Rubinstein v. Jefferson Nat. Life Ins. Co., 200

• Decision Date: 27 March 1973
• Docket Number: No. 200,200
• Citation: 268 Md. 388,302 A.2d 49
• Parties: Blanche RUBINSTEIN, Indiv. and as Adm'x of the Estate of Morris I. Rubinstein v. JEFFERSON NATIONAL LIFE INSURANCE COMPANY et al.
• Court: Maryland Court of Appeals

Page 388

268 Md. 388

302 A.2d 49

Blanche RUBINSTEIN, Indiv. and as Adm'x of the Estate of Morris I. Rubinstein v. JEFFERSON NATIONAL LIFE INSURANCE COMPANY et al.

No. 200.

Court of Appeals of Maryland.

March 27, 1973.

Alexander R. Martick, Baltimore, for appellant.

Edward C. Mackie, Baltimore (Thomas G. Andrew and Rollins, Smalkin, Weston & Andrew, Baltimore, on the brief), for Jefferson National Ins. Co., part of appellees; and by Francis J. Valle, Baltimore (David J. Preller, Baltimore, on the brief), for Sigmund C. Aiken, other appellee.

Argued before MURPHY, C. J., and BARNES, McWILLIAMS, SMITH, DIGGES and LEVINE, JJ.

LEVINE, Judge.

The sole question we are called upon to decide here is whether the Superior Court for Baltimore City (Perrott, J.) erred in ruling as a matter of law that the insurer under a life insurance policy is not barred by waiver or estoppel from asserting a lapse of that policy due to nonpayment of the premium. The facts presented by appellant (plaintiff below) were uncontradicted and are not in dispute. At the close of her case, which was brought to recover the proceeds of the policy, the trial judge directed a verdict against her. From the judgment for costs entered upon that verdict, this appeal is taken.

On October 17, 1966, appellee, Jefferson National Life Insurance Company (the insurer), issued a policy of ordinary life insurance to Morris I. Rubinstein (the insured). At that time, the insured paid the first quarterly premium of $112.63. Appellant, Blanche Rubinstein, widow of the insured, was the sole beneficiary. The pertinent provisions in the policy are:

'. . . Immediately upon default in payment of any premium, this policy shall be null and void . . ..

'REINSTATEMENT.

'If this policy shall lapse because of default in payment of premium, it may be reinstated within three years from the due date of the premium in default, upon presentation of evidence of insurability satisfactory to the Company and upon payment of all arrears of premiums . . ..

'GRACE IN PAYMENT OF PREMIUMS.

'A grace of thirty-one days . . . during which time this policy will remain in force, will be allowed for the payment of all premiums except the first; . . ..

'THE CONTRACT.

'. . . No person can make, alter or discharge this contract or extend the time for payment of premiums, nor can this contract be varied or altered or its conditions waived or altered in any respect except by the written agreement of the Company signed by the President, a Vice-President, Secretary or Assistant Secretary. . . .'

On February 10, 1967, an agent of the insurer, Sigmund C. Aiken (Aiken), who is the other appellee, called upon the insured and persuaded him to add a disability waiver or premium rider to the policy, pursuant to which the insured handed to Aiken a check in the sum of $5.46 as the initial payment for the added benefit. As of that time, however, the second quarterly premium for the policy in the amount of $112.63 had not been paid, although it had become due on January 17. Thus, the grace-period provision was then operative, and continued to be so until February 17, when it expired.

The insured died on April 12, 1967, with the second quarterly premium never having been paid, and the insurer thereafter refused to pay appellant's claim. In prosecuting her case, she relied for her proof upon a group of exhibits and Aiken's deposition, portions of which were read into evidence.

Aiken testified that when he sold the rider to the insured on February 10, he reminded him that the quarterly premium was unpaid; that the rider would not become effective until it was paid; and that the insured acknowledged this and promised to mail his check for the second quarter. He also testified that he spoke to him several times thereafter during a number of personal visits and telephone conversations. Prior to the expiration of the grace period on February 17, he told the insured that payment of the quarterly premium would keep the coverage in force; and after that date, he told him that the policy had 'technically lapsed;' that payment and evidence of 'good health' would suffice to reinstate the policy. One such discussion occurred as late as March 31, when Aiken called upon the insured for the purpose of completing a new application for the rider, the original having contained incorrect information pertaining to height and weight.

Apparently, the insurer was never made aware that the insured had died on April 12 and therefore retained the rider premium, subject to reinstatement of the policy, until May 3 when it finally issued its check for a refund of the $5.46 and closed its file.

At the conclusion of appellant's case, the trial court, in directing a verdict for appellees, ruled as a matter of law that the insurer was not barred by waiver or estoppel from asserting that the policy had lapsed for nonpayment of the January 17 premium. In attacking that ruling, appellant argues that Aiken's conduct in accepting the rider application and premium on February 10 while the grace period was in effect; the acceptance of the corrected application on March 31 after the policy had lapsed; Aiken's reminders of the policy status; and the retention of the premium by the insurer all led the insured to believe that he was still covered.

Undoubtedly, the short answer to appellant's contention is that nowhere in her case was there any evidence of acts, conduct or statements that could remotely have allowed the insured to be misled into believing the policy was in effect after February 17. Apart from the policy language itself, her own evidence was uncontradicted in showing that the insured was told on February 10 that payment was required; and after February 17, that the policy had lapsed and payment coupled with reinstatement was necessary for coverage to be effective.

It is well-settled that if an insurance policy contains a provision for its forfeiture for nonpayment of premiums, the insurance company may avoid the policy on the insured's failure to pay a premium, Alexander v. Life Ins. Co., 166 Md. 112, 170 A. 522 (1934); Burns v. Prudential Ins. Co., 162 Md. 228, 159 A. 606 (1932). But, it is equally well-recognized that the right of an insurer to forfeit or avoid the policy may be lost by the doctrine of waiver or estoppel, McFarland v. Mutual Auto Ins. Co., 201 Md. 241, 93 A.2d 551 (1953); Casualty Co. v. Arrigo, 160 Md. 595, 154 A. 136 (1931); Royal Insur. Co. v. Drury, 150 Md. 211, 132 A. 635 (1926).

We defined 'waiver' in Food Fair v. Blumberg, 234 Md. 521, 531, 200 A.2d 166, 172 (1964) as:

'. . . the intentional relinquishment of a known right, or such conduct as warrants an inference of the relinquishment of such right, and may result from an express agreement or be inferred from circumstances. Gould v. Transamerican Associates, 224 Md. 285, 167 A.2d 905 (1961). And acts relied upon as constituting a waiver of the provisions of a contract must be inconsistent with an intention to insist upon enforcing such provisions.'

This...