151 Ky. 609 | Ky. Ct. App. | 1913
Opinion of the Court, by
Affirming.
On. December 19, 1902, the New York Life. Insurance Company, issued a policy of insurance for $2,500 on the
“If any premium or interest is not paid on the date when due, and if there is an indebtedness- to the company, insurance for the net amount that would 'have been payable -as a death-claim on the date to which premiums were paid, will automatically continue from such date as term insurance for such, time as any excess -of the reserve held by the company under 'this policy over such indebtedness will purchase at the then -age of the insured according to the company’s present published table of single premiums for term insurance, and no -longer.”
On December 19,1907, as admitted by the company, the net reserve on the policy was $329.55. It deducts the debt •of $312.00 from this net' reserve of $329.55, which leaves a balance of $17.55 due the insured and applicable, under the terms of the policy, to the purchase of extended insurance, at a single premium rate, in the .sum of $2;500. This sum -of $17.55, at -the company’s single premium rate, would-serve to keep al-ive insurance, in the amount of $2,500 to March 19th, 1908, and no longer. The Company pleads that it fully complied with its Contract; and that, -on and - after March 19, 1908, the rights of the insured, under -the policy, ceased. T-he insured died on October 19,1908. The beneficiaries, under the policy, his wife and children, brought this action to recover the amount of the insurance. Their position is that, when the premium w-as- -not paid on December 19, 1907, the policy should have been extended, not merely for the length of time that the net reserve of $329.55 less the debt of $312.00, or a balance of $17.55 would have carried it, at a .single premium rate, but that there should have been added to- this net reserve on the policy its proper -share of dividend earnings, and this, -as well, should -have been applied to the purchase of extended insurance. It is conceded that $56.00 of - such additions, if allowed, would have kept the
A determination of the question as to whether the contract is a Kentucky, or a New- York -contract becomes of primary importance. The position taken for -appellants as to the time of the payment of the-initial premium and the instructions and directions, which'Were given to the local agent at the time the policy was forwarded to. him for delivery, must both be borne out by the' -evidence, or else the contention that it is a New York 'and hot a Kentucky contract must fail. As to the payment of the premium, the only evidence upon this point is that oi\ the witness, T. V. Forman, the soliciting agent for the company. He testifies, that, upon the date that he took this application, he took a note of the insured' payable to himself for the amount.of tbe premium, due at sixty days, without interest. He also testifies that be bad no authority to accept a note on behalf of tbe company, or to deliver a policy except for dash, and that the taking of the note was a purely personal transaction between himself and the insured. That the mote was not taken for the company is made clear by his cross-examination, which is as follows:
‘£ Q. 95. , .That was purely a matter between yon as an individual and Mr. Jefferson, — the company had nothing to do with that?
“A. That is so.
£ £ Q. 96. That was just a private, personal, arrangement between yon and Jefferson, and the company had absolutely nothing to-do with that delivery, did it?
“A. I think that I would have shown that note to
“Q. 97. Didn’t you say a -little while ago- that the company would not accept a note, and .that you -had to furnish the cash to them?
“A. I .said I conferred possibly with Tucker and the agency director ais to the advisability of accepting the note.
“Q. 98. That was from -your standpoint -and not from the company’s ?
“A Yes.
“Q. 99. You mean that you possibly conferred with them whether you could -afford to credit Mr. Jefferson with that amount of money?
“A. That is correct.
“Q. 100. I say, therefore, the arrangement of taking this note was purely a personal matter between you and .Mr. Jefferson.
“A. I would say it was.’’
Not -only does this evidence show that, in taking the note of the assured when the -application was made, the agent was acting in his individual capacity, but the record further -discloses the fact -that this note was never delivered to the company, or offered to be delivered to it -by the agent, but, on the contrary, the agent paid to the company the premium on this policy immediately after the policy was delivered by him -and made no- mention of the note. The evidence -entirely fails to support the contention of appellant’s counsel that the premium was paid when the application for the insurance was made. The claim that the application was accepted in New York and the policy issued and forwarded to the agent in Kentucky for delivery, without conditions, is rested upon the statement of Mr. McCall, witness for the company, in which he says that, on December 26, 1902, -the policy was forwarded to the company’s agent in Lexington, for unconditional delivery to the- insured, but, in a later deposition, this statement is explained as follows:
“I should have spoken more accurately if I said the policy was forwarded without -any special restrictions to the cashier about its delivery, -other than the -standing instructions -of the -company, -for this is wh-at I meant.”
He then explains the -standing instructions to be
When his- first -statement is read' in connection with his amplified 'Statement, it is apparent that the policy was forwarded by the home office to- the agent at Lexington, under the rules and regulations governing them in the conduct of their ¡business-, and these rules required, as stated, that the agent was to deliver the policy -only under specified conditions, and not -otherwise. So that the question as to- whether or not the- policy should1 be delivered by the local agent could be determined -only’ when the -attempted delivery was made. If there was then no material change in the ¡health of the applicant, and the requirements -of the company as to the payment of the first premium complied with, he was- authorized to deliver the policy, and not otherwise. Under these circumstances, the policy was not forw-arded by the home office to- the local agent to be delivered by him without conditions or limitation. It was a Kentucky contract; and the New York statutes, having no extra-territorial force or effect, cannot be considered in determining appellant’s rights.. These rights must be determined by the contract of insurance as expressed in the policy when read in the light of the Kentucky Statutes.
If the settlement, or contract -arrangement for settle-meat, provided for in the policy, is -less favorable to the insured than the Kentucky statute provides, it should be, then the contract must -be -so- modified as that the company will be required to. ‘settle -upon terms as favorable as the .statute- provides the contract -shall be made. The only Kentucky statute bearing upon the rights of an insured, when 'he has ceased- to pay his premiums-, is section 659, which provides as follows:
“All policies- hitherto- issued by any domestic life insurance company shall he subject to -the provisions of law applicable and in force at the -date -of such issue.
“Subdivision two.; No policy of life or endowment insurance upon the ordinary plan hereafter issued by
“The reserve for such paid-up insurance shall not be less than two-thirds of the reserve of the original policy; hut, any outstanding indebtedness on account of said policy shall operate to reduce the said paid-up insurance in proportion to-its ratio to- the reserve of such paid-up insurance computed by the .rule of section 116 of the act, to which this is amendatory, and which section is section 653, Kentucky Statutes.
“Efvery such policy,, .after the payment of three full years’ premium thereon, in cash, shall have a surrender value, which shall not be less than seventy per cent of the reserve that would be required for the aforesaid paid-up insurance, after deducting fur .any indebtedness •as above provided, computed by the rule of section 116 of the act, to which this is amendatory, and which section is section 653, Kentucky Statutes.
“Subdivision four: In construing the provisions of this act, ordinary insurance, or insurance upon- the ordinary plan, shall he considered to be insurance which may he paid for by annual premiums, or by semi-annual, or quarterly, or other installments thereon at the option of the company, * * *
The statute plainly provides that, after three full annual premiums have been paid, in cash, if the insured ceases to pay his premiums, the policy shall become a claim against the company for the amount of paid-up insurance which the net value of said policy on that date, when supplemented by all dividend additions thereon, will purchase of life or endowment insurance maturing at the same time and manner as the original policy. The net value of a policy is provided for by section 653, Kentucky [Statutes, and is but another name for “reserve,” and means that part of the annual premiums paid by the insured which, according to the American experience table of mortality, must be set apart to meet or mature the company’s obligations to the insured.. This net value, .or reserve, can always be determined with mathematical precision; and, among those at all familiar with insurance and the technique of that business, there is no dispute as to how the net value of a policy is determined. The net value of a policy, on any given date, is its actual value on that date, its reserve, Hence, when the insured failed to pay his premium on December 17, 1907, under the terms of his contract, he was entitled to extended insurance for such time as the reserve, or net value of the policy, would have carried $2,500, when applied as a single premium, according to the company’s published tables. He was also entitled to have the net value, or reserve, supplemented by the value of any dividend additions to his policy.
There had been no dividend apportioned to his policy for, under its terms, it belonged to that class known as “deferred dividend” policies, and no dividend could have been apportioned to it until it had been in force for fifteen years, the period when, by the terms of the policy, dividends should- be apportioned to it. The term “dividend addition” is perhaps more frequently misapplied than any -other term used in connection with insurance. It means something added to the policy, in the shape or form ¡of paid-up insurance. The term originated in! this way: "When a dividend was apportioned to a policy and not drawn by the policyholder in cash, or used by him in reducing his premium payments, the
It is not contended that there were any dividend additions to the policy under consideration; ¡so that, under both the contract and the statute, the only item which is to be taken into account, in determining the question at issue, is the “net value” of the policy when the insured ceased to pay his premiums'. It is* admitted by the company that this was $329.55; and this is the amount that, nnder both the contract and the statute, should have been applied to the purchase of extended insurance, had the insured not been, at that time, indebted to- the company; but, being indebted, the net value is reduced by the amount of the indebtedness, or $312.00, leaving $17.55 to be .applied to the purchase of extended insurance.
It is insisted for the representative of the insured that, although no dividends had been apportioned to his policy, -still the company, during the years that his policy remained in force, had been accumulating a surplus and •that he should he permitted to participate in this surplus, notwithstanding his contract did not provide for a distribution of any_ surplus to it until it had been in force for fifteen years; and that, as a matter of right, the company should he held answerable to the insured for such an interest in its surplus as had been apportioned, during these ¡same years, to similar policies of like amounts upon which it was paying dividends. A 'sufficient answer to this claim is found in the fact that the contract of insurance does not give him this right, and the statute does- not require that it should. The assured was not entitled to have a dividend apportioned to his policy nntil it had been- in force for fifteen years. "When he ceased .to meet his premium payments, he was, under the statute, entitled to paid-up insurance for such an amount a's the reserve on his original policy would buy; and the statute requires that the reserve on the paid-up policy, so issued, should he not less than two-thirds >of .the reserve on the original policy. The -statute
The policy is the contract entered into by the assured with the company. Its terms express their agreement, and by its provisions each is bound. There is nothing peculiarly sacred about a contract of insurance, which places it upon a plane above, or different from, that upon which other contracts rest. If any of its provisions-are complicated or involved, so as to render them susceptible of a dual construction, courts have uniformly adopted that construction most favorable to the insured; but, when the contract is free from ambiguity, there is' no room for construction and it is the plain duty of the court to enforce it as written. Here the contract provided that, in consideration of a certain sum to be paid’ annually by the insured, the company obligated itself to pay, upon the death of the insured, the sum of $2,500. It further provided that, if the contract should be kept-in force for fifteen years, dividends should be apportioned to it out of the earnings of the company. Thus, under the plain provisions of this contract, in order for the assured to be entitled to have dividends apportioned ■ to his policy, it was essential that it should have been in force for fifteen years. If he paid his premiums for-this time, he was entitled to have dividends apportioned to it; if he failed to'do so, he lost his right in this particular. In another clause of the policy, provision is made for extended insurance, in the event the payment of premiums were discontinued after three full annual premiums had been paid, in cash. The obligations of the company, under this provision of the contract, was to
Judgment affirmed.