American Nat. Ins. Co. v. Coates

• Decision Date: 03 January 1923
• Docket Number: (No. 372-3381.)
• Citation: 246 S.W. 356
• Parties: AMERICAN NAT. INS. CO. v. COATES et al.
• Court: Texas Supreme Court

246 S.W. 356

AMERICAN NAT. INS. CO. v. COATES et al.

(No. 372-3381.)

Commission of Appeals of Texas, Section A.

January 3, 1923.

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

Action by Mary Coates and others against the American National Insurance Company. From judgment for plaintiffs, defendant appealed to the Court of Civil Appeals, which rendered judgment for plaintiff and certified the case to the Supreme Court. Certified question answered.

C. W. Nugent, of Galveston, and Thompson, Barwise, Wharton & Hiner, Alfred McKnight, and F. B. Walker, all of Fort Worth, for appellant.

Slay, Simon & Smith, A. W. Christian, and C. E. McGaw, all of Fort Worth, for appellees.

RANDOLPH, J.

The Court of Civil Appeals for the Second Supreme Judicial District of Texas has submitted to the Supreme Court of Texas the following statement and certified questions in the above-styled cause, and same has been referred to us for consideration and report thereon:

"In the district court of Tarrant county, Tex., Rufus Coates was duly and legally indicted, tried, convicted, and sentenced to be hanged for the murder of Zella Faulk, committed on June 3, 1917, and, in obedience to a warrant from that court, he was legally executed on November 8, 1918. Prior to the commission of that offense, he had obtained from the American National Insurance Company two life insurance policies, each for the sum of $135, the first dated May 4, 1908, and the second dated April 10, 1911. The insurance company was chartered under and by virtue of the laws of the state of Texas, and its principal office and place of business was in Galveston, which was the place of payment of all premiums, and the insured and the beneficiary both resided in Texas. Hence the policies were contracts governed by the laws of this state. Each policy contained these provisions:

"`Incontestability. 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. * * * In event of the death of the insured the company may pay the sum of money due under this policy to the families, heirs, blood relatives, affianced husband or affianced wife, or to persons dependent upon the insured at the time of death and the production by this company of a receipt signed by any or either of said persons shall be conclusive evidence that such sum has been paid to the persons entitled thereto, and that all claims under this policy have been fully satisfied.' * * * `In the event of the death of the insured from suicide, whether sane or insane, within one year from the date hereof, the liability of the company shall be limited to a return of the premiums paid on this policy.' * * * `This policy is issued upon an application which omits the warranty usually contained in applications, and contains the entire agreement between the company and the insured and the holder and owner hereof.' * * *

"At the time of the death of Rufus Coates, all premiums accruing on said policies had been duly paid and the policies were then in full force and effect. After his death, Mary Coates, his mother, and admittedly the rightful and only beneficiary of the policies, duly presented to the insurance company notices of her claims of benefits, and proofs of death, all in compliance with the terms of the policies and the requirements of the statutes applicable thereof. The insurance company refused payment of the amount claimed by the insured, to wit, the sum of $270, which was the aggregate of benefits named in the two policies, but tendered to Mary Coates the sum of $7.70 in full liquidation of the two policies, the amount so tendered being the aggregate of all premiums paid on the policies from the date of the murder of Zella Faulk to the date of the execution of Rufus Coates. That tender was refused by Mary Coates, who, joined by her husband, instituted this suit in the county court against the company to recover the amounts stipulated in the policies, together with statutory interest, penalties, and attorneys' fees for the failure of payment. A judgment was rendered in favor of plaintiff against the company for the amount of the second policy with interest penalties and attorneys' fees, but denying a recovery on the first policy. Both parties duly excepted to the judgment and gave notice of appeal. The defendant has perfected its appeal, and the plaintiff, after replying to defendant's assignments of error, has presented cross-assignments to that portion of the judgment denying her a recovery on the first policy.

"All assignments contained in briefs for the defendant company present the contention that, notwithstanding the incontestable clause in the policies, it would be against the public policy of this state to permit a recovery upon either insurance policy, since the insured came to his death at the hands of the law as a penalty for the commission of a crime; that by reason of such public policy his death, which was legally inflicted for a crime committed, was not an insurable risk, but was excepted therefrom, notwithstanding the clause of incontestability contained in the policies, and notwithstanding that, by the provisions of article 4741 of our statutes, which was enacted in 1909, the company was required to insert that clause in the second policy which was issued after its passage. That defense was presented in the defendant's answer to plaintiffs' petition, and defendant also pleaded the tender of premiums received from the insured.

"The converse of those propositions is the only contention presented in briefs for the plaintiff, both in reply to defendant's assignments, and by cross-assignments to the refusal of the court to allow a recovery on the first policy of insurance, as well as on the second.

"On a former day of its present term, this court overruled the contention so presented by defendant, and sustained the cross-assignment presented by plaintiff to the refusal of the court to allow a recovery on the first policy, as well as the second; and the judgment of the trial court was so reformed as to allow a recovery on both policies. The conclusion reached by this court that neither of the contracts of insurance against the death of Rufus Coates inflicted as a punishment for crime was forbidden by the public policy of this state is in conflict with the decision of the Court of Civil Appeals of the Ninth Judicial District in the case of American Insurance Co. v. Munson, 202 S. W. 987.

"Appellant has filed in this court a motion for rehearing, which is still pending; also a motion to certify to your honorable court the question on which the two courts are in conflict. The latter motion has been granted. Accordingly, by reason of said conflict, and because, aside from such conflict, we deem it advisable so to do, we certify to your honorable court for determination whether or not this court erred in the conclusion reached upon the issue stated above. A copy of our opinion accompanies this certificate."

There are quite a number of cases outside of this state holding that recovery cannot be had upon a life insurance policy where the insured has been convicted and executed for a capital crime (Burt v. Union Central Life Ins. Co., 187 U. S. 362, 23 Sup. Ct. 139, 47 L. Ed. 216; N. W. Mutual Life Ins. Co. v. McCue, 223 U. S. 234, 32 Sup. Ct. 220, 56 L. Ed. 419, 38 L. R. A. [N. S.] 57; Scarborough et al. v. American Nat. Ins. Co., 171 N. C. 353, 88 S. E. 482, L. R. A. 1918A, 896, Ann. Cas. 1917D, 1181; Collins v. Metropolitan Life Ins. Co., 27 Pa. Super. Ct. 353; Ritter v. Insurance Co., 169 U. S. 139, 18 Sup. Ct. 300, 42 L. Ed. 693), but they are based upon the holding in the case of Amicable Society v. Bolland, decided by the House of Lords of England and reported in Bligh N. S. 194-211, or are rendered in cases where there are no constitutional or statutory provisions declaratory of a contrary public policy. The decision in the Bolland Case, supra, was rendered at a time when the laws of England recognized and enforced forfeitures as a punishment for crime, and the declaration of a public policy taken from the laws and decision was in harmony with the...