North Carolina Mut. Life Ins. Co. v. Sanders
| Decision Date | 08 May 1939 |
| Docket Number | 33698 |
| Citation | 188 So. 554,186 Miss. 368 |
| Court | Mississippi Supreme Court |
| Parties | NORTH CAROLINA MUT. LIFE INS. CO. v. SANDERS |
Suggestion Of Error Overruled June 12, 1939.
APPEAL from the Hinds county court HON. A. H. LONGINO, Judge.
Suit by Mabel Lena Sanders against the North Carolina Mutual Life Insurance Company to recover for fraud after denial of liability for cash surrender value of endowment life policy. From an order overruling a demurrer to the bill of complaint the defendant appeals. Affirmed and remanded.
Affirmed and remanded.
Ray & Spivey, of Canton, for appellant.
The bill shows on its face that on or about January 1, 1927, the liability of the Century Life Insurance Company was substituted for that of appellant, and that appellee acquiesced in and accepted said substitution of liability and that appellant was thereby released from liability by reason of such novation of its contract with appellee.
32 C. J. 1034 and 1035; Watson v. National Life & Trust Co. et al., 189 F. 872, 111 C. C. A. 134; In re: Times Life Assurance & Guarantee Co., L. R., 5 C. H. 381; American Blakeslee Mfg. Co. v. Martin Bros., 91 So. 6, 128 Miss. 302; Rea v. Underwood, 152 So. 272, 168 Miss. 799.
The bill shows on its face that appellee's alleged cause of action is barred by our six year Statute of Limitations.
Sections 2292 and 2312, Mississippi Code of 1930; Central Trust Co. v. Meridian Lt. & Ry. Co., 63 So. 575, 106 Miss. 431, 51 L.R.A. (N.S.) 151; Johnson v. Crisler, 125 So. 724, 156 Miss. 266; Jones v. Rogers, 38 So. 742, 85 Miss. 802; Hudson v. Kimbrough, 20 So. 885, 74 Miss. 341; Dunn v. Dent, 153 So. 798, 169 Miss. 574; Thornton v. City of Natchez, 41 So. 498, 88 Miss. 1.
The bill shows on its face that if appellee has any cause of action whatever against appellant, that such cause of action has not accrued, and that this action is prematurely brought.
Sections 374, 526 and 527, Mississippi Code of 1930; North American Life Insurance Company v. Smith, 172 So. 135, 178 Miss. 238.
On the face of the bill, no recovery can be had on the alleged guaranty of appellant.
Section 526, Mississippi Code of 1930; Palmetto Fire Ins. Co. v. Allen, 105 So. 769, 141 Miss. 681.
The allegations of the bill are fatally inconsistent and contradictory.
Stirling & Stirling, of Jackson, for appellees.
Reinsurance is likened by the authorities to sale of mortgaged real estate, where the purchaser without cooperation of the mortgagee, assumes the debt as part of the purchase price, without even the knowledge of the mortgagee, who is ignorant of the sale, and then the mortgagee can sue either his original debtor (the mortgagor and former owner) or the purchaser who assumed the debt, who is called and considered the surety, and purchaser could of course send mortgagee assumption slip or notification without affecting rights.
American Insurance Union v. Woodward, 48 A.L.R. 102; U.S. Fire Insurance Company v. Smith, 164 So. 70, 231 Ala. 169; So. Fire Ins. Co. v. Hand Jordan Co., 112 Miss. 565, 73 So. 578; Peoples Savings Bank v. Jordan, 76 So. 44 or 444.
Where one company assumes all the obligations of the other and the contracts of the former company, i. e., the insurance contracts, the reinsuring company gives the policy-holder right to sue both companies.
Whitney v. American Insurance Co., 59 P. 897, 127 Cal. 464; Bonds v. Heckler Fire Ins. Co., 45 A. S. R. 438.
The failure to pay premiums is complained of, but the bill alleges that premiums were paid up to and including 1933, and if true the statute has not run since 1933, and even if premiums had not been paid since 1927, when the nefarious deal was put over, the undiscovered fraud would have prevented the statute from running against complainant, especially under the provisions of the policy creating reciprocal duties and obligations, namely agreements to give extended insurance, paid up insurance, prorate the profits, and surplus, etc., all of which agreements constituted and created express trusts, which postponed the running of the statute. When the reinsuring company failed, it was but a natural consequence that the policy holders discontinued remitting to it, the receiver was not authorized to receive further premiums, and the whole proceeding was involved in inextricable legal tangle. If the company had not failed and the original company, the N. C. Mutual Life Insurance Co., had not indulged in anticipatory breach of contract, the plaintiff would probably have been still paying premiums. Our friends overlook the difference between simple fraud, if it could such, violation of implied and violation of express trusts and the different degrees of candor, truthfulness, and faithfulness involved in each.
First National Bank of Laurel v. Johnson, 171 So. 11, 177 Miss. 634; W. O. W. v. Penn, 161 So. 681, 173 Miss. 93; Boyd v. Applewhite, 84 So. 16, 121 Miss. 879; Odd Fellows Ben. Association v. Smith, 161 So. 115, 172 Miss. 860; Mutual Res. Life Ins. Co. v. Ferrnebach, 144 F. 342-345, 7 L.R.A. (N.S.) 1163, 199 S.E. 122; 48. A.L.R. 111-116-119; Lovell v. St. Louis Mut. Life Ins., 111 U.S. 264, 28 L.Ed. 423; 32. C. J., page 1264, par. 464; Hand Jordan Co. v. Fire Insurance Co., 112 Miss. 565, 73 So. 578; Barnes v. Fire Insurance Co., 56 Minn. 38, 57 N.W. 314, 45 Am. State Rep. 438; Johnson v. Phenix Ins. Co., 66 Wis. 50, 57 Am. Rep. 249; Livermore v. Johnson, 27 Miss. 284; Buckner and Stanton v. Calcote, 28 Miss. 432; Edwards v. Gibbs, 39 Miss. 166.
This is a case of confidential relations, a case where the insurance company and its officers owed a continuing duty, it was the custodian of the share of the profits to which this plaintiff was entitled, the share in the surplus which should have been prorated to his policy, his paid up insurance, and it was its and their duty to conserve all the assets of the company for him and other policy-holders. It is practically conceded in all the cases where such relations and obligations exist the Statute of Limitations does not run at all, or at most it runs only from the time the fraud was actually discovered, especially where there was active fraud, misrepresentation, etc. The case of Lundy v. Hazlett, 147 Miss. 813, is exactly in point.
Buckner v. Calcote, 28 Miss. 432; State v. Furlong, 60 Miss. 839; Carrier v. R. R. Co., 6 L.R.A. 799; American Bonding Co. v. Fourth Nat. Bank, 91 So. 480; 17 R. C. L. 859; Croendall v. Westrate, Ann. Cas. 1914B 906; 37 C. J. 975; Madole v. Miller, 119 A. 829; 37 C. J. 972; Waugh v. Gas. Co., L.R.A. 1917B 1253; Rosenthal v. Walker, 28 L.Ed. 397; Mathews v. Mathews, 6 So. 201, 66 Miss. 239; 25 Cyc. 1016; Kelly v. Wagner, 61 Miss. 299; Union Mortgage Co. v. Peters, 72 Miss. 1058, 18 So. 497; Hyman v. Bank, 71 So. 598; Barnett v. Nichols, 56 Miss. 622; Dayhood v. Neely, 99 So. 440, 135 Miss. 14.
Whether or not any person has exercised due diligence in any instance must be determined from the peculiar facts and circumstances of each case. This is elemental and well settled.
Steck v. Colorado Fuel & Iron Co., 25 L.R.A. 67; Rosenthal v. Walker, 28 L.Ed. 399; 17 R. C. L. 859; Parham v. Randolph, 4 How. 435, 35 Am. Dec. 403; Loverin v. Kuhne, 33 A.L.R. 852; Mead v. Bunn, 32 N.Y. 275; Norris v. Hay, 149 Cal. 695, 87 P. 380; Yeates v. Pryor, 11 Ark. 58; Buckner v. Calcote, 28 Miss. 432; State v. Furlong, 60 Miss. 839; 17 R. C. L. 859; 37 C. J. 97-977, 978.
The very nature of the Mutual Insurance Company involves the participation of the policy-holder in the profits and surplus and all earnings, if it were not so then as a condition to organization and operation company would have to show substantial capital and surplus whereas mutual company is not required to have capital; the old line company with capital belongs to the stockholders, the mutual company belongs to the policy-holders.
U. S. Insurance Co. v. Spinks, 13 L.R.A. (N.S.) 1053; Crawley v. N.W. Life, 108 N.W. 962; Israel v. N. Western Life, 127 N.W. 187; Moore v. Security Trust & Life, 168 F. 496; Gen'l American Life Ins. Co. v. Roach, 65 P.2d 458.
It will be conceded that the agreement between the two companies set out in the answer is not merely a contract of reinsurance, but also to pay, and assume the payment of losses of parties indemnified by policies issued by the defendant company reinsured. Reinsurance is a mere contract of indemnity, in which an insurer reinsures risks in another company. In such a contract the policy-holders have no concern, are not the parties for whose benefit the contract of reinsurance is made, and they cannot, therefore, sue thereon. But the agreement alleged in this case is not a mere reinsurance of the risks by the reinsurer, but it embraces also an express agreement to assume and pay losses of the policy-holder, and is therefore an agreement upon which he is entitled to maintain an action directly against the reinsurer.
Thorp v. Keokuk Coal Co., 48 N.Y. 257; Klapworth v. Dressler, 78 Am. Dec. 76, 77 note; Mosely v. Insurance Company, 104 Miss. 326.
The North Carolina Mutual Life Ins. Co. repeatedly assured the insured, complainants herein, "they are reinsured" and this language means both companies remained liable and there was no duty, requirement, or incentive to the insured to then protect, object, resist, and bring suit, and there never was until the reinsuring company failed in November, 1933, and thereafter defendant repudiated its contracts and in the liquidation of the Century it leaked out that all the allegations in regard to reserves, payments, collateral, etc., transferred to the Century were false.
Dansby v. Mutual Life Insurance Co., 183 S.E. 521.
Under Section 2957 of the Code of 1930, the statute of limitations would never begin to run...
To continue reading
Request your trial