December 7, 1942.
Under life policy giving insured option to surrender policy for its cash value, privilege to exercise such option was irrevocable by insurer, and when insured elected to exercise option by an unqualified notification to insurer the insurer's obligation to pay cash surrender value became at that time a fixed and perfected obligation.
Where insured sent letter to insurer requesting check for cash surrender value of life policy which gave him option of surrendering policy for its cash value, insured's death on day on which insurer mailed check and before check was received did not revoke offer to surrender policy so as to entitle beneficiary to recover face value thereof, but insurer's only obligation was for amount of cash surrender value.
APPEAL from the chancery court of Adams county, HON. R.W. CUTRER, Chancellor.
Wells, Wells, Lipscomb Newman, of Jackson, for appellant.
Since the contract of insurance contains a continuing offer of insurer that insured might surrender the policy at any time after three full years' premiums had been paid for its net cash value, the contract of surrender became effective and the rights of the parties fixed when, on March 24, 1941, the insured handed to defendant's district manager Pritchard the original policy, together with an unconditional written acceptance of said offer.
Pacific States Life Ins. Co. v. Bryce, 67 F.2d 710; Victory Ins. Co. v. Schroeder, 157 Okla. 516, 30 P.2d 894; Pequot Mfg. Corp. v. Equitable Life Assurance Society of the United States (N.Y.), 170 N.E. 514; Lipman v. Equitable Life Assurance Society of United States, 58 F.2d 15; Northwestern Mutual Life Ins. Co. v. Joseph (Ky.), 103 S.W. 317; Tucker v. Equitable Life Assurance Society of the United States (La.), 141 So. 71; Fowler v. State Life Ins. Co. (La.), 160 So. 139; Howard v. Sovereign Camp, W.O.W., 79 S.W.2d 1000; McCormick v. Travelers Ins. Co., 264 S.W. 916; La Londe v. Roman Standard Life Ins. Co., 257 N.W. 834; Fidelity Mut. Life Ins. Co. v. Merchants' Mechanics' Bank et al., 71 F.2d 777; Lovett et al. v. Phoenix Mutual Life Ins. Co., 44 F. Supp. 888; Manhattan Life Ins. Co. v. Allison, 64 P.2d 1265; Decker v. New York Life Ins. Co. (Utah), 76 P.2d 568.
J.H. Keyer, of Natchez, for appellee.
It is elementary law in this state that the offer must be accepted, and the acceptance of the offer must be in the terms in which the offer was made, and the acceptance must further be evidenced by some conduct actually communicated to the offeror.
Pioneer Box Co. v. Price Veneer Lumber Co., 132 Miss. 189, 96 So. 103, 29 A.L.R. 1349.
Can it be said in the case at bar that the insurer at any time or by any act or conduct on its part evidenced an acceptance of this offer? The record itself discloses that at no time during the lifetime of the insured had the insurer mailed the checks requested in payment of the cash surrender value of these policies prior to the death of the insured.
The request was made by the insured that the checks in payment of the cash surrender value of these policies were to be mailed to him.
This offer to surrender the policy was not accepted during the lifetime of the insured, and as a matter of fact the same never was accepted for the reason that checks in payment of the cash surrender value of these policies were not mailed to the insured as he requested, and the insurer attempted to do something other and different from the offer made, and the same was not therefore accepted in accordance with the terms and conditions of the offer. The offer to surrender these policies and to receive in exchange therefor the cash surrender value of the same therefore was not accepted, and the policies were in full force and effect as of the day and the date of the death of the insured.
The offer was not accepted in the terms in which the same was made, and at no time had the acceptance proceeded to the point where it could be said that the same was at least substantially complete.
An acceptance may be transmitted by any means which the offeror has authorized the offeree to use and if so transmitted is operative and completes the contract as soon as put out of the offeree's possession without regard to whether it ever reaches the offeror unless the offer otherwise provides.
Restatement of the Law of Contracts, p. 70, Sec. 64.
A revocable offer is terminated by the offeror's death or such insanity as deprives him of legal capacity to enter into the proposed contract.
Restatement of the Law of Contracts, p. 56, Sec. 48.
Where a proposed contract requires for its performance the existence of a specific person or thing and before acceptance the person dies or the thing is destroyed, the offer is terminated unless the offeror assumes the risk of such mischance.
Restatement of the Law of Contracts, p. 56, Sec. 49.
We therefore submit that the offer in this case never having been accepted by the insurance company prior to the death of the insured, and they never having complied with the request contained in his letter that the check in payment of the surrender value be mailed to him, the policy in question was in full force and effect as of the date of the death of the insured.
Argued orally by Hubert Lipscomb, for appellant.
On May 23, 1923, appellant company issued its policy of life insurance, No. 2,660,865, to Louis S. Kaiser, with appellee as the named beneficiary. The policy contained the following provision: "After three full years' premiums have been duly paid, and provided there is no premium more than three months in default, the owner may elect one of the following options: (a) to surrender this policy for its cash value, less any indebtedness to the Company. . . ."
On March 24, 1941, the owner of the policy took it to the district office of appellant company, and delivered it to the district manager, with the following letter: "March 24, 1941. The Mutual Life Insurance Company of New York. Gentlemen: Please send me check for the cash surrender value of policy No. 2,660,865. (Signed) Louis S. Kaiser." The policy and letter were received at the home office of the company on March 28, 1941, and on April 1, 1941, the company mailed its check to its state office for delivery to the insured. But the insured died on April 1, 1941, before the check reached him.
This suit is by the beneficiary for the face of the policy, the contention being that the death of the insured before receipt of the check for the cash surrender value operated as a revocation of the offer to surrender, and that in consequence the policy was in full force for its original amount. In this connection it is to be noted that there is no contention as to the surrender value or that the check drawn by the company therefor was not correct in amount, — although this would perhaps be immaterial.
The privilege to exercise the quoted option was one which was bought and paid for by the insured, and was at all times irrevocable by the company so long as the policy remained in force. When the insured elected to exercise the option by an unqualified notification to the company to that effect, the obligation of the company became thereupon a matured indebtedness to the insured for the amount of the cash surrender value, and any contingent liability thereby came to an end. The company would have no right or option or privilege to reject the unconditional notification of the exercise by the insured of his right to accept the cash surrender value, and when so notified in unqualified terms the obligation of the company to pay the cash surrender value became then and there a fixed and perfected obligation, — a matured debt with all other obligations merged into it. The authorities seem to be uniform in so holding. Among these see Victory Ins. Co. v. Schroeder, 167 Okla. 516, 30 P.2d 894; Crown Point Iron Co. v. Ætna Ins. Co., 127 N.Y. 608, 28 N.E. 653, 14 L.R.A. 147; Pacific States Life Ins. Co. v. Bryce, 10 Cir., 67 F.2d 710, 91 A.L.R. 1446; Lipman v. Equitable Life Assur. Soc., 4 Cir., 58 F.2d 15; Pequot Mfg. Corp. v. Equitable Life Assur. Soc., 253 N.Y. 116, 170 N.E. 514; Fowler v. State Life Ins. Co., La. App., 160 So. 139; Howard v. Sovereign Camp, 190 Ark. 610, 79 S.W.2d 1000; McCormick v. Travelers' Ins. Co., 215 Mo. App. 258, 264 S.W. 916; La Londe v. Roman Stand. Life Ins. Co., 269 Mich. 330, 257 N.W. 834; Fidelity Mutual Life Ins. Co. v. Merchants' etc. Bank, 5 Cir., 71 F.2d 777; Lovett v. Phoenix Mutual Life Ins. Co., D.C., 44 F. Supp. 888.
Appellee relies on Murphree v. National Life Accident Ins. Co., 168 Miss. 667, 150 So. 534, 151 So. 748. That case is not in point. There the insured sought to consummate the surrender upon something different in obligatory terms as compared with the terms contained in the policy. In effect, he made a counterproposal, and the court applied the familiar principle of the contract law that counterproposals are in fieri until there shall be a communicated acceptance thereof by the offeree. The opinion in that case made the distinction clear enough when read in the light of the facts there being dealt with.
Appellant tendered to the administrator of the decedent's estate the sum of $954.58, the correct amount due as the cash surrender value, and asserted in its answer its readiness to pay said sum at any time to said administrator. The present suit is by the beneficiary as if the policy was in existence as a life insurance policy at the date of the death of the insured, when in fact it had been converted into a debt to the insured, which debt is now one due to his estate. The disposition made of the present case will, of course, be without prejudice to the administrator to receive or recover the sum of $954.58 with interest.
Reversed, and decree here for appellant.