Robnett v. Cotton States Life Insurance Co.

• Decision Date: 11 April 1921
• Docket Number: 267
• Citation: 230 S.W. 257,148 Ark. 199
• Parties: ROBNETT v. COTTON STATES LIFE INSURANCE COMPANY
• Court: Arkansas Supreme Court

230 S.W. 257

148 Ark. 199

ROBNETT v. COTTON STATES LIFE INSURANCE COMPANY

No. 267

Supreme Court of Arkansas

April 11, 1921

Appeal from Arkansas Circuit Court, Northern District; W. B Sorrells, Judge; affirmed.

Judgment affirmed.

Chapline & Morrison, for appellant.

The court erred in directing a verdict for appellee.

The terms of an insurance contract are construed strictly against the insurer, since the policies are issued on printed forms prepared by the insurer, and the insured has no voice in the preparation. 217 S.W. 462. An insurance company is not required to declare a forfeiture on the failure of the insured to pay a premium note when due, but the rule is different where the policy merely provides that on insured's failure to pay the premium within a specified time after it becomes payable the company shall be at liberty to cancel it without further notice. In such cases the policy does not become void merely by nonpayment of the premium, but remains in force until affirmative action is taken by the company to cancel it. 112 Ark. 171; 3 Cooley's Briefs on Ins., p. 2278. The general rule has no application here, for the policy contains no mandatory provision, and no affirmative action was taken by the company until after the tender of the balance due on the premium.

Forfeitures are odious in the eyes of the law, and a default in payment of a life premium does not forfeit a policy where there is no stipulation to that effect. 159 Ill. 476; 6 Jones, L., 51 N.C. 558; 7 Ohio Dec. 118. There is no express stipulation for forfeiture in the policy because of failure to pay the annual premium on the date fixed, nor any provision of like import from which an inference might be drawn that a failure to pay the premium ad them would automatically cancel or render the policy void. 84 Neb. 682; 19 A. & Eng Ann. Cases 59-64. See 93 U.S. 24; 21 U. S. (1 ed.) 789. The policy here did not lapse but continued in force until affirmative action was taken to declare a forfeiture, and none was ever taken before the tender, and the company is now estopped.

The automatic cancellation in the note is in direct conflict with the terms of the policy. Payment of an annual premium is not a condition precedent but subsequent only. 104 U.S 303; 144 Id. 430-51.

Part payment (as here), accepted by the company after maturity, waives a forfeiture. 25 Cyc. 870, note b.; 41 S.W. 680.

Where there is a conflict between the policy and the note, the policy governs. 4 Mo. 386; 36 Okla. 733; 44 L. R. A. (N. S.) 376.

After a company has once waived its right to declare a forfeiture, can not subsequently avail the effects of such waiver. 53 Ark. 494; 19 Cyc. 872.

The evidence shows payment of the first and second annual premiums. A note marked paid is conclusive. 104 Ark. 367. The tender was made within the customary period made by agreement and the company is estopped from declaring the policy lapsed. 104 Ark. 288; 62 Ga. 250.

Appellant is entitled to judgment for the amount sued for and interest, penalty and costs and attorney's fees. 133 Ark. 223.

Holmes & Canale and C. E. Pettit, for appellee.

Appellant complains (1) because the court enforced the provisions of the "blue note" and (2) because the trial court did not hold that the company waived the lapse of the policy. Our own court, and practically all others, have decided adversely to the contentions of appellant. The "blue note" has been often upheld. 104 Ark. 288; 220 S.W. 803; 89 S.E. 445; 86 N.E. 928; 177 F. 842; 228 U.S. 364. See, also, 74 Ark. 508; 75 Id. 25; 85 Id. 337.

OPINION

WOOD, J.

This is an action brought by the appellant against the appellee to recover the sum of $ 5,000 on a policy of life insurance issued by the appellee to the husband of appellant, and in which the appellant was the beneficiary. The appellant set up the policy, alleged the death of the insured and a compliance with all the terms of the policy necessary to create liability against the appellee.

The appellee answered and denied that the insured had complied with the terms of the policy by paying the second annual premium, and set up that the policy was forfeited because of that fact. The undisputed testimony showed the issuance of the policy by the appellee to the husband of appellant, and that the appellant was the beneficiary in the policy; that the insured was dead, and that the appellant was entitled to recover on the policy, provided the provisions of the insurance contract as to the payment of premiums had been complied with. The testimony on that issue is substantially as follows: The annual premium on the policy was $ 154. The first premium was paid. The second was due October 19, 1919. At that time the insured was unable to pay the second premium, and he arranged with the appellee to extend the time for the payment of this premium by paying the sum of $ 14 in cash and executing a note for the balance of $ 140, dated October 20, 1919, and payable on or before January 1, 1920. When the note became due, the insured was still unable to pay. After several letters had passed between the insured and the appellee with reference to the payment of the note evidencing the balance due on the second premium, the insured paid to the appellee the further sum of $ 100 in cash and executed the following note:

"$ 42.36. January 30, 1920.

"On or before March 1, 1920, after date without demand or notice I promise to pay to the order of the Cotton States Life Insurance Company forty-two and 36/100 dollars at its home office in Tupelo, Miss., value received, with interest at the rate of six per cent. per annum. This note is accepted by the said company at the request of the maker as balance on premium on the following express agreement: That, although no part of the premium due on the 19th day of October, 1919, on the policy No. 3103, issued by said company on the life of Allie E. Robnett, has been paid, the insurance thereunder shall be continued in full force until midnight of the due date of said note; that, if this note is paid on or before the date it becomes due, such payment, together with said cash, will then be accepted by said company as payment of said premium, and all rights under said policy shall thereupon be the same as if said premium had been paid when due; that, if this note is not paid on or before the day it becomes due, it shall thereupon automatically cease to be a claim against the maker, and said company shall retain said cash as part compensation for the rights and privileges hereby granted, and all rights under said policy shall be the same as if said cash had not been paid nor this agreement made; that said company has duly given every notice required by its rules or by the laws of any State in respect to said premium, and in further compensation for the rights and privileges hereby granted the maker hereof has agreed to waive, and does hereby waive, every other notice in respect to said premium or this note, it being well understood by said maker that said company would not have accepted this agreement if any notice of any kind were required as a condition to the full enforcement of all of its terms."

After receiving the above note the appellee mailed the insured the former note, which was marked paid. On the 23d day of February, 1920, the appellee wrote to the insured as follows:

"Your premium extension note for $ 42.36 (which includes accrued interest) given on account of policy No. 3103 in this company will be due March 1, 1920, and payable at this office. Please remit promptly, as this obligation provides that the policy will lapse unless payment is made by the date due."

This letter was received at the post office at Almyra, Arkansas, in due course. The insured at that time, however, was not at his home in Almyra, and the appellant did not personally receive the notice until March 3, 1920.

On March 4, 1920, the appellee received from appellant through one Paul W. Daniels of Stuttgart, Arkansas, a check for $ 42.64, dated March 3, 1920, drawn on the Exchange Bank of Stuttgart, Arkansas, signed by H. G. Miens, which was tendered in payment of the blue note above mentioned, and on March 4, 1920, the appellee returned the check in a letter to Daniels which was received by him on March 5, 1920. In the letter to Daniels the appellee stated that it refused to accept the check for the reason that the policy ceased to be in force at midnight on March 1, 1920, at which time also the note of the insured automatically according to its terms ceased to be a claim against him--that the policy had lapsed. In this letter the appellee enclosed a blank for reinstatement, and stated that it would be pleased to reinstate the policy upon proper settlement of the premium and satisfactory evidence of the good health of the insured. On March 6, 1920, the insured died, and on March 8, 1920, the appellee first heard of his death.

Among others, the policy contained the following provision:

"If any premium shall not be paid on or before the date when due, and if there be no indebtedness to the company, the insurance will automatically continue from said due date as term insurance during the term, including the period of grace, specified in column three (3) of the accompanying table."

The accompanying table showed that, upon the nonpayment of the premium when due at the end of one year, the insurance was automatically continued for one month. There was a grace of one month for the payment of all premiums except the first. The policy was nonforfeitable from the date of issue except for nonpayment of premiums. The payment of premiums in advance on the 19th day of October of every year continued the policy in force during the life of the insured for twenty years, after which the policy was...