Republic Nat. Life Ins. Co. v. Spillars

• Decision Date: 06 December 1962
• Docket Number: No. 4078,4078
• Citation: 363 S.W.2d 373
• Parties: REPUBLIC NATIONAL LIFE INSURANCE COMPANY, Appellant, v. Sudie SPILLARS et al., Appellees.
• Court: Texas Court of Appeals

Page 373

363 S.W.2d 373

REPUBLIC NATIONAL LIFE INSURANCE COMPANY, Appellant, v. Sudie SPILLARS et al., Appellees.

No. 4078.

Court of Civil Appeals of Texas, Waco.

Dec. 6, 1962.

Rehearing Denied Jan. 10, 1963.

Thomas G. Nash, Jr., Dallas, for appellant.

Mac L. Bennett, Jr., Normangee, Fulbright, Crooker, Freeman, Bates & Jaworski, M. W. Parse, Jr., Houston, Boyd M. Bailey, Madisonville, for appellees.

WILSON, Justice.

Credit Life insurance governed by the provisions of Insurance Code Art. 3.53, Vernon's Annotated Texas Statutes is the subject matter of this cause. Judgment was rendered against the insurer in a nonjury trial. No findings or conclusions were filed.

A group creditors life policy was issued by appellant, effective July 1, 1960, to Farmers State Bank of Madisonville in consideration of an original single premium paid by the bank. It provided initial life insurance coverage for all eligible debtors of the bank whose names and amounts of indebtedness were then submitted by the bank to appellant. It further provided that 'all new debtors of the same class or classes may likewise be insured hereunder from the date they become new debtors' of the bank.

The bank's application for the group policy specified that coverage was excluded for debtors 'who are delinquent on their contracts of indebtedness on the date insurance under the policy would otherwise have become effective on such debtors.'

J. D. Spillars, Sr. executed a note to the bank December 23, 1960 in renewal of a previous note secured by a chattel mortgage, and evidencing extension of an indebtedness to the bank which had existed two or three years. Spillars delivered to the president of the creditor bank a check on that bank dated December 23, 1960 in the amount of the premium for his coverage under the group policy. Spillars did not then have sufficient funds soon sell some calves and 'take care president temporarily held it in his desk. Later Spillars told the bank president he realized he was overdrawn, but would soon sell some calver and 'take care of the check.' Again, the president testified, 'he came back in here and told me that he was fixing to sell the calves and to go ahead and write the insurance; and I wrote the insurance on January 14th, at his request.' A certificate of insurance bearing that date was issued by the president as appellant's agent. On January 17, 1961 Spillars died.

Appellant urges that recovery is precluded because of failure to establish the premium for his coverage was paid while Spillars was alive. The point is overruled. The president of the bank, as appellant's agent, issued the certificate of insurance before the death of Spillars. There is nothing in the certificate, application or policy obligating the debtor to pay or remit a premium to the insurer. This was the creditor's obligation. Ins.Code, Art. 3.50, Sec. 1(4)(b), Vernon's Ann.Tex.Stats. The application of the bank to the insurer for the group policy required that 'Subsequent premiums for insurance becoming effective after effective date of the policy shall be remitted by the creditor to the company on the last business day of each calendar month after the effective date of the policy.' The insurer does not contend the group policy was breached or ineffective because of the bank's delay in making remittance to it.

The bank's duty under the terms of the policy was to forward to the insurer 'an itemized list of names of all debtors and the amounts of their respective indebtedness on which insurance was made effective during each such month.' There was no requirement that applications be accepted or approved by the company before insurance on lives of individual debtors became effective. The established system of premium payment and method of remittance agreed to and acquiesced in by appellant was that the bank reported the names of insured debtors, their premiums and the loan amounts on or before the fifth day of each month on certificates issued during the preceding month; and that a deposit to the credit of the insurer of the total amount of premiums on such insurance was made in the Farmers' State Bank within such time....