Union Central Life Ins. Co. v. Spinks

• Decision Date: 09 December 1904
• Citation: 119 Ky. 261
• Parties: Union Central Life Ins. Co. v. Spinks.
• Court: Kentucky Court of Appeals

119 Ky. 261

Union Central Life Ins. Co. v. Spinks.

Court of Appeals of Kentucky.

December 9, 1904.

APPEAL FROM CAMPBELL CIRCUIT COURT — JOHN T. HODGE, CIRCUIT JUDGE.

JUDGMENT FOR PLAINTIFF AND DEFENDANT APPEALS. REVERSED.

ROBERT RAMSEY AND W. W. HELM, ATTORNEYS FOR APPELLANT.

L. J. CRAWFORD AND HAZELRIGG & CHENAULT, ATTORNEYS FOR APPELLEE.

OPINION OF THE COURT BY JUDGE O'REAR — REVERSING.

This suit was upon a ten-year term life policy, issued by appellant upon the life of Charles Spinks for $10,000. The policy was issued February 1, 1894. The annual premium was $396.80. The policy contained the following provisions:

"All premiums or notes, or interest upon notes, given the company for premiums, shall be paid on or before the days upon which they become due." etc.

"Upon the violation of any of the foregoing conditions this policy shall be null and void, without action on the part of the company, or notice to the insured or beneficiary," etc.

"The contract of insurance between the parties hereto is completely set forth in this policy and the application for the same, and none of its terms can be modified, nor any forfeiture under it waived, save by an agreement in writing signed by the president, vice-president, or secretary of the company, whose authority for this purpose shall not be delegated,"

"No suit to recover under this policy shall be brought after one year from the death of the insured."

The insured paid three of the annual premiums, and on December 15, 1897, executed to appellant a six months note for $396.80 for annual premium due on that date. The note was not paid at maturity. On the day following the maturity of the note defendants general agent at Cincinnati wrote the insured as follows:

                                         "Cincinnati, O., June 16, 1898
                

"Charles Spinks, Esq., Newport, Ky. — Dear Sir: Your note of $396.80 ($11.90 interest) on policy 114,386 was due and unpaid on the 15th day of June, 1898. Your immediate attention to the above is of the utmost importance to the validity of your policy in the event of sudden misfortune. Please call and arrange to pay the same at once.

                                  "Yours respectfully
                                          "E. W. Jewell, General Agent
                

The insured made no reply to this letter so far as the proof shows.

On June 21st the general agent sent the note to a bank, with the following letter of advice:

                                           "Cincinnati, O., June 21, 1898
                

"Newport National Bank, Newport, Ky. — Gentlemen: I inclose you the note of Charles Spinks for collection.

                  Note .........................................  $396 80
                  Interest .....................................    11 90
                                                                  _______
                                                                  $408 70
                

                                "Yours respectfully
                                      "E. W. Jewell, General Agent."
                

The bank, as agent of the insurance company, presented the note to the insured and demanded payment. But it was not paid. On July 7th, following, it was returned to appellant. On that day appellant wrote the insured as follows:

                                          "Cincinnati, O., July 7th, 1898.
                

"Charles Spinks, Esq., Newport, Ky. — Dear Sir: The note given in payment of the annual premium on your policy 114,386 was due and unpaid June 15,, and according to the rules of the company you must furnish us a satisfactory certificate of good health before settling this note. If you will kindly take the indorsed health certificate to the medical directors of the company, they will fill it out and pass upon it.

                                   "Yours respectfully,
                                       "E. W. Jewell, General Agent."
                

It is claimed for appellant that it about the same time forwarded to its local agent at Newport, where insured lived, a formal notice canceling the policy for nonpayment of premium; but there is no evidence that it was ever received by the insured. Omitting, therefore, the last named act from the proceedings, we have, so far as the insured was advised, that the insurance company held his premium note, was endeavoring and intending to collect it in full, which represented the premium on his policy to December 15th following, and had taken no action looking to a cancellation of the policy. As a matter of fact, it is testified that the company, immediately upon default, when the note was due, marked the policy on its policy register "Canceled." The insured had been in the habit of executing notes to appellant for his premiums, and of paying them some time after maturity. They were always received, so far as this record shows, without question. The insured, however, died on the 14th of September, 1898. This suit is by the beneficiary of the policy, a son of the insured.

It is the well settled law of this State that, if an insurer desires to avail itself of conditions in its policy to declare it forfeited for the nonpayment of a premium note, it must unequivocally elect to so treat it, and in fact then and thereafter so treat it. It will not be allowed, though, to claim both that it is not bound on the policy, but that the insured is bound to pay the note. Its action must be consistent While it may retain the note, as evidence of its nonpayment, it must not retain it or treat it as an evidence of that much indebtedness. Moreland v. Union Central Life Ins. Co., 104 Ky., 129, 20 R., 432, 46 S. W., 516; Union Life Ins. Co. v. Duvall, 46 S. W., 518, 20 Ky. Law Rep., 441; Johnson v. Southern Mut. Life Ins. Co., 79 Ky., 406, 3 R., 26; Walls v. Home Ins. Co., 71 S. W., 650, 24 Ky. Law Rep., 1452. In the case at bar appellant not only retained the note after its maturity, but repeatedly endeavored to collect it in full thereafter. It thereby claimed that the insured owed to it $396.80 as an enforceable debt. If he did, then appellant was bound to him, as the consideration for it, upon the policy of insurance. Even though such provisions in policies of insurance are automatic, they may be waived by the parties, and this waiver may be indicated by conduct, as well as by express language. The fact that the insured marked on its private books that the policy was canceled, did not cancel it, if thereafter it continued to assert the note as enforceable obligation against the insured, thereby evincing to him that it was not canceled. Upon principle and authority we hold that the evidence here shows a waiver by the insurer of the condition of forfeiture in the policy.

The more important question is that of special limitation of one year provided for by the policy. The suit was not brought till more than one year after the death of the insured. We are aware that this or similar provision is contained in nearly all insurance polices, fire and life. We are further aware that the provision is upheld by many courts, including the United States Supreme Court (Riddlesbarger v. Hartford Ins. Co., 7 Wall., 386, 19 L. Ed., 257), and is approved by text writers. This court has also, though with hesitation and misgiving, followed the other courts in approving it. We therefore have come to the reconsideration of this question with a deep sense of its importance and difficulty, and of our duty in the premises. The legal question is, can parties by contract substitute a period of limitation, binding upon the courts, for the statutes of limitation enacted by the Legislature? If they can, it must be upon some general principle, the breadth and far-reaching effect of which can not logically be limited to mere contracts of insurance, but must incontrovertibly be applicable to all contracts; for, if it is a matter of agreement alone between parties competent to contract, the only inquiry that can ever be made is, have they agreed upon it.

Pleas of limitation were allowed long before there was any statute on the subject. The courts applied them upon the theory of a fiction to the effect that after so long a lapse of time, during which the claimant made no assertion of his rights, in a personal demand, a presumption was raised that the obligation had been paid or discharged, and in the case of real estate, that a conveyance had been executed but lost. The fiction was justified in the reasoning of the courts by the evident justness of its effect; it being argued that one who had so long neglected his rights as to allow the other party to suffer by it, by the loss of evidence and the like, ought not to be heard to disturb a condition he had suffered to come about. But statutes of limitation have come to be enacted everywhere. They are not mere rules of evidence, presumptions of the payment or extinguishment of the obligation sued upon, but are statutes expressive of a public policy, and are favorably regarded by the law. They are not in operation or suspense at the mere will of the parties, but in spite of them. While the statutes themselves make provision for their suspension, it is to be noted that in every instance it is allowed for the purpose of continuing or prolonging a preexisting right to sue, and never to close the door against suits by any kind of waiver in favor of an obligee.

Many statutory provisions are made for the protection of personal rights, which the parties may avail themselves of or not, in their transactions, as they may please. But where the statute is expressive of the public policy, any contract made in contravention of it is ipso facto void. Parties will never be heard to say that they elect to waive the public policy, and are willing to abide by their own substituted policy. The public policy, as the term indicates, is impersonal, and essentially of universal and exclusive application within the territory of the authority declaring it. There could be no public policy otherwise, and the whole people would be powerless to enforce any wholesome general rule of conduct in business transactions, where any number chose to ignore or violate it. Statutes of limitation belong to this class. They pertain...