National Aid Life Association v. Holland

• Decision Date: 29 January 1940
• Docket Number: 4-5715
• Citation: 136 S.W.2d 175,199 Ark. 790
• Parties: NATIONAL AID LIFE ASSOCIATION v. HOLLAND
• Court: Arkansas Supreme Court

136 S.W.2d 175

199 Ark. 790

NATIONAL AID LIFE ASSOCIATION v. HOLLAND

4-5715

Supreme Court of Arkansas

January 29, 1940

Appeal from Scott County Circuit Court; J. Sam Wood, Judge reversed.

Judgment reversed.

Evans & Evans, for appellant.

Bates Poe & Bates, for appellee.

OPINION

SMITH, J.

The appellant insurance association issued what the parties call a Whole Family Policy, in the sum of $ 500, covering the lives of Orin Holland, his wife Inez, and their three minor children, the policy being payable in full upon the death of any one of the five persons insured. The policy was dated August 26, 1936, and the premium thereon was payable monthly, quarterly, semi-annually, or annually, as the persons insured elected. If paid monthly, the premium was $ 1.91; if paid quarterly, $ 5.54, but, however paid, was payable on the 1st day of the month or of the quarter, etc. It was issued subject to the constitution and by-laws of the insurance association, which, by reference, were made a part thereof, and these provided that if the premium was not paid during the calendar month in which it was due the insurance contract terminated and ceased to be effective.

It was further provided that "Reinstatement thereof cannot be required, and no contract of insurance which shall have so terminated for non-receipt of payment within the time so limited, shall be reinstated except upon express written approval of reinstatement by one of the Executive Committee. . . ." It was further provided, upon the subject of reinstatement, that the association shall be allowed thirty days from the receipt of the application for that purpose, and thirty days from its receipt of other information, in which to accept or reject such application, and that failure to accept the application in said limited time should constitute a rejection thereof, and special notice of rejection would not be necessary. A showing of good health of all the persons insured was a condition upon which reinstatement would be granted.

Accompanying the application for the policy, which, by its express terms, made the constitution and by-laws of the association a part of the contract of insurance, there was a remittance of the first monthly payment of $ 1.91, which carried the policy to October 1, 1936, and the premium for October was paid when due. The premium due November 1st was not paid, and on January 14, 1937, Mr. Holland executed an application for the reinstatement of the policy, with which he tendered the premiums for November and December, 1936, and for January and February, 1937. In this application representation was made that all persons insured were in good health. Acknowledgment was made of the receipt of the application for reinstatement, and the association advised that the remittance would be held in trust pending investigation, and the association later advised that the policy had been reinstated.

On April 27, 1937, Mr. Holland sent the association a second application for reinstatement, with a remittance of $ 5.54, covering premiums for the months of March, April and May, 1937, which application was similar to the first, and the policy was reinstated the second time.

On July 10, 1937, Mr. Holland filed a third application, identical in its recitals as to the good health of the parties insured, with the first and second applications, with a remittance covering premiums for June, July and August, 1937. In a letter from the association dated July 26, 1937, Mr. Holland was advised that the third reinstatement had been granted, but he was admonished to be more punctual in his premium payments, and he was advised that "The September premium must be paid by the end of that month or the policy will again lapse." The receipt of this remittance, which was offered in evidence, was for the sum of $ 5.73, the amount of three premiums if paid monthly.

Mrs. Inez Holland, the wife and one of the persons insured, died October 29, 1937, and this suit was brought to enforce payment of the policy after the association had refused to pay, and there was a trial and a verdict and judgment for the face of the policy, with interest, penalty and attorney's fees, from which judgment is this appeal.

The controlling question in the case is the one of fact whether the September premium had been paid during that month, although appellee insists, for reasons hereinafter discussed, that the association is estopped to deny receipt of the premium.

Mr. Holland testified that he remitted the September premium, the remittance being made by enclosing two one-dollar bills to the association. This remittance was 9 cents in excess of the premium. Mr. Holland testified that this remittance was made in the latter part of August, and that he later received a receipt from the association for the remittance about the middle of September. He did not testify whether the receipt acknowledged $ 1.91 or $ 2. he had lost the receipt and did not produce it at the trial. The receipt of this remittance was denied by the accounting officers of the association, who explained how remittances were received and credited. The mail is opened in a glass-enclosed locked room, and a report of all remittances is made to the head cashier. Individual cards are kept for each policy, upon which remittances are respectively credited. These credits are totaled each day, and unless they balance with remittances the cashier is "over" in his account and receipts. The records were in balance. The cards on the policy here in suit were not credited with the $ 2 remittance, and the cashier was not over in his receipts for that amount. Moreover, it was shown that under the custom and practice of the association receipts were never sent out for monthly payments unless a receipt was requested and postage for that purpose was enclosed. Receipts were sent out for quarterly premiums or for a longer period of time. This was obviously for the purpose of avoiding the correspondence and the postage upon small and frequent payments made monthly.

Mrs. Inez Holland was carried to a hospital in the city of Fort Smith on the 8th day of October. She returned to her home October 13. She was again returned to the hospital October 18, where she died October 29, 1937. Her attending physician testified that acute Bright's disease was the cause of her death.

Clifford Hardin, an agent for the association residing in Booneville, Arkansas, handled the application for the insurance, and appears to have assisted Mr. Holland in his several reinstatements. His connection with the association was severed before the trial from which this appeal comes. Mr. Hardin testified that a brother of Mr. Holland called him over the telephone about 9 o'clock October 28th to see him in regard to the reinstatement of the policy. Of course, if the September premium had been paid, it was not necessary to reinstate the policy, as the month of October had not expired and the October premium could have been paid before the end of that month. Hardin testified that he prepared a reinstatement application, and inquired about the health of Mrs. Holland, and, in response to that question, wrote into the application the answer, "Wife has been ill, but is O. K. now. " In his weekly report to the association under date of October 30th, Hardin included the application for reinstatement of the Holland policy, along with three others. After filling out the reinstatement blank, he gave it to Holland's brother for execution by Holland, and it was returned by mail and received by witness on October 29th, and it was then mailed by witness to the association, along with the premiums for the months of September, October and November. This witness further testified that he had endeavored without success to induce the association to send receipts for monthly payments. Witness had no authority to reinstate a policy, and did not attempt to reinstate Holland's. He sent the application to the association for that purpose.

Holland and his brother both testified that the transaction in regard to filling out the blank application for reinstatement occurred October 8th or 9th, and not October 28th or 29th, but, even so, there was no occasion for reinstatement if the September premium had been paid, and Holland had the remainder of the month in which to remit the October premium.

Lawrence Holland, the brother, testified that Mrs. Holland was placed in the hospital on the 8th of October, and that he was directed by his brother to attend to the insurance. He got a check cashed on the 8th, and went to Booneville and saw Mr. Hardin that night and he paid the premium for a quarter of a year. He took the application to his brother which Hardin gave him, and when his brother had signed the application witness mailed it back to Hardin from Waldron. It was about 10:30 p. m., when he got the application from Hardin, and he drove in his truck to Fort Smith to have his brother sign it, and he arrived there about...