Mutual Life Ins. Co. v. Davis

• Decision Date: 01 March 1913
• Citation: 154 S.W. 1184
• Parties: MUTUAL LIFE INS. CO. OF NEW YORK v. DAVIS et al.
• Court: Texas Court of Appeals

154 S.W. 1184

MUTUAL LIFE INS. CO. OF NEW YORK v. DAVIS et al.

Court of Civil Appeals of Texas. Dallas.

March 1, 1913.

Rehearing Denied March 22, 1913.

Error to District Court, Dallas County; Kenneth Foree, Judge.

Action by Alfred Davis and others against the Mutual Life Insurance Company of New York. There was a judgment for plaintiffs, and defendant brings error. Affirmed.

Locke & Locke, of Dallas, for plaintiff in error. Etheridge & McCormick, of Dallas, for defendants in error.

CRAWFORD, J.

This suit was instituted on June 17, 1907, by Alfred Davis et al. against the Mutual Life Insurance Company of New York to compel the defendant to accept a premium of $375.50 on a policy of insurance on the life of one L. J. Thompson, which matured October 27, 1899; plaintiff tendering the amount of such premium, together with all interest thereon. On December 16, 1909, an amended petition was filed, containing an alternative prayer for the recovery of premiums paid, etc. On April 17, 1911, the assured died, and on August 24, 1911, plaintiff filed his second amended petition, seeking a recovery upon the policy, less the said premium, and all interest thereon. The company defended on the grounds that the policy lapsed for nonpayment of the premium due on October 27, 1899; that the sum theretofore held as reserve against said policy was distributed to other policy holders in the form of dividends; that no tender or offer to pay said premium was made for more than 7½ years afterwards; and that the plaintiff was estopped and barred by limitations from asserting its cause of action. Upon the conclusion of the testimony both parties, in open court, agreed that the case depended upon the questions of law, and that it required an instructed verdict one way or the other, and each of the parties stood solely upon their respective requests for peremptory instruction, with the result that the court below instructed a verdict in favor of the plaintiff.

Conclusions of Fact.

The plaintiff was the assignee of three policies issued by the defendant, two on the life of J. L. Thompson and the other on the life of D. C. Brown. All of these policies were taken out many years prior to October 27, 1899. The policy in suit was a ten-payment policy; whereas the policy on the life of D. C. Brown was an ordinary life policy. At the time of the issuance of the policy in suit, and for several years thereafter, the defendant maintained a local agency in Dallas, and said local agents collected thereon the initial and three subsequent premiums by the presentation to the plaintiff at its office of the premium receipts therefor. Said local agents likewise so collected the premiums on the other said policies. After the discontinuance of the Dallas agency, the defendant's Texas business was transacted by Chamberlain & Co., its general agents in San Antonio. Said general agents were authorized by the company to exercise their own discretion as to the method of collecting premiums. Said general agents caused the remaining premiums, up to and including the ninth one, to be collected by the presentation of the premium receipts to the plaintiff at its office. Likewise, the premiums on the other Thompson policy and on the D. C. Brown policy were collected in the same way. Plaintiff in every instance promptly paid every premium receipt on all of the policies upon presentation. The tenth and last premium receipt was never presented, and was therefore not paid. Plaintiff was abundantly solvent, able, and desirous of maintaining the policy in force. It had paid nine premiums thereon, aggregating $3,379.50. It held the policy to secure a large indebtedness from J. L. Thompson, the assured therein, and Thompson was wholly insolvent, and plaintiff had no security other than said policy. The policy contained a provision entitling the plaintiff to a paid-up policy of $4,500 after the payment of nine premiums, upon demand and without further payment. Plaintiff did not demand such paid-up policy, because it was not its purpose to abandon the contract, but to go forward with it, pay the last premium, and maintain the policy in force for its face value. The premium receipt for the tenth and last premium upon the policy in suit, which premium matured October 27, 1899, was by the defendant transmitted to the National Bank of Dallas; but in its letter of transmission it did not advise said bank that the plaintiff was the assignee of the policy, nor that the receipt should be presented to the plaintiff for payment. Said bank, without presenting said receipt to the plaintiff for payment, returned the same to the said general agents at San Antonio, and said general agents thereupon, but without notification to the plaintiff, forwarded said unpaid receipt to the company; whereupon the company, unawares to the plaintiff, made an entry of forfeiture of the policy. Plaintiff did not order the defendant to send said receipt to the National Bank of Dallas. It was not advised that the defendant had done so; neither did the plaintiff know that said receipt had been by said bank returned unpaid to said general agents.

As we view the evidence disclosing the course of dealing which uniformly obtained between the parties, the defendant owed plaintiff the duty to present the premium for collection at plaintiff's office. This is rendered certain by the undisputed testimony showing that all premium receipts upon all of the policies had been so presented to the plaintiff and paid by it, with the exception of the premium receipt in question. The correspondence between the parties definitely shows that the understanding of each of them in that respect was the same. The plaintiff understood that it would pay upon presentation of the premium receipt at its office, and the defendant understood that such premium receipt should be so presented to the plaintiff. The testimony further shows that it was the duty of the defendant, in the event any premium receipt upon any of said policies should, for any reason, be returned unpaid to its general agents in San Antonio, to notify the plaintiff of that fact and afford it an opportunity to pay the same. Such was the course that such general agents pursued, both before and after the event in question. A premium which matured on the other Thompson policy in September, 1896, was not paid. The premium receipt in that case, for some unexplained reason, was returned to the said general agents unpaid; whereupon said general agents called plaintiff's attention to its apparent delinquency, with the result that it was ascertained that said premium receipt had never been presented, and that, as matter of fact, plaintiff was not in default, and the payment of that premium was accepted by the defendant on October 20, 1896, as shown by the letter of said general agents to plaintiff of that date. In that letter said general agents stated: "We have made careful notation now on our register that this renewal must be collected through your office, and we trust in future there will be no trouble and regret there has been in this case." The testimony of W. F. Riddle, the defendant's agent, with reference to the contents of the policy register, is such as to create a necessary inference that said general agents had a similar notation thereon with reference to the policy in suit. To the unbiased mind the conclusion is irresistible that, had said general agents notified the plaintiff that the National Bank of Dallas had returned the premium receipt in question unpaid, plaintiff would have promptly paid the same, protesting, as it did in the previous similar occurrence, that the delinquency was attributable solely to the failure to present the premium receipt to it at its office for collection. A similar occurrence arose thereafter with reference to a premium on the D. C. Brown policy. That premium matured July 3, 1902, and the receipt therefor, like the one in question, was, for some reason, returned unpaid to said general agents. Said general agents did not transmit such unpaid premium receipt to the home office of the company, nor was there any forfeiture attempted or asserted, because of the nonpayment of that premium. Upon the contrary, on August 27, 1902, said general agents advised the plaintiff of the nonpayment of that premium, and on September 8, 1902, the plaintiff, responding to such notification, said: "We beg to say that we have always been in the habit of paying these premiums through the bank here, and if there is any premium past due, it is because it has never been presented to this office for collection." This constituted a plain and frank statement of the plaintiff's understanding of the method of collection and payment of premiums. The said general agents responded to that letter. They took no issue with the correctness of the plaintiff's statement, but responded by saying that the certificate of health required by the policy would be waived upon the plaintiff's statement "that the bank failed to present the receipt as usual." That premium was in due course promptly paid, as was the overdue premium on the other Thompson policy in 1896.

We therefore find that the defendant was at fault, in the first instance, in not causing the premium receipt in question to be presented to the plaintiff for payment, and in failing, in the second instance, to notify the plaintiff that the National Bank of Dallas had returned said premium receipt unpaid. However, said general agents, instead of either causing said receipt to be presented, or of notifying the plaintiff after its return unpaid, transmitted the same to the company direct, and the company, in turn, but without notification to any one, made an entry of forfeiture. The course of conduct pursued by the general agents of the company with reference to the particular premium in question is repugnant to its course of dealing with reference to all other premiums upon all three of the policies named. Defendant's...