This is a suit by the appellee against the appellant upon an accident insurance policy issued by the appellant in favor of the appellee. The plaintiff alleged the policy was issued October 14, 1935, and provided for the payment of an indemnity of $200 per month for a period of twelve months for total continuous disability caused solely and exclusively by accidental means, and on January 7, 1937, he sustained an accidental injury, and as a result thereof plaintiff became totally and continuously disabled and would continue to be so disabled for a period of one year, which was the limit of the time of the coverage under the policy. It was further alleged the Company committed an anticipatory breach of the contract by virtue of letters dated January 5, 1937, and February 9, 1937. In these letters, it was contended by the defendant, the policy had been cancelled under and pursuant to the cancellation provision in the policy contained in clause 16 thereof. This clause reads:
"16. The Company may cancel this policy at any time by written notice delivered to the insured or mailed to his last address as shown by the records of the Company, together with cash or the Company's check for the unearned portion of the premiums actually paid by the insured, and such cancellation shall be without prejudice to any claim originating prior thereto." *Page 845
The defendant asserted (1) the policy had been terminated under the cancellation provision thereof; (2) in the alternative, if in force, the plaintiff was not totally disabled; and (3) if the policy was in force, defendant had the right to pro rate with other insurance covering the same loss of which it had no notice.
The case was tried without a jury and the court held (1) the policy had not been cancelled; (2) the defendant had committed an anticipatory breach of contract; (3) the defendant company had the right to pro rate because of other insurance carried by plaintiff covering the same loss, without giving notice to defendant.
On July 19, 1937 judgment was entered in plaintiff's favor for twelve months' indemnity at $100 per month, making a total of $1,200. Only six months had expired since the accident of January 7, 1937, and the judgment was for damages as for anticipatory breach of the contract. The court gave the defendant the benefit of the proration clause pleaded by it, reducing the damages from $2,400 to $1,200.
The letter of January 5, 1937, upon which the defendant relies as establishing a cancellation of the contract before the date of the accident, and being one of the letters upon which the plaintiff relies as establishing an anticipatory breach, reads as follows:
"Mr. William R. Williams, 1027 South Windomere, Dallas, Texas.
"Dear Mr. Williams:
"Re: Accident Income Policy No. CWS-354848.
"The Underwriting Committee of the Company upon reviewing all papers received in connection with your recent accident claim, finds that you are temporarily uninsurable for accident benefits.
"Therefore, in accordance with the cancellation provision of your Accident Income Policy, the Company must advise you that such benefit has been cancelled as of December 14, 1936, the date to which premiums have been paid thereon. We are sorry we cannot continue your Accident Insurance in force.
"Please date and sign the enclosed form, have your signature witnessed, and forward it to us. Since the Accident Income Policy has been cancelled as of the date specified above, we ask that such policy now be forwarded in the enclosed envelope for our files.
"Due to the cancellation of your Accident Income Policy, the monthly premium under your insurance will be reduced from $31.13 to $28.48 on and after December 14, 1936.
"Very truly yours,
"(S) Walter C. Kennedy —
"Chief Underwriter."
The undisputed facts show said letter was deposited in an envelope, properly stamped and addressed to plaintiff at 1027 South Windomere, Dallas, Texas, which was his last address as shown by the records of the Company, and was placed in the United States mails at Sacramento, California, on January 6, 1937. The evidence shows and the plaintiff alleged the accident complained of by him occurred January 7, 1937.
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