Continental Casualty Co. v. Johnson
This text of 103 F.2d 199 (Continental Casualty Co. v. Johnson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
On October 4, 1921, appellant issued to John A. W. Prout its noncancelable income policy in consideration of an annual premium of $110 wherein appellant agreed to pay the insured a monthly indemnity of $500 (later reduced to $400). The undertaking read: “If the Insured, by reason of accidental injury or sickness, shall be unable to perform all the duties pertaining to his occupation, the Company will pay said monthly indemnity so long as he lives and is physically unable to engage in a gainful occupation.”
Beginning April 14, 1933, and continuing until February, 1935, appellant paid the indemnity at the rate of $400 per month. It refused to make further payments. Prout died March 7, 1936, of “chronic al[200]*200coholism.” Appellee as executrix brought suit to recover the unpaid indemnity installments. A motion for a directed verdict was made by each party. The court sustained the motion of appellee and entered judgment accordingly. Aside from certain matters presently to be considered, there was substantial evidence to sustain the judgment except in the amount thereof, as hereafter indicated.
In its answer and before the court, appellant relied upon the defense of accord and satisfaction and in support thereof presented a purported release.1 The court sustained an objection to the introduction of this instrument upon the ground that it was void for lack of mutuality and consideration.
Appellant discontinued the payments in February, 1935, because a dispute had arisen as to whether Prout was entitled to $400 per month or whether the payments should be reduced to $200 per month in accordance with Part II-B of the policy.
At that time Prout was under a guardianship which terminated, however, on July 11, 1935, and the asserted release grew out of negotiations for settlement. The second “Whereas” clause of this instrument sets forth the situation as it existed on July 16, 1935, the date thereof. Prout was still disabled and desired that appellant should make a lump sum payment in consideration of a release by him of all claim for indemnity then accrued and which might accrue to November 1, 1935, and requested it to make such a settlement. It was anticipated that Prout would be fully recovered by November 1. The “Now, therefore” clause indicates that appellant in consideration of the “premises,” i. e., Prout’s desire and request as set forth in the second “Whereas” clause made “said lump sum settlement * * * in lieu of regular indemnity installments provided by said policy * * * ” and paid Prout $1,500 in full settlement and that Prout then released and discharged appellant from “any and all claims * * * and demands whatsoever * * * which I now have. * * * ”
It is manifest that if the instrument had stopped at this point it was a proper release and discharge of appellant of all indemnity to November 1, since it was a compromise in good faith of a disputed claim. But the instrument went further and discharged appellant from the payment of all claims which Prout or his representative might have thereafter on account of his disability, even though it continued longer than anticipated, i. e., after November 1, even though it does not appear from the instrument that there was any other matter in dispute between the parties as to any claim or demand for any indemnity subse[201]*201quent to that date. There was a reservation, however, that if he should suffer a second disability after November 1, he would be entitled to claim therefor under the policy provisions which eliminated indemnity for the first three months of disability.
Our conclusion is that there was no “accord” over the amount of indemnity due after November 1. There was no dispute over this amount. No consideration passed to Prout for its release, and its voluntary discharge by Prout was of no effect. It was a mere gratuity on his part. See Union Indemnity Co. v. United States, 6 Cir., 74 F.2d 645. The correct judgment should have been for the indemnity installments due from November 1 to the date of death, or $1,670 with interest. If appellee shall within twenty (20) days file a remittitur in the amount of her judgment in excess thereof, the judgment so corrected will stand affirmed; otherwise the case will be remanded for further proceedings consistent herewith.
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Cite This Page — Counsel Stack
103 F.2d 199, 1939 U.S. App. LEXIS 3535, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-casualty-co-v-johnson-ca6-1939.