Sec. Life Ins. Co. of America v. Gottman

• Decision Date: 20 April 1927
• Docket Number: 12624.,Nos. 12575,s. 12575
• Citation: 87 Ind.App. 388,156 N.E. 173
• Parties: SECURITY LIFE INS. CO. OF AMERICA v. GOTTMAN.
• Court: Indiana Appellate Court

87 Ind.App. 388

156 N.E. 173

SECURITY LIFE INS. CO. OF AMERICA

v.GOTTMAN.

Nos. 12575, 12624.

Appellate Court of Indiana, in Banc.

April 20, 1927.

Appeal from Superior Court, Vanderburgh County; Edgar Durre, Judge.

Action by Julia H. Gottman against the Security Life Insurance Company of America. Judgment for plaintiff, and defendant appeals. Affirmed.

Bull, Lytton & Olson, of Chicago, Ill., and Brill & Brady, of Evansville, for appellant.

Winfield K. Denton, of Evansville, for appellee.

McMAHAN, C. J.

On October 21, 1908, appellant issued and delivered to Charles V. Gottman two policies of insurance, insuringthe life of the latter, said policies being numbered 15858 and 15859. Each policy was for $5,000, and named appellee, the then wife of the insured, as beneficiary. The policies were identical in form. The annual premium on each was $177.25, payable October 21 of each year, subject to a grace period of 31 days. One half of the first annual premium for each policy was paid in cash. The other half was paid by a note payable on maturity of and out of the proceeds of the policies. The second annual premium on each policy was also paid one-half cash and balance by note. Subsequent premiums were paid in cash up to and including the premiums due October 21, 1912. About the last of September, 1913, appellant notified the insured that the next premiums would become due October 21, and on October 31, appellant wrote the insured a letter calling attention to this matter and told the insured if he could not comply with the conditions of the policies to write appellant. This was followed by a letter of the insured of November 14, saying he would not be able to pay the premiums, and asking appellant to mail him two notes each for $177.25, due six and nine months with 5 per cent. interest. On November 18, appellant sent the notes, each being dated October 21, 1913, and which were signed by the insured and returned to appellant November 19, and called for 5 per cent. interest. The inference is that two blank notes when mailed by appellant called for 6 per cent. interest, and that the rate of interest was changed from 6 per cent. to 5 per cent. by the insured before he signed and returned the notes, and that appellant did not notice this change and did not discover it until after it had written the insured a letter dated April 8, 1914, notifying him the note due April 21 had been sent to an Evansville bank for collection, and stating that the amount due was $182.56, $5.31 being the amount of interest calculated at 6 per cent. The insured replied stating that it would be impossible for him to pay the note at that time but that he would forward interest on same in the sum of $4.43 by the 20th of the month. On April 13, appellant again wrote the insured saying the note bore 6 per cent. interest and not 5 per cent., and that on receipt of $5.31 covering interest it would be glad to extend the note three months. On April 20, the insured sent appellant a check for $4.43 for the interest, calling attention to his letters of November 14, and 18, 1913, in the first of which he asked appellant to mail him two notes drawing 5 per cent. interest and in the second where he said he was sending the notes to appellant, and stated the rate of interest was 5 per cent.

Appellant accepted the check for $4.43 in full for the interest, and on April 22 so wrote the insured, telling him he must pay interest at 6 per cent. for extension of three months. The insured made no reply to this last letter, and nothing transpired until July 10, 1914, when appellant wrote the insured stating the two notes would be due July 21, with a statement of the amount due on each note. The interest on the six-month note was stated to be $2.66, and on the nine-month note $7.97, the interest being calculated at 6 per cent. on the first note from April 21, and on the second note from date. On July 18, the insured wrote appellant he could not take the notes up at that time, and inclosed a check for $8.87, for interest, saying he expected to take the notes up in a few weeks. It will be noted that the amount remitted for interest was the correct amount if calculated at the rate of 5 per cent., but was $1.76 less than if calculated at 6 per cent. as appellant had figured it. Appellant on July 21 replied to the letter of the insured dated July 18, inclosing the check for $8.87, acknowledging receipt of the $8.87, and saying it would be glad to extend notes to August 21, but must require interest to be paid at rate of 6 per cent., and saying extension would be granted upon receipt of check for $1.76, covering difference in amount of interest. In a letter dated August 19, and mailed on the evening of August 20, the insured wrote appellant he could not pay the notes then but thought he could pay both of them not later than October 21. No reference was made in this letter to the $1.76 which appellant had requested be remitted to cover difference in amount of interest. Appellant on August 20 wrote the insured a letter calling attention to the failure of the insured to send the $1.76, and returning the check for $8.87, with the statement that the policies had lapsed because of the failure to send amount to take up notes prior to July 21, or a sufficient amount to cover interest to extend them, and inclosing blank application for reinstatement to policies.

Prior to this time nothing had been said by appellant intimating the policies had lapsed, or had been or would be forfeited. The correspondence up to this time related to the payment of the notes, the interest thereon, and extension of time for payment of the notes.

On August 24, appellant in reply to a letter from the insured dated August 22, says it was an oversight on its part in approving the notes with interest changed from 6 per cent. to 5 per cent., and referring to the six-month note which was given in connection with policy No. 15858, and also said the letter of July 22 specifically mentioned that the extension would be granted only on basis of 6 per cent. interest, and that the extra 1 per cent. interest on that note from April 21 to July 21 amounted to 44 cents, which the insured was asked to remit, with the statement giving the insured until close of business on August 28 within which this amount must be received by appellant or it would declare the policy void except as to the provision for extended insurance. And referring to the other note which had been given in connection with policy No. 15859, and which became due by its terms July 21, the letter stated appellant would accept interest payment on that note provided the insured agreed to pay 6 per cent. interest for the period of extension, and that extension would be made to September 10 provided the insured advised appellant of the acceptance of the 6 per cent. rate, such advice to reach appellant before the close of business on August 28. No notice or statement was contained in this letter that policy...