Underwood v. Security Life & Annuity Co. of America

• Court: Texas Supreme Court
• Writing for the Court: Yantis
• Citation: Underwood v. Security Life & Annuity Co. of America, 194 S.W. 585, 108 Tex. 381 (Tex. 1917)
• Decision Date: 02 May 1917
• Docket Number: (No. 2482.)
• Parties: UNDERWOOD v. SECURITY LIFE & ANNUITY CO. OF AMERICA.

Page 585

194 S.W. 585

UNDERWOOD v. SECURITY LIFE & ANNUITY CO. OF AMERICA.

(No. 2482.)

Supreme Court of Texas.

May 2, 1917.

Error to Court of Civil Appeals of First Supreme Judicial District.

Action by Mrs. Fannie F. Underwood against the Security Life & Annuity Company of America. Plaintiff brings error to review judgment (150 S. W. 293) for defendant. Reversed in part, and affirmed in part.

Andrews, Ball & Streetman, of Houston, for plaintiff in error. R. W. Franklin, of Houston, and F. W. Bull, of Chicago, Ill., for defendant in error.

YANTIS, J.

This suit was brought by the plaintiff in error, Mrs. Fannie F. Underwood, in the district court of Harris county, Tex., to recover judgment upon two life insurance policies, each in the sum of $5,000, which had been issued by the defendant in error for her benefit on the life of her husband, George B. Underwood. Policy No. 1319 was issued December 31, 1903, with George B. Underwood's son named as beneficiary. As first issued this policy was in the sum of $10,000. Afterwards the amount was reduced to $5,000, and the beneficiary changed from the son to Mrs. Fannie F. Underwood, wife of the insured. Policy No. 6098, for $5,000, was issued December 30, 1905, payable also to Mrs. Underwood. George B. Underwood, the insured, died September 7, 1907, nearly four years subsequent to the issuance of policy No. 1319, and nearly two years subsequent to the issuance of policy No. 6098. The suit was upon both policies. The case was tried by the court without a jury. The trial resulted favorably to the plaintiff in error on policy No. 1319, and favorably to the defendant in error on policy No. 6098. Appeal was taken by the defendant in error, the Security Life & Annuity Company of America, to the Court of Civil Appeals for the First District. In said appeal cross-assignments upon the judgment on policy No. 6098 were made by the plaintiff in error. The Court of Civil Appeals reversed and rendered the judgment, which was favorable to the plaintiff in error on policy No. 1319, and affirmed the judgment of the district court, which was favorable to the defendant in error, on policy No. 6098. (Civ. App.) 150 S. W. 293. A writ of error was granted by this court on the petition of the plaintiff in error, Mrs. Fannie F. Underwood, in which she claims that she is entitled to recover upon both policies, and that the Court of Civil Appeals erred in not so holding.

The defendant in error contended that both policies had been forfeited by the insured's failure to pay the premiums when due. The plaintiff in error, among other defenses pleaded, contended that the forfeiture of both policies for failure to pay the premiums had been waived. The premiums due on policy No. 1319, issued December 31, 1903, had all been paid except the three quarterly premiums which became due December 31, 1906, March 31, 1907, and June 30, 1907. These premiums were never paid. By agreement a note due 30 days after December 31, 1906, was made by the insured to cover the quarterly premium which matured December 31, 1906. Said note provided for an extension of the policy for 30 days, and that a default in its payment when due would, ipso facto, render the policy null and void. This note was never paid. The policy provided that:

A "failure to pay any premiums when due will render this policy wholly void, and forfeit all premiums paid the company, except as herein provided."

This same provision was in both policies, there was no express provision in either policy for forfeiture on account of default in the payment of any note given for premiums, though it was expressly so provided in each note that was given for premiums on both policies.

The failure to pay these premiums which were past due on policy No. 1319 would constitute a forfeiture of said policy, without the necessity of the insurance company so declaring by word or act, unless it had elected not to enforce the forfeiture, but to waive it. The trial court found that it had waived the forfeiture of this policy No. 1319. His finding is as follows:

"There was manifestly a waiver of the right of forfeiture upon policy No. 1319, and the repeated demands for subsequent premiums up to the premium for June, and including that, manifested and made clear that there had been no forfeiture, but the policy was still treated as in force and was desired to be continued, and therefore it was an existing liability for the sum of $5,000 at the time of the death of the insured, and I find for plaintiff on this policy for $5,000 with 6 per cent. interest from December 19, 1907."

The Court of Civil Appeals held that there was evidence to support the finding which was made by the trial court, to the effect that the defendant in error had waived the forfeiture of the policy for failure to pay the quarterly premium, which matured December 31, 1906, and also had waived the forfeiture for failure to pay the quarterly premium which matured March 31, 1907. But it held that there was no evidence to support the finding of the trial court in holding that there was a waiver of the forfeiture for the failure to pay the premium which matured June 30, 1907.

The evidence which tended to prove a waiver of the forfeiture consists of certain letters which were written to the insured by the insurance company on the subject of the insured's failure to pay the quarterly premiums. The letters are as follows:

"April 11, 1907. I desire to direct your attention to the premium on your policy No. 1319, which became due on March 31, 1907. We are particularly desirous of having you continue your insurance with this company, and would respectfully ask that you advise us the reason for your not remitting your premium when due. Thanking you for the courtesy of a prompt reply, I remain."

"May 8, 1907. We have not as yet received payment of the quarterly premium on your policy No. 1319, which became due on March 31, 1907. Heretofore you have made payments very regularly and it is likely an oversight on your part that you have failed to make provision for the last payment. If for any reason you are unable to make payment at this time, we trust you will inform us, as we desire to lend our assistance wherever it will be an accommodation to our policy holders."

"July 11, 1907. The premium of $30.75 on your policy No. 1319 became due June 30, 1907, and remains unpaid. We are particularly desirous of having you continue your insurance with this company, and would respectfully ask that you advise us the reason for your not remitting your premium when due."

It was held by the Court of Civil Appeals that the letter of July 11, 1907, could not have amounted to a waiver of the forfeiture for the quarterly premium which became due June 30, 1907, for the reason that the right in the insurance company to forfeit the policy for this default did not accrue until 30 days after the default, and it could not correctly be held that the insurance company —

"by making demand for payment 20 days before any right to forfeiture accrued elected to waive the forfeiture when such right did thereafter accrue."

This holding by the Court of Civil Appeals cannot be sustained, for the reason that under the contract of insurance the forfeiture of the policy did ipso facto occur upon the failure of the insured to pay the quarterly premium when it matured on June 30, 1907, notwithstanding the fact that the contract allowed the insured 30 days thereafter in which to pay the premium with 5 per cent. interest, and to thereby avoid the forfeiture. The policy in terms provided that a "failure to pay any premium when due will render this policy wholly void." The plain effect of this provision in the policy is that a failure to pay a premium due would ipso facto forfeit the policy. There is a provision in the contract which permits the insured, when the policy has been forfeited for failure to pay a premium due to avoid the forfeiture by paying the premium, with 5 per cent. interest, within 30 days after it became due. This provision in the policy is as follows:

"Should default be made in the payment of any premium due upon this policy as herein provided, the company will waive such default and accept payment of said premium, provided the amount thereof with interest thereon at five per cent. per annum from the date of default be tendered to it within thirty days thereafter."

We think the defendant in error had the right and privilege, on July 11, 1907, to waive the forfeiture of policy No. 1319, which had occurred for failure to pay the quarterly premium which matured June 30, 1907. The fact that by the provisions of the contract the insured could compel the defendant in error to waive the forfeiture...