Denver Life Ins. Co. v. Crane

• Decision Date: 12 October 1903
• Parties: DENVER LIFE INS. CO. v. CRANE.
• Court: Colorado Court of Appeals

73 P. 875

19 Colo.App. 191

DENVER LIFE INS. CO. v. CRANE.

Court of Appeals of Colorado

October 12, 1903

Appeal from District Court, Arapahoe County.

Action by Ella S. Crane against the Denver Life Insurance Company. From a judgment in favor of plaintiff, defendant appeals. Reversed.

Rising & Marshall, J.C. Helm, and E.E. Edmonds for appellant.

J Warner Mills and John H. Gabriel, for appellee.

THOMSON P.J.

Suit by the appellee upon a policy of insurance issued by the appellant on the life of her husband Richard M. Crane. Judgment in her favor, and appeal by the defendant.

The complaint alleged the execution and delivery of the policy, the payment by the insured of the premiums required by the policy, his death, the notice of his death required by the policy, and the defendant's refusal to pay the amount of the insurance. The answer admitted the execution of the policy, but averred the failure by the insured to pay a premium due on the 11th day of May, 1898; the consequent lapse of the policy; his application for reinstatement on the 22d day of June, 1898; his failure of compliance with a provision of the policy requiring him in such case to furnish proof of good health satisfactory to the defendant company's board of directors; and the presence in his system, at the time of the application, of a disease which subsequently caused his death. The replication averred the payment on June 22, 1898, of the quarterly premium due May 11, 1898; the acceptance of the money by the defendant; its notice to Crane, given on the 11th day of July, 1898, of the premium to become due on the 11th day of August, 1898; the acceptance by the company of all previous premiums on the policy long after they had become due; the want of notice to the insured that the premium of May 11th would be required on that day; and a want of knowledge by the plaintiff of the alleged application for a reinstatement. The policy, describing the insurer as a mutual insurance company, by its terms constituted the insured a member of the company. The instrument was dated August 11, 1896, and the following provisions were indorsed upon it, and made part of the contract:

"Thirty days' notice before payment is due, except when monthly payments are made, will be mailed to the insured from the home office to the last known address as it appears upon the books of the company. Failure to make any payment at the home office on or before the day when due, whether the insured does or does not receive such notice, hereby cancels this contract and releases the company and the insured from any further liability, and all payments made on account thereof shall be forfeited to the company. Should this policy lapse by nonpayment, it may be renewed by the insured furnishing proof of good health, satisfactory to and approved by the board of directors, and upon payment of all amounts then due. The insured may, without consent of the beneficiary, diminish the amount of this policy, or appoint another beneficiary in place of the one herein named. Any change of beneficiary or assignment of this policy shall be void unless approved by the board of directors and entered upon the books of the company."

On the 22d day of June, 1898, Crane applied for a reinstatement of the policy, as follows:

"Denver Life Insurance Company, Denver, Colo.: Whereas a premium payment upon my policy No. 30 became due and payable on the eleventh day of May, 1898, and by reason of the nonpayment of said premium when due my policy expired:

"Now therefore, I, Richard M. Crane, of Denver, Arapahoe County, Colorado, occupation ______ do hereby apply to the Denver Life Insurance Company for reinstatement of my policy, and tender the amount of past

due payment of $7.11, which will carry the payment upon my policy to August 11, 1898. In consideration of the same being accepted and my policy restored to regular standing, I agree as follows:

"First: I warrant that I am now of temperate habits, in good health and free from all diseases and infirmities. That since the date of my original application I have had no disease, injury, infirmity or illness, nor had any medical attendance or advice for any illness, except as follows, viz.: slightly under the weather from the warm weather; am attending to duties as usual.

"Second: I hereby agree that if any of the statements and warranties above given are not full, complete and true, the acceptance of the Denver Life Insurance Company of this or any other payment shall not make a valid claim under said policy, and the only liability against the Denver Life Insurance Company shall be the amount of this and subsequent premium payments with compound interest added at four per cent. per annum.

"Dated at Denver this 22d day of June, 1898. R.M. Crane."

At the same time he drew and delivered to the agent of the company his check on the First National Bank of Denver for $7.11, and took from the agent the following antedated receipt:

"Office of the Denver Life Ins. Company, Denver, Colo., May 11th, 1898. Received of Richard M. Crane, $7.11 Seven and 11/100 Dollars on Policy No. 30, being the quarterly premium from May 11th, 1898, to August 11th, 1898. C.E. Channell, Secretary, per H.M."

On the 11th day of July, 1898, the company sent to the insured by mail a notice that a quarterly premium of $7.11 on his policy would be due August 11, 1898, a remittance of which by bank draft, or post-office or express order, was requested. This notice was received by Crane on the day of its date. On the 10th day of August, 1898, the amount named in the notice (being the premium to become due on the 11th) was tendered, on behalf of Crane, to the proper officer of the company, who refused to receive it, except on condition of reinstatement of the policy. The check given by Crane on the 22d of June, but dated the 11th of May, was received at the company's office on the day it was drawn, and was entered on its books. The entry was followed by a memorandum, "Subject to reinstatement." The company collected the money on the check a few days afterwards.

Austin W. Smith, a witness for the defendant, testified that he was an agent of the defendant in 1898; that on the 11th day of May, 1898, he visited Crane's office to collect the quarterly premium due on that day; that the latter said he had concluded to let his policy lapse, and that he could not spare the money, whereupon the witness told him that would be poor policy, on account of the difficulty of being reinstated, and he asked witness to come round about the middle of June; that witness called on him on the 22d of June, and asked him what he proposed as to renewing his policy, and he said he was not feeling very well, and thought it would be a good time to renew; that witness prepared the application for reinstatement, and while doing so inquired about his health; that he replied he was slightly under the weather on account of the heat; that, when the application was signed, witness told him the company would have to act on his application before he could be reinstated, and he said, "I understand that;" and that witness then took the application and check, and gave him the receipt.

Dr. Herbert W. McLaughlin testified that he was medical director of the company, and that at its request he called at Crane's office twice--the last of June and first of July--for the purpose of examining him, but did not find him in, and so reported to the company. On the 19th day of July, 1898, the secretary of the company addressed a letter to Crane, which, after stating that his policy had lapsed on May 11th, and he had applied for a reinstatement June 22d, asked him to appoint some hour when the medical director could see him, so as to pass on his application. To this letter Crane replied that as he held the company's receipt for the premium due May 11th, and its notice of the premium due August 11th, he saw no necessity for reinstatement. On the 10th day of August, 1898, the secretary of the company sent a check to Crane for $7.11--the purpose being to return the premium which Crane had paid for May 11th--and again asked Crane to appoint a time to meet the medical director. This check Crane sent back to the company immediately, and the company returned it to him.

Miss Harriet A. Miner testified that she was the company's cashier and bookkeeper; that she sent out the notice of the premium due August 11th; that such notice was sent in all cases, whether the parties were in good standing or not; and that the purpose of the notice to a policy holder not in good standing was to protect him if reinstated.

It is insisted for the plaintiff that there was no lapse of the policy by reason of the failure of Crane to pay the premium of May 11th when it was due, because, first, as to this premium the notice required by the policy had not been given and, second, no premium since the policy was written had ever been paid until after it was due, and therefore a custom had been established on which the insured had the right to rely. On the other hand, it is contended for the company that whether or not the notice was sent was immaterial, because the policy further provided that failure to make the payment when due would have the effect of canceling the policy, notwithstanding the notice was not received; also that the acceptance by the company of after-due premiums had not been uniform, and had not occurred sufficiently often to establish a custom. We think that, by the terms of the policy, it was incumbent on the company to mail the notice to the last known address of the insured, but that, if it did so,...