Mercer v. South Atl. Life Ins. Co
| Decision Date | 12 January 1911 |
| Citation | 111 Va. 689,69 S.E. 961 |
| Parties | MERCER v. SOUTH ATLANTIC LIFE INS. CO. |
| Court | Virginia Supreme Court |
1. Contracts (§ 1*)—Validity.
A contract binds the parties unless violative of law or public policy.
[Ed. Note.—For other cases, see Contracts, Cent. Dig. § 1; Dec. Dig. § l.*]
2. Evidence (§ 441*)—Testimony Affecting Life Policy.
In a suit on a life policy, a parol agreement by insurer's soliciting agent varying the time and place for paying premiums, as provided in the policy, cannot be shown.
[Ed. Note.—For other cases, see Evidence, Cent. Dig. § 2046; Dec. Dig. § 441.*]
3. Insurance (§ 392*)—Life Policies—Forfeiture—Nonpayment of Premiums.
A life insurer can refuse a check for an overdue premium tendered while insured is fatally ill where he has not paid a renewal premium note, and had been notified that the right of forfeiture under the policy and under the note would be exercised on nonpayment of the note when due; such default not being waived by a subsequent letter requesting prompt payment.
[Ed. Note.—For other cases, see Insurance, Dec. Dig. § 392.*]
4. Insurance (§ 175*)—Life Policies—Time of Taking Effect.
A life policy which provides that it shall take effect on payment of the initial premium for one year from its date cannot be regarded as having taken effect at delivery.
[Ed. Note.—For other cases, see Insurance, Cent. Dig. § 332; Dec. Dig. § 175.*]
Error to Law and Equity Court of City of Richmond.
Suit by Etta Mercer against the South Atlantic Life Insurance Company. Judgment for defendant, and plaintiff brings error. Affirmed.
John A. Lamb and David Meade White, for plaintiff in error.
E. Randolph Williams, for defendant in error.
KEITH, P. Etta Mercer, who was the beneficiary in a policy of insurance issued by the South Atlantic Life Insurance Company to her husband, Hugh C. Mercer, since deceased, brought suit in the law and equity court of the city of Richmond, and after the evidence was placed before the jury the defendant demurred. The jury rendered a verdict in favor of the plaintiff for $1,000. The court entered judgment for the defendant upon the demurrer to the evidence, and the plaintiff obtained a writ of error.
The evidence tends to prove the following facts: Mercer, the insured, was born on the 17th day of January, 1876. On the 16th day of July, 1906, he made application for a $1,000 policy upon his life. Upon being examined by the physician for the company, it appeared that his case was one known to insurance companies as a "border line case"; that is, a case where the applicant for insurance does not disclose a perfect physical risk. His application was referred to the board of review, and as a result the policy was issued on the 31st day of December, 1906, payable in the event of his death to his wife, Etta Mercer. The policy was delivered to Warren Mercer, the agent, of the company, who was a brother of the insured, and was by him delivered to the insured on the 28th of January, 1907. The policy, however, bears date the 16th day of July, 1906. The policy sued on is what is known as a policy by the year—that is, with one annual payment of the premium, as distinguished from quarterly or semiannual payments— and it contains a clause known in insurance parlance as a "grace clause, " in the following words: "A grace of one month, during which time the policy remains in full force, will be allowed in payment of all premiums except the first, subject to legal interest for the days past due."
As we have said, the insured was born on the 17th day of January, 1876. He made application for the policy on the 16th day of July, 1906, and the policy was dated on the day of the application, and the 16th day of July in each year thereafter was fixed as the due date of the premiums. The 20-year accumulation period of the policy was by its terms to end on the 16th day of July, 1926, at which time, if living and all the premiums had been duly paid as provided, the company would apportion to this contract its share of the surplus earnings, or the insured would be given one of a number of options stated in the policy, or if the insured died within one year from the date of the policy or subsequently, if the contract should be extended and kept in force according to its terms, the amount of the insurance became immediately payable upon receipt and approval of the proofs of death.
By dating the policy as of the 16th of July, the date of the application, the insured secured a reduced premium and accelerated the termination of the 20-year accumulation period. Had the date of the policy been postponed until the 17th of July, his nearest birthday would have been the 16th of January, 1907, whereas, counting from the 16th of July, his nearest birthday was on the l6th of January, 1906.
These facts are referred to as giving a reason for the contract into which the insured entered. By that contract he took a policy which bears date the 16th of July, 1900. which upon payment of the first year's pre-mium became binding upon the company until the 16th day of July, 1907.
The contracts which men make constitute the law which governs them, unless the contract be one which the law prohibits, or which is held to be violative of some public policy.
On the 16th of July, 1907, when the second premium became due, it was not paid, but on the 16th day of August of that year the limit of the 30-day period of grace, granted by the terms of the policy, the insured gave his note, due September 16, 1907, for $32.25 on account of the second year's premium. When the note became due, the insured paid $8 in cash on account of this note, and gave his note for $24.41, the balance due, payable December 15, 1907. On December 14, 1907, the insured renewed this obligation with a further note dated December 14, 1907, for $24.77, payable with interest January 2, 1908. This note is in the same form as the previous notes, and is as follows:
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