Columbian Nat. Life Ins. Co. v. Morey, 2229.

• Decision Date: 13 June 1928
• Docket Number: No. 2229.,2229.
• Parties: COLUMBIAN NAT. LIFE INS. CO. v. MOREY et al.
• Court: U.S. Court of Appeals — First Circuit

26 F.2d 580 (1928)

COLUMBIAN NAT. LIFE INS. CO. v. MOREY et al.

No. 2229.

Circuit Court of Appeals, First Circuit.

June 13, 1928.

F. H. Nash, of Boston, Mass. (Benjamin B. Sanderson and Frederick R. Dyer, both of Portland, Me., on the brief), for plaintiff in error.

Frank A. Morey, of Lewiston, Me., for defendants in error.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

ANDERSON, Circuit Judge.

The main question in this case is whether the insurance company was entitled to a directed verdict for $283.23, admitted to be due as extended insurance and as prepaid interest on a loan made the insured. Under date of June 1, 1922, the company issued a policy of life insurance to Robain Arsanault for $8,000, payable to his executors. The pertinent provisions of the policy are:

"This policy shall be incontestable after one year from date of issue except for nonpayment of premium. * * *

"Thirty-one days' grace is allowed for the payment of all premiums after the first, during which period the policy remains in full force. Upon default of payment of any premium or note given therefor, this policy shall lapse, and the company's only liability shall be such, if any, as is hereinafter provided.

"Should this policy lapse, it may be reinstated at any time upon evidence of insurability satisfactory to the company and payment of all past-due premiums with interest at 6 per cent. per annum and payment or reinstatement of any other indebtedness hereon with interest at said rate, unless the cash value has been paid or the extended insurance period has expired. * * *

"In the event of the lapse of this policy after the premiums for three full years have been paid, the policy shall become effective automatically for paid-up insurance, payable as provided on the first page hereof. * * *

"Premiums may be paid — annually, $720.64; semiannually, $374.72; quarterly, $190.96."

The first premium, $720.64, was apparently paid in cash. In 1923, an arrangement, not shown in detail, was made, under which Arsanault made on June 1 a cash payment and gave three notes for three, six, and nine months for the other quarterly payments. These notes, for about $180 each, are payable with interest at 6 per cent., and expressly made a lien upon the policy in the event of the death of the insured, and given "with the full knowledge and intent on my part that, if it is not paid when due, without grace, said policy shall, without further notice, become void and the insurance thereunder terminate as of the date to which premiums have been paid in cash."

These notes, with interest at 6 per cent. payable without grace, aggregated a little less than the larger quarterly premiums ($190.96, each) if paid with grace of 31 days. The arrangement for such notes gave Arsanault a slight advantage if he desired, as obviously he did, to pay quarterly.

The three months' note of June 1, 1923, was paid September 8, 1923. The note due December 1, 1923, was paid on December 5, 1923. When the notes for 1924 were paid does not appear in this record, except that the three months' note due September 1, 1924, was, in writing, extended to October 1, 1924, and apparently then paid. The six months' note due December 1, 1924, appears to have been paid on its due date. When the three months' premium note due September 1, 1925, was paid does not appear.

The note due December 1, 1925, was not paid when due. Arsanault, then 70 years old and a heavy drinker, was suffering from chronic myocarditis, and was weak and nervous from excessive drinking; his attending physician testified that his condition bordered on delirium tremens.

By the noon mail, on December 5, a letter dated December 4, was sent by the insurance company's agent in Portland to Arsanault in Auburn, reading as follows:

"The quarterly payment of $185.56 on your policy No. 111747 fell due December 1, 1925. If you have had no sickness within the last six months, I will take care of this item, providing your check is mailed so that I will get (it) not later than Tuesday, December 8. Trusting that you will give this your usual prompt attention, I am. * * *"

Arsanault died that night about 9 o'clock. Whether the letter was delivered at his house where he died before his death does not appear. There is no evidence whatever that he ever received or heard of the letter. No check was sent by him or on his behalf.

In evidence were also various "reminders" sent by a clerk in the company's employ in Portland to Arsanault, that his premiums or premium notes were coming due on designated dates; most of the "reminders" contained the warning: "Notes are payable when due. No grace period allowed." From one or more such "reminders" this warning was omitted.

On January 21, 1926, the company's agent wrote to one of the executors:

"Re 111747 — Robain Arsanault.

"Dear Sir: Will you kindly let me know when I may expect to receive completed papers in connection with claim under the above-numbered policy."

Later, the same agent wrote to the same executor:

"I acknowledge receipt of proof of death and attending physician's certificate in connection with the claim of Robain Arsanault; in addition to these papers, kindly furnish me with a certified copy of certificate of death, as filed with the local board of health or city clerk. Also, inasmuch as the policy is made payable to the estate of the insured, I must have a certified copy of your letters of administration. Upon receipt of these two articles, the claim will have our prompt attention."

The company claimed a forfeiture of the policy for nonpayment of the note due December 1, 1925, and tendered an unaccepted check for the amount of extended insurance, less a loan of $700 (adjusting the interest) $283.23, as stated above.

The District Court rejected plaintiff's contention that the premium note due December 1, 1925, was subject to the provision in the policy allowing 31 days of grace for the payment of all premiums, but left the case to the jury on the question of whether the company had, on the foregoing facts, waived its right to forfeiture. The jury found for the...