O'Donnell v. Kansas City Life Ins. Co.

• Decision Date: 14 June 1920
• Docket Number: No. 13620.,13620.
• Parties: O'DONNELL v. KANSAS CITY LIFE INS. CO.
• Court: Missouri Court of Appeals

222 S.W. 920

O'DONNELL v. KANSAS CITY LIFE INS. CO.

No. 13620.

Kansas City Court of Appeals. Missouri.

June 14, 1920.

Appeal from Circuit Court, Jackson County; Harris Robinson, Judge.

"Not to be officially published."

Action by Sallie B. O'Donnell against the Kansas City Life Insurance Company. Judgment for plaintiff, and defendant appeals. Reversed and remanded for new trial.

George Kingsley, of Kansas City, for appellant.

Gilmore & Brown, of Kansas City, for respondent.

TRIMBLE, J.

This is an action upon a policy of insurance issued September 14, 1915, by defendant upon the life of James IL O'Donnell for $5,000, payable upon his death to the plaintiff, beneficiary therein. Insured died on August 19, 1916. There is no controversy over these facts. They are admitted. The defense is that for the first annual premium due on the policy the insured gave his two promissory notes; that the insurance contract provided that failure to pay any premium note when due rendered the policy null and void without action or notice on the part of the company; that insured did not pay said notes and same were never paid, and in consequence thereof the policy was void. The reply denied this, and pleaded that if there was a default in the payment of the notes when due the company waived the forfeiture. A trial resulted in a verdict and judgment for plaintiff, from which the defendant has appealed.

The application upon which the policy was issued contains the following provision:

"And I further agree that any money, note, or other thing of value given to this company or its agent taking this application on account of the first premium charge on the policy applied for, in whole or in part, shall be held by this company as a deposit merely and not as payment, until such time as this application shall be accepted or rejected; if same be accepted, such money, note, or other thing of value shall be applied on such first premium charge; if rejected, same shall be returned to me, my heirs, administrators, or assigns."

The policy contained these provisions:

"Upon failure to pay a premium on or before the date when due, or upon failure to pay any premium note when due, this policy will become null and void without any action or notice by the company, and all rights shall be forfeited to the company, except as hereinafter provided. * * *

"In case of default in the payment of any premium hereunder or of any premium note when due, the company will reinstate the policy, if not previously surrendered, at any time upon written request by the insured to the company at its home office, accompanied by evidence of insurability satisfactory to the company and the payment of all premium arrears and the payment or reinstatement of any indebtedness existing at the date of default, together with interest thereon at the rate of 5 per centum per annum."

There is no question but that insured did not pay cash for the first annual premium of $123.45, but executed two promissory notes, both dated August 27, 1915 (the date of the application), both due six months after date both payable to the order of T. F. Walsh, with 8 per cent. interest from maturity, compounding annually if not paid annually. One of said notes was for $74.07 and the other for $49.38, the two aggregating the amount of the annual premium, to wit, $123.45. T. F. Walsh was the agent who solicited the insurance, obtained the application, and procured the making of the insurance contract.

Plaintiff introduced the policy in evidence, proved the death of her husband, and introduced a letter from defendant's secretary, dated August 24, 1916, which read as follows:

"We hold in this office the note of Mr. O'Donnell for the premium on this policy, which note is long past due and which he failed to pay, and therefore said policy, by its terms and conditions, is not in force, for the reason that he did not pay the premium thereon."

Defendant admitted plaintiff had been paid nothing on the policy and thereupon Plaintiff rested. A demurrer to the evidence was offered and overruled, whereupon defendant introduced evidence in behalf of its defense of forfeiture. This was to the effect that nothing was ever paid on the policy; that the two notes were taken at the time of the application and were, by the payee, Walsh, indorsed and sent la to the company along with the application; that nothing had ever been paid on them or either of them, and that they were still in the possession of the defendant; and the two notes were offered in evidence.

It was elicited from the witnesses offered by defendant that the amount represented by one note, to wit, $74.07, was the amount which was due the agent as his commission out of the first annual premium, and that the $49.38 represented by the other note was the net amount due the company out of the first annual premium. The secretary of the company testified on cross-examination that the amount of the two notes was not charged against the agent upon the books of the company, but he did admit that the agent was charged with the difference between the amount of the notes and his commission, that is to say, he was charged with $49.38, the amount represented by the second note above mentioned, and which was the net amount due the company out of the said first year's premium. He further testified that the notes were carried as the property of the company; that the notes fell due February 27, 1916; that when they fell due they notified insured, and after that the company "held them waiting settlement." He further admitted on cross-examination that on the books of the company a running account with the agent was kept and that the items involved herein would show on that account; but he insisted that the charge against the agent of the net premium due the company was made only as a matter of bookkeeping, and that Walsh's account was credited with the amount of the unpaid note; but he was unable to say when this was done, whether before or after insured's death, and admitted that the books would show. At this point plaintiff had him identify a card as being the notice of payment of next premium sent out by the regular renewal premium department of the company, and plaintiff offered it in evidence to show that, long after the default in the payment of the notes, the company notified insured that the next premium would be due September 14, 1916, but this offer was denied and the evidence excluded by the court.

Although the secretary testified that only the difference between the amount of the notes and the agent's commission was charged against the agent's account, and that he was given credit for that at some time, either before or after insured's death, yet, later on, the following occurs in his cross-examination:

"Q. When did the company come into possession of these notes? A. At the time the application was taken.

"Q. Did Mr. Walsh ever get credit on his account for the payment of this premium? A. Yes, sir; for his interest."

The witness further admitted that they kept a record of the lapses and defaults, and thereupon the plaintiff offered to prove that after the death of insured one of plaintiff's counsel, over the phone, called him in his office and, without telling him insured was dead, asked him what condition the policy was in, and that the secretary, after asking for a moment in which to look at the books, returned and reported that the policy was in force. This was, of course, long after default in the payment of the notes, and while such occurrence would not, of itself, constitute a waiver, since the insured was then dead, yet it would seem to be a circumstance which would throw light on the question whether the company had theretofore regarded or treated the policy as forfeited because of the default in the payment of the notes when due, which default had occurred months before and which default was known to the company when it occurred. In other words, it was a circumstance the Jury were entitled to know in passing upon the question whether the company had theretofore waived the default and were still considering the policy in force, looking to the agent for the premium if the insured did not pay it. If such was the fact, then the company was, from the time of the default, occupying an equivocal position, in this, to wit: As long as the insured was alive and the policy was a possible premium getter, the company would regard it as in force so far as its being a source of possible premiums was concerned but the moment insured died, then the policy would be treated as being long since forfeited because of the default in the payment of the notes when they became due. Such equivocal position is...