Scott v. Federal Life Ins. Co.
| Decision Date | 16 February 1962 |
| Citation | 19 Cal.Rptr. 258,200 Cal.App.2d 384 |
| Parties | Ada L. SCOTT, as Executrix of the Estate of Leonard Moomaw, aka Leonard Moonaw, Deceased, Plaintiff and Respondent, v. FEDERAL LIFE INSURANCE COMPANY, a Corporation, Defendant and Appellant. Civ. 25199. |
| Court | California Court of Appeals Court of Appeals |
Betts, Ely & Loomis, and Ingall W. Bull, Jr., Los Angeles, for appellant.
D. Wendell Reid, Encino, and W. Eugene Henry, Van Nuys, for respondent.
This action is brought to recover on a policy of life insurance. The cause was tried by the court without a jury and judgment entered in favor of plaintiff-respondent, the named beneficiary.
The policy contains the usual forfeiture clause. The defense was that the policy had been forfeited prior to the death of the insured for nonpayment of premiums. The court found waiver and estoppel on the part of defendant-appellant, the insurer, by its conduct in dealings with the insured and allowed recovery on that theory. On appeal, it asserts the evidence does not establish either waiver or estoppel.
The facts appear practically undisputed. On July 23, 1954, the insured, then sixty-four years of age, made written application for a policy in the amount of $7000 at the standard rate for the policy at his age, $584.50, payable annually. The application contained this statement: 'I authorize the Company to charge any unpaid premium as a loan against the policy according to its 'Premium Loan' provision, unless otherwise requested by me in writing prior to the due date of such premium.'
Appellant issued the policy for an annual premium of $920.64, adjusting it upwards at the extra rate of $48.02 per thousand because of medical reports indicating impairment of insured's physical condition, and deleting a standard provision in the policy for extended term insurance at the option of the insured in the event of default. Dated August 9, 1954, it was delivered on August 23, 1954, with a copy of the application attached thereto. An annotation had been made on the application under the heading 'Home Office Corrections or Additions' as follows:
The policy in the face amount of $7000 by its terms is payable on proof of the insured's death, or as an endowment at the end of the policy year nearest age eighty-five of the insured. It calls for the first premium payment on delivery of the policy and subsequent premium payments on August 9 of each year. The policy provides a grace period of one month of not less than thirty days and if death occurs during the grace period, any unpaid premium is deductible from the amount payable.
Other pertinent provisions are as follows:
'Reinstatement At any time after any default, this policy will be reinstated upon written application therefor, subject to evidence of insurability of the Insured satisfactory to the Company and also subject to any indebtedness existing against the policy at the date of default, with interest thereon and the payment of past due premiums with interest thereon at five per cent per annum.'
A table setting forth the factors to be employed in determining cash or loan values or the policy at a given age at the end of each policy year is contained in the policy. No explanation of how the computation is to be made appears therein.
The policy was assigned as additional collateral for a mortgage loan made to the insured by a savings and loan association. The association paid the annual premiums on August 31, 1954, and August 23, 1955. The assignment was released on November 16, 1955, and monthly premiums were accepted beginning with the premium due August 9, 1956. The following table chronicles the history of subsequent payments:
PREMIUM DUE DATE PAID PREMIUM PAID PAID BY
---------------- -------------- ------------ -------
Aug. 9, 1956 Sept. 13, 1956 $ 80.64 Insured
Sept. 9, Oct. 9
and Nov. 9, 1956 Nov. 14, 1956 241.92 "
Dec. 9, 1956 Feb. 8, 1957 80.64 "
Jan. 9, 1957 Mar. 19, 1957 80.64 "
Feb. 9. 1957 Apr. 10, 1957 80.64 "
Mar. 9, 1957 May 28, 1957 80.64 "
Apr. 8, May 9
June 9, and
July 9, 1957 July 28, 1957 322.35 Loan
Aug. 9, 1957 Aug. 5, 1957 80.64 Insured
Sept. 9, Oct. 9
Nov. 9 and
Dec. 9, 1957 Nov. 23, 1957 322.35 Loan
Jan. 9, 1958 Jan. 21, 1958 80.64 Insured
Feb. 9, 1958 May 20, 1958 80.64 Loan
At the time payments were made by loans on the policy the cash or loan values of the policy were equal to or in excess of the amounts of the loans. It was the practice of appellant to send out a 'premium due' notice twenty days in advance of the date a premium was due. If a premium which was due prior to the time a notice ordinarily was sent out had not been received, the regular notice would not be sent until receipt of the earlier premium. Premium notices were sent to the insured on or about:
DATE NOTICE DATE PREMIUM
SENT DUE
------------------ -----------------
September 13, 1956 September 9, 1956
November 14, 1956 December 9, 1956
February 8, 1957 January 9, 1957
March 19, 1957 February 9, 1957
April 10, 1957 March 9, 1957
May 28, 1957 April 9, 1957
Premiums due April 9, May 9 and June 9, 1957, were delinquent. On June 18, 1957, appellant sent insured a notice printed on yellow paper similar to that of a telegram entitled 'TELEPOST' advising him these premiums had not been paid and requesting payment. No reply or payment was received. On July 5, 1957, appellant sent insured a letter advising him a loan of $327.81 representing four monthly premium payments, plus interest on the loan to and including August 9, 1957, had been completed in accordance with the policy provisions. The loan was entered on appellant's books on July 10, 1957. Thereafter, notice of premium due on August 9, 1957, was sent and subsequent payment entered August 5, 1957.
A similar telepost was sent by appellant to the insured on October 29, 1957, when premiums due on September 9, and October 9, 1957, were delinquent. A similar letter was sent on November 23, 1957, giving notice of amalgamation of the prior loan and a new loan covering the four monthly premiums due September 9, October 9, November 9 and December 9, 1957. This notice also contained the typed message: 'This transaction uses up the entire loan value of your policy, therefore, if the premium due January 9, 1958, is not paid before that date, or during the grace period, the policy will lapse.' Thereafter, notice of premium due January 9 was sent and subsequent payment entered on January 21, 1958. Notice of premium due February 9, 1958, was then sent.
On March 28, 1958, when the premium due February 9, 1958, remained unpaid, appellant sent insured a telepost letter urging payment of premiums due in the amount of $166.94 (a total of two monthly premiums plus interest on loan) and requesting that the insured complete an application for reinstatement on the reverse side which called for answers as to whether he had consulted a physician for illness or injury since the date of application for the policy, their names and addresses, and whether he had any ailment, disease or disorder. Insured had suffered an automobile accident in October, 1957, and sustained injuries which impaired his health and for which he was treated by many physicians. He would have had to answer these questions affirmatively. The application also required his signature to the following statement: 'I further agree that...
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