Tighe v. Security Nat. Life Ins. Co., 39121

• Citation: 214 N.W.2d 622,191 Neb. 271
• Decision Date: 07 February 1974
• Docket Number: No. 39121,39121
• Parties: Vivian C. TIGHE, Appellant, v. SECURITY NATIONAL LIFE INSURANCE COMPANY, a corporation, Appellee.
• Court: Supreme Court of Nebraska

Page 622

214 N.W.2d 622

191 Neb. 271

Vivian C. TIGHE, Appellant, v. SECURITY NATIONAL LIFE INSURANCE COMPANY, a corporation, Appellee.

No. 39121.

Supreme Court of Nebraska.

Feb. 7, 1974.

Syllabus by the Court

1. The general rule is that a provision for forfeiture of an insurance policy for nonpayment of premiums is self-executing, and notice of forfeiture or other affirmative act on the part of the insurer is necessary only if required by statute, by the terms of the contract, or by course of dealing.

2. A forfeiture or lapse of an insurance policy for nonpayment of a premium generally takes effect from the time the premium is due and unpaid.

3. As a general rule, a mere demand for overdue premiums by an insurer does not amount to a waiver if the insured does not comply with the demand.

4. To constitute an estoppel, there must be a reliance in good faith upon the conduct or statements of the party to be estopped; and action or inaction based thereon of such a character to change the position or status of the party claiming the estoppel to his injury, detriment, or prejudice.

5. An extension of credit for the payment of premiums by an insurer to the insured may under certain circumstances constitute a waiver or estoppel, but whether credit was so extended is a question of fact.

6. The mere fact that the records of an insurer list premiums due from an insured pursuant to premium notices previously sent him as 'account receivable' is not conclusive upon the question of whether the insured intended to and did waive a forfeiture of the policy because of prior nonpayment of premiums.

Leamer & Galvin, South Sioux City, for appellant.

Deutsch & Hagen, Thomas O. Albers, Norfolk, for appellee.

Heard before SPENCER, SMITH and CLINTON, JJ., and BRODKEY and HASTINGS, District Judges.

BRODKEY, District Judge.

This is an action brought by Vivian C. Tighe, the divorced wife of Paul W. Tighe, deceased, and his beneficiary under a certain policy of insurance upon the life of said deceased. On March 8, 1965, Paul W. Tighe purchased a certain 10-year term convertible insurance policy in the face amount of $6,557 on his life from Bankers Trust Life Insurance Company. The appellee Security National Life Insurance Company, subsequently assumed all liability under the aforesaid policy. The insured died on May 14, 1970, and notice of death was given to the appellee by the beneficiary. The insurance company thereafter refused to pay the amount of the policy to the appellant; and this action was then commenced to recover the proceeds of said policy. Trial was held to the court, which held in favor of the appellee insurance company, and this appeal from that decision followed. We affirm.

The issue in this case is whether the policy was in force and effect on the date of decedent's death. The policy in question contains the following provision:

'PAYMENT OF PREMIUMS: This policy is based upon the payment of premiums annually in advance, but premiums may be paid in the manner, for the periods, and at the rates corresponding thereto as shown on the face of the policy. * * * Monthly premiums, where quoted on the face of the policy shall be due at * * * monthly intervals respectively reckoned from the date the first policy year begins. Upon written request to the Home Office a change from one such premium payment interval to another may be made effective on any premium due date with respect to premiums then and thereafter becoming due. All premiums are payable in advance at the Home Office of the Company * * *. If any premium * * * shall not be paid on or before its due date it is in default, and any liability of the Company under this policy shall thereupon cease and terminate except as otherwise provided.

'GRACE PERIOD: If any premium not be paid on or before its due date such premium is in default, but a grace period of thirty-one days will be allowed in the payment of all premiums after the first, during which period this policy will continue in force.

'REINSTATEMENT: Should this policy lapse it may be reinstated * * * upon evidence of insurability, including good health, being furnished satisfactory to and approved by the Company at its Home Office, and upon the payment of past due premiums with interest * * *.'

It appears from the record that during the first policy year from March 1965 to March 1966, the premium on this policy was paid by a single annual premium of $56.75. Thereafter, commencing March 8, 1966, a special monthly payment of $4.90 was made through the medium of twelve post-dated checks, commonly referred to as the 'Econo check method' whereby the insured furnished post-dated checks for twelve monthly premiums; and this method of paying premiums was thereafter followed. The last of the post-dated checks was dated February 8, 1970, and on that date was presented and paid, thereby paying up the policy until March 8, 1970. Prior to that time, however, to-wit, on January 2, 1970, a form letter was sent to the insured requesting that he send a new supply of twelve checks 'so your premiums will be paid promptly when they are due' and informing him that the checks should commence with the month of March 1970. The post-dated checks were never sent to nor received by the insurance company, nor were any further premiums ever paid by or received from the insured. Subsequent to the death of the deceased, the beneficiary found among the papers and effects of the deceased the letter from the Security National Life Insurance Company requesting the new supply of post-dated checks and also three form premium notices for the months of March, April, and May 1970. An official of the insurance company testified that when a supply of post-dated checks is requested and not received, it is its practice to change the mode of paying premiums to regular monthly premiums, with premium notices sent through the mail to the last-known address of the insured. He also testified that when premium notices are thereafter mailed out, the amount of the premium is carried on the computer records of the company as an account receivable and that approximately 60 to 90 days the policy is delinquent, it lapses the policy off its billing records on the computer so that no further premium notices go out to the insured. He further testified that because of the failure to receive premium payments from the insured, the policy lapsed after expiration of the grace period of 31 days after the policy due date of March 8th. We also point out that the policy in question, being a term policy, had no cash value or provisions for extended insurance.

The general rule is that a provision for forfeiture for nonpayment of premiums is self-executing, and that a notice of forfeiture on this ground, or other affirmative act on the part of the insurer, is necessary only if required by statute, by the terms of the contract, or by course of dealing. 45 C.J.S. Insurance § 590 b, p. 388; 43 Am.Jur.2d, Insurance, S. 623, p. 632; Dressler v. Commonwealth Life Ins. Co., 105 Neb. 669, 181 N.W. 543 (1921); Novak v. Lafayette Life Ins. Co., 106 Neb. 417, 184 N.W. 64 (1921); Whitehorn v. Royal Arcanum, 131 Neb. 713, 269 N.W. 821 (1936). In the instant case, the policy of insurance involved was a life insurance policy, and there is no statute requiring the giving of notice of forfeiture; nor are there any provisions in the policy itself requiring that such notice of forfeiture be given. Moreover there is no evidence in the record of any course of dealing between the parties which would so require. The rule is that a forfeiture or lapse of a policy for nonpayment of a premium generally takes effect from the time the premium is due and unpaid. 45 C.J.S. Insurance § 614 e, p. 453. It is the claim of the appellant, however, that by sending out premium notices to the insured any by treating the premiums due as account receivable the insurer waived its right to forfeit the policy for nonpayment of premium and is estopped to claim that the previous premiums are unpaid; and that the insurance contract, therefore, remained in force and effect. W...