Nat'l Fid. Life Ins. Co. v. Stroud

• Decision Date: 26 March 1935
• Docket Number: Case Number: 24581
• Citation: 171 Okla. 247,1935 OK 323,42 P.2d 893
• Parties: NATIONAL FIDELITY LIFE INS. CO. v. STROUD
• Court: Oklahoma Supreme Court

1935 OK 323

42 P.2d 893

171 Okla. 247

NATIONAL FIDELITY LIFE INS. CO. v. STROUD

Case Number: 24581

Supreme Court of Oklahoma

Decided: March 26, 1935

Syllabus

¶0 Insurance - Life Policy - Agreement for Extension of Time for Payment of Premium - Extension Fees not Part Payment of Premium.

Under agreement for extension of time for payment of premium on life policy, where extension fees were not considered as payments on premiums, but became property of insurer, and fees were to be returned if premium was paid, otherwise policy should lapse as of date premium was due, contention that extension fees were accepted in part payment of premium and were in fact paid for privilege of keeping policy in force during such period cannot be sustained. Dreeben v. Mutual Life Insurance Co. of New York, 29 F. [2d] 963.

Appeal from Court of Common Pleas, Tulsa County; Leslie Webb, Judge.

Action by Franklin Tecumsia Stroud against the National Fidelity Life Insurance Company. Judgment for plaintiff, and defendant appeals. Reversed.

Ramsey, deMeules, Martin & Logan and Morrison, Nugent, Wylder& Berger, for plaintiff in error.

Frank Hickman and Irvine E. Ungerman, for defendant in error.

PHELPS, J.

¶1 The parties will be referred to as they appeared in the trial court.

¶2 This is a suit to recover on a life Insurance policy. Since the only question involved is whether the policy was in force at the time of the death of the insured, a rather extended statement of facts is necessary.

¶3 On May 5, 1930, the defendant issued its policy on the life of Ramey R. Stroud, a young man 21 years of age, in the amount of $2,000, the annual premium on which was $59.68. The beneficiary was the insured's father, Franklin T. Stroud, who was also the agent for the company and sold the policy. The first year's premium was paid in advance, thus keeping the insurance in force until May 5, 1931. The policy contained the usual 30 day grace period in which to pay premiums. The policy had attached to it certain dividend coupons, which, according to the terms of the policy, could be applied, the same as cash, in payment of the annual premiums. There was a provision in the policy, however, that if the premiums were paid in semi-annual or quarterly installments, the corresponding coupon could not be applied on the premium payments until the final installment of the annual premium was paid. When the second annual premium fell due on May 5, 1931, it was not paid. However, on May 15^th (within the 30-day grace period) the insured mailed to defendant a post-office money order for $7 and the dividend coupon of $8.96, aggregating the sum of $15.96, as a "payment for the first quarter of this year." Defendant cashed the money order, but on May 21st returned the coupon to the insured, calling his attention to the provision of the policy that this coupon could not be used in payment of the premium until the last installment of the current year's premium was paid. In this letter defendant said:

"We enclose extension agreement showing credit for your remittance of $7 and carrying the balance of the annual premium to Aug. 5. Please sign and return promptly for record."

¶4 This extension agreement was dated as of May 5th. It was signed by the insured and returned to defendant, and reads as follows:

"I am handing you herewith $7 and request that you extend to August 5, 1931, the time for payment of the balance of annual premium of $59.68 due this day on policy No. 37773, said premium to bear interest at the rate of six per centum per annum from date. In consideration of such extension I agree as follows:

"1st. That if said premium and interest be not paid on said date, I shall immediately pay you at your home office, with interest as above, the proportionate part of said premium covering the extension granted and said policy shall be forfeited and void except as otherwise provided by its terms.

"2nd. That no portion of said premium has been paid and that the remittance herewith made you shall be held by you until the end of extension period, to be then subject to my order if I comply with the provisions hereof, but to be retained by you in event of my failure to do so.

"3rd. That the first month of the extension of time under this agreement is to run concurrently with the 31 days of grace allowed by the policy for payment of this premium, and that there will be no additional grace period at the expiration of this extension.

"(Signed) Ramey R. Stroud, "Insured."

¶5 On August 18th, defendant wrote the insured calling his attention to the fact that his policy had lapsed, and among other things said:

"Your extended premium is a little past its due date. Did you forget it? Perhaps you did not realize that no days of grace follow an extension. Of course, you'll want to take care of it, now that you have this reminder. Also, please complete and return the enclosed health statement, along with your check for the amount shown below."

¶6 On August 24th, this letter was returned to defendant marked "unclaimed, unable to locate."

¶7 On September 2d, W.F. Stroud, an uncle of the insured, wrote defendant and inclosed a cashier's check in the sum of $16.06 "in payment of one quarterly premium policy of Ramey R. Stroud." On September 3rd, defendant replied as follows:

"We acknowledge receipt of check for $16.06 which you have tendered to apply on the above policy. In May, a part payment of $7 was made on the annual premium and extension agreement signed carrying the balance to August 5. As there are no days of grace on extension premiums, it is now required that satisfactory evidence of present good health be furnished before we may credit the check of $16.06. We enclose health blank to be completed by the insured. Since the annual extension is already on record, upon approval of health statement, your check of $16.06 will be credited on the annual premium and the balance re-extended to December 5."

¶8 On September 14th, Mr. W.F. Stroud replied to defendant's letter saying that the insured "cannot be reached at this time." On September 16th, defendant replied to Mr. Stroud's letter and recited the various steps taken since the issuance of the policy and closed by saying:

"We are unable to apply the money you have now tendered until evidence of insurability has been furnished and we would suggest that you forward our health blank to Mr. Ramey R. Stroud."

¶9 On September 17th, Mr. Stroud replied to this letter saying:

"Since the matter of keeping up the payment of this policy was left in my hands all I can do is to ask that you either credit the cashier's check as payment of a quarterly premium, sending me receipt for same, or return the check sent you. I have done all that I can do in the matter and I await your reply returning either the check offered in payment of the premium or a receipt for same."

¶10 On September 21st, defendant wrote Mr. Stroud (uncle of the deceased):

"We are returning, enclosed, cashier's check No. 79021 for $16.06 This was received after the above policy lapsed, and as reinstatement has not been applied for, cannot be credited thereon."

¶11 On September 30th, the father of the insured, the beneficiary under the policy, wrote defendant inclosing proof of death showing that the insured died on September 20th (the day before defendant wrote the last letter to the uncle of the insured).

¶12 It developed in the evidence that in July following the issuance of this...