Nelson v. Standard Life Ins. Co.

• Decision Date: 10 January 1938
• Docket Number: No. 19056.,19056.
• Parties: NELSON v. STANDARD LIFE INS. CO.
• Court: Missouri Court of Appeals

112 S.W.2d 901

NELSON v. STANDARD LIFE INS. CO.

No. 19056.

Kansas City Court of Appeals. Missouri.

January 10, 1938.

Rehearing Denied January 31, 1938.

Appeal from Circuit Court, Cole County; Nike G. Sevier, Judge.

"Not to be published in State Reports."

Action by James Nelson against the Standard Life Insurance Company to recover the balance allegedly due under a policy of life insurance. Judgment for plaintiff, and defendant appeals.

Affirmed.

S. W. James, Jr., and James T. Blair, Jr., both of Jefferson City, for appellant.

John A. Davis, of St. Louis, and Robert S. Cobb, of Jefferson City, for respondent.

CAMPBELL, Commissioner.

The American Home Life Association issued to Elsie Nelson under date of February 21, 1934, a contract of life insurance in which plaintiff was the beneficiary. The policy provided for a payment by the insured of $1 each month, and that the amount of insurance was $270. The obligations of the policy were thereafter assumed by the defendant. The insured died on or about July 6, 1935. In August, 1935, the defendant sent its check in the sum of $67.50 to plaintiff. The following was stated on the check, "in full of liability" under the policy. The plaintiff received the check, indorsed and cashed it.

Thereafter, plaintiff brought this suit to recover the sum of $202.50, the balance alleged to be due under the policy.

The answer alleged that the claim was fully settled by the payment of $67.50; that insured made false answer in her application for the policy, in that she stated she was in good health, free from disease, and that she had not been treated by a physician within five years prior to the application; that in truth the insured, at the time the application was signed and for a long time prior thereto, was afflicted with syphilis, chronic myocarditis, and other diseases, and that said diseases caused or contributed to her death. The answer contained a counterclaim in which recovery in the sum of $49.50 was sought upon the theory that defendant was not liable except for return of the assessments in the amount of $18. The trial was with a jury. The judgment was for the plaintiff for $202.50 on his cause of action and for him on the defendant's counterclaim. The defendant has appealed.

Concerning the alleged settlement: The check above mentioned was enclosed in a letter written to plaintiff's attorney by defendant's employee, Henry, in charge of claims. The pertinent part of the letter reads: "The maximum amount of this policy for death from a number of chronic diseases, among them chronic myocarditis, is twenty-five per cent of the principal amount named in the policy. In this case the principal amount is $270 and twenty-five percent of this amount is $67.50 the amount for which we enclose check."

The writer of the letter was defendant's witness. He testified that under his construction of the by-laws of the American Home Life Association the amount payable was $67.50. In his cross-examination is the following:

"Q. I will show you the by-laws and ask you to show the provision in the by-laws authorizing you to do that. A. That wasn't what I used. I considered the value of the policy.

"Q. Where is the clause authorizing you to do that? A. I don't know.

"Q. You just calculated the amount as being $67.50? A. There is a provision in the by-laws somewhere that states the different amounts that shall be paid. The policy was for $270 and the amount of the premium should have been $1.76 and had been for over a year, and I figured it out from the amount she should have paid.

"Q. What we are trying to get at is if you arrived at the amount from your construction of the by-laws? A. I don't know.

"Q. You don't see anything there in the by-laws authorizing you to pay that amount—you don't see anything in the by-laws that would authorize you to do that? A. I don't know whether this is a complete copy or not. There were additions and amendments.

"Q. This is the defendant's exhibit which purports to be the by-laws of the American Home Life Association and is designated as Article 5 and is supposed to state what amounts you can compute, but nowhere do you see there is a principal sum of $270. I will show you the policy— Plaintiff's Exhibit 1 and will refer you to that paragraph and will ask you if there is anything to justify considering the policy as only worth $67.50? A. It would be worth $270 if she had paid the $1.76 premium.

"Q. She had paid the assessment? A. She paid one dollar.

"Q. But she was only required to pay one dollar subject to the renewal of one dollar, wasn't she? A. The rate was $1.76.

"Q. But she was required to pay but one dollar? A. It looks like it had been changed.

"Q. It has been in your possession. A. Yes, sir.

"Q. The premium receipt book that was issued in connection with that policy— what is the amount of the premium paid? A. It is one dollar and in some places it is marked fifty cents. I don't know anything about this.

"Q. But you know that the payment was one dollar? A. It should have been $1.76 according to the by-laws. * * * "Q. I will refer you to my question. Is there anything in that policy that would justify you to fix the amount of your liability at $67.50 instead of $270? A. Yes, sir.

"Q. What is that? A. The rate paid.

"Q. And that is the reason you sent a check for $67.50 instead of for $270? A. Yes, sir."

The policy provided that the assessment was $1 each month and that the benefit was $270. There was nothing in the by-laws of the American Home Life Association which allowed the defendant to reduce the amount of the insurance or increase the monthly assessment.

The evidence of Henry shows that he arbitrarily assumed the monthly assessment should have been $1.76 and that as the insured paid only $1 per month the amount of insurance was $67.50.

The claim that insured made false answers in the application for the policy was, so far as the record shows, not made until defendant filed its answer. Thus, when the $67.50 was paid, there was no dispute in good faith concerning the amount of the insurance nor basis for such a dispute, nor was there any consideration for the alleged settlement. Therefore, there was no settlement. Sappington v. Central Mut. Ins. Ass'n, 229 Mo. App. 222, 77 S.W.2d 140; Sheppard v. Travelers Protective Ass'n of America, Mo.App., 104 S.W.2d 784, 785.

Of the defense that the policy was obtained through false answers in the application: The defendant, though conceding that plaintiff made a prima facie case, contends its evidence showing that insured at the time she signed the application and prior...