Reliance Life Ins. Co. v. Thayer

• Decision Date: 13 December 1921
• Docket Number: Case Number: 10382
• Parties: RELIANCE LIFE INSURANCE CO. v. THAYER.
• Court: Oklahoma Supreme Court

1921 OK 431

203 P. 190

84 Okla. 238

RELIANCE LIFE INSURANCE CO. v. THAYER.

Case Number: 10382

Supreme Court of Oklahoma

Decided: December 13, 1921

Syllabus

¶0 1. Insurance--Life Policy--Completion of Contract.

When an insurance company issues a policy of life insurance and its agent delivers the policy to the insured and such agent thereupon receives and accepts the promissory note of said insured for the amount of the first year's premium on said policy and the agent remits in cash the amount due the insurance company, this constitutes a completed contract and creates a liability on the insurance company under the terms of the policy.

2. Same--Cancellation of Policy--Procedure.

When an insurance company has executed and voluntarily delivered a policy of life insurance to the insured, it cannot cancel such policy except in the manner provided in the policy, or with the consent of the insured and any person having a vested interest therein, or by an action brought for that purpose.

3. Same.

Where the insured has left his policy of insurance in a place where some other person has access to it, and such person, without the knowledge or consent of the insured, delivers such policy to the agent of the insurance company, who transmits it to the insurance company, any act by said insurance company attempting to cancel such policy, without the consent of the insured, is a nullity and such policy remains in full force and effect notwithstanding the attempt on the part of the insurance company to cancel the same.

4. Same--Time for Cancellation--Incontestable Policies.

Where a policy of insurance contains a provision: "This policy and the application therefor, a copy of which is hereto attached, constitute the entire contract between the parties. The policy contains no restrictions upon the occupation, residence or travel and shall be incontestable after one year from its date except for violation of any conditions relating to military or naval service in time of war"--an action to cancel such policy must be brought within one year from the date of said policy. When an action is brought to recover on such policy, the insurance company cannot plead as a defense, fraud in procuring the same or the falsity of answers contained in the application, unless such defense is set up within one year after the date of the policy.

5. Same--Action on Policy--Defense of Cancellation.

The only defenses set up in the answer are that the insured gave false answers to questions in the application which it claimed constituted fraud in procuring the policy, and that the policy had been canceled. The defense of false answers and fraud was not pleaded within one year from the date of the policy. The uncontradicted evidence shows that the only cancellation of the policy was an arbitrary act on the part of the insurance company without the consent of the insured. Under these facts the insurance company did not establish any defense, and it would not have been error for the court to give a peremptory instruction to the jury to return a verdict in favor of the beneficiary under such policy.

6. Same--Instructions.

The instructions examined, and held, that no reversible error was committed in giving the instructions complained of.

7. Same--Refusal of Request.

The requested instruction examined, and held, that it was not error for the court to refuse to give such requested instruction.

Error from District Court, Tulsa County; N. E. McNeill, Judge.

Action by Hazel Thayer, as beneficiary in a life insurance policy issued on the life of George D. Thayer, insured, by the Reliance Life Insurance Company. Judgment for plaintiffs. Defendant appeals. Affirmed.

Poe & Lundy, for plaintiff in error.

L. J. Martin, W. J. Gregg, C. E. Baldwin, and M. C. Spradling, for defendant in error.

MILLER, J.

¶1 This action was commenced in the district court of Tulsa county by Hazel Thayer, plaintiff, to recover as beneficiary the sum of $ 2,000 against the Reliance Life Insurance Company, a corporation, as insurer on a certain policy of life insurance issued by it on the life of George D. Thayer, husband of the plaintiff. The case was tried to a jury, which resulted in a verdict in favor of the plaintiff for $ 2,000. The defendant filed its motion for a new trial, which was overruled by the court. It saved all necessary exceptions, gave notice of appeal, perfected this appeal and appears here as plaintiff in error. For convenience, the parties will be referred to as they appeared in the lower court.

¶2 The defendant set up 17 separate and distinct grounds in its motion for a new trial, The petition in error filed in this court sets out 23 specifications of error. It will not be necessary to set these out in detail. In defendant insurance company's brief it presents its argument under five separate specifications of error as follows:

"1. The plaintiff was not entitled to recover on the policy of insurance, for the reason that the same had been canceled.

"2. The beneficiary had no vested interest in the policy and her consent to its surrender was not necessary.

"3. The plaintiff in error, having ascertained within the year the falsity of answers made in the application had the right to cancel the policy.

"4. The court's instructions were erroneous and prejudicial.

"5. The court should have given the instruction requested by defendant."

¶3 We will consider the first and third specifications of error together. The petition of the plaintiff alleges that George D. Thayer made application to the defendant life insurance company on November 19, 1915, for a policy of insurance. That on January 5, 1916, defendant insurance company issued policy No. 86,977 in the sum of $ 2,000 on the life of the said George D. Thayer and named the plaintiff as beneficiary therein. That the policy bore date of January 5, 1916, and the premium was paid thereon to January 5, 1917. That George D. Thayer died on December 14, 1916. That plaintiff could not set out a copy of the policy, for the reason that H. Clark Thayer had delivered the policy to one Smith, who was the agent of the defendant insurance company, but the petition asked that the defendant insurance company be required to set out a copy of the policy.

¶4 We now quote from the insurance company's brief:

"The insurance company filed an answer to the amended petition, which consisted, first, of a general denial, and admitted that George D. Thayer made application in writing for a life insurance policy with it, and admitted that it executed and delivered to Thayer, policy No. 86,977, in the sum of $ 2,000, and further alleged that the policy was delivered subject to the terms and provisions therein incorporated, and subject also to the written application of George D. Thayer attached thereto, and made a part of said policy, together with all statements in the application. It attached thereto a copy of the policy of insurance, which was identified as "Exhibit A." The answer further denied that the note was accepted by the general agents with the approbation of the defendant company in full satisfaction of the first annual premium, and denied that any false and fraudulent representations were made to M. Clark Thayer, and denied that Smith made any statement which he knew to be false and denied that H. Clark Thayer relied upon any false statement or misrepresentation, but admitted that H. Clark Thayer delivered the insurance policy to the defendant company for cancellation, that the same was canceled, and that thereafter the policy of insurance was not in effect, and that this occurred during the month of March, 1916. The answer further denied that the insurance policy was in full force and effect at the date of George D. Thayer's death, and denied that the company was indebted to Hazel Thayer in any sum, or that she was entitled to recover from it any sum whatever by reason of the insurance of the policy."

¶5 The defendant first contends that the insurance policy was canceled.

¶6 The evidence discloses that George D. Thayer and his father, H. Clark Thayer, were partners and engaged in the business of music dealers at Clearfield, Pa., prior to and at the time that George D. Thayer made application for the policy of insurance which is in controversy in this action. They continued in such business until sometime the latter part of March, 1916, when the firm became financially embarrassed, and was thereafter declared a bankrupt. That in the latter part of March, 1916, George D. Thayer left Clearfield, Pa. Thereafter T. Guerney Smith, a member of the firm of Smith & Bratton, who were the agents for the defendant insurance company at Clearfield, called on H. Clark Thayer and induced the said H. Clark Thayer to go to the private desk of George D. Thayer and take from his private flies or papers the policy of insurance and deliver it to said Smith. That Smith forwarded the policy of insurance to the office of the defendant insurance company, where it was marked canceled. Neither George D. Thayer nor his wife, Hazel Thayer, who was named as the beneficiary in said policy, consented to the surrender of the policy to Smith or its cancellation by the insurance company.

¶7 At the time of the delivery of the policy to George D. Thayer, he executed and delivered to Smith & Bratton his note in the sum of $ 72.06, payable at a future date, in lieu of paying in cash the first year's premium on the policy. Smith & Bratton remitted to the defendant insurance company the amount due it for such first year's premium less their commission for obtaining the insurance. The execution and delivery of the note by Thayer was sufficient consideration for the insurance contract. The insurance company accepted the risk, issued and delivered the policy to the insured; he obligated himself to pay the first year's premium by executing and delivering his promissory note therefor to the agents of the insurance company, which they accepted. This constituted a completed contract,...