Abrams v. Metropolitan Life Ins. Co.

• Decision Date: 01 March 1944
• Docket Number: 93.
• Citation: 29 S.E.2d 130,224 N.C. 1
• Parties: ABRAMS v. METROPOLITAN LIFE INS. CO.
• Court: North Carolina Supreme Court

29 S.E.2d 130

224 N.C. 1

ABRAMS v. METROPOLITAN LIFE INS. CO.

No. 93.

Supreme Court of North Carolina

March 1, 1944

Smith Wharton & Jordan, of Greensboro, and Battle, Winslow & Merrell, of Rocky Mount, for defendant petitioner.

H D. Hardison and Henry C. Bourne, both of Tarboro, for plaintiff, respondent.

STACY Chief Justice.

The case was brought back because of an alleged inadvertence or misapprehension of the record as it relates to the second cause of action. It is contended that no evidence was offered by the plaintiff to show a cancellation of the policy.

It was said on the original hearing that the complaint states a cause of action for wrongful cancellation, which is consistent with the cause of action on the policy, as both are in affirmance of the contract, and a new trial was granted, limited to this alleged breach of plaintiff's contractual rights. American Trust Co. v. Life Ins. Co., 173 N.C. 558, 92 S.E. 706; 29 Am.Jur. 286. The case was tried on both causes of action, and there was no objection or challenge to the joinder of the two causes in the same complaint.

The defendant alleges in its answer that the policy lapsed "for the nonpayment of the premium due July 27, 1939"; that the cash surrender value of the policy "at said time" was $1.86 over and above a loan then existing against the policy, and "a check in said amount of $1.86 was drawn payable to the insured *** and mailed to him, but said check has never been cashed". Defendant further alleges in its answer "that it is due and owing the plaintiff the sum of $7.00", and tenders judgment in this amount.

The plaintiff testified that he tendered the defendant's agent the quarterly premium "due August 27, 1939, within the grace period", which he refused to accept, "and stated as his reason that the policy had been lapsed for the nonpayment of the premium due July 27, 1939". See McAden v. Craig (5th syllabus), 222 N.C. 497, 24 S.E.2d 1. Plaintiff further testified that "he has never received any notice whatever of the lapse of the policy nor has he ever received any premium notices". See G.S. § 58-207 C.S. § 6465.

The defendant's local agent testified that he saw the plaintiff on 27 August, 1939, "the last day of grace according to the policy as I understood it. *** I told him if the policy (premium) wasn't paid that day the grace expired and it would require a certified form before I could collect any money on the policy. *** I told him the grace would expire that day." Cross-examination: "The last day of grace was the 27th of August, according to my receipts. *** My receipts are made up at the home office. *** The 27th day of August is the date the premium would be due under the terms of the policy, and he would have thirty-one days thereafter in which to pay it." Thus the defendant's agent admits that he was misinformed and that he misled the plaintiff.

If the defendant wrongfully terminated or canceled the policy, as may be inferred from the above evidence, it was in derogation of plaintiff's rights. Aiken v. Atlantic Life Ins. Co., 173 N.C. 400, 92 S.E. 184. The home office made up the agent's receipts, and even in the answer, filed 21 October, 1942, the due date of the premium is alleged to be "July 27, 1939." The trial court held, as a matter of law, that the third quarterly premium was due on August 27 of each year, and that the period of grace, in which it could be paid, extended it in each instance for 31 days thereafter. The issue appears to be one for the jury.

It is urged, however, that the plaintiff does not rely upon his allegation of wrongful cancellation, either in his original brief or in his brief on rehearing. His first exception is to the refusal of the court to submit the issue tendered, including the 4th, which relates to the alleged wrongful cancellation of the policy. See issues set out on original hearing, 223 N.C. 500, 501, 27 S.E.2d 148. In his brief on rehearing, the plaintiff says: "The plaintiff offered evidence on both grounds (tender and wrongful cancellation) and tendered issues on both grounds. The trial court submitted the issue on tender, but refused to submit the issue on wrongful cancellation."

This would seem to dispose of the question, certainly so far as a reversal on petition to rehear is concerned. "No case should be reheard up on a petition to rehear unless it was decided hastily and some material point had been overlooked or some direct authority was not called to the attention of the court." Weathers v. Borders, 124 N.C. 610, 32 S.E. 881; Weston v. John L. Roper Lumber Co., 168 N.C. 98, 83 S.E. 693; Jolley v. Western Union Tel. Co., 205 N.C. 108, 170 S.E. 145.

In the petition to rehear, the defendant for the first time takes the position that the plaintiff can sue only on the contract and not for its breach; that the insured and not the beneficiary has such a cause of action. See Wooten v. Odd Fellows, 176 N.C. 52, 96 S.E. 654, and Gorrell v. Water Supply Co. (1st syllabus), 124 N.C. 328, 32 S.E. 720, 46 L.R.A. 513, 70 Am.St.Rep. 598. This is a shift in position which is not permitted on rehearing. Holland v. Dulin, 206 N.C. 211, 173 S.E. 310; Jolley v. Western Union Tel. Co., supra. Moreover, the record supports the plaintiff's right to pursue the matter of an alleged wrongful cancellation. 48 A.L.R. 109.

We adhere to the original decision.

Petition dismissed.

DENNY Justice (concurring).

The opinion disposes of the questions properly presented upon the petition to rehear, but, in view of the position taken in the dissenting opinion, I deem it not improper to discuss the extraneous questions raised.

It is true that no specific issue of damages for breach of the insurance contract was tendered by the plaintiff, but an issue based on the alleged wrongful cancellation of the policy was tendered and its submission to the jury refused by the trial judge. It was held in the original opinion, reported in 223 N.C. 500, 27 S.E.2d 148, that this was error, and the majority opinion adheres to the original decision. The issues tendered by the plaintiff were intended and were sufficient to cover both phases of the case.

In the dissenting opinion it is stated: "The original opinion assumes that the complaint states and plaintiff relies upon two causes of action. In this I think there is error." In the trial below the defendant made no such contention, and, as stated in the majority opinion, "the case was tried on both causes of action, and there was no objection or challenge to the joinder of the two causes [of action] in the same complaint."

Plaintiff's right to bring an action for breach of the insurance contract is challenged on the following grounds: (1) Plaintiff had no vested interests in the policy during the life of the insured because the right to change the beneficiary was reserved by the insured; (2) there is no contract relation between the plaintiff and the defendant; and (3) the policy being cancelled and the contract terminated during the life of the insured, the beneficiary loses any contingent interest he may have had; for his rights, if any, are predicated upon the existence of the contract.

In the first place, the challenge comes too late, none of these questions were raised in the trial below or before this Court when the case was here on appeal, they are raised for the first time in the brief on rehearing. In the case of Gorham v. Pacific Mutual Life Insurance Co., 214 N.C. 526, 200 S.E. 5, 8, it was held: "The rule is, that an appeal ex necessitate follows the theory of the trial. Dent v. Mica Co., 212 N.C. 241, 193 S.E. 165; Keith v. Gregg, 210 N.C. 802, 188 S.E. 849; In re Parker, 209 N.C. 693, 184 S.E. 532. Having tried the case upon one theory, the law will not permit the defendant to change its position, or 'to swap horses between courts in order to get a better mount in the Supreme Court.' Weil v. Herring, 207 N.C. 6, 175 S.E. 836, 837; Holland v. Dulin, 206 N.C. 211, 173 S.E. 310. 'The theory upon which a case is tried must prevail in considering the appeal, and in interpreting a record and in determining the validity of exceptions.' Brogden, J., in Potts v. Ins. Co., 206 N.C. 257, 174 S.E. 123, 124." See also Gorham v. Pacific Mutual Life Ins. Co., 215 N.C. 195, 1 S.E.2d 569.

In the second place, I do not concede that plaintiff's interest was contingent and that he could not have brought an action during the life of the insured, in the light of the facts disclosed on this record: (1) The right to change the beneficiary was a restricted one. The policy states, "The right on the part of the insured to change the beneficiary, in the manner hereafter prescribed, is reserved." The record does not disclose the manner provided for changing the beneficiary. (2) At the time of the lapse, or wrongful cancellation, of the policy, the insured had been adjudged non compos mentis and committed to the State Hospital for the Insane, and was incapable of changing the beneficiary; and (3) the beneficiary in this policy had furnished the consideration money of the contract.

Justice Walker, in speaking for the Court, in the case of Wooten v. Order of Odd Fellows, 176 N.C. 52, 96 S.E. 654, 656 said: "The general rule is that the right to a policy of insurance, at least to one of the ordinary character, and to the money which may become due under it, vests immediately, upon its being issued, in the person who is named in it as beneficiary, and that this interest, being vested, cannot be transferred by the insured to any other person (Central National Bank v. Hume, 128 U.S. 195, 9 S.Ct. 41, 32 L.Ed. 370) without his consent. This does not hold true, however, when the contract of insurance provides for a change of the beneficiary by the insured, or such a right arises in some...