This is a dispute between the beneficiary of a life insurance policy, on the life of her husband, and the insurer as to whether the acts of the husband, during his lifetime, in attempting to secure the cash surrender value of the policy effected a cancellation of the coverage thereunder on his life. Both appellant, Doris L. Green, and appellee, American National Insurance Company, moved for summary judgments. The trial court granted appellee’s motion for summary judgment and entered its judgment that appellant take nothing against appellee.
Appellant’s husband, Carson H. Green, was the insured under a life insurance policy issued by appellee in the amount of $10,000, with appellant the named beneficiary. On May 26, 1965, the insured and his wife, Doris L. Green, gave an assignment of said life insurance policy as collateral security to Bassett National Bank of El Paso to secure a loan. Some time prior to the maturity date of the loan, which was February 8, 1968, the loan was paid off and the policy returned by the bank to Carson H. Green. Thereafter, by undated letter received by the insurer on March 4, 1968, the insured advised the insurer that he wanted to surrender the policy for its cash surrender value and returned the insurance policy with his letter. In response to such notification, the insurer wrote Green on March 13, 1968, acknowledging receipt of the policy and the letter requesting the cash surrender value, and in this letter stated that their records indicated that such policy had been assigned to the Bassett National Bank of El Paso, and that an officer of the bank must join him in executing an enclosed surrender application, or else forward a release of such assignment. Such letter further stated that if Green decided to apply for a loan and continue the insurance in force, no special form was required, but that they would have to have a letter from the bank authorizing such loan. Such letter closed with the statement, “We will hold our file pending.”
Thereafter, in a letter dated March 3, 1968, which is obviously misdated and which both parties agree was probably written on April 3, 1968, in that it was received on April 8, 1968, Carson H. Green returned the completed surrender application to appellee, stating that the loan to which the policy had been assigned as security had been paid off, and that the Bas-sett National Bank no longer had any claim to such policy. The insured closed this letter with the statement that he was not interested in a loan on the policy but wanted the cash surrender value as soon as possible. On May 6, 1968, the insured died. The insurer was duly notified of his death and demand made for the face value of the policy. The insurer thereafter received a release from the bank on May 26, 1968, and a check for the cash surrender value of the policy was tendered to the *3 representativé of Green’s estate on June 6, 1968, which tender was rejected by the beneficiary.
The appellant’s sole point of error is that the trial court erred in rendering judgment for appellee in that at the time of the death of the insured there was in full force and effect an insurance contract written by appellee for the amount of $10,000 on the life of insured. Appellant’s basic contentions in support of such point of error are: (1) that the negotiations with regard to the cancellation of the insurance contract were never completed prior to the death of the insured and there never was a mutual agreement concerning the cancellation of the policy; (2) that by virtue of the collateral assignment of such policy from the insured to Bassett National Bank to secure a loan, the bank had the sole right to request the cash surrender value of the policy and receive the proceeds, and that at the time the insured made his request for the cash surrender value he had no authority whatsoever to cancel the policy.
The policy expressly gave Carson H. Green the right and option to cancel the policy for its cash surrender value at any time after it had been in effect for three years by (1) written request for its cash surrender value, (2) surrender of the policy. The Company reserved the right to defer payment of the cash surrender value for a period of not more than six months.1
There is ample authority to support the fundamental rule that an option contained in a life insurance policy is a continuing and irrevocable offer which becomes a binding contract when accepted by the insured, the subsequent death of the insured being irrelevant to the effectiveness of the election. Annotation,
*4 It is undisputed that the insured, Carson H. Green, made an unqualified notification to the insurer of the exercise of his right to accept the cash surrender value, 2 that he also surrendered the policy and made no further premium payments.
Appellant’s contention that at the time the insured made his request for the cash surrender value he had no authority whatsoever to cancel the policy because of the collateral assignment made to the Bas-sett National Bank is without merit. It is undisputed that prior to the time insured notified the insurer that he desired to surrender the policy for its cash surrender value the loan to which the policy had been assigned as collateral security had been paid off. Our Supreme Court in Caw-thorn v. Perry,
We hold that any interest the Bassett National Bank may have had in the insurance policy in question by virtue of the collateral assignment of the policy was extinguished by the payment of the debt, which was prior to the time that the insured notified the insurer of his election to surrender the policy and collect the cash surrender value, and that such notification effectively terminated the policy and obligated the insurer to make payment of the cash surrender value in accordance with the policy provisions applicable thereto.
The judgment of the trial court is affirmed.
“(e) Cash Surrender Value. Within sixty days after the due date of the premium in default the owner upon written request and surrender of the policy may elect to receive a cash surrender value in accordance with the Table.
“If on or after the third policy anniversary the policy is in force under reduced paid-up endowment or extended term insurance it may be surrendered for cash at any time subsequent to the end of the grace period for the premium in default. The amount of this cash surrender shall be the present value at the date of surrender of the future insurance benefits guaranteed under the paid-up endowment or extended term insurance then in effect.
“The Company reserves the right to defer the payment of any cash surrender value for a period of not more than six months after receipt of written application therefor.”
Notes
. (a) Undated letter received by appellee on March 4, 1968, in which the insured states “I wish to surrender this policy for its cash value.”
(b) Letter erroneously dated March 3, 1968, received by appellee on April 8, 1968, wherein the insured stated, “No, I am not interested in a loan on the policy. I would like the cash value as soon as possible.”
(c) Written application for cash surrender value executed by insured on April 3, 1968, and received by appellee on April 8, 1968.