Opinion
No. 23784
Decided April 11, 1934.
Insurance — Prepayment of premium not condition precedent to commencement of risk — Contract of insurance with individual partners for mutual benefit — Party to such contract may bring action for breach thereof — Pleading — Demurrer admits reasonable inferences from well-pleaded factual allegations.
1. For the purpose of testing the legal sufficiency of a pleading, a demurrer admits not only the proper and well-pleaded factual allegations thereof, but also the fair, reasonable and favorable intendments and inferences arising therefrom.
2. Prepayment of the initial premium on a policy of insurance is not always a condition precedent to the commencement of the risk.
3. An action for the breach of a tri-partite agreement involving the issuance and delivery of a separate policy of insurance on the life of each person but for their mutual benefit, may be brought by a party thereto.
ERROR to the Court of Appeals of Hamilton county.
The defendant in error, Arthur A. Veser, plaintiff below, filed the following amended petition in the Court of Common Pleas:
"Comes now the plaintiff and says that the defendant is a corporation organized and existing under and by virtue of the laws of the State of New York and is engaged in the general life insurance business in said state and is engaged in said business in the State of Ohio and that on or about the 27th day of June, 1928, plaintiff and his brother, Emil J. Veser were engaged in the clothing business as partners, under the style and firm name of 'Veser Bros.' in the City of Cincinnati, Ohio, and that at said time, plaintiff entered into an agreement with his brother, the said Emil J. Veser and this defendant, that plaintiff and the said Emil J. Veser would, each on the life of the other, take out a policy of life insurance in the defendant company for the benefit of the other in the sum of $2500.00; that this plaintiff secured said insurance for the benefit of said Emil J. Veser, his partner, in all respects according to the terms of said agreement with this defendant and that the said Emil J. Veser made an application with the defendant company in pursuance to the terms of said agreement and in the sum of $2500.00 on the life of the said Emil J. Veser and in favor of his said brother, Arthur A. Veser as beneficiary; that the said Emil J. Veser on or about said date signed an application for said insurance with the defendant and passed a satisfactory physical examination all in pursuance to said agreement with this defendant and that on. or about the 24th day of July, 1928, a policy of insurance was issued and delivered by the defendant on the life of Arthur A. Veser in the sum of $2500.00 with the said Emil J. Veser as beneficiary therein and that on or about July 11, 1928, a policy of insurance was issued by the defendant on the life of said Emil J. Veser in the sum of $2500.00 with the said Arthur A. Veser as beneficiary therein and that said policy was delivered by the defendant to its Cincinnati Agent on or about the 11th day of July, 1928, all according to the terms of said agreement with this defendant.
"Plaintiff further says that the defendant through its Cincinnati agent carelessly and negligently and for an unreasonable length of time held said policy of insurance, so issued on the life of Emil J. Veser at its Cincinnati office and failed to deliver said policy to the said Emil J. Veser from said 11th day of July, 1928 until the present time, although defendant's Cincinnati agent was instructed, under the terms of said agreement, to deliver said policy immediately to the said Emil J. Veser upon receipt of the same at the Cincinnati office of the defendant.
"Plaintiff further says that on or about the 17th day of July, 1928, the said Emil J. Veser contracted pneumonia and became suddenly ill, from which illness the said Emil J. Veser died on July 23, 1928.
"Plaintiff further says that by reason of the negligence of defendant's agent as above set forth and by reason of the unreasonable delay of defendant's agent in promptly delivering said policy to the said Emil J. Veser, under the provisions of said agreement with defendant, this plaintiff was deprived of the benefits provided for in said policy of insurance as the surviving partner of the said Emil J. Veser, as beneficiary therein, all to the damage of this plaintiff in the sum of $2500.00.
"Plaintiff further says that he has made demand upon the defendant for the delivery of said policy according to the terms of said agreement and for the payment of the sum of $2500.00 as damages as hereinbefore set forth and that the defendant refused and still refuses so to do.
"Wherefore, plaintiff prays judgment against the defendant in the sum of $2500.00 with interest from the 23rd day of July, 1928 and for his costs herein expended."
To this amended petition the plaintiff in error, The Guardian Life Insurance Company of America, filed a demurrer on the three grounds that there was a defect of the parties plaintiff, that the plaintiff had no legal capacity to sue, and that the facts stated were insufficient to constitute a cause of action. The trial court sustained the demurrer on the second ground.
Error was prosecuted to the Court of Appeals, and the judgment of the Court of Common Pleas was reversed and the cause remanded.
The case is in this court by reason of the allowance of a motion to certify.
Messrs. Hightower O'Brien, for plaintiff in error.
Mr. Bert H. Long and Mr. Milton M. Bloom, for defendant in error.
The first contention of the company is that the allegations of the amended petition state a cause of action in neither tort nor contract. To this the plaintiff replies that his action is for breach of contract, although certain charges of negligence are made. In response to this it is urged by the company that the allegations relating to a contract are mere conclusions and therefore insufficient. An examination of the amended petition does disclose the phrase, "plaintiff entered into an agreement", but in addition to this it is averred in detail that the contract required the doing of specific acts which the company failed to perform, and no motion to strike out or to make definite and certain has been filed. Furthermore, it must be remembered that for the purpose of testing the legal sufficiency of a pleading a demurrer admits not only the proper, well-pleaded, factual allegations thereof, but also the fair, reasonable and favorable intendments and inferences arising therefrom. That the plaintiff may or may not be able to produce the necessary proof when his case comes to trial is, of course, wholly immaterial at this time.
The company further insists that there can be no liability under the alleged contract inasmuch as no policy was ever delivered to plaintiff's brother Emil. Furthermore, the petition does not state whether the contract was oral or written, but in his brief the plaintiff cites authorities sustaining, the validity of oral contracts of insurance. However, these questions present no difficulty in view of the well-settled Ohio rule that a policy is only evidence of the contract, and the latter may be shown by parol when the policy has not been written or is withheld, unless such contract is forbidden by statute or a provision of the company's charter which is brought to the notice of the other contracting party. Newark Machine Co. v. Kenton Ins. Co., 50 Ohio St. 549, 35 N.E. 1060, 22 L.R.A., 768; 22 Ohio Jurisprudence, 318; 14 Ruling Case Law, 880.
The company further complains that the amended petition Contains no recital as to payment of the initial premium. This, too, is a matter of evidence rather than of pleading, for the reason that pre-payment of the first premium on a policy of insurance is not always a condition precedent to the commencement of the risk. 22 Ohio Jurisprudence, 322; 14 Ruling Case Law, 957.
The remaining contention of the company is that the plaintiff did not have legal capacity to sue, because if any cause of action arose in this case it was in tort and in favor of the administrator of the deceased, and not in favor of the plaintiff as the surviving beneficiary. Again it must be remembered that this cause of action is based upon the theory of contract rather than tort. Furthermore, it must be observed that the alleged contract is an unusual one. This is not the ordinary type of action brought for failure to perform a contract providing for the issuance and delivery of a single policy of insurance upon the life of but one individual, as in the cases cited by the company. Rather it is an action predicated upon the breach of a tripartite agreement involving the issuance and delivery of a separate policy of insurance upon the life of each of two persons, but for their mutual benefit. Under these circumstances it is apparent that the contract in question is one to which the plaintiff is himself a party and upon which he therefore may sue in his own right and name.
In conformity with the foregoing views the judgment of the Court of Appeals is affirmed.
Judgment affirmed.
STEPHENSON, BEVIS and ZIMMERMAN, JJ., concur.
ALLEN, J., not participating.