Mutual Life Ins. v. O'Keil

Opinion of the court by JUDGE HOBSON Reversing. •On April 27, 1S70, the Southern Mutual Life Insurance •Company of Kentucky, appellant’s predecessor, issued to — 743 — Francis M. O’Neil a policy insuring his life in the sum of $2,500 for the benefit of his wife, Catherine E. O’Neil, and his children, payable at his death, in consideration of semiannual premiums of $27.39, to be paid -on the 23d of April and October in every year during the continuance of the policy, which contained, among others, the following condition : “In case the said assured shall not pay the said semiannual premiums on or before 'the several days hereinbefore mentioned for the payment there'of, then, and in- every such case, tihe said company shall not be liable for the payment of the sum insured, or any part thereof, and this policy shall cease amd determine. Provided, that if this policy •shall become null and ‘void by reason of the violation of any of the foregoing conditions-, all payments made, hereon shall be forfeited to said company; but if three or more full years’ premiums shall have been paid hereon, a new and paid-up policy will be issued by said company, upon demand thereof, within thirty days after the. said forfeiture, for the equitable value of the original policy.” O’Neil paid the semiannual premiums as they fell due until October 23, 1883, but was unable to pay the semi-annual premium then due, and executed therefor to the company his n{ote due in four months, which contained this stipulation: “In consideration hereof, the policy is extended until default is made in the payment of this note, when all rights and benefits secured thereby shall cease and determine without notice, and this note shall be void; but if this note shall be paid at its' maturity, then the said policy shall continue in force with like effect as if the said premium were thite day paid. The receipt of this date given by said company is subject to the provisions of this note.”. O’Neil failed to pay the note, and the records of the company show that! the policy was terminated on February .26, 1884, by reason of its non-payment. — 744 — This is shown on the caincellation blotter of the company, giving the date when it was canceled and the reason for it. The record alteo shows thait notice of what had been done was.sent to O’Neil on June 25, 1884. On .August 22, 1901, O’Neil and wife filed this -suit against the company for a paid-up policy for the equitable value of the original policy at the time of default -ini the payment' of premiums. He testified that he received no notice of the cancellation of the policy, and that as soon as he found that he could not pay the note, and about the time the note fell due, he delivered h'is policy to T. L. Chaplin, the agent-of the company at Lebanon, where he resided:, and demanded a paid-up policy; that he did' not get a paid-up policy; that he asked Mr. Chaplin about it once or twice; that Chaplin said he would send it in to get a paid-up policy. After Chaplin’s) deaith, which occurred in 1892-, the policy was found among Chaplin’s papers, and was then returned to OlNeil. Chaplin ceased to be agent for the company in the year 1886. He was the agent of the company at Lebanon to solicit life insurance between June, 1883, and January, 1886. He had no other power or authority except to take applications for life insurance. The application for the policy, which wate made in 1870, was taken by T. W. Blandford, who was then the agent at Lebanon. The defendant filed written exceptions to> the testimony of O’Neil in so far as he stated what occurred between him. and Chaplin, on the ground that, Chaplin being dead, O’Neil could not testify for himself as to these matters. The court overruled the exceptions. The propriety of this ruling is the first question to be determined. F. M. O’Neil was a party to the contract and one of the plaintiffs in the action. He was therefore testifying for himself. Chaplin, -'the person with whom the transaction oc — 745 — curred, died in the year 1892. By section 606 of the Civil Code no person can testify for himself as to a transaction with one who is dead, and it has been held that the same reason whifch excludes the testimony of a party testifying for himself concerning a transaction with a principal who is dead, when the testimony is offered to be given, applies equally where l]he transaction was with an agent who is dead. Harpending’s Ex’rs. v. Daniel, 80 Ky., 449, 4 R., 330; Tarr v. Kimbrough, 17 R., 1284, 34 S. W., 528; Breckinridge v. McRoberts, 20 R., 699, 47 S. W., 454; Knight v. Wilson, 22 R., 545, 58 S. W., 439. The court therefore erred in. overruling the defendant’s exceptions to this much' of the testimony of O’Neil. It remains, therefore, to determine whether, without this evidence, there is sufficient testimony in the case to sustain a judgment. The fact that, six years after Chaplin ceased to be agent for the company, the policy was1 found among his papers .at Lebanon and returned to O’Neil, proves nothing against the company. In answer to the question whether at any time he demanded of the defendant a paid-up policy, O’Neil states in his deposition that he wrote the company to grant him a paid-up policy, but he does not say when this was. He also says in another place that after the death of Chapl'ih he wrote to the defendant demanding a paid-up policy, and the company answered that the policy had not been presented in time, and that just before he instituted the suit he again made this demand and was again refused. The proof for the company shows that it kept a record of its correspondence, an)d the only demand shown by this record was made in June, 1901. The policy itself provides that a paid-up policy will be issued upon demand thereof within thirty days after the forfeiture. This court has in a number of cases held that time is not of the essence of the contract — 746 — in such cases, and that a paid-up policy may be had if demanded within a reasonable time after the default, although not demanded within the time fixed by the contract; and it has laid down the rule'that five years is a reasonable time for making the demand. Mutual Life Insurance Company v. Jarboe, 102 Ky., 80, 19 R., 1501, 42 S. W., 1097, 39 L. R. A., 504, 80 Am. St. Rep., 343; Manhattan Life Insurance Company v. Patterson, 109 Ky., 624, 22 R., 1282, 60 S. W., 383, 53 L. R. A., 378; Washington Life Insurance Company v. Miles, 112 Ky., 743, 23 R., 1705, 66 S. W., 740; New York Life Insurance Company v. Warren Deposit Bank, 24 R., 325, 75 S. W., 234. In the last ease it was held that the failure to make á demand within five years defeated the right, to- a paid-up policy where the company simply remained silent without attempting to collect the note. In this case the defendant took no steps to collect the note, and did nothing to waive its right to insist upon the forfeit. Outside of the testimony of O’Neil as to what took place between him and Chaplin which can not he considered, there is nothing to show a demand on the company for a paid-up policy within five years after the forfeiture occurred. The only time fixed by O’Neil as that at which he wrote to them making thiis demand is after the death of Chaplin, which was in 1892, or more than seven years after the default. No- explanation is given of the long delay, after Chaplin ceased to be agent in 1886, or even after his death in 1892, to file this suit. It is a cardinal) principle of equity to- refuse relief to those who have unreasonably slept on their rights: The suit was not filed for something like seventeen years after tbe right accrued to- demand apai’d-up policy,'and under the rule heretofore laid down there can be no recovery. The insured had an option to stand upon his original policy and his rights thereunder, or to take a paid-up policy for — 747 — the equitable value of his original policy. The provisions of the contract as to a paid-up policy are not self-executing. He was to demand the paid-up policy in .thirty days after, default in the payment of premiums if he wanted it. Although the court refuses t’o enforce strictly the limit as to time, and allows a demand within a reasonable time, still it must follow from the contract, on well-settled, legal principles, that, if no demand is made within the proper time for a paid-up policy, the right thereto will be deemed waived. For the policy expressly provides that on default in the payment of premiums it shall cease and determine, and unless something is done to arrest the operation of this, provision the policy is no longer in force. The insurance company must have some basis for carrying on its business with the living and settling the claims of the dead, and, as in other cases, of failure to make an election, it must be presumed . after a reasonable time that the insured did not elect to exercise his option to surrender his original policy and take a paid-up policy for its equitable value. Judgment reversed, and cause remanded for a judgment as herein indicated. Judges Paynter and Nunn dissent.