Court Opinion

ID: 6698624
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:02:30.924472+00
Date Added: 2024-06-11T16:01:20.105689
License: Public Domain

BaeNHIll, J.,
dissenting: The original opinion assumes that the complaint states and plaintiff relies upon two causes of action. In this I think there is error. At least, the plaintiff has never so contended either in his original brief or in his brief on rehearing.
The plaintiff alleges, in substance, that the defendant attempted to lapse said policy for the nonpayment of premiums, but that he duly tendered the premium and thus kept the policy in full force and effect. He admits in his brief (on rehearing) that while the insured might have sued for breach, he, the beneficiary, can sue only on the policy. He seeks no damages. He tendered no issue of damages for breach. The only issue he tendered as to the amount due is, “by reason of said policy of insurance.” Thus it appears he states and relies on only one cause of action. This is on the policy and not for breach thereof.
Even if there are two causes of action, the issues submitted are sufficiently determinative. In the absence of allegation and proof of fraud, Combs v. Ins. Co., 181 N. C., 218, 106 S. E., 826, payment or tender of premium is essential to a cause of action for breach. ‘
This Court, in West v. Ins. Co., 210 N. C., 234, at page 236, said:
“Even if the defendant wrongfully terminated the insurance, that did ' not relieve the insured, if he desired to insist on its continuance, from his obligation to pay or offer to pay the premiums called for in his contract. . . .
“A party to a contract cannot maintain an action for its breach without averring and proving performance of his own antecedent obligations or some legal excuse for nonperformance.”
Without undertaking to cite the cases, it is sufficient to say that this statement is sustained by authorities from other States which hold that the insured is not relieved from the duty to tender premiums by notice of lapse or unlawful forfeiture unless the company refuses to accept the premium or gives notice that it will not accept if tendered.
*8The allegation, of tender has been litigated and decided adversely to plaintiff. This Court has affirmed. He is bound by that verdict.
It may be that if the plaintiff had been misled by the statement of the agent that August 27 was the last day of grace he might have relief under the Combs case, supra, even though he never tendered any premium. But such is not the case. He looked at his policy and decided that the premium was payable in August and he could pay in September. He was not deceived. He knew his rights. Yet he stood by for more than two years without action and defaulted in the payment of nine several premiums.
Furthermore, the plaintiff is beneficiary in the policy at the will of the insured. No rights could accrue to him until or unless the insured died without having first changed the beneficiary. Hence, he can have no right of action for breach of the policy during the life of the insured.
The policy in question was issued on the life of Joe Ellis. It was an endowment policy payable at maturity to the insured. It provides, however, that if the insured should die before the maturity of the policy then the proceeds of the policy are to be paid to the plaintiff. But the insured reserved the right to change the beneficiary.
Thus there is no contract relation between plaintiff and defendant, and plaintiff, during the life of the insured, had no vested interest in the policy. His right accrued only in the event there was a valid policy in full force and effect at the time of the death of the insured. Defendant owes him, if it owes him at all, by reason of the fact it promised the insured to pay.
It is true that Abrams alleges and offered evidence tending to show that he paid the premiums; but he does not make any attempt to prove that he applied for and obtained the policy or that there was any agreement or understanding that he should assume the position or discharge the obligations of the insured under the policy. On this record he merely volunteered to make some or all of the payments. This does not change his status as beneficiary.
A policy of insurance is a contract between the insurer and the insured. Trust Co. v. Ins. Co., 173 N. C., 558, 92 S. E., 706; Rothschild v. Insurance Co., 74 Mo., 41. Upon a breach thereof by the insurer we must look to the policy to ascertain who is the injured party and in whom a cause of action vests by virtue of the breach.
When the insurer wrongfully cancels, repudiates, or terminates a policy three optional remedies immediately accrue to the insured: (1) he may elect to consider the policy at an end — that is, he may recognize the breach and recover its just value; or (2) he may sue in equity to have the policy declared in force; or (3) he may tender the premiums and treat the policy as in force. Trust Co. v. Ins. Co., supra; West v. *9Ins. Co., 210 N. C., 234, 186 S. E., 263; Anno. 48 A. L. R., 107. If be follows tbe latter course tben at bis death tbe policy is enforceable as a subsisting contract.
Thus tbe right of action for a breach, if tbe insured elects to recognize tbe breach, vests in tbe insured and not in tbe beneficiary. This is admitted in plaintiff’s brief. Upon tbe death of tbe insured tbe vested right of action passes to tbe administrator. Tbe policy being canceled and tbe contract terminated, the beneficiary loses any contingent interest be may have bad; for bis rights, if any, are predicated upon tbe existence of tbe contract.
Tbe beneficiary may sue only on tbe policy after tbe death of tbe insured. To recover be must show that there was an outstanding policy of insurance in full force and effect at tbe time of tbe death of tbe insured, and that be was tbe tben named beneficiary in tbe policy. “Tbe insured could have brought an action for damages. . . . Tbe plaintiff could only wait until tbe death of tbe insured and bring bis action on tbe policy.” (Plaintiff’s brief.) Hence, when there is a wrongful lapse bis rights are preserved and be may sue only in tbe event tbe insured elects to adopt tbe third remedy, and this is predicated upon a tender of the premiums.
On this cause of action plaintiff has bad bis day in court and lost. Tbe jury found there was no tender of premium and that verdict has been affirmed. That fact is fully adjudicated. Now, having' asserted that tbe policy was in force and lost, be is permitted to assume the role of tbe insured and attempt to recover damages for tbe wrongful breach. In my opinion no such cause of action vests in him. Slocum v. Northwestern Nat. L. Ins. Co., 135 Wis., 288, 115 N. W., 796; Mutual Relief Asso. v. Ray, 173 Ark., 9, 292 S. W., 396.
But, conceding arguendo that plaintiff may sue for breach, there is no sufficient evidence to support tbe issue tendered and rejected.
Tbe plaintiff relies on certain items of evidence as follows: (1) On tbe due date of tbe premium payable 27 August, 1939, tbe agent told him that was tbe last day of grace; (2) be tendered tbe premium before tbe expiration of tbe due date and it was refused, tbe agent stating at tbe time that tbe policy bad lapsed for failure to pay tbe premium 27 July, 1939; (3) be received no notice of premiums; and (4) tbe defendant admits in its answer facts which constitute a wrongful cancellation.
(1) Tbe agent told plaintiff on 27 August, 1939, that tbe period of grace for paying tbe current premium would expire that day. About this there is no controversy. Both be and tbe agent so testified. It is likewise true that under tbe terms of tbe policy 27 August was tbe due date and be bad thirty-one days thereafter within which to pay.
*10Tbe mere statement of tbe agent tbat tbe time of payment was about to expire did not constitute a lapse. He bad no authority to cancel. Plaintiff admits tbat tbe defendant never notified bim of any cancellation and, as heretofore stated, be was not misled.
(3) Tbe defendant was under no legal obligation to give plaintiff notice of premiums. It was its duty to notify tbe insured. Tbat plaintiff received no notice is no indication tbat notices were not duly mailed as required by statute. C. S., 6465; G. S., 58-207, has no application here. Even if applicable, however, tbe statute does not relieve of tbe duty to pay or to tender tbe premium. It merely extends the time within which tbe payments may be made. Giving tbe plaintiff tbe full benefit of this statute, no premiums have been paid within tbe time required as extended by tbe statute. Tbe last payment was made May, 1939. Tbe deceased died in October, 1941- — more than two years thereafter.
(4) Tbe alleged admission in tbe answer is an affirmative allegation of fact. Tbe plaintiff did not offer it in evidence, as be bad a right to do. Even so, considering it as an admission, it does not admit a wrongful cancellation. Tbe defendant wrote tbe insured “upon tbe lapse of said policy for tbe nonpayment of tbe premium due July 27, 1939.” Was this after tbe grace period bad expired or after tbe extended grace period granted by statute ? G. S., 58-207. Had tbe policy in fact lapsed at tbe time tbe letter was written? Tbe answers to these questions do not appear in tbe evidence. Tbe burden was on tbe plaintiff, and we should not assume tbat tbe letter was written prior to tbe time tbe policy in fact lapsed by virtue of its self-operating provisions. Anno. 8 A. L. R., 398.
It may be tbat tbe plaintiff could have made out a case for tbe jury, but be offered no evidence of payment, and tbe jury has found tbat be made no tender. Tbe other evidence, in my opinion, is insufficient to support tbe issue which tbe court declined to submit.
I do not consider tbat Aiken v. Ins. Co., 173 N. C., 400, 92 S. E., 184, is in point here. It clearly appears in tbat case tbat tbe insured pursued tbe third remedy above cited and thus kept tbe policy alive. Surely, under such circumstances, tbe beneficiary bad tbe right to maintain her action.
There are a number of cases in this and other jurisdictions in which tbe action by a beneficiary at tbe will of tbe insured is referred to as an action for breach of contract. A careful examination of tbe -facts in these cases, however, will disclose tbat in each instance tbe insured, as in tbe Aiken case, supra, bad kept tbe policy alive and in force by tbe tender of premiums. Tbe suits, in fact, were on tbe policies and recovery was bad thereunder.
*11Tbe case comes to tbis: tbe company insured for a specified period — ■ three months — and agreed to extend tbe insurance for a like period upon tbe payment of tbe stipulated premium. In order to obtain tbe periodic extensions tbe positive duty rested upon tbe insured to pay or to tender tbe premium^. Plaintiff offered no evidence of payment, and tbe jury has found that be made no tender. More than two years elapsed between tbe payment of tbe last premium and tbe death of tbe in'sured. At tbe time of bis death nine premiums were in default. Whatever tbe rights of tbe insured may have been, it is clear to my mind that be failed to keep tbe policy alive and there is now no subsisting contract upon which tbe plaintiff, tbe beneficiary, may maintain an action.
Of course plaintiff contends he offered evidence of wrongful cancellation and tender of premium. Having admitted that no premium has been paid since 21 May, 1939, bis counsel correctly conceive that it is necessary for plaintiff to prove both in justification of nonpayment and to show that tbe policy was kept alive. Tbis is essential to make out a case in bis action on tbe policy- — -the third remedy listed in Trust Co. v. Ins. Co., supra. Tbis is tbe theory be has pursued from tbe beginning.
Even now, be in bis brief on rehearing does not adopt tbe view that be has proceeded or can proceed for breach, of contract. He affirmatively asserts that such a cause of action rested in tbe deceased. Tbe first suggestion that such a cause of action is alleged is contained in tbe original opinion. Tbe defendant in its petition for rehearing merely calls tbis to our attention. In any event, if there has been any shift of position it is not chargeable to defendant.
I vote to allow tbe petition.