Dougherty v. Mutual Life Ins. Co. of New York

• Citation: 44 S.W.2d 206,226 Mo.App. 570
• Parties: EDITH E. DOUGHERTY, RESPONDENT, v. THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, APPELLANT
• Decision Date: 07 December 1931
• Court: Court of Appeals of Kansas

44 S.W.2d 206

226 Mo.App. 570

EDITH E. DOUGHERTY, RESPONDENT, v. THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, APPELLANT

Court of Appeals of Missouri, Kansas City

December 7, 1931

Appeal from Circuit Court of Randolph County.--Hon. A. B. Chamier Special Judge.

REVERSED.

Judgment reversed.

Tyree Burton and Roy McKittrick for respondent.

Meservey Michaels, Blackmar, Newkirk & Eager and Frederick L. Allen (of counsel) for appellant.

OPINION

TRIMBLE P. J.

This is an action at law on a policy of life insurance for $ 2000, brought by the beneficiary therein, widow of John M. Dougherty, the insured. The trial court, sitting as a jury, rendered judgment in plaintiff's favor for the full amount due on the face of the policy plus additional insurance and dividends with interest, "less the premium due April 12, 1923, and all subsequent premiums to and including the premium due October 12, 1925," with interest at five per cent on each from due date to January 20, 1926, and less a loan on the policy of $ 147.26 with six per cent interest from August 30, 1922, to January 20, 1926, leaving "amount due plaintiff," at this last named date, the sum of $ 1673.81 which, with interest at six per cent from said date to the rendition of judgment, made the "total amount due plaintiff $ 2054.30," the full amount of the judgment. The defendant appealed.

The policy, though dated August 30, 1918, was not delivered until October 12, 1918. Insured died December 23, 1925.

The original petition alleged, in substance, that the application was made August 26, 1918, and the policy was issued and delivered Ocober 14, 1918; that insured paid all premiums due "up to and including the one demanded on the--day of May, 1923;" that by the terms of the policy insured was entitled to extended insurance; that insured died December 22, 1925, notice thereof was given and demand made for $ 2000 "less such sum due defendant on said policy." The policy was attached to the petition.

The amended petition, in addition to alleging the making of the application and the issuance and delivery of the policy, set up that the annual premiums were $ 76.16, the first of which was paid on the delivery and acceptance of the policy; that insured "by reason of the payments of the premiums for a period of more than three years was entitled to extended insurance" without any action on his part, and that he offered to and did comply in all respects with the conditions and provisions of said policy and that said policy was in full force and effect at the time of his death on December 23, 1925; that notice was given and demand made; that defendant has refused and now refuses to pay and is justly indebted to plaintiff in the sum of $ 2000 with interest, "less any sum that may be due the defendant under the terms of said policy."

The answer set up, among other things not material now, that the policy was issued August 30, 1918, on insured at age forty-four for for an annual premium of $ 76.16, payable August 30th of each year; that insured died December 23, 1925.

The answer then denied that said death occurred during the continuance of the policy, and alleged that said policy "was not in force or value, and had become finally lapsed and valueless and void long prior to the date of the death of insured by reason of the non-payment of premiums due under the terms of said policy and by reason of the failure to repay at the time when due a certain loan on said policy" made by defendant to insured November 2, 1921, and thereinafter more fully set forth.

The answer further alleged that in the year 1919 insured requested to be allowed to pay the premiums quarterly instead of annually, which was granted, and time for payment of premiums was changed to a quarter annual basis, so that "thereafter a quarter annual premium of $ 20.18 became due on said policy payable on the last day of February and on the 30th days of May, August and November of each year."

The answer then set up that by the terms of the policy all premiums were payable in advance with thirty-one days grace, and that no premium payment should maintain the policy in force beyond the date when the next premium came due. [The various policy provisions relating to these matters and regarding reinstatement, loans and nonforfeiture values (cash surrender, paid up insurance and extended insurance) were set out including the table of such values as contained in the policy.]

The answer further set up that on or about November 2, 1921, insured obtained on the security, and assignment, of the policy, a loan of $ 147.26, and executed, with plaintiff, a note therefor payable August 30, 1922, with interest at six per cent, and providing that it might be extended from time to time for one year on payment of interest and premium then due, and if default in any premium should occur the loan should mature on the due-date of said premium, but so long as premiums were duly paid the loan would be extended automatically, interest being added to the principal on each due-date of the loan, so long as the loan, with accrued interest, did not equal or exceed the cash value of the policy but not otherwise; that a portion of the proceeds of said loan was used to pay premiums on the policy and the balance was paid to insured; that on several occasions the policy lapsed for nonpayment of the quarterly premiums, and that insured admitted the lapse in writing and requested reinstatement, furnished evidence of insurability and paid the premiums in default; that the premium due on February 28, 1923, was not paid when due, or within the grace period, and that the policy again lapsed and the loan became due; that insured did not thereafter (as permitted in the policy) apply for the cash surrender value or for paid up insurance, and defendant did thereafter, as required by the policy, cancel the indebtedness and apply the net cash value of the policy to the purchase of extended (or continued) nonparticipating term insurance, and so endorsed the policy for $ 1955 of such insurance to run for a period of two years and ninety-six days from February 28, 1923; that defendant returned the policy, so endorsed, to insured who thereafter retained it; that after the lapse last referred to no application for reinstatement was made; that about June 29, 1923, insured mailed to defendant a check for $ 20.27 to pay, as he stated, the premium due May 30, 1923, and that "through clerical error and mistake" a purported receipt therefor was sent to insured, but within a few days thereafter defendant informed insured of said error and that such payment could not be accepted because of the nonpayment of the previous premium, unless evidence of insurability was furnished and the prior premium paid; and a blank application for reinstatement was sent to insured; that insured, however, did nothing more, and in August, 1923, defendant returned to insured the said sum of $ 20.27 (by its check) with the policy endorsed for extended insurance as aforesaid; that insured received and cashed said check, retained the money and retained the policy so endorsed and made no criticism of defendant's acts but acquiesced therein, plaintiff is estopped from questioning the correctness of the endorsement or defendant's acts as stated; that the period of extended insurance was the full amount to which insured was entitled by law or by the terms of the policy; that the extended insurance expired prior to his death and no insurance was then in force. The answer closed with a general denial.

Plaintiff's reply denied all new matter and stated: that defendant deducted the loan of $ 147.26 plus interest $ 4.42, total $ 151.68, from the face of the policy and the dividend additions, "and thereby waived its right to again deduct the loan and interest from the cash value of said policy."

The reply further set up that "the deduction of $ 151.68 from the cash value of said policy in payment of the note executed by insured was wrongful and in violation of the terms and conditions of said loan agreement and at the time that said cash reserve was applied to the payment of said loan, said note was not matured and due."

The reply further stated that on April 29, 1923, defendant mailed to insured notice of the premium alleged to be due May 30, 1923, and thereafter on June 20, 1923, defendant mailed to insured, and insured received, said notice that the premium alleged to be due May 30, 1923, was past due and unpaid; that insured, in response to said notices, sent to defendant on June 29, 1923, a check for $ 20.27, and on July 2, 1923, defendant mailed to insured a receipt of the payment of said quarterly premium, which said receipt was duly countersigned by the authorized agent of the defendant July 2, 1923.

The reply further stated that on February 28, 1923, and thereafter, defendant had in its possession, declared and allotted dividends due the insured and applicable to the payment of the premium claimed by the defendant to be due; that defendant at no time subsequent to the 28th of February, 1923, and prior to July 2, 1923, by notice or otherwise, made any claim that the premium asserted by the defendant to be due had not been paid; and that by reason of the acts and conduct of the defendant as aforesaid, in continuing to recognize the existence of the policy as being in full force and effect and thereby leading the insured to believe that the policy was in full force and effect, defendant waived its right, if any it had, to assert a forfeiture of the policy by reason of the nonpayment of the premium it alleged was due on February 28, 1923.

On the trial, the following facts were developed which are undisputed:

The application for the policy was signed August 26, 1918, the policy...