Morford v. California-Western States Life Insurance

LUSK, J. The question is whether the court erred in granting the defendant’s motion for judgment on the pleadings. Reduced to essentials we have a case where the plaintiff, the alleged beneficiary in a policy of life insurance in the sum of $2,500, avers that the policy was issued upon the insured’s application; that the plaintiff and the insured performed all the terms, covenants and conditions of the contract of insurance on their part; and that the insured died while the *120 policy was in full force and effect. The answer denies that any policy was issued, and alleges that the decedent applied in writing for a certain type of insurance policy which the defendant refused to issue, but that the defendant did offer to issue a different type of insurance policy subject to the acceptance and approval thereof by the insured in writing, and the substituted offer was never so accepted or approved in writing; and, further, that it was agreed that the insurance applied for should not take effect unless and until the policy had been delivered to and accepted by the applicant and the first premium paid thereon during the lifetime and good health of the applicant; and that no policy was ever delivered to the applicant nor was the first premium ever paid. To this the plaintiff rejoins by admitting the substituted offer, but she denies the allegations that the substituted offer was not accepted in writing by the decedent, and that the policy was not delivered to the decedent, and that the first premium was not paid. If the pleadings, taken together, affirmatively show that the plaintiff has no cause of action against the defendant, or if the facts set forth in a separate defense constitute a complete answer to the cause of action alleged in the complaint, and those facts are admitted by the reply, then the action of the Circuit Court in sustaining the motion was proper: Section 1-616, Oregon Code 1930; Milton v. Hare, 130 Or. 590, 598, 280 P. 511; McDonough v. National Hospital Association, 134 Or. 451, 454, 294 P. 351. The defendant contends that the complaint fails to state a cause of action because it lacks an allegation that the policy was delivered to the decedent. To this plaintiff answers that the allegation that the defend *121 ant “executed and issued” the policy is tantamount to saying that it was delivered. We need not consider that question because, if the complaint is defective in the particular pointed out, the defect has been cured by the course which the pleadings subsequently took, namely, an allegation in the answer that the policy was never delivered which is denied in the reply. It is an established rule of pleading in this state that where an essential fact has been omitted from the complaint an issue as to such fact made by the answer and reply cures the defect in the complaint: Easton v. Quackenbush, 86 Or. 374, 378, 168 P. 631; Treadgold v. Willard, 81 Or. 658, 160 P. 803; Gatlin v. Jones, 48 Or. 158, 163, 85 P. 515. The complaint is also criticized because it does not specifically allege that the first premium was paid during the lifetime and good health of the applicant. But we think that this criticism is without merit because the plaintiff alleges, in the language of § 1-805, Oregon Code 1930, that she and the insured duly performed all the conditions of the contract on their part, and such pleading has been held by this court to be sufficient as an allegation of payment of a premium on an insurance policy: Squires v. Modern Brotherhood, 68 Or. 336, 344, 135 P. 774. Even if this were not sufficient, the defect would have been cured by the allegation in the answer that the first premium was not paid and the denial of that allegation in the reply. It remains, therefore, to consider whether the essential averments of the answer are admitted by the reply. If they are not, or if an issue of fact is made as to any one or more of them, then the Circuit Court erred in granting defendant’s motion. These essential averments are that defendant rejected the plaintiff’s application for a particular type of insurance, made a counteroffer of another type which the applicant did *122 not accept in writing as provided in the policy, that no policy was ever delivered to the applicant, and no premium paid by him. If these things are true and there are no other provisions in the application which are controlling then the plaintiff, of course, has no case. First, because his application was a mere offer, and there could be no contract arising out of that offer if it was not accepted by the defendant; and, similarly, if defendant made a counteroffer, which was not accepted by the plaintiff in the manner provided by the written application, no contract would result. Secondly, because,- under the terms of the application, the insurance was not to take effect “unless and until the policy is delivered to and received by the applicant and the first premium thereon paid in full during his lifetime and good health.” Each of these material allegations is denied in the reply except the allegation that the defendant made a counteroffer of a different type of insurance, which is admitted. And so there are presented issues of fact as to whether the counteroffer was accepted by the applicant, as to whether the substituted policy was delivered, and as to whether the premium was paid by the applicant while he was in good health. All this is entirely consistent with the plaintiff’s claim in the complaint that the policy was issued pursuant to the decedent’s application because the application contains this provision: “It is agreed that if the Company is unwilling to issue a policy on the basis applied for, or at the Company’s premium rate corresponding to the applicant’s age, this application shall be for a policy on the plan, with the additional benefits and at the premium rates corresponding with the Company’s valuation of the risk.” *123 Thus, if, in fact, the company issued and delivered to the decedent a policy of a different type than that applied for, and if that policy was accepted and approved in the manner stipulated by the application (and these matters, as we have seen, are put at issue by the pleadings), such a policy, under the very language of the application, would be one issued pursuant to the application. The defendant urges, however, in the language of the motion, “that the complaint is based upon a definite contract of insurance and the reply is based upon waiver and estoppel of certain material facts of said alleged contract of insurance and therefore a material departure from the theory, of the complaint and therefore void and ineffectual”. The first paragraph of the separate reply alleges an oral statement made by the decedent to the agent of the defendant company, who solicited the sale of the insurance, and an oral agreement between them “that if defendant should be unwilling to issue a policy on the basis set forth in said written application then said written application should be considered as an application for any policy of ordinary life insurance in the sum of $2,500, with such additional benefits as should correspond with defendant’s valuation of the risk.” It is the defendant’s position, as stated in its brief, that this pleading constitutes the plaintiff’s reason “why the provisions were not complied with in connection with both the application for the kind of insurance and the payment of the premium”. We are unable to concur in this view. In the plaintiff’s brief it is said that these allegations are in the reply for the purpose of letting in evidence of a possible ambiguity in the contract of insurance. It is not deemed advisable at this time to pass on the question of whether *124 such evidence would be admissible on that or any other theory, or whether the facts alleged have any materiality. It is sufficient to say that, as we read the language of the paragraph, it is not open to the interpretation placed on it by the defendant. It does not offer an excuse for failure on the part of the plaintiff to comply with any of the stipulations of the application. It does not allege a waiver, which is defined as an intentional relinquishment of a known right. The oral agreement with the agent is not inconsistent with the claim of the plaintiff, as asserted in the pleadings, that a policy of insurance was issued to the decedent in all respects in accordance with the terms of the application and that all the conditions of the contract were duly performed by the decedent and the plaintiff on their part. In fact, the oral agreement is almost in the language of one of the stipulations of the application which we have quoted. The allegations are not a departure from the allegations of the complaint, but if they were, the only result would be that the plaintiff, who must recover on the strength of the cause of action stated in her complaint if she is to recover at all, would be precluded from relying on the allegations of the reply: Mercer v. Germania Ins. Co., 88 Or. 410, 415, 171 P. 412; and cases there cited. The second paragraph of the affirmative reply, which alleges payment of the first premium by a promissory note, is not a plea of estoppel. It merely states the method by which the first premium was paid, and evidence of these facts would be admissible in support of the complaint. It is a new assignment: Pioneer Hardware Co. v. Farrin, 55 Or. 590, 107 P. 456. This court has recently held that payment of a premium on an insurance policy may be *125 made by a promissory note: Union States Life Insurance Company v. Bernert, ante p. 44, 87 P. (2d) 774, decided March 7, 1939. It is true, as defendant says, that the acceptance of a note is not to be considered as taken in discharge or payment of the debt unless it is at the time so agreed and understood: Cranston v. West Coast Life Insurance Company, 63 Or. 427, 128 P. 427. But here the plaintiff alleges that the note was accepted by defendant at its home office “as full payment of said first quarterly premium.” This is a sufficient allegation that the note was taken in discharge of the debt. Whether plaintiff will be able to prove this claim or not is another question. The view which we have taken of the pleadings makes it unnecessary to consider other matters which have been discussed at some length by counsel for respondent and relate either to the substantive law of insurance or to supposititious facts not found in the record before us and therefore not germane to the controversy in its present stage. We deem it well, however, since we are dealing with a question of pleading, to advert to the fact that the defendant’s answer purports to “admit” that no policy of insurance was ever delivered to plaintiff. That is to say, the defendant has admitted something which the plaintiff did not allege. The purported admission is mere verbiage which can avail the defendant nothing, and falls within the condemnation of that sort of pleading by this court in Woolsey v. Draper, 103 Or. 103, 106, 201 P. 730, 203 P. 582, where Mr. Justice Rand said that it “is not a proper way to plead, raises no issue, and should not be tolerated.’’ We conclude that under the pleadings there are issues of fact as to whether a valid contract of insurance *126 was entered into by the parties and as to whether the first premium was paid in accordance with the terms of the application and as to whether the policy was delivered to the decedent, and consequently that the learned circuit judge erred in granting the motion for judgment on the pleadings. The judgment is therefore reversed and the cause remanded for further proceedings not inconsistent with this opinion. Rand, C. J., and Belt and Bailey, JJ., concur.