Opinion
28478.
DECIDED NOVEMBER 14, 1940. REHEARING DENIED DECEMBER 12, 1940.
Complaint on disability policy; from Fulton civil court — Judge Hathcock. April 4, 1940. (Application to Supreme Court for certiorari.)
John J. Neely, Edgar A. Neely Jr., for plaintiff.
Charles D. Hurt, for defendant.
The petition set forth a cause of action for premiums paid on an insurance policy, based on a repudiation of the entire contract by the company. It was error to sustain the general demurrer and to dismiss the action. SUTTON, J., dissents.
DECIDED NOVEMBER 14, 1940. REHEARING DENIED DECEMBER 12, 1940.
STATEMENT OF FACTS BY SUTTON, J.
Edward M. Adams filed his petition against the Inter-Ocean Casualty Company, and alleged substantially as follows: On or about November 15, 1927, the defendant issued to him its policy of life and casualty insurance, which provided, among other things (sec. G) for the payment to him of monthly sick benefits in the sum of $50, if he should be totally disabled as therein specified; (sec. M) that "If this policy is maintained in continuous force and effect without delinquency for a full period of ten (10) years from date of issue, the company will, without further payment by the `insured' and subject to all provisions herein contained, declare it to become and thereafter be fully paid up for both sickness and accidental disability as well as death as herein provided. (If allowed to lapse, this policy may be reinstated; and if kept in continuous force without delinquency for ten years from date of reinstatement, it shall become paid up as provided herein.)" The plaintiff maintained said policy in continuous force and effect, without delinquency, for a full period of ten years from its date. On June 17, 1938, he became totally disabled, necessarily and continuously confined within the home, and therein professionally visited by a physician at least once each seven days, due to illness that originated more than thirty days after the policy was issued; and said condition existed for a period of ninety days. The plaintiff wrote to the defendant, fully stating his condition and the probable duration of his disability, and requested blanks of proof of loss on which to file his claim in conformity with the provisions of the policy and the custom and practice as to transactions of this kind between the plaintiff and the defendant in the past. The defendant then notified the plaintiff that said policy was of no force and effect, and had been canceled or lapsed by the company by a letter as follows: "June 24, 1938. We have your card notifying us of your illness which had its beginning on June 17, 1938, and regret very much to advise that it will not be possible for us to serve you in this matter, for the reason that our records show that you permitted the policy to lapse by the non-payment of the agreed premium on December 15, 1937, and that the contract has not been in force since that time. We also have noted your statement that the policy is `paid up in full.' However, if you will refer to section M of the policy, dealing with the paid-up feature of the contract, you will find the following: `If this policy is maintained in continuous force and effect without delinquency for a full period of ten (10) years from the date of issue, the company will, without further payment by the insured and subject to all provisions herein contained, declare it to become and thereafter be fully paid up for both sickness and accidental disability as well as death herein provided. (If allowed to lapse, this policy may be reinstated; and if kept in continuous force, without delinquency for ten years from date of reinstatement it shall become paid up as provided herein.)' Our records show that you permitted the policy to lapse on July 15, 1928, by the non-payment of the agreed premium within the five day grace period provided in section Q of the contract, subsequently reinstating the policy, subject to all of its terms and conditions on July 23, 1928. The policy consequently would not have become paid up until August 15, 1938. The policy had been permitted to lapse and subsequently reinstated prior to that time on February 15, 1928 (reinstated on March 8, 1928), and again on April 15, 1928 (being subsequently reinstated on May 14, 1928). It will thus be obvious that the policy is not paid up; and further that it has not been in force since December 15, 1937, the expiration of the last period for which payment was made. Sincerely regretting your apparent misunderstanding and also our inability to serve you in this matter, for the above cause, and other causes the grounds for which are fully reserved, we are" (signed).
At this time the defendant denied all liability under said policy, and the defendant has failed and refused to make the disability payments according to the terms of the policy. In March, 1939, the plaintiff again became sick and entitled to disability benefits according to the terms of the policy, and the defendant again refused to pay his claim as provided by the policy, and the defendant again denied all liability under the policy, which denial is evidenced by a letter from the company to John J. Neely, as hereinafter set out in this petition. The defendant further notified John J. Neely, the plaintiff's attorney, by letter of May 12, 1939, that it had denied all liability under the policy, and that the policy had been lapsed and canceled, said letter being as follows: "Your letter of the ninth inst., together with the entire file in connection with the matter discussed, has been referred to the writer for attention; and I find after careful examination that your client permitted the above-numbered policy to lapse by the non-payment of the agreed premium July 15, 1928, and reinstatement was accepted July 23, 1928, subject to all of the terms and conditions of the contract; consequently it is obvious and clear that the policy would not have been paid up until July 15, 1938, in accordance with section M, the paid-up feature, which provides as follows: [same as quoted in letter of June 24, 1938, above set forth.] Therefore, since Mr. Adams permitted his policy to lapse for the non-payment of the agreed premium December 15, 1937, we have no liability in connection with any claim previously presented or any claim which you propose to present, and the policy is void. The last correspondence we had with Mr. Adams in regard to this matter was under date of June 24, 1938, and we are glad to hand you herewith copy of our letter to him at that time, which is further explanatory. Section K of this policy specifically provides that any renewal of the contract at the expiration of any renewal term shall be at the option of the company; and since this policy was sold on a month-to-month basis, or term, the company has a perfect right to decline any renewal at any time. I wish to put you straight in this respect, however; we have not declined the premiums of Mr. Adams, as no tender of premiums has been made to us since November 13, 1937, and the policy simply lapsed by the non-payment of the agreed premium, December 15, 1937. It is our desire, however, to dispose of this matter in an amicable manner; and if you have any reasonable suggestions to offer along this line, we would be glad to entertain them." The plaintiff has paid premiums at the rate of $3 per month for 120 months or 10 years, without being delinquent in a single premium, first payment being made in December, 1927, and the last payment in November, 1937. Judgment for the plaintiff, in the amount of the premiums, $360, and interest, was prayed.
To the petition was attached a copy of the insurance policy which provided, among other things, in addition to those mentioned above, (sec. K) for the termination of the insurance upon failure to pay the agreed premiums on the due dates, and any renewal of the policy was to be at the option of the company; that "if this policy is terminated, all premium payments shall be considered `earned' premiums by the company, and no liability shall attach to the company for refunds or loss occurring during any period of lapse;" that "This policy is issued in consideration of the statements, agreements and conditions contained in the application herefor, copy of which is endorsed hereon and made a part hereof, and a policy fee of $5 and a monthly premium of $3 which carried the insurance up to December 15th, 1927, at which time a like amount will be due and payable without notice, and a like amount on the same date each month hereafter to continue this policy in force." The defendant filed general and special demurrers to the petition. The court sustained the general demurrer and dismissed the action, and the plaintiff excepted.
The following is the opinion of my two brethren of the court, to which I do not agree, as will later appear from my dissenting opinion which appears. The sum and substance of the petition is that the plaintiff had paid continuously on his policy for ten years, and had earned the right to a paid-up policy, which provided for disability benefits and a death benefit; that the insurance company had repudiated the entire contract by erroneously contending that it had lapsed; and that the repudiation was a complete anticipatory one, as well as a mere failure to pay a past claim. The insurance company repudiated the contract, according to the petition, by showing an intention not to be bound thereby. It makes no difference how such an intention is manifested, if it is sufficiently established. If in this case the plaintiff can prove that the insurance company wrongfully repudiated what he contended was a paid-up contract, and demanded more premiums, the repudiation would be proved just as effectively as if he had proved the company had refused to accept further premiums on a binding contract calling for the payment of premiums. The mere fact that the plaintiff could have sued on the policy for the past disability is no reason why he could not accept the repudiation of the whole contract as a breach, and sue to recover the premiums paid. Bankers Health Life Insurance Co. v. James, 177 Ga. 520 ( 170 S.E. 357). Under the allegations of the petition, the repudiation was more than a mere refusal to pay a benefit claim. Here the company gave notice that it would not only not pay a past disability claim, but stated it would not pay any future claim, which included the death benefit. It is true that the plaintiff was not obliged to accept the breach and sue for the premiums. He could have sued on the policy while he was alive, for every benefit accruing to him under it, if it was paid up as he alleged, and his beneficiary or his estate could have sued after his death for the death benefit. He could elect his remedy. The cases cited by the defendant are not in point, and refer to facts showing a mere refusal to pay or facts failing to show a repudiation of the entire contract. The plaintiff's pleading of the letters which he contends show a repudiation is not to be construed as an admission that the contents of the letters are true. It was not necessary for him to plead his evidence in the first place, and the pleading of it will not preclude him from proving that the contention stated therein, namely, that his policy had lapsed, was not true. The court erred in sustaining the general demurrer and in dismissing the action.
Judgment reversed. Stephens, P. J., and Felton, J., concur.
The plaintiff's suit is for a recovery of premiums paid by him on a policy of insurance, on account of an alleged breach of the insurance contract by the insurer. The question for determination is whether, under the allegations of the petition, the insurer breached the contract by a wrongful cancellation and repudiation thereof, or whether the petition, when properly construed on demurrer, shows only a refusal to pay sick benefits, because the plaintiff had allowed the policy to lapse by the non-payment of premiums as required by the terms of the policy. The plaintiff's contention that the defendant breached or repudiated the contract depends on the two letters attached to and made a part of the petition, one under date of June 24, 1938, and the other under date of May 12, 1939, both of which are set out in the statement of facts. These two letters were written by the defendant to the plaintiff in response to claims by him for disability benefits. It will be seen from these letters that the defendant denied liability and refused to pay the disability claims, on the ground that the plaintiff had permitted the policy to lapse on December 15, 1937, by non-payment of the agreed premiums, and that it had not been in force since that date. But it was contended by the plaintiff that the policy was paid up on November 15, 1937, by reason of his having paid the premiums thereon for a period of ten years from the date of the policy. In this respect the policy provides: "If this policy is maintained in continuous force and effect without delinquency for a full period of ten (10) years from the date of issue, the company will, without further payment by the `insured' and subject to all provisions herein contained, declare it to become and thereafter be fully paid up for both sickness and accidental disability as well as death as herein provided. (If allowed to lapse this policy may be reinstated; and if kept in continuous force, without delinquency for ten years from date of reinstatement, it shall become paid up as provided herein.)" The letters relied on as constituting a breach of the contract stated that the plaintiff had permitted the policy to lapse on July 15, 1928, by non-payment of the agreed premiums; that the policy was reinstated on July 23, 1928, and consequently the policy would not have become paid up until July 15, 1938, under the terms of the contract just above stated; that the plaintiff had not paid or tendered any premium since November 13, 1937, and that the policy simply lapsed by the non-payment of the agreed premium on December 15, 1937, and that it had not been in force since that date. These letters were pleaded by the plaintiff, and attached to his petition, to show a breach of the contract; and in construing the petition on demurrer the court will look to the letters themselves to see whether they show a breach, instead of to the allegations and conclusions of the pleader in respect thereto. Strickland v. Lowry National Bank, 140 Ga. 653 (2) ( 79 S.E. 539); Shiflett v. Dobson, 180 Ga. 23, 28 ( 177 S.E. 681); New Zealand Fire Insurance Co. v. Brewer, 29 Ga. App. 773 (6) ( 116 S.E. 922). The suit is not on the insurance contract, but is for a breach of it, and the alleged breach is the cause of action declared on. If the letters do not show that the defendant repudiated or breached the contract, but on the other hand show that the defendant was relying on the terms of the contract, and that the plaintiff had let the policy lapse for the nonpayment of premiums, under its own terms, then the petition failed to state a cause of action, and the court properly sustained the demurrer. In my opinion this is exactly the situation here presented; that is, the letters plead and relied upon in the petition to show a breach of the insurance contract fail to show a repudiation or breach, and therefore the plaintiff is not entitled to maintain this suit to recover premiums paid on the policy.
The cases cited and relied upon by the plaintiff, Glover v. Bankers Health Life Insurance Co., 30 Ga. App. 308 ( 117 S.E. 665), Industrial Life Health Insurance Co. v. Thomas, 43 Ga. App. 679 ( 159 S.E. 885), Prudential Insurance Co. v. Ferguson, 51 Ga. App. 341 ( 180 S.E. 503), and Jones v. Pacific Mutual Life Insurance Co., 57 Ga. App. 16 ( 194 S.E. 249), are unlike the present case, and are not controlling of the question here presented. The case at bar is controlled by the principles as laid down in Farrow v. State Mutual Life Insurance Co., 22 Ga. App. 540 ( 96 S.E. 446); Moore v. Prudential Insurance Co., 56 Ga. App. 356 ( 192 S.E. 731), and Columbian Mutual Insurance Co. v. Carter, 58 Ga. App. 150 ( 197 S.E. 925). As was said in Moore v. Prudential Co., supra, "In each case involving a suit for wrongful cancellation of an insurance contract that our research has discovered, the insurer by affirmative action canceled the contract when it was under a duty to keep it in force according to its terms. For instance, in Alabama Gold Life Ins. Co. v. Garmany [ 74 Ga. 51], the insurer refused to accept premiums tendered in time, under a life policy which it had no authority to terminate. In Glover v. Banker's Health Life Ins. Co. [supra], according to the allegations of the petition which was before the court on demurrer, the insurer refused to accept premiums on an insurance contract which it had no right to terminate. In this class falls also Prudential Ins. Co. v. Ferguson [supra]. . . `While, as a general rule, where the action of the insurance company does not amount to a repudiation of the contract of insurance, but amounts merely to a refusal to pay, as required by the policy, sick benefits accruing under its terms, the right of action of the insured is governed by the policy itself, and he is entitled only to sue for and recover the amount of the benefits thus accruing (29 C. J. 279), still if the action of the insurance company amounts to a repudiation of the contract itself, and is accompanied by a declaration to the effect that no future premiums will be received, the insured may treat the contract as breached, and sue for the premiums paid with interest thereon.' Industrial Life Health Insurance Co. v. Thomas [supra]. In the present case there was no wrongful refusal to keep in force a valid and subsisting contract of insurance belonging to the insured, which he was entitled to have remain in force, but there was merely a refusal to pay benefits accruing under the terms of the contract."
The petition, when stripped of conclusions, shows a refusal by the insurer to pay claimed disability benefits because of a lapse of the policy for non-payment of premiums, instead of a breach or repudiation of the insurance contract by the defendant. In such a case the remedy would be an action on the contract to enforce payment of the claim for disability benefits, instead of a suit for damages on account of a breach of the contract. I think the court did not err in sustaining the general demurrer to the petition.