American Life Insurance Company v Sumintra

• Jurisdiction: Guyana
• Judge: Crane. C,Luckhoo, J.A.,Massiah, J.A.
• Judgment Date: 28 January 1983
• Neutral Citation: GY 1983 CA 2
• Docket Number: No. 20 of 1982
• Court: Court of Appeal (Guyana)
• Date: 28 January 1983

Court of Appeal

Crane, C., Luckhoo, J.A.; Massiah, J.A.

No. 20 of 1982

American Life Insurance Company

and

Sumintra

Appearances:

M. S. Fitzpatrick for the appellants.

8. H. McKay, S.C., D. C. Jagan with him, for the respondent.

Insurance - Premium — Late payment offer — Payment made in period allowed by late payment offer but after death of insured — Payment ineffective to reinstate policy — Late payment offer constituting election by insurer to reinstate policy — Insurable interest — Insurer not estopped from denying validity of policy where no insurable interest — Rights under policy — Waiver — No rights substituting after policy lapsed.

Estoppel - Estoppel in pais — Elements giving rise to estoppel — Detriment — Detriment to representee remaining an essential element — Representation — Need for clear and unequivocal statement — Need for facts on which estoppel claimed to be pleaded.

Crane. C

1 POINT FOR DECISION

2 A point of major significance to both insurers and insured persons alike arises for determination in this appeal. an a legal personal representative of an insured person take advantage of a life insurance company's offer to the insured in his lifetime to accept the late payment of a premium after the grace period has expired and the policy “automatically terminated”? What is the legal consequence of the legal personal representative's acceptance of the company's offer of renewal and revival of the policy of which the deceased could have availed himself had he lived? We shall present see this problem is entwined with the question of agency which will first have to be determined.

3 Of course, if on the true construction of the policy and related documents, it turns out that she may not lawfully exercise option of renewal for the reason that it was intended to be personally exercised in the insured's lifetime, then the matter will admit of no further investigation. In that case, no question could legally arise in a suit such as this in which the insured's wife and executrix in her representative capacity is laying claim to the proceeds of the policy, by endeavouring to estop the insurers by reason of their conduct and representations made from pleading breach of contract by the deceased insured as a ground for avoiding the policy. In that case she will be entirely out of court and can bring no action on the policy.

4 It is all a question of quo animo the parties contracted, and this must be gathered from the terms and conditions of the policy and related documents.

FACTS

5 On 19th August, 1977, Eausar Persaud (the deceased) proposed for a policy of life insurance in the sum of $20,000 and was accepted by the appellants (hereafter called ‘the company’) incorporated in the United States of America, domiciled at Wilmington, Delaware, and carrying on business in Guyana at Lots 30/31, Regent & Hincks Streets, in the city of Georgetown, in the Republic of Guyana.

6 Policy No. 0879201, dated August 19, 1977, was accordingly issued on August 29, 1977, in consideration that a premium of $40.99 would be paid every month on the policy date, August 19, 1977, during the lifetime of the insured. The contract was subject to the proviso that “the payment of premiums will not maintain the contract in force beyond the expiration of a grace period of thirty-one days following the date when the next premium becomes payable.”

7 By supplementary contract No. W1332, it was also agreed to afford the insured additional cover against “death, dismemberment or disability caused directly and independently of all other causes by external violent and accidental means” for $10,000 at a monthly premium of $8.93, for every month thereafter during the lifetime of the insured. There was also a provision in the supplementary contract for its renewal with the company's consent from term to term by payment of the premium in advance at the premium rate in force at the time of renewal, and a grace period of thirty days was allowed for the payment of any premium after the first, also a stipulation that if any premium due on the contract or on the policy was not paid when due or within the grace period of thirty-one days, the contract shall “automatically terminate”.

8 The insured's wife, Sumintra, otherwise known as Sylvie, sued out her writ in the High Court claiming damages for breach of contract in excess of $500.00. In her statement of claim she claimed the sum of $40,000 (double indemnity) together with $10,000 under the supplementary contract abovementioned, on the ground that her husband died as the result of a motor accident; and, as we shall presently see, perhaps the mast significant of her allegations is in para. 6 where it is stated the policy was still in force when he died.

9 The appellant company, on the other hand, while acknowledging receipt of the first premiums for the policy and supplementary contract on 18th August, 1977, have charged the insured with breach of payment of the premiums due on both the policy and supplementary contract on 19th September, 1977, in that they were not paid until 18th November, 1977; also the premiums which fell due on 19th October and 19th November were not paid until 1st December, 1977, the day after the insured died. So, contrary to the respondent, the appellant company contended that since both policy and supplementary contract were not in force on November 30, the date of the insured's death, nothing was due under the policy or supplementary contract to the respondent as legal personal representative for the named beneficiary, vii., the estate of her late husband Eausar Persaud.

10 However, the respondent in her reply to the appellant company's allegation that the insured had committed a breach of the conditions with respect to the premiums due on the policy and supplementary contract, pleaded that the company must be deemed to have waived and/or been estopped by conduct from asserting that the deceased insured had committed any breach in relation to the policy or supplementary contract.

11 We have seen that each party in their pleadings has accused the other of a breach of contract, but before adverting to the findings of the trial judge on the crucial issue of estoppel raised by the plaintiff/ respondent, viz., whether the appellant company could indeed be estopped by their conduct from denying the policy was still in force and asserting that the deceased insured had committed a breach of contract, it will be convenient to recapitulate the facts leading up to the formation of the contract of insurance, particularly insofar as they concern the important matter of agency which was one of the two points on which the trial judge decided the case in favour of the plaintiff/respondent.

QUESTION OF AGENCY

12 It was the contention of the plaintiff/respondent that one Deokarran, who canvassed the policy and supplementary contract as agent for and on behalf of the company, and who received the first premium from the insured with the authority of the company, was the company's agent, not only with respect to receipt of the first premium of August 19, 1977, but also with respect to the premiums for September, October and November which the plaintiff/respondent allegedly paid to him on the company's behalf and received unofficial receipts there for on the dates on which they fell due.

13 The company, on the ether hand, contended that though Deokarran was their agent, his authority was restricted to receiving only the premium on their behalf and that this was amply made known to the plaintiff/respondent. Deokarran, however, had no authority to receive any premiums subsequent to August 19, 1977; and if indeed he did receive any such premiums from the plaintiff/respondent (who told the trial judge she paid them to him and obtained temporary receipts on her husband's behalf), they were definitely not responsible, because of the following directions printed on the reverse side of the “FIRST PREMIUM RECEIPT” they usually posted to all policyholders. These directions are quite clear and rendered them not liable in case such premiums were paid to Deokarran and he should make default in paying them into the company and in not obtaining official receipts.

14 The company's directions about payment of premiums are as follows:

“The acceptance by the company of a premium past due is to be construed as an act of grace only and not as a precedent or as a waiver of any of the conditions of the policy.

This receipt shall not be binding upon the company for any part of said payment covered by check or ether form of remittance unless such remittance is promptly honored on presentation for payment.

The agents are authorised to accept first premium. For all subsequent payments the company's receipts on printed form signed as stated thereon will be mailed when remittance has been received.

Agents have no authority to extend the time for payment of a premium, or to make, alter or discharge a contract, or waive a forfeiture.”

(Emphasis mine.)

WHOSE AGENT WAS DEOKARRAN?

15 On the matter of whose agent was Deakarran when he received from the plaintiff/respondent the subsequent premiums for September, October and November, the trial judge found that his authority as agent of the appellants bad ceased after the issue of the policy and payment of the first premium, and that when he received subsequent premiums from Sumintra for payment to the appellant company, he did as her went.

16 As has been stated in the above passage, the company's policy when remittance is received, is that “receipts on printed form will be mailed” to the insured. However, Deokarran having personally paid in the first premium at the office, the official receipt was delivered to him. On this aspect Mr. Sookwa, the company's claims manager, said “He (Deokarran) paid in the first premium to the office and was given the official company receipt.” When this...