Great Southern Life Ins. Co. v. Doyle

Decision Date05 February 1941
Docket NumberNo. 1848-7593.,1848-7593.
Citation151 S.W.2d 197
PartiesGREAT SOUTHERN LIFE INS. CO. v. DOYLE et al.
CourtTexas Supreme Court

September 1, 1932, the insurance company issued its policy of life insurance in the sum of $2,000 upon the life of Annie Landry, in which Ethel Mary Doyle was named beneficiary.

October 1, 1935, said policy lapsed and under extended insurance provisions thereof terminated on December 1, 1935.

December 18, 1935, insured delivered written application for reinstatement of said policy, bearing same date, which was approved by the company on December 23, 1935.

March 4, 1936, insured suffered a stroke of apoplexy, thereafter dying on March 11, 1936. The insurance company filed this suit to cancel the policy upon two grounds as follows, to wit: First, that the insured was not in good health at the time of making the application for reinstatement nor at the time the application was approved by the company; and second, that said reinstatement should be set aside because of representations made by insured which were untrue and were believed and acted upon by the company and were material to the risk.

The issues were submitted to a jury and were answered as follows:

"Special Issue No. 1:

"Do you find from a preponderance of the evidence that Annie Landry answered question No. 2 of her application for reinstatement dated December 18, 1935, for the purpose of inducing the Great Southern Life Insurance Company to revive the policy of insurance in question?

"Answer `She did' or `She did not.'

"To which the jury answered `She did not'.

"Special Issue No. 2:

"Do you find from a preponderance of the evidence that Annie Landry, during the year 1935 and prior to December 18, 1935, had syphilis?

"Answer `Yes' or `no'.

"To which the jury answered `Yes'.

"Special Issue No. 3:

"Do you find from a preponderance of the evidence that Annie Landry on December 18, 1935, knew that she had had syphilis during the year 1935?

"Answer `Yes' or `No'.

"To which the jury answered `No'.

"Special Issue No. 4:

"Do you find from a preponderance of the evidence that Annie Landry's syphilitic condition in 1935, if any, was material to the risk as that term is herein defined?

"`Material to the risk', as herein defined, means any fact concerning the health, condition or physical history of Annie Landry, which would have induced the insurance company to decline to reinstate the policy at all, or demand the payment of a higher premium.'

"Answer `Yes' or `No'.

"To which the jury answered `Yes'.

"Special Issue No. 5:

"Do you find from a preponderance of the evidence that Annie Landry from December 18, 1935, to December 23, 1935, was not in good health?

"Answer `She was not in good health' or `She was in good health.'

"To which the jury answered: `She was not in good health.'

"Special Issue No. 6:

"Do you find from a preponderance of the evidence that on December 18, 1935, at the time she signed the application for reinstatement, Annie Landry knew that her answer to Question No. 2 therein was false?

"Answer `She did' or `She did not.'

"To which the jury answered `She did not.'

"Special Issue No. 7:

"Do you find from a preponderance of the evidence that on December 18, 1935, at the time she signed the application for reinstatement, Annie Landry knew that in answering Question No. 2 in said application for reinstatement, she was concealing from the Great Southern Life Insurance Company the fact that she had had syphilis during the year?

"Answer `She knew' or `She did not know'.

"To which the jury answered `She did not know.'

"Special Issue No. 8:

"If you have answered the next preceding special issue `She did', and only in that event, then answer this issue:

"Do you find from a preponderance of the evidence that Annie Landry made her answer to Question No. 2 in the application for reinstatement with the intent to deceive and mislead the Great Southern Life Insurance Company into approving her application for reinstatement?

"Answer `She did' or `She did not.'

"To which the jury made no answer.

"Special Issue No. 9:

"Do you find from a preponderance of the evidence that at the time she signed the application for reinstatement on December 18, 1935, Annie Landry did not believe she was in absolutely first-class health?

"Answer `She did not believe so' or `She did believe so.'

"To which the jury answered `She did believe so.'

"Special Issue No. 10:

"Do you find from a preponderance of the evidence that Annie Landry made her answer to Question No. 10 in the application for reinstatement, that she believed she was in absolutely first-class health, for the purpose of deceiving and misleading the Great Southern Life Insurance Company into accepting said application for reinstatement?

"Answer `She did' or `She did not.'

"To which the jury answered `She did not'.

"Special Issue No. 11:

"Do you find from a preponderance of the evidence that the physical condition of Annie Landry at the time she signed the application for reinstatement on December 18, 1935, was material to the risk assumed by the Great Southern Life Insurance Company, as that term is herein defined?

"Answer `It was' or `It was not.'

"To which the jury answered `It was.'"

The insurance company filed motion for judgment, notwithstanding the verdict and for judgment on the verdict. The trial court overruled the first-mentioned motion, but rendered judgment for the insurance company on the verdict. The beneficiary named in the policy appealed to the Court of Civil Appeals. The Galveston Court of Civil Appeals reversed the judgment of the trial court and rendered judgment in favor of the named beneficiary for the full amount of the policy. 126 S.W.2d 735. This court granted writ of error.

It is contended by the insurance company that under the stipulation of the application for reinstatement providing said policy shall not be revived nor go into effect until certificate and contract be approved by the president or vice-president and medical director of said company during the lifetime and good health of applicant, and the finding by the jury that applicant at the time of reinstatement was not in good health, judgment should be rendered denying the beneficiary named in the policy any recovery, as was done by the trial court.

It is true that such a stipulation contained in an application for insurance has been held valid and enforceable and not prohibited by our statutes governing contractual provisions of life insurance contracts made in this state. Wright v. Federal Life Insurance Co., Tex.Com.App., 248 S.W. 325, and subsequent cases following it. The stipulation sought to be enforced in this case is contained in an application for reinstatement of a life insurance policy which had been issued and after issuance had lapsed for the nonpayment of premiums. The policy theretofore issued provided the terms upon which it could be reinstated as follows, to wit: "In the event of nonpayment of any premium when due and the application of the value of this policy to the purchase of other insurance, and if such other insurance shall be in force and the original policy shall not have been surrendered to the company and cancelled, this policy may be reinstated at any time upon evidence of insurability satisfactory to the company and payment of arrears of premiums with interest at the rate of 6% per annum."

The quoted provision of the policy represents the contractual requirements of the parties to it with regard to the right of reinstatement. Neither party should be allowed to vary those terms without an additional consideration. Under such a contract the company had the right to require evidence of insurability satisfactory to it, together with the payment of arrear premiums, with interest at the rate of 6% per annum. The company has not the right under such a provision to add a condition precedent to the taking effect of the reinstatement, i. e., a stipulation of good health, where, as in this case, under the contract the company must determine for itself whether the evidence of insurability furnished by the policyholder is satisfactory to it before the reinstatement becomes effective. The evidence of insurability presented by the policyholder was accepted by the company, presumably because it was satisfactory to it. It would indeed be a harsh rule to allow the company to enforce a condition precedent without any additional consideration to support it and not specifically contracted for in the policy of insurance after the company had determined that the evidence of insurability presented to it was satisfactory, accepted the reinstatement of the policy and after the death of the policyholder. In Corpus Juris, Vol. 37, Sec. 239, p. 497, it is said: "Where the policy specifies the conditions or terms upon which reinstatement may be obtained, insurer may not enlarge such terms or impose additional conditions unless such additional conditions are supported by a consideration. * * *"

The rule stated is applicable to the present case. We also approve the following statement of the law in the case of Missouri State Life Insurance Company v. Hearne, 226 S.W. 789, at page 794, by the Galveston Court of Civil Appeals: "We are also of opinion that appellee's contention, that if the suicide clause in...

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