Appeal by defendant from the County Court of Will county; the
Hon. JOHN C. COWING, Judge, presiding. Heard in this court at the
October term, 1951. Judgment affirmed. Opinion filed January 8,
1952. Released for publication January 28, 1952.
MR. PRESIDING JUSTICE DOVE DELIVERED THE OPINION THE COURT.
This is an action brought by a beneficiary on two insurance policies issued by the defendant. One of the policies is a hospital expense policy and was issued by the defendant to the plaintiff on August 4, 1943. The other policy, issued September 29, 1948, provides for a monthly payment in case of accidental injury.
In its answer the defendant admitted the execution and delivery of the policies, but denied liability for the reason that the policies were in default for nonpayment of the monthly premiums at the time plaintiff sustained the injury for which she claims she is entitled to receive benefits under said policies. In her reply to this defense, the plaintiff takes the position that the defendant is estopped to claim a forfeiture of the policies because of its previous practice and custom in permitting the plaintiff to pay premiums after the due date. Upon a trial before a jury of the issues thus made, a verdict was returned by the jury in favor of the plaintiff in the sum of $1,460 upon which judgment was entered and defendant appeals.
The record discloses that plaintiff sustained a serious injury on May 15, 1949, as a result of an accidental fall. She was taken to the hospital where she remained for some time and from there returned to her home. It is not controverted that if plaintiff is entitled to recover, the judgment is for the correct amount.
The evidence further disclosed that the plaintiff had paid for a number of years the monthly premiums due on her insurance policies by check. Cancelled checks showing payment of premiums for the years 1947 to 1950 were introduced and admitted in evidence, and the plaintiff testified that she always paid the monthly premiums by check. The premiums were due on the first of the month. She testified that on May 1, 1949, she sent to the defendant her check in payment of the premium due May 1st. Her check was in the sum of $11 and represented payments on the two policies here in question as well as the other three policies which she had with defendant and which are not here involved. This check was deposited by defendant on May 3rd in the bank with which it did business. On May 6, 1949, it was received by the Union National Bank and Trust Company of Joliet, Illinois, the bank upon which it was drawn and the bank on which all of the checks issued by plaintiff in payment of her insurance premiums were drawn. On May 6th, plaintiff's account was overdrawn in the sum of twenty-seven cents. The bank marked the check N.S.F. (not sufficient funds) and returned it to the bank from which it was received, and on May 12, 1949, defendant received the check from the bank in which it had been deposited. On May 19, 1949, the same check was again deposited by defendant in its bank, and on May 23, 1949, it was honored by plaintiff's bank and paid. At the time plaintiff wrote the check on May 1, 1949, her check stub showed that she had a balance in the bank of $38.18. Plaintiff's account remained overdrawn until May 10, 1949. On that date she deposited $30, and thereafter for the balance of the month of May she had sufficient funds in the bank to cover the check in question.
The plaintiff testified that the N.S.F. check was never returned to her until after it was paid; that she did not receive any notice that her check had been dishonored; had no notice concerning it or any notice that her policies had lapsed or had been forfeited, or any demand for payment of the premium after plaintiff's check had been dishonored. A representative of the defendant testified that on May 12, 1949, the N.S.F. check was returned to the plaintiff by mail, together with a copy of a notice received from the defendant's bank, the American National Bank and Trust Company of Chicago, showing that the defendant's account in that bank had been debited in the sum of $11 because of the N.S.F. check.
The defendant, in accordance with its custom, sent plaintiff a notice for the premium due for the month of June 1949, and on May 28, 1949, the plaintiff mailed her check to the defendant in payment of the June premium in accordance with the notice which she had received. When the defendant sent the notice to the plaintiff for the premium due for the month of June 1949, nothing was stated in said notice that the plaintiff's policies had lapsed or had been forfeited. Upon receipt by the defendant on May 3, 1949, of the plaintiff's check dated May 1, 1949, for the premium for the month of May, the defendant issued its customary receipt for this monthly premium. This receipt and other receipts issued by the defendant for the monthly premiums contained this provision: "This receipt is subject to conditions stated on reverse side." On the reverse side appeared the following: "Any check, draft or money order received for the premium herein stated is accepted subject to final payment in cash. If such check, draft or money order should not be honored when presented for payment in due course of business this receipt shall be null and void." The receipts which defendant issued to plaintiff dated June 1, 1949, bore the following typewritten statement on their faces: "Received payment 5/19/49. Policy reinstated in accordance with terms of Standard Provision Three." Plaintiff testified that when she received the second premium receipt for the month of May and the premium receipt for the month of June, that she noticed the foregoing statement appearing on these receipts but that she paid no attention to the same since she had her official receipt for the month of May and had sent to the defendant her check for the premium for the month of June in response to defendant's notice that the June premium was due.
The evidence discloses that all premium receipts issued by the defendant are dated the first of the month, including the receipt issued for the month of May 1949. The record shows that for the years 1947 to 1950 the plaintiff customarily sent to the defendant her check for the monthly premiums on or about the first of each month. Sometimes she sent in these monthly payments a few days prior to the first of the month, and sometimes she sent them in as much as four days after the first of the month, and on one occasion in the year 1947 and on another occasion in the year 1948 she was a month late in paying the premiums due, which premiums were accepted by the defendant and no lapse or forfeiture of the policies was declared. These checks for monthly premiums, drawn in 1947 through 1948, 1949, and 1950 by the plaintiff, were honored by the bank upon which they were drawn, at various dates, as shown by the record, not earlier than the 6th of the month and not later than the 21st of the month. There are in evidence twenty-two checks issued by the plaintiff to the defendant for the monthly premiums due between January 1, 1947, and May 1, 1949. Of these twenty-two checks appearing in the evidence, thirteen of them were honored by plaintiff's bank after the 15th of the month. The latest date on which any check was honored was the 21st of the month. The defendant at no time objected to the payment of premiums by check.
The evidence on behalf of the defendant was that it was the custom of the defendant to allow five days after a premium was due before the policy was considered lapsed and that if the premium was received by the 15th of the month, the policy was considered in effect for the full month and that if it was received after the 15th of the month, the premium was applied on the following month, although one representative of the company did testify that "these policies are due and payable on the first of the month or before and are supposed to lapse if they are not paid on that date."
The monthly income policy sued upon contained, among others, the following provisions: "This policy is issued in consideration of the statements in the application herefore, copy of which is attached hereto and made a part hereof, and the payment in advance of the initial amount required to keep this policy in force until November 1, 1948, and such further payments as may be required by the Company from time to time. This policy terminates on said date unless it is renewed for further terms, with the consent of the Company, by the payment of premiums for monthly, quarterly, semi-annual or annual terms as specified in the Premium Schedule below. The provisions of this policy or any renewal thereof shall not take effect unless the premium is actually paid and accepted previous to any loss hereunder for which claim is made."
The pertinent provisions of the hospital expense policy are: "This policy is issued in consideration of the statements in the application herefore, copy of which is attached hereto and made a part hereof, and the payment in advance of the initial amount required to keep this policy in force until November 1, 1948, and such further payments as may be required by the Company from time to time. This policy is issued and accepted subject to the regular premium provided for in this policy and in addition thereto such premium payments as may be required by the Company from time to time." Both policies contain this provision: "If default be made in the payment of the agreed premium for this policy, the subsequent acceptance of a premium by the company, or by any of its agents shall reinstate the policy but only to cover accidental injury thereafter sustained."
Appellee insists that appellant is estopped to declare a forfeiture of the policies here in question because of its practice in permitting the payment of premiums after their due dates thereby inducing plaintiff to believe that payments of premiums could be made after their due dates. Counsel claim that appellant's previous practice amounts to a waiver of the provisions of the policies concerning payment of premiums. The theory of appellant is that the policies were not in effect on May 15, 1949, the date of appellee's injury, the policies having automatically lapsed on May 1, 1949, because the monthly premium for that month had not been paid; that said policies having lapsed were not reinstated until May 19, 1949, and in this connection calls our attention to this provision in both policies: "If default be made in the payment of the agreed premium for this policy, the subsequent acceptance of a premium by the company, or by any of its agents shall reinstate the policy but only to cover accidental injury thereafter sustained."
In Baxter v. Metropolitan Life Ins. Co., 318 Ill. 369, at page 372, it is said: "Waiver by an insurer results when it by an act, statement or course of conduct toward the assured recognizes the policy as existing though the time for payment of the premium has expired. Forfeiture of life insurance policies is not favored, and unless the circumstances show a clear intention to claim a forfeiture for nonpayment of the premium such forfeiture will not be enforced. If the conduct of the insurer is such as to induce the assured to believe that a forfeiture will not be insisted upon, the insurer will be held to be estopped from taking advantage of such forfeiture. Bennett v. Union Central Life Ins. Co., 203 Ill. 439; Aetna Life Ins. Co. v. Sanford, 200 id. 126; Illinois Life Ass'n v. Wells, 200 id. 445; Manufacturers and Merchants Ins. Co. v. Armstrong, 145 id. 469; Chicago Life Ins. Co. v. Warner, 80 id. 410."
[1-3] An insurance company has the option to waive provisions as to forfeiture in an insurance policy the same as any other provision (Baxter v. Metropolitan Life Ins. Co., supra, pp. 372-373; Mims v. Mutual Benefit Health & Accident Ass'n, 319 Ill. App. 239, 48 N.E.2d 796), and an insurance company is estopped to take advantage of a forfeiture where by its conduct it induces the insured to believe payment of premiums may be made after the due dates. (Chicago Life Ins. Co. v. Warner, 80 Ill. 410; Illinois Life Ass'n v. Wells, 200 Ill. 445; Ballah v. Peoria Life Ass'n, 168 Ill. App. 603.) Whether the conduct of appellant in this case was such as to lead appellee to believe that the company ...