Mutual Benefit Life Ins. v. First National Bank

115 Ky. 757 | Ky. Ct. App. | 1903

Lead Opinion

Opinion op the court by

JUDGE PAYNTER

Reverstng.

On July 30, 1897, the appellant issued to Watson A. Sud-doth a policy insuring his life in the sum of $5,000 for the benefit of his executors or assigns in consideration of the payment of a semi-annual premium of $63.50. He paid the premiums for twelve years. On July 14, 1898, he borrowed of the company on the policy $549.60, executing a note due in six months. At maturity, an additional loan being made, the note was renewed for $599.32, payable July 30, 1899. On May 6, 1899, Sudduth, for value, assigned the policy to the appellee, the First National Bank of Louisville. The assignment was assented to by the company in writing. but it was stipulated therein that the assignee agreed that any indebtedness to the company on the policy should be a valid and prior lien thereon. The semi-annual premium falling due on July 30, 1899, was not paid, nor was the: note due by Sudduth to the company; and he died the following November. This action was brought to recover on the policy.

Among other provisions the policy contained the following: “Provided, that in case the said premiums shall not be paid on or before the several days hereinbefore mentioned for the payment thereof at the office of the company in the city of Newark or to agents when they prduce receipts signed by the president or treasurer, then in every such case this policy shall cease and determine, subject to the provisions of the company’s nonforfeiture system, as indorsed hereon with accompanying table.” Sudduth failing to pay the semi-annual premium falling due on July 30, 1899, the policy, by its terms, ceased, unless it was saved by the nonforfeiture provisions thereon indorsed. The nonforfeiture clause, as originally indorsed on the policy, was, on March 24, 1896, changed by the consent of parties, and another substituted for it. The rights of the parties must be determined by the substituted agreement, which is in these words:

“In consideration of the release (copy of - which is indorsed hereon) of the nonforfeiture provisions hereto applicable to policy No. 137,661, on the life of Watson A. Sudduth, the.Mutual Benefit Life Insurance Company hereby agrees that the following nonforfeiture provisions shall apply thereto as if originally incorporated in and indorsed upon said policy:

“ ‘Nonforfeiture Provisions.

“ ‘When, after two full annual premiums shall have been paid on this policy, it shall cease or become void solely by the nonpayment of any premium when due, its entire, net reserve by the American Experience Mortality and interest at four per cent, yearly (provided there be no loan on the policy) shall be applied by the company as a single premium at the company’s rates published and in force at this date, either, first, to the purchase of nonparticipating term insurance for the full amount insured by this policy, or, second, upon the written application by the owner of this policy and the surrender thereof to the company at Newark within three months from such nonpayment of premium, to the purchase of a nonparticipating paid-up policy payable at the time this policy would be payable if continued in force. Both kinds of insurance aforesaid will be subject to the same conditions, except as to payment of premiums, as those of this policy. Third, if preferred, the company will, on surrender of the policy fully receipted within the said three months, pay as a cash surrender value its entire net reserve by the American Experience Mortality and interest at four and one-half per cent, yearly, less a surrender charge equal to one per cent, of the sum insured by the policy.

.“‘If there be any loan on the policy such indebtedness shall be paid off out of the cash surrender value, and the remainder paid in cash by the company; or a value will be allowed by the company in the form of extended or paid-up insurance as above provided, the amount to be applied to the purchase of such insurance being correspondingly reduced in the ratio of the indebtedness to the full cash surrender value.

“ ‘If death shall occur within one year after the nonpayment of premium and during the term of extended insurance, there shall be deducted from the amount payable any premium that would have become due on this policy if it had continued in full force; also the amount of any indebtedness on this policy at time of such nonpayment of premium.

“ 'The company will at any time the policy is in full force loan up to the limit secured by its cash surrender value upon a satisfactory assignment of the policy to the company as collateral security.

“ 'The figures given in the following table are based upon the assumption that all premiums (less current dividends) have been fully paid in cash. The indebtedness, if any, may be paid off in cash, in which case the figures in the table will apply.”

The question involved here is one of contract. The language which evidences the contract is plain and unambiguous. This being true, the court should have but little difficulty in determining the rights of the parties to it. By the terms of the policy, where there is. a loan upon it after two full premiums are paid, it shall cease and become void solely by nonpayment of any premium when due; and its entire net reserve by the American Experience Mortality and interest at 4 per cent, yearly shall be applied by the company as a single premium at the company’s rate published and in force at that date, to the purchase of nonparticipating term insurance for the full amount insured by the policy. By the second nonforfeiture provision the owner of the policy had the option to apply to the company and surrender the policy to it within three months from such nonpayment of premiums, and have the net reserve and interest at 4 per cent, yearly applied to the purchase of a nonparticipating paid-up policy payable at the time the policy would be payable if continuing in force. The insured had paid the premiums for twelve years, and, if he had not secured a loan upon the policy the net reserve so calculated would have carried the policy for something more than eleven years. On July 30, 1899, there was a loan upon the policy then amounting to $617.30, and which matured on that day; it also being the day upon which the semi-annual premium was due, which he failed to pay. The first and second nonforfeiture provisions were not available because of the loan. The third nonforfeiture provision reads as follows: “If preferred the company will, on surrender of the policy, fully receipted within the said three months, pay as a cash surrender value its entire net reserve by the American Experience Mortality and interest at 4% per cent, yearly, less a surrender charge equal to 1 per cent, of the sum insured by the policy. If there be any loan upon the policy, such indebtedness shall be paid off out of the cash surrender value, and the remainder paid in cash by the company; or a value will be allowed by the company in the form of extended or paid-up insurance as above provided, the amount to be applied' to the purchase of such insurance being correspondingly reduced in the ratio of the indebtedness to the full cash surrender value.” This is the provision of the policy which must control in determining the rights of the parties.

It will be observed by the nonforfeiture provisions that-, where there is no loan upon the policy, the net reserve and interest at 4 per cent, purchases the extended insurance. Where there is a loan upon the policy, it is not the net reserve and interest which forms the basis for extended insurance, but the cash' surrender value of the policy. The cash surrender value is defined by the policy to be “its entire net reserve by the American Experience Mortality and interest at 4y2 per cent., less a surrender charge equal to 1 per cent, of the sum insured by the policy.” The table on thé policy shows this to be $617.30; besides, the evidence likewise establishes that to be the correct amount. On July 30, 1899, the.day Sudduth failed to pay the semi-annual premium on the policy, he owed exactly the amount of the cash surrender value of his policy. The net reserve under the first clause is computed on the basis of interest at 4 per cent., but under the third clause, to get the cash surrender value, on the basis of interest at the rate of 4y2 per cent. From a casual examination it might seem that, the greater the rate of interest, the greater the amount would be; but it is just the contrary, as the purpose is to find the present value of the policy, which has not matured, and the present value of a sum due in the future is smaller at 4% per cent, than at 4 per cent. The net reserve of the policy by the American Experience Mortality and interest at 4% per cent, is $666.30. The amount of the policy being $5,000, if there be deducted 1 per cent, of the sum insured, $50, from the net reserve at 4% per cent., there is left $617.30, the amount stated in the table. There was, therefore, on July 30th, after the payment of the note, nothing left of the cash surrender value to be applied to extended insurance.; and, the premium which was then due not being paid, by the terms of the contract the policy ceased. It was understood by Sudduth and the company when the loan was made that the cash surrender value of the policy on July 30, 1899, would be $617.30; therefore the company loaned him that amount, as it agreed to do under the nonforfeiture provisions of the policy, for it is there provided that it will “at any time while the policy is in full force loan up to the limit secured by its cash surrender value, upon a satisfactory assignment of the policy to the company as collateral security.” Sudduth anticipated the cash surrender value of the policy, and drew it in advance. The basis for settlement, after the nonpayment of the premiums, when a loan has been made to the insured by the company is, as plainly stated in the nonforfeiture provisions, as it is when no loan has been made and the insured requests that he be given “a nonparticipating paid-up policy.” He had the right to elect which nonforfeiture right he would accept. When he concluded to borrow from the company an amount, the exact equivalent of the cash surrender value of the policy, he could not fail to pay it and the premium, and then claiml the right to extended or paid-up insurance. By borrowing the money under the terms of the policy he had exhausted the entire amount of the cash surrender value of it, and. in failing to pay it and the premium he elected to settle on the basis of the cash surrender value of the policy. This is necessarily so, because he had nothing due him to purchase extended or paid-up insurance. Suppose Sudduth on July 30, 1899, had elected to take, under second option for settlement, a paid-up policy payable at his death. He certainly could not afterwards have had the right to exercise the first option, and get “nonparticipating term insurance for the full amount insured by the policy.” If he could not do this, it is manifest he could not take the cash surrender value of the policy, and then claim insurance under either of the other plans. The election to exercise one of the options for settlement excludes the right to a settlement under either of the others provided in the policy. Sudduth did not demand a' settlement under either the first or second nonforfeiture clause. Suppose he had done so. Presumably, the parties would have read from the nonforfeiture provisions the clause as follows: “If there be any loan on the policy, such indebtedness shall be paid off out of the cash surrender value, and the remainder paid in cash by the company; or a value will be allowed by the company in the form of extended or paid-up insurance as above provided, the amount to be applied to the purchase of such insurance being correspondingly reduced in the ratio of the indebtedness to the full cash surrender value.” Then they would have ascertained the insured’s indebtedness to the company to be $617.30. After deducting the surrender charge equal to 1 per cent, of the sum insured by the policy, the cash surrender value would have been found to be exactly $617.30. It would have demonstrated that he did not have one cent coming to him with which to pay for extended insurance or a paid-up policy. Of course, the company would have refused to have given him extended insurance or a paid-up policy, because there was nothing due the insured to purchase the same. After making the deduction there was no cash due the insured, so there was no value for the company to allow in the form of extended or paid-up insurance ; hence the policy was not in force when he died. To so hold does not work a forfeiture of any of the insured’s rights, but gives him all the rights which the company contracted to give him, and such as he agreed to accept. There is no element of forfeiture in the case. The three options given by the nonforfeiture provisions presumably were of equal monetary value. As to whether the insured would take one or the other depended entirely upon himself. If he did that which, by the express terms of his contract, showed he elected to take one instead of another, it can not be said he forfeited any right, but rather that he made a choice of rights or privileges thereunder. Sudduth simply withdrew from the company, and used money which he might have left with it as a protection for the future in case he failed to pay a premium. It does not claim a forfeiture of the policy for the failure to pay the nofe, but that the policy ceased to bind it upon the nonpayment of the premium. When this took place, then the nonforfeiture provisions became operative, and the rights of the parties should be determined thereby. That he might exercise the right as fully as he did, he procured the company to substitute the present nonforfeiture provisions for those which the policy originally contained. Appellant seeks the enforcement of the terms of the contract, which are not doubtful or uncertain in meaning. Judge Peckham delivered the opinion of the court in Holly v. Metropolitan Life Insurance Company, 105 N. Y., 442, 11 N. E., 510, in which it is said: “If language as plain and unambiguous as this is not only to be twisted out of its natural meaning, but is to be wholly ignored, by the courts of justice, it will be useless in the future for companies to make any effort to bind policy holders to perform their contracts. The use of language is to express ideas, and writing is resorted to in order to furnish conclusive proof of what language was used. Being certain of the language used, and the case being free from fraud or mistake, if such language is plain and susceptible of but one meaning, that meaning, even in cases of contracts regarding life insurance, must control.” T’here was nothing unjust in the fact that the policy allowed 4 percent. reserved, or $718.30, if that sum be used for extended or paid-up insurance; whilst it fixed a value of $617.30 to be paid to the policy holder in case of lapse. The company doubtless regarded -the benefit which it hoped to derive by the policy holder taking extended or paid-up insurance instead of cash, as being a good business reason for allowing $718.30 in the purchase of such insurance. The cash surrender value of the policy was not diminished because of the loan which the company made to Sudduth. If it was not, then the transaction was not usurious. If no loan had been made, the cash surrender value of the policy on July 30, 1.899, by its terms, was $617.30, and Sudduth could -.only have withdrawn that amount.

It is also urged that the insurance company, having assented to the assignment to the appellee, is estopped to make the defense now relied on. Appellee had no notice there was a loan on the policy, and'was informed by Sudduth, when he assigned the policy to it, that the policy was good for something over eleven years if he paid nothing more on the premiums, but there were then the following indorsements on the policy: “July 14, 1898, the existing indebtedness to the company on this policy is $549.60 (interest at 6 per cent, from July 30, 1898), as evidenced by the certificate of loan in the company’s possession. Paid off January 30, 1899, out of new loan. M. B. L. I. Co., per G. H. C.” “January 30, 1899, the existing indebtedness to the company on this policy is $599.32 (with interest at 6 per cent, from January 30, 1899), as evidenced by the certificate of loan in the company’s possession.” Appellee’s agents failed to observe these indorsements, but being on the policy at the time of the assignment, appellee took subject to them. While the contract above quoted stipulated that the company would loan on a proper assignment of the policy, it was not required to take an assignment. The policy was the obligation of the company to the assured. It was, therefore, properly held by him, and the indorsements on it were notice to all persons dealing with it that a loan had been made on it. No notice was given to the bank as to the maturity of the premium. It was given to Sudduth, which was sufficient, if a notice was necessary at all. Counsel relies upon section 653, Kentucky Statutes, 1899, as prescribing how policies shall be valued; but this is only for the guidance of the insurance commissioner in determining the solvency of the company, and has no application to a contract like the one under consideration. The cases of St. Louis Mutual Life Insurance Company v. Grigsby, 73 Ky., 310; Northwestern Mutual Life Insurance Company v. Fort’s Adm’r, 82 Ky., 269, 6 R., 271; New York Life Insurance Company v. Curry, 24 R., 1930, 72 S. W., 736, and other cases resting upon the same principle, áre not in conflict with the conclusions in the case at bar. In those cases the default was in the payment of a note or interest, not in the nonpayment of the premium. In this case the insured received the full amount he was entitled to under the plan of settlement which he elected to adopt, which does not appear to have been done in those cases. In this case the settlement is made in conformity to the contract of insurance.

The judgment is reversed for proceedings consistent with this opinion.

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Dissenting Opinion

Judge Hobson

delivered the following dissenting opinion:

It is conceded that by the terms of the contract the policy ceased when Sudduth failed to pay the note or the premium due on July 30, 1899. But back of this is the question whether the contract to this effect is such as the courts of this State will enforce. A distinction must be made between the rights of appellant as insurer and its rights as money lender. If there had been no loan on the policy, it would have continued in force, notwithstanding the nonpayment of the premium, something over eleven years. It has been held in a number of cases that the court will not enforce a penalty for the nonpayment of a debt, and thus bring about a forfeiture of the policy. In St. Louis Mutual Life Ins. Co. v. Grigsby, 73 Ky., 310, Grigsby’s life was insured in the sum of $10,000 by a policy issued August 16, 1867, in consideration of the payment annually for ten years of a premium of $690.60. It was stipulated that, if default was made in the payment of any premium, such default should not work a forfeiture of the policy, but it should be reduced to such proportionate part, of the sum insured as the sum of the annual payments made bore to the sum of the ten annual payments stipulated for. It was also provided that, if Grigsby failed to pay annually in advance the interest on any unpaid note or loan on account of any of the annuál premiums, the policy should cease and determine. Grigsby paid the initial premium of $690.60 in 1867. He also paid one-half the premium for 1868 and 1869, and executed his notes for the other half. He failed to pay the premium for the year 1870, or the interest on his notes. In November, 1870, by a. written contract, the policy was renewed and continued in force for the commuted amount of $3,000 until August 16, 1871. Grigsby then paid the amount required of him by the company, and executed notes for the remainder, but he failed to pay the interest due on his notes on August 16, 1871, and after this died on January 2, 1872. The court enforced the policy. It said: “We are satisfied from the nature of the contract that the forfeiture was intended as a penalty to secure not the ultimate but the prompt payment of the interest to become due, and, as the default is only in time, and the company can be given all that it stipulated to receive, a case is presented in which relief can and ought to be afforded.” In Northwestern Mutual Life Ins. Co. v. Fort’s Adm’r, 82 Ky., 269, 6 R., 271, where the failure to pay the interest on a premium note was likewise relied on- to defeat a recovery on the policy, the court, referring to the case above cited, said: “Here the default, if any has occurred, is not of the substance of the contract, but in time of the payment of interest, and the company can be given all that it stipulated to receive. On the other hand, to forfeit the whole policy on account of default in time of payment of the interest, which formed but a small part of the consideration, and which the company is fully secured in the ultimate payment of, if not already paid, would impose upon the insured the entire loss of the premiums actually paid. A forfeiture under such circumstances would be extremely oppressive, and, if provided for in a contract between individuals concerning any ordinary business transaction, be held as in the nature of a penalty. And, as we are unable to perceive any reason for changing or relaxing the rule in respect to contracts about the business of life insurance, the forfeiture provided for in this case must be likewise so held.” In New York Life Ins. Co. v. N. L. Curry et. al., 24 R., 1930, 72 S. W., 736, the assured held a paid-up policy for $630. He borrowed $130, pledging the policy to secure the loan, and signed a writing to the effect that, if he failed to pay the interest on the loan, the policy should be surrendered to the company at its customary cash surrender value, and in that case it should be liable to him for the balance only of the cash surrender value after deducting the loan and interest and any expenses incurred. The interest was not paid. The company claimed that the policy was terminated, and after eight months refused to reinstate the policy upon the payment of the debt. The court said: “By the terms of this writing, if the loan or its interest was not repaid when due under the loan agreement, the policy was to be surrendered to the insurer ‘at the customary cash surrender value then allowed by said party for the surrender of policies of this class.’ This is pure and simple a provision for the forfeiture of the policy upon such terms as the payee of the note may require, and at its option. The difference between this and ordinary unqualified forfeiture lies alone in the extent of the forfeiture. It operates as an enforced conversion without further notice to or consent ol the borrower of his collateral if he fails to meet promptly the payment of interest upon his debt. . . . Appellant, as a money lender, stands under the law precisely as any other lender of money. Its charters and privileges as a life insurance company can not affect its other quality as a money lender. If it loans money on its policies held by its .policy holders, its rights as lender are exactly what they would be if, instead of the policy, the borrower pledged stocks, bonds, or policies in other companies, or gave a chattel or real estate mortgage to secure the loan.” Along the same line, and resting upon the same principle, are Montgomery v. Phoenix Mutual Life Ins. Co., 77 Ky., 51; Mutual Life Ins. Co. v. Jarboe, 102 Ky., 80, 15 R., 1901, 42 S. W., 1097, 39 L. R. A., 504, 80 Am. St. Rep., 343; Manhattan Life Ins. Co. v. Patterson, 109 Ky., 624, 22 R., 1282, 60 S. W., 383, 53 L. R. A., 378; Washington Life Ins. Co. v. Miles, 23 R., 1705, 66 S. W., 740.

The case before us differs from those cited in the following particulars: (1) Here there was a default in the payment of a premium, as well as of the note. There the default was only in the payment of a note. (2). Here the amount of the note was equal to the cash surrender value of the policy as fixed by the company. This does not appear in any of the cases cited. (3) Here the agreement as to' the termination of the policy is contained in the same contract that provides for the extended insurance, and not in a supplementary contract. (4) In those cases the assured held or was entitled to a paid-up policy.

1. While there was a default, both in the payment of a premium and of the note, if the note had been paid the default in the premium would not have affected the policy, for, if there had "been no loan, the policy would have been extended for something over eleven years. It was not, therefore, the failure to pay the premium that terminated the policy, for this would not have mattered but for the nonpayment of the note.

2. In some of the cases nothing is said about the cash surrender value or its amount. But, aside from this, the cash surrender value is fixed by the company as the amount at which it will take the policy under any circumstances on the application of the insured. The policy may be of much greater value, for the cash surrender value does not purport to be the real value of the policy. By statute in this State policies are valued under the American Experience Mortality, with interest at 4 per cent. Kentucky Statutes, 1899, section 653. It must be presumed that policies are ordinarily worth this. On this basis thé policy in contest was of cash value $718.30-. Under special circumstances they are often worth practically their face value, as where the health ' of the insured has failed. If Sudduth had paid his note of $617.30 on July 30, 1899, his policy would have been extended over 11 years. The failure to pay the note, if it gave the company an absolute right to terminate the policy by ap. plying its cash surrender value to the payment of the note, can not be distinguished from a like contract as to any other collateral pledged to secure a debt with a provision in the contract that, if the debt is not paid, the collateral shall vest in the creditor at a price fixed by the contract in advance.

3. It is settled by 'the cases above cited that, where the right to continued insurance has been acquired, a contract for the termination of the policy on the nonpayment of a debt will not be enforced. The reason for the rule is that the law will not suffer the lender to impose on the borrower. The form of the transaction is immaterial. The court will not allow any disguise or mere form to defeat the rule. Here Sudduth had acquired a right to continued insurance on March 24,1896, when the substituted contract was made; and by the terms of that contract when he had paid in July, 1897, the full annual premium for ten years, as there was then no loan on the policy, he had the right to extended insurance without paying anything more for ten years and thirty-eight days. In July, 1898, when he originally negotiated the loan, he had the right to continued insurance, by the terms of the contract, for ten years and 312 days, as there was until then no loan on the policy. This right to continued insurance for over ten years, which he had acquired before the loan was made, he continued to have until his death, unless he lost it by the bare fact that he after-wards secured a loan on the policy. When the loan matured, he did not elect to take up his note and surrender the policy to the company. The following correspondence took place between them looking to Sudduth’s paying part of the premium and giving a new note:

“July 30, 1899.

“The undersigned, the .party assured under policy No. 137,661 in the Mutual Benefit Life Insurance Company, hereby requests that the cash due July 30, 1899, be settled by premium loan. Watson A. Sudduth.”

“Louisville, Ky., August 28, 1899.

“Mr. W. A. Sudduth, Fifth & Court Place, City — Dear Sir: Upon return of policy No. 187,661, the inclosed certificate of loan signed' by yourself and the outstanding assignment to the First National Bank of Louisville, canceled by the bank, the company will now increase the policy loan from $599.32 to $633.30, applying the increase in part payment of the premium due the 30th ult., provided the remainder of the premium, $31.85 be paid in cash. The seal of the bank should be attached to the cancellation of its assignment.

“Yours truly, K. W. Smith & Co.”

The letter of Smith & Co. was written in accordance with instructions from the home office, to which in the meantime the application of Sudduth had been sent. Sudduth did not comply with this proposition, and, though there were some other propositions made subsequently, they were not accepted by him, and matters stood as they were until he was taken sick in November following, when the bank offered to pay both the premium and the note, but the company refused to accept the money. If a bank had made a contract with Sudduth to lend him $617.30, and had provided in it that, if the note was not paid, it should have the policy absolutely, or the entire benefit of it, there, would be no doubt that the contract would not be enforced. The fact that the insurance company made the loan to one who held a policy in the company on his own life can not put it in a better position than if the policy had been in another company, and had been hypothecated for the loan. The substance of the transaction is that the insurance company lent its policy holder $617.30 on his policy. When the note matured, and was not paid, the relation of debtor and creditor existed between them on the note, and the policy was the collateral securing the obligation. A stipulation in a contract that in this event the insurance company should have the right to cancel the policy if the note was not paid, could not be enforced. But that is, in substance, the case we have; for, if the amount of the note is subtracted from the cash surrender value, nothing is left, and, if the cash surrender value is paid by the company in the cancellation of the note, the policy is at an end.

4. In the cases cited the assured had paid for insurance during his life. Here the assured, when the loan was obtained, had paid for insurance for a term of years. No sound distinction can be made between this case and those, because the insurance there had been paid for during the life of the assured and here for a term of years, which might exceed the limit of his life; for in either case the assured had a definite right to insurance — a vested right— which continued far beyond Sudduth’s death, unless it was divested in his lifetime. It was suggested on the argument that he consumed the fund which he had thus provided for extended insurance, and in illustration it was said that one can not keep his cake and eat it, too. But the difficulty is that Sudduth ate no cake. He only got a loan. If the company had paid him a sum of money absolutely in ex-tinguishment of his right to continued insurance, the argument for appellant would apply. But this it did not dolt only lent him the money, and he was under obligation to pay the money back, with interest at 6 per cent. The interest on the money is the only consideration which our statute allows to be paid for its use. All contracts for a greater consideration for the use of money, direct or indirect, are declared void. Kentucky Statutes, 1899, section 2219. The purpose of the statute is to prevent lenders from making-hard contracts with borrowers, and 'the agreement by Sudduth to forego his right to extended insurance, which he had then absolutely for a term of years extending beyond the time of his death in consideration of the loan, besides the lawful interest on the money, was both within the letter and mischief of the statute. When the note matured, the company had a legal demand against Sudduth for the amount of the note, and this it could enforce. He could, at his election, cancel his policy at its surrender value, and apply the proceeds to the payment of his note. But this he did not do. The company continued to hold the note until his death, and therefore continued to hold the demand against him for the money. His assignee, the First National Bank, held the policy. Sudduth had a right to pay his note, and save his policy, for the election was in him to cancel at the surrender value or not. The company, did not tender the note or. demand the policy. It therefore stood simply as a lien creditor, and it could not, on the non-payment of the note, appropriate the debtor’s property at a price fixed by it in advance; for it can not be¡ permitted to impose more onerous conditions upon its policy holders who borrow from it and fail to pay, than other lenders of money may impose upon their debtors.

It is, however, provided in the contract that, if the death of the assured occurred within one year after the nonpayment of a premium, and during the term of extended insurance, there should be deducted from the amount payable such premium, as well as the amount of any indebtedness of the assured to the company on the policy. This was a reasonable provision, for otherwise one who was in bad health might risk his not surviving the year, and thus profit by his own violation of the contract. The amount of the premium due July 30th was not subtracted in the judgment. This was error. ' The credit should have been given as well ■for the premium and interest from the time it was due as for the note.

With this modification, the judgment complained of seems to me correct. I therefore dissent from the opinion of the court.

Judges Nunn and O’Rear concur in this dissent.

Petition for rehearing by appellees overruled.