Sorenson v. National Life Ins. Co.

• Decision Date: 31 October 1972
• Docket Number: No. 211,211
• Citation: 56 Wis.2d 92,201 N.W.2d 510,68 A.L.R.3d 354
• Parties: , 68 A.L.R.3d 354 Edmund D. SORENSON et al., Appellants, v. NATIONAL LIFE INSURANCE COMPANY, a foreign corporation, Respondent.
• Court: Wisconsin Supreme Court

Page 510

201 N.W.2d 510

56 Wis.2d 92, 68 A.L.R.3d 354

Edmund D. SORENSON et al., Appellants, v. NATIONAL LIFE INSURANCE COMPANY, a foreign corporation, Respondent.

No. 211.

Supreme Court of Wisconsin.

Oct. 31, 1972.

Godfrey, Neshek & Worth, Richard A. Howarth, Jr., Elkhorn, for appellants.

Boardman, Suhr, Curry & Field, Madison, for respondent.

HANLEY, Justice.

The sole issue on this appeal is whether the assignee of a life insurance policy is entitled to receive notice of premiums due or lapse notices, where such notice is not specifically required by statute or under the terms of the policy or assignment.

In determining the sufficiency of a complaint to successfully withstand a demurrer, all allegations stated in the complaint must be taken as true; and it should be given a liberal construction with a view to permit all reasonable inferences to be drawn in favor of finding that a valid cause of action has been stated. Jezo v. Jezo (1963), 19 Wis.2d 78, 119 N.W.2d 471. Even when this complaint is so viewed, the appellants have failed to set forth facts sufficient to state a cause of action.

The general rule regarding the duty of an insurance company to send premium or lapse notices to the assignee of an insurance policy is set forth with clarity in 5 Couch, Insurance 2d, p. 677, sec. 30.143. It is there stated:

'In the absence of any statute or contract of the insurer to the contrary or conduct of the insurer giving rise to a duty to notify the assignee, there is no duty on the insurer to notify an assignee of the policy of premiums or assessments due thereon. . . .'

That this is the prevailing view is evidenced by the numerous decisions in which courts have so held. ¹ Both parties are in substantial agreement that no Wisconsin statute is applicable to the facts of this case, or that there is an explicit provision in either the policy or the assignment which calls for premium or lapse notices to be sent to the assignees. The appellants contend, however, that by virtue of the fact that the assignor-insured was entitled to notice of premium and lapse notices, this entitlement was transferred to them by certain language contained in the assignment. They further contend that by the totality of its conduct, National consented to this assignment and cannot now seek to avoid its obligation to the assignees of the policy.

Because of appellants' contentions, a review of certain portions of the policy and assignment is in order.

Question No. 25 of the application for insurance, which by specific provision was made a part of the contract of insurance, asked: 'To whom shall premium notices be sent?' Following the question, and in smaller print, appeared the words: 'Insured,' 'Owner,' and 'Applicant,' with a small box provided directly behind each. The box behind the word 'Insured' was checked; and, in a space provided below, the insured, Ralph R. Stowe, listed his address. The trial court found that the insured was entitled to notice; and the finding is not disputed.

Paragraph D of the assignment states that it is made as collateral security for all liabilities owed to the assignees 'either now existing or that may hereafter arise in the ordinary course of business between' the assignors and the assignees. By the terms of the assignment, Stowe assigned to appellants 'all claims, options, privileges, rights, title and interest' which he had in the policy, except his right to collect disability benefitis; his right to change the beneficiary; and his right to elect an optional mode of settlement.

Under Paragraph E, the assignees agreed that they 'will not exercise either the right to surrender the Policy' except to pay premiums, or their 'right to obtain policy loans from the Insurer, until there has been default in any of the Liabilities or a failure to pay any premium when due.'

Appellants particularly rely on the language of Paragraph G, which states:

'The Assignee shall be under no obligation to pay any premium, or the principal of or interest on any loans or advances on the Policy whether or not obtained by the Assignee, or any other charges on the Policy, but any such amounts so paid by the Assignee from its own funds, shall become a part of the Liabilities hereby secured, shall be due immediately, and shall draw interest at a rate fixed by the Assignee from time to time not exceeding 6% per annum.' (Emphasis supplied.)

Appellants' first argument that because the assignment transferred to them all 'claims, options, privileges, rights, title and interest,' they were thereby entitled to lapse notices, is based on their misconception that the assignment here involved was absolute and unconditional, rather than as collateral security for outstanding debts. In support of their position, appellants cite McQuillan v. Mutual Reserve Fund Life Assn. (1902), 112 Wis. 665, 87 N.W. 1069, 88 N.W. 925. In McQuillan, the insured was a public charge; and he assigned his life insurance policy to the city of Eau Claire to...