author: HOUSER, Commissioner.

text:
    Sarah G. FAYMAN and Sam J. Stone, Assignee, Appellants, v. FRANKLIN LIFE INSURANCE COMPANY, Respondent.
    No. 50735.
    Supreme Court of Missouri, Division No. 1.
    Jan. 11, 1965.

      Frank C. Mann, Bob ICeeter, Mann, Walter, Powell, Burkart & Weathers, Springfield, for appellants.
    Neale, Newman, Bradshaw, Freeman & Neale, Jean Paul Bradshaw, O. J. Taylor, Springfield, Frederick H. Stone, Springfield, Ill., of counsel, for respondent.
   HOUSER, Commissioner.

Action in four counts on four ordinary life insurance policies issued by Franklin Life Insurance Company on the life of Moe Fayman. Plaintiffs are Sarah G. Fay-man, beneficiary, and Sam J. Stone, as-signee. Loans on each of the policies, made on insured’s application pursuant to policy provisions, remained unpaid at the death of the insured. The company tendered $18,013.58, which represented the face amount of the policies, plus certain additions because of interest, less the amount due on the loans. Plaintiffs rejected the tender and filed suit for the face amount of the policies, $35,000, plus interest, 10% penalty for vexatious delay, and attorney’s fees. Tried to the court without a jury, judgment was rendered for $18,013.58. Plaintiffs have appealed. The amount in dispute, excluding interest and costs, is $16,-656.72.

The case was tried on a stipulation of facts, certain documentary evidence, and oral testimony on two issues on which the parties could not agree. We find the facts to be as follows:

The company issued policies which will be referred to as policies 1, 2, 3 and 4, on the life of Moe Fayman. Policy 1 was issued in 1933, the other three in 1956.

Each policy provided a 31-day grace period for the payment of premiums.

Each policy contained a nonforfeiture provision substantially the same as that appearing in policy 1, the pertinent portions of which follow:

“Non-Forfeiture: This Policy is automatically non-forfeitable as follows: After premiums on this Policy shall have been paid in cash for three full years, if any subsequent premium is not paid before the expiration of the period of grace herein allowed, this Policy will, without action of the Insured or payment of further premiums, continue as non-participating paid-up term insurance for the principal sum insured, but without loan values, as follows: * * * * * *

“2. If there is any indebtedness to the Company hereon, such indebtedness shall be deducted from the net value of the term insurance provided for in paragraph I above, computed according to the American Experience Table of Mortality with interest at the rate of three and one-half per cent per annum, and the insurance will' be for such term, reckoning from the due date of the unpaid premium, as the excess of such net value over the indebtedness will purchase at the Insured’s then attained age at net single premium rates by the mortality table and interest rate aforesaid. In lieu of such term insurance, upon the Insured’s written request and legal surrender of this Policy within thirty-one days from the due date of the unpaid premium, the Company will

“(a) Issue a non-participating paid-up life policy payable at the death of the Insured for such amount as the excess above referred to will purchase at the Insured’s then attained age at net single premium rates by the mortality table and interest rate aforesaid, or,

“(b) Pay the cash value specified in Column 3 of the table below, less such indebtedness, provided that the payment thereof may be deferred by the Company for a period not exceeding three months from date request is received.”

Each policy contained an automatic premium loan provision that any premium remaining unpaid on the last day of grace would be advanced by the company if the cash value of the policy exceeded any indebtedness to the company by an amount sufficient to pay the premium. This provision was revocable at any time with respect to premiums subsequently becoming due by filing with the company at its home office a written request signed by the insured and any assignee of record.

Policies 2, 3 and 4 provided in Section H relating to policy loans that “[t]he whole or any part of any indebtedness may be repaid at any time before default in payment of premium.”

Insured had a wife, Sarah, and two married daughters. The sons-in-law were Sam J. Stone and A. B. Kerschenbaum, hereinafter “Mr. S” and “Mr. K.” For years insured was in the jewelry business. For several months prior to his death plaintiffs and Mr. K knew that insured was suffering from cancer of the pancreas. Insured entered a hospital February 8, 1962 because of that illness, and died therefrom on March 8, 1962.

Sometime prior to September 29, 1961 Mr. S, an experienced life insurance underwriter, inquired of defendant concerning the amount of reserve available for the payment of premiums under the automatic loan provision of policies 1, 2, 3 and 4, as well as other policies written by the company on insured’s life. The company answered that policy 1 had sufficient value to continue in force by means of the automatic premium loan provision, but that policies 2, 3, and 4 did not; that if premiums then due were not mailed within the grace period those three would lapse and “The Extended Term Insurance Provision will go into effect, and the protection will continue to the dates shown in the chart.” A memorandum •showing these dates was attached. Mr. S continued thereafter to handle the payment of premiums and other affairs of insured relating to these and several other policies of insurance on his life. Premiums coming due were paid by check but on one occasion the automatic premium loan provision was used to pay premiums due on policy 1. On October 19, 1961 insured gave Mr. S a general power of attorney to manage, operate, sell, liquidate or otherwise dispose of his jewelry business. On October 21, 1961 Mr. S asked the company to calculate the net cash value of each policy as of January, 1962 and the additional amount necessary on each policy to permit it to go on extended term insurance for the full face amount for periods of 1, 2 and 3 years. This information was supplied. On February 17, 1962 Mr. S requested the same calculations as of the premium dates coming due in March and April, 1962 and the date to which the net cash value would provide extended term insurance for the face amount of the policies; and how much of

the existing loan would have to be repaid to extend the term for 3, 6, 9 and 12 months from the premium date. The actuarial calculations were made and after a personal conference between Mr. S and a company representative the company wrote Mr. S a letter on March 2, 1962, attaching a chart showing the adjustments necessary on each policy to continue to furnish extended insurance protection to certain dates in June and September. The chart showed that a loan repayment in the total sum of $420.75 would be necessary to accomplish this as to policies 2, 3 and 4; that policy 1 had more than adequate reserve to extend the insurance to September, 1962. The letter stated that “All of the calculations on the attached chart are on the assumption that the contracts will lapse as of the date to which premiums are complete. As you know, each contract contains an Automatic Premium Loan Provision which must be removed and the forms I gave you when you were in the office will have to be returned promptly.” On the same day, March 2, 1962, a general power of attorney was executed by insured constituting Mr. K his attorney to act for him with respect to his property, including his life insurance, and Mr. K wrote the company enclosing a power of attorney, but mistakenly sending the company Mr. S’s power of attorney relating to the jewelry business (not Mr. K’s power of attorney relating to insurance matters), together with signed requests for revocation of the automatic premium loan provision. The letter, which was also signed by Mr. S, as assignee, requested “Said revocation to be effective this date.” (The reason Mr. S signed as assignee: on November 14, 1961 insured had assigned the policies to Mr. S to secure a debt of approximately $1490 owed by insured to Mr. S. Out of the proceeds of the policies Mr. S’s debt was to be paid, balance to be paid to the beneficiary.) Mr. K’s letter of March 2 was received by the company March 5. On March 3 Mr. K, realizing his error, wrote another letter enclosing his own power of attorney. The letter of March 3 was received in the company’s office in due course (date not reflected by record). The company never took action on this request for revocation. (There is no provision in the policy requiring the company to take action thereon.)

Insured had borrowed from the company a total of $17,031 on the four policies. That amount remained unpaid at the time of his-death.

The premiums on policy 1 were paid to April 30, 1962; on policy 2 to March 4, 1962; on policy 3 to March 5, 1962 and on.: policy 4 to April 5, 1962.

As of March S, 1962:

Policy 1 Policy 2 Policy 3 Policy 4
Net value 6,244.20 4,005.00 3,264.38 4,325.00
Indebtedness due 5,870.59 the company 4,004.28 3,078.75 4,077.50
Excess of net value 373.61 over indebtedness .72 185.63 247.50

If the nonforfeiture provisions of the policies were applicable under the facts and circumstances of this case the above excesses of net value over indebtedness to the company would have provided paid-up term insurance as of March 5, 1962 for the face amount of the policies from March 5, 1962 to the following dates: Policy 1, July 13, 1962; Policy 2, March 7, 1962; Policy 3, June 13, 1962; Policy 4, June 13, 1962.

If the excess of net value over indebtedness as to Policy 2 had been greater by the sum of $274.30, such total excess would have been sufficient to provide paid-up term insurance in the face amount of the policy to a date beyond March 8, 1962.

On March 8, 1962 a registered letter was received in the mail room of the company’s home office at Springfield, Illinois, delivered by the regular letter carrier, addressed to the company, to the attention of Mr. Evans, Supervisor of General Services Section, relating to policies 1, 2, 3 and 4, signed by A. B. Kerschenbaum, “POWER OF ATTY FOR MOE FAYMAN” and Sam J. Stone, “ASSIGNEE.” Dated March 6, 1962, it was postmarked Springfield, Missouri, March 6, 1962. It bore a Springfield, Illinois postmark March 7, 1962. The time of day it was received in the company’s mail room is not in the record but in the ordinary course mail reached that room’ between 9 and 9:30 o’clock a. m. A check for $440.75 was enclosed. The writers of the letter indicated their “desire to put all policies under the extended term option for their respective face amounts.” Their explanation for the difference between the-$420.75 and the $440.75 was -as follows: “Because of the desire to effect these exchanges as of March 5th, instead of March-8th, as was calculated and set up in your letter of March 2nd, we have included in-our check ($440.75) an additional $20.00, to-allow you to make the desired and necessary adjustments.” The letter stated specifically the portion of the $420.75 included' for the purpose of extending policies 2, 3- and 4 to specified dates in September, 1962. It recited that according to their interpretation of the company’s calculation policy 1 had more than adequate reserve “to extend the insurance to the date desired.”" The company was requested to use that-reserve to extend the insurance “for as long-as that reserve allows.” Also enclosed were four separate applications for exchange of policies 1, 2, 3 and 4 and the issuance in lieu thereof of four new policies in the same face amounts as the old, to be dated March 5, 1962. The plan of insurance of' the new policies was to be “Extended 'Term.” Sarah G. Fayman was to be named -as direct beneficiary. The wives of Mr. S and Mr. K were to be named as contingent beneficiaries. The applications were signed by Mr. S as assignee, and Mr. K, “Power of Atty for Moe Fayman.” In the case of policies 2, 3 and 4 it was requested that the appropriate amount of the enclosed check be applied “to reduce loan before ■making exchange.” Policy 4 was enclosed, with the statement that policies 1, 2 and 3 would be received under separate cover.

The person in charge of the mail room delivered the letter unopened to the policy •owners’ service exchange department. On the back of the envelope and the letter a time stamp recites “Mar 8 11:49 A.M. ’62 Policy Owners Service Exchange.” There is no testimony as to when the stamp was affixed with reference to the time the letter was delivered to that department. Moe Fayman, the insured, died at 11 a. m. on March 8, 1962.

The company returned the $440.75 check to Mr. S, rejecting the applications for ■exchange of policies for the reason, among ■others, that the applications “are for an exchange to a plan of insurance — extended term' — which the Company does not issue. Extended term insurance or paid-up term insurance, as it is referred to in the policies, is the Automatic Nonforfeiture Provision if a premium is not paid before the expiration of the period of grace. Paid-up term insurance can only become effective upon default in premium payments at the end of the grace period.” It was pointed out that the policies “do not expressly provide for any change in the plan of insurance. Consequently, any change in a plan of insurance can only be made with the consent of the Company. It is our general practice to require evidence of insurability satisfactory to the Company before permitting a change from a permanent plan of insurance to a term plan of insurance. As previously pointed out, however, the Company does not issue an extended term plan of insurance.” While the company did not have a plan of insurance identified or known as “extended term insurance” for original issuance, it was the intent and purpose of Messrs. S and K, by their letter of March 6, the enclosure of the applications for exchange, and the revocation of the automatic loan provisions of the policies, to put into effect paid-up term insurance as of March 5 for the face amounts of the policies. In the company’s letters and charts the terms “paid-up insurance,” “extended term insurance” or “extended term,” were used synonymously and interchangeably and in their use the parties were talking about the same thing, namely, the “paid-up term insurance” referred to in the nonforfeiture clause.

Whether the beneficiary and assignee are entitled to the face amount of the policies plus interest or only the difference between that figure and the amount due on the policy loans depends upon whether the nonfor-feiture provisions became operative and went into effect prior to March 8, the date of insured’s death.

Plaintiffs’ theory is that the nonforfeiture provision of each policy constituted a continuing offer by the company to the insured, giving the insured an option upon acceptance of the offer to take either extended term insurance, paid-up life insurance, or the cash surrender value of the policies; that the letter of March 6 constituted an election to create a default in the payment of premiums, and did create such a default, and amounted to an acceptance of the company’s continuing offer to take extended term insurance in the face amount of each of the policies; and that the acceptance of the offer was effective when posted in the United States mail on March 6, two days before the insured’s death.

Plaintiffs’ theory may not be sustained. Their contention is based upon the nonforfeiture provisions of the policies and the provisions of the nonforfeiture statutes, §§ 376.630, V.A.M.S. et seq., which are as much a part of these policies as if written therein. Doty v. American Nat. Ins. Co., 350 Mo. 192, 165 S.W.2d 862, 143 A.L.R. 1062. The purpose of the nonforfeiture statutes was to prevent the unfair situation which existed before their enactment in which insurance companies could forfeit and keep all of the net value of a policy when it lapsed, Magers v. Northwestern Mut. Life Ins. Co., 348 Mo. 96, 152 S.W.2d 148, 151; “to prevent the forfeiture of the policy reserve when the policy lapsed for nonpayment,” Doty v. American Nat. Ins. Co., supra, 165 S.W.2d, 1. c. 867 [6]; “to secure to an insured who has paid premiums for 3 or more years substantially what the excess of his contributions over the cost and expense properly attributable to the carrying of his insurance to the date of lapse will purchase in the way of extended or paid-up insurance,” Columbian Nat. Life Ins. Co. v. Griffith, C.C.A. 8 Cir., 73 F.2d 244, 245 [1]; Cleaver v. Central States Life Ins. Co., 346 Mo. 548, 142 S.W.2d 474, 481 [7], 129 A.L.R. 1094. Under the non-forfeiture statutes, §§ 376.630, V.A.M.S. et seq., and the judicial decisions construing them, the law jealously guards and protects the rights of policyholders in the excess reserves built up in the early years of level premium life insurance policies. The benefits conferred by these statutes cannot be abrogated, waived, or contracted away, either by agreement in the policy or by agreement made between the parties prior to default. If any advance agreement is made for the disposition of the reserves upon default for which statutory authority cannot be found it is unenforceable and void. The public policy involved overrides the freedom of contract of the parties before default with reference to these benefits and prior to the time the nonforfeiture statutes become effective (although thereafter the holder and the company can make any further agreement they desire). These rules are made for the benefit and protection of policyholders, to insure that at the moment of default their rights in the excess reserves shall be vouchsafed to-them. This arm of protection thrown around policyholders, however, gives them no rights to these benefits except in conformance and compliance with the statutes and policy provisions. Plaintiffs, seeking the benefit of the nonforfeiture statutes, must accept the conditions they impose, Sanderson v. Postal Life Ins. Co., C.C.A. 10 Cir., 72 F.2d 894, 897 [4, 5, 6], and are bound by the terms and provisions of the policies relating to nonforfeiture, just as their insured was bound thereby. Couch-on Insurance 2d, Vol. 6, §§ 32:161, p. 386 and 32:182. The nonforfeiture statutes plainly reveal that the right to the extended or paid-up insurance or cash benefits they preserve for the legal holder of a policy of life insurance begin at the time when, but for the statutes, the policy would “be forfeited or become void by reason of nonpayment of premiums thereon”; begin "at the time of default of premium” — “at the date of lapse.” Judicial utterances with respect to the time nonforfeiture benefits take effect confirm that they were written into life insurance policies in contemplation of the situation in which a lapse of the policy for nonpayment of premiums has occurred; that a nonforfeiture clause has nothing to do with a “live” policy but “deals wholly with a lapsed policy,” prescribing the various automatic and optional forms in which the insured may receive the benefit of “such value as [it] has as [a] lapsed” policy. Willingham v. Equitable Life Assur. Soc., C.C.A. 5 Cir., 86 F.2d 72, 75 [3]; Magers; Doty; Cleaver; Griffith, supra.

We will assume that the action taken by Mr. K on March 2 and 3 effectively revoked the automatic premium loan provisions of the policies as of March 6; that Messrs. S and K had full authority to act for the insured in sending their letter of March 6, and that the date of the posting of the letter of March 6 is to be considered as the effective date the company was notified of the insured’s desire to make a change. Even so, the letter of March 6 did not constitute the acceptance of a continuing offer, or the exercise of an option to take extended term insurance, as argued by plaintiffs. The policies were to become nonforfeitable automatically after payment of premiums for three full years if any subsequent premium should not be paid before the expiration of the grace period, but the nonforfeiture provisions for paid-up term insurance do not constitute an option in the sense in which plaintiffs use the term. While the provision for extended insurance equal to the face of the policy has been referred to as an “automatic option,” Columbian Nat. Life Ins. Co. v. Griffith, supra, 73 F.2d, 1. c. 245 [2], this means merely that paid-up term insurance will go into effect upon default in payment of premium and expiration of grace period unless insured takes certain prescribed affirmative steps during the grace period so as to avail himself of one or the other of two optional benefits. Nor do the nonforfeiture provisions constitute continuing offers which may be accepted by insured at any time before lapse, whereby a contractual arrangement for the disposition of the policy reserve different from that contained in the nonforfeiture provisions may be entered into prior to default, as plaintiffs contend. Instead of constituting an offer or option the nonforfeiture provisions for paid-up term insurance were contractual rights to which this insured would become entitled upon failure to pay subsequent premiums, expiration of grace periods, and lapse of the policies. When these things happen, i. e., after the policies shall have lapsed, the insured without any action on his part automatically would become entitled to temporary extended insurance for the principal sum insured for the time the excess of net value over any indebtedness due the company would buy insurance. The only real options were those provided for in paragraphs 2(a) and (b) of the non-forfeiture provisions: a paid-up policy for life for a reduced amount, or the cash surrender value.

On March 6 the premiums on policies 1 and 4 had been paid to April 30 and April 15, respectively. On March 6 the premiums on policies 2 and 3 were overdue (two and one days, respectively), but they were “live” policies, because well within the 31-day grace period. Thus on March 6 all four policies were in full force and effect, subject to the repayment of loans, none having lapsed by expiration of the grace period after nonpayment of loans. None of the things had occurred on March 6 which under the policy provisions had to occur before the nonforfeiture provisions automatically would become operative so as to provide extended insurance. No “subsequent premium” was left unpaid “before the expiration of the period of grace.” None of the policies had lapsed. By the letter of March 6, mailed two days before insured’s death, the four policies were sought to be surrendered and, depending upon the construction to be placed upon the letter and its enclosures, insured through his attorney in fact and assignee sought either to continue the existing policies under extended term insurance, or to exchange them for new policies to be issued under an extended term plan. The new extended insurance coverage was intended to commence operation retrospectively as of March 5, and continue thereafter until September, 1962, for the full amount of the policies.

Under the policies as written the company, in case of insured’s death during the grace period following a default in the-payment of a subsequent premium, had a legal right to deduct from the face value of the policies the amounts loaned to the insured. Neither the insured nor his attorney in fact or assignee could take that right away from the company by the unilateral act by which they attempted to accelerate the effective date of the extended insurance coverage. At no time prior to the date of lapse could the company have avoided the terms and conditions of the policies as written, Bramble v. Kansas City Life Ins. Co., 349 Mo. 318, 160 S.W.2d 746, 750 [7], and in like manner the insured, his nominee, assignee, and beneficiary, cannot avoid the terms and conditions of the policies which required a lapse of the policies before they could enjoy the full benefits of the policies without deduction for the policy loans. The nonforfeiture provisions upon which plaintiffs are obliged to rely preclude the right to extended insurance under any other circumstances. Fidelity Mut. Life Ins. Co. v. Heltsley, 254 Ky. 453, 71 S.W.2d 1017, 1. c. 1020. To hold for plaintiffs we would be obliged to write an additional provision into the contract giving insured an election to surrender the policies and invoke the provisions for paid-up term insurance before the expiration of the grace periods. We are not at liberty to so rewrite the policies. Unilateral action on the part of the insured by which he could surrender the policies and invoke the extended insurance benefits, prior to lapse of the policies, was not authorized or contemplated by any provision of the policies. Under the policies as written, which were in full force and effect and none of which had lapsed, insured, his attorney-in-fact and assignee, had no right in advance to elect to create a default in praesenti, or hasten the time within which the policies would normally lapse by nonaction and passage of time, or otherwise accelerate the time when the automatic provision for paid-up term insurance would become operative, and there is no statutory authority for the method by which it was attempted to dispose of the reserves on an anticipated default. The letter of March 6 was ineffective to accomplish its purpose.

Plaintiffs cite Lovell v. St. Louis Mut. Life Ins. Co., Ill U.S. 264, 4 S.Ct. 390, 28 L.Ed. 423; Lipman v. Equitable Life Assur. Soc. of U. S., C.C.A. 4 Cir., 58 F.2d 15; Manhattan Life Ins. Co. v. Allison, 100 Colo. 1, 64 P.2d 1265, and Fennell v. John Hancock Mut. Life Ins. Co., 256 Ala. 15, 53 So.2d 556, in support of the right of this insured at his option to create a default before a premium due date in this situation. In Lovell insured asked for the issuance of a paid-up policy in a reduced amount, a request against his own interest since he was entitled to insurance for the full amount until default; furthermore, neither agent nor company made any objection to surrender in advance. In Lipman the non-forfeiture provision made no reference to the grace period and the different policy provision, describing insured’s right as an “option,” was such that it could be construed not to make insured’s right to exercise the option await the lapse of the policy. In Manhattan the eléction to take the cash surrender value was made during the policy period to take effect upon default in the payment of premium (not retrospectively) and the acts necessary to effectuate cancellation took place after default. In Fen-nell insured’s election to surrender the policy for its cash value and the actual surrender of the policy was accepted by the company, which issued its check in payment of the cash value and sent the check to its agent for delivery to insured, before there was any default in paying the premium on the due date. Without elaborating on other distinguishing features of these cases, we find them not persuasive.

This disposes of plaintiffs’ contentions if the letter of March 6 be construed as an attempt to continue the existing policies under extended term insurance. Plaintiffs have no better rights if the letter be construed as an effort to exchange the old policies for new ones. The applications for exchange requested the issuance of new policies on a different plan of insurance— extended term instead of ordinary life— which was not issued by the company as an independent plan of insurance. Predating of the policies as of March 5 was requested. A different beneficiary arrangement (adding the daughters as contingent beneficiaries whereas they were so designated in only one of the four existing policies) was specified. No evidence of insurability was submitted (insured was in extremis and died two days later), although it was company practice to require such evidence before exchanges were made. Only the president or secretary had power on behalf of the company to modify the contract, and there was no provision authorizing an exchange of policies at the time and in the manner sought to be accomplished by the letter of March 6. The repayment of a portion of the loan on policy 2 on March 6 was tardy under Section H, which allowed repayment of policy loans “at any time before default in payment of premium.” Accordingly, the letter of March 6 and its enclosures, not being an action taken under any provision of the policies, would have to be considered as an offer on the part of insured for a special contract. Such an offer would require acceptance by the company before the policies requested to be issued in exchange would become effective. The offer was not accepted and was revoked by insured’s death on March 8. Landy v. New York Life Ins. Co., 170 Misc. 942, 11 N.Y.S.2d 622; Murphree v. National Life & Accident Ins. Co., 168 Miss. 667, 150 So. 534, 1S1 So. 748; Gram v. Mutual Life Ins. Co., 300 N.Y. 375, 91 N.E.2d 307; Fidelity Mut. Life Ins. Co. v. Heltsley, supra.

Appellants argue that the 31-day grace period referred to in Section B and in the nonforfeiture provision of each of the policies “is a provision solely for the benefit of the insured” and that it is capable of being waived, and was waived by him “in connection with his option to elect to take extended term insurance.” The grace period provided for in Section B, allowing the late payment of premiums, is not involved for there is no question in this case respecting the late payment of premiums. The grace period referred to in the non-forfeiture provision is not “solely for the benefit of the insured.” Under certain circumstances the grace period provided for in the nonforfeiture provision is for the benefit of the company. Under the circumstances of this case the death of insured during the grace period, i. e. before the policy lapsed, would have been considerably more to the advantage of the company than his death after the expiration of the grace period. If the death occurred before lapse the company’s liability was approximately $18,000, because in such case the indebtedness would first be subtracted from the face amount of the policies. But if the death occurred after lapse (in which case the indebtedness would be absorbed and paid out of the net value of the policies) the company’s liability would have been the face amount of the policies, $35,000, plus certain additions for interest, under the provisions for extended insurance. The occurrence of a lapse under the terms and conditions of the policy as written made the difference. Absent a lapse the nonforfeiture provision would not be activated. The company had a right to insist upon the expiration of the grace period provided for in the nonfor-feiture provision, and plaintiffs could not waive the company’s right thereunder.

When the insured died on March 8 the nonforfeiture provisions of the policy had not yet become operative. The beneficiary and assignee of insured were entitled only to the difference between the face amounts of the policies plus additions for interest and the amounts of the policy loans. The judgment is affirmed.

WELBORN and HIGGINS, CC., concur.

PER CURIAM.

The foregoing opinion by HOUSER, C., is adopted as the opinion of the court.

HYDE, P. J., and HOLMAN and HENLEY, JJ., concur.

DALTON, J., absent

      . State ex rel. and to Use of Heuring v. Allen, 342 Mo. 81, 112 SW.2d 843, 846; Cleaver v. Central States Life Ins. Co., supra; Bramble v. Kansas City Life Ins. Co., 349 Mo. 318, 160 S.W.2d 746; Gooch v. Metropolitan. Life Ins. Co., 333 Mo. 191, 61 S.W.2d 704; Liebing v. Mutual Life Ins. Co., 269 Mo. 509, 191 S.W. 250; State ex rel. Clark v. Becker, 335 Mo. 785, 73 S.W.2d 769; Burridge v. New York Life Ins. Co., 211 Mo. 158, 109 S.W. ,560; Cravens v. New York Life Ins. Co., 148 Mo. 583, 50 S.W. 519, 53 L.R.A. 305.

      . State ex rel. and to Use of Heuring v. Allen, supra, 112 SW.2d, 1. c. 846.

      . Gooch v. Metropolitan Life Ins. Co., supra, 61 SW.2d, 1. c. 707.

      . Bramble v. Kansas City Life Ins. Co., supra, 160 SW.2d, 1. c. 749 [3]; State ex rel. Adams v. Allen, 343 Mo. 1191, 1200, 125 S.W.2d 854, 859.


source: Caselaw Access Project

author: HENLEY, Judge.

license: Public Domain

text:
    Harold R. WOODS, Appellant, v. The KANSAS CITY CLUB, a Corporation, Respondent.
    No. 50766.
    Supreme Court of Missouri, En Banc.
    Dec. 14, 1964.
    Rehearing Denied Jan. 11, 1965.
    William D. Cosgrove, Kansas City, for appellant.
    William H. Leedy, John M. Mahota, Gage, Hodges, Park & Kreamer, Kansas City, of counsel, for respondent.
   HENLEY, Judge.

This is an action for actual and punitive damages for alleged failure of the defendant corporation, as the former employer, to furnish plaintiff, as the discharged former employee, a so-called service letter in compliance with § 290.140, RSMo 1959, V.A. M.S. We will continue to refer to the parties by the designation they bore in the trial court.

The verdict and judgment was for plaintiff for One Cent actual damages and Fifteen Thousand Dollars punitive damages. A voluntary remittitur by plaintiff of One Dollar of the punitive damages reduced the final judgment to One Cent actual damages and Fourteen Thousand Nine Hundred Ninety-nine Dollars as punitive damages. The Court sustained defendant’s motion for a new trial and plaintiff appealed to the Kansas City Court of Appeals. The Court of Appeals affirmed the order of the trial court and after handing down its opinion, on motion of plaintiff, transferred the cause to this Court. We determine the case as on original appeal. Civil Rule 84.05(h). (All references to Statutes and Rules are to V.A.M.S. and V.A.M.R., respectively.)

Briefly, the basic facts are: After serving in the employment of defendant as “a cold meat man” or assistant chef for more than five years, plaintiff was discharged by defendant on information that he had taken food out of the kitchen against the corporation’s rules. Plaintiff requested of defendant that he be furnished a service letter in compliance with § 290.140. Defendant furnished plaintiff with a letter stating: “In response to your letter of December 8, I would advise that you were employed by the Kansas City Club October 25, 1954, as an assistant cook. Your employment continued until November 30, 1959, when your services were terminated for infractions of our rules.”

As stated above, after judgment for plaintiff, the Court sustained defendant’s motion for new trial, the order (entered on the 90th day after it was filed) being “defendant’s motion for new trial [is] by the Court sustained for error in giving plaintiff’s instruction No. 2.” The record shows the following entry at the close of all the evidence: “The Court: Let the record show that the Court gives instructions numbered one, two and three offered by the plaintiff, to the giving of which (sic) each of which the defendant duly objects and excepts.” As will be noted, specific detailed objections to these instructions were not made by defendant at the time they were offered. See Civil Rule 79.01. The pertinent portion of defendant’s motion for new trial is: “Because the court erred in giving instructions numbered one, two and three at the request of the plaintiff and over the objections of the defendant.”

In assuming his burden of showing that the trial court erred in sustaining defendant’s motion for new trial, plaintiff contends, first, that because the defendant made neither specific objections to instruction No. 2 before submission as provided in Civil Rule 70.02 nor specific allegations of error in said instruction in its motion for new trial as required by Civil Rule 79.03, the court was “without authority” to sustain defendant’s motion for new trial and defendant is “without right” on appeal to support the court’s order sustaining the motion, and, second, assuming that Civil Rules 70.02 and 79.03 are not applicable, Instruction No. 2 contains no error and the court did not err in giving it.

As to his first contention, in the words of the first point in his brief filed in the Court of Appeals, plaintiff says, “The Court granted a new trial for giving plaintiff’s Instruction No. 2. This was error. The point was not preserved for review.” In his supplemental brief filed here plaintiff contends that Civil Rule 70.02 requires that specific allegations of error must be stated in the motion for new trial to preserve those errors for review by either the trial or appellate court. The Rule does not make the requirement advanced by plaintiff; the rule prescribes when specific objections to instructions need not be made, that is, that specific objections are not required before submission to the jury as a condition to preserving error for review “on after trial motion, or on review by an appellate court, if they are set forth in the motion for a new trial.” Plaintiff contends and argues that the allegations of error in defendant’s motion for new trial as to error in Instruction No. 2 are too general and therefore do not meet the requirements of Civil Rule 79.03; that because the allegations in the motion do not meet those requirements, whether the trial court erred in giving that instruction Is not preserved for review. He argues that whether the instruction was erroneous may not now be determined, and that whether the trial court ruled properly that it should not have given the instruction for error therein may not now be determined. We hold that neither Rule limits or restricts the trial court’s right to pass on its own errors. Civil Rule 79.03 prescribes, inter alia, when it is necessary that specific allegations of error in instructions must be set forth in the motion for new trial in order to preserve the error for appellate review. What was said by the St. Louis Court of Appeals in White v. Metropolitan Life Insurance Company, Mo.App., 218 S.W.2d 795, 798[2], before the adoption of Civil Rule 79.03 which supplanted Supreme Court Rule 3.23 referred to therein, is as true today as it was then. In that case, where the plaintiff-appellant made the same contention as is made in this, the Court correctly stated at 1. c. 798: “As for the contention that the motion for a new trial was insufficient under rule 3.23 of the Supreme Court, appellant overlooks the fact that the rule has to do with the sufficiency of such motions for appellant (sic) review and the trial court’s right to pass upon its own errors is not limited by the rule.”

Defendant’s motion for a new trial was sustained and defendant granted a new trial. On an appeal from an order sustaining a motion for new trial it has been said by this Court “that within the limit of the record brought up for review ‘ * * * it is not only our prerogative, but obvious duty, to review the action of the circuit court, and determine from the law and the facts of the case whether the circuit court exercised a sound judicial discretion * * * ’ in granting the defendant a new trial. Merriam v. St. Louis, C. G. & Ft. S. Ry. Co., 136 Mo. 145, 36 S.W. 630, 631. See also Bushman v. Bushman, 311 Mo. 551, 279 S. W. 122, 125 [2].” Loveless v. Locke Distributing Company, Mo., 313 S.W.2d 24, 27 [2]. Defendant’s motion for new trial having been sustained and it having been granted a new trial it is our duty to review, and we do review, the action of the trial court in granting defendant a new trial for the giving of an alleged erroneous instruction offered by the plaintiff. Motions for new trial were overruled and the movant' appealed in Hartz v. Heimos, Mo., 352 S.W.2d 596, 602; Sullivan v. Hanley, Mo.App., 347 S.W.2d 710, 711, 712; O’Brien v. City of St. Louis, Mo., 355 S.W.2d 904, 908 and Roddy v. General Motors Corporation, Mo., 380 S.W.2d 328, 331, cited by plaintiff. In those cases Civil Rules 79.01 and 79.03 were applicable because the movant appealed and the order overruling the motion made the judgment final. The cases are not applicable and do not support plaintiff’s position on this appeal. In Overton v. Tesson, Mo., 355 S.W. 2d 909, 913; Goodman v. Allen Cab Co., 360 Mo. 1094, 232 S.W.2d 535; Ridenour v. Duncan, Mo., 246 S.W.2d 765; and Roberts v. Emerson Electric Mfg. Co., Mo., 362 S.W.2d 579, 582, cited by plaintiff, the motion for new trial was sustained. Thé cases are to be distinguished from this case. In Overton, supra, the trial court sustained plaintiff’s motion for new trial and defendant appealed. The plaintiff failed to support the trial court’s action in sustaining his motion for the giving of an allegedly erroneous instruction. This court considered whether the instruction was erroneous, held that it was not and that the trial court had erred in granting the new trial for that reason. The court declined to consider another allegation of error not assigned as error in the motion. In Goodman, supra, the trial court sustained plaintiff’s motion for new trial and defendant appealed. The plaintiff failed to support the trial court’s action in sustaining his motion for new trial for the assigned reason of error in admission of incompetent and prejudicial evidence not objected to by plaintiff at the trial. This court considered the evidence and whether it was competent and considered whether the trial court had erred in admitting it. The Court held that the evidence was competent considering the theory on which the case was tried, and that the court had erred in granting the new trial. In Ridenour, supra, a suit to cancel deeds and to quiet title tried by the court,' the trial court sustained plaintiffs’ motion for new trial more than 30 days after it was filed and defendants appealed. The plaintiffs failed to support the trial court’s action in sustaining their motion for new trial for the reason assigned by the court in its order. However, this court considered other grounds assigned in plaintiffs’ motion as reasons for sustaining the order granting a new trial and affirmed the order of the trial court. In that case plaintiffs’ motion did not allege as grounds for new trial the reason given by the court for sustaining the motion. This court concluded that the order granting the new trial for the specified reason was on the court’s own motion and not having been made within thirty days the court exceeded its authority. Section 510.-370, RSMo 1959, V.A.M.S.; Civil Rule 75.01. The court went on to hold that plaintiffs have failed to sustain or support their contention that the ground specified in the trial court’s order was within other general assignments of error, and then considered and ruled upon what were, apparently, specific allegations of error preserved for appellate review in plaintiffs’ motion. Ride-nour, supra, in effect, infers that this court would have considered the referred to general allegations of plaintiffs’ motion since the motion was sustained, but that because plaintiffs failed to sustain or support their contention the ground specified by the trial court in its order was within those general assignments it would not do so. In Roberts, supra, a service letter case and a sequel to Roberts v. Emerson Electric Mfg. Co., Mo., 338 S.W.2d 62, hereinafter referred to, the trial court sustained plaintiff’s motion for new trial and defendant appealed. As to some of the reasons assigned by the triai court for sustaining plaintiff’s motion it is said (362 S.W.2d, 1. c. 582[2]) that the trial court’s order does not meet the requirement of § 510.370 and Civil Rule 75.01 that every order granting a new trial specify ' the grounds therefor; that,where it does not so specify the • presumption is that the trial court erroneously granted the new trial on those grounds and the burden of supporting the action of the court is on respondent. Civil Rule 83.06(b); As to these grounds the Court said plaintiff made no effort to support the trial court’s action, inferring that if the plaintiff had made an effort to support those grounds the court would have considered them. The giving of a cautionary instruction offered by defendant was alleged by plaintiff to be error and assigned by the trial court as one of the reasons for granting a new trial. This Court held that the instruction was properly given and that the trial court erred in sustaining plaintiff’s motion for that reason and the case was reversed and remanded for that and other reasons.

The plaintiff contends that the trial court did not have jurisdiction to sustain the motion for new trial on its own motion more than 30 days after judgment and cites Civil Rule 75.01. The rule is not.applicable here and the point is ruled against plaintiff.

Plaintiff contends that when Instruction No. 2 and Instruction No. 1 are read together it is clear that the court erred in sustaining defendant’s motion for new trial for the reason assigned, i. e., for the giving of Instruction No. 2. The two instructions follow, instruction No. 1 being:

“The Court instructs the jury that if you find and believe from the evidence that plaintiff was employed by defendant as an assistant cook for more than six months prior to his discharge, and that after his discharge, in writing, he requested defendant to give him a service letter, and that defendant gave him the letter identified in evidence as Exhibit 3; and if you find that said letter did not state the true reason of plaintiff’s discharge; and if you find that plaintiff did not violate defendant’s rule prohibiting the removing of food from the kitchen and did not violate a rule of displaying the contents of a package to the food checker on the 14th floor, if you find that either of said rules, in fact existed, then you are instructed that under the law plaintiff is presumed to have sustained nominal actual damages, and you should find in his favor for a nominal amount of actual damages.”; and instruction No. 2 being:
“The Court instructs the jury that if under Instruction No. 1 you find for the plaintiff, and if you further find that defendant acted willfully, maliciously and wrongfully, and without legal justification or excuse, you may award plaintiff punitive damages in such-sum as you may think proper under the evidence to punish defendant for said wrongful act and to serve as a warning to deter defendant and others from committing like wrongs in the future; and in assessing such damages you may take into consideration the net financial worth of the defendant.”

Defendant contends that the giving of instruction No. 2 was error for the reason the instruction did not limit the wrongful act of defendant for which plaintiff would be entitled to punitive damages to the one and only act of failure to state in the service letter the true reason for plaintiff’s discharge; that the instruction permitted the jury to consider as wrongful and malicious another act of defendant (i. e., plaintiff’s discharge by defendant) and assess punitive damages for that act. The instruction is subject to the objection made by defendant and the giving of the instruction was prejudicial error for which the trial court properly sustained defendant’s motion for new trial. See Roberts v. Emerson Electric Mfg. Co, Mo, 338 S.W.2d 62, 70 [8] in which this court was considering a punitive damage instruction quite similar to instruction No. 2 and the objection that it did not limit the wrongful acts to the failure of defendant to issue a service letter stating the true reason for plaintiff’s discharge. The Court said there: “ * * * it seems fairly certain that the jury did not understand that the ‘wrongful acts’ of the defendant was in fact only one matter, viz, defendant’s failure, if any to have furnished a proper service letter, and that plaintiff was not entitled to any damages, actual or punitive, by reason of any other ‘wrongful acts’ of defendant which the jury might find defendant had committed as to plaintiff, including e. g, failure to have continued plaintiff in its employ irrespective of plaintiff’s actions with respect to the temperature records.” For that and other reasons it was held that the instruction was reversibly erroneous.

Instruction No. 2 submits that the jury may find that defendant acted willfully, maliciously and wrongfully (1) in discharging plaintiff, and (2) in failing to furnish a service letter stating the true reason of plaintiff’s discharge. For only one of these acts could the jury assess punitive damages, i. e, failure to furnish a service letter stating the true reason for discharge, and it seems fairly certain that the jury did not understand that the wrongful act, if any, of defendant was confined to this act alone and that they were not to consider any other act of defendant they might deem wrongful in assessing damages.

Plaintiff contends that instruction No. 2 does not refer to wrongful acts of the defendant as does the instruction in the Roberts case last mentioned. The instruction in the case at bar does not use the plural form of the word but contrary to his contention the instruction does refer to acts for the word “acted”, as used in the instruction, refers to and includes one, or more, acts, when read with instruction No. 1. And that act or those acts may be either his discharge or the failure to furnish a service letter stating the true reason for discharge or both, the first of which the jury may not consider in assessing punitive damages.

In assuming for the sake of argument only that the jury may have considered his discharge as a wrongful act for which it might award punitive damages, plaintiff contends that instruction No. 4 offered by defendant and given invited the jury to consider that act and that defendant’s objection to instruction No. 2 is common to its own instruction. Instruction No. 4 submits facts which, if found by the jury, would preclude the existence of malice on the part of defendant in stating the reason for plaintiff’s discharge in the service letter furnished him; the instruction does not submit whether the true reason was stated as justification for the discharge, but rather whether defendant had reasonable grounds to believe and did believe that when the letter was written the true reason was stated. In the absence of malice on the part of defendant in failing to state the true reason for plaintiff’s discharge punitive damages could not be awarded. Franta v. Hodge, Mo.App., 302 S.W.2d 291 and cases there cited. The instruction did not join in the error complained of in instruction No. 2 and the point is ruled against plaintiff.

For the reasons stated, the order of the trial court sustaining the motion for new trial, setting aside the verdict and judgment and granting a new trial is affirmed and the cause is remanded for further proceedings.

All concur.

LEEDY, J., not sitting.


author: HYDE, Judge.

text:
    STATE ex rel. Charles W. KEELING, Relator, v. Honorable Alvin C. RANDALL and Honorable John H. Lucas, Judges of the Circuit Court of Jackson County, Missouri, Respondents.
    No. 50852.
    Supreme Court of Missouri, En Banc.
    Dec. 14, 1964.
    Rehearing Denied Jan. 11, 1965.
    Roy A. Larson, Jr., Kansas City, Sprinkle, Carter, Sprinkle & Larson, Kansas City, of counsel, for relator.

      C. Thomas Carr, of Sheridan, Baty,'Mar-key, Sanders, Edwards & Carr, Kansas City, for respondents.
   HYDE, Judge.

Original proceeding in prohibition to prevent dismissal without prejudice of action by Patrick McNellis against relator for loss of his wife’s services, which had been ordered consolidated with an action by his wife, Mary McNellis, against relator for personal injuries. After the cases were consolidated, Patrick McNellis filed a motion requesting the court to allow him to dismiss his action without prejudice; and the court indicated an intention to sustain this motion but withheld action so that defendant, relator herein, could make application for prohibition.

The question for decision is whether, at a time when an order of consolidation of two or more actions under Rule 66.01(b), V.A.M.R., is in effect, a plaintiff in one of the actions has the right to dismiss without prejudice. Our conclusion is that he does not have the right to do so after the order of consolidation has been made and while it remains in effect. We consider this to be the logical result of the principles established by our decision in State ex rel. Rosen v. McLaughlin, Mo.Sup., 318 S.W.2d 181, 68 A.L.R.2d 1366, involving consolidation of personal injury cases of four members of one family, riding in the same automobile which was struck from the rear by another automobile.

Rule 66.01 (b) is: “When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.”

Rule 67.01, on which respondents rely, states: "A plaintiff shall be allowed to dismiss his action without prejudice at any time before the same is finally submitted to the jury, or to the court sitting as a jury, or to the court, and not afterward.”

These rules must be construed in harmony together. As to dismissal without prejudice, it has been said, “We think the law is well settled that the right to dismiss a cause of action without prejudice under section 510.130, V.A.M.S., is not an absolute right.” Smith v. Taylor, Mo.App., 289 S.W.2d 134, 140; see also McClellan v. Sam Schwartz Pontiac, Inc., Mo.Sup., 338 S.W.2d 49. (Sec. 510.130, now Rule 67.01) Surely this should be true after cases have been consolidated. In the Rosen case, where the court making an order of consolidation of cases of four members of one family, included therein an order for completely separate trials in the cases it consolidated, we said: “The sustaining of the motions for consolidation, consolidated the four cases into one action. The court having validly exercised its discretion with reference to the facts and circumstances presented by the motions for consolidation could not immediately thereafter and on the same state of facts proceed to exercise his discretion and nullify the order for consolidation by ordering separate trials of the four cases. * * * The order for consolidation remained in effect and the order for separate trials in each case was a nullity and must be disregarded.” (318 S.W.2d 1. c. 185.) See also State ex rel. Buchanan v. Jensen, Mo.Sup., 379 S.W.2d 529, in which we prohibited enforcement of a claim in a separate action, which was required to be filed as a compulsory counterclaim under Rule 55.45.

As said in Sec. 941, Federal Practice and Procedure, Barron and Holtzoff: “It is obviously-in the interests of justice not to try issues piecemeal whenever it is reasonably possible to do otherwise.” We consider this particularly applicable in husband and wife suits based on1 the same single occurrence which are so necessarily-interrelated and dependent. Therefore, this court has adopted an amendment to Rule 66.01, designated 66.01(c), effective July 1, 1965, requiring such suits to be enforced in one action brought by both spouses. (Based on Pennsylvania Rules 2228 and 2232, 12 P.S. Appendix.) Our ruling in this case is confined to the situation presented, in which one spouse has sued for personal injuries and the other for loss of services, and we hold that after such an order of consolidation has been made by the court and while it remains in effect, one plaintiff may not be allowed to dismiss without prejudice.

After the court has exercised its discretion in the interests of justice in making the order, which is most proper in such husband and wife cases, one plaintiff does not have the right arbitrarily to have it set aside, which would be the effect of the dismissal right claimed by the plaintiff in the case for loss of services. We do not doubt the authority of the court to set aside an order of consolidation, in the proper exercise of its judicial discretion on a sufficient showing that it would be in the interests of justice; but so long as it remains in effect the parties are bound by it and the court has no authority to allow a dismissal without prejudice by one party while the order of consolidation remains in effect. Otherwise consolidation could only be voluntary, depending on the desires of parties instead of on the exercise of judicial discretion by the court. However, we call attention to the authority of the court under Rule 72.01 to dismiss without prejudice if justice so requires, upon a motion for directed verdict, which provides a safeguard for rights of parties in case of unexpected developments in a trial.

Our preliminary rule in prohibition is made absolute.

All concur except HENLEY and HOLMAN, JJ., who dissent.