Washington Life Ins. Co. v. Lovejoy

• Decision Date: 22 April 1912
• Citation: 149 S.W. 398
• Parties: WASHINGTON LIFE INS. CO. et al. v. LOVEJOY et al.<SMALL><SUP>†</SUP></SMALL>
• Court: Texas Court of Appeals

149 S.W. 398

WASHINGTON LIFE INS. CO. et al. v. LOVEJOY et al.^†

Court of Civil Appeals of Texas. Galveston.

April 22, 1912.

Rehearing Denied May 9, 1912.

Appeal from District Court, Harris County; Norman G. Kittrell, Judge.

Action by John Lovejoy and others against the Washington Life Insurance Company and another. Judgment for plaintiff named, and defendants appeal. Affirmed.

Frank Ewing, of Pittsburgh, Pa., and Carlton, Townes & Townes, of Houston, for appellants. Andrews, Ball & Streetman, of Houston, for appellee.

McMEANS, J.

This suit was instituted by John Lovejoy, on his own behalf and as next friend for his minor children, against the Washington Life Insurance Company and the Pittsburg Life & Trust Company to recover certain premiums paid by him upon a policy of life insurance issued to him by the Washington Life Insurance Company, together with 6 per cent. interest per annum upon each premium from the date of its payment, and in which policy the minor children of the said Lovejoy were named as beneficiaries. Recovery is sought against the Washington Life Insurance Company upon the ground that, after the said Lovejoy had paid premiums for about 10 years, it had repudiated and broken its contract with him; and recovery was asked against the Pittsburg Life & Trust Company on the ground that it had assumed to pay the obligations of the Washington Life Insurance Company, and on the further grounds, in the alternative, that it (the Pittsburg Life & Trust Company) had acquired all, or the substantial part, of the assets of the Washington Life Insurance Company; that there was a merger of said corporations, and an absorption by the Pittsburg Life & Trust Company of the property, business, and franchises of the Washington Life Insurance Company.

In the alternative, plaintiffs prayed that, if they were denied a return of the premiums with interest, they be awarded a judgment for the actual value of the policy with interest thereon from the date of its breach, which actual value was alleged to be $5,000. The petition by its terms sought a recovery solely in favor of plaintiff John Lovejoy, but prayed in the alternative for a joint judgment for all the plaintiffs in the event it should be found that he was not entitled to a recovery for himself alone.

Defendants answered by general denial. The case was tried before the court without a jury, and judgment was rendered in favor of John Lovejoy alone against both defendants for the sum of $4,825, with interest from February 20, 1911, at the rate of 6 per cent. per annum. The court, upon proper request, filed its findings of fact, and upon such findings based the conclusions of law that the Washington Life Insurance Company had broken its contract with plaintiff John Lovejoy, and that he had a right to recover damages by reason of said breach of contract, which damages the court found to be the premiums paid by him, with 6 per cent. per annum interest from their several dates of payment. The court further found that the Pittsburg Life & Trust Company, having expressly assumed all liabilities of the Washington Life Insurance Company, and, in addition, having in effect absorbed said company, and acquired practically all of its assets, was liable to plaintiff for the same amount. From the judgment against them both, defendants have appealed.

Appellants by their first assignment of error complain that the court erred in its finding to the effect that the correspondence between Lovejoy and appellants showed that the Washington Life Insurance Company had transferred all of its assets to the Pittsburg Life & Trust Company, and that the two companies had been consolidated; and they contend in this contention that the contracts between the two companies, and the undisputed testimony of the witnesses Baldwin and Mahan, showed that the companies had not been consolidated; that all of the assets of the Washington Life had not been transferred to the Pittsburg Company, and that such evidence showed that the Washington Life retained a portion of its assets; that it took collateral security amounting to about $18,000,000 to secure the agreement of the Pittsburg Company to protect the obligations existing and that might come into existence against the Washington Life Insurance Company.

Looking to the correspondence alone, the conclusion is irresistible that there was at least a consolidation of the two companies, if not an absorption of the Washington Life by the Pittsburg Company. Preliminary to a discussion of the correspondence, we may say that the undisputed proof shows that the policy in question was issued by the Washington Life to John Lovejoy on August 30, 1899, and from that time down to and including the 30th day of November, 1908, Lovejoy regularly paid the premiums of $360 a year in four equal installments, aggregating $3,420. Up to the time of the payment of the last quarterly installment, Lovejoy conducted all of the transactions relating to said policy with the Washington Life, and this company regularly sent him notices in advance of the maturity of the premiums, and he made the payments directly to it.

About February 7, 1909, Lovejoy received from appellant Pittsburg Life & Trust Company a letter in which was inclosed a printed slip dated February 5, 1909. This slip contained the information that the Pittsburg Company had assumed all of the liabilities of the Washington Life, and requested the insured to consent to the arrangement which had been made between said companies, and to sign an agreement at the bottom of the slip which, in effect, was an agreement to transfer the plaintiff's insurance from the Washington Life to the Pittsburg Company. On February 13, 1909, Lovejoy wrote a letter to each of the companies. In his letter to the Washington Life he stated that he had received a communication from the Pittsburg Company announcing that the former had reinsured his policy in the latter, which had taken over all risks of the Washington Life, and asking if the Washington Life was going or had gone out of business, and if it had been absorbed by the Pittsburg Company, and asking further if arrangements had been made to pay the cash value of his policy. He stated: "I don't care for my policy to be reinsured in any other company." In his letter to the Pittsburg Company he acknowledged receipt of its letter and of the inclosed certificate, and stated that he had written to the Washington Life that he did not care to have the policy reinsured or carried any further, and asking to be informed of the present cash surrender value of his policy. On February 19, 1909, the Washington Life replied to Lovejoy's letter, its reply containing the following statements: "Would say that the Pittsburg Life & Trust Company has purchased practically all of the stock of the Washington Life Insurance Company, and it would naturally follow that the business of the two companies would be consolidated." The letter also referred to a statement inclosed, showing an examination of the Pittsburg Life & Trust Company by the insurance department of Pennsylvania, which was sent in answer to Lovejoy's request for information. This statement contained the following: "On December 30, 1909, articles of agreement were entered into between the Pittsburg Life & Trust Company of Pennsylvania and the Washington Life Insurance Company of New York, by which the Pittsburg Life agreed to assume all liabilities of the Washington Life in consideration of the latter company turning over all of its assets to the former corporation." At the end of its letter the Washington Life says: "The Pittsburg Life & Trust Company will be glad to give you any information you may desire in regard to your policy." This is the last written communication of any kind received by Lovejoy from the Washington Life Insurance Company. Some further correspondence ensued between Lovejoy and the Pittsburg Company, with the purpose on the part of the plaintiff to ascertain what settlement he would be entitled to in case he decided to surrender his policy. No settlement, however, was made, and nothing was done by either company in reliance upon any statement made by Lovejoy. On March 6, 1909, Lovejoy again wrote to the Pittsburg Company, his letter containing the following "First, I want to state distinctly and unequivocally that I never agreed and do not agree that my policy shall be transferred by the Washington Life Insurance Company to any other company, and do not agree that your company shall take it over. That is what I want distinctly understood first."

About the 1st of March, 1909, Lovejoy was notified by the Pittsburg Company that he had failed to pay the premiums due on his policy February 28th. On March 13th, a further notice was sent to him by the Pittsburg Company demanding payment of the premium by the insured to that company, and later, in the same month, the Pittsburg Company notified Lovejoy that, because of his failure to pay the premium due February 28th, his policy had been canceled; and subsequently this company again wrote Lovejoy offering to reinstate him on certain conditions.

We think this evidence entirely sufficient as a basis for the court's findings that there had been a consolidation of the two companies. But appellants contend, as we understand, that, notwithstanding the correspondence, the contracts entered into between the two companies, together with the testimony of the witnesses Baldwin and Mahan, conclusively show that there was no consolidation.

The original contract between the two companies, of date December 30, 1908, is as follows: "Whereas it is the purpose of this agreement to more effectively secure to the policy holders of the Washington Life Insurance Company the payment of their policy contracts already matured or which may mature hereafter according to their terms and conditions, and to further conserve the interests of the policy holders of the said Washington Life...