Bennett v. Royal Union Mut. Life Ins. Co.

• Citation: 112 S.W.2d 134
• Decision Date: 10 January 1938
• Docket Number: No. 18945.,18945.
• Court: Missouri Court of Appeals
• Parties: VIRGINIA C. JOHNSON BENNETT, APPELLANT, v. THE ROYAL UNION MUTUAL LIFE INS. CO., ET AL., RESPONDENTS.

112 S.W.2d 134

VIRGINIA C. JOHNSON BENNETT, APPELLANT, v. THE ROYAL UNION MUTUAL LIFE INS. CO., ET AL., RESPONDENTS.

No. 18945.

Kansas City Court of Appeals. Missouri.

January 10, 1938.

Appeal from the Circuit Court of Pettis County. — Hon. Dimmitt Hoffman, Judge.

AFFIRMED.

Fred F. Wesner and F.M. Ross for appellant.

Montgomery, Martin & Montgomery for respondents.

REYNOLDS, J.

This is an action on a life insurance policy, the petition wherein was filed in the circuit court of Pettis county. The cause was tried in that court: and, from the judgment rendered in that court, this appeal is prosecuted.

The policy — a twenty-payment, life insurance policy for $2,500 — was issued on the life of Robert Johnson, the deceased husband of the plaintiff, on March 10, 1917, in consideration of the payment of annual premiums of $73.63 each agreed to be paid on March 10, of each year. The policy was issued by the Royal Union Mutual Life Insurance Company (hereinafter referred to as the mutual company) afterwards merged with the State Life Insurance Company, forming the Royal Union Life Insurance Company (hereinafter referred to as the union company), which latter company reinsured and took over and assumed all of the liabilities of the policyholders of the said mutual company, including the liabilities under the policy sued upon herein. Thereafter, the union company, by proceedings in the United States District Court in the Central Division of the Southern District of Iowa, was placed in the hands of receivers appointed by that court. Thereafter, the receiver, under the orders of that court, entered into a reinsurance agreement with the Lincoln Life Insurance Company, the defendant herein, by the terms of which such defendant reinsured and assumed all of the life insurance policies of said union company, outstanding and in force on June 3, 1933, including the policy sued upon if in force on that date.

The defendant. Lincoln National Life Insurance Company, expressly denies that such policy was in force at that time or that it assumed any liability on account thereof. Whether it was in force or not and whether the defendant assumed any liability on account thereof are matters to be determined herein upon the record.

The policy contains the following provisions in regard to premium payments:

"Premium Payments: Each premium is due and payable at noon on the dates specified, at the Home Office of the Company; it may be paid elsewhere only to an authorized collector in exchange for the Company's receipt signed by its President or Secretary and countersigned by said collector. Failure to pay any premiums or any note taken therefor, when due and payable, shall cause this policy to cease and determine ...

"Grace in Payment of Premiums: After this policy shall have been in force one year, thirty-one days of grace shall be allowed in the payment of premiums — No agent or collector can extend the time for payment of premiums nor make any binding agreement in relation thereto."

The table of loan values and surrender values contained in the policy shows that, in the sixteenth policy year (which began March 10, 1932), the cash loan and full reserve value of the policy was $790.00.

The plaintiff's evidence shows that Guy W. Peabody was the soliciting agent of the mutual company and had taken the application for the policy in suit and collected the premium thereon; that he continued thereafter as soliciting agent for the union company, after it took over the business of the mutual company, and presumably became such agent for the defendant, Lincoln National Life Insurance company, when it took over the union company; that all premium payments on the policy made after the delivery of the policy and the premium then due thereon was collected were made through him; that, at the time a premium or part thereof was paid by the insured, it was paid to Peabody, who issued his personal receipt therefor to the insured, which was followed by a receipt from the company.

There is no evidence to show that Peabody, in addition to being a soliciting agent for the companies he represented, was their collecting agent, further than the inferences, if any, afforded from the fact that he did, from time to time, collect the annual premiums on the particular policy in question at the dates they became due or within the year for which each was due with the knowledge of his principal and that his act in so doing was approved by it. The policy sued upon provided that the premiums should be paid at the home office of the company.

The transactions about which the controversy in this case centers began around the time the premium due March 10, 1932, fell due. At this time, in addition to the premium then due, it was required that the premiums for the years 1933, 1934, 1935, and 1936 should be paid as they became due before the policy might mature as a twenty-year policy.

At that time, the policy had against it a loan previously executed by the insured in the amount of $162.00 with accrued interest. There was a balance owing on the premium of March 10, 1931; and the entire premium due March 10, 1932, was unpaid. As shown by a loan agreement executed by the insured dated March 28, 1932, the insured negotiated a new loan against the policy in the amount of $789.80, which was sufficient to cover and discharge the old indebtedness against the policy, the amounts owing on the 1931 and 1932 premiums, all interest past due, and interest on the new indebtedness at ____% to March 10, 1933, and for payment in cash to the insured of the sum of $402.55. In consummation of the loan, the company delivered to the insured its check for $402.55, payable to the order of the insured, which check was thereafter endorsed by the insured to Peabody, for which Peabody executed and delivered to the insured his note dated April 6, 1932, for $402.55, payable one year after date with 8% compound interest. The check thus endorsed by the insured was paid by the union company in the usual course. This loan so negotiated, except for a balance of twenty cents, entirely exhausted the cash value of the policy. In the amended answer filed by it in this action, the defendant tendered to the plaintiff such amount.

As to the circumstances which prompted the insured, the plaintiff's husband, to negotiate this loan, the plaintiff testified that Peabody, the company's soliciting agent, had called on her and her husband and had told them that "insurance companies were in pretty bad shape everywhere" and that "some had already stopped issuing cash values;" that "the insurance company was kind in — not just exactly settled" and that "He said they were going into the hands of receiver or something;" that it was best to borrow on the policy; that they could borrow up to the cash value; and that they would then have money with which to pay the four premiums yet to become due for the 1933, 1934, 1935, and 1936 and continue the policy in force and mature it. The insured thereupon applied for a loan amounting to the full cash value of the policy. The application therefor was made up for him by Peabody, and the loan was allowed, and the loan agreement was made March 28, 1932. The policy was assigned by the insured and delivered to the Union company as security for the loan.

It was contended by the plaintiff upon the trial that the check was endorsed over to Peabody in payment in full of the premiums thereafter to become due, respectively for the years 1933, 1934, 1935, and 1936, the payment of which as they became due was required to keep the policy in force and bring it to maturity, and that any balance after the ascertainment of the amount required for the payment of such premiums was to be returned by Peabody to the insured and that the note was given to the insured merely for the purpose of evidencing the receipt of the payment of such premiums by the insured to Peabody. Upon the trial, the plaintiff was permitted to testify to such understanding over the objections of the defendant that, by such testimony, she was attempting to vary by parol the terms of the written contract covering the transaction.

Her testimony upon the trial in her own language is as follows:

"When he — `Peabody' — came out, he said, `the insurance companies were all kinda bad and some that were paying cash values had stopped paying cash values,' and he advised us, the condition we were financially and everything, it would be best to get our money out of the insurance company, `to borrow this to have enough to pay our premiums up for the remaining four years,' that we owed on it and the cash value that we put in he would borrow from the company and have paid the premium up for the four years and — He told us to take our money and pay our four years in advance to the company and we had him write us up this loan... . He fixed the papers for us to get the loan... . Then it was just a matter of a short time and the check came back. I don't think much more than ten days or two weeks. It came to Mr. Peabody and he brought it out to my house, to my husband; it was made out to my husband. I saw the check." It was for "$402.55. My husband endorsed the check and turned it over to Mr. Peabody that very night to pay the four years' premium. That certainly was done in my presence, right there. Mr. Peabody brought the check out, handed to my husband, my husband andorsed it and handed it back to Mr. Peabody. I said something about the receipt and Mr. Peabody brought out a note already fixed up to sign to give us to show in case anything should happen —. He had a note with him to give us for our money. He gave us a note, yes."

"He said about the insurance companies and he didn't know how much the premiums were going to be — whether the same when it went over with this old company. He said they was going into the hands of receiver or something. I don't know what he meant, but he didn't know just how the policy was going to be; he...