Darby v. Northwestern Mut. Life Ins. Co.

A. S. Hathaway, secretary of the defendant company, testified that as secretary he has charge of the issuance of policies, collection of premiums, payment of dividends and commissions, and the reinstatement of lapsed policies; that the medical director, or medical department, passes on the evidence of insurability for reinstatement; that the company does not authorize general agents or others to take notes for premiums; that if agents do accept notes they do so entirely at their own risk and are obliged to report the premium to the company just as though collected in cash; that where a policy lapsed for non-payment of premium, if payment was not made within the thirty-one day period of grace, the insurance "would go wholly out of force, and it could thereafter be reinstated only by payment within five years from the date of default of the amount of all past due premiums, with interest, and subject to evidence of insurability satisfactory to the medical department of the home office. Before reinstatement of the policy in suit, the evidence of insurability and medical examination would have to be passed on in behalf of the company by the medical department at the home office. The premium due October 27, 1918, was not paid on the date due or within the grace period thereafter, and there is no evidence whatever of the receipt by the company on account of this policy of any payment, either from the insured or any agent, subsequent to the initial semi-annual premium."

Dr. J. W. Fischer, medical director of defendant, stated that in order to reinstate the policy sued on, it was necessary "for a medical examination to be made by one of our appointed examiners, showing insurability and approval by the medical director or one of his assistants at the home office;" that "no evidence of medical examination or physical examination or of the insurability of the policyholder, Samuel E. Darby, was received by the company at any time after the policy in question was issued;" that in order to determine the insurability of Mr. Darby for reinstatement it would have been neces

Darby v. Northwestern Mut. Life Ins. Co.

sary for him to have presented himself to Dr. Brandon, the local examiner, and for the doctor to have made an examination, and for Mr. Darby to have signed the "statement for restoration;" that in order to pass upon the insurability for reinstatement, "we require a record of the rate and quality of applicant's pulse, as to whether there is any degeneration of the blood vessels, as to whether his heart is normal, his lungs, his actual weight, whether he has a hernia, if so whether it was retained by a well-fitting truss, an examination of the urine and his blood pressure, and a statement from the applicant as to whether he has had any illness or constitutional diseases or injury or has been confined to his house by illness since his policy lapsed, a statement in regard to his habits and the use of stimulants, the cause of death of members of his immediate family since the policy was issued, and whether he had consulted a physician for any reason since the policy had lapsed." The witness also stated "we had no medical examiner at Essex, Missouri, other than Dr. J. P. Brandon, between the date of this policy and January 12, 1919, who was authorized to examine Mr. Samuel E. Darby for reinstatement of his policy."

Defendant then offered in evidence a blank form of the "Statement for Restoration" referred to by Dr. Fischer. After setting forth several questions to be answered by the insured, the statement closes with the following declaration to be signed by the insured:

"Said policy having lapsed, I desire to have the same reinstated, and herewith pay the past due premiums and interest, with the understanding that no liability exists on the part of the company until said company, at its home office in Milwaukee, shall have assented to the reinstatement of said policy, nor shall said policy be deemed to be in force, unless upon the date of its reinstatement by the company aforesaid, I shall be alive and in good health."

George E. Copeland, superintendent of agencies for defendant, testified in part as follows:

Darby v. Northwestern Mut. Life Ins. Co.

"The company does not authorize general agents or other agents to take notes for premiums on policies in the company. If Mr. Bayley took a note from Samuel E. Darby for an amount equal to a premium on account of a proposed reinstatement of Mr. Darby's policy, he was not authorized by the company to do so. A general agent or other agent has no authority whatever to reinstate or make any agreement for reinstatement of a lapsed policy. The power of an agent of the company in connection with a proposition for reinstatement of a lapsed policy is limited to accepting the premium with the proper medical certificate, and forwarding it to the company for its action, giving a conditional receipt therefor."

The foregoing fairly and somewhat fully outlines the case made. At the close of plaintiff's case and again at the close of the entire case defendant requested an instruction in the nature of a demurrer to the evidence, which instruction was refused. On behalf of plaintiff the court gave but one instruction, not necessary to be noted here. Further matters essential to a consideration of the errors assigned will be noted in the course of the opinion.

I. Defendant contends that the court erred "in admitting evidence incompetent, immaterial and irrelevant to any issue in the case and prejudicial to appellant.'

Before proceeding to a consideration of the error assigned, it might be well to determine the issues actually involved. The policy sued on provides that "upon default in the payment of any premium this policy shall cease and determine except as hereinafter Failure to Pay provided." The exceptions referred to are Premium. a period of thirty-one days' grace and a

right of reinstatement after default. The dates when the semi-annual premiums became due were April 27th and October 27th of each year. Under the decisions time became the essence of the contract and the failure to pay a premium when due worked a forfeiture of the policy,

Darby v. Northwestern Mut. Life Ins. Co.

subject to the exceptions above mentioned. [Ashbrook v. Phoenix Mut. Life Ins. Co., 94 Mo. 72; Suess v. Imperial Life Ins. Co., 193 Mo. 564; Gaterman v. American Life Ins. Co., 1 Mo. App. 300; Sick v. Ins. Co., 79 Mo. App. 609.] By the reply of plaintiff it is admitted that the semi-annual premium due October 27, 1918, was not paid by the insured at the time the same was due or within thirty-one days thereafter. Such being the case, the policy was, according to its terms, terminated by the default, subject only to the right of the insured to be reinstated. The terms of reinstatement were that "evidence satisfactory to the company of the insurability of the insured" should be furnished, and that all premium arrears should be paid with interest. One of the requirements incident to furnishing evidence Reinstatement. of insurability was for the insured to undergo a medical examination. There was no proof of the insured having been so examined. To the contrary there was evidence that he had not been examined. The principal issue made by the pleadings and evidence therefore was, whether or not the defendant had waived the medical examination. The remaining issue presented was whether or not the receipt by the agent Bayley, of the note dated January 3, 1919, amounted to a payment of the defaulted premium with interest and constituted a waiver of the conditions of the policy. With these issues in mind we approach the claim of error urged.

Evidence.

On behalf of plaintiff the court admitted in evidence, over the objection of defendant, three notes signed by S. E. Darby, for $45, $65 and $126.25, respectively, dated August 12th, March 10th and March 23, 1916, respectively, one thereof being payable to A. V. Bayley, Jr., and two being payable to Ira S. Rice and A. V. Bayley, Jr., together with three letters signed by Wm. J. Fischer, General Agent, addressed to S. E. Darby, calling attention to the maturity of said notes and requesting payment thereof. According to the record there is no testimony tending to show the purpose for which the said notes were given. From the briefs, how

Darby v. Northwestern Mut. Life Ins. Co.

ever, we gather that they were given in connection with the payment of premiums on two previous policies for $5,000 each, taken out by Darby in the year 1916, which policies had also lapsed. There was no proof that the notes were given or received after default in the payment of premiums on the said prior policies. Manifestly they were not admissible to show a waiver of any condition or provision of the policy sued on or of any forfeiture thereunder. Nor were they admissible to show a course of dealing on the part of defendant which might amount to a waiver. [Suess v. Imperial Life Ins. Co., 193 Mo. 564.]

Over the objection of defendant the court also permitted the widow of Mr. Darby to testify as to the state of his health on January 3rd. Similarly, the court allowed Dr. Brandon to testify that when he saw Darby on the street on Saturday, January 4th, he seemed to be in perfect health. Again, the court permitted the plain tiff to testify as to the apparent good health of Darby on January 3rd, 4th and 5th and that there was an epidemic of influenza in the community and that "doctors were in great demand.'

None of the above-mentioned evidence was relevant to the questions at issue, and all thereof was prejudicial to defendant. The notes introduced had nothing whatever to do with the policy sued on and were misleading to the jury. The statements as to Darby's good health just prior to his death, as to the prevalence of influenza and as to the business of doctors were offered solely to show the lack of necessity of a medical examination or in excuse for the failure of Darby to complete the evamination required. They shed no light, however, upon the question of waiver of the examination. All of the evidence was incompetent on any theory applicable to the case and should have been excluded.

II. Defendant urges that the court erred in excluding competent, relevant and material evidence offered