Summary
holding life insurance policy had lapsed for nonpayment of premiums, and therefore beneficiary was not entitled to death proceeds after insured died, where policy required evidence of insurability for reinstatement and provided that “reinstatement shall not become effective ... except that at the time of such payment the insured is alive and in sound health”
Summary of this case from Vasily v. Mony Life Ins. Co. of Am.Opinion
32712.
DECIDED OCTOBER 18, 1949. REHEARING DENIED NOVEMBER 9, 1949.
Complaint on life policy; from Albany City Court — Judge Clayton Jones. August 5, 1949.
Leonard Farkas Walter H. Burt, for plaintiff in error.
James W. Smith, contra.
1. In contradictory pleadings, the version most unfavorable to the pleader must be taken, as a pleading must be construed most strongly against the pleader.
2. The acts of the agent in the instant case failed to amount to a reinstatement of the lapsed policy, and the act of the company in retaining the premiums without knowledge of the facts did not amount to a ratification of the unauthorized act of the agent.
3. Where the policy provides that the extent of the company's liability will only be the refund of premiums paid after the lapse of the policy unless the insured is alive and in good health, and where it appears that the insured was dead at the time the lapsed policy was paid up, which fact was unknown to the company or any of its agents, the extent of the company's liability is the refund of the premiums thus paid.
DECIDED OCTOBER 18, 1949. REHEARING DENIED NOVEMBER 9, 1949.
Mrs. Jetter Pantone filed her petition against Independent Life Accident Insurance Company in which she prayed judgment against the insurer for double indemnity, 25% penalty and attorney fees on a policy issued by that company on the life of one Guy Tedders in which she was named beneficiary. The petition as twice amended alleged: that the insured died on December 20, 1948, at 5 a. m., in an accidental fire in Folkston, Georgia, and that the plaintiff did not learn of his death until 10 days later, that demand was made upon the defendant insurance company on January 17, 1949, for payment according to the terms of the policy, at which time it refused to pay her any amount except the return of her premiums in the sum of $12.80.
The allegations relating to the payment of premiums are as follows: that it was customary for an agent to call at the plaintiff's house to collect premiums but that the agent was sick; that on December 20, 1948, between noon and 1 p. m., she called at the office of the defendant's agent to pay her premiums but was informed they had no way of telling how much she owed, and she left $4 with the agent "not knowing whether she was one week or six weeks behind"; that this payment was accepted, and the agent then came to her home and placed the credits in her receipt book; that the next day he came back and asked her to pay up to January 3, 1949; and that she did so; that these payments were accepted by the agent and constituted a waiver of any requirements under the policy as to reinstatement thereof; and that the defendant company accepted the same, thereby waiving the provisions of the policy in reference to non-payment of premiums.
The policy provisions are set out in Exhibits A and C, the pertinent parts reading as follows:
"Payment of premiums — If, for any reason, the agent shall not call for the premium when due, the insured shall be required to pay the premium at the branch office of the company or remit same directly to the home office. In event of the insured's failure to perform this duty within four weeks from the date on which said premium was due, this policy shall thereupon become void and all premiums paid hereon shall be forfeited to the company, except as herein provided. A discount of 5% will be allowed on all quarterly, semi-annual, or annual premiums paid in advance.
"Period of grace — A grace period of four weeks will be granted for the payment of every premium, after the first, during which time the insurance will continue in force. The grace period shall be determined by the last premium due and receipted for [by] any authorized agent of the company during the life and good health of the insured.
"Reinstatement — If this policy be lapsed for non-payment of premiums and no surrender value has been taken, it will be reinstated, within one year from the date to which premiums have been duly paid, upon written application of the insured and upon payment of all arrears and the presentation of evidence of insurability of the insured, satisfactory to the company, but the reinstatement shall not become effective and the company assumes no liability for premiums paid by any one on lapsed policies except that at the time of such payment the insured is alive and in sound health. In all such cases to the contrary, the company agrees to return to the insured or beneficiary such premiums paid out of the grace period." (Italics ours.)
The defendant insurance company renewed its general demurrer to the petition as amended. This demurrer was overruled by the trial court, and the defendant brings error.
The original petition, which set forth the contract of insurance, the death, the demand and the failure to pay, was subject to the demurrers filed against it that there was no allegation that the policy was in full force and effect at the time of the insured's death, and also that the terms of the policy were not sufficiently set forth. In her first amendment the plaintiff further alleged: that about two weeks before December 20, 1948, she called at the office and asked to have an agent sent out to collect her premiums, that on December 20 she again went to the office and this time left the sum of $4, "not knowing whether she was one week or six weeks behind but believing she was leaving enough so that it would be sufficient to pay it up"; that an agent then called at her home and placed the credits in her receipt book, and that the next day he came back and asked her to pay up to January 3, 1949, and that she did so. In her second amendment the plaintiff stated that Guy Tedders died at 5 a. m., on December 20, 1948. By Exhibit "C" attached to and made a part of the amendment she set out further provisions of the policy of insurance, as quoted in the statement of facts, and by Exhibit "B" she set out a copy of the premium receipt book, with the credit entries, showing that the weekly premium payments were in the amount of $.80, and that on December 20, 1948, the agent D. W. Nash had credited her for 16 such payments, for the weeks of September 20, 1948, through January 3, 1949, and that he had written the word "Revival" after the first of these credit entries. This amendment contains the further allegation that "all payments of premiums were made when the same became due and payable but the defendant's agent, D. W. Nash, waited until December 20, 1948, before inserting on the premium receipt book the dates that premiums were paid . . said payments were made when same became due and payable and at the time of the death of the insured, all of the premiums had been paid and the said policy had not elapsed." The plaintiff did not strike any of the allegations of her original petition or amendment.
There results, therefore, a conflict in the pleadings which must be resolved against the pleader, since it affirmatively appears that the insured died at 5 a. m., and that at noon of that day the premiums were in arrears, at the very least, in the amount of $4, or five weekly payments of $.80 each, plus some undetermined additional sum which was paid the next day. In view of these facts, the allegations that the payments were made when due, and that the policy had not lapsed at the time of the insured's death, must be treated as conclusions not supported by the facts stated. The general assertion must yield, on demurrer, to the more particular statement of the transaction which shows that the plaintiff was in fact in arrears at the time of death, for a period of time exceeding four weeks. Reference to the pleaded provisions of the policy discloses that the grace period of the policy is four weeks, and that there can be no reinstatement after that time unless the insured is alive and in good health.
In Coleman v. Western Atlantic Railroad, 48 Ga. App. 343 (1) ( 172 S.E. 577), it was stated:
"It is an elementary rule of construction of pleadings, that the pleading is to be construed most strongly against the pleader, and that if an inference unfavorable to the right of a party claiming a right under such a pleading may be fairly drawn from the facts stated therein, such inference, on demurrer, will prevail in determining the rights of the parties. Krueger v. MacDougald, 148 Ga. 429 ( 96 S.E. 867)." See also Wells v. H. W. Lay Co., 78 Ga. App. 364 ( 50 S.E.2d 755).
2. Counsel for the plaintiff further contends that, even though the petition be construed as showing that the premium payments thereon were in arrears for more than the four weeks allowed by the grace period, and even if, under the provisions of the insurance contract, the agent had no authority to reinstate the policy which, under its terms, could only be reinstated upon written application to the defendant insurance company, nevertheless, the act of the agent in accepting the premiums and writing the word "Revival" upon the premium receipt book, coupled with the fact, as alleged, that after the agent accepted the premiums the defendant company accepted the same and retained them until after demand had been made for the value of the policy, at which time it tendered them back, constitutes a ratification by the defendant of the acts of its agent and a waiver of the provisions of the policy that the contract should lapse upon non-payment of premiums for a period of four weeks.
The policy provides that, upon a lapse at the end of the grace period, it may be reinstated upon payment of the arrearage and written application of the insured, together with the presentation of evidence of insurability satisfactory to the company. Kelley v. Carolina Life Ins. Co., 48 Ga. App. 106 ( 171 S.E. 847), relied on by the plaintiff, is based upon the principle of law of departure from the terms of the contract by the insurance company in having previously accepted late premium payments without lapsing the policy. In Causey v. Gulf Life Ins. Co., 62 Ga. App. 378 ( 8 S.E.2d 535), and in Supreme Lodge Knights of Pythias v. Few, 138 Ga. 778 ( 76 S.E. 91), it appeared that the agent had actual knowledge of the illness of the insured, and knowledge by the agent of such illness was there presumed to be the knowledge of the principal. In Massachusetts Benefit Life Assn. v. Robinson, 104 Ga. 256 ( 30 S.E. 918), the premium payment was receipted to the insured by the insurance company; in Georgia Masonic Mutual Life Ins. Co. v. Gibson, 52 Ga. 640, the payment was received directly by the secretary of the association and retained by him within the scope of his authority; in Neal v. Gray, 124 Ga. 510 ( 52 S.E. 622), the company surrendered a promissory note in favor of a renewal note; in German American Life Assn. v. Farley, 102 Ga. 720 ( 29 S.E. 615), the facts stated in the application for insurance were sufficient to allow the company, on inquiry, to ascertain the true status of the health of the insured, etc. Slight evidence of a waiver of the terms of the policy is sometimes sufficient, in order to avoid the necessity of a forfeiture, but there must be some showing either that the forfeiture was waived by an officer of the corporation having authority to do so, or that the company had knowledge of the facts, or that it had at least the means of knowledge accessible sufficient to satisfy itself, upon inquiry, as to the true state of facts. When such a showing is not made, the plain and unambiguous words of a forfeiture clause of a policy must be given their reasonable intendment and, the forfeiture having already taken place, the agent would be without authority to bind his principal by any waiver thereof. See Carroll v. Garlington Hardwick Co., 79 Ga. App. 708 ( 54 S.E.2d 441); Life Casualty Ins. Co. v. McLeod, 70 Ga. App. 181 ( 27 S.E.2d 871); Sovereign Camp W. O. W. v. Muller, 63 Ga. App. 327 ( 11 S.E.2d 92); Thurmond v. Sovereign Camp W. O. W., 171 Ga. 453 ( 155 S.E. 760); Hutson v. Prudential Life Ins. Co., 122 Ga. 847 ( 50 S.E. 1000); Reese v. Fidelity Mutual Life Assn., 111 Ga. 482 ( 36 S.E. 637); Graham v. Niagara Fire Ins. Co., 106 Ga. 840 ( 32 S.E. 579); Sovereign Camp W. O. W. v. Griffin, 30 Ga. App. 217 ( 117 S.E. 261); Finleyson v. Liverpool Ins. Co., 16 Ga. App. 51 ( 84 S.E. 311); Plumer v. Continental Casualty Co., 12 Ga. App. 594 ( 77 S.E. 917). It would therefore appear that there must be some showing that the company had knowledge of the facts, or of some affirmative act upon its part, before a waiver could be assumed from the act of an agent which was beyond the scope of his authority and in violation of the written provisions of the contract, other than the mere acceptance of the premium by the agent, which under the terms of the policy he was not authorized to accept unconditionally, and the mere allegation (or proof) that this money was forwarded to the company, where the total period of time elapsing between the payment to the agent and the demand upon the company was between two and three weeks, and where the company had no knowledge of the previous death of the insured.
3. The instant case, moreover, must be decided in accordance with the wording of the contract of insurance in regard to the provisions of reinstatement after lapse: "but the reinstatement shall not become effective and the company assumes no liability for premiums paid by any one on lapsed policies except that at the time of such payment the insured is alive and in sound health. In all such cases to the contrary, the company agrees to return to the insured or beneficiary such premiums paid out of the grace period." The petition in this case affirmatively shows that the insured was dead at the time the payments were made, and it certainly does not show that the insurer had knowledge of this fact, nor did the agent, who attempted without authority to reinstate the policy, have such knowledge. The plaintiff entered into a valid contract and by its terms agreed that, if the policy should lapse, there would be no liability on the part of the company for any payments made thereafter unless the insured were alive and in sound health. This he was not, and it only remains to put into effect the plain and unequivocal language of the contract itself, construed in accordance with the law of contracts generally.
This case is distinguished from Wright v. Supreme Commandery of the Golden Rule, 87 Ga. 426 ( 13 S.E. 564), in that there, although the policy was in arrears when the insured died, he was still a member in good standing and the arrearage was paid by his beneficiary within the 31-day grace period allowed. Here the policy had already lapsed.
See also 3 Couch on Insurance, § 635, where it is stated: "If the policy be conditioned for revival of the risk after forfeiture by non-payment of the premium, the company will not be liable, nor the risk revived, where the payment is not made until after loss or death which occurred during default."
The trial court erred in overruling the general demurrer to the petition as amended.
Judgment reversed. MacIntyre, P. J., and Gardner, J., concur.