Kimball v. New York Life Insurance Co.

• Decision Date: 13 February 1922
• Parties: FRANK H. KIMBALL v. NEW YORK LIFE INSURANCE COMPANY
• Court: Vermont Supreme Court

116 A. 119

96 Vt. 19

FRANK H. KIMBALL
v.
NEW YORK LIFE INSURANCE COMPANY

Supreme Court of Vermont

February 13, 1922

October Term, 1921. [116 A. 120]

ACTION OF CONTRACT on a life insurance policy. Answer: That the policy had lapsed by reason of non-payment of premium, and that the term of continued insurance to which insured was entitled under the policy had lapsed prior to his death and that policy was not then in force. Replication: That defendant, having full knowledge for computing term of extended insurance in its possession, had made an indorsement on the policy extending insurance at a reduced amount, to a time beyond the date of insured's death and that the policy was then in force; that by such indorsement the defendant made an election as to the term of extended insurance and waived any different right; and that insured and plaintiff, having relied on such indorsement, the defendant was estopped from claiming that the indorsement was wrong. Rejoinder: That the terms of the policy contract determined the rights and liabilities of parties, and denial of estoppel. Trial by Jury, September Term, 1921, Chittenden County, Butler, J., presiding. Verdict for the plaintiff. The defendant excepted.

Judgment reversed and cause remanded.

Theodore Hopkins and Richard Harthorne (of New York City) for defendant.

Charles H. Darling and Edmund C. Mower for plaintiff.

Present: WATSON, C. J., POWERS, TAYLOR, MILES, and SLACK, JJ.

OPINION

SLACK [116 A. 121]

[96 Vt. 23] On February 5, 1908, defendant issued to one Charles B. Kimball an ordinary life insurance policy on his life payable to the plaintiff if he survived the insured. The premiums were payable semi-annually on February 5th and August 5th. The insured died January 13, 1916; and the main question is whether the policy was in force at that time. The policy provides that the payment of a premium shall not keep the policy in force beyond the date when the next premium is payable. The premium due August 5, 1912, was not paid. The rights of the parties, therefore, depend upon what occurred subsequent to that date. The policy provides that if default be made in the payment of any premium after the policy has been in force three full years, the owner may within three months thereafter, but not later, elect (a) to accept the cash surrender value of the policy, or (b) have insurance for the face amount of the policy plus any outstanding dividend additions and less any indebtedness to the company thereon continued in force from the date of default for such time as is therein provided, etc., or (c) have paid-up nonparticipating insurance payable at the same time and on the same condition as the policy. It further provides that if the insured does not within three months from default surrender the policy to the company at the home office for its cash surrender value as provided in option (a), or for paid-up insurance as provided in option (c), the insurance to which he is entitled will be continued as provided in option (b), for such term as the cash surrender value of the policy will purchase at a net single premium at the attained age of the insured according to the American Tables of Mortality, with interest at the rate of three per centum per annum. The cash surrender value of a policy is made up of the reserve on such policy and on any dividend additions thereto, at the date of default, computed according to the American Tables of Mortality, with interest at the rate of three per centum per annum, less the amount of any [96 Vt. 24] indebtedness to the company and less a surrender charge, depending in amount upon the length of time the policy had been in force at time of default.

About the time the August 5, 1912, premium was defaulted, steps were taken by the insured and the defendant to reinstate his policy and to that end he executed and delivered to the defendant a promissory note, referred to as the "blue note," for $ 19.00, and at the same time delivered to the defendant $ 9.62 in cash. The purpose of this transaction is stated in the note as follows: "This note together with Nine and 62/o100 Dollars in Cash deposited with said Company not as payment of premium either in whole or in part, but upon the following special agreement: First,--That the above numbered policy has lapsed for the non-payment of premium due on 8/o5/o12 and application is being made for its reinstatement; That evidence of insurability satisfactory to the Company and payment of all defaulted premiums with interest are conditions precedent to reinstatement which cannot be waived; That if, however, the Company find the evidence of insurability satisfactory, then, although the policy shall not be reinstated until the full payment required for reinstatement is made (1) the insurance called for by the policy shall be in force from the date of such findings until midnight of the due date of the note; and (2) if this note is paid on or before the date it becomes due, such payment, together with said cash, will then be accepted by said Company as payment of said premium with interest, and thereupon and thereby said policy and all benefits thereunder shall be reinstated; but (3) if this note is not paid on or before the date it becomes due, it shall thereupon automatically cease to be a claim against the maker and said Company shall retain said cash as part compensation for the rights and privileges hereby granted, and thereafter all rights under said policy shall be the same as if said cash had not been paid nor said application for reinstatement made." This note fell due November 5, 1912, and was not paid. The insured also owed defendant $ 64.00 which defendant loaned him on his policy in November, 1910, and some interest thereon. This being the status of the policy, and the insured having failed to elect to accept its cash surrender value or to take paid-up insurance, the defendant on or about August 4, 1913, foreclosed the policy which it then held as security for the $ 64.00 loan and ascertained, or attempted to ascertain, the amount of extended insurance [116 A. 122] to [96 Vt. 25] which insured was entitled, and the time it would continue in force, and indorsed on the margin of the policy the following: "On account of default in the payment of the August 5, 1912, premium and loan interest this policy is continued for the reduced amount of $ 1,479 for the term of three years 274 days from August 5th, 1912 to May 6th, 1916"--and returned the policy to the insured. He retained it until the time of his death.

On the trial below plaintiff offered proof of the policy, of the indorsement thereon, and of the death of the insured and rested. None of these facts were controverted by defendant, but it claimed, and its evidence tended to show, that the term of extended insurance shown by the indorsement was erroneous, due to a mistake in the computation.

At the close of the evidence defendant moved for a verdict on the grounds: (a) That the undisputed evidence showed that the policy expired before the death of insured; (b) that there was no evidence that defendant had waived payment of premiums or the blue note; and (c) that there was no evidence that the insured or the plaintiff had relied on the incorrect indorsement of extended insurance to their damage. The motion was overruled and defendant had an exception. In disposing of this motion the evidence must be considered in the light most favorable to plaintiff. Fitzsimons v. Richardson et al., 86 Vt. 229, 84 A. 811. He claims that the evidence made a case for the jury on the questions of mistake, waiver by defendant of its technical rights under the policy, and estoppel. The defendant's evidence tended to show that the computation which was the basis for the indorsement on the policy was made by clerks in one of the divisions of its actuarial department from data furnished by another division of the same department; that this data erroneously included the regular dividend...