Atlas Life Ins. Co. v. Standfier

• Decision Date: 23 September 1935
• Docket Number: No. 4467.,4467.
• Citation: 86 S.W.2d 852
• Parties: ATLAS LIFE INS. CO. v. STANDFIER.
• Court: Texas Court of Appeals

86 S.W.2d 852

ATLAS LIFE INS. CO. v. STANDFIER.

No. 4467.

Court of Civil Appeals of Texas. Amarillo.

September 23, 1935.

Rehearing Denied October 21, 1935.

Appeal from District Court, Lubbock County; Clark M. Mullican, Judge.

Action by Fred Standfier against the Atlas Life Insurance Company. Judgment for plaintiff, and defendant appeals.

Affirmed.

Bean, Duggan & Bean, of Lubbock, for appellant.

McWhorter & Howard, of Lubbock, for appellee.

HALL, Chief Justice.

The appellant insurance company issued its policy for $5,000 on March 8, 1932, upon the life of Mrs. Lula Standfier, the wife of appellee. The policy provided that in the event of her death two-fifths of the amount due should be paid to appellee, her husband, and one-fifth to each of her three children. The wife died on September 23, 1933, at Lubbock, Tex.

The appellee filed suit, alleging that the other named beneficiaries, viz., the children, were not made parties because they were bona fide residents of the state of Oklahoma and beyond the jurisdiction of the court, and that the policy was issued under the laws of the state of Texas. He alleged that notice of death and demand were duly made; that the appellant denied liability, whereby he was forced to employ attorneys to file this suit, and promised to pay them $750, which was a reasonable fee. He prayed for judgment for two-fifths of the policy, viz., $2,000, with interest, $750 attorney's fee, 12 per cent. penalty, and costs of suit.

The appellant answered by plea in abatement, alleging the pendency of a prior action between the appellant and all of the named beneficiaries, including appellee, in the district court of Haskell county, Okl.; that the purpose of said suit was to cancel said policy upon the ground of fraud and misrepresentation as to the state of assured's health. Appellant also alleged the nonjoinder of necessary parties plaintiff in the appellee's suit filed in Lubbock county, Tex.

The court overruled the plea in abatement, and the appellant duly excepted.

Appellant then answered by a general demurrer, three special exceptions, the first two of which attacked the appellee's right to recover attorney's fees and 12 per cent. penalty without the allegation of necessary facts to show liability therefor upon the part of appellant. The answer further consisted of a general denial and a special denial of liability for attorney's fees and the 12 per cent. penalty, alleging that at the time application was made for the insurance both appellant and the insured were residents of the state of Oklahoma; that by the terms of such policy it was made payable at the home office of the appellant in Tulsa, Okl.; that it became effective only when it was accepted by an executive officer of the appellant at Tulsa, thereby becoming a contract governed by the laws of the state of Oklahoma, which laws provide that there can be no recovery of attorney's fees or penalties; and that its rights were not subject to the laws of the state of Texas. The appellant further specially answered that before two years had elapsed after the execution of the policy, it instituted suit in Haskell county, Okl., against the appellee herein and the other named beneficiaries to cancel said policy on the ground of fraud; that the other named beneficiaries were personally served with process in Oklahoma, and the appellee was cited by publication according to the laws of Oklahoma and in that way was served in Lubbock county; that thereafter, on August 23, 1934, judgment was rendered in the Oklahoma court in favor of appellant against appellee, canceling the appellee's interest in said policy, and declaring the same null and void, and appellant pleaded said judgment as res judicata. The appellant pleaded that the law of Oklahoma authorized the issuance of citation against a nonresident defendant who is a necessary party to a complete determination of the issues involved, and also pleaded the laws of Oklahoma with reference to such a judgment being final and binding upon the appellee.

It is further alleged that at the time the application for the policy was issued, and contrary to statements contained therein, the insured was afflicted with tuberculosis and had consulted a physician for such ailment, and therefore such answers were false and fraudulent and were made by the assured to procure such insurance; that they were material to the risk and made with the knowledge that appellant would rely thereon, which it did, in issuing the policy; that when it was informed that the insured was suffering from such ailment it gave notice that it would not be bound by such policy and tendered to the insured all premiums theretofore collected, with interest, and prayed cancellation of such policy upon the grounds of such fraud and misrepresentation.

The trial court sustained the appellee's special exceptions to the appellant's defense of res judicata, and overruled its exceptions to the claim for attorney's fees and penalty. The case was submitted to a jury upon three special issues, which, with the answers, are as follows:

"1. Do you find from the preponderance of the evidence that Mrs. Lula Standfier misrepresented her state of health in her application for insurance under the policy in question?"

Answer: "No."

"2. Do you find by a preponderance of the evidence that when the company accepted the last premium payment on or about March 8, 1933 it then knew the condition of health of Mrs. Standfier on the date the policy was issued to her?"

Answer: "Yes."

"3. What do you find by a preponderance of the evidence is a reasonable attorney's fee in this case?"

Answer: "$625.00."

Based upon the verdict and the undisputed testimony and stipulations, judgment was entered in favor of Fred Standfier against the appellant for $2,985, with 6 per cent. interest thereon from date until paid.

The first contention to be considered is that because at the time the application for the policy was executed, and at the time it was issued and delivered, both the insured and appellant were residents of the state of Oklahoma, where said policy was expressly made payable, it was error for the trial court to render judgment for attorney's fees and statutory penalty under the Texas statute, article 4736, as amended by Acts 42nd Leg., c. 91, § 1 (Vernon's Ann. Civ. St. art. 4736), and contrary to the laws of Oklahoma which had been pleaded and proven.

R. S. art. 5054 is: "Any contract of insurance payable to any citizen or inhabitant of this State by any insurance company or corporation doing business within this State shall be held to be a contract made and entered into under and by virtue of the laws of this State relating to insurance, and governed thereby, notwithstanding such policy or contract of insurance may provide that the contract was executed, and the premiums and policy (in case it becomes a demand) should be payable without this State, or at the home office of the company or corporation issuing the same."

The record shows that the appellant company was doing business as a life insurance company in the state of Texas and within the provisions of article 5054. H. C. Walker, its agent who solicited the appellee for insurance, resided at Paris, Tex. Dr. Robinson, its medical examiner, also was a resident of Texas, and examined Mrs. Standfier in Texas. The policy was delivered in this state, and, under its own provisions, did not become binding until actual delivery and upon payment of the premium. The premium was paid in Texas to Walker, appellant's Texas agent. The policy provides that the premium might be paid to any agent of the company, and it required the assured to state as one of her representations that she had paid to Walker, as agent of the company, $117.35 for which amount the record shows she held the agent's receipt, witnessed by him as soliciting agent.

Article 4736, as amended by the Acts of the 42nd Legislature, (Vernon's Ann. Civ. St. art. 4736), provides: "In all cases where a loss occurs and the life insurance company, or accident insurance company, or life and accident, health and accident, or life, health and accident insurance company liable therefor shall fail to pay the same within thirty days after demand therefor, such company shall be liable to pay the holder of such policy, in addition to the amount of the loss, twelve per cent damages on the amount of such loss together with reasonable attorney fee for the prosecution and collection of such loss. Such attorney fee shall be taxed as a part of the costs in the case. The Court in fixing such fees shall take into consideration all benefits to the insured incident to the prosecution of the suit, accrued and to accrue on account of such policy."

Article 5054 has been construed several times by the higher courts of this state and, too, in cases where the policy provides that in the event of the death of assured settlement shall be made in a state other than Texas, and that the premiums shall be paid elsewhere than in Texas. The courts of Texas, however, have uniformly held that under the facts which we have quoted above and especially as to the delivery of the policy in this state, article 5054 governs the rights of the parties, and this is true even in group insurance. Metropolitan Life Ins. Co. v. Worton (Tex. Civ. App.) 70 S. W. (2d) 216, 217; Metropolitan Life Ins. Co. v. Wann (Tex. Civ. App.) 81 S. W.(2d) 298; Connecticut General Life Ins. Co. v. Dent (Tex. Civ. App.) 84 S. W.(2d) 250.

24 Tex. Jur. p. 17 announces the rule with reference to the delivery of the policy to be as follows: "For the purpose of the general rule, the place where the contract is made is that where the final act is performed which is necessary to its completion and to make it binding upon both parties. Accordingly, where a policy is not to be in effect until delivery, its validity is to be determined by the rules of the place in which delivery is made." Nat'l Life & Accident Ins....