Kiley v. Pacific Mut. Life Ins. Co.

• Decision Date: 09 February 1939
• Docket Number: 6 Div. 328.
• Parties: KILEY v PACIFIC MUT. LIFE INS. CO.
• Court: Alabama Supreme Court

186 So. 559

237 Ala. 253

KILEY v PACIFIC MUT. LIFE INS. CO.

6 Div. 328.

Supreme Court of Alabama

February 9, 1939

Appeal from Circuit Court, Jefferson County; J. Edgar Bowron, Judge.

Action on a policy of life insurance by Mrs. Hollie Kiley, against the Pacific Mutual Life Insurance Company. From a judgment of nonsuit, plaintiff appeals.

Affirmed.

A plea of insured's suicide in answer to count of complaint in code form in action on life insurance policy, excluding death by suicide was good, as court cannot anticipate evidence in ruling on pleadings.

Plea 7 is as follows:

"That subject to, and in and by the terms of the policy sued on it is provided that the principal sum of One Thousand Dollars ($1,000.00) would be payable in the event that said J. B. Kiley lost his life from the effects of bodily injuries sustained during the term of the policy sued on 'and caused directly, independently, and exclusively of all other causes by external, violent and solely accidental means (excluding suicide, sane or insane, or any attempt thereat, sane or insane)', that said J. B. Kiley committed suicide on, to-wit, November 18, 1936.

"Wherefore, the defendant says that plaintiff ought not to have and recover in this case."

Plea 8, after setting up the provision of the policy, quoted in the opinion, with respect to other insurance, alleges that at the time J. B. Kiley came to his death he carried insurance with the Continental Casualty Company in the amount of $2000, covering the loss for which a recovery is sought in this suit, and also carried insurance with the Life Insurance Company of Virginia in the amount of $1000, covering said loss; that Kiley gave no notice to defendant that he carried insurance with either of said companies; that no premiums were ever paid by said Kiley upon the policy sued on, nor were there any deductions from any of his wages in payment of said premiums.

The following are replications interposed by plaintiff to pleas of defendant:

"5. That said policy was issued to the insured on to-wit the 24th day of October, 1936, that on to-wit said date in lieu of payment of first premium, the insured executed and delivered to the defendant a certain pay order upon the insured's employer to-wit the L. & N. R. R. Co., which order was filed by the defendant with said L. & N. R. R. Co. and by the terms of said pay order it was provided that out of the earnings of the insured for the month of November 1936, the first installment of to-wit $2.90 on said policy should be paid. And plaintiff avers that said defendant company was doing a large business with said employees of said L & N R R Co. and had numbers of similar pay orders filed with said company and that by the custom of said company said amounts accruing to the defendant on its several policies and several pay orders with said company were not paid or made up with said Company until to-wit the 15th day of the subsequent month on which said amounts were earned. And plaintiff avers that this custom of the said company in connection with the said pay order and in accordance with the terms of said pay order was an extension of credit by the defendant to the insured for the first premium of the first installment due on the premium of said policy and that the said insured was working from time to time at different intervals during the month of November and due to work at different intervals during the month of November and during the latter half of the month of November for said L & N R R Co. but plaintiff avers that the said insured met his death on to-wit the 18th day of November 1936, before he had completed his service of working for said company and that by reason of his death and due to the fact that credit for payment of the first installment on the first premium had been extended by the defendant as hereinabove set out, the liability on said policy was fixed at and as of the time of to-wit the 18th day of November, 1936, and the said defendant cannot now renege, evade or escape the liability incurred by reason of its contract made in that behalf and by reason of its agreement for the purpose of inducing and securing business after the liability is fixed by the loss under the policy and under the terms of the said contract.

"8. That according to the terms of the contract and agreement made and entered into by and between the insured and the defendant company in reference to said policy on or about to-wit the 24th day of October, 1936, the employer was made the agent of the insured for the purpose of collecting and paying said money and the notice alleged to have been mailed on to-wit the 12th day of November, 1936, or dated that date and given to the said L & N R R Company or some officer, agent or employer of that company, asking said company to please cancel and close policy giving number and name, on the ground that the insured was not financially able to carry it, was never given to the defendant company, and the notice of cancellation was never served upon the defendant company and the defendant company never agreed to such cancellation.

"10. That the alleged insurance with the Continental Casualty Company did not cover the same loss as that covered by the insurance issued by the defendant in this case; that alleged policy in the Virginia Life Insurance Company, or insurance in said company is denied by said company, and said company denies that any policy was ever issued or that any insurance ever became effective in said company; that credit for the premiums was extended on the insurance in the instant case and the loss became fixed by the death of the insured in the instant case before the term of such credit expired.

"11. That section 17 of said policy as follows: '17. If the insured shall carry with another company, corporation, association or society other insurance covering the same loss without giving written notice to the Company, then in that case the Company shall be liable only for such portion of the indemnity promised as the said indemnity bears to the total amount of like indemnity in all policies covering such loss, and for the return of such part of the premium paid as shall exceed the pro rata for the indemnity thus determined' was fraudulently inserted in said policy; that the same is void as against public policy; that the same seeks to fix a limit upon the value of a human life; that the same is copied from stipulations in fire insurance policies which are rested on an entirely different base that the same is void as against public policy; that the same was inserted in the insurance policy in this case with a fraudulent intent to deceive the insured or to abate the liability that might be incurred under the policy issued to the insured or to make the insured believe that he was receiving a bona fide life insurance policy with a reputable company for the face value of to-wit $1,000.00, whereas the said stipulation attempts to make the defendant a mere co-insurer and said inconsistent averment in said insurance contract is void as against policy and in violation of the insurance laws of the State of Alabama."

Erle Pettus, of Birmingham, for appellant.

Coleman, Spain, Stewart & Davies and H. H. Grooms, all of Birmingham, for appellee.

THOMAS Justice.

The suit is on a policy of life insurance.

The complaint in one count was in Code form, and not subject to demurrer.

The pleas were of the general issue and special pleas 3 to 8, inclusive.

Demurrer to plea 5 was sustained, but demurrer to the other pleas was overruled.

Plaintiff filed replications from 1 to 13, and defendant's demurrers were sustained to replications 2 to 13, inclusive. Wherefore, plaintiff took a nonsuit, with bill of exceptions.

It has been declared by this court that the acceptance of a pay order by the defendant on insured's employer, if not limited in effect by the terms of that order, is tantamount to the extension of credit for the premiums by the insurance company. The general rule of construction for insurance contracts is in favor of the assured, Cherokee Life Ins. Co. v. Brannum, 203 Ala. 145, 82 So. 175; wherein the court held that the taking of a note without limiting the conditions therein was a waiver of the first payment until the note becomes due.

In Continental Cas. Co. v. Vines, 201 Ala. 486, 78 So. 392, 394, this court said: "The pay order, by the authority of which deductions from the insured's monthly wages might be made in favor of the insurance company and in discharge of the railroad company's liability to its employé, did not fix any definite date upon which the monthly installments should be payable or be paid. The source from which each installment should come was stipulated; but, in view of the known customary monthly pay days of the employer, it was quite reasonable for the parties to omit to specify any definite date when the installments should be paid."

The question of group insurance and deductions of premiums by employer is discussed in All States Life Ins. Co. v. Tillman, 226 Ala. 245, 146 So. 393.

The photostatic copies of the policy; of the pay order, on his employer "L. & N." as directed to its paymaster; of the application for insurance, all being a part of the policy, are made exhibits to the pleading and become a part thereof and aid thereto. Grimsley v. First Ave. Coal & Lumber Co., 217 Ala. 159, 115 So. 90.

The policy is dated October 24, 1936, and insured the life of J. K. Kiley, who died on the 18th day of November, 1936, of which the defendant had notice. The policy stipulated that it was issued in consideration of the premium, payable as provided in the application and statements set forth therein; the application contained, among other things, the following question and answer:

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