159 Mo. App. 277 | Mo. Ct. App. | 1911
This is an action in equity to set aside and cancel a life insurance policy issued by defendant to plaintiff in exchange for a prior policy, to reinstate the old policy, and for other relief the nature of which will appear in the statement of the case. The circuit judge before whom the cause was tried filed a written statement and opinion which so comprehensively, clearly and accurately expresses our own views of the case' that we adopt them as our opinion. They are as follows: “Plaintiff, Calvin Green and Sophia A. Green, husband and wife, and, respectively, holder of and beneficiary in a life insurance policy, No. 57234, issued by defendant in exchange for a former policy, No. 7959, bring this suit in equity to set aside such exchange, cancel the new policy, reinstate the old, and to recover the excess premiums paid on the new policy.
“The ground of their complaint is that fraud was practiced by defendant’s agent, upon Calvin Green at the time of the exchange of such policies by obtaining, without Green’s knowledge or consent, his signature to a certain ‘certificate of loan,’ claimed .by defendant to have been executed simultaneously with the agreement to exchange policies, and with the application and payment of premium for the new one.
“The certificate of loan states that defendant has loaned on policy No. 57234 the sum of $299.10, which, with six per cent interest from date, to wit, October 17, 190-3, shall be a lien on the policy and shall be deducted from the amount due thereon when the policy is paid.
“The defendant is a fife insurance corporation organized under the laws of the State of New York and, by authority, doing a general life insurance business in the State of Missouri. Prior to 1899 it was known as Security Mutual Life Association, but in that year it was reincorporated and its name changed to the one by which it is sued.
“Green paid the premium required of him by this policy, and it was in full force and effect at the time he exchanged it for the new policy, as hereinafter stated.
“After defendant had reincorporated into its present status, it began getting the policy holders under the old regime to exchange their policies for others in the new organization, and one W. W. Simmerman was one of defendant’s agents engaged in this work.
“On May 11, 1904, Simmerman appeared at Carrollton, Missouri, where plaintiffs resided, and, over the telephone, arranged for Green to meet him at the hotel, and to bring his old policy with Mm. They met in the hotel lobby about 6 o’clock in the evemng. Simmerman introduced Mmself and told Ms business. He showed Mr. Green a copy of the new policy, and
“Simmerman, standing at his side, first handed him the application for the new policy and asked him to read it over, which Green did. Simmerman then laid the application to one side and handed Green the note, which Green read over and then signed. Thereupon Simmerman laid on the table the application— or what Green thought was the application — and indicated the place where Green was to sign and Green attached his signature. About two or three minutes elapsed between the time Green read over the application and the time he signed it. The moment Green finished signing his name, Simmerman quickly picked up all the papers and put them away, handed Green a receipt for his old policy and hurriedly left the hotel. The entire conversation and transaction did not occupy over fifteen or twenty minutes.
Neither the card given Green by Simmerman, nor the application which he read over before signing, contained any reference to a ‘certificate of loan,’ or other lien, whatever. And no mention is made of it in the new policy. It says it is “granted as of date October 17, 1893, in consideration of the surrender and cancellation of policy No. 7959 and of the application for said policy and the application for this policy and of the payment in advance, October 17, of $20.08 and of the payment of a like amount on or before the 17th days of October and April in every year thereafter until premiums for twenty years have been paid, or until the prior death of the insured.” These “payments in advance” evidently refer to the new premiums to be paid under the new policy, but even if they can be tortured into a cryptic reference to the “certificate of loan” as a payment in advance of all the premiums
“Green is positive that he was to execute only two papers, the note representing the first new premium, and the application, in order to effect the exchange; and he knew nothing of any certificate of loan, until in July, 1908, when, having learned that the company was claiming to hold one against his policy, he wrote to it asking if such were the fact, and in the latter part of that month received a reply in the affirmative. Suit was thereupon instituted early in August, 1908, to cancel of loan, and, after a trial at the January, 1909, term, non-suit was taken and the present suit instituted shortly thereafter.
“The application and the certificate of loan are printed on paper of the same color, size, shape and general appearance. The printing on each is similiar in type, size and arrangement on the page. The word ‘application’ on one, and the words ‘certificate of loan’ on the other are on the left-hand margin instead of at the top.
“By the terms of the certificate, there is nothing for the policy holder to do with reference to it, after it is once signed, which would call his attention to its
“I have studied the evidence carefully as it came-from the witness stand, and am convinced that Green knew nothing of any certificate of loan, nor was he in any way told that he would have to pay back premiums, or give a note for them, or create his own reserve fund, beyond what he had already paid. Under these circumstances does it matter much whether the old policy is an assessment or level premium policy? He is told the company will have to raise the rate, and, under the new, it is more than doubled; but, as a partial recompense for such great increase in the future, the policy is dated back to his old policy so as to give him the benefit of the payments he has made, and these greatly increased payments will cease at the end of ten years. All this without mentioning the certificate of loan, and in the face of his question as to whether he shall have to pay anything further. “
“The evidence shows that the signature to the certificate of loan is Green’s signature; but I am convinced beyond question in my own mind that he did not sign it knowingly. I am convinced of this from his testimony alone, when considered with the attendant circumstance and the motives and influences operating upon the agent, Simmerman. His conduct, his false statements in comparing the old and new policies, his-pretense of lack of time and great hurry, his demand for an immediate decision, all show an evident purpose to defraud. Several other policy holders testified to the same method of procedure on the part of Simmer-man with them; that they were not told of any neces
“Green having signed the certificate of loan without knowledge of it, was he guilty of negligence? I think not. He read over both the application and note before he signed them. They were the only obligations he was to incur in order to get the new policy, according to the representation and assurances made him. He was first handed the application and allowed to read it over, which he was careful to do. Then, before he could sign it, the application is laid to one side and he is handed the note to read and then is allowed to sign it. Then he is handed the application or what is apparently the application, he had read over a moment before, and he signs that also. It is during the few moments he is engaged in reading and signing the note that the agent performs his little feat of legerdemain by which the certificate of loan is slyly inserted in the routine of signing, and Green’s signature is obtained to that as well as to the application, both of which are as nearly alike as two papers of that character could possibly be.
“IL developed in evidence, on cross-examination, that he also signed a receipt surrendering a bond he held under the old policy, but as that was for an insignificant sum, possibly seventy-five cents, his failure to remember signing the receipt for that would not raise the presumption that he had also forgotten his signing an obligation for almost three hundred dollars. In fact, the requirement of this additional
“In addition to tMs, tbe parties to tMs suit are tbe same as they were at tbe time in controversery. No rights of innocent third parties intervene. Shall a court of equity close its eyes to tbe fraud and search out and pumsb tbe negbgence? If Green bad blindly and without question signed every paper put before Mm, without reading or being led to think be bad read them, be ought perhaps to be held to all contracts thus signed. But be did not do tMs. He was approached by tbe agent on an exceedingly techmcal subject, concermng wMcb be could not possibly inform himself; be is told numerous false statements concerning Ms status and rights therein; a new proposition on. tMs techmcal subject is presented to him; be is told that be has oMy two tMngs to do in order to get tbe benefit of tMs new proposition; sign a note and apphcation and surrender Ms old policy. He carefully asks if tbe premium stated is all that be will have to pay, and is assured that it is. He also takes tbe precaution to read over tbe obbgations be is to sign, and then, hurried by tbe agent, be signs what be thought be bad read over. Under these circumstances there was no negbgence such as would excuse tbe fraud. In fact, stricHy speaking, negligence never does excuse fraud. In those instances, where it is loosely said to do so, jt is rather negbgence taking tbe place of fraud; that
“It is contended by the defendant that plaintiff ought not to recover because the evidence does not show the precise method by which the signature was fraudulently obtained; and that defendant’s objection to the introduction of any evidence under the petition ought to have been sustained. In answer to the first part of this contention, it may be said that courts of equity, sitting to redress wrongs, are concerned more about the existence of the fraud than they are about the protean methods of its accomplishment. If, after uncovering a fraud, they must understand and follow all its devious and underground ways before smiting it with the power of their might, then, in many cases, they would be painfully weak and helpless.
“So far as the sufficiency of the petition is concerned, no motion to make it more definite and certain was filed, and the mere objection to the introduction of any evidence cannot prevail, provided the court has jurisdiction and the petition contains any cause of action however imperfectly stated. The petition in this case does not contain contradictory allegations that mutually destroy each other. If it did, the objection to the introduction of any evidence thereunder might be good. In substance, the petition alleges that the certificate of loan is not plaintiff’s act; that he never executed it; that if his genuine signature is to the instrument it was obtained fraudulently by substituting the certificate for the application, or by some other trick, whereby plaintiff’s signature was obtained without his knowledge or consent.
“The further allegation that the signature is perhaps not genuine, but was forged, is not contradictory of the fundamental allegation of the petition, namely, that the certificate of loan was never executed by him. The petition, therefore, did state a cause of action,
“Much more serious questions are raised, however, by defendant’s contention that plaintiffs ought not to recover; first, because Green did not rescend promptly and notify defendant thereof; second, that he did not, as a condition precedent to his right to rescind, tender back to defendant, either before suit or on trial, that which he had received under the new contract, and third, that he did not rescind in toto, but elected, after discovery of the fraud, to stand by the trade and to insist on his rights under the new policy. These features of the case embody the real difficulty the court experienced in reaching a satisfactory conclusion in the matter, and are what caused it to hesitate before rendering judgment herein.
“In arriving at a correct solution of these phases of the case, we must always bear in mind the peculiar relative position and situation of the parties hereto; and because of this, resort must be had to general principles rather than to adjudicated cases not based on similar facts.
“As hereinbefore shown, after Green’s signature to the certificate of loan had been once obtained, there was nothing to call his attention to it, and, therefore, he could not, by reasonable diligence, have discovered its existence. So that his delay in bringing suit from 1904 to 1908, and his payment of premiums on the new policy during that time, and his claiming insurance thereunder, ought not to be held against him. In the latter part of July, 1908, he learned for the first time of the existence of the certificate of loan, and received a copy of it. On August 7, thereafter, he instituted suit to cancel the certificate of loan, but did not ask for the reeission of the new and the reinstatement of' the old policy. After the evidence was submitted in the case at the January, 1909, term, plaintiff took a non-suit and on February 9,1909, instituted the present
“The second ground of defendant’s objection, noted above, that plaintiffs have not tendered before suit that which they have received under the new con
“The third ground of defendant’s objection to plaintiffs’ recovery is that Green did not rescind in toto, but, after discovering the fraud, elected to stand by the exchange and to insist on his rights under the new policy by paying the premiums thereunder. It will be remembered that up to the dismissal of the first suit in January, 1909, the case was not a suit to rescind at all. Plaintiff Green knew nothing of the certificate at the time he accepted the new policy, nor did he accept it as based on the certificate or as having anything whatever to do with it. Hence, his first suit was not to rescind a contract, but to have the court declare that a certain instrument defendant was claiming to be an obligation of plaintiffs was, in fact, no contract at all and had never been entered into. When, however, the evidence is adduced, and it is seen that, from defendant’s standpoint at least, the new policy was issued on the certificate as a part of the consideration and the two were therefore parts of the same transaction, plaintiffs dismiss the suit and ask that the entire new contract be annulled and the old reinstated. Consequently, until the dismissal of the first suit, plaintiffs were not required to relinquish their rights
“But having discovered that the two are inseparably connected, and haying brought this suit to set aside the entire new contract, will the payment thereafter of premiums called for in the new policy be such an affirmance and ratification of the policy and certificate as to preclude plaintiffs’ recovery?
“On this point, it is well to remember the reason for the requirement that persons seeking a recission must rescind in tolo. It is simply the maxim that ‘he who seeks equity, must do equity,’ and the reason the reason underlying this maxim is that the party must relinquish every benefit he has acquired under the contract he seeks to rescind in order that the parties may be placed in the same situation they were in before the obnoxious contract was entered into. Now, in what way are the plaintiffs refusing to do equity, or in what way are they refusing to give up any benefits they may have under the new policy? Certainly, since the institution of the new suit, they cannot be said to be claiming under it, since they are asking the court to cancel it. Can it be said that by paying the premiums under the new policy they are refusing to do equity or to put the opposite party in statu quof The premiums under the new policy are more than twice those under the old. Can the defendant complain of plaintiffs’ inequity because it receives from plaintiffs more than double the amount due under the contract which plaintiffs say should be reinstated? The paying of these increased premiums in not keeping back some of the benefits of the trade sought to be annulled. The show is on the other foot.
“But defendant urges that plaintiffs have had the benefit of the increased insurance during the years that have elapsed since the issuance of the new policy, and, since they have had it, they should not be allowed, at this late day, to rescind the contract. It might be well to inquire what additional insurance the plaintiffs received under the new policy over that in the old? The premiums under the new are more than double those of the old. The face of the two policies are the same, to wit, $1000. There are certain guaranteed additions in the new policy, but, with the certificate of loan in force, they will be promptly absorbed by it, and if the insured lives beyond the premium paying term of the policy (which would give the defendant the benefit of the greatest number of premiums) these additions cease, and the policy drops back to the face again; and upon the death of the insured, this face is to be rduced by the amount of the certificate loan with einterest. It is true the amount of money payable on the old policy is conditioned on the same being realized from the mortuary payments or from the reserve fund. There is no evidence, however, that these funds were insufficient to pay the face of the -policy either at the time it was exchanged or at any time during the years that have since elapsed. Hence, the advantage of the insurance under the new policy over that under the old is not established by reason of the provision in the old policy that the amount payable thereunder is dependent upon the funds on hand. If there is any additional insurance or increased benefit accruing to plaintiffs under the new policy over what they were entitled to under the old, the same is not readily apparent. Defendant’s actuary, Mr. Dickenson, admitted on the stand that during the twenty year period (which has not yet elapsed) the
“But conceding that under the new policy plaintiffs have had the benefit of increased insurance, still, will that prevent their rescinding in this particular case? The reason for refusing a recission where one party has obtained a benefit he does not restore, is that the parties cannot be placed in the same situation they were in at the time the contract was made. But that reason does not exist here. 'The parties can be restored to the situation they formerly occupied. It is true that in the years elapsing since the exchange, defendant, by the death of Green, might have been called on to pay under the new policy, but, as a matter of fact, it hasn’t; and the defendant’s situation has not changed. But even if it has, whose fault is it? Certainly not the plaintiffs.’ They did not secure the exchange of the policies. They were induced to accept the new policy without knowing the real consideration on which it was issued. This fact was fraudulently concealed from them by defendant’s agent. In such cases, the rule is that where the impossibility of restoring the status quo results from the fraud of the defendant, without any fault on the part of the plaintiff, recission will be granted and justice done between the parties as near as circumstances will permit. [24 Am. and Eng. Ency. of Law (2 Ed.), page 623; Paquin v. Milliken, 163 Mo. l. c. 107.]
“In my opinion, therefore, it having been established that plaintiff Green was induced to exchange policies and to pay additional premiums through fraud practiced upon him without fault or negligence on his part, and there being nothing to prevent the parties being placed in statu quo, the plaintiffs are entitled to have the exchange of policies set aside, the
“As to recovering the excess premiums paid up to and including October 17, 1908, there have been eleven premiums paid without knowledge of fraud, involving the integrity of the new policy. In each of these there was an excess payment of $10.52, aggregating the sum of $126.74. The interest on this excess sum amounts to $25.99, making in all, the sum of $152.73, together with two excess premiums paid since institution of suit, amounting to $21.04, aggregating $173.77, which plaintiffs are entitled to. recover in addition to having the other relief above stated. Decree in accordance herewith is therefore ordered.”
For the reasons stated by the learned circuit judge the judgment is affirmed.