Metropolitan Life Insurance Co. v. Calkins, 17 S.E.2d 594

Metropolitan Life Insurance Co. v. Calkins

17 S.E.2d 594 | Ga. Ct. App. | 1941

Lead Opinion

The court did not err in directing the verdict for the plaintiff in the amount sued for.

DECIDED NOVEMBER 18, 1941. REHEARING DENIED DECEMBER 1, 1941. The defendant in error, hereinafter called the plaintiff, filed her petition against the plaintiff in error, hereinafter called the company, and alleged in substance the following: On February 21, 1927, the company issued its policy of life insurance on Steve Calkins, the husband of the defendant. The policy was for the principal sum of $1000. The contract provided for ten annual premium payments, at the expiration of which time no further premiums were required. The ten premiums were paid during the lifetime of the insured. The plaintiff is the beneficiary. Paragraph 11 of the policy provides as to loans: "At any time after premiums for two full years shall have been paid and while this policy is in force, except when continued as nonparticipating paid-up term insurance, the company, on proper and lawful assignment of this policy and presentation of it for endorsement, will loan to the owner or the assignee of record, if any, on the sole security thereof, an amount not greater than the cash surrender value at the end of the current policy year. Any indebtedness to the company on this policy, at the date of said loan, together with interest in advance on said loan to the end of the current policy year and any unpaid premium or premiums for the current policy year, will be deducted from the amount of said loan. Said loan will bear interest at the rate of six per centum per annum payable annually on each anniversary of this policy. If interest be not paid when due, it shall be added to the principal, until the entire outstanding *246 indebtedness shall equal the cash surrender value, in which event this policy shall become null and void, after one month's notice shall have been mailed by the company to the last known address of the insured and of the assignee of record, if any. After the expiration of the premium payment period, or when this policy is continued for a reduced amount of nonparticipating paid-up whole life insurance, payment of interest on any loan each year, in advance, to the end of the current policy year, will be required. At the option of the company, the granting of a loan may be deferred for a period not exceeding ninety days after application therefor is received by the company, unless such loan is to be applied solely to the payment of premiums due to the company. At any time while this policy is in force the whole or any part of any such indebtedness may be repaid. At the death of the insured any such indebtedness to the company shall be deducted from the amount payable hereunder." The policy provided as to "table of guaranteed loan values and surrender options" as follows: "Computed in accordance with paragraph 9 for a policy free from indebtedness and without paid-up additions. (For each $1000 of insurance.)

                                                Paid-up nonparticipating
End of    Cash or     Paid-up Nonparticipating term insurance continued
Year     Loan Value       Whole Life Ins.         Years          Months
 2          $42.              $153.                  6              2
 3           73.               260.                 11              8
 4          110.               387.                 19              9
 5          141.               487.                 27              4
 6          173.               588.                 34             10
 7          206.               689.                 41              1
 8          240.               792.                 46              6
 9          276.               896.                 52              1
10          314.         Policy paid-up                            Life.
11          319.         Participating."
12          325.
13          331.

(Plaintiff's note: "Balance of calculation not essential.") It was alleged that the plaintiff had obtained a loan, principal and interest, which totaled $343.35, and that the company was due the balance of the face value of the policy, $656.65, plus interest, *247 from November 28, 1939, the date of the death of the insured. The petition also asked $250 attorney's fees and the statutory penalty of 25 per cent. The company demurred to that portion of the petition claiming attorney's fees and penalty, which demurrer was overruled. Exceptions pendente lite were filed. The company also filed a motion to dismiss the petition because it set out no cause of action. This motion was overruled. The company filed its answer denying liability.

In support of her petition the plaintiff introduced the policy, the material parts of which were set forth in the petition as quoted above. The parties entered into the following stipulation: "(1) The defendant, the Metropolitan Life Insurance Company, issued its life-insurance policy number 4846627-A for the face amount of $1000 to Steve Calkins on February 21, 1927. The original policy of insurance is in the possession of the plaintiff and will be introduced in evidence on the trial of this case. (2) The policy became `paid-up' on February 21, 1937, the eleventh anniversary of the said policy, by reason of the fact that it was a limited-payment life policy, premiums for which were payable and were paid for ten years, and no premiums were required from the insured or paid on or after February 21, 1937. (3) That on January 26, 1937, the defendant insurance company made a loan to the insured, secured by an assignment of the policy, and in accordance with the policy's requirements, in the amount of $301.25, out of which $1.25 was deducted covering interest up to February 21, 1937. (4) That on December 23, 1937, a dividend was provisionally credited if and when subsequently allowed in favor of said policy in the amount of $3.43, which would reduce the former amount of the loan from $301.25 to $297.82. Said $3.43 was allowed and credited February 21, 1938. (5) That no payment was ever made on said loan after it was made, or on the interest thereof, by the insured or any one else. (6) No reinstatement of the policy was ever applied for or had. (7) That on May 25, 1938, the defendant wrote a letter which was duly sent by registered mail and duly received by the insured, such letter being as follows. `May 25, 1938. Mr. Steve Calkins, 335 Richardson Street, S.W., Atlanta, Georgia. Policy No. 4846627-A. Stone Mt. Ga. Dear Sir: An audit of the above numbered policy on which premiums have been paid in full, shows that on May 23, 1938, the loan indebtedness — principal and accrued *248 interest — of $320.52 equals the cash value of the policy. You are one of our old policyholders and we very much regret that you have allowed the equity in this policy to become entirely exhausted. You, without doubt, desire to continue the policy, but if cancellation is to be avoided it will be necessary that you pay interest on the loan, of $6.68, which payment will continue the policy until Feb. 21, 1939. Unless this payment is made within thirty-one days from May 25, 1938, the company will have no alternative but to cancel the insurance. Credit for the dividend payable on the next anniversary of the policy of $2.87 has been allowed in determining the amount of loan interest you are called upon to pay and it is understood that if, and when, this dividend becomes payable, it will be applied against the indebtedness existing on the policy. Mailing envelope is enclosed for your remittance. Yours truly, H. S. Harbeck, Manager, loan division.' Registered. (8) That defendant received from plaintiff a postal card, copy of which is as follows: `444 Whitehall Terr. S.W. Atlanta, Ga. Feb. 5, 1940. Metropolitan Life Ins. Co., 1 Madison Sq., New York, N. Y. Dear Sirs: Please send me the balance on policy No. 4846627-A on life of Steve Calkins, deceased. I still have the policy. Mrs. S.C. Calkins.' (9) That the insured made no reply, and no payment to defendant, in response to defendant's letter of May 25th, 1938, to the insured. The defendant, after thirty-one days from May 25th, 1938, canceled on its records thereof the policy sued on in this case. (10) That Steve Calkins, the insured, died on November 28, nineteen hundred and thirty-nine (1939). This the 13th day of May, 1941."

The company introduced the loan certificate, as follows: "Loan Certificate and assignment of policy — policy No. 4846627-A. Insured, Steve Calkins. The undersigned Steve Calkins hereby assign(s), transfer(s) and set(s) over unto the Metropolitan Life Insurance Company all right, title and interest in its policy above designated, together with all money that may become payable thereunder, as sole security for a loan in the sum of three hundred one and 25/100 dollars, receipt of which is hereby acknowledged. Said loan shall bear interest from the date the loan is granted at the rate provided in said policy, payable annually on the anniversary date of the policy and, unless duly paid, said interest shall be added to the principal of the loan and bear interest at the same rate and on *249 the same conditions. Payments of interest and payments on account of principal may be made at the Home Office of the Company, 1 Madison Avenue, New York, N. Y., or at such other office as may be designated by the Company; but only in exchange for the company's official receipt, signed by the Secretary, and countersigned by a person authorized to receive such payment. At any time when the principal of said loan, with overdue interest added thereto, shall equal the cash surrender value of said policy, then the policy shall become void and of no effect at the time and upon the conditions provided therein for such contingency. If the policy contains no provision for avoidance when the principal with overdue interest shall equal the cash surrender value, then the policy shall become null and void after one month's notice to that effect. Any notice in connection with this loan duly addressed and mailed to the last post-office address of the undersigned known to the company shall be deemed to have been duly given. Executed at Atlanta this 26th day of January, 1937. Steve Calkins." At the top of this certificate there appeared the following: "For Home Office Use. Policy No. 4846627-A. Date of Loan, 2/4/37. Amount of loan, $301.25 [in pencil] $297.82;" and on the back of the certificate, the following: "Partial payments: Amount, $3.43. Credit date: 12/23/37."

At the conclusion of the evidence the court directed a verdict for the plaintiff for the principal amount sued for. The company filed a motion for new trial based on the general grounds, and afterwards filed an amendment adding one special ground complaining that the court committed error in directing a verdict. The motion was overruled and the defendant excepted. 1. The defendant in error filed a motion to dismiss the bill of exceptions. There is no merit in this motion.

2. Since the court disallowed the attorney's fees and the claim of penalty, this assignment of error is moot.

3. The only question to be determined is whether, in view of the provisions of the policy with reference thereunder, and the loan certificate, considered together, in the light of the facts of this case, the interest was payable in advance at the premium paying period, or was payable a year thereafter. It will be observed from the *250 allegations of the petition and the evidence that the loan, to all intents and purposes, was made on February 21, 1937, for the principal sum of $297.82. On the next anniversary, February 21, 1938, nothing was done with reference to the loan, either by the insured or the company. On May 25, 1938, the company wrote the insured sending him a statement to the effect, as shown by No. 7 of the stipulation, that unless $6.68, an amount sufficient to pay the balance of interest in advance to February 21, 1939, was paid within thirty-one days, the policy will be cancelled. Payment was not made, and the company entered a cancellation of the policy. The status thus stood. The insured died November 28, 1939. On February 21, 1938, there was a sufficient loan value to take care of the interest for the first year, but not enough to pay this earned year's interest and a year in advance to the next anniversary of the policy note. On this anniversary, February 21, 1938, which was the beginning of the second anniversary, the company did not demand advance interest, as it had not demanded it in the first instance, when the loan was made. Indeed, there was not a sufficient amount of loan value on the policy to make the principal loan which was made and at the same time pay the interest in advance.

It is true that the provisions of the policy alone may be construed that the company had the right to demand interest in advance when the loan was first made, Feb. 21, 1937, and we do not hold that it could not have done so at a subsequent anniversary date; but, notwithstanding the rights of the company under the policy as to this, the parties had a right, in a supplemental agreement as to this provision of the policy, to change the right as to the time of payment of interest. This same principal was very ably and exhaustively dealt with by Justice Atkinson in State Life Insurance Co. v. Tyler, 147 Ga. 287 (93 S.E. 415). The court was there dealing with a premium note, but we fail to see any difference in principle. The court held: "A contract of life insurance, as expressed in the policy issued by a company to an individual, may be supplemented by a subsequent contract between the parties, expressed in a promissory note given by the insured to the insurer for a premium on the policy and providing for a termination of all rights under the policy for nonpayment of the note, although the policy contain no such provision." By reference to the loan certificate in the case at bar, as above set forth, it will be observed *251 that it is stated: "Said loan shall bear interest from the datethe loan is granted at the rate provided in said policy,payable annually on the anniversary date of the policy." (Italics ours.) This principle was announced approvingly by this court in Missouri State Life Insurance Co. v. Bozeman,48 Ga. App. 640 (173 S.E. 183), in dealing with a question of loan interest. We will discuss this case later. Hence it follows that the time for the payment of interest in the case at bar is to be determined by the loan certificate or supplemental agreement. Under the loan agreement interest was due and payable on the next succeeding anniversary date of the policy following the date of the loan, or on February 21, 1938. On this last date there was a sufficient amount to take care of this past-due interest and thus extend the loan until the next anniversary date, February 21, 1939, under the loan agreement. Thus the loan was extended until February 21, 1939, and the company had no right arbitrarily to give notice and foreclose the policy on May 25, 1938. Such action was null. The company served no notice and demanded no interest as of February 21, 1939, as provided by the loan contract. Hence the policy remained in force and was alive and enforceable on the date of the insured's death, November 28, 1939.

What is said here is not in conflict with the decision announced by this court in Missouri State Life InsuranceCompany v. Bozeman, supra. In fact, the principle therein announced is in accord with what is here ruled. In that case the court held that a loan agreement to pay interest in advance was binding and enforceable. The insurance company had foreclosed the policy by giving the notice at the time and in the manner and in accordance with the provisions of the loan agreement. The principle announced in that and in this case is the same; the difference lies in the facts only. In Missouri State LifeInsurance Co. v. Bozeman, supra, the company complied with the provisions of the loan agreement to foreclose the policy, while in the case at bar the company did not do so, but adopted an arbitrary method, foreign to the provision of the loan contract, in an attempt to foreclose it.

Judgment affirmed. MacIntyre, J., concurs.

Dissenting Opinion

The controlling question here is whether the policy of insurance sued on was in force on November 28, 1939, the date of the death of the insured. And that question *252 is dependent on the antecedent question whether, under the provisions of the policy and the terms of the loan contract, the insured was required to pay the interest on the loan inadvance, on each anniversary date of the policy. Judge Gardner in the majority opinion states, in effect, that under theprovisions of the policy alone the insured was obligated to pay the interest on the loan annually in advance on the anniversary date of the policy, but that the subsequent loan agreement (which amounted to a supplemental contract) changed that provision of the policy, and provided merely that the interest should be paid annually on the anniversary date of the policy. And he citesState Life Insurance Co. v. Tyler, 147 Ga. 287 (supra), where the first headnote reads as follows: "A contract of life insurance, as expressed in the policy issued by a company to an individual, may be supplemented by a subsequent contract between the parties, expressed in a promissory note given by the insured to the insurer for a premium on the policy and providing for a termination of all rights under the policy for nonpayment of the note, although the policy contain no such provision." In that case the Supreme Court answered the following question certified to it by this court: "Can a forfeiture of a life-insurance policy be declared on the basis of a provision in a promissory note given for a premium on the policy, declaring that the policy shall be forfeited if the note should not be paid at maturity, the policy itself containing no such provision?" It appeared that the policy provided that nonpayment at maturity of any note given for the first premium should render the policy void, but contained no stipulation or reference to the taking of notes forother premiums. Thus it clearly appears that the note provided for a contingency that was not provided for in the policy, and the Supreme Court held that the stipulation in the note "was supplemental to the original contract expressed in the policy, and was valid." And in that case the Supreme Court said that "under such circumstances the policy and note should be considered together."

The case at bar is somewhat different from the case just discussed. Here, the policy clearly and distinctly provides that the interest on the loan should be paid annually inadvance on the anniversary date of the policy. The loan contract contains no new or additional or contradictory provision in respect to the paying of interest in advance. It merely says that the interest is to be paid *253 annually on the anniversary date of the policy. The policy says the same thing, but goes further and provides that not only is the interest to be paid annually on the anniversary date of the policy but it must be paid in advance. There is no contradiction between the provisions of the policy and those of the loan contract, and obviously the loan contract fails to set up a supplemental contract in that respect as the note in theTyler case, supra, did. The insurance contract and the loan contract were not separate independent contracts, but were as closely interlocked as the "Siamese twins." The loan contract was based upon the insurance contract and did not assume to set forth all the necessary provisions to make it a complete and valid contract. It relied largely upon the provisions of the insurance contract which were not directly referred to in the loan contract, and there was nothing in it to indicate an intent on the part of the insured or the insurer that any provision of the policy should be altered, varied, or modified by the terms of the loan contract. On the contrary, as shown by the stipulations of the parties in this case, the loan obtained by the insured was "secured by an assignment of the policy, and in accordance with the policy's requirements," and one of those requirements was that the interest on the loan was to be paid annually inadvance. The facts of this case are quite similar to those ofMissouri State Life Insurance Co. v. Bozeman, 48 Ga. App. 640 (supra); the only difference being that in the Bozeman case the charging of interest in advance was stipulated in both the policy and the loan contract. And in my opinion that difference under the facts of this case is immaterial. In the Tyler case, supra, the court held that since the policy was silent on the question there involved, and since the subsequent contract contained a clear and valid stipulation thereon, such stipulation was controlling. Applying that ruling to the facts of the instant case, in order for the insurer to have the right to charge interest in advance it was not necessary for it to insert that stipulation in both the policy and the subsequent loan contract. It was only necessary to insert it in either the policy or the loan contract, provided that if inserted in the policy only, the stipulation was not varied or contradicted by any provision in the subsequent loan contract. Here, the policy contained a clearly expressed, valid and unambiguous provision for the payment of interest in advance, and that provision was not varied, added to, or contradicted by any provision *254 of the subsequent contract, that contract being silent upon the subject of the payment of interest in advance. I think that in principle the decisions in the Tyler and Bozeman cases are controlling in this case and that a verdict for the insurer was demanded.

ON MOTION FOR REHEARING.

Addendum

It is complained that this court did not specifically pass on the assignment of error regarding the overruling of the general demurrer. The trial court did not err in overruling the general demurrer.

Rehearing denied. MacIntyre, J., concurs. Broyles, C. J.,dissents.