Liebing v. Mutual Life Ins. Co.

• Decision Date: 20 December 1916
• Docket Number: No. 17858.,17858.
• Citation: 269 Mo. 509,191 S.W. 250
• Parties: LIEBING v. MUTUAL LIFE INS. CO. OF NEW YORK.
• Court: Missouri Supreme Court

191 S.W. 250

269 Mo. 509

LIEBING v. MUTUAL LIFE INS. CO. OF NEW YORK.

No. 17858.

Supreme Court of Missouri, Division No. 1.

December 20, 1916.

Rehearing Denied January 2, 1917.

Appeal from St. Louis Circuit Court; George C. Hitchcock, Judge.

Action by Mary S. Liebing against the Mutual Life Insurance Company of New York. From order overruling motion to set aside nonsuit of plaintiff, plaintiff appeals. Remanded, with directions to set aside the order appealed from, etc.

James J. O'Donohoe, of St. Louis, for appellant. Fordyce, Holliday & White, of St. Louis (Frederick L. Allen, of New York City, of counsel), for respondent.

BLAIR, J.

This is an appeal from an order overruling a motion to set aside an involuntary nonsuit taken by appellant in the circuit court of the city of St. Louis in an action she instituted on an insurance policy issued by respondent September 29, 1901, on the life of Frederick W. V. Blees, the then husband of appellant.

Respondent in its answer admitted its corporate capacity and that it was engaged in the life insurance business, that it issued the policy sued on, that the annual premiums (each amounting to $4,291.50) were paid in September 1901, 1902, 1903, and 1904, but denies any premium was thereafter paid, that in March, 1904, the policy was, with its consent, duly assigned by the insured to his wife, this appellant, and that Frederick W. V. Blees, the insured, died September 8, 1906. The answer contained several affirmative defenses: (1) That insured and his wife in October, 1904, secured from respondent a loan equal to the full surrender value of the policy September 29, 1905, to wit, $9,550, the proceeds divided as follows: $4,291.50 to pay premium due September 29, 1904; $468 for interest; and $4,790.50 paid Blees by company's check; that the borrowers signed a loan agreement authorizing respondent, at its option, in case of default in payment of the loan September 29, 1905, without demand and without notice, to apply cash surrender "consideration of $9,550 to the payment of loan and interest and cancel the policy"; that the loan was not paid, and respondent exercised its option, and so applied the cash surrender value to the payment of the loan and canceled the policy, and that it was thereby rendered void; (2) that the repayment of the loan mentioned under "(1)," supra, was a condition of the insurance provided for in the policy; that the failure of Blees to repay violated this condition; that this was a violation of the "condition of the insurance other than the payment of premiums," within the meaning of section 6948, R. S. 1909 (section 7899, R. S. 1899), and for this reason the policy had lapsed and been canceled, and there was no liability thereon; (3) that while the policy was issued in 1901, but two premiums had been paid prior to the act of 1903 (Laws 1903, p. 208) whereby section 7897, R. S. 1899, was amended to permit indebtedness other than that for past-due premiums and interest to be deducted from three-fourths of the net value of the policy under that section; that the amendment is applicable, and that when deductions are made according thereto there was nothing remaining, and the insurance was not extended by the act, but lapsed, and no recovery can be had for that reason; (4) that no proof of death was made in 90 days as provided by section 7899, R. S. 1899, and for that reason the action cannot be maintained; and (5) that, in any event, if there be a cause of action, it is for extended insurance, and arose in September, 1906, while the action was not commenced for more than six years thereafter, and that the liability under the nonforfeiture laws is one created by statute and therefore barred in five years (section 1889, R. S. 1909), and for that reason appellant must fail. In the reply waiver of proof of death was pleaded in addition to a general denial.

The policy consisted of a promise to deliver to the assured, his executors, administrators, or assigns, fifty $1,000 bonds, payable in gold coin 20 years after issuance, with 5 per cent. interest. The delivery of the bonds was conditioned upon the maintenance of the policy in force and effect and proof of the death of the insured. It concluded thus, "This contract is subject to the mutual agreements indorsed hereon and is issued on condition that on its delivery," and each year thereafter during the first ten years of the continuance of the contract insured pay the respondent company $4,291.50. The "mutual agreements" indorsed on the policy provided: (1) Place of payment of premiums; (2) 30 days grace in payment of premiums; (3) for automatic paid-up insurance after three payments in case of failure "to make any subsequent deposit," i. e., pay premiums, provided no loan had been made on the policy; (4) for extended insurance, after three years, on failure to make any subsequent deposit, on conditions and for periods stated; (5) for cash surrender value on conditions and for amounts set out; (6) for loans on the policy on given conditions; (7) for apportionment of surplus; and (8) as follows:

"Cash Option in Lieu of Bonds. — It is hereby mutually understood and agreed between all the parties hereto that the beneficiary under this contract shall have the option of accepting in settlement of this contract, when it matures under its terms, the sum of sixty-five thousand two hundred and fifty gold dollars in lieu of the issuance of fifty thousand dollars of bonds as stipulated in said contract, provided all deposits previously due thereon shall have been made and the contract maintained in full force and effect from date of issue."

These were followed by: (9) Restrictions as to service in army or navy; (10) provision that understatement of age in the application should result in an "equitable adjustment of the amount of the insurance or other benefit"; and then by this paragraph:

"Incontestability. — After two years from date of issue this contract shall be incontestable if the deposits shall have been made."

Space may be saved by stating other necessary facts in connection with the discussion of questions to which they are relevant.

I. The plea of the statute of limitation presents the question whether the action is one on a "writing * * * for the payment of money" (section 1888, R. S. 1909) or on a liability "created by a statute other than a penalty or forfeiture." Section 1889, R. S. 1909. Appellant contends her action is upon the policy, as extended by the nonforfeiture law of the state in force when the policy was issued (section 7897 et seq., R. S. 1899), while respondent insists that the nonforfeiture sections mentioned give the right of action; that no cause of action could exist save for them; and therefore that the liability appellant attempts to enforce is one "created by statute," and was barred five years after the death of the insured and over a year before suit brought.

Counsel for respondent practically concede that under principles announced in previous decisions of this court the sections in question (section 7898 et seq.) were read into and became a part of the policy issued to Blees. Their position is that these statutes are undoubtedly mandatory (Equitable Life Ins. Soc. v. Pettus, 140 U. S. loc. cit. 500, 501, 11 Sup. Ct. 822, 35 L. Ed. 497; Price v. Conn. Mut. Life Ins. Co., 48 Mo. App. loc. cit. 293, 294; Burridge v. Insurance Co., 211 Mo. loc. cit. 178, 109 S. W. 560, and cases cited); that their provisions override the freedom of the parties to contract, at the time the policy is issued or afterward, in contravention of them (same authorities), and that in case of conflict between the statute and the policy or contract the statue controls; wherefore, counsel contend, the very fact that the statute does override conflicting policy stipulations demonstrates that an action for extended insurance is an action on a liability created by the statute, and not one on the policy. The answer to this contention is found in the fact that the statute is a part of the policy contract, as much so for the purpose of an action on the policy as any other. This is the effect of our previous holdings, and is put beyond question by the terms of the statute itself, which make it clear that the liability for extended insurance is a liability under the policy; the policy itself being simply extended by force of the statute. The statute (section 7897, R. S. 1899) expressly provides that "no policy * * * shall, after payment upon it of three annual payments, be forfeited or become void, by reason of nonpayment," but shall be commuted as therein set forth. A further provision is that the temporary insurance is to be for the "full amount written in the policy." No provision for the surrender of the policy is found in this section. In section 7898, giving a right to demand a paid-up policy, it is provided that the original policy shall be delivered up and canceled. In section 7899, R. S. 1899, it was, and, so far as this policy is concerned, is, expressly provided that:

"If the death of the insured occur within the term of temporary insurance covered by the value of the policy as determined in section 7897, and if no condition of the insurance other than the payment of premiums shall have been violated by the insured, the company shall be bound to pay the amount of the policy, the same as if there had been no default in the payment of premiums, anything in the policy to the contrary notwithstanding."

The statute then requires proof of death, according to the manner provided by the terms of the policy, within 90 days, and then provides that the company may "deduct from the amount insured in the policy" all unpaid premiums, with 6 per cent. interest compounded, "including the whole of the year's premium in which the death occurs," but such premium shall in no case exceed the ordinary life premium for the age at issue" (doubtles of the policy), "with interest," etc. It is apparent from these...