New York Life Insurance Company v. Adams

• Decision Date: 19 December 1921
• Docket Number: 48
• Citation: 235 S.W. 412,151 Ark. 123
• Parties: NEW YORK LIFE INSURANCE COMPANY v. ADAMS
• Court: Arkansas Supreme Court

235 S.W. 412

151 Ark. 123

NEW YORK LIFE INSURANCE COMPANY v. ADAMS

No. 48

Supreme Court of Arkansas

December 19, 1921

Appeal from Phillips Circuit Court; J. M. Jackson, Judge; affirmed.

Judgment affirmed.

Ewing King & Ewing, and Fink & Dinning, for appellant.

The policy lapsed and a reinstatement was had, which reinstatement was rescinded when the company discovered the false statements contained in the application therefor. The period of incontestability provided in the policy therefore related from the date of the reinstatement, which was in effect the making of a new contract, the old one having become ineffective, and not from the date of the original policy. 206 F. 20, 46 L. R. A. (N. S.) 1056; 83 F. 631; 159 N.Y. 411; 220 N.Y. 447; 115 Tenn. 471.

The reinstatement of the policy did not constitute a waiver of a forfeiture, and authorities cited in appellant's brief and there discussed are not applicable to the question at issue though frequently cited in opposition to appellant's theory.

An issue of fact was presented which should have been submitted to the jury, as to whether or not the answers given by the assured to the questions, avoided the reinstatement of the policy. 91 Ark. 337; 97 Ark. 438; 103 Ark. 401; 104 Ark. 267.

There was not sufficient funds in the hands of the company to continue the policy in force up to the date of the death of the insured, and the policy could not be held to be in force on this ground according to decisions in 68 Ark. 105; 111 Ark. 514; 125 Ark. 372; 144 Ark. 190.

It is not necessary for application for reinstatement to be attached to original policy or to be made part thereof by reference to enable appellant to avoid the contract of reinstatement either on the grounds of fraud in its procurement or by reason of breached warranties. 105 Ark 101; 111 Ark. 554.

Appellant's request for a peremptory instruction should have been granted, as the uncontradicted testimony shows that the answers to the questions in the application for reinstatement were warranties, and that they were breached by the insured. 58 Ark. 528, 25 S.W. 835; 72 Ark. 621; 84 Ark. 57; 103 Ark 201; 120 Ark. 605.

The court erred in directing verdict for the face of the policy as the amount of an anual premium was due the company. Judgment in any event should not have been for more than $ 4,732.05. If this be true, the recovery would have been less than the sum sued for, and penalty and attorney's fee were therefore improperly allowed. 92 Ark. 388; 93 Ark. 84; 117 Ark. 82. Had plaintiff amended her complaint to ask judgment for the face of the policy, less $ 267.95, the amount of the premium due, she would have come within the rule in 118 Ark. 22, but she failed to do this. The amount due to the company cannot be said, as in 126 Ark. 483, to have been insignificant as compared with the face of the policy.

Bevens & Mundt, for appellee.

The policy never lapsed for the reason that, upon the due date of the so-called defaulted premium, the company had in its hands $ 39.65 unpaid dividends. This sum would have carried the insurance in force until the premium was paid by the taking of a note and check, so that there was never a moment that the policy was forfeited for non-payment of premium. It is the duty of insurance companies to appropriate any moneys it holds for an insured to the payment of his premium to prevent a forfeiture. 68 Ark. 505; 144 Ark. 190; 111 Ark. 514; 125 Ark. 372.

The policy became incontestible after two years. This period dates from the issuance of the policy and not from the reinstatement of same. 104 Ga. 526, 42 L. R. A. 261; 97 Ia. 226, 32 L. R. A. 473; 78 Sou. 299, L. R. A. 1918-D 860; 247 Ill. 488; 84 Ia. 734; 111 N. 3. 391.

Nothing contained in application for reinstatement can be considered by the court, as said application was not attached to the policy or indorsed thereon, or in any manner made a part thereof, as provided by the terms of the policy. 108 Ark. 511.

Penalty and attorney's fee were properly granted. Appellant did not plead the amount of the note as a setoff in his answer filed, nor raise any question to the amount of the verdict. Conceding liability for the outstanding note, yet the amount of interest due on the principal would more than equal this sum, so that in no event would the recovery have been for less than the sum sued for. See cases in 103 Ark. 1 and 92 Ark. 378.

MCCULLOCH, C. J. WOOD and SMITH, JJ., dissent.

OPINION

MCCULLOCH, C. J.

This is an action on a life insurance policy issued by appellant on the life of Richard H. Adams, payable to his wife, the appellee. Payment is resisted on the ground that there was a forfeiture for non-payment of an annual premium, that thereafter, in accordance with the terms of the policy, there was a reinstatement, but that the reinstatement was void on account of breach of warranty by false statements concerning the state of health of the assured and the attendance of physicians. The case was tried before a jury in the court below, but the court gave a peremptory instruction in favor of appellee.

The policy was dated August 27, 1917, and was conditioned upon the payment, annually in advance, of premiums in the sum of $ 267.95. The policy also contained the following clause concerning reinstatement after default:

"At any time within five years after any default, upon written application by the insured and upon presentation at the home office of evidence of insurability, satisfactory to the company, this policy may be reinstated, together with any indebtedness * * * upon payment * * * arrears of premium with 5% interest thereon from due date."

The advance payment of premiums was made on the issuance of the policy and the premium due August 28, 1918, was also paid at maturity, but the premium due August 28, 1919, was not paid. There was at that time an earned dividend of $ 39.65 due the assured. After the failure to pay the premium, correspondence between the company and the assured ensued, which resulted in an application by the assured for reinstatement, dated October 10, 1919. The application was in the following form:

"Application for Reinstatement of Policy.

Policy No. 7385267 Amount $ 5,000.00

All questions must be answered by the applicant.

(Omitting all immaterial questions and answers but questions 4, 5, 6, 7, and answers thereto.)

4. What illness, if any, have you had since the date of the above policy? (If none, so state).

Answer: Influenza.

5. What was the nature of such illness, its date and duration? (If none, so state).

Answer. October, 1918, about two weeks.

6. What physician or physicians have you consulted or been treated by and for what illness or ailment, since the date of the above policy? (If none, so state).

Answer. Dr. H. P. Graves. Influenza.

7. Are you now in sound health?

Answer. Yes.

"I declare on behalf of myself and every person who has or shall claim any interest in or under the above numbered policy, that I made each and all of the foregoing answers; that I have carefully read them over, and find they are written exactly as I made them. Said answers each and all are, and I warrant them to be, full, complete and true. I have made said answers for the purpose of inducing said New York Life Insurance Company to reinstate my said policy, and I understand that they are each material to the risk, and that said company will, and I agree that it shall, rely and act solely upon my said answers in passing upon my application for the reinstatement of the said policy which lapsed for non-payment of premium due on the 28th day of August, 1919, and is not now in force except as may be provided by its non-forfeiture provisions.

"I further agree that said policy shall not be deemed reinstated by reason of any cash paid or settlement made in connection with this application or otherwise, unless and until said company at its home office in acting upon this application shall duly reinstate said policy during my life time and good health, notice of such reinstatement to be promptly mailed to me. * *"

The application was accepted by the company without further investigation upon the agreement that the dividend of $ 39.65 due the assured should be applied on the premium, and a lien note in the sum of $ 228.30 be accepted by the company for the balance, which was done The reinstatement was granted by the company and entered October 30, 1919. The assured died January 12, 1920, the note still remaining unpaid in the hands of the company.

It was shown on the trial of the cause that the statements in the application that the assured was then in sound health and that the extent of the previous illness of the assured was a spell of influenza lasting about two weeks in October, 1918, were untrue in that assured had, for more than a year prior to that time, been afflicted with serious and critical ailments and was then so afflicted. It is also shown that the statement of the assured in his application to the effect that Dr. H. P. Graves was the only physician who had treated him was untrue in that he had also been treated for serious illness by Dr. E. C. Ferguson, of Clayton, Louisiana, and by Dr. Chamberlain, of Natchez, Miss.

It was shown that the policy contained a clause that it should be incontestable after two years from date of issue, except for non-payment of premiums.

It is unnecessary to discuss all of the grounds urged by counsel in defense of the trial court's decision, for, if the undisputed evidence establishes the right of appellee to recover on any ground, the judgment should be affirmed.

There is, as before stated, testimony in the case, at least sufficient to justify submission to the jury of the question whether or not the statements of the...