Butler v. Missouri Ins. Co.

• Decision Date: 17 April 1945
• Docket Number: No. 26797.,26797.
• Citation: 187 S.W.2d 56
• Parties: BUTLER v. MISSOURI INS. CO.
• Court: Missouri Court of Appeals

187 S.W.2d 56

BUTLER v. MISSOURI INS. CO.

No. 26797.

St. Louis Court of Appeals. Missouri.

April 17, 1945.

Rehearing Denied May 15, 1945.

Appeal from St. Louis Circuit Court; Ernest F. Oakley, Judge.

"Not to be reported in State Reports."

Action by Ruth Butler against the Missouri Insurance Company to recover an amount claimed to be due on an insurance policy upon the life of plaintiff's deceased husband. Judgment for plaintiff, and defendant appeals.

Affirmed.

Jones, Hocker, Gladney & Grand, Orville C. Winchell, and Vincent L. Boisaubin, all of St. Louis, for appellant.

John A. Davis, of St. Louis, for respondent.

HUGHES, Presiding Judge.

The case originated in a justice of the peace court by plaintiff filing her petition which alleged the issuance by the defendant of its policy for $500, which is dated November 24, 1941, to and upon the life of John H. Butler, her husband; the death of the insured on July 31, 1942; that following the insured's death the defendant paid to the plaintiff the sum of $300 and that there was a balance of $200 due and owing by the defendant to the plaintiff under said policy, for which amount plaintiff prayed judgment, together with the sum of $20 and interest as a penalty and $100 as an attorney's fee because of the alleged vexatious refusal of the defendant to pay to the plaintiff the balance of $200 claimed to be due and owing by it under said policy.

No other pleadings were filed in the justice court; however, after appeal by the plaintiff from an adverse judgment in the justice court, the defendant filed an answer in the circuit court which admitted the issuance of the policy and the death of the insured on July 31, 1942, and further affirmatively alleged that the policy provided that it should not take effect unless upon its date the insured was alive and in good health; that the insured was not in good health on November 24, 1941, when said policy was issued but was then afflicted with a disease of the heart and kidneys which caused or contributed to the insured's death on July 31, 1942; that in his application for said policy on November 11, 1941, the insured stated and represented that he was in good health; that he had never had any disease of the heart or kidneys; that these statements and representations were false; and that the insured at the time of said application and prior thereto was afflicted with a disease of the heart and kidneys.

The answer further affirmatively alleged that following insured's death a dispute and controversy arose between the plaintiff and the defendant as to the defendant's liability under said policy because and by reason of the foregoing, as a result of which the plaintiff and defendant agreed to settle and compromise the claim of plaintiff under said policy by the payment to the plaintiff of the sum of $300, and that thereupon and on August 27, 1942, plaintiff, in consideration of the payment to her by the defendant of the sum of $300, executed and delivered to the defendant a written release of all claims under said policy. A verified copy of this release was attached to said answer.

The reply of the plaintiff was in the nature of a general denial.

Plaintiff testified on her own behalf at the trial that following insured's death she called at defendant's office and was advised by the manager of its Claim Department, Mr. Suter, that because her husband had not been insured for two years she would have to take $250; that she explained to him that $250 wouldn't help her at all, because she had to pay bills for funeral expenses, insurance, furniture, rent, electricity and so forth, and she wasn't working, that she had two little babies, one just two months old at the time, and that Mr. Suter thereupon told her the company would pay her $300, which she accepted, and signed the release, but she did not know what she was signing for; that she knew she had to have the money; that she hadn't any food for her babies; that her babies needed milk and everything; that if they had just given her $50 she would have been compelled to take it, but that later on she demanded the additional sum of $200 under the policy, which the defendant declined to pay. She further testified that her husband had been examined by one of the Company physicians at the time the policy was issued and that his health was in good condition; that the only excuse or reason given her for why the Company wouldn't pay the $500 was that her husband hadn't been in the Company two years; that Mr. Suter said he would have to be in that long before the policy was in full benefit, or something. She further said that her husband was working up until the time of his death; that he quit work on Friday and died the next Friday; that he wasn't sick at all until he took this illness on Friday. She said: "My husband never was sick and never had a doctor at all until the Missouri Company doctor examined him the whole time we were together."

Plaintiff then introduced in evidence the policy with a copy of the application thereto attached.

In his application for the policy on November 11, 1941, insured stated that he was in sound health, that he had never had heart disease or high blood pressure, or albumin or sugar in the urine.

The policy in suit recites that it is issued in consideration of the application thereof and that the policy should not take effect until the first premium was paid and the policy actually delivered to the insured during his lifetime and good health. The policy contained a two-year incontestable clause.

Plaintiff's attorney testified that a fair attorney's fee in the case would be $100.

The foregoing was all the evidence introduced by the plaintiff.

Mr. Suter, the manager of the defendant's Claim Department, testified on defendant's behalf that plaintiff called to see him on August 27, 1942, and at that time she furnished him with a copy of the official death certificate of the insured's death. This certificate, which was introduced in evidence as Defendant's Exhibit 2, gives the immediate cause of death as follows: "Hypertensive and coronary arteriosclerotic heart disease, cardiac enlargement and myocardial insufficiency, and nephritis, chronic, with nitrogen retention."

The duration of the diseases was marked "unknown".

Mr. Suter testified: "Mrs. Butler came to my office, I told her we would have to make a further investigation, and she told me at the time that she was in such destitute circumstances, that she had two sick babies at home and she had been sick herself, and she was highly nervous, and we sat there and talked a while; I asked her what she would be satisfied with, what she thought would be a fair settlement, it being a borderline case, if we made an investigation. She said she didn't know, she felt like she should have it all. I said, `There are certain things here that are unknown, I should like to make a further investigation.' She told me at the time she needed money so bad, that the funeral bill had not been paid and the children were without food and milk and that she herself was very ill. I said, `Well, suppose we just split it in two and I give you half of it, that will avoid any litigation or anything.' She said, `No, by the time I paid the funeral bill and everything that wouldn't leave us anything to get anything to eat with.' I said, `What about three hundred; would you be satisfied with that?' and she said, `Yes.'"

Mr. Suter further testified: That he did not make any further investigation, and considered it a closed incident; that he did not know whether the insured was examined by a Company doctor before the policy was issued; he said, "There was no investigation made; I don't know whether the man was ever treated before the policy or not, I didn't go any further with the investigation at the time, just filed it away." He further said, "I never made any investigation after that to see whether or not there was any medical examination made or whether he had ever been treated for anything prior to the date of the policy or even after. Those diseases, in my opinion, when adjusting claims, couldn't develop in that length of time; those diseases are chronic, usually run longer, its possible but hardly plausible; it was just my opinion." He further testified as to his reason for paying the $300, that the beneficiary was crying at the time, and he paid it to help her and at the same time it would avoid expense of making an investigation or probably denying liability and litigation later.

The foregoing was all the evidence introduced at the trial.

The case was tried to the court, a jury having been waived.

The trial court found in plaintiff's favor for the sum of $200 with interest thereon from August 1, 1942, amounting to $16.50, together with $20 as a penalty and $100 as an attorney's fee for the vexatious refusal of the defendant to pay the sum of $200 due and owing by it under said policy. And total judgment was entered for $336.50.

The law applicable to cases wherein the defense is a release of liability executed upon payment made under an alleged compromise agreement of a lesser amount than the liquidated claim, is so thoroughly reviewed by this court in the recent case of Foster v. Aetna Life Insurance Co. of Hartford, Conn., Mo.App., 169 S.W.2d 423, and in the same case by the Supreme Court (Mo.Sup., 176 S.W.2d 482), wherein the principles of law involved were the same as here, that we are compelled to follow the reasoning and law as stated in those opinions.

The rule as tersely stated by the Supreme Court is that "release of a liquidated claim on payment of only a part thereof is not binding without an independent consideration, but that a dispute as to liability, made in good faith after reasonable investigation, will furnish a valid consideration". Thus the rule is that such consideration must be based not only upon a dispute as to liability, but the dispute must be in good faith, and after a reasonable...