Stewart v. Continental Cas. Co.

• Decision Date: 24 May 1929
• Citation: 17 S.W.2d 745,229 Ky. 634
• Parties: STEWART v. CONTINENTAL CASUALTY CO.
• Court: Kentucky Court of Appeals

17 S.W.2d 745

229 Ky. 634

STEWART v. CONTINENTAL CASUALTY CO.

Court of Appeals of Kentucky

May 24, 1929

Appeal from Circuit Court, Greenup County.

Action by Elizabeth Stewart against the Continental Casualty Company. Judgment for defendant, and plaintiff appeals. Affirmed.

Allan D. Cole, of Maysville, and J. D. Atkinson, of Greenup, for appellant.

Thomas E. Nickel, of Greenup, for appellee.

McCANDLESS C.J.

On November 21, 1917, the Continental Casualty Company issued an insurance policy of $1,000 on the life of Bastin Stewart and payable to Elizabeth Stewart as beneficiary. Stewart was an employee of the Chesapeake & Ohio Railway Company, and in the application the following stipulation appears: "I agree to pay for my said policy an annual premium of $44.00 in five installments of $8.80 each. If paymaster's order is given to provide for the payment of these installments I agree to pay them as therein provided and do hereby make such order a part of my contract with the company. * * * The amount of my said premium is $44.00 and I have agreed to pay in five installments as follows: $8.80 from my wages for the month of December 1917; $8.80 from my wages for the month of January 1918; $8.80 from my wages for the month of February 1918 $8.80 from my wages for the month of March 1918; $8.80 from my wages for the month of April 1918."

Simultaneously with the application insured executed a paymaster's order to his employer which provided, inter alia: "This order is given to provide for the premium thereon which you are authorized and requested to take from my wages in installments as hereinafter designated, pay to the company for me and charge against my pay account for services rendered or to be rendered to my employer on whom this order is drawn. If for any reason whatever you fail to make deduction of any installment from the wages of the period hereinafter designated for that purpose, you are further authorized and requested at the option of the company to deduct and pay the defaulted installment from any of my subsequent wages. I understand and agree as to the duration of my said insurance: (1) That my said policy after taking effect so continues until the expiration of the period hereinafter designated for the deduction of the last installment of premium unless I sooner cease to be in the service of my present employer, or unless default be made in the payment of any prior installment, in either of which events my insurance shall at once terminate without notice except as it may be continued in force by reason of premium previously paid; (2) * * * That premium if payable in five installments the payment of the first, second, third fourth and fifth installments shall continue my policy in force for respective periods of two, two, two, three and three months, all such periods to be computed successively from the date of the policy; (3) That the action of the paymaster in deducting these installments from my wages is entirely at my risk; (4) That should my policy lapse at any time by reason of nonpayment of any installment and premium afterwards be paid then such payment shall reinstate my policy only as provided therein." (Our italics.)

The policy contains the following provision: "3. If default be made in the payment of the agreed premium for this policy the subsequent acceptance of a premium by the company, or by any of its duly authorized agents shall reinstate the policy, but only to cover loss resulting from accidental injury thereafter sustained."

Stewart remained in the employ of the Chesapeake & Ohio Railway Company until the 16th day of February, 1918, when he was killed in the line of his duty. Proofs of death were duly made out and presented and demand made for payment of the policy, which was refused, and in proper time this suit was filed to recover thereon. The defense is that the policy lapsed for nonpayment of premium; it being admitted that no payments were made of any installment premiums to the company by the paymaster; it being further admitted that Stewart collected all that was due him on each monthly wage without any deductions being made for the payment of the installment premium by the paymaster. Except it does appear a controversy existed at the time between the Director General in charge of railways and the employees as to the wage schedule, and that this was adjusted later and $45 additional placed to the credit of Bastin Stewart several months after his death.

The jury returned a directed verdict for the defendant, and plaintiff appeals. The parties to be referred to hereafter as appellant and appellee.

Appellant calls attention to the following stipulation in the paymaster's order: "The action of the paymaster in deducting the installment from my wages is entirely at my risk," and also to the wording of that stipulation as it appeared in the paymaster's order attached to the policy of the same company in Pritchett v. Continental Casualty Co., 117 Ky. 923, 80 S.W. 181, 25 Ky. Law Rep. 2064 "I agree that failure to deduct any of the above installments by said paymaster, from any cause, is at my risk." And argues that as originally written the stipulation was intended to cover negligence upon the part of the paymaster in failing to act, and that as now written it means the insured assumes the risk of all affirmative action upon the part of the paymaster, such as loss or embezzlement of the funds actually deducted by him, but not of failure to make such deductions; the conclusion being that, as Stewart's wages were in the hands of the railway company and were subject to the control of the...