Alexander v. Pacific Mut. Life Ins. Co. of California

• Decision Date: 17 January 1934
• Docket Number: 94.
• Citation: Alexander v. Pacific Mut. Life Ins. Co. of California, 170 A. 522, 166 Md. 112 (Md. 1934)
• Parties: ALEXANDER v. PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA.
• Court: Maryland Court of Appeals

170 A. 522

166 Md. 112

ALEXANDER v. PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA.

No. 94.

Court of Appeals of Maryland

January 17, 1934

Appeal from Baltimore City Court; Joseph N. Ulman, Judge.

Suit by Corinne M. Alexander against the Pacific Mutual Life Insurance Company of California.From a judgment in favor of the defendant, the plaintiff appeals.

Affirmed.

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTTDIGGES, PARKE, and SLOAN, JJ.

J Craig McLanahan of Baltimore (France, McLanahan & Rouzer, of Baltimore, on the brief), for appellant.

William L. Marbury, Jr., and Jesse Slingluff, Jr., both of Baltimore for appellee.

BOND Chief Judge.

The plaintiff in a suit on a life insurance policy issued to her deceased husband, Walter W. Alexander, appeals from a judgment entered on a verdict directed for the defendant company, and the question is whether the company might still be liable on the policy for the full original amount of it after a premium had gone unpaid through a period of grace specified, and after negotiations had been opened for a new contract for insurance in a smaller amount.There is no dispute on essential facts; most of the facts being presented in an agreed statement.

Walter W. Alexander was one of a partnership of Baltimore agents for the Pacific Mutual Company, and he took out in that company on December 31, 1928, a policy for $50,000.The annual premiums due before December 31, 1931, were paid, but the premium due on that date was never paid.The period of grace specified was thirty-one days, and it was stipulated in the policy that, if a premium remained unpaid throughout that period, the policy "shall thereby be made void and without value, except as set forth in the paragraphs designated 'Non-Forfeiture,''Options on Completion of Life Expectancy Period,' and 'Automatic Non Forfeiture.' "These paragraphs gave the insured after default an election among three courses: (1) To take the cash surrender value; (2) to have the policy indorsed for a reduced amount; and (3) to have the insurance for the face amount of the policy, less any indebtedness, continued for a term specified, but without the right to loans.The third course was fixed upon by the policy as that to be followed if the insured failed to elect.The options, however, were for applications of the cash surrender value of the policy, less any indebtedness of the insured, and that value had in this instance been consumed by policy loans.

The company had issued instructions to its agents to endeavor to conserve business by arranging reissues of lapsed policies or changes, upon terms to the advantage of the insured, and it promised co-operation by the company in quoting terms, and otherwise.Reissues after lapses were, according to the instructions, to be made upon evidence of health, and by the procedure regularly followed in cases of reinstatement."Restoration" was the subject of a special clause that: "After any default in payment of premium this Policy, if not surrendered to the Company, may be restored to full force and effect on written application by the insured to the Home Office of the Company and the payment of premiums to date of restoration with interest thereon at the rate of six per centum per annum, provided the Insured shall with such application submit evidence of insurability satisfactory to the company."During January of 1932, the insured, because of worry over financial difficulties and ill health, went to a sanitarium, leaving with an associate who handled all his personal insurance instructions to reduce the full amount carried, as he(Alexander) could not possibly carry it all.He said he was interested in retaining all policies that had disability coverage, and the Pacific Mutual policy contained coverage to the amount of $300 a month.This was the maximum amount of such coverage, and was allowed on policies of $20,000 or more; and the associate decided, as he testified, to cut the insurance under this policy to $20,000.Accordingly, on January 23, the cashier of the insured's firm, a Miss Patz, forwarded to the company on one of its forms a request: "Please reissue in reduced amount of $20,000 with $300.00 P. T. D. Benefits."It was received by the company on January 29, and replied to on February 2 on a printed form of letter inclosing, "for completion," a form for application for the reissue mentioned.This reply form was filled in with specifications for the reissued insurance, and a space for a time limit, "To complete papers and take settlement," was filled with the date: February 19, 1932.The form of application enclosed was filled in by Alexander after...