Boyle v. Colonial Life Ins. Co. of America

• Decision Date: 07 July 1975
• Docket Number: No. KCD,KCD
• Citation: 525 S.W.2d 811
• Parties: Marie BOYLE, Appellant, v. COLONIAL LIFE INSURANCE COMPANY OF AMERICA et al., Respondents. 26563.
• Court: Missouri Court of Appeals

Page 811

525 S.W.2d 811

Marie BOYLE, Appellant, v. COLONIAL LIFE INSURANCE COMPANY OF AMERICA et al., Respondents.

No. KCD 26563.

Missouri Court of Appeals, Kansas City District.

July 7, 1975.

Motion for Rehearing and/or Transfer Denied Aug. 5, 1975.

Application to Transfer Denied Sept. 8, 1975.

Donald E. Raymond, Kansas City, for appellant.

Lawrence M. Berkowitz, Kansas City, for respondent Colonial; Stinson, Mag, Thomson, McEvers & Fizzell, Kansas City, of counsel.

Don B. Roberson, Kansas City, for respondents Davis; Shugart, Thomson & Kilroy, Kansas City, of counsel.

Before PRITCHARD, P.J., and SWOFFORD and SOMERVILLE, JJ.

SWOFFORD, Judge.

This is an action brought by the widow of one Ernest Boyle, in three counts, in each of which she claims the proceeds of certain life insurance policies issued by the respondent Colonial Life Insurance Company of America (hereinafter called 'Colonial') insuring the life of the said Ernest Boyle and in which the appellant was named beneficiary. She alleges that such policies were in full force and effect at the time of her husband's death on July 24, 1969.

These counts on the insurance policies were joined with a fourth count wherein the appellant, pleading in the alternative, sought damages in the amount of the insurance policies against the Herb Davis Insurance Agency, Inc. and Herb Davis individually (herein referred to collectively as 'Davis'). Basically, this fourth count was bottomed upon allegations of negligence in failing to keep such life insurance in force in accordance with an agreement between Davis and the Boyles.

Colonial filed its answer to the petition, wherein it admitted the issuance of said insurance contracts, but set up as a defense the alleged fact that each of said insurance contracts 'was lapsed and forfeited for non-payment of premiums at the time of the death of Ernest W. Boyle.'

Davis filed a joint and separate answer to the petition, admitting that Herb Davis is a 'duly licensed insurance agent' of Colonial and the issuance of the insurance contracts, but generally denying the allegations of Count IV of the petition and further alleging that if the policies sued on 'were not in force and effect' then Colonial 'is estopped to deny their issuance and the coverage' thereunder. Coupled with this answer, Davis filed a cross-claim against Colonial in two counts. This cross-claim asserts that if Davis is held liable to appellant, Davis is entitled to indemnity for such loss and recovery from Colonial because of Colonial's wrongful conduct in several particulars by reason of its handling of such policies and its failure to notify either Davis or the insured of any lapse.

Colonial filed its answer to the Davis cross-claim, in the nature of a general denial. Coupled with this answer, it in turn filed its cross-claim against Davis admitting that at all times mentioned, 'Davis and The Agency were the duly authorized agents of Colonial Life'. Liability on the insurance contracts was again denied, but if such was found to exist, Colonial asserted it was entitled to indemnification from Davis because in arranging financing of the insurance premiums and in accepting premium payments on the insurance, Davis acted outside the scope and contrary to his authority as agent of Colonial and negligently failed to pay the premiums due on said policies in September, 1968.

The Davis reply to Colonial's cross-claim was in the nature of a general denial.

The appellant filed a reply to Colonial's answer, in which she set forth the whole legal and factual theory of her action on the policies. These allegations need not be set out in detail but may be thus summarized: first, by reason of Colonial's lapsing the policies prior to its insured's death for alleged failure to pay the premiums due for the period from September, 1967 to September, 1968 (which premiums had in fact been paid), the insured was relieved and excused from any obligation to pay further premiums, and since Colonial had asserted the same reason for its denial of the death claims, it is estopped to refuse payment for the asserted failure to pay any subsequent premiums; second, that the original wrongful lapse of the policies by Colonial caused appellant to expend time and attorneys' fees to prove that the action of lapsing the policies was wrongful and Colonial is estopped to assert any other or different defenses to appellant's claims; third, that Davis was clothed with the actual and apparent authority as agent for Colonial to make arrangements for the financing of the premiums with the insured, to accept premium payments on behalf of Colonial, and that it was the custom and practice of Colonial to give its soliciting agent and its insured notices of premiums due and lapse notices, which it had failed to do, and is thus estopped and precluded by such failure; fourth, that the premiums due for the period of September, 1968 to September, 1969, had in fact been paid to Colonial by the execution of the financing papers (invoice contract) in July 1968; fifth, that the premiums for the period from September, 1969 to September, 1970, had been paid to Colonial, acting through its agent Davis, and Colonial is therefore estopped to assert nonliability because of nonpayment of premiums due prior to September, 1969.

With the issues thus drawn, the cause proceeded to trial, and at the conclusion of appellant's evidence the trial court sustained motions for directed verdicts as to both Colonial and Davis. The trial court, so far as the record shows, stated no reasons for this action. After an unavailing motion for a new trial, appellant perfected this appeal.

The action of the trial court in granting the motions for directed verdicts at the close of the plaintiff's evidence is a drastic one and 'should be done only when all of the evidence and the reasonable inferences to be drawn therefrom are so strongly against plaintiff that there is no room for reasonable minds to differ.' McCarthy v. Wulff, 452 S.W.2d 164, 168(3) (Mo.1970); Smith v. prudential Insurance Company of America, 300 S.W.2d 435, 440(3) (Mo.1957); Baumle v. Smith, 420 S.W.2d 341, 344(3) (Mo.1967); Wehrkamp v. Watkins Motor Lines, Inc., 436 S.W.2d 698, 700(1) (Mo.1969).

Another principle of law firmly implanted in this state is, that in a suit to collect the proceeds of a life insurance contract, the plaintiff makes a prima facie case by proving the issuance of the policy by defendant, payment of one premium, beneficiary designation, death of insured, demand for payment, and refusal thereof. Connor v. United Insurance Co., 313 S.W.2d 222, 224(5) (Mo.App.1958); Saunders v. Crusader Life Insurance Company, 421 S.W.2d 563, 567(5) (Mo.App.1967).

Equally well defined in law is the fact that affirmative defenses to suits upon insurance contracts, including the defense of lapse and forfeiture for nonpayment of premiums, as is asserted in the case at bar, must be pleaded, Connor v. United Insurance Company, 313 S.W.2d 222, 225(6) (Mo.App.1958), and the burden of proof on such issue is on the defendant, Stout v. Independent Order of Foresters, 115 S.W.2d 32, 35(3) (Mo.App.1938); Clair v. American Bankers Ins. Co., 137 S.W.2d 969, 973(7) (Mo.App.1970); Saunders v. Crusader Life Insurance Company, supra, and such burden remains with the defendant throughout the case, Gennari v. Prudential Insurance Company of America, 335 S.W.2d 55, 60(2) (Mo.1960).

Once the plaintiff has established his prima facie case, it is the ancient and general rule that his case cannot be taken from the the jury 'for he has the right to have the jury pass on the credibility of the defendant's witnesses and the weight of their testimony', Peterson v. Chicago & A. Ry. Co., 265 Mo. 462, 178 S.W. 182, 187--188(3) (1915); Smith v. Prudential Insurance Company of America, 300 S.W.2d 435, 440(3) (Mo.1957). In Smith, the court notes an exception to this general rule and states it in these terms (l.c. 440):

'* * * When the proof is documentary, or the defendant relies on the plaintiff's own evidential showing (or evidence which the plaintiff admits to be true), and the reasonable inferences therefrom all point one way, there is no issue of fact to be submitted to the jury. * * *' (Emphasis supplied)

In the case of Thrower v. Life and Casualty Ins. Co. of Tennessee, 141 S.W.2d 192 (Mo.App.1940), the court declared, l.c. 195(4, 5):

'The burden of proving the affirmative defense pleaded by defendant was upon defendant. * * * It is the established rule in this State that, where plaintiff has made out a prima facie case, it is beyond the power of the trial court to direct a verdict in favor of defendant where defendant has the burden of establishing an affirmative defense, unless such defense is conclusively established by evidence which is conceded by plaintiff to true, or is established by documentary evidence which is of such a character as to be binding upon plaintiff and thereby to estop him from denying it.' (Emphasis supplied)

In reviewing the action of a trial court in ruling on defendant's motion for a directed verdict (whether ruled at the close of plaintiff's evidence or at the close of all the evidence, and whether sustained or overruled) the reviewing court must determine whether plaintiff made a submissible case, and in so doing, the plaintiff is entitled to the most favorable view of all the evidence and must be given the benefit of all favorable inferences to be drawn therefrom. Duke v. Missouri Pacific Railroad Company, 303 S.W.2d 613, 616(1) (Mo.1957); Willis v. Wabash Railroad Company, 377 S.W.2d 489, 492(1) (Mo.App.1964); Hale v. Kansas City Southern Railway Co., 363 S.W.2d 542, 543(1) (Mo.1963); Grissom v. Handley, 410 S.W.2d 681, 684--685(2) (Mo.App.1966).

An important corollary of this principle is that where a trial court has directed a verdict for the defendant at the close of plaintiff's evidence, the 'plaintiff may urge any and all possible theories of...