Ramirez v. Metropolitan Life Ins. Co.

Decision Date23 June 1978
Docket NumberNo. 4895,4895
PartiesDebra RAMIREZ, Appellant (Plaintiff below), v. METROPOLITAN LIFE INSURANCE COMPANY, Appellee (Defendant below).
CourtWyoming Supreme Court

Patrick E. Hacker of Patrick E. Hacker & Associates, Cheyenne, for appellant.

John B. Rogers, Cheyenne, for appellee.

Before GUTHRIE, C. J., and McCLINTOCK, RAPER, THOMAS and ROSE, JJ.

ROSE, Justice.

The plaintiff-appellant is the widow of the late Raul Ramirez and the beneficiary of a life insurance policy issued by defendant-appellee, Metropolitan Life Insurance Company upon his life. Plaintiff brought an action seeking to recover the double-indemnity benefits provided for under the terms of the policy, which benefits had been refused by the Insurance Company. The district court, at the close of plaintiff's evidence, directed a verdict for the defendant. We will reverse.

On November 20, 1974, Raul Ramirez purchased a life insurance policy with double-indemnity provisions from Marvin Nelson, Metropolitan's agent, the premiums to be paid by Metropolitan's drafting against the bank account of Ramirez according to his authorization. Premium payments were timely made until, on May 22, 1975, Metropolitan's draft upon the Ramirez account was returned marked "insufficient funds." The policy-grace-period expired June 20, 1975, by which time Ramirez had still not made his delinquent premium payment. On June 25, 1975, the Western Head Office of Metropolitan Life Insurance Company mailed a letter to Raul Ramirez, in which it notified him that the May 22, 1975, draft had been returned for insufficient funds and the Company had discontinued drawing checks on the account. The letter, which is set out in detail later in this opinion, requested the insured to let the Company know when it could resume drawing checks or, if the Check-O-Matic feature was to be discontinued, Ramirez was asked to inform the Company how future payments would be made. Agent Nelson testified that on June 27 or 28, Raul Ramirez telephoned him to discuss the fact that there was not sufficient money to cover the most recent draft. On this occasion, the agent told Mr. Ramirez to get the money in the account and to contact him at the first of the following week. Mrs. Ramirez and her husband made plans to meet with Nelson during that week. Nelson asserts that he made no representations concerning coverage during his telephone conversation with Ramirez.

The plaintiff, Debra Ramirez, was not permitted to give hearsay testimony concerning conversations with her husband, wherein she said he related to her certain representations purportedly made to him by Agent Nelson. These conversations and any alleged reliance thereon by plaintiff-Ramirez are not essential to this decision since we hold that there was a jury question on the issue of whether or not the Company waived its right to rely upon Ramirez' default by reason of its acts and the acts of its agent, independent of what those actions might have been as reflected by hearsay testimony.

Raul Ramirez was killed in an automobile accident on July 4, 1975, and, after the funeral, Nelson furnished the claim form to Mrs. Ramirez and mailed it to the Company for her. A death certificate was received by the Company on August 28, 1975. On September 23, 1975, Metropolitan issued a draft against the bank account of the deceased for payment of the May, June, July, August and September premium payments. The money covering this draft was received by the Company and retained until November 5, 1975, when Metropolitan tendered a refund check, which was refused. Nelson could not explain why the Company delayed so long before returning the five months of premiums.

ISSUES ON APPEAL

The appellant asks us the following question for our decision:

By its actions, did the Company waive the default, or is it estopped from denying that the double-indemnity provisions remained in force after default in the payment of the premiums?

WAIVER 1

As this court has observed, the elements of waiver are (a) existing right; (b) knowledge of that right; and (c) intent to surrender or relinquish it. Ranger Insurance Company v. Cates, Wyo., 501 P.2d 1255. In this appeal, the only element of waiver whose existence is in question is whether or not Metropolitan, by its acts, can be regarded as having intended to surrender or relinquish its default rights. In addressing that issue (in the directed- verdict context), we have only to determine whether or not the facts were such as to structure a jury question.

We have held the standard against which a directed verdict is to be tested is that the court will assume all of plaintiff's evidence to be true and will draw every favorable inference which might reasonably flow therefrom. Brasel & Sims Construction Company v. Neuman Transit Company, Wyo., 378 P.2d 501; Potts v. Brown, Wyo., 452 P.2d 975; and Hawkins v. L. C. Jones Trucking Company, 68 Wyo. 275, 232 P.2d 1014. See, also Barnes v. Fernandez, Wyo., 526 P.2d 983, 985.

The Supreme Court of South Carolina, in Graham v. Suggs (S.C.1977), 239 S.E.2d 644, 645, put it this way:

"Under settled principles, we review the evidence and all reasonable inferences deducible therefrom in the light most favorable to the party opposing the motion. Allstate Insurance Company v. State Farm Mutual Automobile Insurance Company, 260 S.C. 350, 195 S.E.2d 711 (1973); Blanding v. Hammell, 267 S.C. 352, 355, 228 S.E.2d 271 (1976). Upon so viewing the evidence, if more than one reasonable inference can be drawn, or if the inferences are in doubt, the motions should be denied. Ray v. Simon, 245 S.C. 346, 140 S.E.2d 575 (1965); see also decisions collected in 3 S.C.Digest, Appeal & Error, k933(1); Wigmore on Evidence, §§ 2494, 2495; McCormick on Evidence § 338."

In Western Transmission Corp. v. Colorado Mainline, Inc., 10 Cir. (Wyo.), 376 F.2d 470, it was said:

" . . . In considering such a motion (for directed verdict) the court must view the evidence in a light most favorable to the party against whom the motion is directed and if the evidence and the inferences drawn therefrom would cause reasonable and fair-minded persons to form different conclusions of the facts in issue the motion should not be granted. . . . " (Footnote omitted; and parenthetical matter supplied)

We said in Holstedt v. Neighbors, Wyo., 377 P.2d 181, 181-182:

"It goes without saying that, in passing upon a motion for a directed verdict, the evidence must be taken in the light most favorable to plaintiff, and we must accept the whole body of evidence in the strongest way it reasonably can be interpreted in support of plaintiff's claim. Cheney v. Wheeler, 122 Vt. 295, 170 A.2d 642, 643; Parker v. Gunther, 122 Vt. 68, 164 A.2d 152, 153; Geiger v. Schneyer, 398 Pa. 69, 157 A.2d 56, 57; 2 B Barron & Holtzoff, Federal Practice and Procedure, § 1075, p. 378 (1961)."

The rule which guides directed-verdict appellate deliberation was recognized in Barnes v. Fernandez, supra, where we said:

"Whether the evidence is sufficient to create an issue of fact for the jury is solely a question of law to be determined by the court, and upon appeal the reviewing court gives no deference to the view of the trial court. Wright & Miller, Federal Practice and Procedure: Civil § 2524, Vol. 19, pp. 541-542."

In addition to the limited circumstances in which a directed verdict will ordinarily be granted, according to the stern strictures of the rules of law just quoted, such disposition is even more tightly confined when the law governing insurance contracts is taken into account. A basic tenet of insurance law proclaims that forfeitures are not favored. Some courts have viewed forfeiture of insurance contracts as "abhorrent." Montano v. Missanellese Society of Mutual Aid, 72 Misc. 515, 130 N.Y.S. 455. The subject of forfeiture of insurance benefits is described in 16A Appleman, Insurance Law and Practice § 9082, pp. 289-290, as follows:

"Courts are always prompt to seize upon any circumstances that indicate an election to waive the forfeiture of a contract of insurance, or any agreement to do so, on which the party has relied and acted. Forfeitures are not favored if there are any circumstances indicating a waiver thereof. Such forfeitures will be enforced only where there is the clearest evidence that such was the intention of the parties, and slight circumstances are sufficient to indicate the intention of the insurer to effect a waiver.

"It has always been a principle of the law of insurance that forfeitures are not looked upon with favor, and the doctrine of 'waiver' was evolved in order to obviate forfeitures which seemed unfair to the court. In passing on the question of the waiver of conditions in an insurance policy inserted for the insurer's benefit, a court will deal generously with the insured. The same rule of liberal construction in favor of the insured applies as governs in the construction of the contract itself . . . ." (Footnotes omitted; emphasis supplied)

What facts, then, does the record present which bear upon the question of Metropolitan's intent to relinquish its default rights as provided by the policy?

On June 25, 1975, when it mailed its letter to Raul Ramirez, Metropolitan knew that its May 22, 1975 draft on the Ramirez account had been rejected for insufficient funds and knew that the grace period had expired without further payment having been made. When the grace period expired on the 20th of June, 1975, there was no double-indemnity insurance in force. At this juncture, Ramirez, absent agreement with or waiver upon the part of the Insurance Company, had no rights upon which he could insist under the double-indemnity clause.

On June 25, 1975, the Company wrote to Mr. Ramirez as follows:

"METROPOLITAN LIFE

Western Head Office

One Metropolitan Plaza

P.O. Box 7750

San Francisco, CA 94120

"Mr. Raul L. Ramirez

3202 Locust Drive

Cheyenne, Wyoming 82001

Policy No. 745 105 091 A

Dear Policyholder

...

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