National Fidelity Life Ins. Co. v. Gerard

• Decision Date: 01 October 1935
• Docket Number: 25772.
• Citation: 52 P.2d 1,175 Okla. 219,1935 OK 901
• Parties: NATIONAL FIDELITY LIFE INS. CO. v. GERARD.
• Court: Oklahoma Supreme Court

52 P.2d 1

175 Okla. 219, 1935 OK 901

NATIONAL FIDELITY LIFE INS. CO. v. GERARD.

No. 25772.

Supreme Court of Oklahoma

October 1, 1935

Rehearing Denied Dec. 10, 1935.

Syllabus by the Court.

1. A contract of life insurance made in violation of section 10512 O.S. 1931, which provides that no insurance company "shall make or permit any distinction or discrimination in favor of individuals between insurants (the insured) of the same class and equal expectation of life in the amount of payment of premium or rate charged for policies of insurance or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contract it makes; nor shall any such company or agent thereof make any contract of insurance or agreement as to such contract other than as plainly expressed in the policy issued thereon" may be enforced by the assured where a mistake is made in the policy which does discriminate in favor of the assured, but without the knowledge of the assured, the parties not being in pari delicto.

2. In order to justify the reformation of a contract on the ground of mistake, the party seeking reformation must establish by clear and convincing evidence either that the mistake was mutual or that there was a mistake on the part of one party and fraud or inequitable conduct on the part of the other.

3. Where a life insurance company makes a mistake in figuring the monthly payment stipulated in the old age annuity clause and places the decimal point one point to the right of where it should be, so that the policy provides for a monthly payment of $182.04 when in fact it should provide for a monthly payment of $18.20, and the mistake is not mutual and the assured is not guilty of fraud or inequitable conduct, and the company, after discovering the mistake, accepts two annual premium payments without calling the attention of the assured to the mistake, the company is not entitled to reformation of the policy.

Appeal from District Court, Caddo County; Will Linn, Judge.

Action by Gabriel R. Gerard against the National Fidelity Life Insurance Company, in which defendant filed a cross-petition. From a judgment for plaintiff, defendant appeals.

Affirmed.

Rehearing denied; GIBSON, J., not participating.

Hatcher & Bond, of Chickasha, for plaintiff in error.

Bailey & Hammerly and T. H. Williams, Jr., all of Chickasha, for defendant in error.

PER CURIAM.

In March, 1929, the plaintiff in error issued to the defendant in error a policy of insurance under the terms of which it promised to pay the beneficiary in the event of death of the assured the sum of $12,000 in 120 equal monthly installments. The annual premium provided for was $557.52. Gerard was then 58 years of age. The policy as delivered provided for an old age annuity of $182.04 per month for life of the assured after he attained the age of 65 years, at the option of the assured.

It is clear from the evidence that the actuary of the company made a mistake in figuring the amount of the monthly payments, and placed the decimal point one point to the right of where it should have been, and the monthly payments should have been $18.20 instead of $182.04. However, before the policy was sold Gerard, a specimen policy was sent the state agent of the company, and it was submitted to Gerard, and it provided for a monthly payment of $182.04 in the old age annuity clause. At least three other policies carrying the same annuity rates were sold in the vicinity of Chickasha, and some of them were sold on the strength of the Gerard policy. It was not shown that any policies carrying the old age annuity clause were sold in Oklahoma carrying any different rates, or the correct rates.

In June, 1929, the company learned of the mistake and wrote to its state agent of the mistake, and asked him to pick this policy up, as well as two others, and send them in for correction and to explain the mistakes to the policyholders. Gerard was not notified of the mistake, and there is no evidence that the state agent made any effort to pick up the policies.

In August, 1932, Gerard sent the policy to the home office to procure a premium loan and to have it indorsed on the policy. The company had the mistake corrected so as to make the annuity payment read $18.20 per month instead of $182.04, and returned the policy to Gerard without calling his attention to the correction. Gerard did not notice the change until April, 1933, when he wrote the company and demanded that the change be corrected so as to read as it was originally issued. The company refused to make the change, and Gerard filed this action to restore the policy as it was originally issued. The company filed an answer and cross-petition seeking reformation of the clause so as to make it read as it was changed.

The trial court entered judgment in favor of the plaintiff, Gerard, restoring the policy so as to provide an old age annuity of $182.04 per month, and from an order overruling motion for new trial the company appealed.

1. The company, for reversal, first contends that the old age annuity clause as originally written violates section 10512 O.S. 1931, in that it discriminated in favor of the plaintiff and against other persons of the same class and equal expectancy of life....