Court Opinion

ID: 9463458
Source: CourtListenerOpinion
Date Created: 2023-08-04 23:07:52.113326+00
Date Added: 2024-06-11T17:38:07.745523
License: Public Domain

WILLIAM E. DOYLE, Circuit Judge,
dissenting.
I respectfully dissent.
The basis for my disagreement with the position taken by the majority is that it is out of harmony with the governing law which is that promulgated by the Supreme Court of Colorado. The majority opinion faithfully points out the course of events which led to the refusal of the appellee insurance company to pay the proceeds in the amount of $100,000. It is true that the insured failed to pay the premium on time. *904The second annual premium was due on June 1, 1973. He waited until August 15, 1973 to pay the amount of $414.72. This would have paid him up until the following June 1. Did appellee insurance company return the check and advise the insured that he was in a state of forfeiture? It did not. It deposited the check and kept the proceeds until after his death, which was December 30, 1973. Then, some two weeks later, on January 14, 1974, it attempted to return the premium to the wife of the insured, who was the named beneficiary and the present plaintiff.
Does this conduct constitute a waiver under the law of Colorado? In the opinion of this writer it does. The ceremony which the insurance company stands upon is the failure of the insured to fill out a health form. It is plain from the lapse of time that the company intended to keep the policy in force and effect pending the completion of this form. Otherwise it would have sent back his money. Furthermore, its General Agent, Mr. Johnson, met on September 17 for the purpose of the execution of a change of beneficiary form and made no comment that the policy was not then in force.
A venerable Colorado decision controls this situation. It is cited in the majority opinion but is not there considered to be significant. I refer to Reliance Life Ins. Co. v. Wolverton, 88 Colo. 353, 296 P. 793 (1931). The facts in Reliance are quite similar to the conditions which are present in our case. There, however, the condition with respect to payment of premiums stated that if the premium was not paid the policy would become void. However, the Colorado Supreme Court held that this strong provision could be waived. The Court first noted that forfeitures are not favored and said further that “courts should be liberal in construing the transaction in favor of avoiding a forfeiture.” Knickerbocker Life Insurance Co. v. Norton, 96 U.S. 234, 24 L.Ed. 689, and Iowa Life Ins. Co. v. Lewis, 187 U.S. 335, 23 S.Ct. 126, 47 L.Ed. 204 (1902), together with Knights of Maccabees v. Pelton, 21 Colo.App. 185, 121 P. 949 (1912). The Court added that this principle “gains renewed force from the verdict of the jury on the question submitted and found against defendant.” The position of the insurance company was that Wolverton had concealed the precarious condition of his health, an issue which is not present here. The Court, however, rejected this saying that the only issue was whether there was a waiver by acceptance. The very significant language of the Colorado court is its statement that after the receipt and unconditional acceptance of the money it is too late to declare a forfeiture. On this the court said:
After the receipt and unconditional acceptance of the money it is too late to declare a forfeiture. Great Western Mutual Aid Ass’n v. Colmar [7 Colo.App. 275, 43 P. 159], supra; Beauchamp v. Retail Merchants’ Ass’n Mutual Fire Ins. Co., 38 N.D. 483, 165 N.W. 545. As said in Denver Life Ins. Co. v. Crane, supra, at page 202 of 19 Colo.App., 73 P. 875, 879: “ * * If there was a waiver, it was already complete, and no change of front on the part of the company could impair its effect.” We are of course aware of defendant’s position in the instant case, that it did not change front, but the jury must have thought otherwise, judging by its verdict.
296 P. at 795.
In our case the evidence of acceptance is much stronger than it was in Reliance. The money was sent August 15. Thereafter it was held until January 14 of the following year, after the insured died. The inference is inescapable from this long lapse of time that the filling out of the form was formal rather than substantial because the premium was being used by the company during this protracted period. Thus, a clear change of position on the part of the company is apparent. It is to be inferred that the insured was perhaps uncertain as to whether he would continue the policy after the sale of his restaurant, but the restaurant was not sold as quickly as everyone had expected and the lending institution, Century Bank and Trust Company of Denver, insisted that the policy be kept in force *905and that was what moved the decedent to pay the annual premium. The company held this money for five weeks before it made any effort to notify the decedent that he had to fill out the form, but this notice did not refer to the policy not being in effect. Also, there was a change of beneficiary form received and apparently accepted by the defendant on October 10, 1973. From then on it was a question of the company’s notifying the insured that he had to file a form, but not cancelling the policy. It waited until the insured died and until a claim was submitted before attempting this. It is then fair to say that the company played both ends against the middle, and for this reason it is not to be permitted to make an election after the man dies.
Finally, it is to be emphasized that the blessed and sacred health form which was used by Puritan in an attempt to cancel the policy would have, if completed, added nothing. It would have been a mere piece of paper.
The majority opinion relies on the Colorado Court of Appeals decision in Kansas City Insurance Company v. Johnson, 480 P.2d 122. However, this is a misplaced reliance because this decision of the Court of Appeals was “not selected for official publication” by the court. It is of limited or perhaps no authority. Besides that its facts are different. The main distinction between Kansas City and our case is that the company acted promptly in cancelling the policy after failure to pay the premium and it never changed its position on this. Thus, it could not be charged with playing hot and cold, so to speak, with the issue of waiver.
Being of the opinion then that the undisputed evidence shows that the policy was in effect as of the date of death, I must disagree with the holding that the policy was effectively cancelled.