Crook v. New York Life Ins. Co.

Decision Date11 January 1910
Citation75 A. 388,112 Md. 268
CourtMaryland Court of Appeals

Appeal from Superior Court of Baltimore City; Henry D. Harlan Judge.

Action by Mary Grace Crook against the New York Life Insurance Company. From a judgment for defendant, plaintiff appeals. Reversed, and new trial awarded.


Geo Weems Williams and Frank Gosnell, for appellant.

Edgar Allan Poe, for appellee.


1. This was an action on a policy of insurance issued on the 17th day of May, 1901, by the New York Life Insurance Company on the life of Edward D. Crook, the husband of the appellant, and payable to here on his death as the beneficiary named therein. Mr. Crook died on December 5, 1907, and this action was commenced on the 11th day of March, 1908. The case was tried in the superior court of Baltimore city, where a judgment in favor of the defendant for costs was entered, and from this judgment Mrs. Crook has prosecuted this appeal.

In the course of the trial in the lower court, 13 exceptions were reserved by the appellant. Eleven of these relate to rulings on questions of evidence, and two to rulings with respect to prayers which were offered by the parties for instructions to the jury. In order that the legal questions raised on the record may be clearly understood, and intelligently disposed of, it is necessary to examine the pleadings to see the precise issues raised thereunder. The declaration contains three counts. The first and second were the common counts, first, for money received by the defendant for the use of the plaintiff; second, for money found to be due by the defendant to the plaintiff on accounts stated between them; and, third, a special count on the policy, which alleged the death of the insured, that proofs of his death were duly furnished to and approved by the defendant, that all premiums were duly paid upon said policy according to its terms, and that the death of the insured was not brought about by any of the causes exempted in the policy. It further alleged that the plaintiff and the insured had obtained a cash loan of $2,500 from the defendant on the 25th of March, 1907, and that the original policy according to the requirements of the loan agreement had been put in possession of the defendant; that the defendant refused to pay the plaintiff the amount of the policy (which the declaration stated to be $5,000) after deducting therefrom the loan mentioned; and that all things had been done to entitle the plaintiff to receive the money. Attached to the declaration was an account which charged the defendant as of February 6, 1908, with $5,000, the amount claimed to be due under the policy, and credited it with the sum loaned; thus leaving $2,500 as a balance due by the plaintiff to the defendant under the policy. Annexed to the declaration was an affidavit under Acts 1886, c. 184.

To the first and second counts of the declaration the defendant pleaded the general issue pleas, and for a third plea it alleged that by the terms of the policy sued on and particularly mentioned in the third count of the narr, the annual premium of $550.15 was payable on the 5th day of April in each year, but that subsequently, on the 4th day of April, 1903, at the request of the insured and Mrs. Crook, the beneficiary, the premiums were made payable on April 5th and October 5th in each year, said semiannual payments being $286.10. It further alleged the making of the loan as stated in the declaration, and charged that when the semiannual premium of $286.10, due and payable on October 5, 1907, matured, the insured did not pay said premium, nor did the beneficiary pay the same, and that the policy by reasons of said nonpayment lapsed, and became null and void, and was never thereafter renewed. These pleas were verified under the act above mentioned. The plaintiff joined issue upon the first and second pleas, and for replication to the third plea averred that the insured did pay the premium due and payable on October 5, 1907, and issue was joined upon this replication. On the day the case was taken up for trial, to wit, May 28, 1909, the defendant by leave of the court filed an additional plea of tender and payment into court under sections 20, 21, art. 75, Code 1904. The amount paid into court was $523.98, which the plea averred was sufficient to satisfy the plaintiff's claim. The plaintiff traversed this plea, and issue was joined.

The plaintiff then filed three additional replications to the defendant's third plea, which had set up the nonpayment of the premium due October 5, 1907. These replications were, first, that the payment of the semiannual premium of $286.10, due and payable October 5, 1907, when it matured was waived by the defendant; second, that the payment of the semiannual premium, due and payable October 5, 1907, when it matured was waived by the defendant; third, that the nonperformance of the alleged conditions of the policy as set forth in said third plea was waived by the defendant. To these additional replications the defendant filed the common traverse upon which issue was joined, and the case proceeded to trial. It thus appears from the pleadings that there was no dispute that the policy sued on was issued by the defendant and accepted by the plaintiff; that there was no dispute as to the validity of the policy when issued; that originally there was due and payable on the 5th day of April in each year a premium of $550.15; that $2,500 was loaned by the company on the 25th of March, 1907, at the instance of the insured and the beneficiary; that the premiums were subsequently made payable semiannually on April 5th and October 5th, respectively, the half yearly premiums being $286.10. There was no issue as to the death of the insured, or the cause of death, or the sufficiency of the proofs of death. At an early stage of the trial Mr. John P. Poe, counsel for the defendant, stated to the court that "the defense simply is the premium was not paid according to the contract, and the policy thereby lapsed. If we are not sound on that point, that being our only defense, why, of course, our case fails."

We will now take up the rulings of the court on questions of evidence. These are (1) the refusal by the court to allow the plaintiff put in evidence Mr. Crook's application for insurance made in 1901; (2) his refusal to allow the report of the medical examiner on that application to be offered in evidence; (3) the cause of Mr. Crook's death; (4) its refusal to allow the witness Goldsmith to say what he meant by "liened" and by "his condition," this witness having previously stated that the policy was liened on account of the insured's condition; (5) its refusal to permit this witness to define a substandard policy as distinguished from a regular 10-year endowment policy; (6) or to allow this witness to show that the defendant company refused to issue to Mr. Crook a standard policy because of his then condition; (7) or to allow him to prove the amount of the premium on a 10-year endowment policy for $5,000 on the life of a man 45 years of age, that being the age of Mr. Crook at the time policy sued on was issued; (8) or to permit him to show that there was a difference between the premium on the policy sued on and the standard 10-year endowment policy; (9) or to show that the defendant knew at the time it issued the policy that Mr. Crook had Bright's disease; (10) or that the company knew Mr. Crook's condition at the time it issued the policy; (11) to the action of the court in striking out certain portions of the testimony of the witness Hunter as to the condition of Mr. Crook's health when the policy was issued, etc. In our opinion none of this proffered testimony had any relevancy to the issues made by the pleadings, and all of it was properly excluded. The contract of insurance sued on was issued by the defendant and accepted by the insured. That contract fixed the rights and duties of the parties, and these should not be altered, added to, or dispensed with, or modified by any or all of the facts sought to be proved. The contract alone is the measure of the rights and obligations to the parties thereto, and each had a right to stand upon it, and to insist upon the performance of its terms and conditions. It is the duty of the court to construe written instruments; but when a contract, which the law does not forbid, has been deliberately and understandingly entered into by parties competent to make it, it is the duty of the court to uphold it. The introduction of the collateral and immaterial matters which it was proposed to lay before the jury could only have resulted in misleading them and obscuring the real issues of fact raised by the pleadings for their determination.

2. We will now consider the main question in this case: Was there a waiver by the defendant of the nonpayment of the semiannual premium due and payable October 5, 1907? By the true construction of the policy it was necessary that the insured should pay the premiums according to its requirements otherwise the policy would become an automatically paid-up insurance under the nonforfeitable features of the policy. This interpretation results from a consideration of a number of the provisions of the policy, all of which contemplate the payment of the premium as necessary to prevent the lapsing of the policy. Two of the stipulations of the policy are as follows: (1) "If any premium or interest due after the first two insurance years is not duly paid, and if there is an indebtedness to the company, this policy will automatically become a paid-up insurance for an amount payable only in the event of death before the end of the...

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