Opinion
No. 33173.
April 25, 1938. Suggestion of error overruled, May 9, 1938.
1. INSURANCE.
The incontestability provision of life policies prevents the insurer from denying validity of the policies, but does not relieve the insured from proving that the relief sought by him, consisting of disability payments and recovery of premiums paid by virtue of waiver of premiums clause, is within the promise made by the insurer.
2. INSURANCE.
Where insurer promised to pay insured one-tenth of face of life policies per annum in event insured should become permanently disabled subsequent to the delivery of the policies, in order to recover disability payments the burden was on the insured to prove that he became permanently disabled after and not before the delivery of the policies.
3. INSURANCE.
Evidence was insufficient to establish that insured's disability arose after delivery to him of life policies and precluded recovery of disability benefits and premiums paid on policies after he had filed claim for disability benefits.
4. INSURANCE.
Where life policies contained disability clause and a promise of insurer to waive premiums in event insured became permanently disabled subsequent to delivery of policies, in order for insured to recover premiums paid after he filed claim for disability benefits he was required to show that he was then permanently disabled and became so after the delivery of the policies.
APPEAL from the circuit court of Monroe County. HON. THOS. H. JOHNSTON, Judge.
Watkins Eager, of Jackson, and D.W. Houston, of Aberdeen, for appellant.
The burden of proof is upon the appellee to show that his alleged total and permanent disability arose subsequent to the delivery of said policies of insurance.
We respectfully submit that the appellant was entitled to a directed verdict at the conclusion of appellee's evidence and to a peremptory instruction at the conclusion of all of the evidence because the appellee wholly failed to meet the burden of proof which was upon him to show that his alleged total and permanent disability arose subsequent to the delivery of the policies of insurance sued on and each of them.
Equitable Life Assurance Society v. Henderson, 177 Miss. 815, 172 So. 321; Columbian Mutual Life Ins. Co. v. Jones, 174 Miss. 33, 163 So. 687; Scales v. Home Life Ins. Co., 89 F.2d 580; New Amsterdam Casualty Co. v. Perryman, 162 Miss. 864, 140 So. 342; Fidelity Deposit Co. v. Merchants' Marine Bank of Pascagoula, 151 So. 373, 154 So. 260.
The incontestable clauses of the policies sued on do not affect the issues involved in this cause.
John Hancock Mutual Life Ins. Co. v. Hicks, 183 N.E. 93; Apter v. Home Life Ins. Co. of N.Y., 194 N.E. 846; Sanders v. Jefferson Standard Life Ins. Co., 4 F.2d 55; Lavender v. Volunteer State Life Ins. Co., 157 So. 101; Messina v. New York Life Ins. Co., 161 So. 462.
The appellee was not entitled to recover premiums voluntarily paid appellant.
Aetna Life Ins. Co. v. Thomas, 166 Miss. 53, 144 So. 50; Featherstone v. Stonewall Life Ins. Co., 165 Miss. 164, 147 So. 305; Columbian Mutual Life Ins. Co. v. Gunn, 173 Miss. 897, 163 So. 454; 48 C.J. 752; Cooley on Taxation (4 Ed.), sec. 1283.
Paine Paine of Aberdeen, for appellee.
We respectfully submit to the court that this is a case properly submitted to the jury on the facts and since the facts were decided by the jury in favor of the appellee, then the case will not be disturbed on appeal unless manifestly wrong or against the overwhelming weight of the evidence.
Counsel for appellant are forced to admit that the incontestable clause would prevent the appellant from claiming fraud by Reedy in his application for insurance under the many and numerous decisions which have so well established this rule of law. And it occurs to us that it is carrying the incontestable clause doctrine mighty far to attempt to defeat the rights of a party after the incontestable period has elapsed by claiming that the efforts of the appellant company in the present case does not constitute a "contest" of appellee's policy rights.
United States of America, Petitioner, v. Patryas, 58 Sup. Ct. Rep. 551, 90 F.2d 715; Massachusetts Benefit Assn v. Robinson, 42 L.R.A. 261.
We do not controvert with appellant's counsel the law that premiums on insurance voluntarily made, where there is no coercion, compulsion or necessity for payments, cannot be recovered. But where such premiums are paid due to compulsion or coercion or through necessity to prevent the threatened lapse of policies, as in the case at bar, we insist that they are not voluntary payments and no decision in Mississippi has ever been rendered holding such payments voluntary payments.
Columbia Mutual Life Ins. Co. v. Gunn, 173 Miss. 897, 163 So. 454; 48 C.J. 752, sec. 306; Pacific Life Ins. Co. v. McCaskill, 170 So. 579.
The courts have established the doctrine that before an insurer will be permitted to rescind an insurance contract, it is required to return or tender the premiums within a reasonable time after it discovers the fact upon which it bases its rescission of the contract.
32 C.J. 1266, sec. 470.
The appellant here contends that the appellee was totally and permanently disabled prior to the issuance of the policies or at least at the time the policies were issued. Yet the appellant charged the appellee with the payment of a premium on both policies for the waiver of premiums and the payment of disability benefits and collected these premiums for seventeen long years and although appellant claims to have discovered this fact in the year 1936, the premiums collected during this period of time have not been paid to the appellee or tendered to the appellee under either one of these cases filed in the justice of the peace court.
The appellee filed two suits against the appellant in the court of a justice of the peace on two life insurance policies issued to him on February 5, 1920, each containing a disability clause, to recover alleged disability benefits and premiums paid on the policies by him. From a judgment there for the appellee the cases were carried by the appellant to the circuit court, where, by agreement, they were consolidated and tried as one, resulting in a verdict and judgment for the appellee.
At the close of the evidence the appellant requested, but was refused, a directed verdict in its favor. Both of the policies, in addition to insuring the life of the appellee, contain the following provisions: "And the Company agrees to pay to the Insured one-tenth of the face of this policy per annum, during the lifetime of the Insured, if the Insured becomes wholly and permanently disabled before age 60, subject to all the terms and conditions contained in Section 1 hereof. . . . Whenever the Company receives due proof, before default in the payment of premium, that the Insured, before the anniversary of the Policy on which the Insured's age at nearest birthday is 60 years and subsequent to the delivery hereof, has become wholly disabled by bodily injury or disease so that he is and will be presumably, thereby permanently and continuously prevented from engaging in any occupation whatsoever for remuneration or profit," then further payment of premiums will be waived and "the Company will pay the Insured a sum equal to one-tenth of the face of the Policy and a like sum on each anniversary thereafter during the lifetime and continued disability of the Insured. . . . This policy is free of conditions as to residence, travel, occupation, or military or naval service, except as provided under Double Indemnity on first page hereof, and shall be incontestable after two years from its date of issue except for non-payment of premium."
In 1935 the appellee filed a claim with the appellant for the disability allowance, setting forth that he was then totally disabled, which claim the company approved, waived further payment of premiums on the policies, and began paying him the disability benefit provided therein. On June 10, 1936, the appellant wrote a letter to the appellee from which it appears, in substance, that it had just learned that the appellee's disability occurred prior to the issuance of the policies, and therefore the appellant was not liable under the disability provision thereof; demanded the repayment of $200 paid the appellee, and the payment of premiums that had been waived, in default of which the company would declare the policies lapsed for nonpayment of premiums. After some further correspondence between them, the appellee mailed a check to the appellant's Jackson, Miss., office for $109.92, inclosed in the following letter: "Gentlemen: You will find enclosed check for $109.92 for premiums on policy numbers 6 671 928- 6 671 929, which the company requested in letter June 10th. Yours truly, Millard G. Reedy." This letter was received and the check collected by the appellant's Jackson office. On July 11th the appellee wrote a letter to the appellant mailing it to its New York office, the substance of which is that he denied liability for the payment of the premiums and stated that he would immediately sue the appellant for the recovery thereof, and would pay premiums thereafter to become due "until a court of competent jurisdiction decides that I am not due to pay any more premiums on account of my physical condition, and I therefore herewith demand that you immediately refund to me these premiums which I paid to you."
Three questions are presented: (1) Does the incontestability of the policies after two years relieve the appellee from proving that his disability occurred subsequent to the delivery of the policies? Should this question be answered in the negative, then (2) should the jury have been permitted to find from the evidence that the appellee's disability occurred subsequent to the delivery of the policies? Should this question be answered in the affirmative, then (3) is the appellee entitled to a recovery, in addition to the disability benefit provided by the policies, of the premiums paid by him after his disability arose?
The incontestability provision of the policies prevents the appellant from denying the validity of the policies but does not relieve the appellee from proving that the relief sought by him is within the promise made by the appellant in the policies. Lavender v. Volunteer State Life Ins. Co., 171 Miss. 169, 157 So. 101; Messina v. New York Life Ins. Co., 173 Miss. 378, 161 So. 462; John Hancock Mutual Life Ins. Co. v. Hicks, 43 Ohio App. 242, 183 N.E. 93; Apter v. Home Life Ins. Co., 266 N.Y. 333, 194 N.E. 846, 98 A.L.R. 1281; Sanders v. Jefferson Standard Life Ins. Co., 5 Cir., 10 F.2d 143. Cf. United States v. Patryas, 58 S.Ct. 551, 82 L.Ed. ___.
The promise here is to pay the appellee one-tenth of the face of the policies per annum in event he should become permanently disabled "subsequent to the delivery" of the policies. Consequently, in order to recover, the burden was upon the appellee to prove that he became permanently disabled after and not before the delivery of the policies. Equitable Life Assurance Soc. v. Henderson, 177 Miss. 815, 172 So. 321.
The evidence introduced by the appellee is that after the delivery of the policies he worked in a hardware store for about two years; that in 1935, when he applied to the appellant for disability benefits under the policies, he was totally and permanently disabled, but when his disability arose does not appear. In his cross-examination, when testifying in his own behalf, the following questions and answers appear:
"Q. As I understand this total disability originated when you were in France during the war? A. Yes.
"Q. This same kidney trouble? A. Yes.
"Q. And has continued ever since? A. Yes. . . .
"Q. You remember the date of your discharge from the Army? A. I think it was the 27th of April, 1919, 27th or 28th, somewhere along there.
"Q. Your total disability has dated at least from that date? A. Yes."
On his redirect examination the following appear:
"Q. Mr. Reedy, you were asked on cross-examination if you were totally disabled on the date of your discharge from the Army, were you or not? A. I misunderstood.
"Q. They asked you were you totally disabled, were you? A. No.
"Q. What did you mean to say in answer to that when you answered you had been totally disabled from the date of your discharge? A. I meant to say I didn't know I was a total disability at the time of discharge.
"Q. Did you have some kidney trouble at the time of your discharge? A. Yes."
It also appears from his examination that he testified in the justice of the peace court that he considered himself wholly disabled from the time of his discharge from the Army. He admitted having sued the government for benefits under a war risk insurance certificate, and alleged in his declaration that he was permanently disabled from a disease of the kidneys when discharged from the Army on April 28, 1919.
It will thus be seen that the appellee failed to prove that his disability arose after the delivery to him of the policies sued on. This being true, he cannot recover on the disability clauses of the policies.
In order for the appellee to recover the premiums on the policies paid by him after he filed his claim for disability benefits, it must appear that he was then permanently disabled and became so after the delivery of the policies, and as this fact does not appear it is immaterial whether he paid the premiums voluntarily or not.
The appellant's request for a directed verdict should have been granted.
Reversed, and judgment here for the appellant.