Scott v. Metropolitan Life Ins. Co.

• Decision Date: 30 September 1964
• Docket Number: No. 40341,40341
• Citation: 398 P.2d 822
• Parties: Electra M. SCOTT, individually, and Electra M. Scott, Executrix of the Estate of Ernest R. Scott, Deceased, Plaintiffs in Error, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 822

398 P.2d 822

1964 OK 211

Electra M. SCOTT, individually, and Electra M. Scott, Executrix of the Estate of Ernest R. Scott, Deceased, Plaintiffs in Error, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant in Error.

No. 40341.

Supreme Court of Oklahoma.

Sept. 30, 1964.

Rehearing Denied and Opinion Amended Dec. 1, 1964.

Application for Leave to File Second Petition for Rehearing

Denied Feb. 9, 1965.

Syllabus by the Court

1. Where, under his sales agreement with a married couple purchasing an automobile from him, and executing and delivering their promissory note, secured by a chattel mortgage on the auto, for the balance due on its purchase price, an automobile dealer insures payment of said note, in the event of the death of the 'debtor', with a group credit life insurance policy, for a premium paid by said purchasers as a part of the total sum involved in the transaction, and, after said dealer sells and assigns the note and mortgage to his bank, the husband dies, and the surviving wife pays the bank the entire balance due on the note, her relationship to the insurer (no contention being made that, if the insurance was effective, it did not mature on the death of either the husband or wife) was that of a surety, who has paid the debt of a principal.

2. Where in the situation referred to above, the wife did not know of the policy's provisions restricting its coverage to debts smaller than the one on which the policy's premium was computed and paid, and the insurer did not tender back any part of said premium until the policy became payable on the husband's death, such provisions were no obstacle to her recovery of the promissory note's entire balance; and the allegations in her Second Amended Petition were sufficient to withstand the defendant's demurrers.

Appeal from the Court of Common Pleas of Tulsa County, C. E. Allen, Trial Judge.

Action by the surviving wife, and administratrix of the estate of a deceased purchaser of an automobile, as plaintiff, against the insurer, as defendant, for the balance due, at the time of his death, on the promissory note given for the unpaid balance due on the auto's purchase price, plus carrying charges, etc., which said sum's payment was allegedly guaranteed, in the event of such death, by a group policy of credit life insurance previously issued by the insurer to the automobile dealervendor. After judgment sustaining the defendant's demurrers to plaintiff's Second Amended Petition, and dismissing the action, plaintiff appeals. Reversed and remanded with directions.

Spillers, Spillers & Givens, Tulsa, for plaintiffs in error.

Gable, Gotwals & Hays, Tulsa, for defendant in error.

BLACKBIRD, Chief Justice.

The parties appear here in reverse order to their appearance in the trial court. For clarity and brevity Electra M. Scott, in both of her capacities as an individual and executrix, will be referred to collectively as 'plaintiff', while Metropolitan Life Insurance Company, principal defendant in that court, will be referred to merely as 'insurer'.

As plaintiff's present appeal has been perfected from the trial court's judgment dismissing the action, as a result of its having sustained the insurer's demurrers to plaintiff's amended petition, and plaintiff's election to stand on said pleadings, the allegations of her amended petition are quoted, as follows:

'That Electra M. Scott is the surviving wife of Ernest R. Scott, deceased, and was appointed as Executrix of his estate by the County Court of Tulsa County, Oklahoma, on or about the 13th day of October, 1960; that Ernest R. Scott died a resident of Tulsa County, Oklahoma, on or about August 21, 1960.

'That the defendant, Metropolitan Life Insurance Company, is a foreign corporation organized under the laws of the State of New York and authorized to do business as an insurance company in the State of Oklahoma, and service of process can be had against the same by serving the Oklahoma State Insurance Commissioner.

'That the defendant, Knotts Rambler Ranch, Inc., is an Oklahoma corporation with its principal place of business at 2802 East 11th Street, Tulsa, Oklahoma.

'That on or about March 21, 1960, Ernest R. Scott and Electra M. Scott, individually, purchased a certain 1959 Chrysler Imperial automobile from Knotts Rambler Ranch, Inc., in Tulsa, Oklahoma, agreeing to pay therefor the sum of $4,892.00. That toward such purchase price, the Scotts paid a $1,000.00 cash payment and further signed a promissory note in the amount of $4,877.10, which included the unpaid balance, plus a finance charge in the amount of $622.17 and a charge of insurance in the amount of $362.93.

'Knotts Rambler Ranch, Inc., thereafter discounted the said note to the Utica Square National Bank of Tulsa, Oklahoma, and received a sum of money unknown to the plaintiffs for assignment thereof.

'The Scotts also executed a mortgage to secure the said indebtedness, a copy of which is attached as Exhibit A to the original petition herein and made a part of this petition the same as if fully set forth.

'Prior to the death of Ernest R. Scott, the Scotts paid the sum of $487.71 toward the unpaid balance of $4,877.10, leaving a balance of $4,389.39 at the date of death.

'That prior to purchase of the said automobile and on or about November 1, 1959, Knotts Rambler Ranch, Inc. was issued a certain creditors group life insurance policy, No. 19533-G, by the defendant Metropolitan Life Insurance Company, a copy of which is attached as Exhibit B (in 5 pages) to the original petition herein and made a part hereof as fully as if set forth again.

'That by the terms of the purchase agreement between the Scotts and Knotts Rambler Ranch, Inc., which agreement was oral, Knotts Rambler Ranch, Inc., represented and promised Ernest R. Scott and Electra M. Scott that they would procure insurance in the amount of the indebtedness, on a declining basis, against the death of either Ernest R. Scott or Electra M. Scott and represented and promised that the said insurance policy, Exhibit B, extended to and insured against the death of Ernest R. Scott or Electra M. Scott, for which coverage the Scotts agreed to pay the sum of $121.95, which amount was included in the total of $362.93 charged for insurance as aforesaid.

'That on or about May 18, 1960, Knotts Rambler Ranch, Inc. forwarded or paid to Metropolitan Life Insurance Company the sum of $54.33, which represented the premium due on the indebtedness owing by the Scotts, or $4,877.10, by the terms of Section 6(B) of the policy. That accompanying said remittance was a statement showing the amount of the insured balance and the premium due and remitted, which statement is attached as Exhibit C to the original petition herein and made a part hereof by reference as fully as if set forth again.

'That the difference between the total amount of $121.95 charged by Knotts Rambler Ranch, Inc., to the Scotts and the $54.33 premium remitted to Metropolitan Life Insurance Company, or $67.72, was retained by Knotts Rambler Ranch, Inc., as commission, fee or profit.

'That by the terms of the said creditors group life insurance policy, it was provided that no person originally indebted to Knotts Rambler Ranch, Inc. in excess of $3,500.00 was insured and that the total amount of insurance on any debtor covered by the policy was to be the lesser of the total amount of his indebtedness or...