Hetchler v. Am. Life Ins. Co., 137.
| Decision Date | 03 April 1934 |
| Docket Number | No. 137.,137. |
| Citation | 266 Mich. 608,254 N.W. 221 |
| Parties | HETCHLER v. AMERICAN LIFE INS. CO. |
| Court | Michigan Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Circuit Court, Genesee County; Edward D. Black, Judge.
Action by Nellie E. Hetchler against the American Life Insurance Company. Judgment for plaintiff, and defendant appeals.
Affirmed.
Argued before the Entire Bench.George E. Leonard and Harry F. Johnson, both of Detroit (Fred H. Aldrich, Claris Adams, and Wilber M. Brucker, all of Detroit, of counsel), for appellant.
Guy W. Selby, of Flint, for appellee.
In 1916 Clarence O. Hetchler of Flint, Mich., took out a $12,000 20-year endowment insurance policy with the Northern Insurance Company, which later was merged with the American Life Insurance Company, defendant herein. The policy provided that, in case of default in the payment of subsequent premiums after three annual premiums had been paid, assured would be entitled to certain surrender and loan values, paid-up insurance, or extended insurance, in accordance with the number of annual premiums that had been paid. It was also provided that the policy might be reinstated at any time during the period of extended insurance, upon evidence of good health satisfactory to the company, and the payment of all arrearages. Hetchler borrowed $2,256.07 on his policy from defendant. After the policy had been in force for 10 years, he failed to pay the annual premium due on October 13, 1926. Thereupon the company sent him the following letter, advising him of the lapse of the policy, and that the balance of the then existing cash surrender value of the policy, after duducting the indebtendness against it, had been used to purchase extended insurance:
‘American Life Insurance Company
‘Detroit, Michigan.
November 29, 1926.
‘Copy
‘Copy furnished to Albert Hetchler, by his request.
‘Mr. Clarence O. Hetchler, 1401 Harrison Street, Flint, Michigan.
‘Dear Sir: On account of your policy No. 12781 having lapsed for non-payment of premium due October 13th, 1926, it has become necessary for us to charge the existing loan indebtedness of $2,256.07 against the cash value of $3079.40. The balance has been used to buy insurance to May 13th, 1932, until which date you are protected under the extended insurance provision of the policy.
‘We trust you have not permitted this policy to lapse because of any dissatisfaction with it, or with the treatment accorded you by the Company or any of its representatives, and we will indeed be pleased to have you take up with Mr. Odle, State Manager of our Flint, Michigan, branch office, the matter of reinstatement of the contract.
A. F. Reinhard.'
The insured evidently relied upon the terms of this letter and believed that he was protected until May 13, 1932. In January, 1929, however, he wrote the defendant in order to make certain as to the status of his policy, and received the following reply:
‘American Life Insurance Company
‘Clarence L. Ayres, President
‘Detroit
‘January 22nd, 1929.
‘Mr. Clarence O. Hetchler, 1401 Harrison St., Flint, Mich.
‘Dear Sir: This is in reply to your letter of January 18th relative to your policy No. 12781 which lapsed some time ago.
‘If you wish to discontinue the policy at this time, the surrender value is $564.50 which would be paid to you upon return of the enclosed surrender receipt signed by yourself and your beneficiary, and accompanied by your policy.
‘Any other information that you would like to have will be gladly furnished.
‘WHE*SK
‘Assistant Secretary.’
Hetchler did not elect to take the $564.50 offered, but permitted the policy to continue for the extended term, obviously relying upon the assurance of the company, expressed in this latter, that he was protected until May 13, 1932. He died on April 13, 1932, and, upon defendant's refusal to pay the amount due under the policy, Nellie E. Hetchler, the widow and beneficiary, brought suit to recover $8,650, the amount due on the policy.
The defendant claims that, after the demand for payment was made on bahalf of the beneficiary, the company rechecked its records, as was its custom upon receipt of notice of death of the insured on any policy running under extended insurance; that it was then discovered tht the company had made a mistake in computing the period of extended insurance, and that it had actually expired on March 15, 1932, 28 days prior to the death of the insured, rather than on May 13, as stated in the letters; that the policy had therefore lapsed prior to the date of Mr. Hetchler's death, and the company was not subject to any liability thereunder. Defendant does not claim that there was any fraud on the part of the insured or plaintiff, or that either of them was in any way responsible for the alleged error or had any knowledge thereof. Two actuaries and a professor of mathematics at the University of Michigan testified that the period of extended insurance, if properly computed, would have expired on March 15, 1932, as claimed by the company.
The trial judge held that the defendant was estopped from denying liability on the policy, on the ground that the insured had relied upon the statements of the company to his detriment. Judgment was rendered in plaintiff's favor for $10,000, payable in installments of $50 per month for 20 years, or 240 months, as had previously been elected by the insured in place of the lump sum of $8,650 in cash, according to the terms of the policy.
The sole question on appeal is whether the company is estopped from denying its liability under the circumstances.
‘It is a familiar rule of law that an estoppel arises when one by his acts, representations, or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence induces another to believe certain facts to exist and such other rightfully relies and...
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