Union Life Ins. Co. v. Bolin, 4-6129.

• Decision Date: 16 December 1940
• Docket Number: No. 4-6129.,4-6129.
• Citation: 145 S.W.2d 734
• Parties: UNION LIFE INS. CO. v. BOLIN.
• Court: Arkansas Supreme Court

145 S.W.2d 734

UNION LIFE INS. CO. v. BOLIN.

No. 4-6129.

Supreme Court of Arkansas.

December 16, 1940.

Appeal from Circuit Court, Pike County; Minor W. Millwee, Judge.

Action by Clarence G. Bolin against the Union Life Insurance Company to recover premiums paid on a lapsed life insurance policy. Judgment for plaintiff, and defendant appeals.

Reversed, and cause dismissed.

E. M. Arnold, of Little Rock, for appellant.

Alfred Featherston, of Murfreesboro, for appellee.

FRANK G. SMITH, Justice.

The appellant, Union Life Insurance Company, hereinafter referred to as the company, issued to appellee, Clarence G. Bolin, a policy of life insurance in the sum of $1,000, upon the consideration of the payment of an annual premium of $54.83. The first premium was paid upon the delivery of the policy, and the second premium in the same amount was paid when due, but the third premium was not paid, and the policy lapsed on that account. The premiums were all payable May 28th.

Earl Hudgens is a soliciting agent for the company. His business was to visit lapsed policyholders and to assist in their reinstatement. The undisputed testimony is to the effect that he had no other or greater authority. Hudgens saw Bolin on July 17, 1939, and Bolin testified that Hudgens solicited the reinstatement of the policy, and told him that if he would sign an application for reinstatement, and pay the delinquent premium, he would be reinstated. Bolin gave Hudgens a check for the premium, and signed a reinstatement application. Bolin was advised in a letter from the company dated October 11, 1939, that the application for reinstatement of the policy had been rejected, whereupon he brought this suit to recover the premiums paid.

In awarding judgment for these premiums the trial court made the following findings. That Hudgens told Bolin that he had a list of delinquents, and was making reinstatement of those policies, and that if appellee would sign the application and pay the premium he would be reinstated. The application for reinstatement contained a number of questions, the answers to all of which were written by Hudgens. These Bolin did not read. Bolin told Hudgens that he had recently had an operation, consisting of the removal of a tumour from his knee, and that a second operation would be required. Bolin testified that no request for additional information was made to him. The check for the delinquent premium was not cashed, nor was it returned until its enclosure in the letter dated October 11th. Upon these findings the court held that, inasmuch as the right of reinstatement was a contractual right, given by the policy, it could not be regarded as a gratuity, and that inasmuch as the company retained possession of the check from July 17th to October 11th, its action in refusing reinstatement was arbitrary, and constituted a breach of the contract. Under the facts stated the court found that Hudgens had the apparent authority to reinstate the policy, and had done so.

Now, the right of reinstatement was not a gratuity, but was contractual. The policy which gave that right provided how it might be exercised. The provision is that at any time within three months after default in payment of premium, "upon written application by the insured, and presentation to the Company, at its home office, of evidence of the insured's then insurability, satisfactory to the Company, and upon payment of all premiums in default", the policy should be reinstated.

The application for reinstatement which Bolin signed provides that: "I also further agree that said policy shall not be considered reinstated until the application shall be approved by the Company at its home office during my lifetime and good health * * *," and that "any payment of premiums made by me in advance of any receipt therefor shall not be binding upon the Company until this application is approved."

The application stated that the applicant was then in good health, and that since the date of the issuance of his policy he had not been sick from any cause, and had not consulted or been prescribed for or attended by a physician or practitioner for any cause. Bolin testified that these were not the answers given by him, which Hudgens denied, but the finding of the court sitting as a jury concludes this question of fact.

The company received information that Dr. Good had performed an operation by removing a tumour on Bolin's knee, and that a second operation would be required. The company wrote Dr. Good for information, and received the reply that he had performed the operation, and that Bolin was in charge of Dr. Duncan for post-operative treatment. Dr. Duncan was Bolin's family physician, and resided in Murfreesboro, where the trial from which is this appeal occurred.

On behalf of the company it was shown that three letters were properly addressed to Dr. Duncan asking for information about these operations. These letters were dated August 3d, September 2d, and September 14th, respectively. Dr. Duncan was not called to deny the receipt of these letters.

The testimony on behalf of the company was to the further effect that, failing to receive a reply to any of the letters written to Dr. Duncan, the company, on September 26th, wrote, properly addressed, a letter to Bolin asking his co-operation in procuring evidence as to his then existing state of health. Bolin denied receiving this letter, and the trial court found this statement to be true.

Bolin had a policy in another company, which covered disability benefits, and during the time hereinbefore referred to he was attempting to collect the disability benefits from this other company. He was confined at his home and in a hospital from June 7th, when the operation was performed, to July 1st. It is apparent, of course, that Bolin could not make the conflicting proof to meet the requirements of both companies even with the aid of his family physician, and this may account for the failure of Dr. Duncan to answer the company's letters. The doctor was not called to deny having received the letters from the company, and there was no testimony that he answered them. In other words, the only information which the company had was that one operation had been performed on Bolin, and another was required, the prognosis of which was unknown. Under these facts, it cannot be said that the company acted arbitrarily in refusing to reinstate Bolin, who had not complied with the requirements of his policy in regard to reinstatement.

The policy was not, therefore, reinstated, unless it was within the apparent scope of Hudgens' authority to do so. The court found that, in view of Bolin's truthful answers, which were not correctly incorporated in the application for reinstatement, and the assurance given Bolin by Hudgens that he had been reinstated, and the retention of the check for the premium, which was retained by the company until October 11th, that the policy had been reinstated, and the refusal to accept the third premium constituted a breach of the contract of insurance, which entitled Bolin to recover the first and second premiums, for the amount of which...