Cunningham v. The Globe Life Insurance Company

• Decision Date: 10 April 1920
• Docket Number: 22,632
• Citation: 106 Kan. 631,189 P. 158
• Parties: S. M. CUNNINGHAM, as Administrator of the Estate of BERTHA M. CUNNINGHAM, Deceased, Appellee, v. THE GLOBE LIFE INSURANCE COMPANY, Appellant
• Court: Kansas Supreme Court

189 P. 158

106 Kan. 631

S. M. CUNNINGHAM, as Administrator of the Estate of BERTHA M. CUNNINGHAM, Deceased, Appellee, v. THE GLOBE LIFE INSURANCE COMPANY, Appellant

No. 22,632

Supreme Court of Kansas

April 10, 1920

Decided January, 1920.

Appeal from Saline district court; DALLAS GROVER, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

LIFE INSURANCE--Extension Note for Premium--Note in Default--Notice of Intended Forfeiture Necessary. Where before a life insurance premium becomes due an agreement is made extending the time of payment, a failure to meet the obligation at its new maturity does not cause a lapse of the policy, notwithstanding a provision therein contained to that effect; this result being prevented by the statute which forbids a forfeiture on account of the nonpayment of a premium until a thirty-day notice thereof shall have been given after such default has occurred.

C. W Burch, B. I. Litowich, and La Rue Royce, all of Salina, for the appellant.

C. S. Crawford, and E. S. Crawford, both of Abilene, for the appellee.

Edwin E. Brookens, of Topeka, as amicus curiae.

Mason J. Dawson, J., dissents.

OPINION

MASON, J.:

On March 28, 1917, the Globe Life Insurance Company issued to Bertha M. Cunningham a policy by which it agreed to pay $ 1,000 to her estate upon her death, in consideration of the payment of an annual premium of $ 27.20. She paid the first premium at the time of taking out the policy. The second premium was due March 28, 1918. On March 6 of that year she wrote to the company saying that she would be unable to meet the obligation for at least three months, and asking if the policy would still be good at that time. The company answered that the policy could be kept in force by her signing a note, which was inclosed in its letter, for $ 27.20, dated March 28, due in three months, bearing interest from date at the rate of 6 per cent per annum. On March 17 she returned the note with her signature attached. She died July 21, 1918. Her administrator brought action against the company on the policy, recovering a judgment, from which it appeals.

The company contends that by the failure of the insured to pay the premium note at maturity--on June 28, 1918--all its liability ceased. The plaintiff contends that, notwithstanding such default, no forfeiture could result without the service upon the insured of a notice of forfeiture as provided by the statute. The question involved is whether such a notice was necessary under the circumstances stated.

The statute referred to, so far as here important, reads:

"It shall be unlawful for any life insurance company other than fraternal doing business in the state of Kansas to forfeit or cancel any life insurance policy on account of the nonpayment of any premium thereon, without first giving notice in writing to the holder of any such policy of its intention to forfeit or cancel the same." (Gen. Stat. 1915, § 5292.)

"Before any such cancellation or forfeiture can be made for the nonpayment of any such premium the insurance company shall notify the holder of any such policy that the premium thereon, stating the amount thereof, is due and unpaid, and of its intention to forfeit or cancel the same, and such policyholder shall have the right, at any time within thirty days after such notice has been duly deposited in the post office, postage prepaid, and addressed to such policyholder to the address last known by such company, in which to pay such premium; and any attempt on the part of such insurance company to cancel or forfeit any such policy without the notice herein provided for shall be null and void." (Gen. Stat. 1915, § 5293.)

It is not competent for the insured, by any stipulation inserted in the policy, to waive the benefit of this statute; otherwise it would be of little practical effect. (Reynolds v Insurance Co., 105 Kan. 669, 185 P. 1051.) In the present case (which differs in that respect from the one just cited) no express waiver was attempted. The policy granted thirty days of grace after a premium was due, interest at 6 per cent to be charged from the original maturity unless payment should be made within the first twenty days. The written application contained a provision, assented to by the insured, that if any premium should not be paid when due all previous payments should be forfeited to the company except as provided in the policy. So that except for the statute a forfeiture would have resulted automatically from a default which continued for thirty days. The statute, of course, is to be read into the contract as a qualification of the provision referred to. The company concedes that no waiver made in advance would be effective--that the insured could not by agreement entered into at the time the policy was executed bind herself not to take advantage of the statute. But it contends that the benefits thereof might later become a proper subject of contract--of sale or barter--and that here the insured must be deemed to have exercised an option to accept a privilege offered by the company in lieu of that given her by the statute. An analogy in this regard is suggested between the right to demand a notice as a prerequisite to a forfeiture and the right of the owner to redeem land from a judicial sale. After a sale of real estate upon the foreclosure of a mortgage the mortgagor may doubtless release his right of redemption to the purchaser, on such terms as he may see fit,...