Equitable Life Assur. Soc. v. Tucker

• Decision Date: 06 April 1942
• Docket Number: No. 12051.,12051.
• Citation: 126 F.2d 396
• Parties: EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES v. TUCKER.
• Court: U.S. Court of Appeals — Eighth Circuit

126 F.2d 396 (1942)

EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES v. TUCKER.

No. 12051.

Circuit Court of Appeals, Eighth Circuit.

March 12, 1942.

Rehearing Denied April 6, 1942.

Ralph M. Jones, of Kansas City, Mo. (William C. Michaels and Michaels, Blackmar, Newkirk, Eager & Swanson, all of Kansas City, Mo., Rassieur & Rassieur, of St. Louis, Mo., and Alexander & Green, of New York City, on the brief), for appellant.

Milton Keiner, of St. Louis, Mo. (Benjamin B. Smith, of St. Louis, Mo., on the brief), for appellee.

Before STONE and JOHNSEN, Circuit Judges, and OTIS, District Judge.

JOHNSEN, Circuit Judge.

The controlling question is whether, under the law of Missouri, the five-year term life insurance policy, upon which this suit is brought, expired on April 6, 1940, the anniversary of the register date endorsed upon the policy, or on April 20, 1940, the anniversary of the date when the first premium was actually paid. The insured died on April 15, 1940.

The trial court held that, on the facts before it, the policy did not expire until the anniversary of the first premium payment date and entered judgment in favor of the beneficiary for the face amount of the policy. The insurance company has appealed.

The application was dated April 7, 1935. The policy was executed by the company on May 3, 1935. On the back of the policy, however, was the following indorsement: "Register date: April 6th, 1935."

The coverage clause recited that the company would pay to the wife of the insured, as beneficiary, the sum of $5,000, "upon receipt at any time of due proof of the death of the Insured prior to the fifth anniversary of the Register date, provided premiums have been duly paid". The policy contained the following further applicable provisions: "This insurance is granted in consideration of the payment to the Society of a first premium of Fifteen and 30/100 Dollars, and of the payment thereafter of a monthly premium of a like sum upon each sixth day of every month until five full years' premiums shall have been paid, or until the prior death of the Insured." "The first policy year under this policy shall begin on the Register date stated on the back of this policy and the second and subsequent policy years shall begin on the respective anniversaries of the Register date."

In the application, a copy of which was attached to and made a part of the policy, was the following clause: "I hereby agree that any policy issued hereon shall not take effect until the first premium thereunder has been paid during my good health." A receipt issued by the agent for the first monthly premium, under date of April 20, 1935, recited: "Insurance, subject to the terms and conditions of the policy contract, shall take effect as of the date of this receipt."

The policy contained the usual clause for thirty-one days' grace in the payment of subsequent premiums. The record indicates that, of the sixty subsequent monthly premiums, fifteen were paid prior to the twentieth day of the month, fourteen were paid on the twentieth day of the month, and thirty-one were paid between the twenty-first day of the month and the sixth day of the month following.

The trial court, as indicated in its memorandum opinion, D.C., 36 F.Supp. 809, relied upon and applied the rule of Halsey v. American Central Life Insurance Co., 258 Mo. 659, 167 S.W. 951, and Howard v. Aetna Life Insurance Co., 346 Mo. 1062, 145 S.W.2d 113. These cases, as well as Newman v. John Hancock Mutual Life Insurance Co., Mo.App., 7 S.W.2d 1015; Hampe v. Metropolitan Life Insurance Co., Mo.App., 21 S.W.2d 926, and other Missouri decisions, hold generally that, where a contract of life insurance provides that it shall not take effect until the first premium has been paid, and the policy is not previously unconditionally delivered, the insured or his beneficiary is entitled to claim, for whatever benefit may be derived from such position, that the coverage commenced only as of the date the premium was actually paid, notwithstanding that the policy bears a previous issue or register date or fixes an earlier date for subsequent premium payments, unless it is clearly established that the insured has in fact agreed to the earlier date, as a matter of express contract or of controlling acceptance. Mere retention of the policy alone is not sufficient to establish such an agreement or acceptance as a matter of law.

The position and the reasoning of the Missouri courts are indicated by the following quotation from Hampe v. Metropolitan Life Insurance Co., supra, pages 927, 928 of 21 S.W.2d: "For many years the Missouri courts, standing somewhat alone upon the question, have held that, where an insurance contract provides that it shall not become effective until the happening of certain contingencies, such as the delivery of the policy during the lifetime or good health of the applicant and the payment of the first premium, but elsewhere recites a prior date of issue or due date, it is the date of delivery and payment which marks the beginning of the effectiveness of the policy, and determines the time when each succeeding premium shall be paid. * * * This ruling is founded upon the theory that where there is no liability, there can be no insurance; that the payment by the insured of a stipulated premium for a certain term entitles him to protection for the full term, and not for a less one; and that an insurance company should not be permitted, where the policy is legitimately susceptible of any other construction, to accept a premium for a definite term, and then escape liability by interposing the technical defense that the insured had agreed to pay the premium long before it was due."

Appellant contends that the rule in the Halsey, Hampe and Howard cases, supra, has application only to policies of regular or ordinary life insurance, and that the trial court erred in applying it to a contract of term insurance. Term insurance, it is argued, must be held to expire upon the date fixed in the policy, regardless of when the contract actually took effect. Such doubtless is the rule where the contract unequivocally limits the coverage to a specific date and the consideration represents an entirety, which is not made referable to some general calendar period. And so, a contract of term insurance, providing for coverage to a specific date only, in consideration of a recited premium entirety, without more, will ordinarily not give the insured the right, for the purpose of extending the coverage period, to claim the benefit of a clause in the policy that the insurance shall not take effect until a certain payment has been made. Compare Prange v. International Life Insurance Co., 329 Mo. 651, 46 S.W.2d 523, 80 A.L.R. 950; National City Bank v. Missouri State Life Insurance Co., 332 Mo. 182, 57 S.W.2d 1066; Penn Mutual Life Insurance Co. v. Forcier, 8 Cir., 103 F.2d 166, 169.

The policy involved in the Prange case falls within the rule which we have stated. It provided 329 Mo. 651, 46 S.W.2d 524, 80 A.L.R. 950: "This contract is made in consideration of * * * the payment of Seven Hundred and 75/100 Dollars, constituting payment of premium for term insurance ceasing at noon on the fourth day of April, 1923, from which date it may be renewed as an Ordinary Life policy by the payment of like sum on said date and on each succeeding anniversary date of the policy during the lifetime of the Insured." The opinion says (pages 526 and 527 of 46 S.W.2d): "Appellants say that the payment of $700.75 made by the insured on May 18th, the time when the policy was delivered to him, was the payment of an annual premium, which entitled the insurer to a full year's insurance; otherwise, they say, the insured paid for approximately a month and a half's insurance which he did not get. The contention ignores the plain language of the contract. In its inception the contract was not one for life, but an assurance for a term ending on April 4, 1923, at which time it could be converted into a life policy by the payment of a stipulated premium. The first payment is not designated an annual premium, nor is it anywhere referred to as such, in either the policy or the application. On the contrary, it clearly purports to be a single premium for limited term insurance. * * * Under the plain unambiguous provisions of the policies sued on, the term insurance provided by each expired on April 4, 1923." (Italics added.)

The court also significantly takes occasion to point out in its opinion that, as a matter of fact, the insured in that case had specifically agreed to the contract as written, by signing a statement at the time the policy was delivered to him that "I desire my policy to be dated April 4, 1922" — a circumstance to which we shall refer later in our discussion.

Appellant contends, however, that the National City Bank case goes further than the Prange case and holds, without qualification, that the rule of the Halsey case is not applicable under any circumstances to a policy of term insurance. The policy in that case insured against death "within the term of five years from March 19, 1923", and further provided: "This Insurance Is Granted in consideration * * * of the payment in advance of Eighty-eight and no/100 Dollars, and of the payment of a like amount on the nineteenth day of September, 1923, being the premiums for the first year's insurance under this policy ending on the 19th day of March, 1924. The insurance will be continued thereafter upon the payment of the semi-annual premium of Eighty-eight and no/100 Dollars, on or before the nineteenth day of each of the months of March and September in every year during the continuance of this policy, until premiums for five policy years, including the first, have been paid." 332 Mo. 182,...