Pfingsten v. Franklin Life Ins. Co.
| Citation | 330 S.W.2d 806 |
| Decision Date | 14 December 1959 |
| Docket Number | No. 47188,No. 1,47188,1 |
| Court | United States State Supreme Court of Missouri |
| Parties | Regina M. PFINGSTEN, Respondent-Appellant, Respondent-Appellant, v. FRANKLIN LIFE INSURANCE COMPANY, Appellant, Community Federal Savings & Loan Association of Overland, Respondent |
Heneghan, Roberts & Cole and W. Munro Roberts, Jr., St. Louis, for appellant, Franklin Life Ins. Co., Harold B. Bamburg, St. Louis, of counsel.
Stanley R. Schuchat, Harold I. Elbert, St. Louis, for Regina M. Pfingsten. Thompson, Mitchell, Thompson & Douglas, St. Louis, of counsel.
Robert F. Stanton, Erwin Tzinberg, Clayton, for respondent Community Federal Savings & Loan Ass'n of Overland.
Plaintiff, Regina M. Pfingsten, widow of Earl Pfingsten, deceased, is the beneficiary in a policy of insurance for the principal sum of $8,000, issued May 16, 1956, by defendant The Franklin Life Insurance Company (herein referred to as 'Franklin') on the life of Earl Pfingsten (herein referred to as the insured'), which was assigned to and held by defendant Community Federal Savings & Loan Association of Overland (herein referred to as 'Community') as collateral security for certain mortgage indebtedness of plaintiff and her insured husband to Community. Following the death of insured on October 27, 1956, and receipt of proof of his death, Franklin refused payment on grounds 'the first premium was not paid during Mr. Earl Pfingsten's lifetime and good health.' Plaintiff's action is pleaded in two counts.
Count One seeks judgment against Franklin for the face of the policy, with interest and damages for vexatious refusal to pay. Count Two (in the alternative if plaintiff is not entitled to recover on Count One) seeks judgment against Community for $8,000 and interest on grounds it had represented to plaintiff in a letter dated May 23, 1956, that it had paid the annual premium to Franklin. Community cross-claimed against Franklin, seeking indemnity against Franklin if held liable on Count Two, on grounds that, by reason of a course of dealing between it and Franklin, Community was not required to make payment of premiums on Franklin policies assigned to it as collateral at the time of delivery of such policies.
The jury found for plaintiff and against Franklin on Count One for $8,000, plus $734.40 interest and damages for vexatious refusal to pay in the sum of $800, total, $9,534.40; in favor of Community on Count Two; and in favor of Franklin on Community's cross-claim. Franklin appealed from the judgment rendered in favor of plaintiff on Count One. Plaintiff appealed conditionally from the judgment rendered in favor of Community on Count Two.
A brief summary of the pleadings will tend to clarify the issues presented. Insofar as material, plaintiff's petition alleges: That plaintiff and her husband delivered to Community their promissory note secured by deed of trust on their home in St. Louis County; that beginning prior to May 2, 1956, Franklin and Community had an arrangement whereby Franklin solicited persons indebted to Community to purchase life insurance policies from Franklin, the proceeds of which, in the event of death of insured, were to be used to pay on said indebtedness; that under said arrangement Community agreed with Franklin to pay the premiums on such policies, add it to the loan account of such persons and collect from the latter in twelve monthly installments; that on May 2, 1956, Earl Pfingsten was induced by Franklin to apply for the policy in issue, with the understanding that the policy issued would be assigned to Community and the annual premium charged to his loan account with and paid by Community; that under date of May 16, 1956, the policy applied for was issued and delivered to Community, together with the assignment thereof; that under date of May 23, 1956, Community notified the insured that the cost of the insurance had bee paid by it and that the premium had been added to the loan balance of plaintiff and the insured, for which they were to repay Community at the rate of $9.14 per month; that insured had complied with all conditions precedent to issuance, delivery and liability under the policy; and that insured died on October 27, 1956, and Franklin had refused payment.
In its answer to Count One of the petition, Franklin admitted the issuance and delivery of the policy under date of May 16, 1956, and the death of the insured on October 27, 1956, denied that all conditions precedent to Franklin's liability had been performed, denied the arrangement alleged to exist between Franklin and Community with reference to payment of premiums on policies issued under such an arrangement, denied that the application for insurance signed by Earl Pfingsten provided that the policy would be assigned to Community; and then went on to allege as an affirmative defense that the application for insurance signed by Earl Pfingsten and the policy issued to him provided that those documents constituted the entire contract between them; that those instruments provided that the policy would not take effect unless and until delivered to insured or his assignee and the first premium paid during the lifetime and good health of the insured; that the first premium was not paid until the 14th day of September, 1956, before which date insured had been diagnosed by medical men as having a tumor of the lungs and was hospitalized on May 22, 1956, at which time he was found to be suffering from tumor of the lungs; that insured was not in good health at the time the first premium was paid; and that said policy never went into effect for the reason that the aforesaid condition precedent to the existence of the policy was never met and fulfilled.
On July 1, 1955, plaintiff and her husband purchased a home in St. Louis County, at which time, for value received, they executed their note to Community secured by deed of trust thereon for the principal sum of $9,750, with interest at 6% per annum, payable $69.91 per month. At some time prior to May, 1956, Franklin approached Community for the purpose of obtaining prospects for the purchase of mortgage life insurance under Franklin's 'Home Security Plan.' Community agreed to the plan and thereafter, through an agency known as Quint Investment Company, furnished Franklin with the names of its mortgage borrowers. Under that plan, Franklin, at the time of taking an application for life insurance from one of Community's borrowers, would have him sign the Home Security Plan, which by its terms assigned all rights in the policy to Community, and further provided:
'And to further secure said loan I hereby authorize and direct said Association, Community Federal Saving & Loan Ass'n of Overland, St. Louis, Missouri, to pay in advance the premiums as they become due on said Policy and to charge the amount paid therefor to my account in said _____, the same to be added to the loan and, together with interest thereon at the rate provided by said mortgage, I agree to pay in twelve equal monthly installments, said payments of such increase to be made in addition to the payments provided for in said mortgage.'
Following receipt of letters from Community relative to purchasing mortgage insurance, Franklin's agent (John W. Matchell) on May 2, 1956, procured from Earl Pfingsten an application for the policy here in issue and at the same time insured signed the Home Security Plan. The application for the policy was in the form in general use by Franklin, except that it bore the following rubber-stamped notation thereon:
'Issue on 1st or 15th of Month following approval--under Community Federal Savings and Loan Association of Overland.'
It read, in part, as follows:
Plaintiff testified: When the application was signed, the agent said the plan was in full force and that insured did not have any worry and that the premium payments would be added to their loan account with Community starting in July. There was nothing wrong with her husband at all. He worked every day until the day he became ill in the latter part of May.
On May 10, 1956, Dr. John Roberts, a medical examiner for Franklin, called at the Pfingsten home and gave Mr. Pfingsten a physical examination, the report of which was signed both by the applicant and the doctor. The doctor told plaintiff that 'he had passed; he said he was O.K.' Two of the questions on the application to which the applicant is shown to have answered 'No' are: (4) 'Has your weight changed in past year?' and (10) 'Have you ever had tuberculosis, spitting of blood, asthma, frequent cough or hoarseness, pleurisy or any other disease of the chest or lungs?'
The policy was issued and delivered under date of May 16, 1956, with a certificate stating that Franklin 'has delivered to [Community] insurance policy number 1488161 () on your life.' A bill for the amount of the premium was sent to Community when the policy was delivered to it.
On May 20, 1956, the insured collapsed; on May 21, 1956, he was examined by Dr....
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