Harrison v. Farmers & Bankers Life Ins. Co.

• Decision Date: 07 June 1947
• Docket Number: 36872.
• Citation: 163 Kan. 277,181 P.2d 520
• Parties: HARRISON v. FARMERS & BANKERS LIFE INS. CO.
• Court: Kansas Supreme Court

181 P.2d 520

163 Kan. 277

HARRISON v. FARMERS & BANKERS LIFE INS. CO.

No. 36872.

Supreme Court of Kansas

June 7, 1947

Rehearing Denied July 14, 1947.

Appeal from District Court, Sedgwick County, Division No. 4; I. N Williams, Judge.

Action by Dorothy Deal Harrison against the Farmers & Bankers Life Insurance Company on endowment insurance policy. From a judgment for plaintiff, the defendant appeals.

Judgment reversed.

Where application which was made part of endowment life policy contained typewritten provision that proceeds should be payable 10 years certain irrevocably and with spendthrift clause and typewritten rider attached to policy provided that net proceeds should not be paid to insured in one lump sum but should be paid as provided by Option (b) in equal monthly installments for 10 years certain and as long thereafter as payee should survive, the payment provisions should be strictly construed in compliance with original intent of the parties and when insured accepted the policy she divested herself of the right to have payment made in lump sum.

Syllabus by the Court.

1. When the terms of a typewritten answer in an application for an insurance contract and the terms of a typewritten rider attached to such contract irreconcilably conflict with a printed provision in the policy, the typewritten parts prevail over the printed and the conflicting printed provision should be considered as deleted or omitted from the contract.

2. The rule that irrevocable powers of attorney are revocable unless the representative relationship is coupled with an interest on the part of the representative, should not be applied for the purpose of permitting an insured to revoke the 'irrevocable' periodical payment provisions of an endowment insurance policy and to demand payment of the policy proceeds in a lump sum.

Roetzel Jochems, of Wichita (W. D. Jochems, J. Wirth Sargent, Emmet A. Blaes and Robert G. Braden, all of Wichita, on the brief) for appellant.

Glenn Porter, of Wichita (Getto McDonald, William Tinker, Arthur W Skaer and Hugh P. Quinn, all of Wichita, on the brief), for appellee.

BURCH Justice.

The appeal in this case concerns construction of the provisions of an endowment insurance policy. The question involved is whether the insurer was obligated to make a lump sum payment of the principal amount or required to make payments in periodical installments. The trial court held that the insurer was obligated to pay the proceeds of the policy in a lump sum. The insurance company contends that it was morally and legally obligated to pay the proceeds in periodical payments even though a lump sum payment would be to its financial advantage. The case was submitted to the trial court upon the pleadings and facts stipulated by the parties in the opening statements of respective counsel therefor. The pleadings are short and clear.

The petition alleged that on the 24th day of December, 1935, the defendant, for an agreed consideration, executed and delivered to the plaintiff a life insurance policy covering the life of the plaintiff, in the principal sum of $22,900; that under the terms of the policy it was provided that should the insured be alive on the 24th day of December, 1945, the defendant would pay such sum for the surrender of the policy provided all premiums had been paid in full as they became due. The petition further alleged that the policy contained a general provision setting forth that the insured might elect, revoke or change any payment option in the policy by filing a written request therefor with the defendant company; that the plaintiff filed a written election to accept a payment option which required the company to pay the principal sum of $22,900 in cash upon surrender of the policy; that the plaintiff had paid all the premiums as they became due and had surrendered the policy in connection with the written election but that the defendant had failed and refused to pay the principal amount in a lump sum.

The answer of the defendant admitted the execution of the policy and a photostatic copy of the policy was attached as a part of the answer. In addition the answer alleged that the consideration for the policy was paid for by the father of the plaintiff and that a rider attached to the policy, which stated that payment should not be made in a lump sum, was attached at his special instance and request. Attached to the answer, as another exhibit thereto, was a supplemental contract which consisted of a written acknowledgment by the defendant company that it was obligated to pay to the plaintiff $99.61 each month until the date of her death. The supplemental contract also contained a provision to the effect that should the death of the plaintiff occur before she had received 120 installments, in the named amount, that the balance of the 120 installments would be computed at the rate of 3 1/2% per annum, compounded annually and paid in one lump sum to her estate. The supplemental contract set forth that it was offered in accordance with the terms and provisions of the designated policy. The reply of the plaintiff denied all new matter set forth in the answer and alleged that the plaintiff had not accepted or agreed to the terms of the supplemental contract.

The opening statements by counsel for the respective parties developed that no significant factual controversies existed between the litigants. Counsel for the plaintiff admitted that a certain payment option 'B' in the policy, which provided for periodical payments, was made irrevocable at the instance and request of the plaintiff's father, T. M. Deal, but insisted that such fact was of no consequence because the policy had been entered into solely between the defendant and the plaintiff. Plaintiff's counsel also conceded that a large percentage of the premium money had been furnished by T. M. Deal but stated that all of the premium payments had been made by the plaintiff to the defendant and that, therefore, the source of the money was of no importance because the policy contract had been entered into only between the two parties involved in this action. Insofar as the irrevocable feature of the option 'B' payment provision was concerned, counsel for the plaintiff contended that the defendant was not entitled to rely thereon because the defendant did not claim any financial interest in the method of payment or that any less or more amount in premiums had been required by the defendant by reason of the irrevocable periodical payment provision in the policy. Counsel for the defendant admitted, in effect, that payment in a lump sum would be to the financial advantage of the defendant but insisted that the provisions of a typewritten rider attached to the face of the policy controlled the controversy. Counsel for the plaintiff informed the trial court that the plaintiff was in need of all of the money at once because she and her husband had obligated themselves to purchase a large amount of stock in a company which had been operated by the plaintiff's father and that the full amount of the money was required in order for the plaintiff to retain control of such company. The trial court held, in substance, that since the defendant had admitted it did not have any financial interest in retaining a large portion of the proceeds of the policy for the purpose of making periodic payments, the irrevocable provision was revocable and that under a provision in the policy which permitted the plaintiff to revoke or change a payment option the plaintiff was entitled to elect to recover the full cash value of the policy in a lump sum. Judgment was entered for such amount.

The foregoing develops the necessity for examination of the pertinent policy provisions. We observe that the written application for the policy, the typewritten rider attached thereto, and the printed policy, all were conceded to be the integral parts of the entire insurance contract. The application for the policy contained a clause reading as follows:

'How are proceeds to be paid? * * *--in the event the insured is living at maturity of endowment, the proceeds are to be paid under option B, 10 years certain irrevocably and with the spend thrift clause.' (Emphasis supplied.)

Option (b) in the policy was entitled 'Monthly Income for Life' and provided that the company would pay equal monthly installments for a definite number of years (admittedly 10 years in this case) and as long thereafter as such payee (the plaintiff) might survive. In compliance with the application for the insurance the defendant issued the policy and attached on the face of the second page thereof a typewritten rider which read as follows: 'By this rider attached to and made part of Policy No. 94354, and in accordance with the written request of the Insured, contained in the application for this Policy, a copy of which is hereto attached, it is hereby agreed that, should this Policy mature as an Endowment, the net proceeds of this Policy shall not be paid to the Insured in one lump sum but shall be paid as provided in Option (b) in the 'Optional Settlements' provisions, in equal monthly instalments...