Court Opinion

ID: 9833817
Source: CourtListenerOpinion
Date Created: 2023-09-01 23:03:18.834038+00
Date Added: 2024-06-11T07:44:07.045119
License: Public Domain

On Rehearing.
In response to appellant’s rather vigorous motion for rehearing we have again studied this record in the light of the contentions presented in said motion. We think the original opinion makes it sufficiently clear that the contract of insurance, forming the basis of this litigation, was not conditioned upon the approval of the risk at a later date by the company or the final issuance and delivery of the policy while the ap-pellee’s husband was in good health, etc.
The contract involved in this litigation is not evidenced by the usual policy contract for none was executed and delivered. The rights here claimed were predicated upon a contract providing for temporary insurance and evidenced by what is called a “binding receipt”, which put in operation, in favor of the deceased, or his beneficiary, insurance in the amount of $500, provided “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 * * * paid in cash, then in such cm event such insurance * * * shall be in force from the date of the payment of said money * * (Italics ours.)
We are not dealing with what is generally known as a “conditional receipt” or what is less frequently called a “conditional binding receipt.” Commonly there is found in this type of receipt, and in some instances duplicated in the application, a provision to the effect that the insurance shall be considered as in force from the date of the receipt, or the date of the medical examination, provided the application is approved and accepted at the home office of the insurer. Of course, such an instrument is ineffectual to provide protection to the applicant until the application is approved or rejected.
Plaintiff, by pleading and proof, assumed the burden of establishing the conditions prerequisite to recovery. That is reflected by the verdict of the jury, as supplemented by the court’s findings on- the undisputed testimony. The binding receipt itself evidences the authority of the agent to detach and deliver the same upon the condition that “First Payment” was made in full. .
We recognize the rule of law “that a life insurance company is at liberty to choose its own risks, and may accept or reject those who apply to it for insurance as it may see fit”, as held in American Life Ins. Co. v. Nabors, 124 Tex. 221, 76 S.W.2d 497, 498, but that rule has no application here, for, as stated, the insurance rights asserted rest upon a contract for temporary insurance for the interim or period of time between the date of the binding receipt and the date on. which the company might approve the application, issue and deliver the policy, or reject the risk and cancel the application, etc.
*856' Rights . and liabilities under 'the terms of an insurance policy which may or may not have been delivered are not involved. Neither are we concerned with the rule, supported by the great weight of authority, that mere delay in passing upon an application for insurance cannot be considered an acceptance thereof by the insurer. Northwestern Mut. Life Ins. Co. v. Neafus, 145 Ky. 563, 140 S.W. 1026, 36 L.R.A.,N.S., 1211.
The evidence is undisputed that the deceased's age was under 45 years, at the date the binding receipt was delivered to him (March 11, 1936) and that he died the following March 29. The defendant alleged by way of special defense that it gave notice to said Teague in his lifetime, as well as his wife, that the company was “canceling” his application for insurance because Mr. Sullivan was not the agent of the company “at the time he took [the] application.” The wife denied these allegations as for herself and if there is any evidence that such information never reached the deceased in his lifetime it is circumstantial only. There is some indication that a registered letter from the company containing such information was received by some member of the Teague family at their post office after the death and burial of Earl L. Teague. However, this may be, and conceding that there was some evidence that such notice was brought home to them in his lifetime, no such issue was submitted by the trial court and the defendant requested none. As stated in the .original opinion, this would amount to a waiver o*E the issue. This is material upon the duty of the defendant, under the circumstances, and we are in accord with the appellant’s view of the law relative thereto as stated in its brief on page 35. viz., “The law in this State is that, when a binding receipt is given, that if notice of the rejection, of the application for insurance is brought home to the insured, or his agent, before his death, that there is no liability on the part of the insurance company.” In this connection, we quote from 81 A.L.R. 336, as follows:
“ ‘Where the provision in a receipt is construed as providing temporary protection until such time as the insurer has considered the application and announced its determination to accept or reject the risk, the insurer cannot terminate the risk so assumed otherwise than by notice brought home to the insured in his lifetime that his application was rejected. Mohrstadt v. Mutual L. Ins. Co. * * [8 Cir.] 115 F. 81.
“ ‘Such insurance is effective until superseded by a policy, when issued, or terminated by a rejection of the application and notice to the insured. Starr v. Mutual L. Ins. Co. * * [41 Wash. 228] 83 P. 116.’ ”
These authorities were cited and discussed in our original opinion.
As we construe the contract it provides temporary insurance. There is nothing legally wrong or immoral about the contract, whether viewed from the stand point of the company, the deceased or the beneficiary. If the language found in the binding receipt means anything at all, it means that such temporary insurance was provided. It was to the advantage of the applicant to have it, and the fact that the company could extend it, was no doubt a strong talking point in persuading Teague to take the insurance and pay the premium in full, which the jury found he did. As acknowledged by the attorneys for the respective litigants, no Texas authority directly in point seems to be available. We believe, however, that the authorities cited announce the principles of law applicable to the facts of the case.
The appellant raises the question that the contract for $500 insurance would in no event be such contract as would authorize the _ recovery of attorney’s fees and penalty under the provisions of Art. 4736, R.S.1925, Vernon’s Ann.CiV.St. art. 4736. That statute reads: “In all cases where a loss occurs and the life insurance company, * * * liable therefor shall fail to pay the same within thirty days after demand therefor, such company shall be liable to pay the holder of such policy, in addition to the amount of the loss, twelve per cent damages on the amount of such loss together with reasonable attorney fees for the prosecution and collection of such loss.” (Italics ours.)
Considering the nature of the contract upon which this suit is predicated, we have, after due consideration, concluded that the attorney’s lees and penalties are not recoverable under that provision of the statute. It has often been held that this statute is highly penal and must be strictly construed. Washington Fidelity Nat. Ins. Co. v. Williams, Tex.Com.App., 49 S.W.2d 1093. Numerous authorities cit*857ed under note “la” to Art. 4736, supra. The contract in 'suit is not a “policy” of insurance. It is a contract of insurance preliminary to insurance under a policy as such. As analogous we cite DeCesare v. Metropolitan Life Ins. Co., 278 Mass. 401, 180 N.E. 154, 81 A.L.R. 327, where it was held, as indicated by point 4 of the syllabus, that “Statutes which by their terms relate to ‘any policy’ of insurance have no application to temporary contracts to insure pending the issuance and delivery of a policy or other formal contract of insurance.” No penalty was involved in that case, and hence it would appear that for an even greater reason the penalty and attorney’s fees should be rejected in'the instant case.
For the reasons assigned the appellant’s motion for rehearing is granted in part and overruled in part. However, the judgment hereinbefore entered pursuant to the original opinion will be set aside in toto, and judgment will now be rendered upon the original opinion, supplemented by this one, and in conformity to them. It is so ordered.