American Nat. Ins. Co. v. Tabor

• Decision Date: 20 April 1921
• Docket Number: (No. 2851.)
• Citation: 230 S.W. 397
• Parties: AMERICAN NAT. INS. CO. v. TABOR.
• Court: Texas Supreme Court

230 S.W. 397

AMERICAN NAT. INS. CO. v. TABOR.

(No. 2851.)

Supreme Court of Texas.

April 20, 1921.

Certified Question from Court of Civil Appeals of Second Supreme Judicial District.

Action by Mrs. Kate Tabor against the American National Insurance Company.

From judgment for plaintiff, defendant appealed to the Court of Civil Appeals, which affirmed, and certifies a question to the Supreme Court. Question answered for plaintiff in accordance with the opinion.

Lattimore, Cummings, Doyle & Bouldin, of Fort Worth, for appellant.

Martin & Smith and W. C. Prewitt, all of Fort Worth, for appellee.

GREENWOOD, J.

The facts stated in the certificate of the honorable Court of Civil Appeals may be summarized as follows:

Appellant issued a policy of insurance on the life of Edward L. Tabor for $210, payable to appellee, his wife, bearing date March 6, 1911. The policy stipulated for weekly payments of premium in the sum of 25 cents each. The age of Edward L. Tabor was shown on the face of the policy as 64 years.

According to appellant's insurance rates, a weekly premium of 25 cents would purchase insurance in the sum of $210 upon the life of a person at the age of 48 years, and would purchase insurance in the sum of only $85 upon the life of a person at the age of 64 years. The correct age of Edward L. Tabor was 64 years.

The policy contained these stipulations:

"If the age of the insured is not correctly stated herein no greater amount will be paid than the premium herein would have purchased at the true age."

"This policy shall be incontestable after two years from its date of issue for the amount due provided premiums have been duly paid, except for fraud."

Edward L. Tabor died on April 2, 1913, having paid all installments of premium on his policy at the rate of 25 cents per week.

Appellee sued appellant to recover the insurance of $210, besides interest, penalty, and attorney's fee.

Appellant tendered $85 in discharge of its obligation under the policy, averring that Edward L. Tabor had stated his age to be 48 years in his application for insurance; that the policy was issued by appellant in reliance on that statement; that the policy, as issued, showed the age of Edward L. Tabor to be 48 years; and that the policy was afterwards fraudulently changed in such a way as to show the insured's age to be 64 years.

In replication to the facts set up by appellant, appellee pleaded that appellant knew when it issued the policy and when it accepted premium payments that the policy showed Edward L. Tabor to be 64 years of age, and that the policy was incontestable on any ground relied on by appellant at the date of the death of the insured.

The case was tried by a jury, who returned a special verdict to the effect that the age 64 was written in the policy when it was delivered by appellant's agent to the insured, that the jury did not know whether the insured's age was stated to be 48 years in the application on which the policy was issued, and that the age of the insured was not understated in the policy.

The trial court rendered judgment for appellee against appellant for $210, interest, penalty, and attorney's fee. The Court of Civil Appeals first reformed the judgment of the trial court so as to allow appellee to recover only $85. On rehearing the trial court's judgment was affirmed, Associate Justice Dunklin dissenting.

As we construe the certificate, the question propounded to us is: Had the policy become incontestable for $210 under subdivision 3 of article 4741 of the Revised Statutes, or was the policy unenforceable for any greater amount than the premiums paid would have purchased at the insured's true age, by reason of the prohibition in article 4954 against discrimination among policy holders in charges for insurance?

Appellee filed a motion to dismiss the certificate upon the ground that article 1620 of the Revised Statutes did not authorize the Court of Civil Appeals to certify a point of dissent in cases of which that court was given final jurisdiction. The motion was overruled, because we were advised by the Court of Civil Appeals that the question of law which was certified was one which the court deemed it advisable to present, under article 1619, to the Supreme Court for its adjudication. Our authority to answer such a question is established by the settled construction of the statutes, though the case in which the question arises falls within the final jurisdiction of the Court of Civil Appeals. Wallis v. Stuart, 92 Tex. 572, 50 S. W. 567.

Among the provisions which the Legislature has required to be substantially included in policies of life insurance to be issued or delivered in this state, or to be issued by life insurance companies organized under the laws of the state, are:

"3. A provision that the policy, or policy and application, shall constitute the entire contract between the parties and shall be incontestable not later than two years from its date, except for nonpayment of premiums; and which provision may or may not, at the option of the company, contain an exception for violations of the conditions of the policy relating to naval and military services in time of war. * * *

"5. A provision that, if the age of the insured has been understated, the amount payable under the policy shall be such as the premium paid would have purchased at the correct age."

R. S. art. 4741.

The policy before us departs from subdivision 3 in that it allows the insurer to contest same for fraud, after two years though all premiums have been paid. It was the obvious purpose of subdivision 3 to prescribe two years as a maximum period of limitation, after which no defense should be allowed to defeat payment of the policy, except nonpayment of premiums, or violations of conditions relative to naval or military services during war. The subdivision allows the insuring company to fix a period of time, not to exceed two years, during which it may make fully available to itself all the legal consequences of fraud which ought to be discovered through the exercise of proper diligence; but, after the expiration of the period fixed, the subdivision eliminates all defenses, save those specially mentioned.

The parties could not, by contract, put something into the policy which was repugnant to the mandatory statute, and thus destroy a benefit to the insured which the statute was designed to guarantee. Hence the attempted reservation by the insurer of the right to interpose fraud by way of defense to a suit to enforce payment of the policy after it had been issued more than two years was void.

If the policy had accurately followed subdivision 5 of article 4741, this case might be determined on different...