Lane v. Fid. Mut. Life Ins. Co

• Court: North Carolina Supreme Court
• Writing for the Court: WALKER
• Citation: Lane v. Fid. Mut. Life Ins. Co, 115 Am. St. Rep. 729, 54 S.E. 854, 142 N.C. 55 (N.C. 1906)
• Decision Date: 18 September 1906
• Parties: LANE. v. FIDELITY MUT. LIFE INS. CO.

54 S.E. 854

142 N.C. 55

LANE.

v.FIDELITY MUT. LIFE INS. CO.

Supreme Court of North Carolina.

Sept. 18, 1906.

1. Insurance—Life Insurance—Reinstatement of Members—Discretion.

Where a life insurance policy provided that after forfeiture the insured could be reinstated, provided his application was first approved by the president and medical director of the company, and he could give reasonable assurance that he was still in good health, the approval by the president was not a mere ministerial act, but involved the exercise of judgment and discretion, and hence the insurer was not liable for refusal to reinstate insured if such refusal was neither fraudulent nor purely arbitrary.

[Ed. Note.—For cases in point, see vol. 28, Cent. Dig. Insurance, §§ 932, 933.]

2. Same—Validity of Provisions.

A provision in a life insurance policy that after forfeiture insured could be reinstated as a member and policy holder on the approval of his application by the president and medical direct-tor of the company, and reasonable assurance that he was still in good health, was valid.

3. Same—Instructions.

Where a policy provided that after forfeiture insured might be reinstated on the approval of his application by insurer's president and medical director, and on his giving reasonable assurance that he was still in good health, an instruction that if plaintiff applied for reinstatement, and was refused after he had furnished proof of good health, the issue whether defendant wrongfully refused to reinstate plaintiff's policy should be answered in the affirmative was erroneous.

Appeal from Superior Court, Craven County; E. B. Jones, Judge.

Action by W. B. Lane against the Fidelity Mutual Life Insurance Company. From a judgment in favor of plaintiff, defendant appeals. Reversed.

The plaintiff sued for the recovery of $2,000 alleged to be the damages sustained by the cancellation of his policy, and the defendant's refusal to reinstate him. He had taken a policy in the defendant company for $3,000 upon his life for the benefit of his wife, and failed to remit his annual dues which were payable July 24, 1901. The policy provides as follows: "In the event of a failure to pay either dues or assessments the day on which they shall become due, then in either case this certificate of membership and policy of insurance shall be ipso facto null and void, and of no effect whatever." The policy having been forfeited or having become void, as plaintiff admitted, by nonpayment of dues, he applied for reinstatement as a policy holder and member of the company, under article 9 of section 7 of the company's by-laws, which is as follows: "Delinquent members may be reinstated if approved by the medical director and president, by giving reasonable assurances that they are in good health." It is declared in the policy that the by-laws are made a part of the contract to the same extent as if they had been inserted therein, and the rights and obligations of the respective parties are to be determined with reference thereto.

The plaintiff's application for reinstate ment was accompanied by a certificate of his continued good health. The president of the company and the manager of its reinstatement department wrote to the plaintiff and his agent T. G. Hyman, that the company would not reinstate him, the president in his letter stating his reasons for thus exercising his judgment against the granting or "approving" the application. Among other reasons given was the advanced age of the applicant, he being then about 68 years old, and it Is suggested that it would not conduce to his interest nor that of the company for him to be readmitted as a member, because at his age his insurability on the mutual plan had ceased, and his only proper course would be to seek some plan by which he could combine insurance with investment. The court charged the jury that under the agreement the plaintiff had a right to be reinstated if he made application, and further that if the jury should find from the evidence he did apply for reinstatement, and furnished evidence of his good health, and the defendant refused to reinstate him, the first issue should be answered "Yes." Defendant excepted. The statute of limitations was pleaded, and in support of the plea It was shown that the defendant had domesticated under Acts 1899, p. 197, c. 62. Plaintiff's right of action accrued on or before August 20, 1901. He commenced suit against the defendant by issuing a summons January 15, 1902, which was served January 16, 1902, but no pleading of any sort was ever filed in the case. The plaintiff was permitted to testify, over the defendant's objection, that the said suit was brought upon the cause of action declared on in this suit. The court instructed the jury upon the second issue, as to the statute of limitations, that the action brought by the plaintiff January 15, 1902, arrested the operation of the statute, and that plaintiff had one year within which to bring a new action after the nonsuit in that case, which was entered November 23, 1903. That the summons In this case was issued November 11, 1904, or 11 days before the one year expired and If the jury find that to be the case, they will answer the second issue "Yes." The issues submitted and the answers thereto were as follows: "1. Did the defendant wrongfully refuse to reinstate the plaintiff's policy? Ans. Yes. 2. Did the plaintiff's alleged cause of action accrue within three years before the bringing of this action? Ans. Yes." The damages were left to be settled by agreement of the counsel and were afterwards fixed at $2,000. The defendant, at the close of the plaintiff's testimony and again at the close of all the testimony, moved for judgment as of nonsuit under the statute. The motion was overruled, and it excepted The defendant also moved for a new trial upon exceptions filed to the rulings of the court Motion overruled, and the defendant again excepted.

Judgment was entered on the verdict, and the defendant appealed.

Hinsdale & Son and W. W. Clark, for appellant.

W. D. McIver and O. H. Guion, for appellee.

WALKER, J. (after stating the case). It is conceded that the plaintiff, under the terms of the contract of insurance, had forfeited his policy and consequently his membership, by the nonpayment of...