Opinion
No. 70-271 (Supreme Court No. 23682)
Decided June 30, 1970. Rehearing denied July 21, 1970.
Action to recover on life insurance policy. From a finding that effective date of the policy was the date of delivery and that therefore policy had not lapsed, defendant appealed.
Reversed
1. INSURANCE — General Rule — Ambiguity — Effective Date — Resolved — Favor of Insured — Not Apply — Certain Circumstances — Parties — Expressed Intent. Although general rule is to the effect that, where there is an ambiguity within an insurance policy as to whether delivery date or date of the policy is the effective date, the question must be resolved in favor of the insured, this rule does not apply under certain circumstances particularly where the parties have expressed their intent as to the effective date.
2. Premium Paid — October 14 — Specific Request — That Date — Subsequent Reinstatements — Facts Indicated — Date Agreed Upon — Parties — Effective Date. Where insured paid his premium on October 14, 1964, and specifically requested that the policy be dated that date and where subsequent reinstatements recognized the fourteenth as the payment date, the facts indicated that this date rather than the delivery date was agreed upon and recognized by the parties as the effective date of the policy.
3. Plaintiff's Theory — Reinstatement — December 7 — Prospectively — Date of Payment — Not Supported — Authority — Life Insurance — Contrary — Contract Terms. Plaintiff' theory that when October 14 premium payment was not paid until December 7, policy was reinstated prospectively from date of payment is not supported by any authority as regards life insurance policies and is contrary to the clear and unambiguous terms of the contract.
Error to the District Court of the City and County of Denver, Honorable Ned J. Carpenter, Judge.
Phelps, Hall Keller, Glen E. Keller, Jr., for plaintiff in error.
James G. Johnston, V. G. Seavy, Jr., for defendant in error.
This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
This is an action to recover proceeds on an insurance policy. The parties appear in the reverse order of their appearance in the trial court. Plaintiff was beneficiary under a policy issued by the defendant company insuring the life of the deceased, Eugene V. Romero. At the time of the insured's death, a premium was due. The company claims and the plaintiff denies, that the period of grace provided for in the contract had then expired. The determinative question is: What was the effective date of the policy? The case was submitted to the court on stipulated facts.
On August 19, 1964, deceased signed an application for a term life insurance policy. An agent of the company delivered the policy to the deceased on October 14, 1964. The policy was dated September 1, 1964. The deceased found the policy to be acceptable in all respects except for the date. No explanation is given as to why the delay between the date of application, the date on the policy and the date of delivery. The deceased requested that the policy date be changed to October 14, 1964. The agent of the company had no authority to authorize any change in the policy. However, on October 14, 1964, the deceased signed a request for a change form furnished by the company which stated:
"Change date on Policy to October 14, 1964." On this same date, the deceased paid the agent the first three month premium and the agent then returned the policy with the request for the change of date to the company.
On or about October 29, 1964, the agent delivered a new policy to the deceased bearing the same number as the first policy and identical in all respects except the policy date had been changed to October 14, 1964. The next premium was not paid on January 14, 1965, and the policy lapsed February 15, 1965. March 1, 1965, the plaintiff signed an application for reinstatement which contained the following statement:
"I hereby apply for reinstatement of this policy which lapsed for non-payment of the premium with due date January 14, 1965."
Again on October 14, 1965, the quarterly premium was not paid and the policy lapsed November 15, 1965. This time the deceased signed an application for reinstatement on December 7, 1965, which contained the same statement quoted above except the statement said the policy had lapsed for non-payment of the premium with due date of October 14, 1965. On the next due date, January 15, 1966, payment was not made and the insured died February 18, 1966.
If the effective date of the policy was October 14, 1964, then the deceased died four days after the lapse of the grace period and the plaintiff would not be entitled to recover. If, however, the effective date of the policy was October 29, 1964 (when it was delivered), as claimed by the plaintiff, then the death occurred within the grace period and plaintiff would be entitled to recover.
The application, which is a part of the policy, provides that the insurance shall not be in effect until a policy is issued by the company, delivered to and accepted by the insured and the first premium paid. If further provides that the policy shall take effect as of the policy date stated in the policy.
The trial court in entering judgment for plaintiff concluded that the policy dated September 1, 1964 was an offer from the company which was rejected October 14, 1964, and that on that date the deceased made a "counterproposal"; that this "counter-offer" was accepted by the company at its home office; and that this acceptance by the company was not made known to the deceased until the re-delivery on October 29, 1964. The court then stated:
"The difference in time, from October 14, 1964 at which time decedent made his counter-offer, through the company agent, for a changed policy date, paying at that time a quarterly premium, and having no knowledge of the acceptance of his request is the same type of ambiguity as has been previously heard by the Court in Shinall v. Prudential Insurance Company, 91 Colo. 194. In this case the Court said, 'If there is any ambiguity as to the meaning of a contract of life insurance, it must be resolved in favor of the insured.'"
We do not agree that the delivery date is the controlling date in this particular case.
I.
The plaintiff and the trial court rely on Shinall v. Prudential Insurance Company of America, 91 Colo. 194, 14 P.2d 183, as being controlling and conclusive that the date of deliver, i.e., October 29, 1964, is the effective date of the policy. We agree with the decision announced in that case and the subsequent cases which cite and affirm that decision on the facts of those cases. A careful review of the Shinall case, supra, shows the following similarities with the case at hand: In both cases the application for insurance was made on one date, the company dated the policy a later date and the delivery was made on date subsequent to the date on the policy. Likewise, both policy applications provided that the insurance was not in effect until delivery by the company, acceptance by the insured and the first premium was paid. Under such a state of facts, there is an ambiguity within the policy as to whether the delivery date or the date of the policy is the effective date and we agree that under these conditions, the question must be resolved in favor of the assured. However, in the case at hand, the intent of the parties was expressed and there were other circumstances which must be considered. As previously recited the deceased specifically requested that the policy be dated October 14th and he paid the premium on that date. He received what he bargained for even though the policy was not delivered until October 29th. Further, we have the evidence of the policy having lapsed twice during the one year of its existence and the applications for reinstatement were signed by the plaintiff and by the insured respectively reciting that the premium due date was the 14th day of the respective months.
The Supreme Court recognized the limitations of the general rule as applied in the Shinall case and so stated that it did not apply under certain conditions. At page 201 in said case, the court said:
"This decision, as always, is limited to the facts of this case. But as an additional precaution we say it does not contemplate cases where the premium was paid at the time of the application and the policy was not antedated, where the application was not made a part of the policy, where the parties themselves have interpreted an otherwise obscure or conflicting contract, where waiver or estoppel have intervened, where there was an unambiguous contract to pay a year's premium for less than a year's protection, or where there was a special consideration for antedating the policy. No such case is before us." (Emphasis added.)
Here, as noted, Mr. Romero paid his premium on October 14, 1964, and specifically requested that the policy be dated that date. The subsequent reinstatements recognized the 14th as the payment date. The facts indicated that this date was agreed upon and recognized by the parties. In Business Men's Assurance Company of America v. Davies, et al., 106 Colo. 51, 101 P.2d 432, while recognizing the general rule of the Shinall case, the court said:
"We think the effective date of the policy was September 6th (date appearing on the policy), as the trial court inferentially held. The ambiguity in the contract is admitted, but we have held in similar cases that the date agreed upon and long recognized by the parties is to be accepted. . . . 'The important point is that the parties thereto had, by their own correspondence and conduct, put upon the policy in question the construction contended by the company.'" (Emphasis added.)
Plaintiff also relies on American National Insurance Company v. Gregg, 123 Colo. 476, 231 P.2d 467. There the court affirmed the Shinall case, supra, and held the date of delivery was the effective date of the insurance policy. However, it also recognized that other circumstances could have changed the result as stated at page 479:
"The circumstances considered, and in all reasons, as we think, and in the absence of specific agreement otherwise, not claimed here, the delivery date of the policy here should control and that is the sum of our holding in those cases." (Emphasis added.)
Plaintiff presents an alternative argument in support of its position that the deceased was covered by the policy in question. The theory presented is that the deceased failed to make the premium payment due October 14, 1965, that he reinstated the policy December 7, 1965, with payment of a three month premium and that this reinstatement operates prospectively giving coverage to March 7, 1966, which would cover date of death, February 18, 1966. Assuming that such a principle may apply in health and accident coverage, the plaintiff cites no authority and we find none to support such a theory applicable to term life insurance. In any event, the terms of the contract of insurance before us are quite clear and unambiguous on this point. The reinstatement provision provides:
"If the term period has not expired, this policy may be reinstated within 3 years after default in premium payment upon the following conditions: (1) production of evidence of insurability satisfactory to the Company; and (2) payment of all arrears of premiums with compound interest at 5% per annum." (Emphasis added.)
The judgment of the trial court is reversed and the cause remanded with directions to dismiss the action.
CHIEF JUDGE SILVERSTEIN and JUDGE DWYER concur.