Pedersen v. United Life Ins. Co. of Kansas

• Decision Date: 09 June 1934
• Docket Number: 31503.,31502
• Citation: 33 P.2d 297,139 Kan. 695
• Parties: PEDERSEN v. UNITED LIFE INS. CO. OF KANSAS. [*] PEDERSEN et al. v. SAME.
• Court: Kansas Supreme Court

33 P.2d 297

139 Kan. 695

PEDERSEN v. UNITED LIFE INS. CO. OF KANSAS. ^[*]

PEDERSEN et al. v. SAME.

Nos. 31502, 31503.

Supreme Court of Kansas

June 9, 1934

Syllabus by the Court.

Notices to insured relating to due and unpaid premium on life insurance policy and intention to cancel policy subject to terms thereof, where notices did not conform to statute, held ineffective to terminate insurance contract upon nonpayment of premium (Rev. St. Supp. 1933, 40--410, 40--411).

Where insured died within six months after date when quarterly installment of premium became due and remained unpaid, but insurer had taken no effective steps to forfeit policy between time of default and death of insured, actions on policy begun within six months after death of insured held timely brought (Rev. St. Supp. 1933, 40--410 to 40--412).

Where insured died during time life policy remained in force under statutes notwithstanding default in payment of part of current annual premium, liability of insurer to beneficiaries became absolute, and time for commencement of action on policy was governed by general limitation (Rev. St. Supp 1933, 40--412; Rev. St. 1923, 60--305).

1. Where a policy of life insurance contained no specific provision for its cancellation for nonpayment of premium, and did contain a provision that any part of the premium for the current year remaining unpaid at the death of the insured would be deducted in any settlement thereunder, the provisions of the Insurance Code, R.S.Supp. 1933, 40--410 and 40--411, governed the method by which the policy could have been terminated for default in payment of premium; and held that the notices sent by defendant to the insured touching the next payment of premium did not conform to the statute and were ineffective to terminate the insurance contract, and the policy was in force when the death of the insured occurred.

2. Where the insured died within six months after the date (April 7, 1931) when the second quarterly installment of the third year's premium became due and remained unpaid, but where no effective steps were taken to forfeit the policy and it remained in force by virtue of the statute (R. S. Supp 1933, 40--410, 49--411) until the death of the insured on August 14, 1931, it is held that actions by the beneficiaries to recover on the policy begun on December 22, 1931, were filed in time and not barred by R.S.Supp. 1933, 40--412.

3. When an insured dies during the time his insurance policy is in force under the provisions of the Insurance Code and notwithstanding his default in payment of part of the current annual premium, the liability of the insurance company to the beneficiaries becomes absolute; and the time within which an action to recover thereon may be begun is governed by the general provisions of the Civil Code, and it is not barred by 40--412 of the Insurance Code (Rev. St. Supp. 1933).

Appeals from District Court, Lincoln County; Dallas Grover, Judge.

Separate actions by Anna Emilie Minna Pedersen and by Cecelius Nikoloi Johannes Pedersen, a minor, and others, against the United Life Insurance Company of Kansas. The cases were consolidated for trial. From judgments in favor of the defendant, the plaintiffs appeal.

Judgments reversed, with instructions.

Samuel E. Bartlett and George D. Miner, both of Ellsworth, for appellants.

C. E Rugh, Karl B. Rugh, and B. F. Napheys, Jr., all of Abilene for appellee.

DAWSON Justice.

These actions were begun to recover on a policy of life insurance which defendant issued to the late Niels Marinus Pedersen, husband of the plaintiff in case No. 31502, and father of the plaintiffs in case No. 31503.

The facts were developed by the pleadings and by admissions of the parties.

It appears that on January 7, 1929, the defendant, for a lawful consideration, executed and delivered to the insured a policy of insurance in the sum of $5,000; and some two months later, in accordance with its terms, defendant permitted a change of beneficiaries to be made by Pedersen, which change was to the effect that in the event of his death $1,000 in cash should be paid to his wife, and $4,000 in monthly installments for a period of ten years should be paid to his eight minor children.

The consideration for the policy in the first instance was a premium in the sum of $138.30 which Pedersen paid at the time the policy was executed and delivered to him, January 7, 1929. The policy contained nearly all of the elaborate provisions of the usual life insurance contract, and, so far as necessary, they will be referred to as we proceed.

When the policy was a year old, on January 7, 1930, Pedersen paid the second annual premium of $138.30 in full. At the beginning of the third year, January 7, 1931, Pedersen chose to pay only a quarter of the annual premium, $36.65, as he was privileged to do under the terms of the policy. This quarterly premium paid the insurance to April 7, 1931. He paid nothing further, and on August 14, 1931, he died.

Plaintiffs' claims under the policy were rejected, and this lawsuit was begun on December 22, 1931.

In its answers in both cases defendant admitted various noncontroversial matters, and alleged that on or about March 7, 1931, it forwarded to Pedersen a notice reminding him that the next quarterly premium would be due on April 7, 1931.

Defendant also alleged that on April 8, 1931, it forwarded to Pedersen by mail a notice reciting that the premium was due and unpaid, and "that the company intends to forfeit or cancel said policy, except as to the right to a surrender, or extended or paid up insurance value, if any, as provided by the terms of the policy contract, unless payment of such premium is made within thirty-one days from the deposit of this notice in post office."

Defendant further alleged that on April 18, 1931, it sent a further notice to Pedersen, as follows:

"This will remind you that the premium described below is past due and unpaid. We sincerely trust that you will give this matter your early attention, and that we may be in receipt of remittance before the expiration of the period granted by the terms of your policy.

"Please Return This The United Life Insurance Co. of Kansas

"Notice With By M. C. Beamer, Secretary

"Remittance "Policy No. "2157 Prem. Due Date 7 April 1931

"Quarterly Premium $36.65."

The trial court construed the policy, the pertinent statutory provisions, the pleadings and admissions of the litigants, and found generally in favor of defendant, and judgment was entered accordingly.

Plaintiffs appeal, emphasizing the ineffectiveness of the three successive notices to terminate the insurance contract, that it was in force when Pedersen died, and that these actions, which were begun four months and eight days after his death, were not barred by the provisions of the insurance code, R.S.Supp. 1933, 40--412, upon which defendant chiefly relies to uphold the judgment.

The policy in this case did not contain any specific provision for its cancellation or forfeiture for nonpayment of premiums. It did allow a grace period of one month for the payment of every premium after the first, during which time the insurance should remain in force. Among its general provisions was one which read: "Any part of the premium for the current policy year remaining unpaid at the death of the insured will be deducted in any settlement hereunder."

The payment of a quarterly premium at the beginning of the third year carried the insurance until April 7, 1931, and the grace period continued it in force until May 7, 1931, by the specific terms of the insurance contract.

Can it be said that the policy expired on the latter date? Certainly the contract did not say so. And just as certainly the notices sent by defendant to the insured on March 7, April 8 and April 18, singly or altogether, were ineffective to terminate it. Priest v. Life Association, 99 Kan. 295, 161 P. 631; Cunningham v. Insurance Co., 106 Kan. 631, 189 P. 158; Wolford, Administratrix, v. Insurance Co., 114 Kan. 411,...