Sun Life Assur. Co. of Canada v. Wiley

• Decision Date: 19 March 1935
• Citation: 258 Ky. 311
• Parties: Sun Life Assurance Co. of Canada v. Wiley.
• Court: United States State Supreme Court — District of Kentucky

258 Ky. 311

Sun Life Assurance Co. of Canada v. Wiley.

Court of Appeals of Kentucky.

Decided January 15, 1935.

As Extended on Denial of Rehearing March 19, 1935.

1. Insurance. — Where application for reinstatement of life insurance was based on belief by insured that reinstatement was necessary because of lapse, though premium due had been paid, insured was not estopped from showing that no lapse had occurred.

2. Insurance. — In action for disability benefits under life policy, conflicting testimony as to time of payment of premium and alleged execution and delivery of insured's application for reinstatement of policy held for jury.

3. Insurance. — Though life policy provided that no payment to any person except in exchange for insurer's official receipt would be recognized, insurer by its agent who was in actual control and management of policy involved could waive such provision, even though receipt for disputed premium had not later been signed by proper official of insurer and delivered to insured (Ky. Stats., sec. 633).

4. Insurance. — Insured who furnished proofs of disability within grace period after premium was due held entitled to recover benefits as against insurer's denial of liability because of failure to furnish proofs before default in payment of premium, since policy was in full force during grace period and there was no default until after expiration of such period.

5. Insurance. — In construing policy, that view should be adopted, if possible, which will sustain, rather than forfeit, the contract.

6. Appeal and Error. — In action for total disability benefits under life policy where evidence abundantly established insured's total permanent disability, instruction giving technically incorrect defintion of "total disability" held not prejudicial error.

Appeal from Franklin Circuit Court.

WM. MARSHALL BULLITT, EUGENE B. COCHRAN and BRUCE & BULLITT for appellant.

WILEY C. MARSHALL and ALLEN PREWITT for appellee.

OPINION OF THE COURT BY JUDGE RICHARDSON.

Affirming.

The Sun Life Assurance Company of Canada issued to John C. Wiley, a resident of Franklin county, Ky., two policies of life insurance. Each provides for a waiver of premiums and a monthly income of 1 per cent. of the face amount upon his becoming totally and permanently disabled. One policy is for $10,000 and the other for $5,000. Asserting he was totally and permanently disabled within the meaning of these terms as they are used in the policy, in an action on the policies in the Franklin circuit court he recovered a judgment January 18, 1933, for $1,300. In its brief the Sun Life presents no criticism of the judgment on the $5,000 policy. It confines its grounds of reversal to so much of the judgment as amounts to 1 per cent. of the face of the $10,000 policy. Therefore we shall confine our consideration of the case to so much of the judgment as amounts to 1 per cent. of this policy.

A summary of the grounds of reversal is, the policy lapsed for the assured's failure to pay the premium due October 11, 1931, and the policy was not thereafter reinstated during his "good health"; Wiley did not furnish proof before the payment of the premium due April 11, 1932; the policy lapsed on April 11, 1932; the trial court erroneously defined the term "total disability."

A correct disposition of the first two grounds requires a review of the facts.

George H. Poe was the agent of the Sun Life in charge of its business in Franklin county. He witnessed and accepted Wiley's application for the $10,000 policy, received the premiums on it, and tranmitted the same to the Sun Life. The policy provides:

"All premiums are payable in advance at the head office of the company or to an agent thereof, upon delivery of a receipt signed by either the President or Secretary of the Company and countersigned by the said Agent." "No person, except the President, Vice President, Actuary or Secretary, has power to alter this contract in any way. No payment made to any person, except in exchange for the company's official receipt will be recognized."

The agreed premium was $248.28, payable on the 11th day of January, 1931, and a like amount half yearly thereafter on the 11th days of July and January in every year during the continuance of the policy. Later, in July, 1931, the premium was by agreement of the parties payable quarterly, or $125.50 on the 11th days of January, April, July, and October. There is no dispute repecting the payment of the premiums prior to October 11, 1931. Wiley deposed that he paid Poe $125.50 on November 9th or 10th, the premium due October 11, 1931. The policy contains a grace clause of one month. The October premium, if paid as asserted by Wiley on November 9th or 10th, was within this grace period, and consequently the policy did not lapse untl 30 days after October 11, 1931. At the time he paid this premium, he claims, Virgil Burnett and Francis Wiley were present. They corroborate him by the statement they were present and witnessed the payment of the premium by him to Poe and heard Poe assure him "his insurance would be all right until after the first of the year 1932," and that he would see that "the company" sent him a certificate to show that he had paid "the premium." Poe denies the October premimum was paid to him in November, and asserts that it was not paid until December 24, 1931, at which time he claims "Wiley made a request for reinstatement."

Poe is corroborated by the signed request for the reinstatement of the policy bearing date December 24, 1931, and by a duplicate of a deposit slip, dated December 26th, showing he deposited Wiley's premium in the Capital Trust Company, Frankfort, Ky., on that date. Acting on Wiley's written request for reinstatement of the policy, the company reinstated it January 12, 1932. Between the date of the request for reinstatement and the act of the company in reinstating it Wiley sustained an injury producing total disability, and consequently was not in "good health" at the time of the reinstatement on January 12, 1932. Wiley failed to pay the premium due April 11, 1932, and the Sun Life insists the policy lapsed on that date. He furnished to the Sun Life proof of disability on April 30, 1932, or within the days' grace allowed by a clause of the policy. On these facts and the provisions of the policy, the Sun Life contends the policy lapsed on October 11, 1931, and was not thereafter reinstated while Wiley was in "good health"; also it lapsed on Aprl 11, 1932, and, since he did not furnish proof "before default in the payment of the premium," its liability for the benefits of the policy never accrued.

It should be admitted that the conflcting evidence as to the payment on November 9th or 10th of the premium due October 11, 1931, made an issue for the jury, and it was its province to accept on this issue the testimony in behalf of Wiley or that in favor of the Sun Life. To avert the consequences of the evidence in favor of Wiley as to this issue, the Sun Life relies upon the provision of the policy that "no payment made to any person, except in exchange for the company's official receipt, will be recognized." It is argued this language of the policy forbids the recognizing the payment on November 9th or 10th of the October premium as testified to by Wiley. In support thereof,...