National Life Co. v. Harvey

• Decision Date: 02 February 1942
• Docket Number: No. 5388.,5388.
• Citation: 159 S.W.2d 920
• Parties: NATIONAL LIFE CO. v. HARVEY.
• Court: Texas Court of Appeals

159 S.W.2d 920

NATIONAL LIFE CO. v. HARVEY.

No. 5388.

Court of Civil Appeals of Texas. Amarillo.

February 2, 1942.

Rehearing Denied March 9, 1942.

Appeal from District Court, Wheeler County; W. R. Ewing, Judge.

Suit by Owen B. Harvey against the National Life Company to recover damages for cancellation of a policy of insurance issued by defendant on the life of plaintiff. From a judgment, overruling its plea of privilege, defendant appeals.

Judgment reversed and judgment rendered.

Coker, Rhea & Vickrey, of Dallas, for appellant.

Lewis M. Goodrich and Clayton Heare, both of Shamrock, for appellee.

STOKES, Justice.

On May 14, 1918, the National Life Association of Des Moines, Iowa, a mutual assessment company, issued to appellee, Owen B. Harvey, its policy or certificate of life insurance in the sum of $5,000 payable to Minnie Harvey, his wife, as beneficiary, at the home office of the association in Des Moines. The annual premium to be paid to the association by appellee was the sum of $72.50 which, by special arrangement, was payable semiannually in the sum of $36.25 May 14th and a like amount November 14th of each year. Appellee paid the premiums regularly until May 14, 1940, when his cheque for $36.25 was refused by appellant for the reason, as given by it, that the amount remitted thereby was not sufficient. The record shows that on January 30, 1929, the National Life Association was reorganized and converted into a legal reserve or old line company under the name of National Life Company, which is the appellant herein; that the new organization assumed the contracts of the old, including appellee's policy, and continued to receive the premuims paid by appellee and the others who held insurance policies or certificates in the old association. The policy contract contained the provision that "after the first annual payment stated in the face of this policy, the insured agrees to make subsequent payments to the association, which shall be due and payable annually, at the expiration of each year from the date of this policy, as follows: (a) For the general and benefit funds such amounts as may be levied by the board of directors of the association, the entire mortuary and surplus funds being pledged to maintain an annual rate therefor which is not in excess of $72.50; also, the reserve fund may be drawn upon to maintain said rate if the amount realized therefrom for mortuary purposes is not sufficient."

Sometime prior to May 14, 1940, the board of directors of appellant company levied an assessment on appellee's policy and appellant notified appellee that there would be due and payable on May 14, 1940, a semiannual premium of $88.75, and the record indicates that the semiannual payment tendered by appellee on May 14, 1940, being for the sum of $36.25 only and not for the amount of $88.75 in accordance with the resolution of the board of directors, constituted the cause and reason for appellant's refusal to accept the same. Appellee declined to increase his payments in accordance with the resolution and appellant thereupon canceled the policy.

Appellee filed this suit on October 30, 1940, in the District Court of Wheeler County for damages which he alleged had accrued to him by virtue of the act of appellant in wrongfully repudiating the contract, measuring his damages by what he alleged to be the value of the policy at the time it was rescinded, which he alleged was the sum of $3,840. He contends that, in view of the provisions of the policy which we have quoted, appellant could not change or increase the premiums without his consent.

Appellant filed its plea of privilege in the ordinary form, in which it alleged that at the time the suit was filed and citation served upon it, and at the time of filing the plea of privilege, the place of its residence was Dallas County. It alleged that it was a corporation, organized under the laws of the State of Iowa, with its principal office in that State, but having a permit to do business in Texas, and that its only office and principal place of business in Texas was located in Dallas County. It also alleged that no exception to exclusive venue in the county of one's residence provided by law existed in the cause, and prayed that the cause of action be transferred to one of the district courts of Dallas County.

Appellee filed a controverting affidavit, and the issues made upon the plea of privilege and affidavit were submitted to the court on the 9th of May, 1941, and resulted in an order overruling the plea of privilege. Appellant duly excepted to the order, gave notice of appeal, and has brought the case to this Court for review upon a number of assignments of error and propositions of law in which it seeks a reversal of the judgment. It devotes a large portion of its brief to the proposition that at the hearing on the plea of privilege, appellee did not establish a cause of action, but, in view of the conclusions we have reached in regard to other assignments urged by appellant, we deem it unnecessary to discuss that contention or express any opinion concerning it.

The controlling issues presented by the brief are, first, that the cause of action as pleaded by appellee is a suit for damages for alleged wrongful cancellation or repudiation of the contract of insurance, and not a suit on the policy within the contemplation of section 28, article 1995, R.C.S., and, secondly, that neither the pleading nor proof reveals a cause of action, or any part thereof, which arose in Wheeler County, as provided in section 27, article 1995, R.C.S.1925.

The law is well settled in this State that when an insurance company wrongfully repudiates or cancels a policy of insurance before it matures, its act in doing so gives rise to a cause of action in favor of the insured. He has several remedies, among which are (a) an equitable proceeding to enforce specific performance, (b) he may tender his payments in accordance with what he conceives to be the terms of the contract, and at his death his beneficiary can collect the face value of the policy less the amount of the premiums due if his interpretation of the policy proves to be correct, or (c) he may treat the cancellation of the policy as a repudiation and sue to recover his damages for such breach. Supreme Lodge K. P. v. Neeley, Tex.Civ. App., 135 S.W. 1046; Grand Fraternity v. Nicosia, Tex.Civ.App., 41 S.W.2d 684; Washington Life Insurance Co. et al. v. Lovejoy et al., Tex.Civ.App., 149 S.W. 398. It is the last-mentioned course which appellee pursues in...