73 So. 409 | Ala. | 1916
This cause involves a policy of insurance issued on the life of John Roscoe Stewart, now deceased. The beneficiary named therein was Anna E. Stewart. The appellees claim as assignees of the policy.' The amount of the insurance stated in the face of the policy was $2,000. It is said to be of the class of policies called “standard accumulation classthe accumulation period being fixed at 20 years. The application therefor was made and taken in Duluth, Minn., and the policy was delivered in that city on to-wit, the 19th day of April, 1906. The annual premiums, stipulated to be paid in advance for 10 years, were duly paid up to and including that due the 19th day of April, 1911.- In the policy it was provided:
“The insured may obtain cash loans on the sole security of this policy, on written request, at any time after it has been in force two full years, if premiums are duly paid to the anniversary of the insurance next succeeding the date when the loan may be obtainéd. The insured shall pledge this policy and its accumulations as collateral security for such loans, in accordance with the terms contained in the company’s then existing form of policy loan agreement. The amount of loan available at any time is stated on the second page, and includes loans then unpaid. Interest will be at the rate of 5% per annum, payable in advance to the next anniversary, and annually in advance on that date and thereafter.”
The policy also bore these stimulations:
“This policy is automatically nonforfeitable, as follows:
“First. — If any premium is not paid on or before the date when due, and if there is no indebtedness to the company. The insurance will automatically continue from such due date as term insurance as follows, and no longer, namely: for 37 days if premiums have been paid for 3 months; for 45 days if for 6
“In lieu of such automatic term insurance, on the insured’s written request within six months from such due date but not otherwise, this policy will be indorsed for the amount of paid-up insurance, if any, stated on the second page.
“Second. — If any premium or interest is not paid on or before 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 said due date, will automatically continue from said due date as term insurance for such time as any excess of three-fourths of the reserve under this policy over such indebtedness will purchase at the age of the insured on said due date, according to the company’s present published table of single premiums for term insurance, and no longer.”
After paying the premium, the sixth in number, due April 19, 1911, and thereby paying for the insurance to April 19, 1912, the insured, while a resident of Alabama, borrowed from the company $458, executing therefor a “policy loan agreement” in the form provided by the company and assigning the policy as collateral security therefor. The report of the appeal will’ contain the body (except the sixth paragraph, which we quote below) of the instrument executed by the borrowing policy holder. The sixth paragraph of the “policy loan agreement” is this:
“That the application for said loan was made to said company at its home office in the city of New York, was accepted, the money paid by it, and this agreement made and delivered there; that said principal and interest are payable at said home office, and that this contract is made under and pursuant to the laws of the state of New York, the place of said contract being said home office of said company.”
In the amended bill it is averred:
“Orators are informed and believe, and upon such information and belief aver, that in the foreclosure of the said policy pursuant to the terms of the said loan agreement the respondent lapsed the said policy before the death of the insured by the following method of calculation, viz.: The full legal reserve on the policy at the end of the sixth year, or on the 19th day of April, 1912, was the sum of $544, and three-fourths of the same
We appropriate this very satisfactory statement of the learned judge, sitting in equity, accurately outlining the case made by the amended bill:
“The seventh premium was not paid by the insured, who died a few months thereafter, viz. in December, 1912. The policy of insurance is alleged to have been canceled by the defendant in April, 1912, on account of the nonpayment of the premium. Complainants allege that the policy is still in force and effect, on account of the matters set out below: They say that the legal reserve, which the company is required by law to set apart, in April, 1912, amounted to, as they are informed and believe and so state, $544. They say, however, that the company canceled the policy of insurance under a provision by which a borrowing
(1) A primary inquiry raised by the demurrer to the amended bill is this: Whether the nature, obligation, validity, and interpretation of the “policy loan agreement” is a contract affected with and governed by the laws of the state of New York; or, as to its nature, obligation, validity, and interpretation, is it a contract affected with and governed by the laws of the state of Alabama or of the state of Minnesota? “The general rule of law, * * * is that a contract is governed, as to its nature, obligation, validity, and interpretation, by the law of the place where * * * made, unless the parties have in view some other law, or unless it is to be wholly performed in some other place, in which case the law of place of performance, or the law which
(2, 3) Unless the above-quoted recitals and stipulations, with respect to the law that should govern the cash loan thereby affected, of paragraph 6 of the “policy loan agreement,” are to be taken as qualified, if not annulled, by the resultant effects of the facts that John Roscoe Stewart was a resident of the state of Minnesota when he applied for and received the delivery of this policy on his life and paid the initial, and, perhaps, some others of the annual premiums therefor — a policy that by its terms anticipated and assured the particular character of cash loan privilege or option of which the insured availed in April, 1911— and therefrom deducing the conclusions that the policy contract was a Minnesota contract, and that the loan agreement was but a subsidiary element of the policy contract, and, in consequence, itself a Minnesota contract, it is quite plain that the contract for the loan was, when made, and has continued to be, a New York contract, subject to the applicable laws of that state, and not a Minnesota contract, and certainly not an Alabama contract. The judgment of the Supreme Court of Missouri upon this question was invoked in Head v. New York Life Ins. Co., 241 Mo. 403, 417, 418, 147 S. W. 832, though the insurance company there appears to have pressed the view for which complainant-appellee contends in the cause at bar. That court said: “It is next insisted by counsel for appellant that, conceding the contract expressed in the policy in suit is construed and governed by the laws of Missouri in vogue at the time it was formed, and that it was formed originally in Missouri, yet inasmuch as the present beneficiary in 1904 entered into a loan agreement whereby she borrowed from the defendant $2,270, and wherein she agreed that the policy in question should be governed and controlled by the laws of the state of New York, such loan agreement constituted a new and valid contract which precluded the present beneficiary from any other redress under the policy in suit than she would be entitled to if it had been settled in accordance with the laws of New York. We cannot concur in this view. It is not an open question in this state that all subsidiary contracts made by the parties to an insurance contract are within the con
Through writ of error this decision of the Misouri court was brought under review of the Supreme Court of the United States.—New York Life Insurance Co. v. Head, 234 U. S. 149, 34 Sup. Ct. 879, s. c., 58 L. Ed. p. 1259 et seq. The- Supreme Court, in reversing the judgment of the state court, Chief Justice White writing, held that the statutes of Missouri were wholly ineffectual beyond the borders of that state, so as to impair and destroy the right of persons not its citizens to make a contract not operative within its -jurisdiction and lawful in the state where the contract was made. In the concluding sentences of the opinion, it was said: -“But before we come to direct the judgment of reversal, we briefly refer to another aspect of the subject, that is, the ruling of the court below as to the subsidiary nature of the loan agreement and its consequent control by the broader principle upon which its conclusion was really based. Of course under the view which we have taken of the case, that is, of the want of power of the State of Missouri because the contract of insurance was made within its jurisdiction to forever thereafter control by its laws all subsequent agreements made in other jurisdictions by persons not citizens of Missouri and lawful where made, that is, to sterotype, as.it were, the will of the parties contracting in Missouri as of the date of the contract, it is unnecessary to consider whether the loan agreement was or was not subsidiary, but see on this subject Leonard v. Charter Oak Life Ins. Co., 65 Conn. 529 [33 Atl. 511]; Fireman’s Ins. Co. v. Dunn, 22 Ind. App. 332 [53 N. E. 251]; S. S. White Dental Mfg. Co. v. Delaware Ins. Co. (D. C.) 105 Fed. 642; 2 Wharton, Conflict of. Laws, § 467g, and cases cited, and see note 63 L. R. A. 833.”
At the above citation in 2 Wharton, this pertinent statement occurs: “The general principle seems to be that the assignment of a policy of insurance, or the benefit thereunder, is a contract distinct and separate from the original contract of insurance, and is governed by the laws of the place where it [the assignment] is made, without reference to the law governing the contract of insurance itself.”
As we understand the opinion of the Supreme Court in the: Head Case, supra, the essential premise of the ruling made was,, in accordance with the insurance company’s contention, that a. contract for a loan was made in New York. That it was there made, for the purpose indicated, by parties beyond the law power of the state of Missouri did not minify the broader pronouncement that a contract for a loan was made long subsequent to the creation of the contract of insurance itself. The conclusion from the opinion of the Chief Justice is not, we think, reflected upon by quotation made from the opinion. But, if standing alone,, this: expression is susceptible of an interpretation contrary to what, we have thought was a necessary deduction from the ruling made,, a reference to the text and decisions noted in the quotation leave,, we think, no real doubt but that had it been deemed necessary the court would have accepted the doctrine of the text quoted from Wharton.
The insurance policy anticipated a cash loan upon it by the insured as sole security. It carried a table wherefrom the annual loan .value could be accurately ascertained. The policy specified the terms of the loan that might be availed of by the insured. It further stipulated for the satisfaction thereof, in contingencies defined, by recourse to the reserve “under this, policyand, under conditions, it invested the borrowing insured with rights that projected beyond default in the payment of the annual premium and in the payment of the loan and the interest thereon. Notwithstanding these contractual assurances to the insured and these anticipatory contingent provisions for his advantage, there is nothing in the policy contract that required the insured to make a loan under the terms assured thereby. The option was his to make a loan consistent with those anticipatory provisions. Doubtless such provisions were intended to serve, and did serve, to induce the acceptance by the insured of the policy contract, but beyond this he was not obliged to take the loan its terms assured him if he desired to make it. The loan agreement, of a particular form used by the company, was mentioned in policy contract; but the policy contract nowhere indicates a purpose or an intent to effect a loan otherwise than
(4) Under the averments of the amended bill, considered in connection with the provisions of the policy and of the “policy loan agreement,” the case made is, in all its legal aspects, that determined by the Court of Appeals of Kentucky in Emig v. Mutual Benefit Life Ins. Co., 127 Ky. 588, 106 S. W. 230, 23 L. R. A. (N. S.) 828. There may be found an excellent discussion of the fundamental, meritorious questions presented by this appeal, aside from the question to which we have hereinabove given consideration. The doctrine of that decision is thus accurately, succinctly stated in the headnote in the Lawyers’ Reports Annotated : “An insurance company will not, in computing the amount of cash surrender value or the sum applicable to the. purchase of extended insurance after default in payment of premiums,' be permitted to discriminate against policy holders who have borrowed on their policies, by exacting more than the loan with legal interest, and therefore a method of settlement by which the amount to be deducted from the reserve applicable to the pur
We approve and adopt the opinion in that case.
The applicable New York statutes are appropriately pleaded in the amended bill. The decision of the court below, sustaining the equity of the cause the appellee would assert and have vindicated, was well supported in the deliverance to which we have referred. The decree, from which this appeal was taken, overruling the demurrer to the amended bill, was well rendered. It is affirmed.
Affirmed.