105 P. 265 | Cal. Ct. App. | 1909
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *389 Action to recover upon a life insurance policy. The complaint alleges: That about August 29, 1889, defendant issued to plaintiff a policy of insurance on the life of her husband, William Frese, agreeing thereby to pay to her $5,000 at his death; that the premiums due thereon were prior to his death fully paid; that on July 7, 1899, plaintiff's said husband borrowed from defendant the sum of $1,930 repayable to defendant on August 29, 1900; that defendant required as security for said loan the pledge of said policy, and plaintiff assented thereto, and thereupon plaintiff and her said husband entered into an agreement with defendant by which they assigned to defendant said policy and agreed therein to repay said sum to defendant on August 29, 1900, and as collateral security, and in consideration of the amount so loaned, did "assign, transfer and set over all their right, title and interest in and to said policy . . . together with all the moneys which may become payable under the same, to the company as collateral security for the payment of said loan with interest." The agreement further provided: "In the event of default of the payment of the said loan on the date herein above mentioned, the company is hereby authorized at its option, without notice and without demand for payment, to cancel said policy, and apply the customary cash surrendered consideration then allowed by *390 the company for the surrender for cancellation for similar policies, namely, $1,932.15 to the payment of the said loan with interest, the balance, if any, to be payable to the parties entitled thereto on demand."
Plaintiff further alleges that she did not know whether or not said indebtedness had ever been paid; or whether said policy had been canceled, "although the defendant now claims to have so canceled it"; on information she averred that defendant waived performance of said agreement touching payment of said indebtedness at maturity and its right to cancel said policy, and on September 4, 1900, "entered into a new agreement with said William Frese whereby in consideration of the payment by him for $96.50 in cash, which sum was then paid to the defendant, said loan was extended by defendant for one year from August 29, 1900"; and in like manner entered into "a fresh agreement with said William Frese, upon a like consideration of $96.50," extending payment of said indebtedness to August 29, 1902; that at said last-mentioned date and for a long time prior thereto said William Frese "was sick in body and mind and was mentally incompetent to attend to business," and that plaintiff was not aware that said indebtedness was not paid or that said policy had been canceled until after the death of her said husband (which occurred April 8, 1903), and not until when she made proof of death of her said husband; that she was furnished by plaintiff with blanks of proof of death on or about May 27, 1903, and made up and duly verified and filed the same with defendant, "and that no objection was made thereto, and no further or other proofs demanded"; that five months have elapsed since said proofs were made, and although payment has been demanded defendant has neglected and refused to pay the sum of $5,000, by said policy agreed to be paid to her by defendant.
Defendant by its answer admits the issuing of said policy and that it has not been paid; that all premiums thereon were paid by the assured prior to his death, and that he kept and performed all its terms "save and except as they referred to the payment of the loan hereinafter mentioned." Most of the other averments of the complaint are denied. As to the loan defendant alleges that it was made "to said William Frese and plaintiff jointly," and that "as collateral security *391 for said loan, said William Frese and Ida F. H. Frese, plaintiff herein, pledged to the defendant said policy of insurance and delivered to defendant the written instrument, copy of which is set out in the complaint, . . . and that no part of said loan has ever been paid to defendant, save and except by the application of the cash surrender value of said policy as hereinafter stated"; that the loan not being paid at maturity, to wit, August 29, 1900, "at the request of said assured the term of payment of said loan was extended by defendant until August 29, 1901, and on said last named date the term of payment was again, at the request of the assured, extended by defendant to August 29, 1902. That no further extensions of the due date of said loan were ever made nor was the right of defendant to cancel said policy ever changed or altered, except as herein stated." Further answering, defendant avers that prior to the last date to which said loan had been extended, to wit, about August 6, 1902, defendant notified said assured that the said loan would be due and payable on August 29, 1902, and that if the same was not so paid, "the company would cancel said policy and apply the cash surrender consideration thereof toward the payment of the said loan, with interest, as provided in said loan agreement"; that said loan was not then or ever paid, and no application was made to renew the same, "and thereupon, to wit, on October 11, 1902, in accordance with said agreement, said policy was canceled by the defendant, and the cash surrender consideration thereof applied toward the payment of said loan and interest"; that the cash surrender value of said policy was $2,037.99, leaving a balance of $107.99 in excess of the amount of said loan and interest, which said balance defendant has ever since been and now is ready and willing to pay plaintiff; that on October 21, 1902, defendant advised said assured of the cancellation of said policy and of the facts last above stated, and then and there offered to pay said assured said balance "upon the execution of a form of surrender receipt by plaintiff and said assured"; that thereafter said assured made application to defendant to restore said policy, but defendant refused "on account of the condition of health of said assured, and the assured was so notified by defendant on November 18, 1902"; that subsequent to the death of said assured plaintiff made *392 demand upon defendant for the amount of said policy, but payment was refused "on the ground that said policy was not in force at the time of the death of said assured, and plaintiff was so notified by defendant"; that plaintiff was then notified that there remained a balance in cash of $107.99 due plaintiff as the difference between the cash surrender value of said policy and the amount due on said loan at the time of said cancellation; that a check for that amount and a blank form of receipt were sent to plaintiff and still remain in her possession; that "plaintiff requested defendant to furnish her the usual form of proofs of death of said assured and the same was so furnished to plaintiff"; but that she was then informed that said proofs were furnished "upon the distinct understanding that it was without waiver upon the part of defendant that said policy of insurance had been canceled during the lifetime of the insured, and was not in force at the time of his death, and said forms of proof of death were secured by said plaintiff upon such understanding, and not otherwise."
The cause was tried by the court without a jury, and plaintiff had judgment for $107.99. Plaintiff appeals from so much of the judgment as gave her but $107.99, and claims that it should have been for the full amount claimed "or at least for the sum of $2,998.17, with interest thereon from May 27, 1903"; and appeals also from that part of the judgment awarding costs to defendant. The appeal comes up on a bill of exceptions.
It is not necessary to set out the findings specifically — suffice it to say that the averments of the answer are found to be true in all material particulars.
In certain respects the findings are challenged as unsupported by the evidence. It is claimed that the evidence was insufficient to show that the policy was canceled by defendant and also to show that its cash surrender value was as alleged by defendant. The evidence consisted in considerable part of letters between the officers and agents of the company and by them to the assured and plaintiff; also of office records and abbreviated notations on the policy which were explained. It is suggested by plaintiff that these mention the "surrender" of the policy and not its "cancellation." But the surrender spoken of was explained to have been made *393 under the loan agreement, and it was further shown that the surrender of the policy was in effect its cancellation. It sufficiently appeared that so far as the company could do so it canceled the policy and so treated it. Whether it had a right so to do is a question of law rather than of fact. The evidence was also sufficient to show that the cash surrender value of the policy at the date of its cancellation was as claimed by defendant and as credited on the loan. The finding "nor was the right of said defendant to cancel said policy ever changed or altered except in reference to said due date," is challenged as unsupported by evidence. This refers to the extension of time of payment of the loan as shown above. It is claimed that as these extensions were made at the request of the insured as alleged in the answer and shown by the evidence, and not by plaintiff, and as the notice given was to William Frese that the loan would be due August 29, 1902, and was not given to plaintiff, she is not bound by what took place between her husband and the company of which she had no notice. Passing for the moment the legal effect of these extensions as affecting plaintiff's rights, it will be observed that the loan agreement expressly authorized the company, on default of payment of the loan, "without notice and without demand for payment, to cancel said policy and apply the customary cash surrender consideration . . . to the payment of the said loan."
The alleged errors in admitting evidence over plaintiff's objection may here be disposed of. They are five in number, to wit: (a), relating to the admission of the letter of the defendant's agent to plaintiff's husband informing him that the company had canceled the policy; (b), his reply thereto; (c), the company's reply to this letter; (d), the second letter of William Frese to the company; (e), the company's letter to plaintiff declining to pay the policy. There is nothing in any of these letters in the slightest degree harmful to plaintiff. There are no admissions or declarations of plaintiff's husband affecting the rights of plaintiff; they had some tendency to show that her husband was not mentally deranged.
The real questions presented by the appeal are questions of law, and upon these plaintiff's position is: 1. That the loan agreement is ultra vires; 2. That the right given by the agreement to cancel the policy is a provision for the forfeiture of *394 property subject to a lien and is in restraint of the right of redemption from a lien, and therefore void; 3. That if not void as a provision for forfeiture, it is merely an option or offer by plaintiff to sell the insurance policy within a reasonable time after August 29, 1900; 4. That plaintiff pledged her policy as a surety for money borrowed by William Frese and she was exonerated by the new agreement of August 29, 1900, whereby William Frese was given an extension of one year.
It should be stated that the loan was made to plaintiff and her husband both joining in the execution of the agreement to repay the sum loaned and assigning the policy as collateral security; the money was paid to them by the company's check to the order of both; there was evidence that William Frese was sound of mind during all the transactions between him and the company, and although not in good health, the company, so far as appears, was not aware of his condition until he applied for a restoration of the policy after its cancellation, and upon the report of the company's medical examiner.
1. Was the agreement ultra vires? The argument of appellant is that under the act of March 28, 1874 (Stats. 1873-74, p. 777), defendant was authorized "to loan upon mortgages of real estate"; that the agreement of 1899 was prior to the enactment of section 421, subdivision 7, of the Civil Code which permits insurance corporations to loan money on their own policies, and hence there was no authority for making the loan agreement. The contention is that by the act of 1874 there was an implied prohibition to loan upon property other than real estate. Respondent, it seems to us, makes conclusive answer to this contention: That by the terms of the agreement and as alleged in the complaint, "plaintiff consented to the pledge, and did pledge, the said policy of insurance to defendant as security for said loan"; that plaintiff and the assured received consideration for the loan agreement and have not offered to repay it and are estopped from setting up the act of the corporation as ultra vires. (Grangers' Assn. v. Clark,
2. It is contended that the loan agreement provides for the forfeiture of property the subject of a lien, and is void as in violation of section
3. We do not think appellant's third proposition is tenable, namely, that if the provision relating to the cancellation of the policy was not a provision for a forfeiture, then it was merely an offer or option to sell the policy for $1,932.15 within a reasonable time after August 29, 1900. Appellant's contention is derived from the provision of the agreement that the company "is hereby authorized, at its option, without notice and without demand for payment, to cancel said policy." The object of the agreement plainly manifest by its terms, and as shown by the complaint itself, precludes the construction thus given by appellant. The transaction was a loan pure and simple, secured by a pledge of the policy. The agreement of the company was "to loan the parties of the second part the sum of $1,930"; it provided that "the receipt of the foregoing amount as a loan is hereby acknowledged upon the pledge hereinafter set forth of policy No. 371,257," and "in consideration of the amount of said loan the parties of the second part hereby assign . . . said policy as collateral security for the payment of said loan." There is no element of a sale, or option of a sale to be found in the agreement. It would be a perversion of the English language to call this an offer or option of plaintiff and her husband to sell the policy for a certain sum. The term "option" as used in the agreement means that the company was authorized, on default of the pledgors, at its pleasure or upon its own motion, to apply the cash surrender value in payment of the loan.
4. Neither is the proposition of appellant maintainable, that plaintiff pledged her policy as surety for the money borrowed by her husband, and hence she and her property were exonerated by the new agreement of August 29, 1900, between her husband and the company. There is no evidence in the record that plaintiff signed the agreement as a surety. The evidence is that the loan was to her and her husband; the agreement was signed by both and the money was paid to both. The company was not informed as to what use the *398
money was to be put or by whom; both plaintiff and her husband were, by the terms of the agreement, principals and both were debtors, and if any other relation existed, it was not shown. The company had the same right to apply the cash surrender value to the loan as to both that it had to either. That the company gave notice to the husband and not to plaintiff was not prejudicial to plaintiff, for it was under no obligation to give notice to either. Neither was there any waiver by defendant of plaintiff's rights because it failed to collect the loan when originally due. Deferring the exercise of its right to cancel the policy by delaying to enforce the agreement ought not to be regarded as a waiver of defendant's rights, for it was a benefit rather than a detriment to plaintiff. The code provides (Civ. Code, sec.
Since the argument of the cause our attention has been called to the very recent case of Sherman v. Mutual Life Ins. Co. (Wash.), 102 P. 419. In that case the same company was defendant as here, and the same form of agreement was entered into between the parties under like circumstances. It was there held that the contract was valid; that the stipulation as to cancellation is not waived by an extension of the date of payment of the loan; that no notice of intention to cancel the policy was necessary; and that the company had the right, upon default in payment of the loan, to cancel the policy.
5. Defendant had judgment for costs. The allowance of costs is a matter of statutory regulation. Plaintiff is entitled to costs, of course, "in an action for recovery of money damages, when plaintiff recovers three hundred dollars or over." (Code Civ. Proc., sec. 1022, subd. 3.) "But no costs can be allowed in an action for the recovery of money or damages, *399
where the plaintiff recovers less than three hundred dollars." (Code Civ. Proc., sec. 1025.) It was held in Anthony v. Grand,
The judgment is modified by striking out that part thereof which provides that "defendant have and recover of and from Ida F. H. Frese, plaintiff, its costs incurred herein," and as thus modified the judgment is affirmed.
Burnett, J., and Hart, J., concurred.
A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on November 26, 1909.