Scales v. Union Central Life Insurance Co.
| Decision Date | 10 June 1940 |
| Docket Number | 4-5991 |
| Citation | 141 S.W.2d 547,200 Ark. 869 |
| Parties | SCALES v. THE UNION CENTRAL LIFE INSURANCE COMPANY |
| Court | Arkansas Supreme Court |
Appeal from Pulaski Circuit Court, Second Division; Lawrence C Auten, Judge; affirmed.
Judgment affirmed.
Elmer G. Schoggen and Melbourne M. Martin, for appellant.
Buzbee Harrison, Buzbee & Wright, for appellee.
This action was instituted in the Pulaski circuit court by the appellants, W. T. and Ivy E. Scales, against the appellee The Union Central Life Insurance Company on April 12, 1939. The complaint alleged that on August 11, 1926, the appellee, The Union Central Life Insurance Company, delivered its policy of insurance on the life of Mrs. Ada S. Scales, mother of appellants, by the terms of which policy the appellee agreed to pay to the plaintiffs, as beneficiaries thereunder, the sum of $ 5,000 upon the death of the assured. It was alleged that all the terms and conditions of said policy were complied with, and that the same was in full force and effect at the time of the death of the assured, and that there is now due and payable on said policy, after the deduction of a loan made by the insured, the sum of $ 3,000.
On January 10, 1940, appellants filed an amendment to the complaint, and they replied to the answer of appellee. The suit was originally brought by W. T. Scales, and his brother, Ivy E. Scales, was made a party plaintiff.
The appellee, on May 11, 1939, filed an answer making specific and general denial of each and every allegation in the complaint. It denied that the policy was in legal force and effect, and stated further that the policy was voluntarily surrendered on or about October 14, 1938, by the insured during her life and upon a payment by appellee to the insured of the cash surrender value at that time.
The reply to the answer denied that the insured, Ada S. Scales, voluntarily surrendered during her lifetime the policy sued on, and alleged that she was overreached by representation that said policy had no future value, in that the premium due August 11th was not paid, except that of an accumulative dividend, when in fact said policy, by its provisions, automatically carried itself to a date appreciably beyond the date of insured's death. Appellants further denied that insured received the cash surrender value of the policy; that pursuant to a contract for a valuable consideration between appellant and the insured and the appellee, appellants for a long period of time paid all the premiums on the said policy of insurance, and they, therefore, acquired a vested interest and became the owners of the proceeds of said policy on the death of the insured; that the appellee insurance company had, for a long period of time, depended on the appellant, W. T. Scales, for the payment of the premiums due, and that pursuant to an agreement with their mother, the insured, a vested interest was given them and that Ivy E. Scales, brother of W. T. Scales, acted through him as his agent; they further alleged that the insured, Ada S. Scales, was incapable of making a valid and binding contract with the appellee, to the exclusion of appellants without their knowledge and consent because of their vested rights in the policy. It is further alleged that, at the time said policy is alleged to have been surrendered and canceled, the company already had it in its possession and was holding the same as security for a loan, and that neither of the appellants had any notice of the attempted surrender or cancellation of the policy. They further alleged that under the provisions of said policy, failure to pay the premium alleged to be due on August 11, 1938, did not void said policy but under the provisions of the same, it became automatically transformed into extended term insurance for such period of time as the reserves in cash against said policy would afford and that the said reserves carried the same on an extended insurance basis appreciably beyond the date of the death of insured; that by reason of their vested interest in said policy, their failure of knowledge or consent to the alleged surrender and cancellation, the terms of the contract itself and the cash reserves against the said policy, the appellee breached the said contract and that the same was in full force and effect at the time of the death of the insured.
At the close of the evidence each party requested a directed verdict, and the court directed a verdict for the appellee. Motion for new trial was filed and overruled, and the case is here on appeal.
W. T. Scales testified in substance that he is one of the plaintiffs, and the other is his brother, Ivy E. Scales; their mother was Ada S. Scales; she had the insurance policy in question; there were no other children, just the two brothers. The policy sued on was introduced in evidence, and was for the sum of $ 5,000, and the beneficiaries named, W. T. and Ivy E. Scales, in the portion of 3/5 and 2/5 respectively. Witness states the change in beneficiary was made in the early part of February, 1938, and the mother's death occurred October 23, 1938; witness was in Houston, Texas, at the time; he loaned his mother money to pay the premiums from time to time. The attorney for appellant then asked if witness had any understanding with his mother about the payment of these premiums and if so to state what it was. Objection was made and sustained and exceptions saved. Witness stated that he began regularly in the latter part of 1937 to pay the premiums on the policy. Drafts paid by witness were introduced. Letter from the insurance company to Mrs. Ada Scales was introduced. The letter is as follows:
"The Union Central Life Insurance Company
J. J. Harrison, Manager
June 20, 1938.
"Mrs. Ada Scales,
Weldon, Arkansas.
After the introduction of the letter witness continued: the $ 68 was paid; when asked what he did upon receipt of the letter from his mother, objection was made to any conversation between him and his mother; objection sustained; a check was introduced, written by Mr. Cole to witness' mother showing that she borrowed $ 68 indorsed by his mother and the insurance company; witness knew nothing about the attempted surrender and cancellation of the policy prior to the death of his mother; neither he nor his brother received any information relative to the surrender of the policy prior to her death; after her death he went to the insurance company in connection with the matter and received a copy of the letter that his mother had written; the letter was introduced in evidence and is as follows:
Little Rock, Arkansas.
Witness stated that he was paying the draft and had arranged the payment of the $ 68 because the policy was payable to himself and his brother; letter of October 12th was introduced, which is as follows:
Weldon, Arkansas.
The check was then introduced showing the payment by the insurance company to Mrs. Ada S. Scales of $ 38.78. This check was indorsed by the insured and paid by the bank. Memorandum of account was then introduced showing a loan on the policy of $ 1,740. Witness was then asked if he recalled whether there was an extension agreement made April 11, 1938, and he answered "No"; he said he knew his mother's signature and that was her signature.
Statement was then introduced showing the extension agreement signed by Mrs. Ada S. Scales. This was on April 11, 1938. Insurance company wrote witness about draft drawn on him in Hot Springs and he was addressed at Houston; this letter was written latter part of May and addressed to witness at Hot Springs and forwarded to him at Houston; does not know...
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