Wilson v. Prudential Ins. Co. of Am.

• Decision Date: 16 June 1936
• Docket Number: No. 60.,60.
• Citation: 276 Mich. 232,267 N.W. 824
• Parties: WILSON et ux. v. PRUDENTIAL INS. CO. OF AMERICA.
• Court: Michigan Supreme Court

276 Mich. 232

267 N.W. 824

WILSON et ux.

v.PRUDENTIAL INS. CO. OF AMERICA.

No. 60.

Supreme Court of Michigan.

June 16, 1936.

Suit by Charles Wilson and Florence Wilson, his wife, against the Prudential Insurance Company of America. From a judgment for plaintiffs, defendant appeals and plaintiffs cross-appeal.

Reversed, and a new trial granted.

Appeal from Circuit Court, Wayne County; Robert M. Toms, judge.

Argued before the Entire Bench.

Emmons, Oren, Sleeper & Krise, of Detroit (Donald McGaffey, of Detroit, of counsel), for appellant.

Albert Summer, of Detroit, for appellees and cross-appellants.

BUTZEL, Justice.

On October 22, 1926, defendant issued to Frederick J. Wilson, then 16 years of age, a 30-year $2,000 endowment policy in which plaintiffs were named as beneficiaries. Subsequently, on April 22, 1929, in consideration of an extra premium and by an appropriate rider, defendant agreed to pay an additional sum of $2,000, double indemnity, in case the insured met death by accident; this double indemnity rider to become null and void should the nonforfeiture privileges of the policy become operative. The policy provided in one of the nonforfeiture clauses that where the policy lapsed for nonpayment of premiums the insurance should be automatically extended for a period reflected by the cash surrender value of the policy. It is conceded that the quarterly premiums up to and including that due on October 22, 1929, where paid. On December 6, 1929, the insured borrowed $100 from defendant upon the sole security of the policy. He died as a result of an accident on May 9, 1931. Defendant based its refusal to pay the loss on the ground that the policy was null and void through a lapse of the policy owing to the failure to pay the quarterly premiums due after October 22, 1929. Plaintiffs brought suit and in their declaration, as modified by their reply, claimed the original amount of the policy, plus the additional $2,000, together with interest on such sums, less the amount borrowed by the insured from the defendant, plus interest. The sole question presented to the jury was: ‘Were all premiums which became due prior to the death of Frederick Wilson, the insured, paid to the insurance company?’ The answer was in the affirmative. Thereupon, the trial judge entered a judgment for the full amount of the policy and for double indemnity, together with interest, less the amount due on the loan and interest thereon.

Plaintiffs on cross-appeal, in claiming that the amount of the loan should not have been deducted in the rendition of the judgment, contend that, as insured was a minor when he made the loan, the loan was voidable and was disaffirmed by plaintiffs after insured's death which occurred 17 days after he became of age. We will not discuss the question raised by the fact that plaintiffs' pleadings authorized the deduction of the $100 loan from plaintiffs' recovery, as this question was not raised in the lower court nor discussed in the briefs. We affirm the trial court's action, however, on the ground that the loan was valid and binding under section 12454, C.L.1929, which provides: ‘All contracts for * * * insurance made by any person between the ages of sixteen (16) and twenty-one (21) years for the benefit of * * * his father, mother, * * * or for the surrender of such insurance, or for the discharge of any money payable or benefit accruing thereunder, shall be * * * of the same force and effect as though said minor had attained his majority at the time of making such contract: Provided, That this section shall not have the effect of making a promissory note or other evidence of indebtedness given by such minor in payment of premium or premiums on such contracts for insurance valid, either in the hands of the original owner or subsequent purchaser thereof.’

The note given by the insured was not for the payment of a premium. The loan was made in accordance with provisions for such in the contract of insurance wherein it was provided that any indebtedness to the company should be deducted from the amount otherwise payable by the company; that in computing the period of extended insurance the amount of the loan must be considered and deduction made. The loan and the attendant contractual obligations were binding by virtue of section 12454, supra, and the trial court was correct in deducting it.

The jury was properly instructed that upon the introduction of the policy and the submission of proper proofs of death of the insured, a presumption arose that all premiums had been paid and that the policy had not lapsed. Rousseau v. Brotherhood of American Yeomen, 186 Mich. 101, 152 N.W. 939. Upon submission of evidence to the contrary by the insurer, the presumption in favor of the insured disappears, but the burden is on the insurer to establish the nonpayment of premiums. Watts v. Metropolitan Life Ins. Co., 211 Ala. 404, 100 So. 812;Pilot Life Ins. Co. v. Hawkins, 222 Ala. 218, 131 So. 889;Sovereign Camp, W.O.W., v. Madrigal, 40 Ariz. 396, 12 P.(2d) 615;Little v. Illinois B. Life Ass'n, 247 Ill.App. 547;Ragan v. Provident L. & A. Ins. Co., 209 Iowa, 1075, 229 N.W. 702; Equitable Life Assur. Soc. v. Campbell, 85 Ind.App. 450, 150 N.E. 31,151 N.E. 682, superseding 148 N.E. 505;Smith v. Ohio M. M. Fire Ins. Co., 330 Mo. 236, 49 S.W.(2d) 42;Medling v. Abraham Lincoln Life Ins. Co., 225 Mo.App. 1243, 41 S.W.(2d) 6;Carden v. Sons & Daughters of Liberty, 179 N.C. 399, 102 S.E. 610;Bianco v. Lentino (Sup.) 177 N.Y.S. 244;Hall v. Scottish Rite, K. T. & M. M. Aid Ass'n, 3 Ohio C.D. 384, 6 Ohio Cir.Ct.R. 137;Sullivan v. Supreme Council of C. M. B. Ass'n, 266 Pa. 57, 109 A. 604;Curdts v. Pioneer Life Ins. Co., 166 S.C. 94, 164 S.E. 438;Winters Mutual Aid Ass'n v. Corum (Tex.Civ.App.) 297 S.W. 238; 4 Cooley, Briefs on Insurance (2d Ed.) p. 3863; 8 Couch, Insurance, § 2223. Defendant contends that this rule is only applicable to fraternal insurance, but as the authorities above cited and elsewhere hold, this rule is applied against both fraternal and nonfraternal insurance companies.

The jury rendered a verdict for plaintiff. Reversible error was committed in excluding from the jury's consideration the original records of the company, showing the insured's account with the company, on the ground that such evidence offended the rule prohibiting the admission of testimony equally within the knowledge of the deceased. A clerk of the company testified that she made entries showing the status of the insured's account on a separate card such as was made out and kept by the company in the ordinary course of business for each policyholder. Plaintiffs conceded that a photostatic copy of the card might be used were not the original inadmissible for the reason stated. Defendant claims that beneficiaries are not persons who may invoke the protection of this statute. See Schempf v. New Era Life Ass'n, 253 Mich. 152, 234 N.W. 177, to the contrary. The court was in error in holding that the statute prohibiting testimony equally within the knowledge of deceased applied to books of account. By the great and overwhelming weight of authority, books of account properly presented are admissible for whatever evidentiary force they may have in order to establish a claim against the deceased person despite statutes, like the one in Michigan, prohibiting testimony as to matters equally within the knowledge of the deceased. Roche v. Ware, 71 Cal. 375, 12 P. 284,60 Am.Rep. 539;Haines v. Christie, 28 Colo. 502, 66 P. 883; Robinson v. Dibble's Administrator, 17 Fla. 457; Chapin v. Mitchell, 44 Fla. 225, 32 So. 875; Strickland v. Wynn, 51 Ga. 600; Dysart v. Furrow, 90 Iowa, 59, 57 N.W. 644;Alling v. Brazee, 27 Ill.App. 595; Anthony v. Stinson, 4 Kan. 211; Mansfield v. Gushee, 120 Me. 333, 114 A. 296;Dexter v. Booth, 2 Allen (Mass.) 559;Green v. Gould, 3 Allen (Mass.) 465, 467;Bookout v. Shannon, 59 Miss. 378;Martin v. Scott, 12 Neb. 42, 10 N.W. 532; Jones v. Gammans, 11 Nev. 249; Cather v. Damerell, 5 Neb. (Unof.) 490,99 N.W. 35;West v. Van Tuyl, 119 N.Y. 620, 23 N.E. 450; McGoldrick v. Wilson's Ex'r, 18 Hun.(N.Y.) 443; Keener v. Zartman, Adm'r, 144 Pa. 179, 22 A. 889;Cargill v. Atwood, 18 R.I. 303, 27 A. 214;Sanborn v. Dentler, 97 Wash. 149,...