121 Ky. 839 | Ky. Ct. App. | 1906
Opinion by
Reversing .
On June 1, 1900, the appellant, Michigan, Mutual Life Insurance Company, issued and delivered to "William Mayfield a policy for $500 on his life, which sum was to be paid at his death if the policy was then in full force. The insured paid the premiums on the policy until July 1, 1905. On the 17th of that month he died. This is an action to recover the full amount of the policy. The payment is resisted upon the ground that the policy was not in force at the time of the death of the insured. He had paid three years and more of premiums before his death, but he did not make the payment of the premium which matured July 1, 1905. To ascertain the liability of the company, the court is called upon to construe clauses 6 and 8 of the policy, which appear under the heading of “Benefits and Provisions,” which read as follows:
“Paid-Up Insurance. If the payments are not made as provided herein, then in every such case the com-
“Extended Insurance. After the payment of three full annual premiums, if default be made in the payment of any premium thereafter, the insured may, by giving written notice to the company within thirty days after such default,- elect, in lieu of the paid-upinsuranee provided for in this policy, to have the full amount insured carried as non-participating term insurance without further payment of' premiums, for the time specified in the table of extended' insurance below, provided there is no indebtedness to the company on account of this policy. . This nonparticipating term insurance shall be subject to the condition of this policy, except as to the payment of premiums, and if death should occur within three years after the non-payment of premiums, and during-the continuance of the non-participating term insur
The theory upon which the appellee sought to recover upon this policy is that it was in full force at the time of the intestate's death, it being claimed that he had thirty days after he failed to pay the premium in which to elect whether he would take “paid-up insurance” or take “extended insurance.” The appellant questions the correctness of this position, and claims that by the terms of the policy the paid-up insurance feature was automatic, and that upon failure to pay the premium the insured was entitled to paid-up insurance. It is conceded by appellant that after the paid-up insurance took effect the insured had the privilege of substituting extended insurance therefor by giving notice within thirty days after the default in the payment of the premium that he desired to exercise his privilege. The solution of the question depends upon the terms of the policy. The parties were capable of contracting. It is the business of the court to ascertain and enforce the contract. It is expressly provided in clause 6 that the company is not liable for the payment of the insured sum; that the policy shall cease and determine after the premiums have been paid for three years, if default be made in the. payment of any premium thereafter. It is then provided that the policy is valid as a non-participating policy for a fractional part of the sum insured, this sum to be paid on the death of the insured. This provision is automatic in character. When the insured failed to pay the premium, the liability of the company was for that fractional part of the sum insured, as shown by the table
It is insisted, however, as„ the insured has thirty days in which to apply for extended insurance, that the policy for the full amount remains in force until the expiration of thirty days. This contention is in the face of the plain terms of the policy. To take this view of it, we would have to hold that the policy remains in force for thirty days after default in the payment of premiums, although it is expressly provided that the company is not liable for the payment of the insured sum after default in the payment of the premiums, but only for a paid-up policy for a fractional part of the sum insured. The,policy for the full amount did not remain in force after default in the payment of the premium. If we so held, we would say that the clauses intended to fix the rights of the parties upon the default of the payment of the premium did not become operative until thirty days
The provisions of the policy fixing the rights of the parties upon the default of the payment of the premiums differ widely from the provisions in the policies which this court has been called upon to construe in cases cited both by counsel for the appellant and appellee. In most of these cases the insured was not entitled to paid-up insurance, unless he had, before the expiration of a certain period, surrendered his policy and demanded paid-up insurance. In the case at bar, as we have stated, the insured was entitled to paid-up insurance for a specified sum without any further act upon his part, other than default of the payment of the premium.
We do not deem it necessarw to review the cases cited by counsel, except the case of Drury’s Administrator v. New York Life Insurance Company, 115 Ky., 681, 25 Ky. Law Rep., 68, 74 S. W., 663, 61 L. R. A., 714, 103 Am. St. Rep., 351, as counsel for appellant claims that case is decisive of the question here involved. In the Drury Case the policy provided that the insured was entitled to paid-up insurance upon the surrender of the policy within six months after
The judgment is reversed for proceedings consistent with this opinion.
