French v. Columbia Life & Trust Co.

• Decision Date: 25 April 1916
• Parties: FRENCH v. COLUMBIA LIFE & TRUST CO.
• Court: Oregon Supreme Court

156 P. 1042

80 Or. 412

FRENCH v. COLUMBIA LIFE & TRUST CO.

Supreme Court of Oregon

April 25, 1916

On Rehearing, May 16, 1916.

In Banc.

Appeal from Circuit Court, Multnomah County; John P. Kavanaugh Judge.

Action by Elizabeth French against the Columbia Life & Trust Company. From a judgment for defendant, plaintiff appeals. Affirmed.

Elizabeth French is prosecuting this action in an attempt to recover on two life insurance policies which had been issued to her husband, James M. French, now deceased, by the defendant, a life insurance company, The first policy is dated March 11 1912. The insured is James M. French. The beneficiary is Elizabeth French, and the amount of the annual premium is $170.13 payabre for the period of 20 years on March 11th each year, with a grace of 31 days allowed for the payment of premiums. A copy of the application for insurance is attached to the policy, and shows that the insured agreed that:

"This application together with the policy which may be issued shall constitute the contract between me and the company."

By the terms of the policy the insurer agrees to pay $2,500 to the beneficiary "less any indebtedness hereon to the company, and any unpaid portion of the premium for the then current year." The policy reaffirms the statement appearing in the application by declaring that "this policy and the application therefor shall constitute the entire contract between the parties." Other stipulations found in the policy and material to this discussion are here quoted:

"No premium after the first shall be considered paid unless a receipt shall be given therefor, signed by the president, a vice president, or secretary, and countersigned by an agent authorized to receive such premium, nor shall any premium payment have the effect to continue this policy in force longer than for the period covered by such payment, except as otherwise provided herein. Agents are not authorized to make, alter or discharge contracts, or to waive forfeitures, or to waive or postpone payment of premiums."

On May 24, 1912, the defendant issued to James M. French a second policy which was identical with the first, except that the May policy named Irene C. French, a daughter of the insured as the beneficiary, and the annual premiums are made payable on May 24th. The defendant concedes that the premiums on both policies were paid the first year, although the payments were made by giving two notes each being for $170.13, the amount of the initial premiums. The note given for the premium on the March policy was ultimately paid in money, but only $62.50 was paid on the note covering the first premium on the May policy. The giving of the notes for the first premiums on the two policies is of no importance except that the note on the May policy is one of the "several notes" referred to in a letter sent to the insured on November 12 1913, by the company.

The insured was not able to pay the second premium on the March policy. French represented to the company that he had considerable funds coming due in July, and that if an extension could be granted for the payment of the initial premium note on the March policy "and the new premium falling due, he could take care of all of it at that time," and afterwards on April 10, 1913, before the expiration of the 31 days of grace, he signed and gave to the company a writing, which will be called a note because the parties themselves have so designated it, reading thus:

"$170.13. Portland, Oregon, April 10, 1913.

"On the 15 day of July 1913, without grace, for value received, I promise to pay to the order of Columbia Life & Trust Company, at its office in the city of Portland, Oregon, one hundred seventy and 13/100 dollars, in U.S. gold coin, with interest thereon in like gold coin at the rate of six (6) per cent. per annum, from the 11th day of March 1913, until paid.

"This note is given on account of the renewal premium for the period of 12 months ending on the 11th day of March, 1914, on policy No. 6551 issued to me by said Columbia Life & Trust Company.

"If this note is not paid, principal and interest, at the maturity thereof, said policy shall thereupon and on the 15th day of July, 1913, without notice or other action by said Columbia Life & Trust Company, lapse and become of no further force or effect; and thereupon this note shall, without notice or other action by said Columbia Life & Trust Company, immediately become due and payable, to the extent of so much thereof as may be required to cover the pro rata premium of the insurance under said policy to the date of such cancellation thereof."

Not being able to liquidate the second premium on the May policy, failing due on May 24, 1913, the insured within the grace period, executed a note which contained the same terms as the quoted note given for the second premium on the March policy, except that the note for the May policy is dated June 24, 1913, and provides for a reasonable attorney's fee in case suit or action is instituted to collect the note or any portion tbereof. The company acknowledged the receipt of the note for the May policy by giving or sending to the insured a form letter dated June 24, 1913, which opens by stating that:

"We are in receipt of your valued remittance, in payment of the premium on your policy, and have the pleasure of handing you the official receipt herewith."

While it does not definitely appear that the insured received a similar letter when he executed the note for the renewal premium on the March policy, yet he may have received such a letter because it was a form letter used by the company. When the note dated April 10, 1913, was delivered to the company, it in turn delivered or mailed to the insured a receipt for "the annual premium due March 11, 1913, as per statement in the margin hereof, on policy No. 6551, insuring the life of James M. French." The statement in the margin reads: "Premium for one year, $170.13, subject to note given in payment hereof." The receipt for the renewal premium note on the May policy is not worded like the receipt for the renewal premium note on the March policy. The second receipt reads thus:

"Received from the owner of policy No. 6579 the annual premium of $170.13 due on the 24th day of May, 1913. Given in accordance with note dated June 24th, 1913."

When the company issued the March policy an entry was made on a card, used for that purpose, showing the name of the insured, the date, amount, plan and number of the policy, the amount of the annual premium, the name of the agent writing the insurance together with the amount of his commission; and after the general heading "Premium Payments," but under the subheadings "Yr/Date/Amount" on a line made for the initial premium the company wrote the date and amount of that payment. No additional entries were made on the card until April 10, 1913, when the note of that date was executed. On the line prepared for the second annual premium payment in the columns headed "yr/date/amount" the company wrote "4-10-13 170 13." On the back of the card are ruled lines and columns which are headed thus:

"Premium Loans. Dr. Cr. ------------------------------ Date. Amount. Date. Amount. ------------------------------ ------------------------------ ------------------------------

On the "Dr." side, and under the heading "Date" the company wrote "4-10-13" and beneath the heading "Amount" was entered "170 13." At the same time an entry was made in the premium journal thus:

"Policy No. 6551, twenty year endowment, $2,500.00, second year annual payment $170.13, March 11, entered on the 10th day of April. J. M. French. Premium note entered under renewal premium, pure 163.67, load 6.56."

After the issuance of the May policy as well as when the note of June 24, 1913, was given on account of the May policy, entries were made on a card and in the premium journal, as was done in the case of the March policy, and the note given on account of the renewal premium on the March policy. On November 12, 1913, the insured received a letter from the defendant, which is here quoted in full:

"We hold several notes signed by you, which are long past due.

"Your policy #6551 lapsed because of nonpayment of the note given for the premium on July 15, 1913.

"Your policy #6579 lapsed for nonpayment of your note given to cover the premium on same on July 24, 1913.

"The policies may be reinstated provided you are in good health by the furnishing of a health certificate and by paying up the premiums. In fact, if you will make a substantial payment on account of the notes which we hold, we will be willing to accept a new note in payment of the balance; but, whether you reinstate the policies or not, we must require at least a substantial cash payment from you at this time. These matters have dragged so long that we are not willing to permit them to run longer unless there is a substantial payment made by you."

On November 29, 1913, on the back of the card on the "Cr." side of "Premium Loans," under the heading "Date," was written "11-29-13 ch off," and under the heading "Amount" was entered "170 13."

James M. French, the insured, died on December 19, 1913. No payments were ever made by him on either of the two notes given in 1913. On February 21, 1914, a clerk in the office of defendant mailed a letter addressed to James M. French saying:

"You are hereby notified that on policy No. 6551 the annual premium of $170.13 will fall due the 11th day of March, 1914. Prompt payment is important and may be made personally or by bank draft, check or money order."

On March 4, 1914, the company prepared a statement showing that the estate of James M. French was indebted to the company for $107.63 balance of the principal due...