Opinion
6 Div. 394.
October 20, 1921. Rehearing Denied November 24, 1921.
Appeal from Circuit Court, Jefferson County; Horace J. Wilkinson, Judge.
Stokely, Scrivner Dominick, of Birmingham, for appellant.
The payment of premiums under a contract of insurance is a condition precedent for the continued existence of the policy and calls for an affirmative act on the part of the insured. In other words, the affirmative duty rests upon the insured to make the payment of premiums. 14 Ruling Case Law (Insurance) 957; New York Life Ins. Co. v. Statham, 93 U.S. 24, 23 L.Ed. 789; Brooklyn Life Ins. Co. v. Bledsoe, 52 Ala. 538; Mobile Life Insurance Co. v. Pruett, 74 Ala. 496.
Where an insurance contract places upon the insured the affirmative duty of paying a premium or else suffer a forfeiture of the policy, and foreclosure of a pledge of the policy, nothing short of showing that the act cannot be performed will relieve of the obligation. Borst v. Simpson, 90 Ala. 373, 7 So. 815; Brooklyn Life Ins. Co. v. Bledsoe, 52 Ala. 538.
When a tender of an insurance premium is made by the insured to prevent the foreclosure of his policy under a pledge of the policy, the tender must be kept good, as the tender does not discharge the debt, but merely relieves the payment of interest. Maxwell v. Moore, 95 Ala. 166, 10 So. 444, 36 Am. St. Rep. 190; Wilson v. Kirkland, 55 So. 174; 26 Ruling Case Law (Tender) 644; Odum v. Railroad Co., 94 Ala. 488, 10 So. 222; Frank v. Pickens, 69 Ala. 369; Park v. Wiley, 67 Ala. 310; Manning v. Carter, 201 Ala. 218, 77 So. 744.
A debtor who makes a tender must have the money ready to pay when called on, and must pay it to the creditor if called on, and if the first tender made is refused, the debtor must comply with a subsequent request or the prior tender is of no avail. 38 Cyc. Tender, p. 161; Ruling Case Law, Tender, § 24, p. 644; McCally v. Otey, 99 Ala. 584, 12 So. 406, 42 Am. St. Rep. 87, and 90 Ala. 302, 8 So. 158; Frank v. Pickens, 69 Ala. 369; Terrell Coal Co. v. Lacey (Ala.) 31 So. 109; note to Moynahan v. Moore, 77 Am. Dec. 481; Rose v. Brown, Kirby (Conn.) 293, 1 Am. Dec. 22; Lanier v. Trigg, 6 Smedes M. (Miss.) 641, 45 Am. Dec. 293.
The act which prevents the performance of the contract obligation on the part of the insured must be a distinct, absolute and unequivocal refusal on the part of the insurer to perform, and must be the proximate cause of the failure on the part of the insured to perform. Borst v. Simpson, 90 Ala. 373, 7 So. 815; Brooklyn Life Ins. Co. v. Bledsoe, 52 Ala. 538.
Where the insured and the insurer mutually believe and understand that a policy has been foreclosed under a pledge of the policy with the insurer and that the indebtedness to the insurer by the insured for which the policy was pledged has been satisfied and the policy declared of no value, and the insured thereafter during his lifetime for a period of years fails to assert any claim under this policy and fails to pay the premiums thereunder, this would constitute an abandonment or rescission of the contract of insurance and would put an end to the same. Mutual Life Ins. Co. v. Hill, 193 U.S. 551, 24 Sup. Ct. 538, 48 L.Ed. 788; Mutual Life Ins. Co. v. Phinney, 178 U.S. 327, 20 Sup. Ct. 906, 44 L.Ed. 1088; Mutual Life Ins. Co. v. Sears, 178 U.S. 345, 20 Sup. Ct. 912, 44 L.Ed. 1096; Ryan v. Mutual Reserve Fund Life Ass'n (C. C.) 96 Fed. 796; Smith v. New England Life Ins. Co., 63 Ind. 769, 11 C.C.A. 411.
Black, Altman Harris and B. M. Allen, all of Birmingham, for appellee.
An insurer's refusal of a tendered premium makes unnecessary the tender of subsequent premiums. Girard Life Insurance Co. v. Mutual Life Insurance Co. of N.Y., 86 Pa. 236; New York Life Insurance Co. v. Clopton, 7 Bush (Ky.) 179, 3 Am. Rep. 290; Knott v. Security Mutual Life Insurance Co., 161 Mo. App. 579, 144 S.W. 178; Meyer v. Knickerbocker Life Insurance Co., 73 N.Y. 516, 29 Am. Rep. 200; Continental Insurance Co. v. Miller, 4 Ind. App. 553, 30 N.E. 718; Ætna Life Insurance Co. v. Curley's Adm'r (Ky.) 47 S.W. 585; Phœnix Mutual Life Insurance Co. v. Caroline R. Doster et al., 106 U.S. 30, 1 Sup. Ct. 18, 27 L.Ed. 65; National Life Insurance Co. v. Eggleston (Tex.Civ.App.) 195 S.W. 942; Guetzkow v. Michigan Mutual Life Insurance Co., 105 Wis. 448, 81 N.W. 652; Supreme Lodge K. P. v. Connelly, 185 Ala. 301, 64 So. 362.
No forfeiture can be lawfully declared for nonpayment of a premium, if the insured has made proper tender thereof. Davis v. Northwestern Mutual Life Insurance Co., 98 Misc. Rep. 456, 163 N.Y. Supp. 56; Mutual Life Insurance Co. v. Davis (Tex.Civ.App.) 154 S.W. 1184; Meyer v. Knickerbocker Life Insurance Co., 73 N.Y. 516, 29 Am. Rep. 200; Doney v. Prudential Insurance Company of America, 99 App. Div. 23, 90 N.Y. Supp. 757; Guetzkow v. Michigan Mutual Life Ins. Co., 105 Wis. 448, 81 N.W. 652; Western Southern Life Ins. Co. v. Giltnane, 157 Ky. 275, 163 S.W. 192; Johnson v. Standard Life Accident Ins. Co. (Tex.Civ.App.) 97 S.W. 831.
An insured's silence when notified of wrongful forfeiture does not destroy his beneficiary's right of recovery. Purdy v. Bankers' Life Ass'n of Des Moines, Iowa, 101 Mo. App. 91, 74 S.W. 486; Travelers' Insurance Co. v. Pulling, 159 Ill. 603, 43 N.E. 762; Jones v. Preferred Bankers' Life Ass'n Co., 120 Mich. 211, 79 N.W. 204; Manhattan Life Insurance Co. v. Fields (Tex.Civ.App.) 26 S.W. 280; Wayland v. Western Life Indemnity Co., 166 Mo. App. 221, 148 S.W. 626; Aiken v. Atlantic Life Ins. Co., 173 N.C. 400, 92 S.E. 184.
An application for reinstatement by an insured, whose policy has been wrongfully declared lapsed or forfeited, is not a consent to the wrongful forfeiture. George Washington Life Ins. Co. v. Norcross, 178 Ky. 383, 198 S.W. 1156; McNaughton v. Des Moines Life Insurance Co., 140 Wis. 214, 122 N.W. 764; Hayes v. N.Y. Life Insurance Co., 68 Misc. Rep. 558, 124 N.Y. Supp. 792.
An insured's statement, without any consideration therefor, that he has no insurance, is not a waiver of his own or of his beneficiary's rights under the policy. Denison v. Masons' Fraternal Accident Association of America, 59 App. Div. 294, 69 N.Y. Supp. 291.
A tender, when kept good, prevents the running of interest; if not kept good, the only effect is to let interest run. 86 Ill. 470; Bissell v. Heyward, 96 U.S. 580, 24 L.Ed. 678. See, also, cases cited under proposition No. 9.
The insured, whose tender of premium has been refused, does not have to keep his tender good, by always keeping the precise amount of money on hand. Dennison v. Masons' Fraternal Acc. Ass'n of America, 59 App. Div. 294, 69 N.Y. Supp. 291.
Where an insurer refuses a proper tender of a premium, the measure of recovery on the policy, when the insured does not keep the tender good, is the face of the policy, less the unpaid premiums with interest on them. Fed. Cas. No. 6478; Dennison v. Masons' Fraternal Acc. Ass'n of America, 59 App. Div. 294, 69 N.Y. Supp. 291; Wayland v. Western Life Indemnity Co., 166 Mo. App. 221, 148 S.W. 626; Owens v. North State Life Insurance Co., 173 N.C. 373, 92 S.E. 168; Inter-Southern Life Insurance Co. v. Duff, 184 Ky. 227, 211 S.W. 738; Reed v. Provident Savings Life Ass'n, Society of New York, 190 N.Y. 111, 82 N.E. 734.
The appellee (plaintiff) was awarded judgment against the appellant on a policy of life insurance issued in 1905 by the appellant to F. M. Norris, in which appellee (insured's wife) was named as beneficiary. Norris died in 1916. For several years prior to 1912, Norris had annually borrowed from the insurer the amount necessary to pay the annually due premium on his policy, upon the security alone of the policy then deposited with the insurer. The annual premium and the interest (in advance) on the thus annually increasing loan — on the sole security of the policy — was due the 3d of July of each year. In 1912 the insured had thus borrowed, with the policy so pledged, $1,580, the interest on which had been paid up to July 3, 1913. As stated, the annual premium was also due on that date. Because of the asserted default of the insured to pay the annual premium on July 3, 1913, or within the stipulated 30-day period of grace thereafter, the insurer, on January 14, 1914, foreclosed the promise and pledge, in accordance with the statutes of New York, to which law the loan contract subjected the rights of the parties; and thereupon advised the insured by mail of the fact of foreclosure, of the satisfaction of his indebtedness to the insurer, and of the termination of any right of the insured under the policy.
The pleadings in the cause are very voluminous, covering about 36 pages. The material issues the parties were entitled to have determined were not numerous, but their statement in pleading seemed to justify the volume of writing employed in their presentation by the respective parties. The case was a typical one for the employment of the increasingly acceptable method for pleading, in short, by consent with leave to give in evidence any admissible traversing or avoiding matter that the parties might desire to assert. To recite the entire pleading would require too extended a statement for any practical purpose.
To the complaint, on the policy contract, the defendant (appellant) thru its pleas asserted, in substance, other than will be later indicated, the default and forfeiture of the policy and foreclosure of the pledge before mentioned, and also averred the absence of right to protracted insurance, to the time of insured's death, as the result of premium payment afforded by the stipulated excess in the reserve. Those matters were of course conclusive of plaintiff's right to recover, provided (a) they were sustained by the evidence in respect of their bases of fact; or (b) were not deflected, by appropriate allegation of fact, from their normal effect as legal obstacles to plaintiff's right to recover, which, being efficiently averred, were later justified, at least prima facie, by the proof relevant thereto. The defendant's plea 4 (amended) contained with those just mentioned, these additional averments:
"Defendant further avers that on, to wit, January 15, 1914, it deposited in the United States mails, properly addressed to Frank M. Norris at his post office and street address in Birmingham, Ala., with sufficient postage, a letter notifying him that, under said loan agreement said policy had been pledged to and deposited with the defendant as collateral security for said cash loan, and that the premium and interest due on said policy on the 3d day of July, 1913, not having been paid, the principal of said loan became due and had been settled according to the terms of the policy and that the policy had no further value. Defendant avers that said Norris did not deny the validity of said settlement and did not raise any protest thereof, but, with knowledge of said foreclosure, did not make any further claim of right to or interest in said policy during the remainder of his lifetime and up until his death on, to wit, February 12, 1916, nor did he pay or offer to pay any further interest on said debt nor premiums on said policy. Nor did said Norris ever inform the defendant that any of its agents or employees had for any reason refused or failed to accept the premium or interest on said loan due in July, 1913, for the failure to pay which said foreclosure was had, nor did said Norris make any claim that the defendant's agents or employees had failed or refused to accept said premium for any reason whatever, but thereafter said Norris accepted said foreclosure of said policy as valid and binding. Wherefore defendant says plaintiff is estopped to proceed in this suit."
In still other pleas, on which the trial was had, the defendant averred the failure of the insured to pay the annual premiums for 1914 and 1915, as well as the loan or the annual interest thereon from July, 1913, at any time before his death in 1916. To amended plea 4, above quoted, among others of defendant's pleas, the plaintiff, thru special replications, asserted, in avoidance of the matter of amended plea 4, that insured's representative, both on July 3, 1913, the due date, and within the 30-day period of grace in August, 1913, offered to pay to the authorized agent of the insurer, at its Birmingham office, the premium then due and the interest on the loan then demandable, and that the offer was twice refused, the payments twice declined, by the agent of the insurer. The appellant complains of error in overruling its demurrer to special replications, asserting the matter just stated, as an efficient answer to plea 4. The argument is that such replications are no efficient answer to that plea, having particular reference to quoted but only partial features of that plea, the amended plea 4 being designed in respect of only part of it to assert an abandonment of the policy by the insured, subsequent to the tender alleged in the special replications, or an estoppel predicated of such subsequently intervening inaction in the circumstances averred in the quoted part of amended plea 4. We find in the record no ground of demurrer taking this particular objection within the exaction of the statute, Code, § 5340. Anyway, amended plea 4 was constituted of averments borrowed from plea 3, to which were added the quoted allegations. There is much in the thus appropriated averments from plea 3 to which the matter in the special replications indicated was serviceable in avoidance of its effect, in part, in the particular that the pleas (as composed) assumed to assert a valid forfeiture and foreclosure of the policy's pledge, in virtue of an unpalliated or unexcused default in paying the premium on July 3, 1913, or within the 30-day grace period provided in the policy contract. Error cannot be pronounced of the overruling of the demurrers interposed to special replications to amended plea 4, on the theory argued here.
And it may be observed in this connection that the decisions of the Supreme Court, in Mutual, etc., Co. v. Sears, 178 U.S. 345, 20 Sup. Ct. 912, 44 L.Ed. 1096, Mutual, etc., Co. v. Hill, 193 U.S. 551, 24 Sup. Ct. 538, 48 L.Ed. 788, among others cited on the brief for appellant, declare no principle that requires a different conclusion upon the differentiating facts set forth in the pleading in this case. The principle is sound and well supported in authority that no forfeiture of rights, under a life policy contract, for failure to pay an annual premium thereon, can result against the insured, if the insured has seasonably tendered the premium, and such tender has been refused, unless the insurer recants its refusal and advises the insured of that fact, mainifesting a willingness to accept the tender as of the time it was seasonably made. Knott v. Mutual Co., 161 Mo. App. 579, 144 S.W. 178; Guetzkow v. Ins. Co., 105 Wis. 448, 81 N.W. 652; Girard Ins. Co. v. Ins. Co., 86 Pa. 236, 240; Supreme Lodge, etc., v. Connelly, 185 Ala. 301, 307, 64 So. 362.
Under these circumstances of seasonable tender and refusal, the insured's contract is preserved against forfeiture on that account, and he is not under any duty to protest, to resist, or to contest the bases or the fact of such wrongful pronouncement of the extinction of the insured's right in the premises, in order to avoid the implication of his acquiescence in, or acceptance of, the result consequent upon the insurer's breach of its duty to the insured under the contract; or to make another or other tenders of subsequently accruing premiums, unless, as stated, the insurer recants and so advises the insured as to reimpose or revive the duty of the insured to pay such subsequently accruing premiums on their due date. Supreme Lodge, etc., v. Connelly, supra; Purdy v. Life Ins. Asso., 101 Mo. App. 91, 74 S.W. 486; Wayland v. Western, etc., Co., 166 Mo. App. 221, 148 S.W. 626; Aiken v. Ins. Co., 173 N.C. 400, 92 S.E. 184.
To serve the preservative purposes within the principles stated, a seasonable, effective tender is not required to be kept good by the retention of the money so tendered, every essential right of the insurer, in this aspect, being conserved by the appropriate reduction of the amount recoverable by the aggregate of the amount of the unpaid premiums, with interest thereon from the respective dates the contract stipulated they should be paid. Dennison v. Fraternal Asso., 59 App. Div. 294, 69 N.Y. Supp. 291; Owens v. Ins. Co., 173 N.C. 373, 92 S.E. 168; Inter-Southern Co. v. Duff, 184 Ky. 227, 211 S.W. 738. Like considerations lead to similar conclusions with respect to the rights of the parties under the loan agreement.
The court below took due cognizance of these principles in its rulings on the demurrers to the defendant's (appellant's) rejoinders to plaintiff's special replications. Rejoinders 4, 5, D, E, and F were interposed to special replications that averred a tender and refusal in July and August, 1913, of the premium, etc., then due; and these rejoinders carried the allegation, among others, the significance of which was to interpret the refusal averred in the special replication to an effect contradictory of the express averment thereof in the special replication — a matter serviceable to defendant and open to assertion by the defendant under its joinder of issue upon the averments of the special replications. No prejudicial error, if error at all, resulted from sustaining demurrers to rejoinders asserting the interpretative, contradictory allegations mentioned.
The material issues of fact raised by the pleading — including rejoinder 2, wherein defendant set up an acquittance by mutual assent of its liability on the policy and the cancellation of insured's indebtedness to the insurer — were, under the whole evidence, due to be submitted and were submitted to the jury for solution. According to the evidence for plaintiff, a representative of the defendant at Birmingham refused seasonable tender averred in the special replications. The plaintiff's evidence, touching this aspect of the case, was susceptible of the interpretation that the refusal was predicated of some doubt in respect of the loan by the insurer to the insured, and this fact (if so) inspired the defendant's agent to state to the insured's wife, in the presence of his daughter, that he would take up the matter with the head office and communicate later. This evidence cannot, as a matter of law, be said to show a conditional refusal. Quite differently, it rather seems to evince the assertion of a reason for the refusal — a reason, the evidence nowhere shows, was ascertained by the defendant to be ill founded or which the defendant afterwards withdrew or repudiated through definite advice to the insured or his representative. The correspondence shows, unmistakably, that the insurer regarded the insured as in entire default with respect to the July, 1913, premium, on that account pronounced the policy a "lapsed" policy, and, so affirming, sought to induce insured to proceed as for a reinstatement consequent upon his default; whereas, if plaintiff's evidence of seasonable tenders was accepted by the jury, the insured was not in default at all, was still entitled to the benefit of the insurance the policy contract assured. The action of the insurer, in January, 1914, in foreclosing on the pledge of the policy (sole security for the loan) for failure to pay the July, 1913, premium, precludes any doubt of the defendant's attitude in the premises. From the whole evidence, it is apparent that no communication, oral or written, manifesting the insurer's recantation or notifying insured thereof, will be or can be produced; this to the end of reimposing upon the insured the duty of paying the July, 1913, premium.
There was no reversible error in sustaining an objection to this question propounded by defendant to its witness Lantrip: "What did he [Norris] state [in 1915] with reference to trying to get a policy from the New York Life Insurance Company?" The fact that Norris had, in 1915, applied in writing for a policy of insurance with this defendant, thru its agent Lantrip, was admitted in evidence without objection; and the witness stated (also without objection) that Norris, in answer to a question in the application, said he had no insurance. In explanation of the quoted question to Lantrip, counsel "offered to show that Norris stated that he would come to Birmingham and get a policy through his regular physician here" — this after his application, in 1915, had been rejected. If it is assumed (quite doubtfully) that the quoted question to Lantrip was not subject to the objections interposed thereto, no prejudice resulted from its exclusion, the defendant having already the benefit of Norris' affirmation that he then (1915) had no insurance — a declaration that the expected answer to the excluded question to Lantrip would not have materially aided or amplified.
Thru written requests, numbered 9 and 10 (assignments 62 and 63), the defendant sought to have the jury instructed that plaintiff could not recover, if the insured made the mentioned application for new or other insurance in 1915, and therein stated that he had no insurance. The principles illustrated in the analogous cases of Ins. Co. v. Norcross, 178 Ky. 383, 198 S.W. 1156; McNaughton v. Ins. Co., 140 Wis. 214, 122 N.W. 764; Hayes v. Ins. Co., 68 Misc. Rep. 558, 124 N.Y. Supp. 792; Dennison v. Fraternal Asso., supra; Aiken v. Ins. Co., supra, justified the refusal of these requests (9 and 10) for instruction. If, as plaintiff's evidence went to show, there was, because of seasonable tenders of the 1913 premium, no ground for forfeiture of insured's rights under the policy, the policy continued in force, notwithstanding the insurer's ill-founded declaration and insistence that the policy had "lapsed" on account of the failure of the insured seasonably to pay the July, 1913, premium. The mere assumption of the insured in and under such circumstances, however formally expressed, afforded no basis for conclusions that he had acquiesced in the asserted forfeiture or had raised up an estoppel against the assertion of insurer's liability under the policy; no consideration for the relinquishment of insured's right under the policy being shown to have passed to him.
It is insisted that rejoinder 2 was conclusively established in the evidence. It results from the application of the principles earlier stated in this opinion, that Norris' omission or failure to take active steps to repudiate the asserted forfeiture and foreclosure, after notice of the fact from the insurer, or his entire inactivity or silence thereafter, did not prejudicially affect any right he had under the policy, if the tenders asserted were found by the jury to have been seasonably made; and, of course in that state of the law, such inactivity or silence did not suffice to establish the acquittance and settlement averred in rejoinder 2.
A large number of the assignments of error are predicated of the refusal of requested instructions and of excerpts from the oral charge of the court. Under the applicable principles of law, before stated, there was no error in these particulars. Authorities cited to the contrary, in which appropriate account was not taken or could not be there taken of seasonable tenders of premium on which forfeiture, etc., was asserted against liability on the policy, are not apt or influential, in the circumstances presented by this contest.
There was no error in sustaining plaintiff's objection to the question propounded to the defendant's witness Toombs, viz.: "What was the substance of the main contention of the plaintiff or her agents up to that time?" — meaning the time of the first trial in 1919. If the question had been permissible otherwise, the essence of its effect had been already stated by the witness.
The judgment is affirmed.
Affirmed.
SOMERVILLE, THOMAS, and MILLER, JJ., concur.
On Rehearing.
In the argument supporting the application for rehearing, the only matter presented for reconsideration brings into question the declination of this court to affirm reversible error of the trial court's action, in sustaining demurrers to rejoinders 4 and 5. These rejoinders were addressed to special replications averring refusal, without qualification, to accept seasonable tender of the July, 1913, premium. In material aspects, these rejoinders sought to interpret, as qualified or conditional, the refusal of tender averred in the replications to have been declined without qualification or condition. The defendant (appellant) joined issue on the allegations of the replications, asserting the unqualified refusal to accept seasonable tender, thereby rendering relevant and admissible evidence designed to sustain defendant's (appellant's) theory that the refusal of tender was qualified or conditional; whereupon this court concluded, without passing upon the sufficiency of rejoinders 4 and 5, that no prejudice to appellant resulted from sustaining demurrers to rejoinders 4 and 5. This construction of the rejoinders was justified by the terms employed by the pleader in the first sentences thereof. In each it is averred, but interpretatively in a material aspect that "the alleged refusal of the defendant * * * consisted in this, * * *" and that "the matters and facts set up in said replication [e. g., an unqualified refusal of tender] consist in this. * * *" (Italics supplied.) In the printed brief for appellant, these rejoinders (4 and 5) are treated as asserting a refusal of a character in contradiction of the unqualified, unconditional refusal averred in the replications.
On reconsideration, the court remains convinced that the conclusion pronounced with respect to rejoinders 4 and 5 is correct. Application for rehearing is hence overruled.