Stark v. John Hancock Mutual Life Insurance Company of Boston

• Decision Date: 16 July 1913
• Parties: OTTMAR GEORGE STARK, Respondent, v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY OF BOSTON, MASSACHUSETTS, Appellant
• Court: Missouri Court of Appeals

159 S.W. 758

176 Mo.App. 574

OTTMAR GEORGE STARK, Respondent, v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY OF BOSTON, MASSACHUSETTS, Appellant

Court of Appeals of Missouri, St. Louis

July 16, 1913

Appeal from St. Louis City Circuit Court.--Hon. George H. Shields Judge.

AFFIRMED.

Judgment affirmed.

Leahy Saunders & Barth and Block & Sullivan for appellant.

(1) Policies of insurance, like other contracts, are to be interpreted as they read. Staluth v. Guaranty Co., 81 Mo.App. 632; Hoover v. Ins. Co., 93 Mo.App. 118; Carr v. Ins. Co., 100 Mo.App. 609; Webb v. Ins Co., 134 Mo.App. 580. (2) And all provisions thereof are to be given effect. Webb v. Ins. Co., supra; Lewis v. Ins. Co., 3 Mo.App. 372. (3) Nonpayment of premiums is a forfeiture of all rights except as the policy otherwise provides, and except as otherwise provided by statute. Insurance Co. v. Statham, 93 U.S. 31; Klein v. Ins. Co., 104 U.S. 91. (4) The nonexistence of any indebtedness against the policy, at the time of lapse, was a condition precedent to the paid-up policy contracted for. Hawthorne v. Ins. Co., 5 Mo.App. 74; 25 Cyc. 854; Whitaker v. Ins. Co., 133 Mo.App. 670; Jargoe v. Ins. Co., 123 Ky. Law Rep. 516; Ins. Co. v. Wieshes, 92 Tex. 470; Ins. Co. v. Buxer, 62 Ohio St. 385; Haynes v. Ins. Co., 124 N.Y.S. 797. (5) The plaintiff had the benefit of the reserve on his policy, less the indebtedness, in extended insurance. Capp v. Ins. Co., 117 Mo.App. 535. (6) The agent Raleigh had no power to bind the defendant by his construction of the contract. Thompson v. Ins. Co., 169 Mo. 23; Ins. Co. v. Wood, 32 Ky. Law Rep. 1123; Prine v. Ins. Co., 54 So. 548. (7) His statements were inadmissible and could not be the basis of an estoppel even though acted on, because made outside the scope of his authority. Lumber Co. v. Kreeger, 52 Mo.App. 422. (8) Unless plaintiff relied on the statement, to his hurt, there could be no estoppel, even though the statement was authorized. Blodgett v. Perry, 97 Mo. 272; Shields v. McClure, 75 Mo.App. 641; Trust Co. v. Horn, 83 Mo.App. 120.

Jones, Hocker, Hawes & Angert and Vincent L. Boisaubin for respondent.

(1) The parenthetical provision "there being then no existing indebtedness as aforesaid," properly construed, operated as merely a lien on any amount payable under the policy; that is, the indebtedness, if any, is simply to be deducted from the sum agreed upon as paid-up insurance, because: (a) This construction is clearly in accord with the apparent intent of the parties as shown by the whole instrument. Renshaw v. Ins. Co., 103 Mo. 595; St. Louis v. Railroad, 228 Mo. 735. (b) In case of doubt the provisions of a policy of insurance are to be liberally construed, against the insurer and in favor of the insured. Paper Stk. Co. v. Fid. & Cas. Co., 104 Mo.App. 157; Renshaw v. Ins. Co., 103 Mo. 595; Burnett v. Ins. Co., 68 Mo.App. 343; Ethington v. Ins. Co., 55 Mo.App. 129; Hale v. Ins. Co., 46 Mo. 508; Walton v. Ins. Co., 162 Mo.App. 316, 329; Life Ins. Co. v. Bouldin, 56 So. 609; LaForce v. Ins. Co., 43 Mo.App. 530. (c) It is the only construction consistent with the Revised Statutes of Missouri for 1909, secs. 6947 and 6949, relating to paid-up insurance. If appellant's construction be allowed, to-wit, that the right to paid-up insurance obtains only in the event that no indebtedness exists at the time of default, then the provision is for paid-up insurance on condition and is in contravention of the statutes and is void. Secs. 6947, 6949, R. S. 1909; Cravens v. Ins. Co., 148 Mo. 583; Whittaker v. Ins. Co., 133 Mo.App. 664; Paschedag v. Ins. Co., 155 Mo.App. 185; Assur. Soc. v. Clements, 140 U.S. 226. (d) If the phrase be construed as a condition at all, it is a condition subsequent which would work a forfeiture and provide a penalty where none is expressly stated. Forfeitures and penalties are not favored and will not be tolerated unless clearly and expressly provided for. They will never be imposed by construction. McFarland v. Accident Assn., 124 Mo. 204; Foglesong v. Modern Brotherhood, 121 Mo.App. 548; Ins. Co. v. Bank, 78 S.W. 1066; Ins. Co. v. Grigsby, 10 Bush (Ky.), 310; Ins. Co. v. Fort's Admr., 82 Ky. 269; Ins. Co. v. Curry, 72 S.W. 736; Cowles v. Ins. Co., 63 N.H. 300; Ohde v. Ins. Co., 40 Ia. 357; Bruce v. Ins. Co., 58 Vt. 253; Eddy v. Ins. Co., 65 N.H. 27; Matthews v. Modern Woodmen, 236 Mo. 326; Mears v. Maryland Cas. Co., 162 Mo.App. 178. (e) Contracts of insurance must be given a reasonable construction. Appellant's construction is unreasonable since it would make the provision for paid-up insurance utterly nugatory in the event of the existence of any indebtedness, no matter how small. Gropper v. Ins. Co., 135 N.Y.S. 1028; St. Louis v. Railroad, 228 Mo. 712, 736; Lumber Co. v. Dent, 151 Mo.App. 614, 618; Zinc & Lead Co. v. Ins. Co., 152 Mo.App. 332. (2) The parties themselves so understood the language and construed the policy. When a contract is susceptible of the interpretation given it by the parties thereto, courts will not tolerate a rule of construction which might make of the policy a snare and trap for the unwary, but should adopt the parties' own construction. LaForce v. Ins. Co., 43 Mo.App. 530; Matthews v. Modern Woodmen, 236 Mo. 343; Packwaukee v. Bridge Co., 183 F. 359; Gas Light Co. v. St. Louis, 46 Mo. 121; Fuller v. Fid. & Cas. Co., 94 Mo.App. 390; Tetley v. McElmurry, 201 Mo. 382. (3) Raleigh was the agent of the insurer and had implied power to construe the policy. Nickell v. Ins. Co., 144 Mo. 426; Jackson v. Ins. Co., 27 Mo.App. 73; Campbell v. International Life, 4 Bosw. 310; James v. Mutual Reserve, 148 Mo. 11; Richards on Insurance (Ed. of 1911), sec. 168. (4) The letters of the agent introduced in evidence were properly admitted. They did not vary the contract but simply construed or explained doubtful terms therein. Hotchkiss v. Ins. Co., 76 Wis. 269; Ins. Co. v. Burnett, 136 Ill.App. 187; Gropper v. Ins. Co., 135 N.Y.S. 1028; Ins Co. v. Loan Assn., 43 N. J. L. 652. (5) The company, through the letters of its agent Raleigh, waived its right, if any it had, to claim that the policy provided for paid-up insurance only in the event that no indebtedness whatsoever existed; and is estopped from now asserting such a claim. Burdick v. Life Assn., 77 Mo.App. 629; James v. Life Assn., 148 Mo. 1; McMaster v. Ins. Co., 78 F. 33.

ALLEN, J. Reynolds, P. J., and Nortoni, J., concur.

OPINION

ALLEN, J.

This is an action on a policy of life insurance. Plaintiff recovered and defendant prosecutes the appeal.

On September 17, 1900, the defendant issued to one Albert E. Mumbrauer a twenty-payment life policy of insurance for three thousand dollars, payable to his wife, Nellie Mumbrauer, in consideration of an annual premium to be paid it of $ 86.10. On March 18, 1904, the insured and his wife, with the consent of defendant, for value received, assigned and transferred all of their interest in the policy to the plaintiff. It appears that seven annual premiums were paid, either by the insured or out of loans made by the company thereon. The eighth annual premium, which was due September 17, 1907, was not paid. At the time of said default in the payment of premiums, there was due the company for prior loans on the policy $ 216.56. The insured died January 29, 1910. On March 29, 1910, due notice and proofs of death of the insured were furnished defendant, and plaintiff demanded of it the payment of the sum of $ 945, the same being the amount of the paid-up insurance payable under the terms of the policy, as claimed by plaintiff, less the said indebtedness of the insured to the defendant of $ 216.56. The cause was tried before the court, without a jury, upon the pleadings and an agreed statement of facts, which we need not set out, together with certain letters offered by plaintiff and admitted in evidence. Plaintiff had judgment for $ 728.44, being the $ 945 paid-up insurance above mentioned, less the $ 216.56 indebtedness of the insured, with interest from March 29, 1912, the day upon which proofs of death of the insured were furnished, and demand for payment made. From this judgment the defendant has appealed to this court.

The question involved in the appeal relates to the construction to be placed upon that provision of the policy providing for paid-up insurance, upon which plaintiff's right to recover is predicated. The portions of the policy here pertinent are as follows:

"In consideration of the representations and statements made in the application for this policy . . . and of the premium of eighty-six and 10/100 dollars, to be paid on or before the seventeenth day of September in each and every year. . . . The John Hancock Mutual Life Insurance Company insures the life of Albert E. Mumbrauer of Hermann, Missouri, in the amount of three thousand dollars, for the benefit of his wife, Nellie Mumbrauer, provided she survives him.

"And the said company promises to pay at its home office, in Boston, said amount to Nellie Mumbrauer if she survives him, otherwise to his executors or administrators, upon satisfactory proof of the death of the said insured, deducting therefrom any indebtedness to this company of the other parties to this contract, and the premiums, if any, for the balance of the policy year, subject to the following conditions:

"In case any subsequent premium is not paid when due, this policy shall become void except as hereinafter agreed. If the third or subsequent annual premium or installment thereon shall not be paid when due, the company will (there being then no existing indebtedness as aforesaid) after payment of premiums for . . . seven full years . . . without any action on the part of the insured, continue this policy as paid-up insurance for . . . $ 945."

The position of appel...