Saunders v. Crusader Life Ins. Co., 24655
| Citation | 421 S.W.2d 563 |
| Decision Date | 02 October 1967 |
| Docket Number | No. 24655,24655 |
| Parties | Estella M. SAUNDERS, (Plaintiff) Appellant, v. CRUSADER LIFE INSURANCE COMPANY, (Defendant) Respondent. |
| Court | Court of Appeal of Missouri (US) |
John A. Watkins, Kansas City, for appellant.
James Wilson Spencer, Davis & Haley, Kansas City, for respondent.
MAUGHMER, Commissioner.
The plaintiff, Estella M. Saunders, as named beneficiary, sued the defendant, Crusader Life Insurance Company, for the death benefits under a life insurance policy which that company had issued on the life of her husband, David Saunders, who died on January 4, 1965. There was a verdict and judgment for plaintiff. Defendant's motion for new trial was sustained and plaintiff has appealed.
Crusader Life Insurance Company is a Kansas Corporation, authorized to and doing a life insurance business in Missouri. On December 28, 1961, it issued Policy #5831 to David Saunders, a Missouri resident. The plaintiff, described as the insured's wife, was the named beneficiary. This particular contract is a 'reduced term policy' and was written for a term of 25 years with annual reducing benefits from $12,000 during the first year to $900 for the 25th year. The insured's death having occurred during the fourth year, death benefits, if any such were payable, were $11,328. The policy itself was received in evidence. It provided for a grace period of 31 days during which an overdue premium might be paid without penalty. Being term insurance, no cash value, extended insurance, or automatic loan privileges existed. Therefore, the coverage lapsed completely 31 days after default in premium payment unless there was a reinstatement. The first premium and all subsequent payments which were made, were on a quarterly basis. The amount of the quarterly premium was $35.98.
Plaintiff's first amended petition alleges: issuance of the policy, payment of the first quarterly premium, naming plaintiff as beneficiary, death of the insured on January 4, 1965, proof of death, asserted the policy was 'in full force and effect on the date of the insured's death', that $11,568 was due and that demand for payment had been made and refused. The petition also prayed for interest at 6 percent from January 4, 1965, penalties and attorneys' fees for vexatious refusal to pay, and for costs.
It has been held (Connor v. United) Insurance Co., ,Mo.App., 313 S.W.2d 222) that the defense of lapse and forfeiture for nonpayment of premiums is not only an affirmative defense, but it must be pleaded. Defendant's answer denied plaintiff's allegation that the policy was in force when insured died, but did not specifically and affirmatively plead lapse and forfeiture for nonpayment of premiums. However, the question of lapse was the only defense put forward, was the only issue litigated and both parties treated it as the main controversy or dispute. Therefore, the issue of payment of nonpayment of premiums must be treated as having been raised by the pleadings. Section 509.500, V.A.M.S.
No witness was called or testified on behalf of the plaintiff. Plaintiff (1) introduced the policy itself into evidence; (2) read admissions of defendant that Contract #5831 on the life of David Saunders was issued on December 28, 1961, the first quarterly premium of $35.98 had been received and accepted, Estella M. Saunders was named beneficiary and (3) read the following requests for admissions which had elicited no responses from defendant; the death certificate of insured was supplied to defendant, plaintiff had demanded payment which defendant refused, and insured died on January 4, 1965. Thereupon plaintiff closed her case. There was no showing as to the date upon which proof of loss, by delivery of death certificate or otherwise, had been made.
The defendant called three witnesses. Mr. Robert P. Lyons, vice-president and agency director of the Crusader Company, said he was the agent who sold the policy sued upon, which he described as term insurance. He testified that such term insurance accumulated no cash values, provided for neither extended insurance no automatic loans and would lapse and become forfeited if any premium was not paid when due or within the 31 days grace period thereafter. Defendant sought to have this witness testify from his personal knowledge and based upon information derived from his own and from the company's records as to the date of lapse. The court excluded this oral testimony.
Lillie Owens, supervisor of the premium billing department of defendant company, testified. She said it was her duty to 'bill the policy holders when their premium is due, 15 days before the due date'. She identified Exhibit 4, which was received in evidence as a copy of the notice mailed to the insured on September 15, 1964, advising that a quarterly premium of $38.98 would be due on September 28, 1964. This witness stated further that the company, through her department, sent a second notice approximatey 30 days after the premium was due and if payment was not then received within 20 days, a Reinstatment Form Letter was sent. Such a Reinstatement Form Letter (Exhibit 5) was identified and the witness testified that such a letter was mailed to insured in November, 1964.
Mr. Gabriel S. Alexander testified that he was secretary and office manager of the defendant company and as such custodian of the company's records. He said that these records were made and kept under his supervision. He identified Exhibit 6 as the history record card of policy #5831, Mr. David Saunders, and it was received in evidence. This card shows issuance of the policy on December 28, 1961, quarterly premium of $35.98, and that the last premium ever paid was on July 23, 1964, which payment, considering the date of issue, paid the quarterly premium due on June 28, 1964, and paid for coverage until September 28, 1964, when an additional quarterly premium was due. Mr. Alexander said that this card showed that two quarterly premiums (September 28, and December 28, 1964) were due and unpaid when Mr. Saunders died on January 4, 1965. Plaintiff, as a part of its cross-examination of Mr. Alexander, offered in evidence some checks signed by the insured and payable to Crusader. The latest of these checks was dated February 25, 1964, and bears the stamp 'Paid' on March 3, 1964, by the bank on which it was drawn.
The court denied defendant's motion for directed verdict submitted at the close of all of the evidence. The jury returned the following verdict:
'We, the jury, find the issues in favor of the plaintiff and assess her recovery at $11,328.00, and assess interest at $792.96 being the total sum of $12,120.96. It is also recommended by the jury that attorneys fees be paid in addition.
It might be noted that this verdict recommends allowance of the penalty of attorney fees, when that issue had not even been submitted to the jury.
Defendant duly filed its motion for new trial and therein, among others asserted errors as follows:
(1) Denial of the motion for directed verdict.
(2) In refusing the testimony of the witness Robert Lyons, agent who wrote the policy, who attempted to testify from the records (before same were introduced) and from his 'independent recollection of facts showing that said policy had lapsed', said testimony not being in violation of the Dead Man's Statute.
(3) 'In giving instructions submitted by plaintiff, in that said instructions permitted indulgence in wild fishing expedition, speculation, and groundless inferences and presumptions'. The court sustained the motion for new trial 'for the following reasons'.
(1) The Court erred in excluding material evidence offered by the defendant.
(2) The Court erred in the giving of Instruction number four. We set forth Instruction number four in full:
'If you find in favor of the plaintiff, then you must award the sum of $11,328.00.
'In addition, you may award the plaintiff interest at the rate of 6% per annum on the above amount from the time you believe that the policy proceeds should have been paid.'
'Not in M.A.I.
Submitted by plaintiff.
Given RHK J'.
Plaintiff says Instruction No. 4 was not and is not prejudicially erroneous because a defect as to allowance of interest can be cured through entry of the proper amount of interest by the court. This would undoubtedly be true in those instances where the date on which interest in allowable is clear and definite, for example in a...
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