Alliance Life Ins. Co. v. Saliba, 10674.

• Decision Date: 11 February 1937
• Docket Number: No. 10674.,10674.
• Citation: 87 F.2d 937
• Parties: ALLIANCE LIFE INS. CO. v. SALIBA.
• Court: U.S. Court of Appeals — Eighth Circuit

87 F.2d 937 (1937)

ALLIANCE LIFE INS. CO. v. SALIBA.^*

No. 10674.

Circuit Court of Appeals, Eighth Circuit.

February 11, 1937.

Clinton R. Barry, of Fort Smith, Ark. (Loyd Shouse and W. S. Walker, both of Harrison, Ark., on the brief), for appellant.

Virgil D. Willis, of Harrison, Ark., for appellee.

Before STONE, SANBORN, and VAN VALKENBURGH, Circuit Judges.

STONE, Circuit Judge.

In 1926, Saliba took out a life insurance policy in the Old Colony Life Insurance Company of Chicago, Ill., which provided for a payment of $10,000 upon his death and also for monthly disability income payments of $100. Thereafter, the disability under the policy occurred and the claim therefor resulted in an action on the policy by him in a state court. Without trial, the parties agreed upon a settlement which was embodied in a consent decree. This settlement provided that the existing policy should be canceled and delivered up to the company and that a new policy of the same number should be issued with a provision acknowledging the disability and agreeing to the monthly payments during life and to waiver of further premium payment. These payments and further premiums were to be charged (without interest) against the face amount ($10,000.00) of the policy and any balance left on death of Saliba was to be paid to the beneficiary. In compliance with the settlement, the old policy was surrendered and a new policy in the same terms delivered upon which was the indorsement following:

"Indorsement.

"Chicago, Illinois, December 18, 1930.

"Due proof of the total and permanent disability of Daibes A. Saliba, the insured hereunder, having been received at the Home Office of the Company, payment of the premium falling due hereon on the 14th day of May, 1930, and the payment of all premiums falling due hereunder subsequent to said date are hereby waived. The company will also pay to insured the Monthly Disability Income of $100.00 per month, in accordance with the terms and provisions of the Disability Clause of this contract, the first payment to be made as of the first day of February, 1930.

"This indorsement and the waiver of premiums and the payments of Monthly Disability Income to be made as above stated, are made in pursuance of a certain stipulation or agreement entered into on the 9th day of December, 1930, by and between the solicitors of the respective parties in a certain cause then pending in the Circuit Court of Houston County, Alabama, on the Chancery side thereof, wherein the Old Colony Life Insurance Company, a corporation, is complainant and Daibes A. Saliba and his wife, Habka Saliba are respondents."

Back payments due under this arrangement and monthly payments thereafter were made until September, 1932. Shortly thereafter the insurance company went into the hands of receivers under the laws of Illinois. The receivers entered into a reinsurance contract with the Life & Casualty Company of Chicago (the former name of appellant). A certificate of assumption of liability on this policy was issued by the reinsurer to appellee in the amount of $6,556.10 and attached to the policy, the above reinsurance contract being made a part of the certificate.

This action is against the reinsurer for $2,800 (the past-due monthly disability installments), a statutory penalty of 12 per cent., and a reasonable attorney's fee. To this petition a demurrer was filed upon the ground that the petition did not state a cause of action. The demurrer was overruled, issue joined, jury waived, evidence introduced, and judgment entered for plaintiff for $2,800 and interest of $189. From that judgment, defendant brings this appeal.

The brief of appellant states two issues here. One of these, an attack upon the sufficiency of the evidence, was abandoned. It could not have been presented because a jury was waived and there was no request for findings or motion for judgment on the evidence by appellant. Becher v. Sidner, 87 F.(2d) 899 (C.C.A. 8); Fierce v. Wyatt, 83 F.(2d) 892, 893 (C. C.A.8).

The issue open for presentation here is the sufficiency of the petition to state a cause of action against appellant. The controversy as to this issue is confined to whether this insurance contract was assumed by appellant in so far as disability payments are concerned.

The legal connection of and the relation between these parties arises from a certificate sent appellee by appellant to which was attached a reinsurance agreement which was expressly made a part of the certificate.¹ The reinsurance agreement was the general contract between appellant and the receivers of the Old Colony Life Insurance Company which was an extended and comprehensive instrument covering seven pages of this printed record and dealing with many matters.

Appellant argues that this case turns upon the proper construction of this reinsurance contract. In a sense this is true, but it must not ignore the effect of the certificate upon such construction.

The argument of appellant is not that it did not assume any obligation whatsoever in connection with this policy, but it is that it assumed no obligation as to disability payments. It contends that "under the life insurance policy the appellee was simply a policyholder with his wife as beneficiary. Under the judgment and contract he was simply a general creditor." It is upon this "distinction between appellee's rights as a creditor and his rights against appellant as a policyholder of the Old Colony Company" that appellant relies to show that liability for these disability payments was not assumed.

This argument that the obligations under this policy can be separated and payment on death to the beneficiary assumed and payment to insured of disability installments not assumed is ingenious and pressed with zeal and skill. Whether it could have been done is beside the question here of whether it was done. There are provisions in the reinsurance contract which, considered alone, seem to sustain appellant. Probably the strongest expression of that kind is as follows:

"Fourth: As to all contracts assumed and taken over by Life and Casualty, the Receivers shall pay or deliver to Life and Casualty cash in an amount equal to the full amount of all premiums heretofore or hereafter collected or received by said Receivers, including extra premiums and premiums for double indemnity and disability, if any, due on or after September 20, 1932, such payment or delivery to be made immediately upon receipt, it being intended that this agreement shall...