Citizens' National Life Insurance Company v. Morris

• Citation: 148 S.W. 1019,104 Ark. 288
• Parties: CITIZENS' NATIONAL LIFE INSURANCE COMPANY v. MORRIS
• Decision Date: 03 June 1912
• Court: Supreme Court of Arkansas

148 S.W. 1019

104 Ark. 288

CITIZENS' NATIONAL LIFE INSURANCE COMPANY v. MORRIS

Supreme Court of Arkansas

June 3, 1912

Appeal from Mississippi Circuit Court, Chickasawba District; Frank Smith, Judge; reversed.

STATEMENT BY THE COURT.

On June 14, 1905, the Citizens' Life Insurance Company issued to R. L. Morris a policy on his life in the sum of $ 5,000 payable at his death to his wife, Mary C. Morris, appellee herein. The annual premium was $ 127, "less the dividends credited thereon." The Citizens' National Life Insurance Company succeeded to all the assets and liabilities of the Citizens' Life Insurance Company. The Fidelity & Deposit Company was the surety for the Citizens' National Life Insurance Company. On the day the policy was issued Morris became a member of what is called the "Department of Commercial Information" of the Insurance Company on his application, by the stipulations and agreements of which he was obligated to perform certain specific services for the Insurance Company, in consideration for which he was to receive compensation to be estimated by a certain percentage of the premiums collected by the Insurance Company each year. The sum was to be computed on the first of January of each year, and on that date Morris was to be credited with that sum, and same was to be paid him each year "on the anniversary of the date of his policy." Premiums were payable in advance, and were paid under the policy until June 14, 1909. On that date the premium of $ 127, which was then due, was reduced by $ 33.03 which had been credited to Morris January 1, 1909, on his compensation for services, which left a balance of $ 93.97, for which he gave his note with interest at 6 per cent. per annum payable to the Company October 15, 1909. The note contained the following provision: "I understand and agree that in consideration hereof said policy is extended until default is made in payment of this note, when all rights and benefits secured thereby shall cease and determine without notice, and said policy shall be ipso facto null and void. I hereby agree that this note shall not be deemed a payment for life insurance, but only for an extension of time for the payment of same, and the nonpayment of this note when due, and the termination of said insurance thereof, shall not impair the validity of this note, but the same shall become due and payable for the proportion of its face and interest that the time the insurance has been extended for bears to the whole time covered by said premium."

The policy provided that premiums "may be paid in half-yearly or quarterly installments, as fixed by the company, provided that when premiums are thus paid the portion of the full year's premium, if any, remaining unpaid at the death of the insured shall be deducted in the settlement of this policy." And, further: "In case any premium should not be paid when due according to the terms of this contract, then and in such case this policy shall cease and determine, except as otherwise herein expressly provided."

Morris died June 7, 1910, and the appellee brings this suit against the appellants to recover on the policy. The appellants defend on the ground that the policy was forfeited because of nonpayment of the premium for 1909. The appellee contends that forfeiture was waived.

On October 5, 1909, the Company wrote Morris that his note of $ 93.97, with interest at 6 per cent., amounting, principal and interest, to $ 95.85, would be due October 15, 1909, and asking him to give it his prompt attention. The letter contained the following clause: "Important. Notes given for extension of time in payment of renewal premiums should be paid on or before maturity to prevent lapse of policy. Said notes have no grace period."

They wrote him to the same effect on October 9, 1909. On October 20, 1909, the Company wrote Morris, telling him that it was without remittance to cover the note, and saying: "The agreement on the face of the note provides that payment shall be made on or before maturity. If not so paid, the policy becomes null and void. However, it will be reinstated upon approval by the company of the enclosed health certificate and payment of half of the face of the note, with interest at 6 per cent. to October 15, 1909." And further: "If the policy is reinstated, the company will grant additional time in which to take up the balance of the note. This proposition is made merely as a matter of accommodation, as we would not have you abandon a policy that you can not possibly duplicate."

In answer to this letter Morris sent the health certificate which, among other things, contained the following provision "It is understood that future payments on said policy if revived, shall be promptly made."

On the 30th of October, 1909, the Company acknowledged receipt of the health certificate and revival contract executed by Morris, and stated in the letter that same had been approved and the policy reinstated. The letter also stated: "We have, therefore, credited your remittance for $ 47.95 on the above described note, which leaves a balance of $ 49.90 which we have extended to January 15, 1910, at 6 per cent interest."

On January 5, 1910, the company wrote Morris reminding him that the balance of $ 47.90 and 72 cents interest, total $ 48.62, would "be due 1-15-10." The letter closed with the following: "Important: Notes given for extension of time in payment of renewal premiums should be paid on or before maturity to prevent lapse of policy. Said notes have no grace period."

On January 19, 1910, the Company wrote Morris that they had extended the note to February 15, 1910. They again wrote him February 5, and February 10, 1910, reminding him that his note would be due on the 15th, and that it had to be paid "on or before maturity to prevent lapse of the policy."

On February 21, 1910, the Company wrote Morris, saying: "The agreement on the face of the note provides that payment shall be made on or before maturity. If not so paid, the policy becomes null and void. However, it will be reinstated upon approval of the company of the enclosed health certificate and payment of half of the balance due, say $ 24.90, with interest at 6 per cent. on the full amount to February 15, 1910, 96 cents. If the policy is reinstated, the Company will grant an extension of sixty days in which to take up the balance of $ 23.00."

On March 2, 1910, the Company wrote Morris as follows: "Your note given June 14, 1909, to extend the payment of premium on your policy until February 15, 1910, has not been paid, and under its terms this policy is lapsed; but the Company expects payment of the premium earned for the time it was on the risk by reason of the extension of premium by said note. That is, you enjoyed protection for the full face of policy from June 14, 1909, to February 15, 1910, a period of eight months. The amount of premium earned is $ 15.59, with interest, 96 cents, on full amount of balance. Please let us have this amount by return of mail if possible, but we think you will be doing a much wiser thing to remit the full amount of the balance ($ 15.59, interest 96 cents), thus giving yourself the protection afforded by your policy for another year, if the policy is reinstated." With this letter was enclosed a health certificate with the request to execute same and return. The letter concluded: "Upon reinstatement of the policy we will mark the note 'Paid' and forward to you, together with premium receipt for premium due June 14, 1909."

On June 7, 1910, the secretary of the Company wrote Morris, saying: "My attention has just been called to the termination of your policy No. 1523. As the nonpayment of premium may have been an oversight, I take the liberty of writing to ask if you will let me hear from you personally about the reason for discontinuance, as this may afford the opportunity to furnish any desired information, or to offer some suggestion that may be of advantage to you."

The appellants, after setting forth what they conceived to be the facts as to the course of dealings between the parties, prayed the court to instruct the jury that such course of dealings "was not such as to justify Morris as a reasonable man in believing that he was still insured after February 15, 1910; and if the note or any part thereof was unpaid at the date of his death, they should find for the appellants." The court refused to so instruct the jury, but gave, among others, the following instruction:

"If you find from the entire course of dealings between deceased and defendant from first to last that the conduct of defendant was such as would naturally lead a reasonable and prudent business man to believe that premiums would be accepted by the defendant after they were due, and that a forfeiture of the policy would not be claimed on account of the failure to make payments promptly at maturity; and if you find that the deceased was so led to believe, then I instruct you to return a verdict for the plaintiff."

Other instructions were to the same effect. The verdict and judgment was in favor of the appellee for the sum of $ 5,000. Other facts stated in the opinion. The appellants have duly prosecuted this appeal.

Judgment reversed, and cause dismissed.

Helm Bruce and Allen Hughes, of Memphis, for appellants.

Under the provisions of the note due June 14, 1909, which was never paid, and of the policy, as to the effect of nonpayment there can be no recovery in this case. 75 Ark. 25; 85 Ark. 337; 104 U.S. 259; 3 Cooley's Brief on Ins. 2706, 2709; 74 Minn. 387; 71 Vt. 482; 143 Mass. 438; 6 L. R. A. (N. S.) 1042; 49 L. R. A. 737; 107 S.W. 688; 91 Va. 169; 44 Conn. 72; 63 F. 769; 98 F. 250; 118 F. 250; 84 S.W. 425; 100 Pa. 172; 18 S.W. 165; 64 Ia. 134; 207 Pa. 609; 10...