American Life Ins. Co. v. Williams

• Decision Date: 28 June 1937
• Docket Number: 6 Div. 152
• Citation: 175 So. 554,234 Ala. 469
• Parties: AMERICAN LIFE INS. CO. v. WILLIAMS.
• Court: Alabama Supreme Court

175 So. 554

234 Ala. 469

AMERICAN LIFE INS. CO. v. WILLIAMS.

6 Div. 152

Supreme Court of Alabama

June 28, 1937

Appeal from Circuit Court, Jefferson County; C.B. Smith, Judge.

Action on a policy of life insurance by Carrie Williams against the American Life Insurance Company. From a judgment for plaintiff, defendant appeals.

Transferred from Court of Appeals under Code 1923, § 7326.

Reversed and remanded.

Hugh A Locke and Andrew W. Griffin, both of Birmingham, for appellant.

Horace C. Alford, of Birmingham, for appellee.

FOSTER Justice.

This is a suit on a policy of industrial life insurance issued by appellant on the life of Nathaniel Williams without a physical examination.

The pleas and replications were in short by consent with leave to give in evidence any matter which would be a legal defense or in reply to such defense.

The policy was issued August 26, 1935; insured died January 6 1936. The policy contained a clause that, if the death of the insured occurred within nine months from the date of delivery of the policy on account of any of the following diseases, pulmonary disease, chronic bronchitis, cancer, or disease of the heart, liver, or kidneys, liability under it was limited to a return of the premiums paid. (This is not intended as an attempt to quote the terms of the policy, but to state its substance.)

Defendant claimed that insured died of a pulmonary disease, to wit, tuberculosis, and also claimed an accord and satisfaction, in that on January 7, 1936, defendant paid plaintiff, who was the beneficiary, the sum of $1.20, alleged to be the amount of premiums which had been paid in so far as this insured was concerned, when she executed a receipt to defendant for said sum in which the recital is made that it is "in full for all claims against said company upon (the) policy issued on the life of Nathaniel Williams."

The evidence was to the effect that on that day, which was next succeeding that of his death, plaintiff went to the office of defendant, and reported the death, and said that she was told he died of tuberculosis, whereupon she signed a statement giving the information sought by various questions. One was that he died of "pleurisy and tuberculosis." She signed the statement containing those answers. Thereupon, she says, the manager for defendant said he would save her some trouble and gave her $1.20, and told her to go home and he would see her later; that she did not know what kind of paper she signed, and did not read it, neither did the manager read it to her. She says he did not tell her it was for the premiums that had been paid.

The evidence for the defendant on that point tended to show that the manager and cashier read to plaintiff the clause which we have mentioned, and told her that the company would only pay her the premiums which had been paid, to wit, $1.20, because insured died of pleurisy and tuberculosis, and that she said all right and signed the receipt and received the $1.20.

She had not offered to return this amount and did not make such offer on the trial, though she claims she is not bound by the receipt as a full settlement, since a legal fraud was perpetrated, or what is equivalent to it. Defendant contends that she cannot set up that claim except upon a return of the amount paid her or an offer to do so. But this court in Kyser v. Southern Building & Loan Ass'n, 224 Ala. 673, 141 So. 648, after noting the general rule that it is necessary to return the amount of value received under a contract sought to be rescinded, or offer to do so, referred to an exception which exists when the amount so received is what he was entitled to at all events, and when its retention merely reduces the liability to plaintiff, the defendant admitting it to be due though his defense should prevail.

The only defense here was to the effect that because of the terms of the policy the $1.20 was due and all that was due. So that, on defendant's contention, plaintiff was entitled to retain it and had no duty to return it or offer to do so.

But regardless of the question of whether there was fraud or its equivalent in procuring the receipt as a contract of accord and satisfaction, another inquiry is, whether an accord and satisfaction under those circumstances was supported by a sufficient consideration. In 1 Corpus Juris Secundum, Accord and Satisfaction, p. 504, it is said, "and claim for the full amount of a life insurance policy is not discharged by the acceptance of a sum equal to twice the premiums paid, tendered under the terms of the policy on the theory that the insured committed suicide." It was also said "that a transaction of this character is clearly distinguishable from one in which the whole of a claim or demand is in dispute and there is paid and received in settlement the amount which the debtor believes or concedes to be due or is willing to pay." The case cited of Zinke v. Knights of Maccabees, 198 Mo.App. 399, 200 S.W. 99, supports this text.

This is said to be true notwithstanding the general rule that the acceptance of a part of a single indebtedness with a discharge of the balance is binding only when there is a dispute as to whether there is a balance. 1 Amer.Jur. p. 251; § 64; 1 Corpus Juris Secundum, Accord and Satisfaction, p 512, § 32. In Buel v. Kansas City Life Ins. Co., 32 N.M. 34, 250 P. 635, 52 A.L.R. 367, the principle was applied to double indemnity insurance, when there was never a dispute as to the single indemnity, which was paid. It was said...