REY v. MUTUAL BEN HEALTH ACCIDENT ASS OMAHA (1935)

This is an action to recover upon a policy of health and accident insurance issued by defendant association by which Dr. Charles R. Rey was insured, and in which policy plaintiff and respondent, Amy Rey, his wife was named beneficiary.

In 1933, Dr. Rey was killed in an automobile accident. The policy was issued in 1921, and provided for a death benefit of $4,000, and contained the further provision:

“Part B.

“Annual Increase Four Hundred Dollars Per Year.

“After the first year's premium has been paid, each year's renewal of this policy shall add Four Hundred Dollars to the death benefit until the same amounts to ($8,000.00) Eight Thousand Dollars.”

It is the claim of appellant that when the policy in question was issued as of April 20, 1921, one of its officers, namely, the chief underwriter, dictated a letter to Dr. Rey which was signed, “Mutual Benefit Health & Accident Association,” and attached to the policy, and the two were then mailed to Dr. Rey in the same enclosure. This letter in part reads:

“April 20, 1921.

“Dr. C. R. Rey, Tulare, California.

“* * * The policy which you applied for and which we issued calls for the payment of premiums on the annual plan, but at the request of our representative we are permitting you to carry this protection by the payment of premiums on the quarterly plan. Under the arrangement the sections under Part ‘B’ of your policy which refers to the ‘Annual Increase’ and the ‘Twenty Year Privilege’ will not be effective, but in all probability you will be in a position in the near future to tender your premiums on the annual plan, when you will be entitled to the additional protection. * * *”

Upon the death of the insured the company tendered to the beneficiary the sum of $4,000, which was refused. Thereafter this action was commenced by respondent for $8,000 under the policy.

It is conceded that the insured did not make payments upon an annual basis, but did for more than ten years pay the premiums in quarterly installments, and the policy was renewed from year to year.

The letter above referred to was set forth in full in the verified answer of defendant as a special defense. No affidavit was filed by plaintiff denying the genuineness and due execution of this instrument. It is the contention of defendant that this letter became a part of the policy and therefore came within the provisions of section 448 of the Code of Civil Procedure. Upon the trial the court found, however, that it was not true that on the 20th day of April, 1921, or at any other time, Dr. Charles R. Rey entered into an agreement set forth in the letter above referred to, and that it was not true that the letter was attached to said policy at the time the policy of insurance was delivered to Dr. Rey. The court also found that the insured paid the premiums accruing upon the policy and in all other respects paid, kept, and performed all of the agreements and conditions in said policy contained on his part to be kept and performed, and that the policy was in full force and effect at the time of the death of the insured. As a conclusion therefrom, the court directed judgment be entered in favor of plaintiff in the sum of $8,000, together with interest thereon. It is from the judgment entered in accordance therewith that this appeal is taken.

It is the contention of appellant that the findings are not supported by the evidence. The deposition of the chief underwriter was received in evidence, wherein, in answer to certain interrogatories he testified he wrote the letter in question and attached the same to the policy of Dr. Rey, and that he personally mailed the envelope which contained the policy and the letter attached thereto. The original letter was never found among the effects of Dr. Rey, and after demand upon respondent for producton of the original, appellant offered a carbon copy of the letter referred to.

There is nothing in the evidence to establish the fact other than the testimony of the witness that this letter was ever attached to the policy or was ever sent to the insured, and there is no reference in the letter itself of any enclosure, nor to any particular policy either by date or by number, and the context of the letter itself refers to a policy as one, “which you applied for and which we issued,” not to one then being issued or enclosed. Whether or not the policy therein referred to was the policy here in question was a matter for the determination of the trial court; a physical examination of the policy itself discloses no satisfactory evidence of any letter having been attached. The court having found adversely to appellant, that finding is binding upon us. Common knowledge, too, would seem to indicate that if the letter were intended as a rider or a modification of the policy in question, it would have distinctly referred to the policy to which it related and would have been attached thereto in some permanent and definite manner. The letter also states that the policy referred to called for payments of premiums on the annual plan, but an examination of the policy issued to the insured in this case does not seem to be one that contains such a provision. That part of the policy bearing upon the subject of payment of premiums is part “B” set forth above, and we quote further provisions found elsewhere in the policy:

“Standard Provisions. 1. This policy includes the endorsements and attached papers, if any, and contains the entire contract of insurance. * * *” “2. * * * No change in this policy shall be valid, unless approved by an executive officer of the association, and such approval be endorsed herein.” “(c) The copy of the application endorsed hereon is hereby made a part of this contract and this policy is issued in consideration of the statements made in the application and the payment of dues of $116.00 the first year and $96.00 each year thereafter. * * *” “And the payment of dues, as stated above, or at such time as the Treasurer shall advise the Insured, beginning with July 1, 1921, is required to keep this policy in continuous effect. * * * (e) This policy shall not be in force until the premium is paid, and should the premium provided for herein be insufficient to meet the requirements of this policy the Association may call for the difference as required.”

In the application by the insured which is attached to the policy appears the following: “16. What is the form number of policy applied for? 12D. What is the premium? $116. 1st year, $96.00 thereafter. * * *”

We are of the opinion therefore that the policy in question did not call for the payment of premiums upon the annual plan, and that any attempt, if such were made, to modify this policy by the issuance of the letter referred to would be ineffective for the reason that under paragraph 2 as quoted above there is no showing that the letter was sent by an executive officer of the company nor was such approval for a change endorsed upon the policy.

In Burch v. Hartford Fire Ins. Co., 85 Cal. App. 542, 259 P. 1108, 1111, it is said: “Provisions may be incorporated into the policy by slips or riders attached thereto. Such slip or rider will be construed in connection with the printed provisions of the policy, and the entire contract harmonized, if possible, but, if there is an irreconcilable conflict, the slip or rider will control. In order, however, to form a part of the contract, the slip or rider should be referred to in the body of the policy; it is not a part of the policy merely because it is enclosed in the same envelope in which the policy is sent to insured, or because it is pinned on the policy.”

Appellant's contention that the failure of respondent to deny the genuineness and due execution of the letter set up in the answer of defendant as a special defense now precludes her from denying the validity of that instrument, cannot prevail. Section 448 of the Code of Civil Procedure provides that when the defense to an action is founded upon a written instrument and a copy is either contained in the answer attached thereto the genuineness and due execution is deemed admitted unless plaintiff within a given time denies the same by affidavit. We do not believe, however, that this instrument referred to is such a written instrument as calls for such denial.

In the case of Marx v. Raley & Co., 6 Cal. App. 479, 92 P. 519, it was held that a letter similar to that pleaded is not a written instrument upon which the defense is based within the meaning of section 448 of the Code of Civil Procedure. The case of Heath v. Lent, 1 Cal. 410, 411, is therein cited as follows: “It is clear that the statute does not extend to any other parties than those who are alleged to have signed the instrument.” This last case is also cited with approval in the case of Miller v. Price, 103 Cal. App. 650, 284 P. 1035. If the law were otherwise, the plaintiff in this action, who had never seen the original copy of the letter alleged to have been mailed to Dr. Rey, would be required to deny the due execution and delivery thereof under oath or be precluded from availing herself of any evidence produced at the trial disproving the same. The law cannot exact such an affidavit from one who had no knowledge whatever of the original letter in question.

We believe, therefore, that the findings of the court are sustained by substantial evidence and that respondent herein is entitled to recover the amount found due by the trial court.

The judgment is therefore affirmed.

Mr. Presiding Justice PULLEN delivered the opinion of the court.

I concur: THOMPSON, J.