Metropolitan Life Ins. Co. v. Chappell

• Decision Date: 28 February 1925
• Parties: METROPOLITAN LIFE INS. CO. v. CHAPPELL ET AL.
• Court: Tennessee Supreme Court

269 S.W. 21

151 Tenn. 299

METROPOLITAN LIFE INS. CO. v. CHAPPELL ET AL.

Supreme Court of Tennessee.

February 28, 1925

Certiorari to Court of Civil Appeals.

Action by Lavinia Chappell and another against the Metropolitan Life Insurance Company. To review the judgment of the Court of Civil Appeals, reversing a judgment in favor of plaintiffs and dismissing suit, plaintiffs petition for writ of certiorari. Writ denied.

HALL J.

This action originated before a justice of the peace of Davidson county, and was brought by Lavinia Chappell against the defendant, Metropolitan Life Insurance Company, to recover the sum of $246, alleged to be due the plaintiff upon an industrial policy of insurance issued by defendant upon the life of Birdie Lee Chappell (named in the policy as "Birdie L. Chappell"), on March 20, 1922; the insured having died on April 20, 1922.

The justice of the peace gave judgment for the plaintiff, and the defendant appealed to the circuit court of the county, and in that court the warrant was amended, by leave of the court, so as to make Frank Chappell (husband of Lavinia) a coplaintiff.

The case was tried to a jury and the jury found the matters in controversy in favor of the plaintiffs; that is, that the defendant was indebted to the plaintiffs in the sum of $246 with interest thereon, making in all the sum of $259.53.

A judgment having been entered in accordance with the verdict of the jury in favor of plaintiffs and against defendant for said sum, defendant prayed an appeal from said judgment to the Court of Civil Appeals, after its motion for a new trial had been overruled, which was granted upon condition that defendant execute an appeal bond as required by law. This the defendant failed to do. It however, seasonably filed a bill of exceptions containing a record of the evidence introduced and the proceedings had on the trial, and, on March 11, 1924 (less than three months after the rendition of said judgment), filed the record in the Court of Civil Appeals for writ of error. That court reversed the judgment of the trial court and dismissed plaintiffs' suit. The case is now before this court upon the plaintiffs' petition for writ of certiorari, and for review.

The plaintiffs are the father and mother of the insured, who was 23 years of age, unmarried, and without issue at the time of her death.

By the terms of the policy, the defendant agreed that, in consideration of the payment by the insured of the weekly premium of 15 cents, and upon receipt of proof of the death made in the manner, to the extent and upon the blanks required by the policy, and upon the surrender of the policy and evidence of the premium payment thereunder, it would pay the sum of $246 to the executor or administrator of the insured, "unless payment be made under the provisions of the next succeeding paragraph," which next succeeding paragraph is in words as follows:

"The company may make any payment or grant any nonforfeiture privilege provided herein to the insured, husband or wife, or any relative by blood or connection by marriage of the insured, or to any other person appearing to said company to be equitably entitled to the same, by reason of having incurred expense on behalf of the insured, or for his or her burial; and the production of a receipt signed by either of said persons, or of other proof of such payment or grant of such privilege to either of them, shall be conclusive evidence that all claims under this policy have been satisfied."

The policy also contains certain "conditions" as a part of the contract, and one of these "conditions" is as follows:

"No obligation is assumed by the company prior to the date hereof, nor unless on said date the insured is alive and in sound health. Should the proposed insured not be alive or not in sound health on the date hereof, any amount paid to the company as premiums hereon shall be returned."

At the beginning of the trial in the circuit court the defendant, through its counsel, gave notice that, among other defenses, it would rely upon the above-quoted provision of the policy, and defendant tendered to plaintiffs the premiums paid by the insured, viz., 90 cents, but the tender was refused.

Upon the policy being introduced in evidence by the plaintiffs, defendant moved the court to dismiss the suit because the plaintiffs were not the administrators or executors of the insured, and therefore could not maintain a suit on the policy, which motion the court overruled.

Another defense, of which defendant's counsel gave notice at the beginning of the trial, was that fraudulent misrepresentations were made by the insured as to the true condition of her health at the time of making application for the policy, in that she concealed the fact that she had been treated by a physician for a serious disease within two years prior to the date of the application for the policy.

At the close of all the evidence the defendant moved the court to peremptorily instruct the jury to return a verdict in its favor upon the following grounds:

"First, because the plaintiffs are not the personal representatives of the deceased Birdie Chappell, not being either the executor or executrix or administrator or administratrix of the deceased, and they not having any right to prosecute the suit.

Second, that there are no facts to warrant a verdict in favor of the plaintiff."

The motion for a directed verdict was overruled, and the case was submitted to the jury, with the result before stated.

All the questions we have indicated were preserved by defendant's motion for a new trial, and were seasonably and fully presented by its assignments of error filed in the Court of Civil Appeals.

As before stated, that court reversed the judgment of the trial court and dismissed plaintiffs' suit, holding that defendant's motion for a directed verdict should have been sustained by the trial court because of the lack of a right of action in the plaintiffs, and also because the undisputed evidence showed that the insured was not "in sound health" at the date of the policy.

Through their assignments of error filed in this court, plaintiffs urge that the Court of Civil Appeals committed error in sustaining defendant's motion for a directed verdict and dismissing plaintiffs' suit on the grounds hereinbefore stated.

We are of the opinion that the judgment of the Court of Civil Appeals is correct upon both grounds. The contract of the defendant is to pay the amount of the policy "to the executor or administrator of the insured, unless payment be made under the provisions of the next succeeding paragraph." The next succeeding paragraph has been hereinbefore set out, and constitutes what is known in the nomenclature of life insurance contracts as the "facility of payment clause." This court has not heretofore been called upon to determine the effect of such a clause with respect to the right of any other than the personal representative of the insured to maintain a suit on a policy of life insurance. But numerous cases involving a similar clause have been before the courts of last resort in other states.

In the recent case (1923) of Williard v. Prudential Insurance Co. of America, 276 Pa. 427, 120 A. 461, 28 A. L. R. 1348, it is said that--

"It is generally held that facility of payment clauses in industrial life insurance policies, providing in substance that the insurer may pay the benefit to the beneficiary named, or to any other person appearing to it equitably entitled thereto, are for the benefit of the insurer, to be exercised or not at its option, and that it gives a third party, to whom the insurer might have elected to pay the benefit, no right to compel the insurer to make the payment to him."

In Manning v. Prudential Insurance Co. (1919) 202 Mo.App. 124, 213 S.W. 897, a sister of the insured who had suggested that her brother take out the policy sued on, and who had paid all but the first premium and also a part of his funeral expenses, was held to have no right of action under the policy, which was payable to the executor or administrator of the insured, and contained a "facility of payment" clause like that in the preceding case. The court said:

"Though reluctant so to do, we are of the opinion that we must hold that the policy in suit vests in plaintiff no right of action against the defendant; that only the executor or administrator of the insured can

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