National Life Ins. Co. of United States v. Eggleston

This appeal is from a judgment for $6,216.78 entered upon an instructed verdict. The basis of the judgment is a life insurance policy for $5,000, interest, and attorney's fees. Findings of Facts. The suit was originally (May 29, 1913) instituted by appellee against the National Life Insurance Company of the United States of America, upon a policy for $10,000 and interest, damages, and attorney's fees. Afterwards, December 17, 1915, and after certain depositions were taken, which disclosed that the $10,000 policy was returned to the company and negotiations entered into to reduce to $5,000, the petition was amended alleging the completion of the negotiations and reduction of policy to $5,000. While the $10,000 policy was in force, on, to wit, January 25, 1911, a proposition to reduce the policy to $5,000 was made by the following letter: "S. H. C. January 28, 1911. "Mr. Robert D. Lay, Secretary, Chicago, Ill. — My Dear Mr. Lay: Mr. Jno. W. Eggleston, insured under policy No. 118637, premium $425.20, is desirous of having the policy reduced to $5,000.00. I talked with Mr. Eggleston in Fort Worth a few days ago in an effort to persuade him to continue the $10,000.00 policy, even if he had to cut it up in quarterly payments, but he states that he cannot make the payments on this amount of insurance. "On the new policy he wants to pay $50.00 when the receipt is delivered to him and $25.00 per month until the annual premium is paid. If you are willing to make the change under these conditions, I will thank you to send me such papers as may be necessary and I will take pleasure in giving the case my personal attention. Yours truly, "S. H. Chiles, State Manager." January 30, 1911, the company by letter accepted the proposition "upon surrender of the original policy and receipt of proper application for reduction duly completed by the insured and beneficiary, which application is inclosed." And the matter referred to Toy Bros., by the following letter to be closed up: "Feb. 10th, 1911. "Messrs. Toy Bros., 207 Exchange Bldg., Fort Worth, Texas — Gentlemen: I wish the senior member of your firm would please attend to the following piece of business for me: "J. W. Eggleston, former owner of the Siebold Hotel, Fort Worth, holds policy No. 118637, $10,000.00, ordinary life, nonparticipating, with us. You remember when I was over there some time ago, it was to see him, and he wants to reduce the contract $5,000.00. He stated he would pay $50.00 and would give notes for the balance. I inclose herein six notes of $25.00 each, one note of $12.60. Upon his paying you $50.00 cash and signing these seven notes, will make a total of $212.60, then have him deliver to you the old policy of $10,000.00 and execute the *Page 943 inclosed application for reduction of insurance. If the beneficiary, Jno. W. Eggleston, Jr., is a minor, this request may be signed by a legally appointed guardian, and as you will see from the blank, before a notary public. "I will appreciate your immediate attention to this, as the time is now fast drawing near when the first note of $25.00 will be due. "Kindly acknowledge receipt of this, and oblige. Yours truly, "S. H. Chiles, State Mngr." February 4, 1911, while the $10,000 policy was still in force, the notes and cash mentioned in the above letter were mailed to Chiles, manager of company, at Dallas, and receipt issued to Eggleston. The reduction blank was not signed at this time, but was signed March 6, 1911, and was then sent into the company at Chicago. This application was returned to the agent March 10, 1911, with the objection: "We are compelled to return this application, because it is not properly completed. It is signed by J. W. Eggleston and also by Mrs. J. W. Eggleston, Guardian. Mrs. Eggleston should have added the words `for John W. Eggleston, Jr., Minor.' Also, the notarial acknowledgment is not correct, as it recites that the instrument was acknowledged by John W. Eggleston and John W. Eggleston, Jr. We are therefore inclosing another form which please have completed as we have added the proper words in the blank. We hold policy awaiting return of corrected application." J. C. Toy testified: "I do not remember giving him (Eggleston) or any one else the proper application for reduction. I could not see him when he was in the sanitarium. * * * J. W. Eggleston was insane and an inmate of an insane asylum from March 15 to April 18, 1911. And was then taken to the state asylum, where he died." Mrs. Julia B. Eggleston testified, without contradiction by any one: "Mr. Toy read it (the application for reduction) to us. He pointed out where to sign the paper and told my husband to sign it and then told me to sign it. I signed it where he told me to. The word `guardian' was not written under my name when I signed the instrument. I did not write it there. After the paper was signed by myself and husband, Mr. Toy took it. We thought it was perfectly all right. * * * He said `it was perfectly all right.' The original policy of $10,000 was delivered to Mr. Toy at the same time. It was after we had signed this paper and delivered the policy to Mr. Toy that he said it was all right. I never saw any other instrument sent to Mr. Toy for my husband and myself to execute, and never had any conversation with Mr. Toy regarding the reduction of the policy after I signed this paper. * * * No one ever informed us that the paper was improperly signed or executed. * * * No one ever notified me that the notes were due and demanded payment of them. Had such demand been made, I was able to pay the notes. Under the policy, the insured had the right to change beneficiary without the consent of the beneficiary named in the policy." The amended application was not executed, and upon March 23, 1911, the notes and $50 were returned with the statement that: "The proposition for reduction is still open, subject to furnishing the company satisfactory evidence of good health." Mrs. Eggleston was never appointed guardian of J. W. Eggleston, Jr., the beneficiary. The first assignment urged is that the undisputed evidence shows that the negotiations for the $5,000 policy were abandoned before completion, no policy issued; therefore judgment should have been rendered for defendant company. The facts do not sustain the charge that the negotiations were abandoned. The insured made his application for reduction of policy. It was communicated by the Texas manager to the company at Chicago. It was accepted upon the condition that the original policy be surrendered and "upon receipt of proper application for reduction duly completed by the insured and beneficiary, which application was inclosed." This application was forwarded to Toy Bros., as indicated by letter February 10, 1911. The evidence is uncontradicted that this application was executed in the presence of Toy, that the $50 cash was paid and notes executed, and receipted for, to cover the first year's premium. If the formal application sent in was not executed exactly as suggested by the state manager, it could in no sense be an abandonment of the contract. The company's agent Toy attended to its formal execution; both he and the Egglestons evidently thought it complied with the demands of the company. That the amended application was not signed is in effect an abandonment of the negotiations for a policy as urged by appellants is without merit, we think, for the reason that it was not communicated to the insured. In other words, the insured had no notice that the original application as executed was not in compliance with the conditions imposed by the company. Again, the mere fact that there was no guardian of the minor beneficiary in the $10,000 policy to sign the application for reduction policy could in no way militate against a closed contract, for the reason that the insured could abandon the policy at any time by failing or refusing to pay the annual premium; the policy being "ordinary life, nonparticipating." But one of appellant's propositions is that the company had the right to condition the issuance of the reduced policy in any way it chose, and, if the condition imposed were not met, there could be no binding agreement. In the first place, there is no direct evidence in the record that the conditions contained in the letters to the agents were ever communicated to the insured, unless it be that the application contained the word "guardian," under the signature of Mrs. Eggleston, and this she denies. But, if they were, it is evident that they thought they had complied with them. This application, as appears by the letters, was obtained by Toy. He considered it all right. From him it went to Chiles, state manager, and thence to the general offices of the company at Chicago, and, before any one interested knew of any objections to the application, *Page 944 the insured became insane, and in the meantime the days of grace in which to pay the January premium on the $10,000 policy had expired. The question is: Did the parties agree upon the reduction policy? In Eames v. Home Ins. Co., 94 U.S. 621, 24 L.Ed. 298: "If parties could not be made secure until all the formal documents where executed and delivered, especially where the insurance company is situated in a different state, the beneficial effect of this benign contract of insurance would often be defeated and rendered unavailable." The parties had agreed upon all the conditions and terms of the contract. If Eggleston failed to execute the formal application exactly as expected by the company, the fact that he signed and acknowledged it, with his wife, as he and the company's agent Toy understood was sufficient, is proof positive that he had agreed to all the terms. "Such contracts as these must be sustained, else the parties can have no benefit of them during that incipient period when the papers are being perfected and transmitted. It is sufficient if one party proposes to be insured, and the other party agrees to insure, and the subject, the period, the amount, and the rate of insurance is ascertained or understood, and the premium paid if demanded." Eames v. Home Ins. Co., supra. All these things clearly existed, and there is not one fact which indicates an intention to abandon. The second assignment is that the failure to pay or tender payment of the premium notes forfeited or canceled the contract. The original policy contained a clause providing for such forfeiture, and the application for the reduction contained the provisions that the conditions of the policy are to remain unchanged except for the reduction in amount. It is admitted that no tender of payment of the notes was made. So, if the company is not estopped by its subsequent acts as contended by it has presented a good defense to a recovery. The rule is that, when either party to a contract gives notice to the other that he will not comply with its terms, the other need not in action thereon allege or prove tender of performance. Brown v. Binz, 50 S.W. 483; Gray v. Smith, 83 F. 824, 28 C.C.A. 168. The appellant, in its answer, alleged that it did not demand payment of the premium notes because they were not accepted by the company. The company had not issued its policy, and had not communicated its reason why, to the insured, up to the time he became insane. He therefore had the right to presume that, in the absence of an acceptance of his application and issuance of policy, tender of the amount of the notes was unnecessary. On March 2, 1911, the plaintiff in error wrote its general agent at Dallas the following letter: "Chicago, March 2, 1911. "S. H. Chiles, Mngr., 209 Praetorian Bldg., Dallas, Texas — Dear sir: In re 118637 — J. W. Eggleston. In further reference to your communication of the 15th ult., I beg to say that it is essential that the matter of reduction of the above policy have immediate attention, and you are requested to advise Mr. Eggleston accordingly. While it is true that the company has $50.00 in cash and his notes aggregating $162.50, these items are held subject to his order, awaiting the completion of the transaction, which should have had much earlier attention. "Now, unless the application accompanied by the policy is received within the next ten days, we shall be obliged to return the notes and our check for $50.00. I trust, however, that it will be unnecessary for us to do this, and I hope that you will be able to have the transaction completed before that time. "Very truly yours, C. M. Currie, "Assistant Secretary." The above letter and other facts in the record disclose that, if tender had been made, it would have been rejected. The company declared no forfeiture, but before this suit, and by its answer herein, declares that there is no liability because the reduction contract was never consummated. Under such circumstances as revealed by this record, we think the insured was excused from tender of payment. Third assignment: "The court erred in rendering judgment in favor of the plaintiff, for that the undisputed evidence showed that the defendant originally insured the life of John W. Eggleston in the sum of $10,000 by a policy dated January 17, 1910, and that in February and March, 1911, negotiations took place looking to the surrender of said policy and the issuance in lieu thereof of a policy of $5,000, and that if thereafter there was a contract of insurance between said parties for $5,000 there was none for $10,000, and if there was one for $10,000 there was none for $5,000. And, further, the undisputed evidence showed that more than a year after the death of the said John W. Eggleston, to wit, on May 29, 1913, the plaintiff sued upon said original policy of $10,000, averring in substance that the same was still in force at the time of the death of John W. Eggleston, and that said negotiations for reduction thereof never had been completed. And thereby plaintiff elected to claim under said original policy of $10,000 and not to claim under the negotiations for reduction thereof to $5,000. And the evidence further showed, without dispute, that the plaintiff abided by such election until, to wit, December 17, 1914 (misprint for 1915), when his amended original petition was filed, in which he sought to recover upon insurance in the sum of $5,000, claiming that the negotiations for the issuance of policy in that sum in lieu of the original policy of $10,000 had been completed and merged in a valid contract of insurance before the death of said John W. Eggleston." This is without merit, because the plaintiff had no cause of action upon the $10,000 policy. It had been returned to the company for cancellation as a part of the consideration for the issuance of the reduction policy and had been forfeited for failure to pay premium. To establish the defense of estoppel by election, it must be made to appear that the plaintiff had two valid and available and inconsistent remedies and that *Page 945 he undertook to pursue one. Bandy v. Cates, 44 Tex. Civ. App. 38,97 S.W. 711. Finding no error in the record, the assignments are overruled, and cause affirmed.