Andrus v. Fidelity Mutual Life Insurance

MARSHALL, J. — This is an action upon a policy of insurance for $2,000 issued by the defendant on November 22, 1892, upon the life of Laura E. Andrus, payable'to her mother and her son, with a proviso that if she survived the beneficiar — 156 — ies, the policy should be payable to her legal representatives. The assured died on December 20, 1898, and her son survived her, but her mother had died previously. The suit is by the executor of her estate and her minor son by his guardian and curator. The plaintiffs obtained judgment in the circuit court, and the defendant appealed. This court has jurisdiction because the defendant invoked in the lower court the protection of the fourteenth amendment to the Oonstitution of the United States, and that court held that the defendant was not denied the protection of the Eederal Oonstitution by its proceedings and judgment in this case. The case made is this: On November 22, 1892, the defendant issued its said policy. By its terms the insured was required to pay semiannual premiums of nineteen dollars on May 22 and November 22 of each year, and it was stipulated that a failure to pay the same at such times should cause a forfeiture of the policy, and that no agent had a right to extend the time of payment of the premiums, but that if they were paid after the required times the policy could only be reinstated with the approval of one of the medical directors and of the president of the company, and then only upon application of the assured containing a statement that the assured is in good health and of any medical treatment or advice and of any sickness or complaint the assured may have had since the issuing of the policy and that the acceptance of any premium on a, defaulted policy from one who had not been reinstated as aforesaid, should not be a recognition of the policy, but it should remain null and void until the assured was reinstated in the manner above set forth. The petition, after setting out the character of the parties and the issuance and terms of the policy, the death of the assured and her mother, avers “that immediately after the death of the said Laura E. Andrus as aforesaid the plaintiffs herein gave the defendant due notice and proof of the said death, and duly and faithfully performed all the other terms, — 157 — stipulations and requirements imposed upon them by the terms of said contract of insurance,” etc. The answer pleads a forfeiture of the policy by reason of a failure to pay the premium that fell due on November 22, 1898; and further pleads that the premium was paid on December 12, 1898, to its agent in Kansas Oity, who remitted it to defendant at its home office in Philadelphia, where it was received on December 15, 1898, and that the president'and treasurer immediately mailed receipt therefor, containing a conditional revival, that is, that the policy was not to be understood as revived by the receipt of the premium unless the assured was in good health and free from all diseases, ailments or injuries, -and that the acceptance of that receipt by the assured was a warranty that such was the case, and if it was not true the policy should be null and void; that a certificate of health and application for a revival of the policy was mailed to the assured at the same time for her to execute, but which she never did; and that when the defendant learned on January 21, 1899, from the proofs of loss, that the assured was not in good health and free from disease when the premium was paid on December 12, 1898, it immediately tendered the premium to the plaintiffs, which was refused. The answer then pleads that the policy had become forfeited and void, and'the defendant is not liable. It also pleads that there is a defect of parties plaintiff, in that, the administrator of the assured’s mother is not a party, and then concludes with a general denial of everything not expressly admitted. The reply is a general denial. The constitutional question arose and was brought into the case in this way. During the trial the plaintiffs offered in evidence the receipts for all the premiums paid upon the policy. The defendant objected thereto on the ground that it was incompetent and immaterial. Thereupon the plaintiffs’ counsel stated that he desired by such evidence to show ,a waiver of the conditions of the policy as to the payment of premiums and — 158 — as to the forfeiture of the policy because of the failure to pay the premiums promptly when due. Counsel for defendant then said: “Defendant objects to any proof of waiver for the reason that the rule which allows waiver to be shown without being pleaded is confined to insurance contracts in Missouri, and for that reason the rule is a violation of the fourteenth amendment to the Constitution of the United States, and is an unjust discrimination against them and a denial of the equal protection of the law.” The court overruled the objection and the defendant saved an exception. Thereupon the plaintiff introduced the receipts of premiums which showed that the payments were made as follows: The first premium due on November 22, 1892, was paid on December 3, 1892. The second premium, due May 22, 1893, was paid on that day. The third premium, due November 22, 1893, was paid on that day. The fourth premium due May 22, 1894, was paid on that day. The fifth premium, due November 22, 1894, was paid November 20, two days before it was due. The sixth premium due May 22, 1895, was paid on May 21, 1895, one day before it was due. The seventh premium, due November 22, 1895, was paid on December 11, 1895, nineteen days after it was due, and the assured was required to sign a health certificate and application for reinstatement of the policy. The eighth premium due May 22, 1896, was paid on May 25, 1896, three days after it was due. The ninth premium, due November 22, 1896, was paid on November 20, 1896, two days before it was due. The tenth premium, due May 22, 1897, was paid on May 17, 1897, five days before it was due. The eleventh premium, due November 22, 1897, was paid on November .19, 1897, three days before it was due. The twelfth premium, due May 22, 1898, was paid on May 24, 1898, two days after it was due. The thirteenth premium, due November 22, 1898, was paid on December 12, 1898, twenty days after it was due. The testimony further shows that the circumstances sur — 159 — rounding the payment of these premiums were as follows: the •defendant drew a draft on the assured for each premium, and sent it to a bank in Kansas Oity, where the assured resided, for collection, and gave the assured notice by mail a week or ten days before the maturity of the premium that the draft had been drawn. No such notice was ever received by the .assured or by any one for her, as to the last premium. Her husband had always paid the premiums. The National Bank •of Commerce of Kansas Oity was then, and had been for some time prior thereto, the agent of the defendant for the collection of its premiums. Her husband had an account in that bank, and had an arrangement with the bank, that whenever any drafts came for the premiums, the bank should pay them out of his deposit and charge them to his account, and the bank had done this several times prior to November 22, 1898. "When this premium fell due the husband was away from Kansas Oity, On his return, which was about December 11, he learned that no notice of the draft for this premium had been received, and the premium had'not been paid. So on December 12, he gave the money for this premium and also for the premium on a policy on his own life, which was due about that time, to his friend, Mr. Witten, and asked him to go to the bank and pay the premiums. This Mr. Witten did, and received from the bank the following íeceipt: “Received of J. L. Andrus, $19 to be remitted to the Fidelity Mutual Life Association, for the payment of her premium due November 22, 1898, on policy No. E36615, the same having become past due and returned to the company.” This receipt was dated December 12, 1898. In the meantime, however, the company, knowing that the premium due November 22, 1898, had not been paid, sent the following letter to the assured: — 160 — “December 8, 1898. “In re Policy No. E36675. Mrs. Laura P. Andrus, Kansas City, Mo. “Dear Sir:— “As you have evidently overlooked the payment of the semiannual premium of $19, due November 22, on your policy of the above number, I trust that you will remit this amount at your earliest convenience, or the quarterly rate of $9.78, with the enclosed health certificate duly signed, according to the terms of the contract. “Never lapse an insurance policy in a good company, as it becomes more valuable with every payment made. If you do not thoroughly understand your policy, the advantages and security afforded by it, let me know, and it will always be my pleasure to give you a full explanation. You can not obtain a more favorable and secure contract of insurance than the one you have under this policy. “Yours truly, “L. G-. Eouse, President.” This letter was received by the husband of the assured on December 19, 1898. His wife never saw it, and never signed the health certificate referred to therein. She was-taken sick on December 6th, and for the first five or six days was not regarded as seriously ill, but a pelvic abscess developed, she was operated on, and died from blood poisoning on the twentieth of December. The defendant was notified of the death, and furnished blank proofs of loss, and directed that as the mother of the assured was dead, her share reverted to the estate of the assured, and hence the claim should be made by the administrator or executor of the assured’s estate and the guardian of the minor child. All of which was done. The evidence further developed that there was an unwritten custom between the company and its collecting agents to allow three days of grace for the payment of premiums, — 161 — which was afterwards extended to seven days grace, and that the agents were allowed a discretion to allow this time if in their judgment the assured was still in good health. The fact was also shown that though the policy contained the provision for forfeiture for failure to pay premiums promptly, and that though the company issued what was called a conditional receipt when premiums were paid after they were,' due, which recited that the policy was not thereby reinstated, and could only be reinstated upon the assured signing the health certificate and then only by the president and a medical director, still, the policies were not in fact marked “lapsed” under such circumstances, and the policy in this case never was so marked, or treated as forfeited by reason of failure to make prompt payment of premiums or for any other reason. The case was submitted to the jury upon an instruction properly defining what would constitute a waiver of the terms of the policy requiring prompt payment of premiums, and leaving the jury to find the facts. A verdict was rendered for the plaintiffs, and the defendant appealed. I. Eor over fifty years the practice has obtained in this State in suits upon insurance policies, to admit proof of waiver without requiring the waiver relied on to be alleged in the pleadings. [Ins. Co. v. Kyle, 11 Mo. 278; Russell v. Ins. Co., 55 Mo. l. c. 593; McCullough v. Ins. Co., 113 Mo. l. c. 616; Nickell v. Ins. Co., 144 Mo. l. c. 432; James v. Ins. Co., 148 Mo. l. c. 10.] And this, too, notwithstanding a recital in the policy that no waiver or change or alteration of the terms of the contract shall be binding, unless it is in writing, signed by the president, and that no agent shall have the right to waive the terms of the policy, and notwithstanding that the policy recites that the payment of premiums after they be — 162 — come due shall be “considered as an act of grace or courtesy, and forms no precedent in regard to future payments,” or that such payments shall not have the effect of reinstating the policy. Such proofs have always been admitted under an allegation of performance of the terms of the policy by the assured. That is, if such terms of the policy have been waived by the conduct and course of business of the company, they no longer constitute any part of the policy, and hence, the allegations of performance covers all that the assured is required to make. As was pointed out in James v. Insurance Co., 148 Mo. l. c. 11, a waiver is held to arise under such circumstances in many of the States of the Union besides Missouri. Now for the first time it is contended that the'practice allowing proof of waiver without an allegation of waiver in the pleadings violates the fourteenth amendment to the Constitution of the United States, because it denies to insurance companies the equal protection of the law, inasmuch as this practice does not obtain as to waiver of any other kind of a contract. It will at once be observed that it is not contended, and is not true, that the doctrine of waiver is applied to insurance companies and their contracts, and is not applied to individuals or other companies and their contracts. Eor the fact is, that the doctrine and principle of waiver is applied to all persons and companies alike. The objection goes only to a question of practice, and not to a question of right. The provision of the, Constitution of the United States invoked was not intended to control or regulate mere matters of practice in the State courts, but was intended to secure the same — an equal — protection to every person or company in a class, that is accorded to every other person or company in the same class. “When legislation [and in like manner judicial administration] applies to particular bodies or associations, imposing — 163 — upon them additional liabilities, it is not open to the objection that it denies to them the equal protection of the laws, if all persons brought under its influence are treated alike under the same conditions.” [Railroad v. Mackey, 127 U. S. l. c. 209; Railroad v. Herrick, 127 U. S. 210; Walston v. Nevin, 128 U. S. 578; Hayes v. Missouri, 120 U. S. 68; Railroad v. Humes, 115 U. S. 512; Wurts v. Hoagland, 114 U. S. 606; Dow v. Beidelman, 125 U. S. 680; Missouri v. Lewis (Bowman’s case), 101 U. S. 22; Turnpike v. Sandford, 163 U. S. 578; Railroad v. New York, 165 U. S. 628; Brass v. North Dakota, 153 U. S. 391; Lowe v. Kansas, 163 U. S. 81; Duncan v. Missouri, 152 U. S. 377; Cotting v. K. C. Stock Yards Co., 79 Fed. 679.] Thus laws relating to railroads as a class, and making them liable in a different manner or for matters for which other companies or individuals are not liable, or prescribing different modes of procedure against them from those prescribed in cases against other companies; laws for the government of municipalities; for opening and improving streets, for irrigation and drainage; for liens in favor of mechanics and not in favor of other persons; requiring railroads to be fenced; for killing stock by railroads; fellow-servant laws applied to railroads and not to other persons; creating a liability (criminal as well as civil) for bank officers of an insolvent bank or of a trust company or building association, to receive deposits or money, and making the failure prima facie evidence of their knowledge of such insolvency, while such liability is not provided as to officers of any other kind of a company, are all held not to be obnoxious to the fourteenth amendment to the Federal Constitution, “if all persons subject to it are treated alike under similar circumstances and conditions in respect to both the privileges conferred and the liabilities imposed.” [Railroad v. Mackey, 127 U. S. l. c. 209; Railroad v. Humes, 115 U. S. 512, and cases cited.] The practice challenged in this case, obtains as to all insur — 164 — anee companies, and hence, is not obnoxious to the fourteenth amendment to the Federal Constitution. Neither does this practice violate any rule laid down by this court in State v. Loomis, 115 Mo. 307, or any rule announced by the Supreme Court of the United States in Ex parte Virginia, 100 U. S. 339; Railroad v. Ellis, 165 U. S. 159; or Railroad v. Chicago, 166 U. S. 226. Eor the classification of insurance companies and their contracts is no more an arbitrary classification than is the classification of railroads. On the contrary, by reason of the nature of the business insurance companies conduct, by reason of the character of their contracts, which may last for the life of the assured or may terminate any year or any quarter, by reason of the common experience of mankind with reference to the manner the contracts of such companies are secured, and the company’s manner of dealing with the assured while he lives and with the beneficiaries after the death of the assured, such companies and such contracts naturally and properly belong to a class unto themselves, and must be governed by laws that would be wholly inappropriate to any other company or any other contracts. The wisdom and necessity of such a classification and of the practice here challenged is fully attested by the fact that it has obtained for over fifty years, that it has met the approval of the bench, the bar and the people, and that no insurance company has ever before called its propriety or constitutionality into question. Under this practice an insurance company is fully charged with notice that it must come into court prepared to meet proof of waiver, without waiver being charged in the petition or pleadings. And this defendant did come into court prepared for this proof in this case, just as fully as if it had been charged in the pleadings. Eor it set out all the facts about the payment of the last premium, upon which it claimed the forfeiture had been declared, and took the depositions of all — 165 — its officers as to its course of business with reference to forfeiting, policies for failure to pay premiums promptly. Therefore, the defendant not only knew the rule and practice that for so long a time had been applied to all insurance companies, but it prepared for trial according to that established practice. Without further elaboration, enough has been said to show that the contention of the defendant that the protection of the fourteenth amendment to the Constitution has been denied to it, is untenable. n. It is next insisted that the evidence is not sufficient to show a waiver. There is unquestionably some substantial evidence of such a course of business as to. amount to a waiver, and this being so, and the court having submitted the question of fact to the jury, under proper instructions, this court will not interfere with the finding. [James v. Ins. Co., 148 Mo. l. c. 16.] The evidence shows that some of the premiums were paid before they were due, some at maturity, and some at different times after they were due. When the last premium, due November 22, 1898, fell due and was unpaid, the company, on December 8, 1898, wrote to the assured reminding her that it had not been paid, and urging her to pay. Before this letter reached her, however, the company on December 12, 1898, received the payment. It did not refuse to take it. It did not mark the policy lapsed or forfeited. It never objected to keeping the money and never offered to return it until more than a month after she was dead. Then it was too late to take such a position. The conditional receipt in use by the company is a snare in itself. It acknowledged receipt of the money. It keeps the money. But it says the policy is not reinstated by the acceptance of the money and shall continue to — 166 — be null and void until tbe bealtb certificate is filed, and until tbe president and medical director determine to reinstate tbe policy. Tbe company must take one born of tbe dilemma or tbe other. It can not retain the benefits and deny the existence of tbe contract. If it does not wish tbe receipt of tbe premium to bave tbe effect in law of reinstating tbe policy or of preventing a forfeiture, it must refuse to receive tbe money until tbe bealtb certificate is filed and until tbe president and medical director act. in. It is next insisted that tbe petition does not allege performance and bence there could be no waiver or proof thereof. No such objection was made in tbe lower court, and bence no such position can be taken in this court. But aside from this the petition does allege performance.. Tbe defendant construes tbe allegation in the petition in regard to performance to refer to what was done after tbe death and.not before. Such a construction is too narrow. Tbe allegations of tbe petition in reference to performance are sufficient to make tbe petition good after verdict, and in addition tbe sufficiency of tbe petition was not called in question by a motion in arrest. IV. Finally it is argued that tbe administrator of tbe assured’s mother is a necessary party plaintiff. This position is untenable. The policy provided that it should revert to the estate of the assured in case of tbe death of tbe beneficiaries. One of the beneficiaries, tbe mother, died before tire assured. After the death of tbe assured, the company construed it to mean that tbe interest of this beneficiary reverted to tbe estate of the assured, while the interest of tbe minor son remained in him, and accordingly the company required tbe claim to be made by the — 167 — administrator or executor of the deceased and the guardian of the minor son, and the proofs of loss to be furnished by them. This was done. It is too late for the company now to say this was not proper or sufficient. Eor if it could be heard to interpose such a defense, it might then say no proper proofs of loss or claim had been made by the mother’s administrator, and thus defeat a recovery as to one-half of the policy, if the interest of the beneficiaries was several and separate. On the contrary, if the beneficial interest is joint, then upon the death of one the whole interest passes to the survivor. [Crecelius v. Horst, 78 Mo. 566; Schneider v. Ins. Co., 33 Mo. App. 64.] However, the construction placed upon this policy by the defendant immediately after the loss, is the proper construction. The beneficial interests were several. The policy provided that if the beneficiaries died before the assured the benefits should go to the legal representatives of the assured. As the beneficial interests were several, the interest of the mother passed at her death to the legal representatives of the assured, while the beneficial interest of the son remained in him. The judgment of the circuit court is right and is affirmed. All concur.