Missouri State Life Ins. Co. v. Hearne

• Decision Date: 27 November 1920
• Docket Number: (No. 7887.)
• Citation: 226 S.W. 789
• Parties: MISSOURI STATE LIFE INS. CO. v. HEARNE.
• Court: Texas Court of Appeals

226 S.W. 789

MISSOURI STATE LIFE INS. CO. v. HEARNE.

(No. 7887.)

Court of Civil Appeals of Texas. Galveston.

November 27, 1920.

Rehearing Denied December 22, 1920.

Appeal from District Court, Harris County; Henry J. Dannenbaum, Judge.

Suit by Madge W. Hearne against the Missouri State Life Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Baker, Botts, Parker & Garwood, of Houston, and Locke & Locke, of Dallas, for appellant.

Gill, Jones, Tyler & Potter, of Houston, for appellee.

PLEASANTS, C. J.

This suit was brought by appellee to recover upon a life insurance policy issued to Roy W. Hearne, her deceased husband, for her benefit by appellant.

The company defended upon the ground that, said policy having lapsed, it was reinstated with a condition forming a part of the reinstatement contract that, if the insured should die by self-destruction, sane or insane, within one year from the company's approval of his application for reinstatement, the amount payable as a death benefit should be only the reserve on the policy, and that the insured did so die within one year, and that the defendant had tendered payment of the amount due. To this the plaintiff replied that, for a number of reasons urged by her, said condition was not valid and binding upon her.

The case was tried before a jury, but the court submitted to the jury only an issue as to the amount of a reasonable attorney's fee. Uncontroverted findings were made by the court that the insured died by suicide within a year from the date of the company's approval of his application for reinstatement.

It was undisputed that at the time of the death of assured, in January, 1917, the policy was in force, with all premiums paid thereon up to July 24, 1917, and that the plaintiff was entitled to recover under the terms of the original policy, unless the terms of the policy had been changed by the additional agreement alleged to have been made as a condition to the reinstatement of the policy, which was alleged to have lapsed by reason of assured's failure to pay a note given for a part of the 1915 premium.

Upon a return of a verdict by the jury fixing the sum of $5,000 as reasonable attorney's fees, judgment was rendered in favor of the appellee for the amount stated in the policy, with interest, attorney's fees, and statutory damages, aggregating the sum of $30,985, less the amount of a loan on the policy made by the company to Hearne a few months before his death.

The grounds upon which appellee insists that the suicide provision in the contract of reinstatement pleaded by the appellant constitutes no part of the contract of insurance, and is not binding upon appellee, all of which were properly pleaded in the court below, are:

"(1) Because no such agreement was ever made between the assured and the insurance company.

"(2) Because, if such agreement was made, it was obtained by misrepresentation, fraud, and duress on the part of the company in securing the alleged forfeiture or lapse of the policy and consequent application for reinstatement.

"(3) Because there was no consideration for this additional agreement, the assured at that time having a contract right to the reinstatement of the policy without additional exceptions being ingrafted thereon.

"(4) Because, if such contract was made, it was superseded by a subsequent contract between the parties whereby they contracted, for a valuable consideration, that the policy be restored under its original terms and conditions, the same as if no lapse had ever occurred.

"(5) Because, if said agreement was lawfully made and supported by a consideration, it was waived and became no part of the contract of insurance, because not attached to the policy and made a part thereof as required by law.

"(6) Because, even if incorporated in the policy, this suicide clause was rendered nugatory by the provision in the policy making it incontestable after August 3, 1910."

The policy sued on was issued on August 3, 1909, and requires the payment of yearly premiums of $767, and contains a provision making it incontestable after August 3, 1910. It also contains the following provisions:

"Premiums may be paid annually, semiannually, or quarterly, in advance, in accordance with the company's table of rates applicable hereto, and the company will allow a change from one to another of such modes of payment upon the insured's written request therefor on the company's form.

"All premiums are payable in advance, either at the home office of the company in St. Louis, Missouri, or to an agent of the company, upon delivery of a receipt signed by the president or secretary and countersigned by the authorized agent. If any premium is not paid on the date when due, this policy shall cease and determine except as hereinafter provided.

"If any premium after the first is not paid on the date when due the insurance will continue in force from such due date for the term of one month, which is the period of grace allowed hereunder, without interest charge, in the payment of any such premium; and after the second policy year, if a premium is not paid within the period of grace, insurance will automatically continue as term insurance for the face amount hereof for a further term, the total term of continued insurance, including the period of grace, granted at completion of any policy year, being specified in the table below. In lieu of such automatic insurance, upon the insured's written request and legal surrender of this policy within one month from said due date, either a paid-up life policy will be issued, or the cash value of this policy paid the amount of which, at the completion of any policy year, is specified in the table below." (A table showing the amount of the paid-up policy, the amount of the cash value, and the terms of continued insurance available at the end of each policy year was given.)

"If any premium is not paid on the date when due, or within the period of grace, and this policy had not been surrendered, the company will reinstate the policy as of said due date at any time thereafter, upon evidence of insurability satisfactory to the company and payment of all arrears of premiums, with interest, together with the payment, or reinstatement, of any indebtedness on this policy on said due date, with interest.

"The Missouri State Life Insurance Company agrees to pay twenty-five thousand dollars immediately upon receipt of proof of the death of Roy W. Hearne, the insured, to Madge W. Hearne, wife of the insured and beneficiary, it being understood that the insured may change the beneficiary or beneficiaries as hereinafter provided.

"The insured may, at any time during the continuance of this policy, with the consent of the company, provided the policy is not then assigned, change the beneficiary or beneficiaries herein by filing at the home office a written request on the company's form therefor, duly acknowledged, accompanied by this policy, such change to take effect upon the indorsement of the same on the policy by the company. If any beneficiary shall die before the insured, the interest of such beneficiary shall vest in the insured.

"This policy is issued with the express understanding that the insured may, without the consent of the beneficiary, receive every benefit, exercise every right, and enjoy every privilege conferred on the insured by this policy."

When the premium of $767, due July 24, 1915, matured, it was settled by the payment of $127 in cash, and the giving of a note for $640 due November 24, 1915. Said note contained a provision reading as below quoted, and the receipt given therefor contained a provision in substantially the same words, to wit:

"This note, together with one hundred twenty-seven and no/100 dollars in cash, is tendered to said company by the maker upon the understanding and agreement that it shall not be binding upon the maker until it is accepted by the president or secretary of said company, and if and when accepted such acceptance shall be upon the following agreement, to wit, that although no part of the * * * annual premium due on the 24th day of July, 1915, on policy No. 41131, has been paid, the insurance under said policy shall, subject to any indebtedness thereon, be continued in force until midnight of the due date of this note; that, if this note is paid on or before the date it becomes due, such payment, together with said cash, will then be accepted by said company as payment of said premium, and all rights under said policy shall thereupon be the same as if said premium had been paid when due; that, if this note is not paid on or before the day it becomes due, it shall thereupon automatically cease to be a claim against the maker, and said company shall retain said cash as part compensation for the rights and privileges hereby granted, and as the earned premium for the insurance granted from the maturity of said premium to the maturity of this note, and all rights under said policy shall be the same as if said cash had not been paid nor this agreement made."

When said note matured November 24, 1915, it was not paid in cash, but was settled by the payment of an additional sum of $40 in cash, the giving of a new note of $600 due February 24, 1916, and the payment of interest on the maturing note amounting to $12.80.

This note and the receipt issued by the company contained provisions identical with those contained in the previous note and receipt, except as to dates and amounts.

On January 26, 1916, the company sent to its agent, Leek, at San Antonio, for collection, the note of $600, maturing February 24, 1916. On the same day it mailed to the insured at his address, 211 Jefferson avenue, Dallas, Tex., given upon the note itself, a notice of the approaching maturity of the note. This notice was sent in an envelope which bore a return request card, and the postage was prepaid. The envelope never was returned by the post office...