180 A. 746 | Pa. Super. Ct. | 1935
Argued May 6, 1935. Plaintiff, the beneficiary in an insurance policy on the life of her husband, James F. Browne, brought this action to recover a balance claimed to be due thereon. The cause was submitted to the court upon an agreed statement of facts and judgment was entered for the amount claimed by the plaintiff. Two questions of law *225 are raised on the agreed facts, to wit: (1) Was the policy in default by reason of a failure to pay the premium within the time fixed by the contract, and (2) was the beneficiary, after the death of the assured, entitled to elect to take the benefit of that one of three options which was then the most favorable to the beneficiary, and did she so elect?
1. On July 10, 1923, the defendant company issued and delivered to James F. Browne an endowment policy of insurance on his life. The contract of insurance provided as follows: "In consideration of the representations in the application herefor, a copy of which is attached hereto and made a part hereof, and of the premium of Thirty-three and 56/100 Dollars to be paid on delivery of this policy and of the payment of a like premium on or before the tenth day of July in each succeeding year," etc. The application, however, which was attached to and made part of the policy was as follows: "Premium to be paid quarterly, amount $8.64." It is conceded that by the terms of the contract the premium was to be paid in quarterly installments, but appellee insists that it was not payable in advance. Under the heading of "Payment of Premiums" it was provided by the policy that all premiums were "payable in advance annually or in regular equivalent semi-annual or quarterly installments." The policy also provided for a grace of thirty-one days without interest during which the policy should remain in force. All premiums due on the policy up to and including the payment for the quarter beginning July 10, 1932, were paid to the defendant. Payment was never made for the quarter beginning October 10, 1932, and on December 16, 1932, James F. Browne died.
We find no merit in the contention of the appellee that under this state of facts the assured was entitled to pay the premium at any time during the quarterly period. The first premium was certainly due in advance *226
and quarterly thereafter would therefore mean at quarterly intervals. In other words, if the first payment was due on July 10, 1923, the second payment would be due on October 10, 1923. We are impelled to this conclusion, in any event, by the terms of the insurance law in force at the time in this state, for it is provided by the Act of May 17, 1921, P.L. 682, Article IV, § 410 (
Except as otherwise provided, whether by statute or contract, the nonpayment when due of the premium on a life insurance policy causes a forfeiture thereof: Lantz v. Vermont Life Ins. Co.,
2. The insured having been in default for more than thirty-one days in the payment of the premium due on October 10, 1932, the rights of the beneficiary necessarily depend upon the construction of certain options granted by the contract. (See reporter's statement). An examination of the policy shows that the holder of the policy, in case of default in payment of premium, was entitled to elect one of three options based on the surrender value of the policy after taking into account any indebtedness to the company, to wit: A. Paid-up *227 endowment insurance; B. Surrender value in cash; or, C. Extended term insurance. No election was made by Browne prior to his death. Immediately after his death, the defendant company tendered to the beneficiary the sum of five dollars, the amount which would be due under the first option, claiming that by the death of the insured without an election by him the first option was automatically in force. Thereupon, the beneficiary wrote the defendant on December 24, 1932, as follows: "I am making application for claim on Policy No. 987599, on the life of James F. Browne, who died on December 16, 1932. Your representative was at my home to return some money on policy, which I do not understand. Clause in policy as far as I can figure places same in benefits. Please send forms for claim or have your representative stop at once." She then brought this suit claiming that the third option could be accepted by the holder of the policy at any time within ninety days after October 10, 1932, that the beneficiary was such a holder, and that the letter quoted above was an election to take advantage of the third option. Under these options, by the agreed statement of facts, if the first option was in force automatically and became fixed by the death of the insured, the beneficiary was entitled to a judgment for five dollars, while if the third option could be exercised by the beneficiary after the death of Browne and was so exercised, then the plaintiff was entitled to a judgment for $775.72 with interest from December 16, 1932, which represented the amount of insurance which would have been in force for the term of 231 days from October 10, 1932, a period expiring after the death of the insured, and after taking into account the difference between the cash surrender value of the policy and any indebtedness due by the insured to the company.
It will be observed that it is provided by option A that "without action on the part of the holder" the *228 policy will be "continued for its value in participating paid-up endowment insurance." We believe that the phrase "without action" as here used is the equivalent of "in case of no action," and that the death of the insured without an election by him left option A automatically in effect. To hold otherwise would permit the beneficiary after death to choose the option most advantageous to her and correspondingly unfavorable to the insurer.
The contention of the beneficiary that she was privileged, after the death of the insured, to make an election is directly contrary to the principles announced in the case of McDonald v. Columbian Nat. Life Ins. Co.,
In the recent case of Fisher, Exec., v. Fid. Cas. Co.,
Looking at the contract in the case we are considering, the insured was in a position where he might elect to take either approximately five dollars in cash or extended insurance for a term of 231 days for approximately eight hundred dollars. If the beneficiary should be permitted to make an election after the death of the insured, she would then choose between eight hundred dollars and five dollars which, because of lack of proportion, would not be a choice. "It would be so one-sided that it is impossible to believe the parties intended that the right to choose after death should exist and be exercised by the [beneficiary] personal representative": Fisher v. Fid. Cas. Co., supra, p. 188.
The option clause also provides that the paid-up and extended insurance under options A and C are computed upon the basis of the surrender value applied as a net single premium at the attained age of the insured upon the mortality and interest basis adopted for reserve computation. In other words, the options were, taking into account expectancy and class of insurance, *230 the mathematical equivalents of each other. This was fair to the insured and insurer while if we adopt the contention of the beneficiary, plaintiff in this action, she might have elected to take eight hundred dollars in place of five dollars. We cannot believe that the parties intended by their contract any such disparity.
The appellee stresses the fact that in all three options the person authorized to make an election is the "holder" and, relying on Entwistle v. Ins. Co.,
There is an additional and controlling reason which would prevent a recovery of the amount claimed by the appellee. By the terms of option C it is required to be exercised within ninety days from the due date of the premium in default. Appellee depends upon her letter of December 24, 1932, to show an election under option C, but we search that writing in vain for any indication of such an election. The purport of that letter is that in her opinion she is entitled to benefits without saying what benefits and without indicating whether it is under option A or option C. All that she said in the letter could be referred to the automatic option just as well as the third option. We are unable to find anything in the letter which could be interpreted as an election to take term insurance.
By the stipulation filed, referred to as a case stated, it is agreed that if the court should be of the opinion that the defendant is liable to the plaintiff only for paid-up insurance under option A, then judgment should be entered in favor of the plaintiff in the amount of five dollars, costs to be paid by the plaintiff.
Judgment reversed and it is directed that judgment be entered in favor of the plaintiff for the sum of five dollars; cost to be paid by the plaintiff. *232