Mutual Life Ins. Co. of New York v. Lovejoy

• Decision Date: 26 June 1919
• Docket Number: 3 Div. 387
• Citation: 203 Ala. 452,83 So. 591
• Parties: MUTUAL LIFE INS. CO. OF NEW YORK v. LOVEJOY.
• Court: Alabama Supreme Court

83 So. 591

203 Ala. 452

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

3 Div. 387

Supreme Court of Alabama

June 26, 1919

On Rehearing, October 30, 1919

Appeal from Circuit Court, Montgomery County; Leon McCord, Judge.

Action by T.E. Lovejoy, as administrator of the estate of W.C Lovejoy, against the Mutual Life Insurance Company of New York on a life insurance policy. Judgment for plaintiff, and defendant appeals. Affirmed.

Anderson C.J., and Gardner, J., dissenting.

There was but one count which declared upon the policy, setting the same out in full.

The following is the reinstatement clause of the policy:

Unless it shall have been surrendered for its cash value this policy may be reinstated at any time within three years from date of default in payment of any premium, upon evidence of insurability satisfactory to the company and upon payment of the arrears of premiums with interest thereon at the rate of five per centum and at the option of the insured either (a) upon payment in cash to the company of any indebtedness which existed at said date of default together with interest thereon at the above rate, or (b) upon reinstatement of such indebtedness increased by the amount of tax interest thereon at the above rate, provided such reinstated increased indebtedness does not exceed the loan value at the date of which re-instatement is made.

The incontestability clause was as follows:

This policy shall be incontestable except for nonpayment of premiums, provided two years shall have elapsed from its date of issue.

The policy was issued March 2, 1912. There was default in the payment of the premium due March 2, 1914, and on April 20th insured executed the following application for reinstatement:

I, the undersigned, Welcome E. Lovejoy, the person upon whose application the Mutual Life Insurance Company of New York issued policy No. 1968645--7 dated March 2, 1912, for $2,500.00 on the T.W. plan with a year distribution hereby request the said company to accept the premium of $48.83 es and the interest of $_____ on loan, on said policy, due March 2, 1914, with interest thereon to date and payment, and to establish said policy in full force and effect, it being understood and agreed that such placing in force shall not take effect until this application shall have been finally approved at the said company's home office in New York City, nor until said premium and interest have been paid.

I was born one the 16 day of Sept. 1877.

My P.O. address is (street and number, town and state) Birmingham, Alabama.

My place of business is (street and number, town and state) same.

My present occupation is stocks and bonds.

And I, the undersigned, hereby certify that I am the person insured under said policy and ratify and confirm all the statements made in the application upon which said policy was issued and warrant that I am and have been of temperate habits, and that since the date of the original application for said policy, except as noted below, my health is and has been good, and has remained unimpaired at all times, that I have not consulted or been treated by a physician or been declined by any life insurance company or association since that date, and that my family record has remained unchanged since that date. (Exceptions noted below.)

If no exceptions are noted it shall be understood as a statement by the applicant that there are no exceptions.

No exceptions beyond death of brother at age of 25, death due to appendicitis.

In consideration of the placing in force of the said policy, I, the undersigned applicant, agree for myself and all persons having any interest in said policy, that the said company shall not be liable under the said policy for any amount in any of the following cases:

1. If I shall die by my own hand or act, whether sane or insane, within one year from the date of such placing in force.

2. If any of the statements made in this application or to the company's medical examiner for such placing in force shall be in any respect untrue, and provided that in such case my death shall occur within two years from the date of such placing in force.

3. If within one year from the date of such placing in force, I shall engage in any extra-hazardous occupation or employments mentioned in my original application for said policy.

W.C. Lovejoy.

(Signature in full of the applicant, who must sign in the presence of the medical examiner.)

I certify that the above statements were read, approved and signed by the applicant, in my presence at Birmingham, state of Alabama, on the 20th day of April, 1914.

James McLester, M.D.

(Medical Blank on Reverse Side.)

On May 14th the company made a loan to insured secured by the policy sued on, and on that same day premium was paid to reinstate the policy, and on May 20th notice was addressed to insured that his application for reinstatement had been issued and attached to the policy.

These things all appear from the agreed statement of facts, and it appears therefrom that on August 25, 1914, said Welcome C. Lovejoy committed suicide. The other facts sufficiently appear from the opinion.

Steiner, Crum & Weil, of Montgomery, for appellant.

Ball & Beckwith, of Montgomery, for appellee.

MAYFIELD J.

This is the second appeal in this case. See report of case on former appeal, 78 So. 299, L.R.A.1918D, 860, for statement of case.

The record on this appeal differs from that on the former to the extent that the agreement in the application for reinstatement is now shown to be a part of the policy in such manner and form as to meet the requirements of section 4579 of the Code, as construed in Gee's Case, 171 Ala. 435, 55 So. 166; Satterfield's Case, 171 Ala. 429, 55 So. 200; and Allen's Case, 174 Ala. 511, 56 So. 568.

The reinstatement of the policy or contract of insurance did not have the effect of creating a new contract of insurance, dating from the time of the renewal. It had the effect only of continuing in force the original contract of insurance, which would, under its terms, have terminated and become void if it had not been reinstated in the manner and within the time provided in the original contract.

This right to renew, or to reinstate the original contract, after a breach of some of the conditions by the insured--that is, a failure to pay premiums at times named--was a part of the original contract, and, after it was so renewed or reinstated in accordance with the original contract of insurance, the original contract was binding and of force as to each party just as if there had never been a breach, a renewal, or reinstatement. The original policy then stood as if there had never been a failure to pay to any of the premiums when due, or any cause for forfeiture of the original.

On the former appeal, we declined to follow that line of cases which treat a renewal or reinstatement of a contract after breach as a new contract and a forfeiture of the original. We approve and follow the line of cases which hold that the renewal or reinstatement is a mere continuance of the old or original contract which, but for the renewal or reinstatement, would have been forfeited and void. Silliman v. Ins. Co., 131 Tenn. 303, 174 S.W. 1131, L.R.A.1915F, 707, and note, which cites and reviews many cases. Of course, the facts and circumstances in each case are somewhat different, the terms of the original policies were different in many of the cases, and so were the provisions as to renewals or reinstatement.

Under the facts and circumstances of this case, we hold that the policy in force when the insured died was, in effect, the original policy made with the insurance company, and the time intervening between the making of the contract and the death of insured is the time from the date of the original policy to the date of his death.

The insurance company pleaded several special pleas, setting up the suicide clause of the policy of insurance--to which plaintiff replied setting up the nonforfeiture clause. To these replications defendant attempted to rejoin by stating its conclusions as to the legal effect of the application for renewal or reinstatement, and of the acceptance by defendant of the application. The pleas, replications, and rejoinders must be construed in reference to the complaint, the insurance policy, the application, and renewal, which were made parts thereof. So...