Hutchinson v. National Life Insurance

196 Mo. App. 510 | Mo. Ct. App. | 1917

ELLISON, P. J.

Plaintiff’s action is to recover upon a policy of life insurance for $5000 issued upon the life of her deceased husband by the Des Moines Life Insurance Company and assumed by defendant in its reinsurance of that company’s business. The policy is dated the 2nd day of May, 1907, for a premium of $84.75 payable in advance on the 2nd day of May of each year during the term of insurance. The policy provided for thirty days’ grace for payment of premiums. The insured died on the 3rd of October, 1914, without having paid the premium due the preceding May, and the defense is based on that default.

Plaintiff concedes the default, but claims the policy remained in force beyond the date of the death by reason of extended insurance based on the “net value” of the policy, under the provisions of section 6946, Revised Statutes, 1909; and she insists that this net value is aided by a dividend of $19.12 due deceased; and that the period of extended insurance is added to by the provision for thirty days of grace for the payment of premiums after they become due; and, by the fact that the policy was not delivered until May 22nd, whereby premiums were not due until the 22nd of May each year. That is to say, it is plaintiff’s claim that in determining the purchasing power of the “net value” of the policy, the amount of the dividend should be added to it; and that in determining the time from which the period of extended insurance should begin to run, the time of the delivery of the policy and not its date, should be considered; and that the thirty days’ grace should be allowed.

The trial court adopted plaintiff’s view and rendered judgment for her.

The statute referred to reads as follows: “The net value of the policy, when the premium becomes due, and is not paid, shall be computed upon the actuaries ’ or combined experience table of mortality, with four per cent interest per annum, and after deducting from three-fourths of such net value, any notes given on account of past premium payments on said policy issued to the insured, and any evidence of indebtedness to the company, which notes and indebtedness shall be then cancelled, the balance shall be taken as a net single premium for temporary insurance for the full • amount written in tbe policy.”

Prom May 2nd, the date on the face of the policy, until deceased’s death on the 3rd of October (counting by the day) is a period of one hundred and fifty-four days. The statute above quoted is that the net value of the policy at the time the premium becomes due is to be ascertained with four per cent interest, and that three-fourths of such value (after’ deducting indebtedness) is considered a single premium extending the life of the policy for the same proportion of a year that such three-fourths net value bears to an annual premium. That is to say, if the three-fourths net value at the time of default is $50 and the annual premium defaulted is $100 the life of the policy would be extended for six months.

It is admitted by defendant that a single net premium on a policy of $5000 at deceased’s age of forty-six years at his death, was sixteen and ninety-one hundredths cents per day and that the net value of the policy was $23.50, and that three-fourths of this would purchase, at the rate of a single net premium, one hundred and thirteen days extended insurance. It is, however, claimed by plaintiff that according to the testimony of witnesses, testifying as experts for defendant, based on the character of policy this is, it would purchase one hundred and seventeen days and we will assume this to be correct. But, counting from the date of the policy, that lacks thirty-seven days of reaching to the death of deceased; and counting from the date of delivery of the policy (say May 22nd) and not the date on its face (Halsey v. Ins. Co., 258 Mo. 659) it would still lack sixteen days. Therefore, in order to save her ease, plaintiff must maintain a right to thirty days’ of grace after May 22, or that the dividend of $19.12 should be counted as a part of the “net value” of the policy. If she can sustain either one of these positions, within the terms of the policy as they are pleaded in the petition, it will carry extended insurance beyond the date of deceased’s death, as the dividend is a sum sufficient to purchase insurance far beyond that time.

The provision of the policy as to days of grace is as follows: “If any premium be not paid when due, this policy shall be extended and remain in force for thirty days from such date, and if not then paid with the additional payment of ten cents per thousand dollars of insurance, this policy shall be absolutely void, and all premiums paid shall be forfeited to the Company.” In our opinion this did not affect the default; for the assured did not pay within the thirty day period. He did not embrace the terms of the provision. If he had, it would have related back to the default and prevented the forfeiture. But, obviously, by no fair interpretation of the provision, can it he said that the policy was to run an extra thirty days without charge if, as here, the defaulted payment was not made. Deceased had all of the thirty days after the default in which to pay, and if he had died between the default and the expiration of that time the premium, under another provision of the policy, would have been deducted from the amount of the insurance. But if he had the full time and threw away his days of grace, and died in default, under no circumstances could his beneficiary get aid from that provision. We do not see that Martin v. Ins. Co., 190 Mo. App. 703, cited by plaintiff, has any application, since in that case the premium was paid.

This brings us to the final claim that the dividend should be considered as a part of the net value of the policy. The “net value” at a given time was shown at the trial to be the “reserve.” This is conceded and it is the view adopted by the authorities. [Liebing v. Ins. Co., 191 S. W. (S. C.) 250, 254; Rose v. Ins. Co., 153 Mo. App. 90; Fahle v. Ins. Co., 155 Mo. App. 15.] The statute enacts the process whereby the net value is ascertained and does not include an unpaid dividend. On the other hand, the contract in the policy is that the unpaid dividend is to be applied in part payment of the next annual premium.

Running through the argument for plaintiff there is to be found a confusion of statement as to the application of the dividend of $19.12, declared by defendant on the 31st of December, 1913. First is the insistence that it should be applied to the payment of the premium, then follows an assumption that the dividend, thus applied, bought extended insurance. We think that does not follow. The two things are wholly disconnected and distinct matters. A sum which.is to be used in payment of premiums becomes a part of the premium fund and pays, or helps to pay, the premium which buys the regular insurance and furnishes no part of the fund which purchases extended insurance, except as it may do so indirectly by a part of it becoming a part of the reserve. The fund which buys the latter insurance is provided by law and is ascertained after the manner pointed out in the statute; while the former is provided for by the contract, and contemplates a continued live contract. The latter is attached by law to prolong the life of a contract which, if left to its own terms, would be ended by forfeiture. Plaintiff truly says, at page 10 of the brief in her behalf, that “the policy provided that the dividend of $19.12 should be applied as a credit on the premium.” But it is immediately added, that this, at the rate per day, “carried the insurance 118 days,” a period long beyond the date of deceased’s death. The policy does provide that “dividends assigned by the company shall be applied to the reduction of each subsequent year ’spremium, or if the insured prefer to pay any premium or premiums in full, the dividend or dividends will be applied to the purchase of paid-up additions to the policy.” But as deceased did not pay his premium due in May, 1914, this dividend of $19.12 declared the previous December, was automatically credited on that premium, reducing it from $85.75 to $66.63, but still leaving the default. The fact that it was for a less amount does not destroy its force as a forfeiture.

Plaintiff seeks to deal with this dividend as a separate and distinct payment of a premium for the purchase of extended insurance, carrying the. life of the policy beyond the death of the insured. This would not be within the law and would be outside the terms of the contract. For, as we have seen, it must be merely credited on the annual premium falling due next after the dividend is declared.

But there is. a provision in the policy that premiums may be paid annually, semi-annually, or quarterly, and it may be suggested that the dividend would apply as for, as it would go as a quarterly payment. But the same answer could be made to this as has just been made to a full annual payment. The dividend was not sufficient to cover a quarterly payment, and if, without request from the assured, defendant had credited it as a quarterly payment, it would still have left a default. If a quarterly payment was intended to be made, it, of course, should have been for a full quarter. The defendant could not be required to accept less. [Terry v. Ins. Co., 90 S. C. 1.]

The fact that the lawmakers in legislating on the subject of extended insurance have failed to provide in terms that upon default in payment of premiums when there were dividends declared, but not paid or applied, the amount of such dividends should be used in the purchase of extended insurance, is apparently conclusive it was not intended that they should be used for that purpose. The contract provides for only two uses of unpaid dividends, one as a credit on the nest annual premium, and the other to purchase of additional insurance if the insured paid the annual premium in full; and we have seen that as the insured did not pay the premium, the dividend could only be applied as a credit thereon.

It is apparent from plaintiff’s petition that the theory that the dividend was to be considered as an addition to the net value of the policy was not entertained when that pleading was drawn; for it is therein alleged that “dividends assigned by the company shall be applied to the reduction of each subsequent year’s premium.” And that when the defaulted “premium matured and became due (the assured was) entitled to a dividend of $19.12 to be applied as a credit on said premium.”

There is a somewhat vague claim madé by plaintiff that there was a large surplus due the policy 'holders and that she should in some way receive such benefit from it as either to discharge the premium defaulted, or at least carry the insurance beyond the assured’s death. Nothing of that nature was pleaded.

From the foregoing considerations it follows that the judgment is without legal support and it is therefore reversed.

All concur.