Opinion
No. 33260.
June 20, 1938.
1. DISCOVERY.
Bills of discovery are cognizable in equity courts (Const. 1890, section 160).
2. DISCOVERY.
The fact that under statute a party may demand and receive papers and documents from his adversary without the necessity of a bill of discovery does not deprive the chancery court of jurisdiction of pure bills for discovery (Code 1930, section 744; Const. 1890, section 160).
3. JUDGMENT.
A decree rendered on a bill of discovery which sought only discovery of a life policy was not res judicata on issue of insurer's liability in subsequent suit by the beneficiary on the policy, which the insurer allegedly wrongfully claimed to be void (Code 1930, section 744; Const. 1890, section 160).
4. EQUITY.
A demurrer to an insurer's plea of res judicata did not admit, to the exclusion of adverse allegations of the declaration, the answer of the insurer to a bill of discovery, which was made an exhibit to the insurer's plea of res judicata.
5. INSURANCE.
Where an insurer wrongfully cancels a life policy, the beneficiary or the insured is not required to institute a suit at the time but may elect to treat the policy as still in force and wait until it is payable, or file a suit in equity to set aside the cancellation and to have the policy declared to be valid and enforced.
6. INSURANCE.
Allegations that life policy premium was paid to authorized agent of insurer before days of grace expired and that receipt of the premium by the agent was receipt by the insurer and that the insurer declined to accept the payments although tendered and that the policy was improperly declared to be void, if sustained by the proof, would authorize recovery by the beneficiary on the ground that the purported cancellation of the policy was wrongful.
7. INSURANCE.
Generally, if an insurer declares a forfeiture of a policy and it is clearly apparent from the acts and declarations that a tender would not be accepted or if it has declared a forfeiture and refused the premiums, the fact that there has been a failure subsequently to pay or tender the premiums as they fall due will not prevent a recovery on the policy.
8. INSURANCE.
Where an insurer wrongfully cancels a life policy the insured may ignore the cancellation and keep the policy in force by paying or offering to pay the premiums thereafter becoming due or he may sue in equity to set aside the cancellation or he may treat cancellation as an anticipatory breach of the contract and sue for the damages thereby sustained by him.
9. LIMITATION OF ACTIONS.
An action on a life policy brought after insured's death by beneficiary who contended that insurer had wrongfully declared the policy to be void during insured's lifetime, was not barred by limitations because action was brought more than six years after last premium payment was remitted by insured, since beneficiary had right to treat the policy as in force and delay suit until the policy became payable upon insured's death (Code 1930, section 2292).
APPEAL from the circuit court of Lincoln county; HON. J.F. GUYNES, Judge.
Chalmers Potter and Henry Barksdale, both of Jackson, and R.L. Jones, of Brookhaven, for appellant.
Although pure bills of discovery are seldom used in this jurisdiction, it by no means follows that the same has ever been abolished, or that the same is not now still a part of the general equity jurisprudence of our state.
Griffith's Chancery Practice, sections 427, 428.
If, as stated by Judge Griffith, a pure bill of discovery has not been abolished in Mississippi and if, as treated by both parties and the chancellor, the action in the chancery court was a pure bill of discovery, then, in that event, the action in the chancery court and the decree thereon is no bar to the action herein pending, because not only must there be an identity of parties, but there must also be an identity of issues, and also a judgment upon the merits in the first suit. Of course, the identity of parties is admitted, but where the issue in the chancery court is simply whether the complainant therein is entitled to discover, and the issue in the present suit is plaintiff's right to a money judgment, there is no such identity of issues so that the chancery proceeding will bar the maintenance of the present suit. In the argument at the bar in the court below, however, the defendant maintained that not only were all matters concluded in the first judgment, or decree, that were shown to have been concluded, but that all matters were concluded that could or might have been decided therein.
There are two answers to this contention: first, as stated by Judge Griffith in the work above cited, a pure bill of discovery still exists in our jurisdiction, and secondly, as a necessary corollary thereto, that the true rule is not that all matters are concluded which might or could have been concluded, but that all matters and issues are concluded only when necessarily involved in the prior action.
Lion Oil Refining Co. v. Crystal Oil Co., 156 So. 593, 171 Miss. 36; Hubbard v. Flynt, 58 Miss. 266; Davis v. Davis, 4 So. 554, 65 Miss. 498; 15 R.C.L. 964; Freeman on Judgments (5 Ed.), 1447.
The estoppel arising from a judgment or decree is not odious, because it is confined to those points which either were in fact litigated and determined between the parties or which were determined in the absence of any actual contest, but not until after a full legal opportunity was given both parties to make such contest as they might deem proper. It follows from this that no judgment can be available as an estoppel, unless it is a judgment on the merits.
Freeman on Judgments (5 Ed.), page 1530, par. 723; True-Hixon Lbr. Co. v. Thorn, 158 So. 909; Russell v. Place, 4 Otto 606, 24 L.Ed. 214; DeSollar v. Hanscome, 158 U.S. 216, 39 L.Ed. 956; Moore v. Chattanooga Electric Co., 109 S.W. 497, 16 L.R.A. (N.S.) 978.
We most confidently assert that no one would successfully contend that the decree of the chancery court was a decree upon the merits on the issues involved in the instant case; that is, whether Mrs. Callender, as beneficiary, was entitled to a money judgment against the defendant. The thing, and the only thing, determined in the chancery decree was that Mrs. Callender in that suit was entitled to the discovery prayed for; this being so, the most that can be said of the chancery proceedings is that it is still a pending cause, because there has been no final adjudication on its merits. We do not concede this to be true, and insist that it is not so, for the reason that the chancery proceeding was a bill of discovery, but if we are wrong there has been no final decree in that action and it is still a pending suit. If it is a pending suit, then the pendency of that cause is no bar to the maintenance of this action. The only manner in which this question could be raised by the defendant would be by a plea in abatement.
49 C.J. 238.
In this case, the insurance company announced that the policy was void July 1, 1931, because of a non-payment of premium. Thereafter, in 1934, the insured died. This suit was filed September 22, 1937, more than six years after the policy was declared void, but within six years from the death of the insured.
Where the defendant insurance company wrongfully cancels a policy of insurance upon the life of a person neither the insured nor the beneficiary is required to institute a suit at that time, or within the period of limitation dating from that date, but they have the election of remedies to do either one of three things, to-wit: (a) they may elect to treat the policy as still in force and let the test of the validity of the cancellation await until the policy is payable; (b) the insured may sue in equity to set aside the cancellation and have the policy declared to be valid and in force; (c) the insured may maintain an action at law to recover damages for wrongful cancellation or repudiation.
32 C.J. 1263; American Ins. Union v. Woodard, 48 A.L.R. 102; Indiana Life Endowment Co. v. Carnithan, 109 N.E. 851; Sovereign Camp v. Penn, 161 So. 681, 173 Miss. 93; 107 A.L.R. 1233.
The following rule as to the necessity of paying, or tendering, any premiums required by the policy subsequent to a wrongful breach is announced by our court in the case of Daggett v. Prudential Life Ins. Co., 166 So. 405, 175 Miss. 89, as follows: "The general rule is that if the insurance company has declared a forfeiture of the policy, and it is clearly apparent from acts or declarations that a tender would not be accepted, or if it has declared a forfeiture and refused the premiums, the fact that there has been a failure subsequently to pay or tender the premiums as they fall due will not prevent a recovery on the policy."
2 Joyce, The Law of Insurance (2 Ed.), 2240, par. 1123.
Plaintiff's cause of action is not barred by the six year statute of limitations.
Wells, Wells Lipscomb, of Jackson, for appellee.
The defendant's first special plea was well taken and the learned trial judge properly overruled plaintiff's demurrer thereto. We do not believe that learned counsel for the plaintiff would contend for one minute that the chancery court of Hinds county did not have jurisdiction to render a monetary decree in favor the beneficiary, had it been determined that she was thereto entitled. Can a litigant then, with a choice of one of two forums, first choose one, which has full and complete jurisdiction to determine all her rights, and, to suit some whim or fancy, pinch off only a piece of the relief which she seeks, and then go into another forum seeking other relief on the same identical contract?
Griffith's Mississippi Chancery Practice, sees. 36, 428, and 614.
Where a court has jurisdiction of the subject-matter and the parties in interest, its judgment is not alone res adjudicata of the questions specifically presented by the pleadings, but is also res adjudicata of all questions necessarily involved and which could have been presented.
Bates v. Strickland, 139 Miss. 636, 103 So. 432; Love v. Mayor and Board of Aldermen of Yazoo City, 138 So. 600, 162 Miss. 65; Brock v. Adler, 177 So. 523; Griffith's Chancery Practice, sec. 375.
Judgment in former case is res judicata of questions specifically presented by pleadings, and of all questions involved which could have been presented.
Darrow v. Moore, 163 Miss. 705, 142 So. 447; Harvison v. Turner, 77 So. 528, 116 Miss. 550; Bates v. Strickland, 139 Miss. 636, 103 So. 432; Dean v. Bd. of Suprs., Desoto County, 99 So. 563, 135 Miss. 268; Vinson v. Colonial, etc., Mortgage Co., 116 Miss. 59, 76 So. 827.
The proof necessary to sustain the bill of discovery was the same proof necessary to sustain the allegations of the declaration.
Griffith's Chancery Practice, sec. 429.
Not only were the allegations of the bill of complaint substantially identical with those of the declaration; not only was the testimony necessary to sustain the bill of complaint substantially the same as that necessary to support the declaration; not only is it true that the complainant would not have been entitled to discovery without substantially showing a cause of action on the contract she sought to have discovered; but the allegations of the answer in the chancery case were the same as those necessary to defeat the action at law subsequently filed.
Phoenix Fire Ins. Co. v. Hoffheimer Bros. Co., 46 Miss. 645.
Even leaving the res adjudicata feature of the defendant's first special plea out of consideration, the lower court was eminently correct in overruling plaintiff's demurrer to defendant's first special plea.
Travelers Fire Ins. Co. v. Price, 152 So. 889.
Irrespective of the question of res adjudicata, and irrespective of Watts' authority with respect to the premium due on May 26, 1931, the court was required to overrule plaintiff's demurrers to defendant's special pleas under the authority of Daggett v. Prudential Life Co., 166 So. 405.
Plaintiff's cause of action, if any she had, was barred by the six year statute of limitation.
The law in this state as to when a cause of action for breach of contract arises is well settled. Counsel for plaintiff contends that such cause of action did not arise until the death of the insured. If, as plaintiff contends, the defendant repudiated its contract in June, 1931, and announced its irrevocable intention not to accept any more premiums, then and there a breach of the contract occurred. The insured could then and there have sued in equity to set aside the cancellation. He could have sued at law for damages sustained by him as a result of the alleged breach, or he could have prevented the statute of limitations beginning to run "by paying, or offering to pay, the premiums thereafter becoming due thereon." Since he did none of these things, his beneficiary who derives whatever rights she may have through the insured, cannot sue more than six years after the alleged breach and obviate the effect of the statute of limitations by asserting merely that the insured was ready, willing and able to pay such premiums, but failed to do so under the assumption that the defendant would not have accepted them. The correct rule as to when limitation begins to run in the case of a breach of contract is laid down in Johnson v. Crisler, 125 So. 724, as follows: "In the case of a breach of contract, the cause of action accrues generally at the time of the breach, regardless of the time when damages from breach occurred."
Argued orally by Chalmers Potter, for appellant.
On September 22, 1937, the appellant filed a declaration against the appellee, the Lamar Life Insurance Company, seeking to recover the face value of Policy Number 86,819, not exhibited with the declaration. The appellee appeared and filed a plea of the general issue; a plea of res judicata, and a plea setting up the six year Statute of Limitations. Code 1930, section 2292. The appellant filed separate demurrers to each of said pleas which were overruled by the court, and the appellant declining to plead further the court entered a final judgment in favor of the appellee, from which this appeal is prosecuted.
The declaration alleged the issuance of the policy; the payment of the first premium thereon, and that W.E. Watts delivered said policy to William C. Callender in his lifetime and received the premium then due, and that it was the custom of said Watts to receive premiums, other than the first, in the territory in which he was agent for the appellee, and to remit such collections to appellee at its home office in Jackson, Mississippi. The declaration specifically alleged that Watts was authorized by the appellee to collect the premiums herein referred to, and that this practice and custom had been acquiesced in for a long period of time by appellee with its full knowledge, and that this fact was well known to the said Callender, the insured. The declaration further alleged that on June 26, 1931, the said William C. Callender paid to Watts, as district manager of the appellee, a sum sufficient to pay the third quarterly premium due on said policy in time for him to remit same to the Home Office in Jackson, Miss.; that appellee, notwithstanding said payment, notified William C. Callender that the payment, so made by him had not been received until after the days of grace had expired, to-wit, on June 27, 1931, and that thereafter said William C. Callender repeatedly requested, but was refused, reinstatement, the appellee stating that the policy was void and of no effect, and that no further premiums would be received by it, although Callender was ready, willing and able, at all times prior to his death, to pay and would have paid the premiums subsequently accruing thereon. The declaration further alleged the death, on January 29, 1934, of said William C. Callender, and that appellant was named as beneficiary in said policy of insurance herein involved.
The appellee's first special plea alleged that on December 1st, 1936, appellant filed her bill of complaint in the Chancery Court of Hinds County against the appellee, the suit being predicated upon Policy Number 86,819, praying for a discovery of said policy, and concluding with a prayer for general relief. The Answer of the appellee to the bill of complaint was made Exhibit B thereto; a copy of a final decree rendered on June 16, 1937, was made Exhibit C, and it was alleged therein that said suit was predicated upon the same policy and that appellant prayed for a discovery of said policy, and that the said decree so rendered in said cause, being between the identical parties and predicated on the identical policy, is res judicata of all the issues involved, and that appellant had a perfect right in said cause to pray for a monetary decree awarding her the proceeds of said policy.
The bill annexed to the plea contains practically the same allegations as the declaration in the case at bar, but the bill further alleged that said policy is not now in the possession of the appellant and cannot be attached thereto as an exhibit, but that said policy, or a copy thereof, is in the possession of the appellee, Lamar Life Ins. Co., and that the appellant is entitled to a discovery of its terms, and being without a remedy at law, prayed that the bill be received and filed, and that process issue to appellee commanding it to appear at the next term of the chancery court and to exhibit to said court a true copy of Policy No. 86,819, issued by it to William C. Callender on Nov. 26, 1930. Appellee then prayed for general relief. The Answer made Exhibit B to the Bill was a denial of Watts' agency. It admitted that appellee notified Mrs. Callender that it had received payment after the expiration of the grace period, and that the policy had lapsed for nonpayment of premium.
The Chancery Court of Hinds County, in the suit between these parties, rendered the following decree:
"This cause having come on this day to be heard on bill of complaint herein wherein she prays for a discovery, and the same having been heard and considered, the court is of the opinion that she is entitled to the relief prayed for. Therefore, be it, and it is hereby ordered, adjudged and decreed that the defendant, the Lamar Life Insurance Company, be and it is hereby required and directed to furnish the complainant a copy of the form employed in the issuance of its policy Number 86,819, being the policy herein involved, within (15) fifteen days from the date hereof. Ordered, adjudged and decreed this the 16th day of June, 1937.
"V.J. Stricker, Chancellor."
The second special plea invoked the six year statute of limitations, setting up that on the due date of the premium on the policy, the premium was not paid, and that it was not paid within the days of grace; that on June 27, 1931, appellee received a check for $48.80 to cover a quarterly premium on the policy, and two days later it wrote William C. Callender advising him that said check had been received after the expiration of the days of grace, and returned the check, inclosing therewith a blank form of application for reinstatement of the lapsed policy, said letter, it was alleged, having been received by the insured on July 1, 1931. It was further alleged that if the action of the appellee in advising the insured that it could not accept said check, and that the policy in its then shape was null and void, was wrongful, then the appellee wholly breached said contract of insurance on July 1, 1931, and that a cause of action immediately arose against the insurer, which cause of action, under the six year statute of limitations, is now barred, said suit not having been filed until three months after the statute had barred the cause of action.
The fourth ground of the demurrer to the plea of res judicata is to the effect that the allegations of the special plea, and the exhibits, show, on their faces, that the bill filed in the Chancery Court of Hinds County, Miss., was a pure bill of discovery, and no other relief was there sought, and no other issue determined by said court. A casual reading of the allegations of the bill reveals that it was intended solely as a bill for discovery, and the decree of the Chancery Court shows that no other issue was considered. Such bills are still cognizable in equity courts under Section 160, of the Constitution. The fact that by Section 744, Code of 1930, a party may demand and receive papers and documents from his adversary without the necessity of such a bill does not deprive the Chancery Court of jurisdiction of pure bills for discovery. This Court has set this question at rest in the case of Citizens' Bank of Hattiesburg v. Tracy, 120 Miss. 413, 82 So. 307, and it is so evident as not to require a discussion, that there was no decree on the merits, and hence no termination of the litigation in the Chancery Court.
The contention of the appellee that the answer filed as Exhibit B to its plea of res judicata is admitted, by the demurrer, to the exclusion of adverse allegations of the declaration, is without merit, and no authority is cited to support it. The demurrer admitted the pleadings and decree.
We are of the opinion that the demurrer should have been sustained as to the plea of res judicata. To hold otherwise would be to announce that bills of discovery in aid of a court of law have been abolished, and this is patently not correct. See Griffith's Chancery Practice, Sections 427 and 428.
As to the plea setting up the Six Year Statute of Limitations, the demurrer to the second special plea fully states the applicable principles of law to the question presented, and states that where an insurance company wrongfully cancels a policy, the beneficiary or the insured is not required to institute a suit at that time but may elect one of three remedies, first, they may treat the policy as still in force, and wait until it is payable; second, a suit in equity may be brought to set aside the cancellation, and third, the insured may sue in equity to set aside the cancellation and to have the policy declared to be valid and in force.
The declaration specifically alleged that Watts was authorized to receive payments of premiums, and that his custom in so doing had been ratified by the insurer.
It is undisputed here that the premium was paid to the authorized agent before the days of grace expired; that the receipt by Watts was a receipt by the insurer at its home office, and that the insurer declined to receive the premium, although tendered and the policy was improperly declared to be void. If the facts sustain these allegations of the declaration upon proof, then the cancellation was wrongful under the rule announced in Daggett v. Prudential Life Ins. Co., 175 Miss. 89, 166 So. 405, in which it was said that (page 409): "The general rule is that if the insurance company has declared a forfeiture of the policy, and it is clearly apparent from acts or declarations that a tender would not be accepted, or if it has declared a forfeiture and refused the premiums, the fact that there has been a failure subsequently to pay or tender the premiums as they fall due will not prevent a recovery on the policy. Joyce, The Law of Insurance (2 Ed.), vol. 2, sec. 1123, p. 3340."
Having reached the conclusion that the declaration states facts sufficient to establish a waiver of further tender, the demurrer should have been sustained under the authority of Sovereign Camp, W.O.W., v. Penn, 173 Miss. 93, 161 So. 681, wherein this Court held that when a Life Insurance Company wrongfully cancels its policy of insurance, the insured may ignore the cancellation, and keep the policy in force by paying, or offering to pay, the premiums thereafter becoming due thereon; or he may sue in equity to set aside the cancellation, or he may treat the cancellation as an anticipatory breach of the contract, and sue for the damages thereby sustained by him. 32 C.J. 1265.
So then, the appellant in the case at bar had the option to wait until the death of the insured before her cause of action would accrue, and as to the effect of the six year statute of limitations, it clearly did not begin to run until that time.
Reversed and remanded.