State Mut. Life Assur. Co. of Worchester, Mass. v. Dischinger, 43528
| Decision Date | 14 December 1953 |
| Docket Number | No. 1,No. 43528,43528,1 |
| Citation | 263 S.W.2d 394 |
| Parties | STATE MUT. LIFE ASSUR. CO. OF WORCHESTER, MASS. v. DISCHINGER et al |
| Court | Missouri Supreme Court |
Douglas H. Jones, James J. Connell and Douglas L. C. Jones, St. Louis, for appellant Violet J. Dischinger.
Dubail & Judge, St. Louis, for appellant Marie B. Dischinger.
James C. Jones, Jr., Franklin Ferriss, Jones, Hocker, Gladney & Grand, St. Louis, for respondent.
On March 18, 1948, Carl F. Dischinger (hereinafter referred to as the insured) instituted an action against the State Mutual Life Assurance Company of Worchester, Massachusetts (hereinafter referred to as the insurer, respondent) upon three 'twenty premium payment life insurance policies,' on all of which policies the premiums had been fully paid. The insured asked (1) for an adjudication of the rights of the respective parties in and to the said policies; (2) to recover a money judgment for certain disability benefits alleged to have accrued under the terms of the policies by reason of the insured's total and permanent disability from and after March 13, 1946; (3) for the issuance of new policies to the insured, but payable on death to Violet J. Dischinger, his second wife, rather than to Marie B. Dischinger, his first wife, from whom he had been divorced; and (4) for penalty and attorney fees for vexatious refusal of the insurer to pay the amounts alleged to be due the insured as disability benefits under the policies and for vexatious refusal to change the named beneficiary in each of said policies.
The said policies had been issued on the life of the insured in August 1922 and provided for death benefits in the sum of $2,000, $3,000 and $4,000, respectively, and in the event of permanent and total disability for certain disability benefits. All of the said policies had been pledged as collateral security for policy loans obtained by the insured from the insurer. The insurer had theretofore (under a provision of the policy loan agreement) undertaken to cancel the second or $3,000 policy on July 24, 1946 and had undertaken to cancel the first or $2,000 policy on August 2, 1946 both of them on the ground that on the respective dates the said policy loans with interest had equalled or exceeded the cash surrender value of the respective policies. Prior to such cancellation, the insurer had given due notice and the insured had failed to pay the required interest necessary to keep the policies and loans in force and effect. The requests for change of beneficiary in the said policies had been refused by the insurer because the request for such chgange was not accompanied by said policies.
After the insurer's answer had been filed to the insured's action, Marie B. Dischinger was, by consent, added as a party defendant and she appeared and filed an answer and cross-bill asking judgment that the said policies or any new policies issued to the insured be delivered to her as security for payment of delinquent installments under a judgment for divorce and for the support of her child, as entered in her favor and against the insured on July 6, 1942.
Thereafter, the death of the insured on April 27, 1949 was suggested and, acting under the refusal of letters of administration on his estate, Violet J. Dischinger, his widow, appeared and was substituted is plaintiff and the pleadings were amended accordingly.
Thereafter, on June 20, 1949, the insurer, the defendant in the proir action, instituted an action in interpleader in the said Circuit Court of the City of St. Louis against both Marie B. Dischinger and Violet J. Dischinger, in which action, the insurer, as plaintiff, admitted that a net amount, to wit, $1,744.34 (after the payment of the policy loan and interest) was due and payable as death benefits under the $4,000 policy issued to the insured. The insurer sought an order permitting the payment of the asid sum into court; and that defendants, the widow of deceased and his divorced wife, be required to interplead therefor, and that the insurer be discharged.
Violet J. Dischinger answered setting forth her claims to the fund and filed a petition asking affirmative relief, to wit, for the recovery of certain disability benefits claimed to be due under the $4,000 policy, and she further sought to recover the net amount of death benefits due and payable on the other two policies (after the payment of the policy loans and interest) and also disability benefits alleged to be due and payable under said policies. Defendant, Marie B. Dischinger, also filed an answer and cross-bill claiming the proceeds of the policies as the beneficiary named therein and on the ground that the policies had been delivered to her (at the time of her divorce from the insured) with the understanding and agreement that they and the proceeds thereof were to be and remain her property. Therefter, by stipulation of the parties, the two pending causes were consolidated and proceeded under the style of the interpleader action and the issues for decision were stipulated at a pretrial conference.
Thereafter, a joint answer and counterclaim was filed on behalf of both defendants (claimants) together with a stipulation as to the disposition (as between them) of such proceeds of the policies as might be recovered.
The necessary facts will be subsequently stated, but the theory upon which the defendants-appellants (claimants) proceeded was that the insured became totally and permanently disabled on March 13, 1946, and remained so until the date of his death on April 27, 1949; that by reason of an oral notice to Eugene Reilly, an agent of the insurer, the insurer received actual notice of such permanent and total disability on May 15, 1946 and formal notice of claim on July 22, 1946; that, upon such notice, liability commenced as of March 13, 1946; that a total of $90 per month of total disability benefits under the terms of the policies 'became due with the date of disability'; that the policies provided that unpaid interest on policy loans should be deducted from disability payments; that the insurer should have credited the insured with the accrued disability benefits in order to discharge the interest due on the policy loans; that the insurer was indebted to the insured in the sum of $360 on June 24, 1946 and to an even larger amount on August 2, 1946; that, therefore, the insurer had no right to cancel the $3,000 policy on June 24, 1946, or the $2,000 policy on August 2, 1946,; and that disability benefits continued to accrue under all of the policies until the death of the insured, when death benefits also became due and payable.
At the trial, the right of the insurer to interplead the net proceeds of the death benefits under the $4,000 policy (after the payment of the policy loan and interest) was conceded. It was agreed by all parties that the plaintiff-insurer be allowed the sum of $200 as attorney fees for interpleading the $1,744.34 fund. The cause of action at law involving the claims of the defendants was tried to the court without the aid of a jury and upon issues theretofore stipulated at a pre-trial conference. The stipulated issues were as follows; (1) Was the verbal notice of insured's disability given to Eugene Reilly, an agent for the State Mutual Life Assurance Company, sufficient compliance by the insured of the provisions calling for due proof of disability? (2) Was Eugene Reilly such an agent, that notice to him would be a sufficient compliance with the due proof provisions of the policies? (3) Assuming proper and sufficient due proof of disability was made, when would disability benefits begin to accrue? (4) Must interest due on the loans be paid out of disability benefits only? (5) The issue of possible statutory penalties for vexatious refusal to pay.
The trial court found the issues for the insurer and against the defendants and held:
(1) That, under the terms of the policies, the furnishing of due proof of the total and permanent disability of the insured was a condition precedent to any obligation on the part of the insurer to pay the insured disability benefits; that due proof was required before any disability benefits accrued under the policy provisions; and that there was a difference between notice of a claim and due proof of the loss insured against;
(2) That the record showed that Eugene Reilly was a mere soliciting agent for the insurer; that it failed to show Reilly was a general agent for the insurer and entitled to receive notice; that notice of a claim was not due proof of the loss insured against; that actual notice was not a compliance with the terms of the policies; that the record did not show acts and conduct to make it apparent to the insured that Reilly was a general agent for the insurer or entitled to waive the due proof provisions of the policy; that due proof of disability was not waived; and that the policy provisions prohibited modification by an agent;
(3) That, regardless of the court's findings on points one and two, yet under the provisions of the policies, payments of disability benefits in any case would not have begun in time to have prevented the termination of the policies on July 24 and August 2, 1946, when the indebtedness equaled or exceeded the cash surrender value of the respective policies because, under the policy provisions, disability benefits did not become due or payable until six months after the receipt of due proof of such permanent total disability; and (4) That the provision in the policies that disability benefits should be applied in liquidation of interest on policy loans did not prevent the operation of the provision in the policy loan certificates calling for the termination of the insurance, when the outstanding indebtedness against the respective policies equaled or exceeded the cash surrender value; and that the provision for the...
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