Appeal from the District Court of the United States for the Western District of Pennsylvania; Frederic P. Schoonmaker, Judge.
Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.
In this suit on a policy of life insurance the plaintiff had a verdict and judgment. The defendant appealed.
Alois F. Seifris, a practicing physician and local medical examiner of the New York Life Insurance Company, applied to that company for a policy of insurance. The application was dated June 13, 1928, and a policy on Seifris' life, with his wife (the plaintiff) as beneficiary, was issued by the insurance company on June 27, and was handed Seifris by McCall, the company's local agent, about the first of July, following. Seifris met with an accident and died on August 4. On proof of death, the insurance company denied liability under the policy by reason of a provision of the application (made a part of the policy) which reads:
"That the insurance hereby applied for shall not take effect unless and until the policy is delivered to and received by the applicant and the first premium thereon is paid in full during his lifetime."
Suit followed. At the trial, two related issues of fact and one question of law arose under this provision; one issue of fact being whether the policy had been formally and finally delivered to Seifris or had been left with him merely for inspection; the other, whether Seifris had in his lifetime paid the first premium. The question of law concerned the character or measure of evidence required of the insurance company to contradict its receipt for the premium.
While both issues of fact were contested at the trial, the main controversy revolved around the issue whether Seifris had paid the first premium, for if he had not, that under the terms of the policy was the end of the matter.
The plaintiff made a prima facie case by proving the death of the insured, and by proving the policy of insurance which contained a receipt for the first premium in these words:
"This contract is made in consideration of the payment in advance of the sum of $708.10, the receipt of which is hereby acknowledged, constituting the first premium. * * *"
There she rested. The defendant company then assumed the burden of contradicting its own receipt and otherwise proving nonpayment of the first premium. Gibson v. Life Insurance Co., 181 Mo. App. 302, 168 S.W. 818. The learned trial judge in his charge instructed the jury on the defendant's burden of contradicting its receipt in terms which the defendant thinks bore too heavily upon it, and which therefore it assigns as error.The instruction was in these words:
"The burden, as I have said to you, under the facts of this case, due to the acknowledgment of the policy itself, rests with the insurance company to satisfy you by proof that is clear and convincing that the premium was not paid."
The defendant maintains that the quality or measure of evidence which the law requires to contradict its receipt is nothing more than that of preponderance. We cannot agree with this proposition. The preponderance rule applies where one contradicts someone else. Something more is required when a party takes the stand to contradict what he has previously, and deliberately, said under his own hand or, as here, under its own seal. A receipt is a written acknowledgment of payment and therefore evidence of payment. Moreover, it is evidence of a high order because it is the creditor's admission against interest that the debtor has paid his debt. A receipt is, of course, subject to explanation, correction and, indeed, to contradiction, Gregory v. Huslander, 227 Pa. 607, 76 A. 422, especially where, as in this case, an insurance company in New York issues a printed policy intended to be delivered in Pennsylvania under circumstances indicating the improbability of payment of premium before delivery, although the policy speaks to the contrary. Against the legal force of a receipt thus made before payment, insurance companies can and usually do protect themselves by promulgating and enforcing a rule which provides that delivery of a policy before actual payment of the premium shall be for inspection only and shall be made upon a formal receipt or acknowledgment to that effect signed by the proposed insured, and that a policy so delivered shall remain outstanding on the receipt for not more than ten days. The defendant insurance company had such a rule, but in this case its agent delivered the policy to the insured without obtaining his receipt or acknowledgment that it was delivered merely for inspection. Thus its receipt for the premium was left outstanding and, except for McCall's testimony, was not affected or limited by any qualified delivery of the policy. This prompted the court to charge that in view of the delivery of the policy and accompanying receipt without this formal qualification or limitation there rested on the company the burden of satisfying the jury "by proof that is clear and convincing that (contrary to the receipt) the premium was not paid."
The character of proof required of this company to contradict its own receipt must, we hold on ample authority, be more than preponderance. Though open to explanation and contradiction, courts have said that receipts should not "be set aside except for weighty reasons and by proof clear and satisfactory," Flaccus v. Wood, 260 Pa. 161, 103 A. 549, 550; the "causes for disregarding" a receipt, such as fraud, accident or mistake, "must be made to appear distinctly," Rhoads' Estate, 189 Pa. 460, 42 A. 116, 117; to do away with the force of a receipt, "the testimony should be convincing," Vigus v. O'Bannon, 118 Ill. 334, 8 N.E. 778, 779, Winchester v. Grosvenor, 44 Ill. 425; it "must be sufficient to produce strong and clear conviction," Gibbons v. ...