Commonwealth Life Insurance Co. v. Davis

• Decision Date: 13 January 1910
• Parties: Commonwealth Life Insurance Co. v. Davis
• Court: Kentucky Court of Appeals

Page 339

136 Ky. 339

Commonwealth Life Insurance Co. v. Davis

Court of Appeals of Kentucky.

January 13, 1910.

Appeal from Boyd Circuit Court.

W. C. HALBERT, Circuit Judge.

Judgment for plaintiff, defendant appeals. — Reversed.

GREGORY & McHENRY and HAGER & STEWART for appellant.

JAS. A. WILLIAMS for appellee.

OPINION OF THE COURT BY JUDGE CARROLL — Reversing.

On January 30, 1907, the appellee, Mary E. Davis, applied to appellant company for insurance in the sum of $500 upon the life of her husband, David Davis. She paid the agent of the company 60 cents, the amount of the first premium and agreed to pay a like amount every week during the life of the policy, but no other premium was paid or offered to be paid by her during the life of the insured. When the payment was made, she took from the agent the following receipt: "Received from Mrs. Davis sixty cents, being a deposit on account of application for insurance in the Commonwealth Life Insurance Company made this date, which said deposit is to be paid by me to the company if the application be accepted, and returned to the applicant if the application be rejected. No obligation is incurred by said company by reason of this deposit, unless and until a policy is issued upon said application, and unless at the date and delivery of said policy the life proposed is alive and in sound health." On the back of this receipt there was printed: "If the holder of this receipt does not receive a policy of insurance or the return of the money herein receipted for within three weeks, write, stating name of agent and particulars to Darwin W. Johnson, Secy., Louisville, Ky." At the time this application was made the insured was in good health, but on March 11, 1907, he was stricken with an attack of pneumonia and died from the effects of this disease on March 17, 1907. At the time of his death no policy in pursuance of the application had been delivered to the insured or Mrs. Davis, but the policy had been issued and sent to the local agent for delivery. This suit was brought by Mrs. Davis to recover the amount of the insurance less 60 cents a week from the date of the application until the death of the insured. The lower court rendered a judgment against the company for the amount claimed, from which judgment it prosecutes this appeal.

The case went off on a demurrer to the answer of the company, and so no dispute as to the facts appears in the record. In her petition Mrs. Davis averred that the company accepted the risk and issued a policy in accordance with the application which was sent to the local agent to be delivered to the insured, but that the insured was sick with the disease from which he died at the time the policy was received by the local agent, and he refused to deliver it. In an answer, to which a demurrer was sustained, the company admitted the execution of the receipt, the payment of 60 cents, and that the application of the insured was accepted by it, but on account of errors and unavoidable delays not until March 12th, at which time it issued a policy and sent it to the local agent, who received it on March 14th, but refused to deliver it for the reason stated, but tendered back the 60 cents. It denied its liability upon the ground that both the receipt and application stipulated that no obligation was assumed by the company "unless at the date and delivery of said policy the life proposed is alive and in sound health," and that, as the insured was not in sound health either when the policy was issued by it or received by its local agent, it incurred no obligation under the contract.

It being admitted that the policy was not issued while the insured was in sound health, or delivered to him at all, the case narrows down to the single question whether or not the receipt of the first premium, the acceptance of the application and the issual of a policy completed an enforceable contract between the parties notwithstanding the conditions in the receipt and application. It is insisted by counsel for Mrs. Davis, and the lower court apparently so ruled, that neither the receipt nor the application, both of which contain the condition upon which the company relies to defeat a recovery, can be considered because they were not attached to the policy. Section 679 of the Kentucky Statutes (Russell's St. § 4400) provides that: "All policies * * * which contain any reference to the application of the insured,...