Cherokee Life Ins. Co. v. Brannum

• Court: Alabama Supreme Court
• Writing for the Court: THOMAS, J.
• Citation: Cherokee Life Ins. Co. v. Brannum, 203 Ala. 145, 82 So. 175 (Ala. 1919)
• Decision Date: 17 April 1919
• Docket Number: 8 Div. 148
• Parties: CHEROKEE LIFE INS. CO. v. BRANNUM.

82 So. 175

203 Ala. 145

CHEROKEE LIFE INS. CO. v. BRANNUM.

8 Div. 148

Supreme Court of Alabama

April 17, 1919

Rehearing Denied May 22, 1919

Appeal from Circuit Court, Madison County; Robert C. Brickell Judge.

Action by John B. Brannum against the Cherokee Life Insurance Company on a life insurance policy. Judgment for plaintiff and defendant appeals. Reversed and remanded.

The second replication contains the receipt referred to in the opinion, and is as follows:

(2) On said 26th day of October 1916, the defendant, by and through its duly authorized agent Charles B. Tarr, signed and delivered to the plaintiff an instrument in writing in words and figures as follows:

"This receipt is not valid for more than first year's premium nor in excess of a premium on $25,000.00 of insurance. This receipt must not be altered. The settlement as shown herein must correspond in amount with the settlement as shown in the application of corresponding number signed by the applicant.

"Received of John S. Brannum, at Owen's X Roads state of Alabama, this 26th day of October, 1916, the sum of seventy-eight and 08/100 dollars, in connection with his application for insurance in the Cherokee Life Insurance Company, said application corresponding in date and number with this receipt and containing said applicant's declaration that he paid the sum hereby receipted for, and that he assents to the terms of this receipt, as follows, to wit:

"First, that if a policy be delivered on said application said company shall accept this receipt as cash towards the payment on the first premium of said policy.

"Second, that if the company fails to offer to deliver a policy on said application within ninety days from this date and if such failure is not attributable to the applicant's neglect or refusal to comply with the company's rules, regulations and requirements as to medical examination and other customary requirements in acting upon application for insurance (and only on this event) the company will return said sum to the applicant upon surrender of this receipt, otherwise the payment will be retained by the company in consideration of this trouble and expense incurred on account of this application.

"Third, that if said company will within ninety days from this date offer to deliver to said applicant a policy of insurance on the plan applied for and said sum in consideration of the trouble and expense it shall have incurred on account of said application," etc.

"Fourth, that this receipt will not be valid for any sum in excess of the sum declared by said applicant in his said application to have been paid. It will not be valid if issued after December 31, 1916. It will not be valid if any erasures or additions have been made in printed form.

"Fifth. That this receipt is nonnegotiable and cannot be assigned or transferred.

"Sixth. If full settlement has been made with this application the insurance will be in force from the date of approval of the completed application by the company medical adviser.

"Seventh. No conditions or agreements other than those printed herein and in the application shall be binding. Conditions on back of this receipt a part of same, as if printed herein.

"[Agent must sign here] Chas. B. Tarr, Agent. No. 46397. AC. Chas. B. Tarr. R.R. Guice. Cherokee Life Insurance Company. Gadsden, Alabama."

On the back is found the following in writing:

"The agent is not authorized to give this receipt to the persons exceeding the limit of height and weight indicated in the table below or to those who have been rejected by another company or who are not in good health."

And plaintiff alleges that full settlement was made with said application by said agent taking the notes of said plaintiff for the premium one for $50 due on delivery of the policy and the other for $28.08 due on January 15, 1917, both of which were paid when due and payment accepted by the defendant and said policy delivered to plaintiff. And plaintiff further alleges that said completed application for insurance was approved by the defendant's medical director on the 4th day of January, 1917, which was prior to the death of said Bertha Brannum.

Hood & Murphree, of Gadsden, and Cooper & Cooper, of Huntsville, for appellant.

R.E. Smith and Spragins & Speake, all of Huntsville, for appellee.

THOMAS J.

The suit was upon a policy of life insurance in Code form, and resulted in judgment for the plaintiff.

Defendant's pleas were: (1) A denial of liability under its policy; (2) that the application which is made a part of the contract provides that the policy shall not become effective "until the first premium is paid and the policy delivered to and received by the applicant during her life and good health"; that the insured died before the payment of the first premium and before the policy was delivered; (3) that the policy was not delivered until after the death of the insured, of which defendant did not know, at the time of delivery of the policy; (4) that the policy was procured to be delivered by the fraud of the plaintiff in withholding (before and at the time of that delivery) information of insured's death.

Defendant's demurrers to the several replications were overruled, and this ruling is duly assigned as error.

Were the replications full answer to the several pleas? Referring to the specific averments of the latter, "the replication for the insurance policy which is made a part of the policy here sued on" was a part of the policy as required by the statute and its construction by this court. Code 1907, § 4579; Prudential Casualty Co. v. Kerr, 80 So. 97; Mut. Life Ins. Co. v. Lovejoy, 78 So. 299, 301, L.R.A.1918D, 860; Norris v. N.E. Mut. Life Ins. Co., 73 So. 377; Pac. Mut. Life Ins. Co. v. Hayes, 76 So. 12; Locomotive Engrs. Mut. L. & A. Ins. Asso. v. Hughes, 77 So. 352; Supreme Ruler, etc., v. Darwin, 79 So. 259; Ill. Surety Co. v. Donaldson, 79 So. 667, 670; Eminent Household of Col. Woodmen v. Blackerby, 78 So. 821. Of this written contract of insurance with the application therefor expressed therein, it is averred that the contract stipulated that "said policy should not take effect until the first premium is paid and the policy delivered to and received by the applicant during her lifetime and in good health," and pleas 2 and 3 aver that the policy was not so delivered during the life and good health of Mrs. Brannum, but after her death, and (plea 3) of which fact the defendant did not know at the time of the delivery of said policy. The fourth plea avers that--

"The application for the policy sued which is made a part hereof and was signed by the assured stipulates that the policy should not take effect until the first premium is paid and the policy delivered to the applicant during her lifetime and good health, and *** that said premium had not been paid and the policy delivered when the insured died, but that the policy was procured to be delivered by the fraud of the plaintiff in this, that plaintiff, after the death of the insured, called up the defendant by long distance phone, and asked that said policy be delivered, and concealed from the defendant the fact that the insured was then dead, and thereby induced the defendant to forward said policy attached to a draft for the first premium to the bank of New Hope to be delivered on the payment of the draft, and thereafter plaintiff paid said draft and secured the policy before defendant had any knowledge of the death of the insured, and gave no notice thereof until several

days after her death and until he had secured and delivered the policy as above stated."

Plaintiff took issue on these pleas. Further replying to pleas 2, 3, and 4, he said that on the date of the application for insurance (October 26, 1916) the defendant through its authorized agent signed and delivered to the plaintiff an instrument in writing, known in insurance law as a "binding slip or memorandum" (Sun Ins. Office of London v. Mitchell, 186 Ala. 420, 427, 65 So. 143), which is embodied in the replications and will be set out by the reporter. It is recited and stipulated in this receipt that there had been received of John S. Brannum, on "this 26th day of October, 1916, the sum of seventy-eight and 8/100 dollars, in connection with his application for insurance in the Cherokee Life Insurance Company, said application corresponding in date and number with this receipt and containing said applicant's declarations that he has paid the sum hereby receipted for, and that he assents to the terms of this receipt, as follows, to wit: First, that if a policy be delivered on said application, said company shall accept this receipt as cash towards the payment of the first premium of said policy. *** Sixth, if full settlement has been made with this application the insurance will be in force from date of approval of the completed application by the company's medical director" (italics supplied). Plaintiff further replied to said pleas (2, 3, and 4) by the additional averment (replications 4 and 5) that--

"The defendant did not, prior to the death of said Bertha Brannum, or prior to the delivery of the policy, notify the plaintiff or said Bertha Brannum, by notice brought home to them or either of them, that said instrument in writing or receipt was not further binding on defendant."

It is a familiar declaration of the courts that contracts of insurance are liberally construed in favor of the assured and, if doubtful, such contracts are construed against the insurer. Union Cent. Rel. Asso. v. Johnson, 73 So. 816; Allen v. Standard Ins. Co., 73 So. 897; Empire Life Ins. Co. v. Gee, 178 Ala. 492, 60 So. 90; Equitable Life Ass. Soc. v. Golson, 159 Ala. 508, 48 So. 1034; Nat'l Life & Acc. Ins. Co. v. Lokey, 166 Ala. 174, 52 So....