Court Opinion

ID: 9833816
Source: CourtListenerOpinion
Date Created: 2023-09-01 23:03:18.82658+00
Date Added: 2024-06-11T07:44:07.041980
License: Public Domain

LESLIE, Chief Justice.
Mrs. Earl L. Teague instituted this suit against the Colorado Life Company, a corporation and old line life insurance company, to recover insurance on the life of her deceased husband, attorney’s fees, penalties, etc., aggregating $1,060. The defendant answered by general demurrer, general denial, and as special' matters of defense alleged: (1) That John D. Sullivan, purporting to act as agent of the company in taking application for' the insurance, was not in' fact the agent of the company and had no authority to take the application or deliver a receipt for premium, etc.; (2) that the deceased never in fact paid to said Sullivan the first year’s premium in cash and in full, the same being $13.78,, that by reason thereof the purported receipt was null and void; (3) that Earl L. Teague, deceased, was not a standard life insurance risk at the date of the application and receipt, as represented by him; (4) that he did not state in his application all the diseases for which he had been recently treated, as required in the application; (S) that immediately upon receipt of the application for insurance the company on March 25, 1936, registered to the deceased a letter informing him that his application for insurance was rejected and that such notice was given him prior to his death; (6) that if said policy had been issued to him in accordance with the application, it could not have been delivered to him in his lifetime and during good health, since he *851was at the time the company received the application sick with influenza and meningitis, with which he died.
It is unnecessary to state other defenses. The trial was before the court and jury, and upon the answers of the latter, to special issues a judgment was rendered in favor of the plaintiff for the insurance in the amount of $500, $225 as a reasonable attorney’s fee, and $60 as 12 per cent penalty provided by statute, costs of suit, etc.
In answer to the special issues, the jury found (1) that the alleged agent, John D. Sullivan, was on March 11, 1936, the date of the application and the receipt, paid in cash $13.78, the first annual premium in full; (2) that on said date Earl L. Teague “was a standard life risk for insurance”; (3) that on said date said Sullivan was the agent of the Colorado Life Company; (4) that a reasonable attorney’s fee for plaintiff’s attorney was $225; (5) that if the Colorado Life Company had, upon receipt of the application of Earl L. Teague, issued a policy in a reasonable time, it would have reached said Teague before the beginning of his last sickness; and (6) that said Teague, in his application for insurance, did not fail to state all diseases that he knew he had been suffering with.
The correctness of the judgment based upon the verdict is challenged under eighteen different propositions of law. The firs? and second, and in fact the third, fourth and eighteenth, present the contention that the court erred in overruling its general demurrer to the plaintiff’s petition. It is asserted that the plaintiff’s pleadings failed to state the kind of insurance contract sought to be recovered upon and the terms and conditions of the same. The plaintiff’s suit is based upon an alleged contract, evidenced by .the application for insurance, and upon the terms of what is designated a “binding receipt” for the full cash payment, March 11, 1936, of the first annual premium. The receipt contains this provision:
“If, according to the company’s rules and requirements, the applicant was age 45 or under and insurable as a standard risk on the date of the application to which this receipt was attached and said ‘first payment’ has been paid in cash, then in such an event -such insurance not in excess of $2500 shall be in force from the date of the payment of said money.” In the left hand-margin of the “binding receipt” is found the following:
“No. 72046A
“If settlement for all * * * of the ‘First Payment’ is made with the application, this receipt is to be completed accordingly and given to the applicant; otherwise, this receipt must not be detached.”
The theory of the appellee’s case is that on March 11, 1936, when the application was signed and the “binding receipt” delivered to the deceased, he was under 45 years of age, insurable as a standard risk under the terms of an ordinary life insurance policy, that the full amount of the first year’s premium being paid and the defendant company not having brought home to applicant any notice that it had rejected his application prior to the death of the deceased March, 29, 1936, the contract of insurance evidenced by the application and receipt matured in favor of the beneficiary for the sum of $500, etc. On the other hand, it is the appellant’s contention that the binding effect of the receipt was conditional in that its liability, if any, was predicated upon its acceptance of the application and issuance and delivery of a policy thereunder.
To reflect more accurately the nature of plaintiff’s suit in the light of appellant’s contentions, a further and more detailed statement from the record or the pleading will be made. March 11, 1936, the deceased, Earl L. Teague, made his written application to said company for an “ordinary life” insurance “policy” in the amount of $500, making his wife beneficiary. The application is in usual form, containing many questions and answers by the applicant. First “policy premium” was stated to -be $13.78 for twelve months. The'premium “settlement” was stated to be “cash.”
Earl L. Teague died about noon March 29, 1936. No regular insurance policy was issued to him pursuant to the application. Pertinent features of the application are as follows :
“I understand and agree that the ‘first policy premium’ * * constitute the ‘first payment’ under the policy and that the ‘first policy premium’ is for the period (therewith indicated) beginning the first day of the first policy year. * * * I further agree that the policy and application which includes the statements and answers over my signature in part II hereof and otherwise made in connection hereto shall constitute the entire contract between *852the parties hereto and that no statement or answer, no matter ■ to whom made, not in this application (including said part II) shall bind the company and that any insurance issued on account oí this application will not be in force unless the ‘first payment’ required under the policy be duly made and the policy be duly delivered during my lifetime and continued good health. Whereupon the policy shall relate back to and take effect as of its date unless otherwise indorsed thereon. I understand that only an executive officer of the company in writing can make, modify or discharge contracts of insurance or waive any of the company’s requirements, and that none of these acts can be done by any person other than aforesaid, and that knowledge' or information of the agent taking this application or any other person whomsoever relating to my insurability which is not contained herein shall not be imputed to the company. I further agree that my acceptance of any policy issued on account of this application whether or not at the rate, upon the form, plan or for the amount now applied for, will constitute a ratification by me of any change in said rate, form, plan and/or amount or correction in or addition to this application (including said part II hereof) made by the company, copy of which attached to or indorsed on the policy shall constitute a sufficient notice to me thereof. A policy delivered to me or my representative and not returned to the company for cancellation within seven days after such delivery shall constitute and be deemed an acceptance by me.
“If within a reasonable time after making this application I am not advised in writing by the executive officer of the company that this application has been received I agree to write the company at Denver, Colorado, by registered mail, and. state that I have not been so advised. I understand the receipt attached hereto with its printed provisions unaltered, is the only receipt authorized by the company in connection herewith.” (Italics ours.)
Following the above is a statement by the insurance agent, John D. Sullivan, to the defendant company, as follows:
“Colorado Life Company.
“I have taken settlement for the ‘first payment’ of . this application, as follows: Cash $13.78 * * *. I have known the applicant for eight years * *
In the agent’s report (answering numerous questions) he states in answer to Question 7, viz., “Does applicant’s -appearance indicate good health and strong constitution? A. Excellent.” “10. Do you recommend issuing to the applicant a policy at standard rates? A. Yes.”
The agent certifies to the truthfulness and correctness of his answers above. The same is of date March 11, 1936. The so-called “binding receipt” was attached to the foregoing application for insurance, and upon the payment of the first year’s premium in full, as alleged, it was detached and delivered to Earl L. Teague, the insured. That receipt is to the tenor following :
“Note: No other form of receipt, nor alteration of this one, for payment of premium under application to which the receipt was attached will' be recognized by the company. The agent taking said application is not authorized to accept payment for any but ‘First Páyment’ (including short term premium, if any) and this receipt is not valid for any other.
“Received on account.of the. application (bearing date and number hereof) to the Colorado Life Company (herein called Company) Denver, Colorado, of Earl L. Teague (herein called applicant) for insurance of $500 face amount, settlement as follows: Cash $13.78 * * account of ‘first payment’ defined in said application. Said ‘First Payment’ is made subject to the conditions of said application, and particularly the conditions quoted in -substance on the reverse side hereof. If, according to the company’s rules and requirements, the applicant was age 45 or under, and insurable as a standard risk on the date of the application to which this receipt was attached .and said ‘First Payment’ has been paid in cash, then in such an event such insurance, not in excess of $2r 500 shall be in force from the date of the payment of said money; otherwise the insurance will not go into force unless and until said ‘First Payment’ be duly made and the policy be duly delivered during the lifetime and continued good health of the applicant; in either event the policy shall relate back to and take effect as of, its date, unless otherwise indorsed -thereon. Nothing herein shall be deemed to prevent the company from disapproving said .application. This receipt will not be binding upon the company if issued for any sum other than that declared’ by the applicant in said application to have been paid.” *853Signed “John D. Sullivan, Agent of the Colorado Life Company.” (Italics ours.)
We are of the opinion that the ap-pellee’s' construction of the contract, evidenced by the receipt and application, is supported by sound authority. Preliminary contracts for insurance are common and sustained by the courts. Reynolds v. Northwestern Mut. Life Ins. Co., 189 Iowa 76, 176 N.W. 207; Gardner v. North State Mut. L. Ins. Co., 163 N.C. 367, 79 S.E. 806, 48 L.R.A.,N.S., 714, Ann.Cas. 1915B, 652; Cooksey v. Mutual Life Ins. Co., 73 Ark. 117, 83 S.W. 317, 108 Am.St.Rep. 26.
The rule of law is stated in Mohrstadt v. Mutuai Life Ins. Co., 8 Cir., 115 F. 81. It is likewise held in Starr v. Mutual Life Ins. Co., 41 Wash. 228, 83 P. 116, that such temporary insurance is effective until superseded by a policy^ when issued,' or terminated by a rejection of the application and notice to the insure^ of such action. The provision of the “binding receipt” first quoted above stipulated that in event the applicant was 45 or under, an insurable risk on that date, ‘and that if the-first- annual premium was paid in full, then the insurance “shall be in force from the date of the payment of said. money/1 In this same connectiqn, the" receipt .stated:
“Otherwise, the insurance will not go into force unless and until said first payment be duly made and the policy be duly delivered during the lifetime and continued good health of the applicant * ⅜
This language is clear and unambiguous and would not seem to be open to construction.
. In Albers v. Security Mutual Life. Ins. Co., 41 S.D. 270, 170 N.W. 159, a case quite similar to this one, it was held that it could be fairly inferred from the terms of the “binding receipt” that-there was an agreement for present insurance. The receipt and application in the instant case present a stronger one for present insurance. It was said of the “binding receipt” in the Albers Case (page 160) :
“If the company did not intend that there should be insurance effective pending the date of the application and the date of the approval of the risk and the issuance of the policy, then the company would be charging and obtaining the full amount of the premium for one year, while the period of actual .insurance would be as many days less than one year as there were days intervening between the date of the application and the approval. This would not be dealing honestly with the insured.”
Concerning the nature and legal effect of such receipt, we quote as following from the notes to the opinion in DeCesare v. Metropolitan Life Ins. Co., 81 A.L.R. 335:
“But notwithstanding the fact that it lies within the power of the insurer to avoid liability under a conditional receipt by .rejecting the application-, there .remains for consideration the effect of such receipt after there has been an acceptance of the application. Such effect is stated in the opinion in Union Central Life Ins. Co. v. Robinson [5 Cir.] 148 F. 358, 8 L.R.A.,N.S., 883, as follows:
.“ With the application only submitted to the company, to effect insurance it required its acceptance and the issuance and delivery of a policy. The binding receipt changed this. If- it is controlling, it required by its terms only its approval and. acceptance by the company to effect insurance/ ” (Italics ours.)
The law pertaining to preliminary or temporary contracts of insurance of the type here involved is briefly stated in 32 C.J. p. 1099, sec. 183, as follows:
“For sake of convenience, contracts of insurance sometimes exist in two forms : (1) A preliminary contract intended to protect the applicant pending investigation of the risk by the company or until the policy can be properly issued. (2) The final contract or policy itself. This preliminary contract is of the greatest importance, for if the applicant could not be made secure until all the formal documents were issued and delivered, the beneficial effect of the insurance system would be greatly impaired. To be binding as a contract of insurance, a preliminary contract must be one for present insurance and not merely an agreement to insure at some future time, as on acceptance of an application or on the issuance or delivery of a policy. There must be both an agreement and ¿ consideration for present binding insurance of a temporary nature. There must be a meeting of the minds of the parties on all of the essential elements of the contract; but it is not essential that there be a specification on all the details to be embodied in the final contract.”
' A careful consideration of the terms of the application and the “binding receipt” in the light of the authorities cited convinces us that a contract was effected between the *854parties.providing for temporary life insurance for the deceased from the time of. the issuance of the binding receipt until the issuance of the policy by the company or a rejection of the application. As will be hereinafter noticed, neither event took place within a reasonable time or within the lifetime of the deceased.
Further, the receipt was attached to the application, and under the instructions of the company and as stated in the receipt, it was not to be delivered unless the first year’s premium was paid in cash and in full. Upon compliance with that provision, as found by the jury, the receipt was made out and delivered to the assured.
If the “binding receipt” in. the instant case does not mean what we have construed it, then the contract or that particular provision appears to be worthy of the' comment referring to a like provision found in Francis v. Mutual Life Ins. Co. of New York, 55 Cr. 280, 106 P. 323, reading as follows (page 327):
“The clause seem's to be a mere trick -on the part of the insurance company to deceive the applicants into the belief that they have temporary insurance, and thereby induce them to part with their money in advance of the issuance of the policy.”
There is nothing in this record to indicate that the' appellant contemplated any such deception. We do not believe it was incorporated in the receipt “to enable the insurance company to collect premiums for a period during which there was in fact no insurance and consequently no risk.” Starr v. Mutual Life Ins. Co., 41 Wash. 228, 83 P. 116, 117.
Believing that the authorities cited present the rules of law applicable to the facts of this case and that the pleadings fairly interpreted state a cause of action thereunder, we for the reasons assigned, overrule all the assignments urged by the appellant to the action of the trial court in overruling the general demurrer and exceptions to the pleadings. We deem the pleadings sufficient to state a cause of action under the terms of an ordinary life insurance policy, as contemplated by the application and the “binding receipt.”
The instruments referred to as “binding receipts” differ in their terms and legal effect in the various cases. The question always arises : What is the contract in a given case? In this one we hold that it provided for temporary or preliminary insurance.
The issue of the insurability of tfye applicant on the date of the delivery to him of the “binding receipt” is by the contract made one test of the company’s liability. The jury’s answer to issue No. 2 resolved that question in favor of the appellee.'
True, no policy was issued to the deceased during his lifetime, but neither was there any notice brought home to him that his application was rejected so as to set at naught or bring to a conclusion the temporary insurance provided by the “binding receipt.” Discussing the duty of the insurance company to give such notice in a proper case, it was said in Mohrstadt v. Mutual Life Ins. Co., supra (115 F. page 85)
“With reference to this proposition, it may be said that we have already intimated our opinion that it would have been necessary to notify the deceased of the rejection of his application, provided it had entered into a contract with him for temporary insurance until his application was acted up-QJJ ⅜ ⅜ ⅜ **
Likewise, it was held in Starr v. Mutual Life Ins. Co., supra, that such insurance is effective until superseded by a policy, when issued, or terminated by a rejection of the application and notice to the insured. The appellant in its answer alleged the giving of such notice, but if the evidence raised any such defensive issue it was not submitted by the court to the jury nor was any issue in that respect requested by the defendant. This would work a waiver of such defense under the authority of Gulf, C. & S. F. Ry. Co. v. Conley, 113 Tex. 472, 260 S.W. 561, 32 A.L.R. 1183; Harris v. Thornton’s Dept. Store, Tex.Civ.App., 94 S. W.2d 849, 857; Harris v. Leslie, 128 Tex. 81, 96 S.W.2d 276; Wichita Valley Ry. Co. v. Minor, Tex.Civ.App.; 100 S.W.2d 1071.
The propositions directed to the failure of the court to give an instructed verdict on such grounds are overruled.
There is no showing that the' appellee, Mrs. Teague, was the agent of the deceased husband to receive such notice of rejection of the application, nor is there any finding that she in fact did so; She denied receiving same.
In the deceased’s application for in-' surance he designated his wife to be beneficiary, stating her name to be'Zola E. Keith *855Teague. His wife institutes this suit as Mrs. Earl L. Teague, alleging herself to be the wife of deceased and the beneficiary in the insurance contract. The pleadings and testimony dearly identify the plaintiff as the beneficiary intended. The testimony is conclusive.
We think that there was no error in the court’s refusal to define the word “agent” as used in issue No. 3. There is nothing in the record to indicate the use of the word was in a technical or legal sense, rather than in a common and ordinary sense. The record reflects no reasonable “necessity” for the explanation or definition of the word. Art. 2189, R.S.1925; General Motors Acceptance Corp. v. Killingsworth, Tex.Civ.App., 54 S.W.2d 266.
Several other propositions present the contention that the answers of the jury to various issues were against the great weight and overwhelming preponderance of the evidence. We do not so appraise the testimony. The evidence was conflicting and sufficient to support the verdict. These assignments are overruled.
Other assignments not specifically discussed have been duly considered and are overruled.
The finding of the jury that $225 was a reasonable attorney’s fee for plaintiff’s counsel does not present any error under the facts of this case. We would not hold it excessive .under the following authorities and others which might be cited: American Nat. Ins. Co. v. Gonzalez & Co., Tex.Civ.App., 72 S.W.2d 388; Gibralter Colorado Life Company v. Taylor, Tex.Civ.App., 99 S.W.2d 1084; Southern Surety Co. v. Calhoun, Tex.Civ.App., 44 S.W.2d 459; National Life Ins. Co. v. Mouton, 113 Tex. 224, 252 S.W. 1040; Connecticut General Life Ins. Co. v. Bertrand, Tex.Com.App., 65 S.W.2d 279.
For the reasons assigned, the judgment of the trial court is affirmed.