Cummings v. Conn. Gen. Life Ins. Co.

• Decision Date: 14 January 1930
• Citation: 148 A. 484
• Court: Vermont Supreme Court
• Parties: CUMMINGS v. CONNECTICUT GENERAL LIFE INS. CO.

148 A. 484

CUMMINGS

v. CONNECTICUT GENERAL LIFE INS. CO.

Supreme Court of Vermont. Caledonia.

Jan. 14, 1930.

Exceptions from Caledonia County Court; John S. Buttles, Judge.

Action by Asa Cummings against the Connecticut General Life Insurance Company. Judgment for plaintiff for the amount of premium received by defendant, and plaintiff brings exceptions. Reversed and remanded.

Argued before WATSON, C. J., and POWERS, SLACK, MOULTON, and WILLCOX, JJ.

Shields & Conant, of St. Johnsbury, for plaintiff.

Searles, Graves & Waterman, of. St. Johnsbury, for defendant.

POWERS, J. We have here the record of a retrial of Cummings v. Connecticut General Life Ins. Co., 101 Vt. 73, 142 A. 82. The retrial was by jury, and was on amended pleadings. It resulted in a verdict for the plaintiff for the amount of the quarterly premium received by the defendant, with some interest and costs, amounting in all to $24.02 which sum the defendant conceded was due the plaintiff, and had paid into court. Judgment was rendered on the verdict for the plaintiff, and he excepted.

The plaintiff was a witness in his own behalf, and in cross-examination he testified that he and his wife had made previous applications for life insurance, and he was asked this question: "Q. And up to that time neither of you had paid the first premium, had you?" Objection was interposed and overruled. The witness answered, "No." Thereupon an exception was claimed and allowed. But there is nothing in the record to indicate that the exception was treated below as seasonably claimed, so, the answer being responsive, we can do nothing but apply the ordinary rule and hold that the exception is unavailing. Ford v. Hersey, 92 Vt. 405, 412,104 A. 875; Reeves v. Redmond, 95 Vt. 106, 109, 113 A. 711.

One of the defenses made by the defendant and one now covered by the amended pleadings was that the quarterly premium above referred to did not reach the defendant during the life of the insured. The evidence of the defendant tended strongly to establish that fact. By divers exceptions and in various ways the plaintiff raised the question that the defendant, by its conduct and assertions, had waived that forfeiture, if it had occurred.

It appeared that the defendant wrote a letter to the plaintiff, and somewhat later another to his counsel. In the former, the defendant took the position that the policy was obtained by certain false representations regarding the health of the applicant, and asserted that, if the true facts had been known, the company would have declined the risk. "We have no option now," says the letter, "but to return to you all premiums paid with Interest thereon, as this insurance was issued upon a misrepresentation of the facts and was ineffective from its inception." Nothing is said in the letter about the failure of the premium to reach the company while Mrs. Cummings was yet alive or any defense to the policy other than the false representations referred to above. In the letter to the plaintiffs counsel, the defendant insists that Mrs. Oummings' application contained material misrepresentations with regard to her physical condition and past history, and concludes with this statement: "We have no option but to maintain our previous position, which is to the effect that this insurance was never effective." This letter, too, is silent as to the defense now under discussion.

The defendant insists that these letters assert two grounds for its refusal to pay the policy in question: (1) False representations; and (2) the policy was never effective. And it argues that, by this construction, the new defense is saved to it, whatever the result might otherwise be. But the true meaning of the letters seems too plain to admit of this construction. What the defendant means by the language used in the letters is that the policy never became effective because of the false representations in the application. If confirmation of this statement was required, it would be found in Defendant's Exhibit E, which is the record card of this policy from the office of the general agent of the company, whereon this notation appears: "Not settled because of misstatement at time app. (application) was written."

The defendant argues that a waiver of a defense, in order to be effective, must embrace all of the elements of an equitable estoppel, and cites cases so holding. But that is not the law of this state. In Webster v. State Mutual Fire Ins. Co., 81 Vt. 75, 80, 69 A. 319, this court took occasion to draw the distinction between a waiver and an estoppel as it exists in insurance law, and to lay down the rule that, when an insurer elects not to take advantage of a forfeiture, he waives it, and cannot assert it in defense, though the insured was not misled to his prejudice. Such a waiver may be express or implied, before or after the forfeiture. Bates v. German Commercial Acc. Co., 87 Vt. 128, 130, 88 A. 532, Ann. Cas. 1916C, 447. An insurance company which thus waives a forfeiture is bound to treat the contract of insurance as though no forfeiture had occurred. Francis v. London Guarantee & Acc. Co., 100 Vt, 425, 430, 138 A. 780, 782.

In Frost v. North British & Mercantile Ins. Co., 77 Vt. 407, 418, 60 A. 803, it was held that a denial of liability on a specified ground unconnected with the proof of loss, made within the time such proof was required, is a waiver of that proof. To the same effect are Mellen v. U. S. Health & Acc. Ins. Co., 83 Vt 242, 248, 75 A. 273, and Clarke v. Travelers' Ins. Co., 94 Vt. 383, 391, Ill A. 449. The rule as stated in these cases and other earlier ones therein cited carried the court as far as it was necessary to go in order to dispose of the questions there presented. But the Webster Case, the Bates Case, and the Francis Case show that the waivers would have been just as effective if they had followed the forfeitures. The logic of those cases requires us to take the broad ground that, when one defense is specified by an insurer as its reason for refusing to pay a loss, all others are waived.

This doctrine finds support in many cases, of which the following are accessible; Security Ins. Co. v. Laird, 182 Ala. 121, 62 So. 182, 184; Travelers' Ins. Co. v. Plaster, 210 Ala. 007, 98 So. 909, 910; Watts v. Metropolitan Life Ins. Co., 211 Ala. 404, 100 So. 812, 813; London & Lancashire Ins. Co. v. McWilliams, 218 Ala. 503, 119 So. 15, 16; Powers v. Bohuslav, 84 Neb. 179, 120 N. W. 912, 944; Hilnier v. Western Travelers' Acc. Ass'n, 86 Neb. 285, 125 N. W. 535, 537, 27 L. R. A. (N. S.) 319; Yates v New England Mutual Life Ins. Co. (Neb.) 220 N. W. 285, 287; Smith v. German Ins. Co., 107 Mich. 270, 65 N. W. 236, 30 L R. A. 368, 372; Smith v. Grange Mutual Fire Ins. Co., 234 Mich. 119, 208 N. W. 145, 146; Wyatt v. Henderson, 31 Or. 48, 48 P. 790; Eaid v. National Casualty Co., 122 Or. 547, 548, 259 P. 902. See, also, McCormlck v. Royal Ins. Co., 163 Pa. 184, 29 A. 747, 750; Western, etc., Pipe Lines v. Home Ins. Co., 145 Pa. 346, 22 A. 665, 27 Am. St. Rep. 703, 708; Brink v. Insurance Co., 80 N. Y. 108; Vulcan Ins. Co. v. Johnson, 74 Ind. App. 62, 128 N. E. 664, 665; Travelers' Ins. Co. v. Fletcher Am. Nat. Bank, 84 Ind. App. 563,150 N. EL 825, 827; Snyder v. Supreme Ruler of the Fraternal Circle, 122 Tenn. 248, 122 S. W. 981, 45 L. R. A. (N. S.) 209, 214; Royal Ins. Co. v. Drury, 150 Md. 211, 132 A. 635, 643, 45 A. L. R. 582.

It is to be noted that some of the cases say in effect that the waiver estops the insurer. But, as was suggested in the Webster Case, the terms "waiver" and "estoppel" are often used as meaning the same thing. In some cases cited, the word "estops" is so used, and is not to be given its technical meaning. In others, the court finds the element of prejudice to the insured in the fact that he has brought suit relying upon the expressed or indicated attitude of the company toward his claim.

The Supreme Court of the United States, as do one or two of the state courts, extends the application of this rule to cases other than insurance cases, saying that, "where a party gives a reason for his conduct and decision touching any thing involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration. He is not permitted thus to mend his hold. He is estopped from doing it by a settled principle of law." Ohio & Miss. Ry. Co. v. McCarthy, 96 U. S. 258, 267, 24 L. Ed. 693, 696.

The rule works no hardship on the insurer. Considerations of public policy require that he shall deal with his individual customer with entire frankness. He may refuse to pay and say nothing as to the basis of his refusal. In that case, all defenses to an action on the policy are available to him. He may refuse to pay on a particular ground reserving the right to defend on other grounds, with the same result. But, when he deliberately puts his refusal to pay on a specified ground, and says no more, he should not be allowed to "mend his hold" by asserting other defenses after the insured has taken him at his word and is attempting to enforce his liability.

It is not suggested that this defendant acted in ignorance of the facts. Nor could such a suggestion be accepted, for all the facts were in its possession in written or printed form.

Waiver is usually a question of fact, since the question most always depends on acts or declarations of an indecisive and doubtful character. Wells, Law & Fact, § 124. But, where all the facts and circumstances are undisputed, the question is for the court. Wells, § 250; 27 R. C. L. 912. The case in hand is of the latter class, and there is nothing to do but say as we did in the Francis Case that the facts and circumstances are "so inconsistent with a purpose to assert the forfeiture and so convincing of an intent to waive it that it must be held to amount to a waiver as matter of law."

This disposition of the matter makes it unnecessary to...