White v. Metropolitan Life Ins. Co.

• Decision Date: 09 January 1924
• Docket Number: 4013
• Court: Utah Supreme Court
• Parties: WHITE v. METROPOLITAN LIFE INS. CO

224 P. 1106

63 Utah 272

WHITE v. METROPOLITAN LIFE INS. CO

No. 4013

Supreme Court of Utah

January 9, 1924

Rehearing denied April 10, 1924.

Appeal from District Court, Third District, Salt Lake County; M. L Ritchie, Judge.

Action by Zina T. White against the Metropolitan Life Insurance Company. Judgment for plaintiff, and defendant appeals.

REVERSED.

W. H Leary and W. H. Bramel, both of Salt Lake City, for appellant.

C. E. Marks and Hurd & Hurd, all of Salt Lake City, for respondent.

THURMAN, J. WEBER, C. J., and GIDEON, FRICK, and CHERRY, JJ., concur.

OPINION

THURMAN, J.

This is an action by plaintiff to recover judgment on a policy of insurance alleged to have been issued by the defendant company upon the life of her husband, Alvin B. White. Plaintiff sues as beneficiary of the policy. Plaintiff had judgment in the court below and defendant appeals. The errors assigned are denial of defendant's motion for a directed verdict and its motion for a new trial; also error of the court in directing a verdict for the plaintiff.

The material facts are substantially as follows: On the 6th day of November, 1918, Alvin B. White made application to the defendant company through its local agent in Salt Lake City for $ 2,500 life insurance, naming plaintiff as beneficiary of the policy. At the time of making the application he paid the company the sum of $ 5, for which the company gave him a receipt in the following form:

"Received from Mr. Alvin B. White five dollars on account of application made this date for insurance in the Metropolitan Life Insurance Company. Said amount is to be applied by said company, or to be returned to applicant if the company shall decline this application. If a policy is issued and the applicant refuses to accept it and pay the balance of the first premium this advance payment will be forfeited to the company. No insurance is in force upon the application unless and until a policy is issued thereon and delivered in accordance with its terms.

"A. A. Dunn,

"District Salt Lake.

"11--6--1918.

"If policy is not delivered to you in 60 days from date this receipt must be presented to the district or home office for redemption."

The applicant was examined by defendant's medical examiner at the time of making the application, and the evidence tends to show it was agreed between applicant and the company's agent that the unpaid balance of the first quarter premium might be paid on the first day of the next succeeding month. Within a week or ten days after the application was made, a policy of insurance was made on the application by the home company and forwarded to the local agent in Salt Lake City. The agent called at the home of applicant and notified his wife, the plaintiff, that the policy had been received. She informed the agent that her husband would pay the balance of the first quarter premium on the first of the next month. As the first of the month occurred on Sunday, nothing was done concerning the payment of the premium until the next night when the applicant requested his father to have applicant's brother collect applicant's wages then due from his employer and pay to defendant the balance of the stipulated premium. On the next day (December 3d) applicant's brother having procured the necessary funds appeared at the office of defendant in Salt Lake City for the purpose of paying the balance of the premium. The clerks in the office were unable to find the policy, and apparently not understanding the business referred him to the superintendent, Mr. Beckstead, who at the time was absent from the office. At any rate, some time during the day (December 3d) applicant's brother got in communication with the superintendent and informed him that he was prepared to pay the balance of the premium. The superintendent inquired as to the condition of applicant, who had not appeared in person, and applicant's brother informed him that he did not know but would find out and let him know the next day. On the following morning (December 4th) he called the superintendent by 'phone and informed him that the applicant had been "sent to bed by the doctor" on the night of December 2d with a slight case of "flu." Thereupon the superintendent informed him that he could not accept payment of the premium or deliver the policy. The $ 5 paid by applicant at the time of making the application was returned to plaintiff within a month afterwards. Applicant died December 8, 1918. Due proof was made of loss and demand made for payment of the policy, which demand was refused.

Appellant contends there was no completed contract of insurance, and relies principally upon the following stipulation contained in the application:

"It is agreed that, inasmuch as only the officers at the home office of the company in the state of New York have authority to determine whether or not a policy shall issue upon this application, and as they act on the written statements, answers and agreements herein made, no statements, promises or information made or given by or to the person soliciting or taking this application for a policy, or by or to any other person, shall be binding on the company or in any manner affect its rights unless such statements, promises or information be reduced to writing and presented to the officers of the company at its home office. It is further agreed that the company shall incur no liability under this application until it has been received, approved and the policy issued and delivered and the full first premium stipulated in the policy has actually been paid to and accepted by the company during the lifetime of the life proposed."

The last sentence of the excerpt above quoted, together with the undisputed facts, is especially relied on by appellant as showing that no contract of insurance was consummated between the parties.

It is earnestly insisted by appellant, under said provision, that it had the right to refuse to accept payment of the balance of the premium and also to refuse to deliver the policy.

Appellant quotes the following excerpt from the opinion of this court in Sterling v. Head Camp, Pacific Jurisdiction, 28 Utah 505, 80 P. 375. The quotation commences on page 520 (80 P. 380):

"It certainly must be conceded that it was competent for the parties to stipulate when and upon what conditions their proposed contract should become operative and take effect, and could have conditioned it upon delivery of the contract, payment of premiums, some fixed time, or any other reasonable condition; and when the parties have done so, in such clear terms as here, courts should not seek means to contravene and frustrate the terms of such stipulations, and thereby defeat the intention of the parties, thus plainly expressed."

In the same connection and as illustrative of the same rule appellant quotes from the concurring opinion of Mr. Justice Frick in Lombard v. Columbia Life Ins. Co., 50 Utah at page 564, 168 P. 272, the following language:

"There can be no doubt that such a provision in the application, and especially if made a part of the policy, is valid and binding on both parties to the contract. 25 Cyc. 725, and cases there cited. Nor is there any doubt that such a provision may be waived by the company. Same volume, p. 730. It is also settled beyond dispute that the contents of the application and of the policy, if the application is made a part of the policy, constitute the contract of insurance."

The provision referred to in the excerpt last quoted was to the effect that the insurance should not take effect until the issuance and delivery of the policy and the payment of the first premium while the insured was in sound health.

There is no such provision in the application or policy in the case at bar, but appellant earnestly contends that the doctrine enunciated in the excerpt above quoted applies with equal force and effect to any lawful stipulation the parties may agree to as a condition precedent to a policy of insurance becoming effective. In this case the agreement is that the insurance company--

"shall incur no liability under this application until it has been received, approved and the policy issued and delivered and the full first premium stipulated in the policy has actually been paid to and accepted by the company during the lifetime of the life proposed."

I have italicized certain words in the above quotation, for it appears to me that the words italicized constitute the crux of the controversy involved in this appeal.

Cases too numerous to mention can be found holding that when an application has been made, presented and approved and a policy prepared and returned to the local agent for delivery when the premium has been paid, such will constitute a contract of insurance enforceable by the beneficiary, even though the policy is not in fact delivered either to the insured in his lifetime or to his beneficiary afterwards. Such is the case of Lombard v. Insurance Company, supra, and cases therein cited. It may also be conceded that the weight of authority is that, where a contract of insurance is complete, except the payment of the premium, and such payment is tendered in time and refused, the contract of insurance is nevertheless complete and enforceable against the insurer. This concession as to what the majority of the cases hold, and what appears to be the weight of authority, renders it unnecessary to review in detail many of the cases cited in the briefs of the contending parties. Nevertheless, we shall cite the cases as they illustrate the rule that while contracts of insurance are construed liberally in favor of the insured, they are, nevertheless, to be construed according to the manifest intention of the parties.

Many of the cases relied on...