that the insured stated the date of his birth as March 13, 1879, and it stands admitted that the actual date of his birth was March 13, 1878.

As to the above, the defendant answers as follows:

"Defendant further states that on the 28th day of June, 1929, defendant did at its home office and principal place of business in the city of Milwaukee, state of Wisconsin, accept the said application of the said George T. O'Maley for said policy of insurance without condition or restriction and the said insurance did on said date and at said place become effective and that said policy of insurance did become a valid and binding contract at that time and place between the said George T. O'Maley and this defendant; and that said contract of insurance is ruled and controlled by the laws of the state of Wisconsin and there is no statute or law or decision of said state impairing the full force and effect of the policy clause respecting misstatement of age hereinafter in paragraph seven (7) set forth, and said clause is valid and binding in said state by reason of the following statute of said state:

"'If the age of the insured has been misstated in an application for a policy of life insurance and the error shall not have been adjusted during the lifetime of the insured, the amount payable under the policy shall be such as the premium paid would have purchased at his correct age, except that if the insured at the time the insurance was applied for shall have been beyond the maximum age limit designated by the insurer, the insurer may, at its option, admit a minimum liability equal to the amount of premius collected under the policy. This section shall apply to fraternal benefit societies.' [1933 c. 487 s. 245.]"

The defendant sets forth in its answer the following communication sent by the plaintiff.

"Kansas City, Missouri

"January 11, 1933.

"The Northwestern Mutual Life Insurance Co.

"Milwaukee, Wisconsin.

"Gentlemen:--

"Supplementing my claim in connection with various policies issued by the Northwestern Mutual Life Insurance Company on the life of George T. O'Maley, deceased, in answer to question 4 (b) of the claimant's statement, I wish to advise that the correct date of the insured's birth was March 13, 1878.

"It is understood and hereby agreed that settlement of my claim will be made on the adjusted basis, the Company allowing such amount as the premiums paid would have purchased at the correct age.

"Witness. Lucie E. O'Maley.

"W. J. Carroll."

The defendant further answers as follows, to-wit:

"Defendant further states that pursuant to said request and in reliance thereon and in order to fully settle, compromise and adjust the then existing dispute and controversy between defendant and said Lucie E. O'Maley, plaintiff herein, with respect to the amount payable under said policy, defendant did pay and deliver over to said plaintiff the sum of $ 23,942.00.

"8. Defendant states that the said misrepresentation of age by said George T. O'Maley was the misrepresentation of a matter which actually contributed to the contingency or event on which the said policy might become due and payable and such misrepresentation rendered said policy wholly null and void and defendant would have so claimed at the time of the death of the said George T. O'Maley except for said adjustment provision heretofore stated in paragraph seven (7), and that the payment aforesaid to the said Lucie E. O'Maley, plaintiff herein, was in full settlement, compromise and adjustment of her claim against this defendant for the sum of $ 25,000.00.

"9. Defendant further states that the difference in premium on the aforesaid policy between the premium actually paid by the said insured and the premium which should have been paid at the true and correct age of said insured, amounts to the sum of $ 178.00; in other words, that if the said insured had stated his true and correct age and given his true and correct date of birth as March 13, 1878, instead of March 13, 1879, this defendant would have charged as a premium for the said contract of insurance $ 178.00 more than was actually charged and paid by the said insured for said policy of insurance; that to require this defendant to pay any more than has actually been paid by this defendant to the beneficiary would cause this defendant to make a distinction or discrimination in favor of the insured and the beneficiary in said policy, as between said insured and said beneficiary and other insurants in the state of Missouri contrary to the policy and statute of the state of Missouri, to-wit, Section 5729 of the Revised Statutes of Missouri, 1929, which provides as follows, to-wit:

"No Life Insurance Company doing business in this state shall make or permit any distinction or discrimination in favor of individuals between the insurants (the insured) of the same class and equal expectations of life in the amount or payment of premiums or rates charged for policies of life or endowment insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contract it makes. . . .'

"10. Defendant further states that to compel the defendant to pay any additional sum of money under said policy of insurance other than the amount already paid pursuant to the clause of said policy heretofore referred to in paragraph seven (7) of this answer, and pursuant to the aforesaid settlement and adjustment, would result in causing this defendant to pay as alleged proceeds of said policy of insurance a sum of money for which no premiums or other consideration has been paid and would result in taking the property of this defendant without due process of law contrary to Section 30 of Article II of the Constitution of Missouri; and contrary to Section I of the Fourteenth Amendment to the Constitution of the United States of America; that so to compel this defendant to pay said additional sum or any additional sum as alleged proceeds of said policy of insurance would impair the obligation of contract contrary to the provisions of Section 10, Article I of the Constitution of the United States of America.

"Wherefore defendant prays to go hence without day and for its costs herein...