Texas Prudential Ins. Co. v. Wiley

• Decision Date: 28 March 1935
• Docket Number: No. 2702.,2702.
• Citation: 80 S.W.2d 1024
• Parties: TEXAS PRUDENTIAL INS. CO. v. WILEY.
• Court: Texas Court of Appeals

80 S.W.2d 1024

TEXAS PRUDENTIAL INS. CO. v. WILEY.

No. 2702.

Court of Civil Appeals of Texas. Beaumont.

March 28, 1935.

Rehearing Denied April 3, 1935.

Appeal from Jefferson County Court; W. S. Nichols, Judge.

Action by Sallie Wiley against the Texas Prudential Insurance Company. Judgment for plaintiff, and defendant appeals.

Reversed and rendered.

Orgain, Carroll & Bell and Ewell Strong, all of Beaumont, for appellant.

C. W. Wiedemann, of Beaumont, for appellee.

O'QUINN, Justice.

Appellee sued appellant in the county court at law of Jefferson county to recover on an insurance policy in the sum of $300. She alleged that appellant issued a policy of life insurance to Fred Mays, a son of appellee, in which she was named the beneficiary; that Fred Mays died on December 18, 1930; that at said date all premiums on said policy had been duly paid, and that said policy was in full force and effect; that proof of loss was duly made, and demand made for payment, which was refused; that said demand was made more than thirty days before the filing of the suit. She prayed judgment for the face of the policy, 12 per cent. of the amount of the policy as penalty, and attorney's fee in the sum of $150, which was alleged to be reasonable.

Appellant answered by general demurrer, general denial, and specially that about February 25, 1929, the policy lapsed because of nonpayment of premiums, and so remained until about November 24, 1930, when said policy was revived subject to the provisions in the policy relative to reviving or reinstating same. That said policy contained the following provision: "If this policy be lapsed for non-payment of premiums it can be revived or reinstated only after evidence of the insurability of the insured, satisfactory to the Company has been furnished—the policy and the Receipt Book properly endorsed at the Home Office by an officer and due payment of all arrears have been made, provided no claim whose cause had its beginning prior to 5 weeks after date of the last reinstatement can ever accrue under this insurance."

That on November 24, 1930, in compliance with an application made by the insured, Fred Mays, said insurance policy was reinstated, and thereafter on December 18, 1930, Fred Mays, insured, died from gunshot wounds inflicted by an assassin, such death being within five weeks after said reinstatement of said lapsed policy, wherefore, under the express terms of the policy, no liability existed against it, and no recovery could be had.

To this answer appellee replied that the policy, although it had lapsed for the nonpayment of dues, was, on November 24, 1930, fully reinstated, without reservation, and therefore was in full force and effect from its date, May 9, 1927, more than two years from its date of issuance, and until the death of the insured, for in that said policy contained the following provision: "This policy and application is entire agreement between the company, the insured, and the holder and owner hereof, and is incontestable after 2 years from date of issuance except for nonpayment of premium. Its terms can not be changed or its condition varied, except by a written agreement signed by the President, a Vice President or a Secretary of the company. Therefore agents (which term includes Inspectors, Superintendents, Assistant Superintendents and Cashiers) are not authorized to make, alter or discharge contracts, or waive forfeitures. This policy shall be void if assigned or otherwise parted with, or if any erasures or alteration be made herein, except by endorsement signed by the President, a Vice President or a Secretary."

That at the time of the death of Fred Mays, the insured, said above-quoted provision of the policy (incontestable provision) rendered nugatory and of no force the provision in the policy pleaded by appellant relative to reinstating a lapsed policy, referred to and pleaded as the five weeks' clause. That appellant was barred by the incontestable provision of the policy from contesting its liability under and by virtue of said five weeks' clause, as said liability under the policy could be contested only for nonpayment of dues.

The case was tried to the court upon an agreed statement of facts, and judgment rendered in favor of appellee for $277.25 principal, with 6 per cent. interest thereon from and after December 18, 1930, and $33.27, being 12 per cent. of said sum as penalty, and $75 attorney's fee. This appeal is from that judgment.

The court filed his findings of fact which are in accord with (in fact a copy of) the agreed statement filed by the parties. He found that on May 9, 1927, appellant issued its policy of insurance on the life of Fred Mays in the sum of $300, naming his mother, Sallie Wiley, appellee, as beneficiary; that all premiums on said policy were paid and the policy was in full force and effect up to, but not including, February 25, 1929, when said policy lapsed for nonpayment of premiums; that it so remained until November 24, 1930, when, upon written application of Fred Mays, the insured, it was revived, subject to the provisions therein contained; that Fred Mays died on December 18, 1930, from gunshot wounds inflicted by an assassin on December 1, 1930, said death occurring within five weeks after said policy was revived on November 24, 1930; that at the time of insured's death all premiums had been paid; that due proof of death was made; that there was a lien in favor of the insurance company against the principal sum of the policy in the sum of $22.75, given by insured for securing the payment of premiums that were in default on November 24, 1930, when the policy was reinstated; that, when the policy was revived, the premium rate remained the same as before it lapsed, but that, based upon the age of Fred Mays, the insured, it would have been higher than was charged after the date of revival; that by reviving the policy the cash value provisions were continued in full force as if the policy had at all times been in force from the date of its original issuance; that, after the death of the insured, appellant tendered to appellee the sum of $1.25, same being the amount insured had paid in premiums after the policy was revived on November 24, 1930.

We think the above is sufficient statement of the facts found.

The court concluded as a matter of law, and based his judgment thereon, that subdivision 3 of article 4732, R. S. 1925 (incontestable clause), rendered nugatory the provision in the policy relating to reviving policies lapsed for nonpayment of premiums, reading: "If this policy be lapsed for nonpayment of premiums, it can be revived or reinstated only after evidence of the insurability of the Insured, satisfactory to the Company, has been properly endorsed at the Home Office by an officer and due payment of all arrears have been made, provided no claim whose cause had its beginning prior to 5 weeks after date of the last reinstatement can ever accrue under this insurance," and that such five weeks' clause afforded no defense to an action for recovery of insurance under such policy.

Appellant assigns error against this holding, insisting that article 4732, subd. 3, does not render nugatory and void the five weeks' clause of the policy, but that said clause is not inhibited by said statute, and, being a lawful contract between the insured and insurer, is capable of full enforcement, whereby, under the undisputed evidence, no liability against it appears.

Appellee challenges this assignment and insists that subdivision 3 of article 4732 inhibits the inclusion of the provision of the five weeks' clause in the policy, and renders same of no effect.

It is seen that the only question urged is the validity of the provision in the policy that, if the policy be lapsed for nonpayment of premiums and is revived, no claim the cause of which originated within five weeks after the last reinstatement could ever accrue under the policy.

Appellant strongly contends that it is not contesting the policy or its validity, but, to the contrary, is squarely standing upon the policy, asserting its validity, and contending for the enforcement of its terms. Appellee in her brief admits, and upon oral submission admitted, that, if the five weeks' clause is lawful, she has no cause of action.

We do not believe that the five weeks' clause is in contravention of subdivision 3 of article 4732, referred to as the incontestable provision. It provides: "3. That the policy, or policy and application, shall constitute the entire contract between the parties and shall be incontestable not later than two years from its date, except for non-payment of premiums; and which provision may or may...