Green v. American Life & Accident Ins. Co.

• Decision Date: 05 May 1936
• Docket Number: No. 23829.,23829.
• Citation: 93 S.W.2d 1119
• Court: Missouri Court of Appeals
• Parties: GREEN v. AMERICAN LIFE & ACCIDENT INS. CO.

93 S.W.2d 1119

GREEN v. AMERICAN LIFE & ACCIDENT INS. CO.

No. 23829.

St. Louis Court of Appeals. Missouri.

May 5, 1936.

As Modified on Denial of Rehearing May 19, 1936.

Appeal from St. Louis Circuit Court; M. Hartmann, Judge.

"Not to be published in State Reports."

Action by Fannie Green against the American Life & Accident Insurance Company. From a judgment for plaintiff, defendant appeals.

Affirmed.

Martin Farrow, of St. Louis, for appellant.

S. R. Redmond and Henry D. Espy, both of St. Louis, for respondent.

BENNICK, Commissioner.

This is an action by plaintiff, the beneficiary, upon a policy of insurance issued upon the life of her husband by the now defunct Quick Payment Old Line Life Insurance Company. She sues defendant, American Life & Accident Insurance Company, alleging in her statement or petition that defendant purchased, assumed, and took over certain of the business and obligations of the Quick Payment Old Line Life Insurance Company and thereby became liable to the holders of certain policies issued by the former company. In the course of the proof it appears as a conceded fact that the policy in suit was one of the policies so taken over and assumed by defendant.

The policy, which was issued on April 20, 1922, was for the principal sum of $250, with a monthly premium upon it of $1.49, which sum was required to be paid the company on or before the 20th of each and every month during the continuance of the contract, subject, however, to a further provision allowing a grace period of one month for the making of premium payments.

Among the other provisions of the policy was one providing for the revival of the policy upon certain specified conditions after a lapse of the same for the nonpayment of premium; another providing that no agent should have the power on behalf of the company to modify any of the terms of the contract, and that no condition, provision, or privilege thereof could be waived or modified except by an indorsement thereon signed by one of the company's officers; and still another provision that if, after premiums had been paid for three full years, the policy should lapse for nonpayment of premium, the insured would automatically become entitled to such extended term insurance for the face amount of the policy as its cash surrender value would purchase at the attained age of the insured, unless he should elect in lieu thereof to receive either a paid-up life policy for the amount available at the date of lapse, or else the surrender value of the policy in cash.

Suffice it to say that plaintiff seeks to recover in this case upon the theory that upon the lapse of her husband's policy, which seems to have occurred in March, 1933, it then had an available reserve with which to have purchased extended term insurance for its full value for a period of time extending well beyond the date of the death of the insured, which occurred on April 26, 1934,

The suit originated in a justice's court in the city of St. Louis, from which it was thereafter taken on appeal to the circuit court. Along with plaintiff's petition or statement in which she alleged that at the time of the death of the insured all the premiums due on said policy were paid, she filed the policy itself as an exhibit. Defendant for its part filed no pleading. Upon a trial in the circuit court to a jury a verdict was returned in favor of plaintiff, and against defendant, in the aggregate sum of $493.01 (embracing, among other things, an allowance of damages and an attorney's fee by way of vexatious refusal to pay); and from the judgment rendered, following the court's denial of its motion for a new trial, defendant has duly perfected its appeal to this court.

Though it was a conceded fact that defendant had taken over the policy in suit, which, as we have already pointed out, had been issued to the insured by the Quick Payment Old Line Life Insurance Company, there was a decided dispute or lack of agreement in the case regarding the course of events leading up to defendant's assumption of liability under the policy.

Under defendant's version of the facts, the Quick Payment Old Line Life Insurance Company had originally changed its name under some sort of a reorganization scheme into that of "First National," which company had then in turn been taken over by the Mississippi Valley Life Insurance Company, which was thereafter the insurer under the policy until the time of the transfer of its assets and liabilities to defendant pursuant to the terms of a reinsurance agreement entered into between defendant and the receivers of the Mississippi Valley Life Insurance Company.

It appears that on April 22, 1932, one Moran, the holder of a policy theretofore issued to him by the Mississippi Valley Life Insurance Company, instituted a suit against such company in the circuit court of the city of St. Louis, praying for the appointment of a receiver for said company upon the ground that it owed Moran a cash surrender value under his policy, and was insolvent and was being mismanaged by its officers. Thereupon, after the taking of certain intermediate steps, the court appointed two receivers for the company, one of whom was the state superintendent of insurance. Thereafter the receivers petitioned the court for an order concerning an offer of reinsurance of certain types of the company's business; the court entered an order granting the petition as prayed; and pursuant to such order, the reinsurance agreement heretofore referred to was entered into between defendant and the receivers of the Mississippi Valley Life Insurance Company as of May 14, 1932.

Under such agreement defendant undertook to assume all liability to the insured or beneficiary on all monthly industrial and stipulated premium policies issued by the said Mississippi Valley Life Insurance Company on which there were no claims by death or disability and no default in premium, as well as on all policies of a similar nature issued by other companies and theretofore assumed by the Mississippi Valley Life Insurance Company on which there were no claims by death or disability and no default in premium.

Said agreement further provided that as a part of the consideration for the contract of reinsurance there should be established and placed against each policy on which liability was assumed by defendant a lien equal to 100 per cent. of the legal reserve thereon as it had been established and carried on the books of the Mississippi Valley Life Insurance Company and as of the date to which premiums had been paid to such company, such lien to bear interest at the rate of 6 per cent. per annum compounded annually, and that both the lien and interest thereon should be deducted from any payment made by defendant pursuant to the terms of the policies, and from any settlement thereunder, or from the value used to purchase any paid-up or continued insurance.

It was because of such latter provision of the reinsurance agreement that defendant undertook to deny all liability to plaintiff in this case, its contention being, in brief, that upon the lapse of the insured's policy in March, 1933, for nonpayment of premium, the lien against his policy, with accrued interest thereon, equaled and in fact exceeded the reserve under his policy as of the date of lapse, so that there was no surplus reserve available with which to have purchased extended term insurance.

The evidence for plaintiff consisted principally of the testimony of a daughter of plaintiff and the insured, who had customarily handled her father's business affairs for him.

The daughter testified, in brief, that she had paid all her father's premiums to the Quick Payment Old Line Life Insurance Company, and never to the Mississippi Valley Life Insurance Company, until in April, 1932, when she was told by the collecting agent that he would make no further collections for the old company, but that collections would be resumed in the following June at which time she would be expected to make her back payments.

She testified further that in June, 1932, a collecting agent for defendant called at her home and informed her "that the American Life & Accident Company had taken over all responsibilities of the Quick Payment Company," and that "we would have to have our old policies stamped with the American Life & Accident Company stamp on them and that was all that was necessary." Following such conversation with the agent the witness went to defendant's office and had a conversation with defendant's manager regarding the status of her father's policy. According to her testimony, the manager advised her on that occasion that no new policies would be issued, and while certain other of her testimony regarding the admissions made by the manager was later stricken out on defendant's motion, it does at least appear that the insured's policy was revived and the stamp of defendant placed upon it.

It is of further significance that under plaintiff's version of the facts defendant's collecting agent, in advising the insured of defendant's assumption of his policy, had made no mention of the fact that either the Quick Payment Old Line Life Insurance Company or the Mississippi Valley Life Insurance Company had become insolvent, nor did the manager of defendant inform the insured's daughter of the pendency or outcome of the receivership proceedings to which we have heretofore referred.

Defendant's manager admitted that the insured's daughter brought the policy in to him in ...