178 Mo. App. 89 | Mo. Ct. App. | 1913
defendant appeals from a judgment recovered in the trial court on a policy of insurance issued by defendant on the life of Frank E. Gillen in favor of his wife, Mary C., the plaintiff herein, as beneficiary. The case was tried on an agreed statement of facts. The policy was issued in August, 1900, for $2000, and is conditioned on the payment of semi-annual premiums of $44.50 each, payable on the 28th days of February and August of each year. These premiums were paid until August 29, 1909, when default was made. In the meantime two loans were made to the assured finder the term provided in the policy, but, as the first loan was paid out of the proceeds of the second loan, we are concerned with that one only. This loan was for $500 at five per cent, interest, payable in advance, and was made on April 29, 1909, and the interest then paid in advance to August 28, 1909; so that both the premium and interest on the loan became due on that date and default was made in both. No further premium was paid on the policy nor interest on the loan prior to the death of the assured on May 28, 1911.
The plaintiff’s case proceeds on the theory that this policy, being a Missouri contract and governed by the provisions of the non-forfeiture laws of this State in force at the time the policy was issued, being sections 7897, 7898, 7899 and 7900, Revised Statutes 1899, and which are the same as section 6946, before the
The policy itself provides that cash loans at five per cent, interest can be obtained by the insured on the sole security of the policy after the policy has been in force for two years or more, if the premiums are paid to the anniversary of the insurance-next after the date of the loan, in varying amounts as shown by a table of cash loans based on the age of the policy. This is one of the rights of the assured under the policy. The loan agreement signed by the assured and this plaintiff acknowledges the receipt of the money, $500, agrees to pay interest on same in advance, pledges the policy as sole security for the loan and interest and deposits same with the company for that purpose and agrees to
The agreed statement of facts further cites: “In accordance with said loan agreement and policy, the defendant duly foreclosed the lien on said policy on the 26th day of November, 1909, and neither the reserve held by the company on said policy on said date or at the time of its lapse, nor the reserve or net value of the policy on said date, computed upon the Actuary’s or Combined Experience Table of Mortality, with interest at four per cent per annum, nor the reserve or net value of the policy computed upon the American Experience Table of Mortality, with three per cent interest per annum, exceeded thé sum then due on account of said indebtedness, and interest. Defendant, at the same time, canceled said loan and canceled the indebtedness of the insured and of plaintiff. Thereafter, on November 26, 1909, the defendant wrote and
It will thus be seen that the whole case turns on the right of the defendant to use the net reserve value of the policy at the time default was made in the payment of premiums or thereafter _ in paying the loan instead of applying it as a net single premium to purchase temporary insurance for the full amount of the policy as provided by section 7897, Revised Statutes 1899/
The question here presented is by no means a new one and has been before the courts under somewhat varying facts in several recent cases. [Christensen v. Insurance Co., 160 Mo. App. 486, 141 S. W. 6; Christensen v. Insurance Co., 152 Mo. App. 551, 134 S. W. 100; Burridge v. Insurance Co., 211 Mo. 158, 109 S, W.
It is also settled that what cannot be done by the original policy contract — “a straight line” — cannot be done by a supplemental or collateral contract, in this case a loan agreement, that is, “cannot be done in a circle.” [Burridge v. Insurance Co., 211 Mo. 158, 178, 109 S. W. 560; Head v. Insurance Co., 241 Mo. 403, 408, 147 S. W. 827.]
It is also the settled law that in determining the amount of the net value of the policy applicable to purchasing temporary or extended insurance, the insurance company has no right to demand nor can it compel a deduction of any indebtedness of the insured to the company except “notes given on account of past premium payments on said policy.” [Smith v. Insurance Co., 173 Mo. 329, 341, 72 S. W. 935; Burridge v. Insurance Co., 211 Mo. 158, 171, 109 S. W. 560; Paschedag v. Insurance Co., 155 Mo. App. 185, 198, 134 S. W. 102.] It must, therefore, be held that the defendant in this case acquired and had no right or authority either by the original policy or by the supplemental loan agreement, or both combined, to use the net value of the policy in paying off or canceling the loan made by it to the assured. Whether the assured could or did confer this right by consent and agreement after default was made in paying the premiums will be considered later.
The pledging of the policy as security for the loan and the foreclosure of the lien on the same and the application of the proceeds to a payment of the loan, in so far as such acts depend for their validity on any power or authority given by the policy and loan agree
It is also conceded, and need only be mentioned, that the amendment of section 7897, Revised Statutes 1899, by Acts of 1903, p. 208, permitting cmy indebtedness of the insured to the company to be deducted from the net value of the policy before applying the same to the purchase of temporary or extended insurance, is not applicable to this policy as it was issued before such amendment, though the loan was made after the amendment. That act is not retroactive. [Paschedag v. Insurance Co., 155 Mo. App. 185, 199, 134 S. W. 102; Christensen v. Insurance Co., 152 Mo. App. 551, 556, 134 S. W. 100; Christensen v. Insurance Co., 160 Mo. App. 495, 141 S. W. 6; Burridge v. Insurance Co., 211 Mo. 158, 173, 109 S. W. 560.]
It is also suggested that the policy and loan agreement in question makes the loan payable solely out of the policy or its proceeds, pledged for its payment as collateral security, and imposes no personal liability on the insured. It is hence argued that, as there was no indebtedness of the assured to the defendant, none ’ could by contract or consent be deducted from the net value of the policy before applying it to the purchase of temporary or extended insurance. We do not so read or interpret the policy and loan contract. The fact that the company mainly relied on the security to collect its money does not-relieve the personal liability as such is often the case in making loans with security. The transaction is denominated a loan throughout and bears interest. There is an express promise ‘£ to, pay said company said sum when due with interest” and
In Paschedag v. Insurance Co., 155 Mo. App. 185, 197, 134 S. W. 102, the court, speaking of such an agreement, said: “It is true enough the loan contract does not expressly provide for a repayment of the loan, except in so far as it authorizes defendant to appropriate the cash surrender value of the policy to that purpose, but it nevertheless implies an agreement to that effect, for it recites the matter as a loan to bear interest until a definite time and pledges the policies as collateral security therefor. Both parties understood at the time that they were making a loan and nothing appears whereby the intention is manifested to terminate the relation of insurer and insured by defendant paying to the insured the cash surrender value of the policies for their surrender and cancellation.”
In Smith v. Insurance Co., 173 Mo: 329, 340, 72 S. W. 935, after holding that the pledge of the net value of a policy to the payment of a similar loan was in
In Bank v. Insurance Co., 81 Fed. 935, the court said: “While it may be that in the settlement of an annual premium the portion thereof represented by the certificate of loan does not actually pass back and forth between the insured and the company, yet the transaction in substance is a loan of money. The certificate designates it a ‘loan,’ the amount bears ‘interest,’ and it is made a lien on the policy-until paid. No doubt the company’s main reliance is upon this lien because of its effectiveness, but personal liability is not expressly or necessarily excluded. A loan imports an obligation to pay back. I do not see why an action could not be maintained on the certificate of loan after demand. Debt lies whenever a sum certain is due, without regard to the way in which the obligation was incurred, or by what it is evidenced. [Stockwell v. U. S., 33 Wall. 531.]”
We think, therefore, that the loan transaction and agreement had between the insured and the defendant created a personal obligation on the insured to pay the amount of the loan with interest and, as the pledge of the policy was invalid in so far as it authorized, or rather attempted to empower defendant to compel, the use of the net value of the policy in discharging the loan, such loan was, so far as this case is concerned, nothing but a personal obligation of the insured and plaintiff to the defendant.
For the purpose of this case then, after the assured had defaulted in the payments of his premiums, the situation was this: he had to his credit with the defendant the net value of his policy, computed as specified by section 7897, Revised Statutes 1909, which he had an undoubted right to have used to purchase
In spealdng of the exceptions to our statute now under consideration, the Supreme Court of the United State in Equitable Life Society v. Clements, 140 U. S. 1. c. 233, which case has been the foundation of most of our state decisions, said: “In defining each of these two cases, the statute, while allowing the holder to make a new bargain with the company, at the time of surrendering the policy, and upon such terms as, on the facts then appearing, are satisfactory to him, yet significantly, and, it must be presumed, designedly, contains nothing having the least tendency to 'show an intention on the part of the Legislature that the company might require the assured to agree in advance that he would at any future time surrender the policy or lose the benefit thereof, upon any terms but those prescribed in the statute.’'’
In Smith v. Insurance Co., 173 Mo. 329, 342, 72 S. W. 935, the court said: “True the plaintiffs’ husband did obtain that amount of money from the company, but not after default in the payment of the premium, not after the provisions of the statute under discussion took effect, not as in payment to him of the
In Paschedag v. Insurance Co., 155 Mo. App. 185, 199, 131 S. W. 102, the court gives the reasons why a loan contract providing for a surrender of a policy in case of default in paying interest and premiums does not fall within the exceptions to the statute providing for a surrender of the policy “for a consideration adequate in the judgment of the legal holder thereof,” in these words: “But, of course, this involves, too, a transaction where the parties contemplate a cessation of the insurance contract at the time. By the express provision of the statute, the insured may surrender the policy and terminate the relation of insurer and insured for any consideration which in his judgment is adequate therefor, but the consideration must be given by the company for such a surrender and not for some other purpose. . . . Where the transaction is denominated by the parties as a loan and the pledge of the policies and their dealings touching the matter manifest they did not intend the policy was thereby surrendered in the sense of the statute referred to for
We, therefore, hold, that, while plaintiff did not and could not by the policy or loan agreement make a valid contract compelling him to surrender his policy in case of default in payment of premiums and interest and apply the net value of the policy or any part thereof in payment of such loan, yet, he could after such default voluntarily agree to and actually surrender his policy to the company in consideration of the payment of his personal debt to the company out of the net value of his policy.
Viewing this case as we must from the standpoint that the assured’s pledge of his policy to the payment of his loan was void, that such loan was a personal debt only, that after his default in payment of the premium and interest he was perfectly free to refuse or give assent to the use of the net value of the policy to the payment of his indebtedness to the company instead of applying it to the purchase of temporary insurance — a proposition, which, if accepted, would result in a surrender of his policy for a consideration adequate in his judgment — the sole question remaining is to determine whether he did assent to this settlement and surrendered his policy. We will concede that he might assent to this arrangement either directly or by way of estoppel. It must be granted, however, that the defendant had no right to impose on the insured any such settlement and it will be seen that when it wrote to him in effect that it had foreclosed the loan and applied the net value of the policy to the payment of the loan, thus cancelling both the policy and his personal indebtedness to it, the letter in no wise suggested that he had any right to object and decline any such settlement. This letter was not designed to give the insured any freedom to contract
In thus charging against the insured a duty to protest against the company’s action in this respect defendant imputes to him and the beneficiary a better knowledge of their rights under the policy than was possessed by the company. We will accord to the company an -honesty of purpose and that it honestly believed the loan agreement and pledge of the policy gave it a right to thus cancel the policy, although, as we have seen, it was mistaken in this. As said in Smith v. Insurance Co., supra, the insured is not presumed to have the technical knowledge in reference to life-insurance contracts possessed by the experienced officers of such companies; and, if they did not know the rights of the respective parties under this policy contract, how can the insured be charged with suffi
In the Head case, supra, as in this one, the insurance company undertook to enforce its supposed right under a similar loan agreement to apply the net value of the policy at the time of default in payment of premiums to the payment of the loan and gave the
On the point now being discussed the Head case, supra, seems to be in direct conflict with the case of Christensen v. Insurance Co., 160 Mo. App. 486, 141 S. W. 6, “the facts of the two cases being so near alike as to warrant no distinction in principle. The decision in the Head case was rendered shortly after the decision in the Christensen case and makes no mention of it. The only difference pointed out between the present case and the Christensen case is that in the Christensen case the whole net value of the policy was not used in paying the loan, and, therefore, the policy was
This court, of course, is bound by the Head case, supra, as being the last decision of the Supreme Court. We have, however, sufficiently indicated our own views on the matter. It is conceded in this case, as in the Head and Christensen cases, that there was no direct or express assent or agreement to a surrender of the policy for a consideration adequate in the judgment of the insured and we hold, as did the Supreme Court, that the facts here are not sufficient to show that such result was accomplished by acquiescence amounting to an estoppel.
The judgment will, therefore, be affirmed.