Page v. Prudential Life Ins. Co. of America

• Decision Date: 02 January 1942
• Docket Number: 28512.
• Citation: 12 Wn.2d 101,120 P.2d 527
• Parties: PAGE v. PRUDENTIAL LIFE INS. CO. OF AMERICA.
• Court: Washington Supreme Court

120 P.2d 527

12 Wn.2d 101

PAGE v. PRUDENTIAL LIFE INS. CO. OF AMERICA.

No. 28512.

Supreme Court of Washington

January 2, 1942

Department 2.

Action by Marie A. Page, individually, and as executrix of the estate of Winfield H. Page, deceased, against the Prudential Life Insurance Company of America, to collect on two life policies issued by defendant. From a judgment in favor of the plaintiff, the defendant appeals.

Judgment reversed.

Appeal from Superior Court, Spokane County; Chas. W. Greenough judge.

Cannon, McKevitt & Fraser, of Spokane (Joseph L Thomas, of Spokane, of counsel), for appellant.

Brown &amp Huneke, of Spokane, for respondent.

SIMPSON Justice.

This action was instituted by plaintiff Marie A. Page, individually and as executrix of the estate of Winfield H. Page, deceased, to collect on two life insurance policies issued to Winfield H. Page by defendant.

Plaintiff alleged that February 6, 1922, defendant issued two life insurance policies to Winfield H. Page, who died November 29, 1939; that the policies were in full force; and that defendant refused to pay them. Defendant admitted issuing the policies, but as an affirmative defense alleged that insured cash surrendered the policies May, 1938. By reply, plaintiff admitted the cash surrender, the receipt of defendant's cheek in payment thereof, and the indorsement and collection by Winfield H. Page. For affirmative defenses to the answer, plaintiff alleged that during the month of May, 1938, and for many years prior thereto, Winfield H. Page was totally disabled and not mentally competent to make any contracts, all of which was known to defendant, who acted secretly and in bad faith in accepting the policies.

The cause, tried to the court sitting without a jury, resulted in the entry of judgment for plaintiff in the total sum of $519.03. Defendant appeals.

The assignments of error which we feel it is necessary to consider are in overruling appellant's general objection to the introduction of evidence touching the mental incapacity of the deceased, in denying appellant's motion at the close of all the evidence to dismiss the action, and in entering judgment for respondent.

The facts involved in the appeal now Before us, in brief, are as follows: For some years prior to 1924, insured was employed as a teller in the Federal Reserve Bank at Spokane. He and respondent lived with their six children outside the city limits. Besides a house, the community owned a $3,000 insurance policy and several industrial policies, all issued by appellant. Two of these industrial policies constitute the subject matter of this litigation. One was in the amount of $265 with a premium of 25 cents per week; the other in the amount of $106 with a premium of 10 cents per week. Each policy provided that upon receipt of proof of the insured's death, the amount of the insurance would be paid to his executors of administrators, unless payment be made under the 'facility of payment provision.' This provision gave the insurer authority to make payment to any person related to the insured by blood or marriage, and a receipt signed by such person was deemed sufficient proof of payment.

The last twenty-seven years of Mr. Page's life was spent in very poor health. In addition to becoming afflicted with progressive muscular atrophy in 1912, he suffered a hip fracture in 1924, causing total incapacitation and necessitating confinement to a wheel chair until his death. In 1935 Mr. Page also acquired cardo-vascular-renal disease. His death in November, 1939, was diagnosed as nephritis.

When insured became totally disabled in 1924, respondent was compelled to support the family. Everything possible was done to keep insured not only physically comfortable, but also mentally cheerful and content. For some time, a joint checking account was maintained and he attended to the payment of household expenses. As insured's health grew worse, this account was discontinued. To keep him occupied, respondent established a $20 petty cash fund from which he would pay small household bills and the weekly premiums on the policies in question. Both the money and the insurance policies were kept in a 'strong box' in his desk. He exercised particular care in maintaining an accurate record of his disbursements. As time passed, his vision failed and he became more paralyzed and helpless. He was also irritable, excitable and obstinate, tolerating no opposition to his wishes. At times, he became hysterical, even threatening physical injuries to himself. Moreover, he believed that he possessed great business acumen and would plan business ventures. To relieve his restlessness, he performed light office duties in his son's insurance office for about ten days in November, 1938, his health preventing a longer period.

In May, 1938, V. L. Peterson, an employee of appellant, who had collected the premiums for many years, called upon Mr. Page at his request. Page informed Peterson that he wished to surrender the policies in question. It was then explained to insured that the dividends would pay the premiums on the policies for a number of years and that the policies at maturity or at death would have a value of $500. In reply to a question to state what Page did and said, Peterson testified that:

'He [Page] said that he realized that the valuation of the policies with the dividends, and he appreciated the same, but he had to have the money.

'After arguing with him, and talking with him over half an hour and explaining the policy and the dividends, he still insisted on cash surrendering the insurance, so all I could do was to write up a cash surrender form, and give it to the superintendant with the policies.'

As a reason for surrendering the policies, Page stated that he needed the money to pay certain bills, which unknown to him had been paid. Thereafter, the necessary applications were signed by insured. Before appellant accepted the offer to surrender, however, its assistant superintendent called upon Page. He testified that insured stated: 'Q. When you told him what the purpose of your business was, what, if anything, did he say, if you recall? A. First he explained to me that Mr. Peterson had gone over the matter with him. As I am required to do, I went over the entire transaction with him again, explaining the accumulated dividends, what the policy would be worth in the event of his death, and what it was worth then as cash, and he explained that he had understood that, but that he needed this money for current bills, and at that time he mentioned water obligations, I believe.' Subsequently, Peterson delivered to insured a check for the cash surrender value. The check shows the endorsements of Winfield H. Page and Charles Page, his son. On being interrogated, Charles Page verified his signature, but stated that he did not remember cashing it. What became of the proceeds was never discovered.

Appellant contends that insured possessed the mental capacity to contract with respect to the surrendering of the two policies, and that, in any event, it could not be held liable for the reason that respondent represented to the public that insured was normal, and that it was not apprised of his mental condition. Respondent, on the other hand, maintains that insured was mentally incompetent to contract; that appellant was acquainted with facts sufficient to make it guilty of constructive fraud in accepting the policy cancellations; and that respondent possessed a vested interest in the policies which could not be terminated without her consent.

The first question to be determined is whether or not the insured possessed the requisite mental capacity to contract with respect to the surrender of the insurance policies. Respondent's assertion of mental incompetency is based on insured's physical condition, his excitability and attitude during the last years of his life, his sale around 1930 of the family automobile, his installation in 1934 of a new furnace in the house, his attempt in 1935 to change the benefits of the $3,000 policy from the payment of 3.2% interest thereon during respondent's lifetime to monthly payments of $100 per month, and his surrender of the policies in question.

To consider properly insured's mental capacity, it is necessary to detail at some length the testimony of respondent, Doctors Jennings and Lynch, Charles Page and Robert Page, respondent's sons. Having referred already to the insured's physical condition and excitable nature, we shall advert to the car transaction. This consisted of a sale by Page in 1930 of the family's 1924 Dodge for $50 a short time after a like sum had been spent for new tires.

With reference to the furnace incident, the installation of hot air for a pipeless system which respondent asserts was ordered by insured without thinking the idea through, respondent testified as follows:

'Q. Who conceived, first, the idea that there should be a furnace change in the house, from pipeless to hot air? Was that your idea or Mr. Page's, or both? Did you agree on it? A. Well, I can't tell you that exactly. Those things came up and we talked about them, and I know that previous to the change we were not satisfied with the pipeless furnace, and we had expressed our dissatisfaction, and we expected to change it over, but I don't know whether I mentioned it or he mentioned it first. I know we were dissatisfied with the old way.

'Q. He didn't do this out of a clear sky, and without previous discussion about change? A. No, he didn't. We had discussed it.'

It is to be observed that this incident was not the result of hasty action, but had been previously discussed Before the installation.

In regard to the change of payment of the $3,000 insurance policy, Robert...