Fidelity Mutual Life Insurance Co. v. Bussell

• Decision Date: 08 April 1905
• Citation: 86 S.W. 814,75 Ark. 25
• Parties: FIDELITY MUTUAL LIFE INSURANCE COMPANY v. BUSSELL
• Court: Arkansas Supreme Court

86 S.W. 814

75 Ark. 25

FIDELITY MUTUAL LIFE INSURANCE COMPANY v. BUSSELL

Supreme Court of Arkansas

April 8, 1905

Appeal from Union Circuit Court, CHAS. W. SMITH, Judge.

Reversed.

STATEMENT BY THE COURT.

On the 25th of June, 1900, the appellant insurance company issued a policy of $ 1,000 upon the life of John T. Bussell, payable to his father, Thomas P. Bussell, the appellee The premium was $ 50.40, payable on the 25th of June, 1900, and every year thereafter for twenty years. No premium was paid on delivery of the policy other than 80 cents, the cost of the revenue stamps, and in lieu of cash premium John T. Bussell executed his note for said premium (less the revenue tax), $ 49.60, due November 1, 1900. Thereupon the insurance company issued him a receipt for the first premium, which contained this stipulation:

"It is understood and agreed that a protested check or a past-due note or obligation of any kind is not payment, and that any obligation given in exchange for this receipt, when dishonored or not paid at maturity, shall render this receipt and said policy absolutely void; and when payment hereof is made to an authorized agent, such agent must countersign at the date of paying, as evidence of payment to him."

When the note fell due, it was sent to R. A. Cloud, the local soliciting agent for the company, for collection. Bussell paid $ 25, and for the balance executed the following note:

$ 24.60

Junction Ark., November 1, 1900.

"On or before December 20, without grace, after date I promise to pay to the order of R. A. Cloud twenty-four and 60-100 dollars at Junction, Ark., without defalcation, for value received. If this note is not paid at maturity, policy No 107561, issued by the Fidelity Mutual Life Insurance Company of Philadelphia, for which it is given, shall be ipso facto null and void, without notice to the maker hereof and without any act on the part of the company, and shall remain so until restored as provided by its terms. It is expressly agreed and understood that in the event of failure to pay the note at maturity, the maker of this note shall be liable for its face value with interest from date at the rate of per cent. per annum with all costs of collection, including attorney's fees of 10 per cent. as liquidated damages.

"J T. BUSSELL.

(Stamp.)

"No Due

"Indorsed:

"R A. CLOUD.

"REAVES & BRIGHT."

This note was indorsed by Cloud, and sent to the general agents of the company at Little Rock, Reaves & Bright, and they in turn indorsed it, and sent it to the home office of the company where it was accepted. Before it was due, the company sent it to Little Rock to its cashier, Bright, for collection, and he sent it to Cloud for collection. The evidence conflicts as to the course of events when Cloud presented it. Evidence for appellee tends to show that Cloud waived the prompt payment, and agreed to wait a few days for payment, and in the time indicated Bussell was killed. Evidence of appellant tends to show that there was no waiver, nor act from which it could be inferred, and that a waiver was beyond the scope of Cloud's agency. Evidence was adduced by appellee tending to prove that the company was accustomed to accept payments after maturity without requiring a health certificate as stipulated in the policies, and evidence was adduced contradicting or explaining the instances proved. After the death of Bussell his partner paid Cloud the amount of the note and received this receipt:

"$ 24.60.

January 1, 1901.

"Received of E. A. Burnside twenty-four and 60-100 dollars to pay balance on J. T. Bussell policy.

"R. A. CLOUD. "

The evidence conflicted as to the circumstances under which this payment was made. Cloud sent the money to the cashier, and he returned it by first mail, and Cloud turned it back to Burnside. The application contained a clause to this effect: "That the policy issued hereon shall not become binding on the company until the first payment due thereon shall have been actually received by the company or its authorized agent during my lifetime and good health," and to the further effect that no statement, to whomsoever or however made, should modify the contract unless in writing and affirmed by the company, and, further, that no agent of the company should have power to modify the contract, or grant credit, or extend the time of payment of any premium, or to waive any forfeiture, etc.; such power to be exercised only by the president, vice president, actuary or assistant actuary at the head office and in writing.

The case was tried to a jury under instructions to this effect: That the forfeiture could be waived, and it was a question of fact whether it was waived.

The jury returned a verdict for the beneficiary for the amount of the policy, and, after aptly saving all questions, the insurance company appealed to this court.

Judgment reversed and cause remanded.

F. H. Calkins, and Cantrell & Loughborough, for appellant.

The failure of insured to pay his premium note at maturity forfeited his policy. 187 U.S. 335; 93 U.S. 24; 104; U.S. 88; 104 U.S. 252; 28 S.W. 411; 93 Tex. 733; 49 S.W. 425; 98 N.W. 69; 75 S.W. 735; 43 N.Y. 288; 49 Ark. 322; 62 Ark. 348; 54 Ark. 75; 52 Mich. 188; 116 N.Y. 389; 74 Minn. 387; 105 N.Y. 437; 93 N.W. 800; 62 P. 48; 56 P. 101; 67 S.W. 941; 63 N.Y. 160; 29 S.E. 927. Cloud had no authority to vary the conditions of the contract. 65 Ark. 248; 187 U.S. 353; 62 Ark. 353; 71 Ark. 242; 54 Ark. 75. Bussell had notice of the limitations upon the authority of Cloud, and expressly agreed to such limitations. 78 F. 566; 117 U.S. 519; 20 N.Y. 52; 85 N.Y. 278; 36 S.E. 637. Acceptance of payment of the note after maturity did not constitute a waiver. 28 S.W. 413; 74 S.W. 809; 96 N.W. 605; 39 Wis. 111; 96 N.C. 158; 53 Ind. 380; 2 Lans. 480.

G. W. Hays and Gaughan & Sifford, for appellee.

The forfeiture clause in the note to Cloud was void, and could not be enforced by appellant. 9 Cyc. 380; 71 Ark. 242; 53 Ark. 494; 62 Ark. 348, 562; 24 U.S. Law Ed. 690.

OPINION

HILL, C. J., (after stating the facts.)

In the case of Iowa Life Insurance Company v Lewis, 187 U.S. 335, 47 L.Ed. 204, 23 S.Ct. 126, the Supreme Court of the United States carefully reviewed the decisions of that court and other courts on the effect of premium notes and their nonpayment and extension of time by agents, and the conclusion reached is thus stated in the syllabus: "When the first premium on a policy of insurance is paid by note, and a receipt with such an indorsement thereon is given and accepted therefor, whilst the primary condition of forfeiture for nonpayment of the annual premium is waived by the acceptance of the...