Lakin v. Postal Life & Cas. Ins. Co.

• Decision Date: 13 October 1958
• Docket Number: No. 46075,No. 2,46075,2
• Citation: 70 A.L.R.2d 564,316 S.W.2d 542
• Parties: Henry L. LAKIN, Appellant, v. POSTAL LIFE AND CASUALTY INSURANCE COMPANY, a Corporation, Respondent
• Court: Missouri Supreme Court

Page 542

316 S.W.2d 542

70 A.L.R.2d 564

Henry L. LAKIN, Appellant, v. POSTAL LIFE AND CASUALTY INSURANCE COMPANY, a Corporation, Respondent.

No. 46075.

Supreme Court of Missouri, Division No. 2.

Oct. 13, 1958.

Donald G. Stubbs, McKenzie, Williams, Merrick, Beamer & Stubbs, Kansas City, for appellant.

James A. Moore, Jess W. Van Ert, Laird P. Bowman, Kansas City, for respondent Gage, Hillix, Moore & Park, Kansas City, of counsel.

STOCKARD, Commissioner.

Appellant Henry L. Lakin instituted this action April 18, 1955, against Postal Life and Casualty Insurance Company to recover the face amount of $25,000 and interest on a policy of insurance dated October 13, 1954, on the life of W. Harvey Hankinson, appellant's alleged business partner, and for the statutory allowance for vexatious refusal to pay and for attorneys' fees. Respondent admitted the issuance of the policy, a change of beneficiary and an assignment to appellant in form only, and it based its defense on the submitted grounds that said policy was invalid (1) because appellant had no insurable interest in the life of the insured and sought to evade the law against wagering insurance contracts; (2) because of false representations in the procurement of the policy; and (3) that appellant intentionally took the life of said insured and is not entitled to receive the proceeds of said policy. Judgment was entered for respondent on the unanimous jury verdict. Appellant contends reversible error resulted in not directing a verdict for him for the face amount of the policy, plus interest, as requested at the close of the evidence, and in giving respondent's instructions Nos. 3, 7 and 8.

This is a reassigned case. A rather detailed statement of the facts will be made, perhaps more detailed than necessary for the disposition required. However, a complete picture of the facts as disclosed by the evidence is believed advisable as well as helpful.

Appellant was a small roofing and siding contractor in Kansas City with his office located in his home. He placed the following advertisement in the 'help wanted' sections of the Kansas City Star and Kansas City Times of August 19, 1954: 'Man--Age 25 to 30, single, start as helper and learn trade; wages plus room and board; prefer person with no family ties. CL 7446.'

W. Harvey Hankinson was a native of Gloverville, South Carolina. After he was discharged from military service in 1949 he returned to Gloverville and worked as an auto mechanic in his father's garage and also operated a wood and coal business. He abandoned his wife and four children in the early part of 1954. From August 9 to August 19, 1954, he was a patient in the Veterans Hospital at Kansas City. He had worked in the kitchen of a railroad section gang just prior thereto. Earl Hankinson, Harvey's brother, testified that after Harvey's release from the army his 'business went bad' because he started drinking, that his drinking came 'before anything else' and that he was 'a drunkard, a derelict and a floater.' He also testified that Harvey had permitted his National Service Life (G.I.) insurance to lapse for nonpayment of premiums.

Appellant testified that Hankinson responded by telephone to the above newspaper advertisement, and that he met him at a drug store near the hospital and 'selected' him 'to work for me at the time.' Hankinson had no place to stay, and appellant took him to his home where he thereafter lived. Appellant also stated that Hankinson worked 'the first job or two for nothing, that was to learn the trade, see if he liked it and all, he got his room and board out of it.' This arrangement lasted about a week. Although appellant testified that he paid Hankinson a weekly sum 'for awhile,' he also stated that he never gave him a definite amount each week because the payments were based on piece work and job work. According to appellant, Hankinson was a willing worker and 'caught on to things;' they were friendly; talked about the business and about joining as partners; and that they entered into a percentage arrangement under which Hankinson's share 'grew very rapidly' and he was drawing from forty-five to fifty or fifty-five per cent at the time of his death. Also, appellant stated that if Hankinson 'needed an advance of money I would give him advance money. We didn't argue much about the money.' However, appellant kept no books showing the amount of those 'advances.' Hankinson's name never appeared on any letterheads, business cards, invoices, or in any contract. Appellant had no written agreement with him, and they never used a partnership name because 'we hadn't got to that.' Hankinson made no capital contribution whatever to the alleged partnership, and he did not buy any share in appellant's equipment. Appellant kept no accounting books, but he maintained what he called a 'job analysis sheet.' The partnership maintained no bank account and all checks for work done were payable to appellant alone and were deposited to his credit. Hankinson had no right to issue checks, and he did not hire or fire any employees. Appellant testified that he filed a Lakin & Hankinson partnership income tax return for the year 1954 about four weeks prior to the trial. This meant that the return was filed about twenty-two months after Hankinson's death and about eighteen or nineteen months after it was due. Following the death of Hankinson, appellant made no settlement of partnership interests.

Appellant testified that he previously had had three partners. One of these alleged partnerships was with a person named Shelton but it did not last 'over about six weeks.' Another was with a person named Dummit and it lasted 'less than a month.' The other alleged partnership was with Frederick E. Scott. Appellant stated that this partnership lasted 'about three years, all told,' but that he had no written agreement with Scott. According to appellant the percentage division between him and Scott was 'fifty percent,' but he also testified to a most unusual arrangement whereby Scott 'gave' all of his share of the money back to appellant, because, according to appellant, 'he wouldn't take it,' and then appellant gave Scott 'what he needed.' Scott also lived at appellant's house as did Shelton.

On applications, dated September 5, 1951, signed by Scott and by appellant stating their relationship as partners, the Prudential Insurance Company of America issued separate $25,000 ten-year term policies, with double accidental death benefits, on the life of Scott with appellant as beneficiary and on the life of appellant with Scott as beneficiary. Scott testified that he thought appellant's wife was designated as beneficiary in appellant's policy and that he did not remember seeing the policies or paying any premiums on them. He testified that he quit working for appellant following an attack upon him by appellant with an iron pipe. However, he also admitted that he stayed at appellant's house several months after the attack because he had no money to leave and that he left shortly after he had a wreck with appellant's car. There was no settlement of partnership interests when Scott left.

Appellant also testified that his brother had been a partner with him during 1956 for five months, but that 'right now he is not a partner with me' because he was 'out selling.'

Appellant filed no partnership income tax returns for any of his partnerships prior to his alleged partnership with Hankinson because, as he stated, 'there was no partnership with me.' There is no explanation of this obviously inconsistent statement.

In the course of his testimony, appellant stated that he was a 'believer' in insurance and carried approximately $80,000 on his own life. He admitted that he was influential in Hankinson's becoming interested in insurance. Tom Ballard, an agent for Prudential Insurance Company, and appellant were good friends. Appellant told Ballard that he had a new partner, and on August 26, 1954, which was only seven days after appellant placed the advertisement in the newspapers which Hankinson answered, Ballard took Hankinson's application for a $50,000 ten-year term double indemnity policy in which appellant as 'partner' was designated as beneficiary. Prudential wrote Ballard and requested his justification for this application, and he answered on September 20, 1954, that the partners had agreed that Hankinson was to receive 25% of the profits while learning the business and that Hankinson had stated he had invested $5,000 in the business. Both of these statements, according to the testimony of appellant, were untrue. Ballard then made the request to Prudential that if it would not issue a $50,000 policy it consider issuing a $25,000 policy. Prudential rejected the application.

Dayton Ballard, Tom's brother, was also an agent for Prudential and had a soliciting agent's contract with respondent. Tom informed Dayton that Prudential had rejected the application for insurance which he had submitted, and he asked Dayton if there was 'a possible chance' of placing the insurance with respondent. On October 12, 1954, Tom and Dayton Ballard met appellant and Hankinson at appellant's home. When advised that Hankinson had four children but no insurance, Dayton suggested that Hankinson submit to respondent an application for a five-year term policy in the amount of $25,000, with double indemnity, with his wife designated as beneficiary. He explained that since Hankinson's application to Prudential had been rejected the premium would be rated up, and that if respondent issued the policy he would then ask for 'business insurance' in the amount of $25,000.

Hankinson executed an application as Dayton suggested, and he obtained the $58.75 quarterly premium from appellant in cash and handed it to Dayton. Dayton wrote in the answers to the questions on the application, and stated, among other things, that Hankinson's age was thirty and that he had been a partner with appellant for...