Opinion
30225.
DECIDED NOVEMBER 16, 1943.
Complaint on life policy; from Fulton civil court — Judge McClelland. June 10, 1943.
Roy S. Drennan, Croom Partridge, for plaintiff.
Bryan, Carter Ansley, for defendant.
1. ( a) Where the cashier of a branch office of an insurance company wrote to an insured: "Confirming our telephone conversation of to-day, I advise that the above numbered policy was paid up for $1,000 on March 29, 1923. There are no further premiums to be paid;" the company is not estopped to assert that the policy at the time the letter was written was paid up for $1000 for 16 years and 10 months, and that at the time of the insured's death it had completely expired, for the reason that the policy, in the insured's possession, and in default, showed that at the time the letter was written it was extended for $1000 for 16 years and 10 months, and the petition does not allege how the insured was misled or injured by the letter, and fails to allege that he was an insurable risk, and that he could have been reinstated.
( b) The petition set forth no cause of action for a proportion of the profits for a part of an accumulation period, when the policy provided for an apportionment of profits every five years, and the petition showing that the insured under the terms of the policy was not eligible to receive the profits at the end of the five-year period.
2. For the reason that the insured was not entitled to any profits, as shown above, the policy was not in force by reason of the company's alleged duty to apply the profits alleged to be due to the payment of premiums which would, as alleged, have carried the policy beyond the death of the insured. The action was properly dismissed on general demurrer.
DECIDED NOVEMBER 16, 1943.
Mrs. Sara J. Cone brought this action against the New York Life Insurance Company on a policy of insurance issued on the life of her husband. The material allegations of the petition, which was in two counts, are as follows: "1. That she is the widow of John F. Cone Jr., late of said State and county, deceased. 2. That on or about the 29th day of March, 1899, plaintiff's said husband and the defendant herein entered into a certain contract of life insurance, in the principal sum of $1,000. 3. That plaintiff herein was designated beneficiary of said policy of insurance on or about the 19th day of November, 1901, and that said designation of beneficiary was never thereafter changed. 4. Plaintiff shows that her said husband departed this life on the 11th day of March, 1940. 5. Plaintiff shows that on March 29th, 1923, the above-mentioned policy became paid-up, and that, thereafter, there were no further premiums to be paid, and the insured was so advised by said company. 6. That, pursuant to the terms of said policy, the principal sum payable thereunder was subject to be increased by the cash profits or dividends apportioned by said company to its policyholders, none of which said dividends or cash profits were paid to the said insured by said company during his lifetime. 7. The amount of dividends or cash profits apportioned or declared by said defendant to its policyholders during the years 1923 through 1940 is unknown to plaintiff, but she calls upon defendant to advise the court as to the amount of dividends or cash profits declared or apportioned to similar contracts of insurance to the one here declared upon, per $1,000 of insurance for each of the years 1923 to 1940 inclusive. 8. In addition to the principal sum of $1,000, with interest at the legal rate since the death of her husband, plaintiff shows that she is entitled to receive the amount of dividends paid by said company to each other holder of a similar policy, together with interest on each such dividend since it became due and payable. 9. Since the death of plaintiff's husband, plaintiff has demanded payment by the defendant of all benefits under said policy, and defendant has denied liability under said policy. Said demand for payment and denial of liability were made more than sixty days prior to the filing of this suit, to wit, during the year 1940. 10. Plaintiff shows that the refusal to pay the benefits due to the plaintiff under said policy of insurance was and is in bad faith, and that, therefore, in addition to the sums stipulated in said policy to be paid, with interest thereon, she is entitled to recover twenty-five per cent. thereof as damages, plus a reasonable sum as attorneys' fees for the prosecution of this action."
The plaintiff filed an amendment, the material parts of which are as follows: "2. Plaintiff amends paragraph 5 of her said petition by adding thereto the following subparagraphs, to wit: 5-A. Plaintiff says that on or about April 25, 1925, her husband, the insured under the aforementioned policy of insurance, received from the Atlanta branch office of defendant a letter advising him that the aforementioned policy was paid-up, and that there were no further premiums to be paid. 5-B. That said letter was signed, on behalf of defendant company, `J. V. Hollingsworth, Cashier, By D. R. Coleman.' That on April 25, 1925, and for many years before and after said date, said J. V. Hollingsworth was, in fact, cashier of said Atlanta branch office of defendant company, and said D. R. Coleman was his clerk, or assistant. 5-C. That among other duties, it was the duty of the cashier, and of his said clerk or assistant, to collect premiums, arrange for premium loans, and as a necessary corollary thereto, to advise policyholders as to the amount of premiums due and the value and status of their respective policies. 5-D. Plaintiff alleges, upon information and belief, that at the time of dictating the letter of April 25, 1925, above referred to, the said D. R. Coleman had before him, and consulted, the records of defendant company relating to said policy, and which said records were in the custody of said Hollingsworth and his said assistant, Coleman. 5-E. Plaintiff avers that in writing and mailing said letter to her husband, the insured, the said J. V. Hollingsworth, cashier, and the said C. R. Coleman, his assistant, acted within the real or apparent scope of their authority. 5-F. Plaintiff avers that her husband acted and relied upon said letter, as evidenced by the fact that he attached said letter to the aforementioned policy, and placed both the policy and the letter in his safety deposit box, where the same would be found after his death. 5-G. A copy of said letter of April 25, 1925 is attached hereto, made a part hereof, and marked Exhibit B. 5-H. Plaintiff avers that by virtue of the writing of said letter and the delivery of same to her husband, the insured, and by virtue of his reliance thereon as aforesaid, defendant company is estopped to deny the truth of the statements made therein, and is estopped to deny that said policy was in full force and effect at the time of her husband's death on March 11, 1940. 3. Plaintiff amends her petition by striking paragraphs 6 and 7 thereof and by substituting the following in lieu thereof: Among others, the aforementioned policy of insurance contained the following provision, to wit: `Profits after accumulation period. If this policy is continued beyond the accumulation period, with payment of premiums, profits shall be apportioned at the end of every five years thereafter during the continuance of the policy.' 6-A. That the accumulation period provided in said policy ended on March 28, 1919. 6-B. That said policy was continued thereafter, with payment of premiums, the insured paying the annual premiums due on March 29, 1919, March 29, 1920, March 29, 1921, and March 29, 1922, respectively. 6-C. That after March 29, 1923, said policy was continued as paid-up insurance. 6-D. That on or about March 29, 1924, and during the continuance of the policy as aforesaid, defendant company apportioned profits to other policies similar to the one sued on, which had been continued for five years after the accumulation period with payment of premiums, but did not apportion any of such profits to the policy sued upon. 6-E. Plaintiffs show that said policy which is here sued upon, having been continued for four years after the accumulation period with payment of premiums, and having been continued thereafter as continued insurance, or paid-up insurance, as aforesaid, was entitled to have apportioned to it four-fifths of the amount of profits apportioned to similar policies which had been continued for five years with payment of premiums. 6-F. That the amount of profits apportioned to policies similar to the one sued upon, as aforesaid, amounted to the sum of $41.39 per thousand, and that said apportionment was made on or about March 29, 1924. 6-G. Plaintiff avers, therefore, that in addition to the face amount of the policy sued upon, she is entitled to recover of the defendant a sum equal to four-fifths of said apportioned profits, to wit, the sum of $33.11, with interest at seven per cent. per annum from March 29, 1924."
The material allegations of count two of the petition, which was added by amendment, are as follows: "8. That after March 29, 1923, said policy was continued as continued or paid-up insurance; defendant company undertook to apply the value of said policy to the continuance of said policy as continued or paid-up insurance, but failed, through no fault of the insured, to apply the full value thereof to such purpose, as will more fully appear hereinafter. 9. That on or about March 29, 1924, and during the continuance of said policy as aforesaid, defendant company apportioned profits to other policies similar to the one sued on, which had been continued for five years after the accumulation period with payment of premiums, but notwithstanding the provisions of said policy quoted in paragraph 5 of this count, said company failed to apportion any of such profits to the policy sued upon. 10. Plaintiff shows that the policy sued upon, having been continued for four years after said accumulation period with payment of premiums, and having been thereafter continued as continued or paid-up insurance, as aforesaid, was entitled to have four-fifths of the amount of profits apportioned to similar policies which had been continued for five years with payment of premium. 11. The amount of profits apportioned to policies similar in amount, form, and substance to the one here sued upon, amounted to the sum of $41.39 per thousand, and said apportionment was made on or about March 29, 1924. 12. Plaintiff shows that the defendant, having undertaken to apply the full value of said policy sued upon to the purchase of continued or paid-up insurance, it was under a duty on March 29, 1924, to apportion to said policy four-fifths of $41.39, or $33.11, and to apply said sum to the purchase of further continued insurance. 13. The sum of $33.11, if applied as aforesaid to the purchase of continued insurance, would have continued the term of said policy for approximately three additional years, or until approximately January 29, 1943, a date long subsequent to the death of the insured. She now seeks to have said contract enforced according to its terms."
It will be seen that the first count seeks recovery of the principal sum plus accumulated profits, and the second count seeks recovery of the principal sum. The letter referred to in both counts of the petition, in its material parts, is: "Mr. John F. Cone, Jr., . . Dear Sir: Re-Pol. No. 934563-Cone, Jr. Confirming our telephone conversation of to-day I advise that the above numbered policy was paid up for $1,000 on March 29, 1923. There are no further premiums to be paid. Yours very truly, J. V. Hollingsworth, Cashier. By D. R. Coleman." This letter bore the date of April 25, 1925. The material provisions of the policy will be quoted in the opinion. The court sustained the demurrers to both counts of the petition as amended, and dismissed the action. The exception here is to that ruling.
1. Count one of the plaintiff's petition relies for a recovery on an estoppel by virtue of the quoted letter from the cashier of the company to the insured in 1925, and it is specifically stated in the brief of counsel that no contention is made that the cashier had any real or apparent authority to change the terms of the policy sued on, nor that the letter so written by the cashier had that effect. The policy which is the basis of this action has the following material provisions:
"This policy is automatically non-forfeitable from date of issue, as follows: First — If any premium is not duly paid, and if there is no indebtedness to the company, this policy will be endorsed for the amount of paid-up insurance specified in the table on the second page, upon written request therefor; or if no such request is made, the insurance will automatically continue from said date for $1,000 for the term specified in said table and no longer. Such paid-up or continued insurance shall be subject to the provisions of this policy, without the further payment of premiums, but without participation in profits, without premium return, or the right of securing cash loans. Third — If the non-forfeiture provisions in either of the two preceding paragraphs become operative, the insured may resume full participating premium-paying membership at any time within five years thereafter, upon written application therefor, and the payment of premiums to the date of resumption, with interest at the rate of five per cent. per annum . . subject to evidence of insurability satisfactory to the company.
"General provisions. (1) Only the president, a vice president, the actuary or the secretary has the power in behalf of the company to make or modify this or any contract of insurance or to extend the time for paying any premium, and the company shall not be bound by any promise or representation heretofore or hereafter given by any person other than the above. (2) Premiums are due and payable at the home office. . . If any premium is not paid on or before the day when due, or within the month of grace, the liability of the company shall be only as hereinbefore provided for such case.
"Profits after accumulation period. — If this policy is continued beyond the accumulation period, with payment of premiums, profits shall be apportioned at the end of every five years thereafter during the continuance of the policy.
"This agreement is made in consideration of the sum of $20.55, the receipt of which is hereby acknowledged, and of the payment of a like sum on the 29th day of March until 20 full years' premiums have been paid, and of the payment in like manner of $19.62 in every year thereafter during the continuance of this policy."
Attached to the policy, and a part thereof, is a table headed: "Table of paid-up or continued insurance and of cash loans." This table shows that at the expiration of the 24th year paid-up insurance amounted to $504, and that there was continued insurance for 16 years and 10 months; at the expiration of 26 years there was $542 paid-up insurance, and continued insurance for 17 years and 1 month; and at the expiration of 30 years there was $612 paid-up insurance, and continued insurance for 16 years and 9 months.
Aside from the tontine, or accumulation features of this policy, it will be seen that it is also an ordinary life policy, with premiums payable thereon during the life of the insured. The consideration for the policy is recited in the policy as being a certain sum for the first 20 years, and a slightly smaller sum "in every year thereafter during the continuance of the policy."
In April 1925, the cashier of the company wrote to the insured the letter set out in the statement of facts preceding this opinion. At the time that letter was written the premium due March 29, 1923, had become due and was unpaid, and in so far as the petition discloses there was no indebtedness to the company. The failure to pay this premium due March 29, 1923, in the absence of any indebtedness to the company, made operative the first non-forfeiture provision of the policy. It is well to examine that provision. Upon its becoming operative the insured had an election to make within a certain period of time. Had he made this election, the company, under the terms of the policy, would have endorsed the policy for the amount of paid-up insurance set out in the table attached to the policy. This would mean that the insurance would be paid up under this policy for $504, for the life of the insured. However, when the insured failed to make the election which he was entitled to make, the second part of the provision became effective, which provided that the policy would be continued automatically for the period set out in the table mentioned above and for no longer, which in this case was 16 years and 10 months. This would mean that instead of being paid up for the life of the insured for the smaller amount under the first part of the provision, it was paid up for the amount of the policy, $1,000, for a limited term as set out in the table. It follows as a natural consequence that when the cashier wrote the letter in 1925, he stated the condition of the policy at that time; that is, that the policy was paid up for the face value of the policy and there were no further premiums to be paid. It is true that he did not inform the insured that the policy was paid up for only a definite term, but the insured was in possession of the policy, and by its terms the only way it could become paid up for $1,000, with the premiums paid for the length of time they were paid on this policy, was in the way mentioned in the policy, which could be readily ascertained by a cursory examination of the policy. That this is readily discernible is shown by the fact that a mere reference to the table of paid-up insurance in the policy shows that if the premiums thereon had been paid for 30 years, the amount for which the policy would be paid up for the life of the insured would be only $612. The insured had the policy in his possession, and actually attached the letter to the policy. This court will not say that the letter which stated to the insured what was already provided in the policy was so misleading to him that the company would now be estopped to deny that the policy was paid up for the life of the insured.
And this is true for another reason. It is not alleged in the petition just what the telephone conversation between the insured and the cashier of the company consisted of. This court cannot say from the allegations in the petition that the insured called the company for the purpose of having the insurance reinstated as provided in the policy. It is true that at the time the letter was written he had the right to become again a premium-paying member; but it is not alleged in the petition that at the time of the telephone conversation referred to in the letter, nor at the time the letter was received, the insured was an insurable risk, and that because of the misleading nature of the letter he desisted in his effort to have the policy reinstated. It is as reasonable to assume that the insured was dissatisfied with the returns from the policy, or disliked the idea of paying premiums thereon during his lifetime, and seeing the provisions with reference to the non-forfeiture of the policy called the company with reference to it. The letter might well have been written in answer to the question, "Is my policy paid up for $1,000 for 16 years and 10 months?" The first count fails to affirmatively allege that the insured was misled by the letter, or that he suffered damage or injury because of it.
As was stated at the outset the policy here was a "tontine," "accumulation," or "deferred dividend" policy. The insured, under the terms of the policy, first participated in the profits at the end of the accumulation period, which in this case was 20 years. The policy also provided that if the policy was carried beyond that period with payment of premiums, profits would be apportioned every five years. If we hold the contention of the insured to be sound; that where the premiums were paid for four years beyond the accumulation period the insured is entitled to have four-fifths of the profits apportioned to policies of like age and amount credited to this policy, we would change the contract from an accumulation or deferred dividend policy to an annual dividend policy. As was said by the Court of Appeals of Kentucky in Jefferson v. New York Life Insurance Co., 151 Ky. 619 ( 152 S.W. 780), "A deferred dividend policy cannot be treated by either the company or the assured, as though it was an annual dividend policy, any more than an ordinary life policy could be held to be subject to the provisions of a term policy. . . No dividends were to be apportioned to the policy until it had been in force for 15 years. By carrying out his contract and paying his premiums annually for 15 years, if he had lived that long, the assured would have been entitled to participate in the dividend distribution, but not otherwise." We think this reasoning applies with equal force here, and that the insured is not entitled to credit for four-fifths of the profits apportioned to other like policies, the apportionment being made one year after this policy lapsed, and under the terms of which the insurance was extended for 16 years and 10 months without participation in profits. "The policy is the contract entered into by the assured with the company. Its terms express their agreement, and by its provisions each is bound. There is nothing peculiarly sacred about a contract of insurance, which places it upon a plane above, or different from that upon which other contracts rest." Jefferson v. New York Life Ins. Co., supra. See annotations in 92 A.L.R. 706; 6 A.L.R. 1401; Empire Life Insurance Co. v. Wier, 135 Ga. 130 ( 68 S.E. 1035). The court consequently did not err in sustaining the demurrers to count one of the petition.
2. What has been said in the foregoing division of this opinion with reference to the credit of four-fifths of the profits apportioned to like policies to the policy in this action, applies with equal force and for the same reasons to the question of using the four-fifths of the profits to extend the insurance beyond the period for continued insurance shown in the table attached to the policy. The time for the apportionment not having arrived when the policy lapsed, the company was under no duty to apportion any dividend to it, and to use that dividend to extend the insurance beyond the term shown in the table.
The court did not err in sustaining the demurrers, and in dismissing the action.
Judgment affirmed. Stephens, P. J., and Sutton, J., concur.