American Life Association v. Vaden

• Citation: 261 S.W. 320,164 Ark. 75
• Decision Date: 28 April 1924
• Docket Number: 335
• Parties: AMERICAN LIFE ASSOCIATION v. VADEN
• Court: Supreme Court of Arkansas

261 S.W. 320

164 Ark. 75

AMERICAN LIFE ASSOCIATION v. VADEN

No. 335

Supreme Court of Arkansas

April 28, 1924

Appeal from Clay Circuit Court, Eastern District; W. W. Bandy Judge; affirmed.

Judgment reversed.

Oscar A. Knehan and Gautney & Dudley, for appellant.

The validity of notes of this character is recognized and upheld by this and other courts. 104 Ark. 288, 148 S.W. 1019; 143 Ark. 143, 220 S.W. 803; 230 S.W. 257; 85 Ark. 337, 108 S.W 213. Where the stipulation provides that the policy shall be null and void upon the failure to pay the premium or premium note when due, it is held to be self- executing, and the policy ceases to exist. A promise to pay on the part of the company in such a case, after notice of forfeiture, would have to be supported by a new consideration to be enforceable. While the company might estop itself by conduct misleading the insured to his prejudice, mere silence on its part, or nonaction, is not sufficient to bring it within the rule. Here we are dealing with the beneficiary, and not the insured, and proofs of death were submitted under the express provision that, in doing so, the company did not acknowledge any liability. 200 Mass. 510, 86 N.E. 928; 18 Ga.App. 347, 89 S.E. 445; 28 N.W. 749; 86 Ill.App. 315; 75 S.W. 234; 112 Ark 171; (U. S.) 26 L. ed. 765; 47 L. ed. 204; 156 Ark. 77; 65 Ark. 240; 86 Ark. 326. Non-waiver stipulation valid. Action taken under same does not constitute waiver of compliance with terms of policy. L. R. A. (N. S.) 1917F, p. 663. The legal evidence establishes that the premium note was not paid when due, that, by the terms of the policy, it was forfeited before the death of the insured, and that there has been no waiver of the forfeiture. Not only was the appellant entitled to the peremptory instruction requested, but it was clearly error to modify instruction 2 by adding the words "unless you find that payment of the note was extended or forfeiture of the policy waived," as that modification was without evidence to support it. There is an absolute want of evidence to sustain the submission of the issue of extension of time of payment of note. 72 Ark. 630; 75 Ark. 25. See also 87 Ark. 326.

W. E. Spence and Costen & Harrison, for appellee.

1. Any agreement, declaration or course of action on the part of an insurance company which leads the insured honestly to believe that, by conforming thereto, a forfeiture will not be incurred, followed by conformity on his part, will estop the company from insisting upon the forfeiture. 53 Ark. 494; 62 Ark. 43; 65 Ark. 54; 92 Ark. 378; 94 Ark. 227; 99 Ark. 476; 132 Ark. 548; 14 R. C. L. 1181, § 357; 25 Cyc. 858; 144 U.S. 439.

2. Where notes are given in payment or part payment of premiums, and the policy provides that, on default in payment of the notes, the policy shall become ipso facto null and void, the forfeiture is waived if, after default, the insurer continues to assert liability on the part of the insured to pay the notes. 14 R. C. L. 1192, § 369; 25 Cyc. 865; 81 Ark. 160. And requiring proof of loss with knowledge of the facts, especially if the beneficiary is induced thereby to incur expense or trouble under the belief that the policy will be paid, is a waiver of the forfeiture. 53 Ark. 494; 67 Ark. 584; 92 Ark. 378; 14 R. C. L. 1197; 25 Cyc. 872. See also 83 Ark. 575; 94 Ark. 227. An offer to pay a part of the loss under the policy would amount to a waiver of the forfeiture, if there was a forfeiture. 99 Ark. 476; 83 Ark. 575; 14 R. C. L. 1195, § 373; 25 Cyc. 872.

3. The testimony as to an offer of settlement made by the company was competent for the purpose of showing a waiver of the forfeiture, and it was properly admitted for that purpose.

WOOD, J. MCCULLOCH, C. J. dissenting. Mr. Justice SMITH concurs in this dissent.

OPINION

WOOD, J.

This is an action by the appellee, the beneficiary in a policy of life insurance, against the appellants, on a policy issued to Ira L. Cox, husband of the appellee, by the American Life Association of Campbell, Missouri. The policy was in the sum of $ 1,000, and it is admitted that the Liberty National Life Insurance Company assumed the liabilities of the American Life Association on the latter's policies. Hereafter, for convenience, the company issuing the policy will be referred to as company.

The policy was issued on the 20th of September, 1918. The annual premiums on the policy were $ 32.89, payable September 30 of each year until twenty premiums had been paid. For the first premium Cox executed a note dated October 2, 1918. This note was for $ 32.89, payable on or before the 20th day of October, 1918. The note contained the following recital: " Upon default of payment of this note, the makers, endorsers, guarantors, and sureties, agree to pay all reasonable attorneys' fees and expenses of collection, and do hereby severally waive demand of payment, protest, and notice of protest of this note, and consent that time of payment may be extended without notice. The failure to pay any of above installments or interest, when due, shall cause this note to become due."

The policy contained the following provision: "A grace of thirty-one days, without interest, will be allowed for the payment of each premium except the first, and during this time the policy shall be in full force and effect. If the insured should die during this period, or before any year's premium is paid in full, the premium or installments for the current year will be deducted in any settlement thereunder; or, if any premium or premium note is not paid when due, this policy shall be null and void, and all premiums paid hereon shall be forfeited to the company, except as otherwise provided herein."

Cox died on the 28th of October, 1918. Proof of death was made out and presented to the company on blanks furnished by the company, which, among other things, provided: "The furnishing of these blanks by the American Life Association on which to make proof of any claim against it shall not be an acknowledgment of any liability of said association." The blanks were furnished by the company on November 9, 1918, at the request of the appellee, after the death of Cox. They were sent in a letter shown to have been written by the secretary of the company.

The blanks were filled out and returned to the company in person by the appellee's brother. At that time Cox had been dead two or three weeks. When appellee's brother went into the office of the company at Campbell, Missouri, he asked for the secretary, and stated he wanted to speak to the one in authority who was running the business. A lady was called from the back of the office, who came and looked over some papers on the desk, and said they could not make settlement, as the secretary was then in St. Louis. They didn't say anything at that time about the policy being forfeited. On October 30, 1918, the company wrote a letter to Cox which stated: "Your note for premium, dated Oct. 2, 1918, on policy No. 6262, for $ 32.89, will be due Nov. 1, 1918. Unless said note is paid to the association on or before said date, said policy will be forfeited, canceled, and of no effect, except as provided herein. You will find the above note at the home office of the association. We trust you will give the matter your prompt attention." Up to the time of giving the above notice, the fact of Cox's death was unknown to the company. Two or three weeks before his death Cox had requested the Bank of Rector to write to the company in regard to the payment of the premium on his policy. In four or five days the bank had a reply.

On February 17, 1919, the father of the assured wrote to the company in regard to the claim caused by the death of his son, and stated that he hoped to hear from the company soon. The company, through its assistant secretary, replied to this letter Feb. 18, 1919, stating that the secretary of the company was absent, and that the letter would be brought to his attention when he returned. The father of the assured also had a talk with a man by the name of Bray, who said that they had talked the matter over, and could settle the claim at thirty cents on the dollar, and that the company would settle if appellee would take that. Witness didn't know who Bray was or what authority he had, but he represented to witness that he was in the insurance company's office back of the bank, and had been down about Greenway, settling claims.

The appellee testified that she, in company with her then husband, went to Campbell about the 28th of February, 1919, to talk to the company about the insurance of her former husband. They talked to Mr. Morgan and Mr. Bray. They did not, at that time, say anything about a forfeiture, but said they would settle for three hundred dollars. Witness offered to compromise with them for $ 500, and Morgan said they would pay it if witness would take out insurance in the new company, and no one suggested that they did not owe witness anything on the policy, or that it was forfeited. Witness believed the policy was worth one hundred cents on the dollar, but was offering to settle for $ 500 because she didn't want a suit. The note which they owed was not due.

Bray testified that he was superintendent of agencies for the appellant company in December, 1918. Morgan was the secretary and general manager. Bray settled some claims, such as were handed him by the board of directors. The claim in controversy was not handed witness by the board. The note given to the company for the first premium was never paid.

Bertha D. Morgan testified that, during the year 1918, she was employed by the company in the capacity of assistant secretary and stenographer. She had charge of the records of the company. William G. Morgan was secretary of the company...