Equitable Life Assur. Soc. v. McElroy, 787.

• Decision Date: 02 August 1897
• Docket Number: 787.
• Citation: 83 F. 631
• Parties: EQUITABLE LIFE ASSUR. SOC. v. McELROY et al.
• Court: U.S. Court of Appeals — Eighth Circuit

83 F. 631

EQUITABLE LIFE ASSUR. SOC. v. McELROY et al.

No. 787.

United States Court of Appeals, Eighth Circuit.

August 2, 1897

L. C Krauthoff (J. V. C. Karnes and Daniel B. Holmes on brief) for plaintiff in error.

Gardiner Lathrop (H. M. Beardsley on brief), for defendants in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge.

This was an action upon a policy of insurance upon the life of James E. McElroy, issued by the Equitable Life Assurance Society of the United States, the plaintiff in error, on June 29, 1894, to Della Irene McElroy, James Edward McElroy, and Myrtle Beckham McElroy, the defendants in error. The insurance company answered to the complaint of the defendants in error upon that policy that on June 29, 1894, negotiations were pending between McElroy and the company relative to the insurance of his life, but no contract had been made, and no premium had been paid; that on June 26, 1894, he was taken seriously ill with appendicitis; that on June 28, 1894 expert physicians and surgeons decided that a dangerous surgical operation offered the only chance of saving his life; that he was taken to a hospital, and such an operation was performed upon him on that day; that on June 29, 1894, Helen C. Doty, the private secretary of McElroy, who knew these facts, of which the company was ignorant, appeared in its office in New York, concealed the whereabouts of McElroy, his illness, and the operation that had been performed upon him, represented that he was in good health, but was absent in Boston, and had left funds with her to pay the premium for, and to consummate the contract of, insurance, paid a part of the premium on that day and the remainder on the next day, and thereby induced the company to issue the policy in suit, which it would not have done if it had been informed of the facts. McElroy died about 4 o'clock on the morning of June 30, 1894, from the effects of the disease and the operation. The case was tried to a jury, and there were a verdict and judgment against the company for the full amount of the policy. The writ of error challenges this judgment, and the alleged errors on which counsel place their chief reliance are the refusal of the court to instruct the jury to return a verdict in favor of the assurance society, and some portions of its proof. A statement of these facts is essential to an understanding of the questions presented by the assignment of these errors.

The facts which stood admitted or established by uncontradicted testimony or by the evidence introduced by the defendants in error at the close of the trial were these: On December 30, 1892, the assurance society issued its policy No. 627,641,on the life of McElroy, for $100,000, payable to James E. McElroy, his executors, administrators, or assigns, in 30 equal annual installments after his death, in consideration of the annual payment, in advance of a premium of $1,669 on or before the 30th day of December in every year during the continuance of the contract. This policy was a tontine installment policy, and provided that at the end of the tontine period, which was on December 30, 1912, the society would commute or discount and pay to McElroy, if living, any installment at the rate of 3 1/2 per cent. compound interest per annum, and would give him the option to receive the installments as they fell due, or in a single payment at the rate of discount stated. The policy gave the same option to his executors, administrators, or assigns if he was dead when the first installment became due. McElroy failed to pay the second premium on this policy, which fell due on December 30, 1893.

George E. Tarbell was third vice-president of the society, and an intimate friend of McElroy. At the latter's request, he extended the time for the payment of this premium until January 30, 1894, but McElroy did not pay it and the policy lapsed and was forfeited on that day. McElroy applied to Tarbell for a further extension, but was refused, because the rules of the society prohibited an extension of more than one month. During the spring of 1894, Tarbell repeatedly solicited McElroy to have his policy reinstated, and McElroy often urged Tarbell to become a director in a telephone corporation which he was promoting, but neither granted the request of the other. On May 8, 1894, Tarbell again urged McElroy to have his policy reinstated, and he replied that he did not know whether he should carry any insurance or not but that, if he did, it would not be more than $50,000. Tarbell told him that he would be compelled to submit to another medical examination before his policy could be reinstated in any event, urged him to return his old policy and to take the examination, and assured him that taking the examination would put him under no obligation to take the insurance. On May 10th he was examined and certified by the surgeon of the society for restoration. On June 13th or 14th he brought his old policy to Tarbell, and said he had not decided how much insurance he would take. Tarbell told him that, if he would make up his mind and give him his check, he could put his insurance into effect. He declined to do so, and said he was not ready to determine that matter definitely, but that, if he took any insurance, he would probably take $50,000; and Tarbell told him he would have the policy reduced to $50,000, and take it down to him, and he replied that he would discuss the matter then. On June 14, 1894, the chief medical director of the society approved the report of McElroy's examination on May 10, 1894; and, by direction of Tarbell, a new policy on the life of McElroy, for $50,000 was written. This policy bore the same number, had the same tontine period, and was payable to the same parties, as the old policy; but it provided for the payment by the society of only $50,000, in installments one-half as large as those in the old policy, in 'consideration of the payment in advance of $434, and of the semiannual payment of $434 * * * on or before the 30th day of June and December in every year during the continuance of this contract. ' Tarbell then wrote McElroy: 'I have asked Miss Amendt to hand you policy No. 627,641, which, as per your request, we have reduced to $50,000, with the premium payable semiannually. Kindly give her your check for the same, $434, and she will have a renewal receipt sent to you;' gave this letter and the policy to his private secretary, Miss Amendt, and instructed her to hand the letter to McElroy, and, if he paid the premium, to deliver the policy to him. On June 15, 1894, she took them to him, delivered the letter, and told him what her instructions were. He read the letter, and said, 'I don't want to do anything about that policy until I can see Mr. Tarbell. ' She urged him to pay the premium and take it. Then he read the policy, and said he wanted it made out differently; that he wanted $30,000 payable to his wife, and $10,000 to each of his children. Miss Amendt had no authority to change the policy in this way, and she took memoranda of the names of the new parties, and told him she would take the policy back, and see if she could have it written as he desired, and that she would then bring it back, and deliver it to him, so that he could have the insurance. He replied, 'No,' never mind about that, he wanted to see Tarbell. She took the policy and her memoranda back to the office, and placed them in her desk. Tarbell was then out of the city. When he returned, a few days later, she related the conversation she had with McElroy to him; but nothing further was done in the matter until after Miss Doty, McElroy's private secretary appeared, on June 28, 1894, told them that McElroy was away, and had left funds with her to pay the premium, and asked for the policy. On June 26, 1894, McElroy was taken seriously sick with appendicitis. On the morning of June 28, 1894, the surgeon decided that his situation was grave, and that an operation offered the only chance for his recovery. He then called Miss Doty to his room, signed a number of blank checks, and told her to get the policy in suit, and pay the premium on it, but not to tell the officers of the society that he was sick. He was then taken to the hospital; the operation was performed, and he died from its effects, about 4 o'clock in the morning of June 30, 1894. Immediately after her interview with him, Miss Doty went to the office of the society, where she found Tarbell and Miss Amendt. She knew of the illness of McElroy, and that he had been taken to the hospital for the operation. She told them that McElroy was away, and had left instructions with her to pay the premium and get the policy, and asked if it was ready. Miss Amendt replied that it had not been touched, because she had not been feeling well, and she had left it go by. She said she was in a hurry for the policy, and asked if she could have it that day. She was told that it would be written as soon as possible, but that it would probably not be ready until the next day. Thereupon Tarbell directed the policy to be changed so that the beneficiaries should be Della Irene McElroy, Myrtle Beckham McElroy and James Edward McElroy, Jr., instead of James E. McElroy, his executors, administrators, and assigns; and this was done. The next morning, June 29th, Miss Amendt telephones to Miss Doty that the policy was ready, and Tarbell would bring it over to McElroy. She replied that McElroy was still away. Thereupon Miss Amendt took the policy to her, received McElroy's check for $434, told Miss Doty that there was $13.02 interest owing on this installment, and that another installment would be due the next day. She gave Miss Doty the receipt of the society for '$434, being the semiannual premium due on...