Seymore v. Greater Mississippi Life Ins. Co.

• Decision Date: 30 August 1978
• Docket Number: No. 50453,50453
• Parties: Kay McGarrh SEYMORE, Administratrix of the Estate of Augustus K. McGarrh v. GREATER MISSISSIPPI LIFE INSURANCE COMPANY.
• Court: Mississippi Supreme Court

Page 611

362 So.2d 611

Kay McGarrh SEYMORE, Administratrix of the Estate of Augustus K. McGarrh v. GREATER MISSISSIPPI LIFE INSURANCE COMPANY.

No. 50453.

Supreme Court of Mississippi.

Aug. 30, 1978.

Rehearing Denied Sept. 20, 1978.

Jacobs, Griffith, Pearson, Eddins & Povall, John Kirkham Povall, Cleveland, for appellant.

Alexander & Johnston, Robert G. Johnston, Cleveland, for appellee.

Before ROBERTSON, SUGG and COFER, JJ.

ROBERTSON, Presiding Justice, for the Court.

On March 2, 1976, Kay McGarrh Seymore, Administratrix of the estate of Augustus K. McGarrh, deceased, filed suit against Greater Mississippi Life Insurance Company in the Circuit Court of the First Judicial District of Bolivar County, Mississippi, to recover the sum of $7,500, which plaintiff alleged to be the balance due on a $15,000 certificate of group credit life insurance issued to her father, A. K. McGarrh.

Plaintiff alleged that a $2,500 certificate of group credit life insurance was purchased by McGarrh on August 11, 1975, from defendant's agent, First National Bank of Rosedale, when he borrowed an additional $2,500 from the Bank. McGarrh purchased $15,000 of group credit life insurance from the defendant on December 5, 1975. The certificate of insurance was issued by the Bank through its president, H. E. McCaslin, who had continuously acted as the agent of defendant since June 20, 1970, the date of the master policy contract between the Bank of Beulah (predecessor to the First National Bank) and defendant. The premium for this level term (12 months) non-reducing $15,000 certificate of insurance was $300, of which premium $150 was deposited to the account of defendant in the First National Bank of Rosedale on December 9, 1975, and the remaining $150 was retained by the Bank as its commission for selling the insurance.

McGarrh died on December 10, 1975, at the age of 49. Proofs of death on the two McGarrh certificates were executed by the Bank and sent to the defendant on December 17, 1975.

On February 6, 1976, defendant wrote H. E. McCaslin, president of First National Bank, Rosedale, as follows:

"On August 11, 1975, you insured Mr. A. K. McGarrh for $2,500 level coverage on Certificate # 95512. Mr. McGarrh died on December 10, 1975, and we have determined that the insurance on this certificate is payable.

On December 15, 1975, we received Certificate # 107351 for $15,000 level coverage insurance to be effective December 5, 1975. This second certificate is, of course, $7,500 in excess of the maximum coverage provided in your Credit Life Insurance Master Policy. Since our investigation reveals that Mr. McGarrh was probably an acceptable Credit Life Insurance risk on the date of his loan, we have determined that $7,500 of this coverage may be accepted and liability assumed for that amount as a claim resulting from Mr. McGarrh's death on December 10. The balance of the coverage on this second certificate may not be accepted and is, therefore, rejected according to the terms of the master policy.

Enclosed is our check in the amount of $10,075 representing payment of the claim under certificate # 95512, payment of the balance of our maximum liability under Certificate # 107351 and a refund of our portion of the premium on the excess insurance written on certificate # 107351.

Mr. McGarrh's account should, of course, be credited for an additional $75.00 representing a refund by the bank of the commissions retained on the excess insurance."

The plaintiff refused to accept this settlement and brought suit for $7500. Defendant answered that plaintiff stated no cause of action because the two certificates of insurance issued McGarrh totaled $17,500, and the master policy contract between the defendant and the Bank provided:

"SCHEDULE

1. Ages 18 through 54, inclusive, the amount of insurance not to exceed $10,000, terms may be extended through 60 months."

Defendant further answered that no provision of the master policy contract could be orally changed, modified or waived because the contract provided, under the heading "General Provisions":

"MODIFICATION: This Policy may be modified or amended at any time, subject to the laws of the jurisdiction in which it is delivered, without the consent of the Debtors insured hereunder, by written agreement between the Creditor and the Company.

"AUTHORITY: Only the President, a Vice-President, the Secretary or an Assistant Secretary of the Company has the power to change, modify or waive the provisions of this Policy and then only in writing."

After a full trial the court dismissed the jury, finding "that there are no issues or questions of fact for decision by the jury," and took the matter under advisement for decision in vacation. On June 23, 1977, the court, in a letter opinion, said:

"Among other things, the terms of the policy provide: . . . 'Provided, however, that such amount of insurance shall not exceed . . . the original principal amount of the borrower's note covering the loan in connection with which insurance is effective,' "

and then proceeded to find that, inasmuch as the amount of McGarrh's indebtedness to the Bank at the time of his death was $10,790, his estate was only entitled to recover $790 more from the defendant. The plaintiff thereupon perfected an appeal to this Court.

The appellant assigns as error:

The lower court committed reversible error in its findings when it limited Appellant's recovery by reliance on an issue outside the scope of and unresponsive to the pleadings.

Appellant contends in her brief that the lower court could not base its decision on an affirmative defense not raised by the appellee, not within the framework of the pleadings, and mentioned for the first time by the court itself after the trial had been completed and both sides had rested.

The liability ledger (two sheets, single-spaced) of the First National Bank of Rosedale, introduced without objection, listed a continuous series of loans to A. K. McGarrh beginning September 21, 1973. Listed also were payments on these loans beginning October 8, 1973. The amount of his indebtedness to the bank varied from a high of $27,126 on August...