Peterson v. New York Life Ins. Co.

• Decision Date: 22 January 1932
• Docket Number: No. 28702.,28702.
• Citation: 185 Minn. 208,240 N.W. 659
• Parties: PETERSON v. NEW YORK LIFE INS. CO.
• Court: Minnesota Supreme Court

240 N.W. 659

185 Minn. 208

PETERSON v. NEW YORK LIFE INS. CO.

No. 28702.

Supreme Court of Minnesota.

January 22, 1932.

Appeal from District Court, Ramsey County; Richard D. O'Brien, Judge.

Action by Thomas R. Peterson against the New York Life Insurance Company. A verdict was directed for the plaintiff. From an order denying its motion for a judgment notwithstanding the verdict or for a new trial, defendant appeals.

Order reversed, and cause remanded, with instructions.

Doherty, Rumble, Bunn & Butler and R. O. Sullivan, all of St. Paul, for appellant.

Paul C. Thomas, of St. Paul, for respondent.

LORING, J.

In an action upon a life insurance policy, the plaintiff had a directed verdict. The defendant has appealed from an order denying its motion for judgment notwithstanding the verdict, or for a new trial.

April 26, 1926, Jennie R. Peterson applied to the defendant for insurance on her life, naming her husband, Thomas R. Peterson, the plaintiff, as beneficiary. She paid the premiums until January 26, 1927, when the policy lapsed for nonpayment. March 7, 1927, she applied for reinstatement of the policy and represented in writing to the defendant that to the best of her knowledge and belief she was in the same condition of health as when the policy was issued, and that within the previous twelve months she had had no illness and had not consulted or been treated by any physician. The policy was reinstated, and subsequent premiums were paid until she died December 28, 1928, from tumor of the brain. The evidence clearly shows that in June and July, 1926, she had been treated by Dr. Voges, and on July 12, 1926, had been operated upon in a hospital by Dr. O. W. Sterner and Dr. Voges. She remained in the hospital about two weeks after the operation. February 24, 1927, she consulted a Dr. Larrabee, who referred her to Dr. Hengstler, a brain specialist, by whom she was examined. He treated her for some time after the policy was reinstated. Having ascertained these facts in connection with its investigation of the proofs of death, the defendant notified the beneficiary of the policy of its election to rescind the reinstatement on the ground of misrepresentations, and sent him a check for $70.88 to cover premiums paid and interest thereon from the date of the reinstatement of the policy. The check was cashed by the beneficiary, but about a month later he caused a certified check to be sent to the company as a tender of the return of the money he had received. The tender was refused.

The company defended this action, on the ground that the reinstatement of the policy was obtained by misrepresentations of the insured as to her physical condition, and as to her treatment by physicians during the twelve months prior to her application for reinstatement. It also claims that the acceptance by the beneficiary of the check for returned premiums and interest amounted to a rescission by consent and an accord and satisfaction.

1. We first consider the appellant's claim that a rescission was effectuated by its letter returning the premiums paid since the reinstatement and by plaintiff's acceptance of those premiums. It sent the premiums and interest to date in the form of a check payable to plaintiff. The check was stamped "refund of premiums and interest with interest on policy No. 9460577, Peterson dec'd." The letter with which the check was inclosed fully explained the defendant's position in regard to the policy. It set out its claim that the reinstatement had been obtained by misrepresentation of matters material to the risk, and that it elected to rescind on that account. It transmitted the check to return the premiums and interest to date. It also set out its position that the policy stood lapsed, and that nothing was payable thereon. The letter was clear and easily understandable. Plaintiff does not claim to have misunderstood it. He consulted his banker and cashed the check, as he says, because he "needed the money bad." True, he says he did not intend to forego his claim for $1,000 upon the policy, but this does not change the effect of what he did. C. J. vol. 1, p. 562; Truax v. Miller, 48 Minn. 62, 65, 50 N. W. 935. That instead of consulting his lawyer he consulted a banker and may have been wrongly advised in consequence does not relieve him. Fidelity & Casualty Co. v. Gillette-Herzog Mfg. Co., 92 Minn. 274, 277, 99 N. W. 1123. As in the case of accord and satisfaction, it was not necessary that the letter state in so many words that the check, if accepted, must be accepted in full of defendant's liability. If the tenor of the letter made it clear that the purpose of the payment was to effect a rescission, it would be equally effective. 1 C. J. p. 557, note 53. Nothing could be plainer than that, if plaintiff accepted the return of the premiums, he consented to and effectuated a rescission by consent. He could not possibly believe that he was entitled to both the returned premiums and the insurance which the premiums had been paid to obtain. When he cashed the check transmitted for the purpose stated in the letter, the minds of the parties met, and the rescission became complete. An effort a month later to retract was ineffectual. Beck v. National Cont. Co., 143 Minn. 190, 173 N. W. 413. The case differs from Tupper v. Insurance Co., 156 Minn. 65, 194 N. W. 99, where plaintiff had an undisputed right to the money paid her. Here plaintiff had no right...