Court Opinion

ID: 3504272
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:14:12.875019+00
Date Added: 2024-06-11T14:16:28.882739
License: Public Domain

In my view there should be a new trial to allow evidence to be taken on the single issue of whether or not the policy when rewritten March 24, 1926, and dated back to December 20, 1924, also related back to December 20, 1924. If it did relate back, then insured had on deposit with the company $313.57 at the time the policy lapsed. This amount was sufficient to purchase term insurance through and beyond the date of his death.
The evidence shows only that Erickson was originally insured as a substandard risk. Because of this he paid a higher annual premium than that paid by standard risks. He had paid two annual premiums at the higher rate when the company, during the second year the policy was in force, reclassified him as a standard risk. Thereafter he was required to pay only the standard rate. The policy, as then rewritten, was dated back to December 20, 1924, the date of original issue. After this reclassification Erickson was refunded only that part of the second year's premium which represented the difference between the higher rate and the standard rate from and after the date of his reclassification. He was refunded none of the excess premium paid for the first year.
On this statement of facts it might well be found that the company had made a mistake in the first instance in classifying Erickson as a substandard risk and that upon discovery of the mistake reclassified him but neglected to refund the excess premium that had been paid during the first year and part of the second. *Page 282 
There is absolutely no evidence as to why this reclassification was made. If the company did not make a mistake in the first instance in writing Erickson as a substandard risk and if Erickson's physical condition was such that he should have been insured originally as a substandard risk, the insurance company could easily have shown such fact. It did not do so. This leaves an inference that perhaps there were no such facts and that the subsequent reclassification was made because of an error in the first instance. There can be no question but that if the substandard classification was erroneous, Erickson should have been entitled to a refund of the excess premium paid for the first year and part of the second, and that, not having received the same, he had sufficient funds on deposit to purchase term insurance beyond the date of his death.
There is a difference between rewriting a contract and adding to or amending it or changing one of its terms by subsequent agreement. If the rewriting was intended merely to be a termination of the subnormal classification up to that time, the natural and simple method, it seems to me, would have been to attach an ordinary rider to the policy stating that the change had been made. The fact that there was a rewriting of the entire policy relating back to its inception rather impresses me with the idea that the subnormal classification in the original was merely a mistake and that a rewriting was for the purpose of correcting the error rather than for the purpose of simply changing the classification because of any change in the situation of the insured. The fact that the policy when rewritten was dated back is persuasive that error had been made in the first instance.
For the reasons above stated, I think there should be a new trial. This will permit the insurance company to show the facts as they exist. In the absence of a showing that the original classification was not a mistake, I think the plaintiffs should prevail.