Vail v. Midland Life Ins. Co.

• Decision Date: 02 August 1937
• Docket Number: No. 5714.,5714.
• Parties: VAIL v. MIDLAND LIFE INS. CO.
• Court: Missouri Court of Appeals

108 S.W.2d 147

VAIL v. MIDLAND LIFE INS. CO.

No. 5714.

Springfield Court of Appeals. Missouri.

August 2, 1937.

Appeal from Circuit Court, Dunklin County; James V. Billings, Judge.

"Not to be published in State Reports."

Suit by Quilla Jane Vail against the Midland Life Insurance Company. From a judgment in favor of the plaintiff, the defendant appeals.

Reversed.

Bradley & Noble, of Kennett, and Sebree, Sebree & Shook, of Kansas City, for appellant.

John A. McAnally, of Kennett, for respondent.

ALLEN, Presiding Judge.

This is a suit on an insurance policy, issued by the defendant, a life insurance company of Missouri, to Floyd Franklin Vail, who was the husband of the plaintiff, the beneficiary in the policy. Trial was had in the circuit court in Dunklin county, and resulted in a verdict and judgment for the plaintiff in the amount of $1,000 and $100 as a penalty and for $350 attorney's fee, or in all $1,450. Defendant filed its motion for a new trial, which was overruled, and the cause comes to this court on appeal by defendant.

The petition alleged that the policy was dated and issued April 2, 1934, and was on the life of the insured and promised, in consideration of the premium therein stipulated, to pay the plaintiff $1,000 upon the death of the insured, provided his death occurred while the policy was in full force and effect and while all premiums due thereon had been fully paid, or if said premiums had not been fully paid, payment thereof had been waived by virtue of the fact that the defendant lapsed and canceled said policy of insurance for the nonpayment of premiums due thereon before payment of said premium was due to be made under the terms of said policy.

The petition further alleged the death of insured on May 25, 1935, the refusal of the defendant to furnish blanks for proof of death, and denial of liability under the policy and refusal to pay; and that such refusal was vexatious, willful, and without reasonable cause. The petition further alleged that the policy provided that advance premium of $33.95 for the first year's insurance under the policy ending on April 2, 1935, was term insurance, when in truth and in fact the policy was and is not a term insurance policy for the first year, and that if it had been term insurance for the first year the premium therefor would have been less than $33.95, but that said policy was and is an endowment insurance policy, and was such endowment policy during the first year of its existence and not a term insurance policy.

The prayer was for $1,000, with 10 per cent. penalty and $350 attorney's fees and costs.

The answer admitted that the policy was dated and issued April 2, 1934, and that it promised upon the death of the insured to pay the plaintiff $1,000, provided such death occurred while the policy was in force and while the premiums due thereon had been paid, and stated that insured thereupon accepted the policy and acknowledged receipt thereof by his receipt dated April 2, 1934; and admitted the death of insured on May 25, 1935, and that the defendant refused to furnish blanks for proof of death, and denied liability; but denied that the refusal to pay was vexatious, willful, or without reasonable cause; and admitted that the said policy stated that the advance premium of $33.95 for the first year's insurance which ended on the 2d day of April, 1935, was term insurance; and defendant stated that it was also provided in said policy that it was issued in consideration of an application by said insured, copy of which was attached to said policy, and the payment in advance of $33.95, the premium for the first year's insurance under said policy, ending the 2d day of April, 1935, was term insurance and for legal reserve, if any; and that the insurance would be continued thereafter as endowment insurance upon the payment of the annual premium of $33.95 on or before the 2d day of April in every year during the continuance of said policy, until premiums for 37 policy years, including the first, had been paid; and that if the insured was living and said policy was in full force on the 2d day of April, 1971, which was the end of the endowment period and the anniversary date of said policy nearest insured's eighty-fifth birthday, the insurance would terminate, and the company would pay him $1,000 in cash or convert the policy into a fully paid up policy of $1,116, or into a fully paid life policy of $1,000, and pay insured in cash $103, or into a fully paid life annuity, paying annually $353.

That long before thirty-one days previous to the insured's death the premium on said policy became due but was never paid, and by reason thereof the said policy lapsed and ceased to exist and was not in force at the time of the death of the insured, and the defendant is in no wise indebted to plaintiff on account thereof.

The answer then stated that said application was made and delivered to defendant prior to the time said policy was issued, and that in said application the insured stated and warranted on behalf of himself and any other person who should have or claim any interest in the policy, that the answers as made by insured in said application were full, complete, and true; and that in answer to the question in said application, "State definitely kind and amount of alcoholic beverages used by you and how frequently," the insured stated, "None at all"; that said statement by the insured was untrue when made and known by the insured to be untrue, and was knowingly and fraudulently made for the purpose of deceiving and misleading the defendant, in inducing the defendant to issue the said policy, and in truth and in fact the insured had up to the time of making the said statement and for a long time prior thereto frequently used and drunk alcoholic beverages. That defendant believed and relied upon said statement as being true and was thereby deceived and induced to and did issue the said policy of insurance, and would not have issued same without said statement and defendant's belief and reliance thereon; that the said false statement in the matter misrepresented therein, as aforesaid, was material to the defendant's risk in said policy, and the said drinking of alcoholic beverages by the insured, as aforesaid, contributed to the death of the insured.

That defendant first discovered the said answer was false and untrue after the institution of this suit, and prior to the filing of this answer the defendant tendered to the plaintiff the sum of $50, there being no legal representatives, which tender was refused. That said sum tendered included the only premium paid on said policy, with interest thereon from April 2, 1934, to the date of the filing of this answer, and also all court costs that have accrued herein to the date of the filing of the answer, and defendant on filing its answer deposited said amount with the clerk of the court for such disposition as the court might order.

The answer also contained a denial of each and every allegation in said petition, except such allegations as were admitted to be true.

The plaintiff filed a reply to said answer, stating that the plaintiff "admits the knowledge of assured's drinking first came to defendant after the institution of this suit, and denies each and every allegation of new matter therein contained."

The tender, refusal thereof, and deposit were made as alleged in the answer, and there was no controversy about them in the trial court.

The evidence on the part of the plaintiff consisted of the policy and the application by insured attached thereto, the application being dated March 24, 1934, and the policy April 2, 1934; and also further evidence tending to show that the policy was delivered some time between the 2d day of April, 1934, and the 11th day of April, 1934, both inclusive, and that the first and only premium ever paid on the policy was paid by a promissory note, payable to the agent of the defendant, bearing date of April 11, 1934. Also a letter from O. C. Thornton, vice president of the defendant company, dated July 24, 1935, and addressed to John A. McAnally, the plaintiff's attorney in this case. This letter was in answer to a letter written by Mr. McAnally to the company, dated July 22, 1934, in regard to this policy, which letter stated that the policy was issued under date of April 2, 1934, and that the second annual premium fell due April 2, 1935; that the company sent the usual notices to insured about this premium, and when no settlement was received, the insured was notified that the policy had lapsed. That nothing further was received from the insured about the matter. The letter then referred to another letter from the company to the brother of the plaintiff, dated June 3, 1935, to the effect that the policy lapsed at the expiration of the grace period following April 2, 1935. The letter to Mr. McAnally then stated that as the insured died on May 25, 1935, there would be no liability on the part of the company and that the policy became null and void quite a while before the date of insured's death.

Plaintiff's evidence further tended to show that $350 would be a reasonable attorney's fee for the prosecution of this suit; and also that a higher rate of premium is charged on endowment policies than on term insurance.

Plaintiff admitted that the insured had notice of the second premium on the policy when it became due, and also that it was never paid.

Oliver C. Thornton, vice president of the defendant company, testified that on May 6, 1935, he sent notice to the insured that the policy had lapsed. That the company considered the policy had lapsed for nonpayment of premium, and for that reason the notice was sent. That at the end of the grace period of thirty-one days after the date of the policy, April 2, 1934, which was provided for in the policy, the policy lapsed itself for the nonpayment of premium, according to the terms of the policy, as he understood it. The...