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

• Decision Date: 25 June 1920
• Docket Number: 4159.
• Citation: 190 P. 927,58 Mont. 153
• Parties: NELSON v. MUTUAL LIFE INS. CO. OF NEW YORK.
• Court: Montana Supreme Court

190 P. 927

58 Mont. 153

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

No. 4159.

Supreme Court of Montana

June 25, 1920

Appeal from District Court, Yellowstone County; Charles A. Taylor Judge.

Action by Lura A. Nelson against the Mutual Life Insurance Company of New York. From a judgment for defendant and order denying new trial, plaintiff appeals. Affirmed.

James L. Davis and F. B. Reynolds, both of Billings, and Clyde McLemore, of Baker, for appellant.

Charles R. Leonard and Earle N. Genzberger, both of Butte, and O. F Goddard, of Billings, for respondent.

COOPER J.

Action to recover upon a policy of life insurance in the sum of $2,000. The cause was tried by the court without a jury and resulted in a judgment for the defendant. Plaintiff appeals from the judgment and from an order denying her a new trial.

The provisions of the policy pertinent to this inquiry are as follows:

" Premiums. All premiums are payable in advance at said home office or to any agent of the company upon delivery, on or before date due, of a receipt signed by either the president, vice president, second vice president, secretary or treasurer of the company and countersigned by said agent.

A grace of 30 days (or 1 month, if greater), subject to an interest charge at the rate of 5 per centum per annum, shall be granted for the payment of every premium after the first during which time the insurance shall continue in force. If death occur within the period of grace, the overdue premium and the unpaid portion of the premium for the then current policy year, if any shall be deducted from the amount payable hereunder.

Except as herein provided, the payment of a premium or installment thereof shall not maintain this policy in force beyond the date when the next premium or installment thereof is payable. If any premium or installment thereof be not paid before the end of the period of grace, then this policy shall immediately cease and become void, and all premiums previously paid shall be forfeited to the company, except as hereinafter provided. * * *

Reinstatement. Unless it shall have been surrendered for its cash value, this policy may be reinstated at any time within 3 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 premium with interest thereon at the rate of 5 per centum per annum. * * *

Agents are not authorized to modify this policy or to extend the time for paying the premium."

By mutual agreement, the policy was changed to permit the annual premiums to be paid in quarterly installments of $16.49 on February 10, May 10, August 10, and November 10, of each year.

The determinative issue in the case is presented by the sixth paragraph in the complaint, as follows:

"That said Merl S. Nelson fulfilled all the conditions of said policy on his part to be performed, and paid all premiums provided for in said policy up to the date of his death, in accordance with said policy and agreement for quarterly payments, as above mentioned, except the installment of premium which was due August 10, 1915, was paid October 13, 1915, and the installment due November 10, 1915, was never paid."

All the allegations of the complaint are denied by the answer. The premium payments were all met to the satisfaction of the company, until August 10, 1915, the policy being in full force on that date, at which time, however, a quarterly payment of $16.49 on the annual premium fell due. On October 8 insured's check for that amount was received by the company and placed in its suspense account. The insured died on December 13, 1915.

Appellant's position is that the forfeiture was waived:

"1. (a) By the acceptance of the payment of premium on October 8; (b) by demand of payment of the next quarterly premium, which became due November 10; and (c) by the retention of the money from receipt thereof on October 8, without even offering to return the same until after the death of the insured.

2. Having waived the forfeiture, the company had no right to require a certificate of health.

3. The time for the payment of the premium which became due November 10 was extended to December 25, by reason whereof the policy was in full force and effect at the death of the insured."

If the retention of the proceeds of the check is to be construed as a waiver of the health certificate the policy requires, or, what amounts to the same thing, "evidence of insurability satisfactory to the company," the conclusion would logically follow. Did the company forego this important right?

On September 9, 1915, the following letter was mailed to the insured by the agent of the company in the city of Spokane, Wash., and received in due course:

"Mr. M. S. Nelson, Billings--Dear Sir: 1 regret to note that you have allowed your policy to lapse by default in the payment of the last premium. This may have been an oversight, or there may be something about your contract which you do not fully understand. In either event, I trust you will favor us with your reason for discontinuing. Frequently a policy that does not exactly meet the requirements of a policy holder may be changed to some other plan, or, if necessary, reduced in amount. If it is inconvenient for you to pay the premium at this time, it is possible we can assist you with a loan, if the contract has been in force three years; or the payments may be changed to semiannual or quarterly. At any rate we would like to hear from you on the subject. A life insurance policy is too valuable an asset to your estate to be cast aside if it can possibly be avoided, and it should be borne in mind that to drop a policy or change it for a contract in another company is always to the detriment and cost of the insured. Being a mutual company our interests are the same, and we are always pleased to answer any questions or make explanations which may be of service to our members. Trusting that you will take up the matter of restoring the policy, and that we may hear from you by return mail, I am, etc. W. H. Shields, Manager."

The following indorsement appears on the bottom of the letter last referred to, in the handwriting of Merl S. Nelson: "Inclosed find check. Merl S. Nelson, 203 S. 30th St., Billings, Mont." This, the father of the insured testified, was found shortly after his death, in a tin box containing his private papers, together with a canceled check dated September 5, 1915, in the sum of $16.49, showing its indorsement and deposit by defendant and return in due course to the insured.

From the testimony of Miss Mary I. Williams, it appears that on October 14, 1915, after the receipt and deposit of the check, the following letter was sent to the insured:

"Dear Sir: We beg to acknowledge receipt of check for $16.49 tendered in payment of the premium due August 10 last under your policy No. 2043467, but as this remittance was not received within the 30 days of grace allowed by the company the policy has now lapsed, and in order to restore same it will be necessary for you to furnish the company with a satisfactory certificate of health. We are inclosing you herewith blank for this purpose, which, if you will kindly take to either of our examiners, Dr. James Chapple or Dr. E. W. Thuerer, of your city, he will be glad to complete same for you. The fee charged in this connection will be paid by the company. Trusting you will give this matter attention at your earliest convenience, so that your policy may be restored, we are, etc. W. H. Shields, Manager."

To this there was no reply.

On December 8, 1915, the following letter was sent from the office of the defendant in Spokane, Wash., in the regular routine of the business:

"Dear Sir: On October 14, last, we acknowledged receipt of your check for $16.49 tendered in payment of premium due August 10, last, under your policy No. 2043476. Of course, this check could not be accepted, as your policy had already lapsed; it was therefore placed in suspense pending receipt of satisfactory certificate of health, but to date we do not appear to have received this certificate. Another quarterly premium of $16.49 fell due November 10, last, and check for this amount must now accompany the certificate of health to this office.

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