Republic Life & Accident Ins. Co. v. Hatcher

• Decision Date: 21 June 1932
• Citation: 244 Ky. 574
• Court: United States State Supreme Court — District of Kentucky
• Parties: Republic Life & Accident Insurance Co. v. Hatcher.

244 Ky. 574

Republic Life & Accident Insurance Co. v. Hatcher.

Court of Appeals of Kentucky.

Decided June 21, 1932.

1. Payment. — Payment may be made by check if parties agree it shall constitute payment.

2. Insurance. — Acceptance of negotiable paper in payment of insurance premium is binding on parties, though contract called for cash payment.

3. Insurance. — Postdated check constituted payment of insurance premium under policy requiring payment before delivery; acceptance of check by agent authorized to collect premium being within apparent scope of agency (Ky. Stats., secs. 3720b-1, 3720b-12, 3720b-185).

4. Insurance. — Death from poison taken by insured in belief it was intoxicant was result of "external, violent and accidental means" within policy.

The policy besides containing suicide clause provided for reduced payment for death resulting from "poison self-administered," but when interpreted most favorably to insured, death involved in present case was not within such clause.

5. Insurance. — Insurance contract must be given interpretation most favorable to insured.

Appeal from Floyd Circuit Court.

ANDREW E. AUXIER for appellant.

E.D. STEPHENSON and STRATTON & STEPHENSON for appellee.

OPINION OF THE COURT BY JUDGE WILLIS.

Affirming.

This appeal is by the Republic Life & Accident Insurance Company from an adverse judgment upon a contract of insurance. It issued a policy to George F. Hatcher whereby it insured him in the principal sum of $1,000 against

"the effects resulting exclusively of all other causes from bodily injury sustained during the life of this policy solely through external, violent and accidental means (excluding suicide while sane or insane, or any attempt thereat, while sane or insane), subject to all the conditions, limitations and exclusions, and within the amounts, hereinafter expressed."

Another paragraph of the policy provided:

"For death covered by the provisions of this policy, where it results from asphyxiation by illumiating gas, shooting self-inflicted, or poison self-administered, the amount payable shall be one-fifth of the principal sum."

The beneficiary designated to receive the indemnity in the event of the death of the insured was Minnie E. Hatcher, his wife. In this action on the policy by the beneficiary it was alleged that the assured, during the life of the policy, had died as a result of accident, and solely through external, violent, and accidental means. The defense, in its final analysis, was rested upon the contentions that the premium which constituted the consideration for the contract had not been paid, and that the death of Hatcher resulted from "poison self-administered," in which event the amount of indemnity agreed to be paid was only $200, or one-fifth of the principal sum named in the policy.

1. The policy was dated June 25, 1930, and called for the payment of a premium of $6 "on or before the delivery hereof." It was issued upon a written application forwarded by the agent, and was delivered to the insured about July 1, 1930. At the time the policy was delivered, Hatcher gave his check, payable to the order of the agent, for the initial premium. The check was dated July 10, 1930, and it was accepted by the agent as a payment of the premium. The insured, on July 9, 1930, became violently ill and died within an hour. It appeared that he had been in the habit of drinking heavily, and when on a spree would drink extracts or anything that contained alcohol. He had gone to the office of his brother-in-law, who was a physician, and in seeking an intoxicant had apparently taken copiously from a preparation containing strychnine, with the result stated. After the death of Hatcher, the agent collected the check for the premium from members of the family, and, after deducting his commission, the agent made remittance of the remainder to the company. Learning meanwhile of the death of Hatcher, the company did not collect the check sent by the agent.

The check given to the agent by Hatcher was a negotiable instrument. Ky. Stats, secs. 3720b-1, 3720b-185. The holder could maintain an action thereon against the maker. Thomson v. Peck, 217 Ky. 766, 290 S.W. 722. The fact that it was postdated did not render it invalid, provided it was not dated ahead for an illegal or fraudulent purpose. Ky. Stats., sec. 3720b-12; Triphonoff v. Sweeney, 65 Or. 299, 130 P. 979; American Agricultural Chemical Co. v. Scrimger, 130 Md. 389, 100 A. 774. It is not claimed that the check for the premium was postdated for any illegal or fraudulent purpose, but simply that it was not a compliance with the contract which called for a payment "on or before delivery" of the policy. It is said that such a payment must be in cash. 32 C.J., p. 1200, sec. 333. A payment may be made by check if the parties agree that it shall constitute payment. 30 Cyc. 1207; 48 C.J., secs. 50, 51, pp. 617-619; Carter & Co. v. Richardson, 60 S.W. 397, 22 Ky. Law Rep. 1204; Harbison v. Frazier, 64 S.W. 738, 23 Ky. Law Rep. 1115; Cogar Grain & Coal Co. v. McGee, 241 Ky. 485, 44 S.W. (2d) 551; Ratliff v. St. Paul Fire & Marine Ins. Co., 207 Ky. 492, 269 S.W. 546.

It is proven that the check was accepted by the agent as payment of the premium and the check was paid at the time it was due to an agent having the right to receive the money. The acceptance of negotiable paper in payment of a premium is binding on the parties, even though the contract called for a cash payment. New York Life Ins. Co. v. Evans, 136 Ky. 391, 124 S.W. 376; American National Ins. Co. v. Brown, 179 Ky. 711, 201 S.W. 326; Kansas City Life Ins. Co. v. Hislip, 154 Okl. 42, 6 P. (2d) 678. The agent had authority to collect the premium, and the acceptance of a postdated check therefor was within the apparent scope of the agency. George Washington Life Ins. Co. v. Norcross, 178 Ky. 383, 198 S.W. 1156; Inter-Southern Life Ins. Co. v. Duff, 184 Ky. 227, 211 S.W. 738; Henry Clay Fire Ins. Co. v. Grayson County State Bank, 239 Ky. 239, 39 S.W. (2d) 482; Federal Life Ins. Co. v. Warren, 167 Ky. 740, 181 S.W. 331; Globe Mutual L. Ins. Co. v. Wolff, 95 U.S. 326, 24 L. Ed. 387; Union Mutual Life Ins. Co. v. Wilkinson, 13 Wall. 222, 20 L. Ed. 617.

It follows that the premium was lawfully paid and the policy was in force when the insured died.

2. The second proposition involves an interpretation of the contract of insurance as applied to the facts found to exist. The company argues that the amount of indemnity provided for poisoning, taken by the insured intentionally, but without knowledge that it was poison, was only $200, or one-fifth of the principal sum.

The evidence, although circumstantial, was adequate to support the finding that, in searching for an intoxicating drink, Hatcher had ignorantly swallowed a deadly poison. A drink was intentionally taken under the belief that it was an extract or decoction that would intoxicate, but with no intention of committing suicide and without knowledge of its death-dealing character. Such an occurrence is an accident within the terms of an insurance contract, and the fatal consequences are the result of external, violent, and accidental means. Woods v. Provident Life & Accident Ins. Co., 240 Ky. 398, 42 S.W. (2d) 499.

The beneficiary argues that the provision limiting the indemnity for death by shooting self-inflicted, or by poison self-administered, applies only to voluntary acts of the kind described and not to accidents. Her position is that the poison was not self-administered by the insured, but was accidentally swallowed in the belief that it was a potable substance. The insurance company insists upon a different construction. It says the insurance contract covered death by accident, but death by suicide was excepted...