194 Mo. App. 214 | Mo. Ct. App. | 1916
Action on an insurance policy, filed nine years, nine months and fifteen days after the death of the assured. Judgment for plaintiff for the face of the policy, $2000 — less the amount' of a loan, $435, with interest thereon to October 9, 1904, making a total due on the loan of $582.43, leaving a difference in favor of plaintiff of $1417.57 together with interest on said difference amounting to $921.43, making a total judgment for $2339. Defendant appeals.
On February 18, 1878, defendant, a New York corporation, authorized to do business in Missouri, issued to James Ruane in this State an ordinary life policy for $2000 payable to his estate. The semiannual premiums of $32.56 were paid on the fifteenth day of each February and August up to and including the one due on August 15, 1898. On August 13, 1898, the assured executed a promissory note payable to the defendant company for $435, due February 15, 1899, and assigned his policy to the company as collateral security for the payment of said note. The loan was never repaid, nor did the- assured pay the semiannual premium due February 15, 1899, or any premium thereafter. He died
Defendant’s answer to the first count admits that it denied liability on the policy and refused to pay anything on account thereof, and pleads the provision of the policy to the effect that it is issued in consideration of the first semiannual premium and the payment on the fifteenth of every August and February thereafter of a like sum; and this further provision of the policy: “1st. That this policy shall not take effect until the first premium' hereinbefore specified shall have been paid in cash during the lifetime of the person whose life is hereby insured; and that if any subsequent premium on this policy shall not be paid in cash on or before the day when due, then this policy shall cease and determine.” Defendant alleges that no premiums were paid after August 15, 1898, so that the insurance terminated and lapsed and the policy ceased and determined. In. the answer to the second count of the petition, these things are reiterated, the execution of the note and the assignment of the policy as collateral are admitted, and it is alleged that the note expressly provides as follows: “It is understood and agreed that if the principal amount of the loan above specified, or if any premium or interest, due according to the terms of this obligation or said policy, shall not be paid when due, said policy shall be forfeited and the said company is hereby expressly released from any liability, claim or demand upon or by reason of the said policy.” It is then averred that the note was never paid, so that
The reply was a general denial of each count of the answer.
The pleadings serve as a statement of the facts as far as they go, and it is unnecessary to copy those portions of the agreed statement of facts on which the case was tried which show the same things.
The policy contained this provision: “7th. That in every case where this policy shall cease and determine, or become null and void, all previous payments made thereon shall be forfeited to the said Company; excepting that in .case of forfeiture after three or more years’ premiums have been paid hereon, the Company will purchase the policy and pay therefor its equitable value, provided the policy be duly surrendered to the Company on or before the day of the lapsing of the same; which equitable value shall be determined by the Company.”
There is no provision in the policy giving the assured the right to paid-up or extended insurance upon the lapse of the policy for the nonpayment of premiums, the only right given him in case of nonpayment of premiums being that last above quoted.
The nonforfeiture laws of this State, providing for extended and paid-up insurance, had not been enacted when this policy was issued, and respondent concedes that Missouri could not pass a law changing the terms of a policy previously issued, and that section 7897, Revised Statutes 1899, by its terms, did not apply to such policies.
As this policy had been in force more than three years, the company proceeded as follows: Upon the lapse of the policy for the nonpayment of the premium due February 15, 1899, it calculated the then reserve on the policy (computed on the Actuaries’ or Combined Experience Table of Mortality with 4 per. cent, interest per annum), which amounted to the sum of $745.08; within thirty days after February 15', 1899, without any direction from or notice to the assured, it
It is pointed out by appellant that the only monetary value which a policy can have at any time prior to its maturity is its reserve, and that if the reserve is taken as the equitable value of this policy, then the assured received from the company the equitable value by way of extended insurance; that, if it be contended that the equitable value means the full reserve on the policy at the date of its lapse, and that the company should have applied the full reserve, computed as hereinbefore stated, less the outstanding indebtedness, to the purchase of extended insurance, the answer is (1) that this equitable value, under the express provisions of the policy, is to be determined by the company itself, and that the company was justified in treating three-fourths of the reserve as the equitable value of the policy, particularly when three-fourths of such reserve is treated by the nonforfeiture statutes of Missouri and other States having nonforfeiture laws as the amount or value which the company shall allow the assured in ascertaining the paid-up or extended insur
The equitable value of a life insurance policy constitutes its reserve fund. [People of New York v. Security Life Ins. and Annuity Co., 78 N. Y. 114; New York Life Ins. Co. v. Statham, 93 U. S. 24, 23 L. Ed. 789.]
Appellant claims that in allowing any extended insurance it did so voluntarily, and that in thus giving the assured a right or benefit it could do so by any standard of measurement it chose, and the fact that it measured the extent of the benefit it would allow by the same standard of measurement then fixed by the Missouri statute, did not impose upon it any of the conditions or provisions of the Missouri statute; that therefore it could allow the assured three-fourths of the reserve toward the purchase of extended insurance, which is the same standard of measurement provided by the Missouri statute, but that, as it was not hound by the statute, it would deduct the indebtedness from this reserve before buying extended insurance although it could not have deducted the indebtedness if bound by the statute in force at that time which permitted the deduction of only that part of the outstanding indebtedness on the policy at the time of the lapse which had been applied to the payment of past premiums on the policy. It may be observed that this has been changed. [Sec. 6946, R, S. 1909.]
Respondent points out that the defendant applied so much of the Missouri statute then in force as authorized the deduction of one-fourth of the serve, thereby enabling it to make a profit of $186.27 for a six months’ loan of $435, but refused to apply the other portion of the statute which forbade the deduction of this character of loan from the reserve before three-fourths of the reserve was applied to the- purchase of extended insurance; and the trial court manifestly took the view that since the company in its letter dated April 13, 1905, stated that upon the lapse of the policy for the nonpayment of premiums it applied three-fourths of the reserve, computed in accordance with the provisions of the nonforfeiture statute of Missouri, it therefore intended to comply with that statute and should have complied with it entirely instead of only in part.
To this we cannot agree. Respondent, in short, asks this court to hold that the company is liable for the full amount of the policy because it arrived at the equitable value of the policy by the same standard of measurement provided by the Missouri nonforfeiture statute, although it is conceded that that statute did not control the policy in suit, and although the loan agree
As a matter of fact there is no showing that when the calculation of the reserve was made by the company within thirty days from February 15, 1899, tie company had in view the Missouri nonforfeiture statute. It was in a letter written by defendant’s actuary over six months after the assured’s death and seven years after the lapse of the policy that the statement occurred to the effect that the reserve on this policy was arrived at in accordance with the Missouri nonforfeiture statute; this-letter was-written in 1905 at which time the nonforfeiture statute had been changed and provided that any outstanding indebtedness, whether given on account of past premiums or not, could be deducted from the reserve; there is no statement in the letter that the company had attempted to calculate the reserve in accordance with the provisions of the statute as it existed in 1899. We hold that the parties were governed by their contract made years before this letter was written.
Quotations from the policy in this opinion show that it contained provisions for forfeiture in case the stipulated premiums were not paid, with the benefit, however, that after three premiums have been paid the company will give the assured the equitable value of the policy, which equitable value it would determine, upon the nonpayment of any subsequent premium when due, provided the policy is surrendered. The assured did not ask for or demand the equitable value of the policy upon its lapse according to the pláin provisions of the contract, nor does the plaintiff in this action sue for the equitable value of the policy at the time of its lapse. Now when the loan of $435 was made in August, 1898, the parties agreed in writing that if it was not repaid, “or if any premium or interest, due according to the terms of this obligation, or said policy, shall not be paid when due, said policy shall be for
The courts are uniformly upholding provisions in loan agreements similar to the one involved in the case at bar, that upon default the pledge of the' policy should be foreclosed by satisfying the indebtedness out of its reserve or surrender value and the balance, if any, paid to the assured in cash or applied to the purchase of extended or paid-up insurance, and that this is “a
The insurer is held as a trustee to fairly and properly treat the assured. [Tennent v. Union Central Life Ins. Co., 133 Mo. App. 345, 112 S. W. 754.] In that case, the court found that the ultimate result of the sale, which was in fact private but was to be public, showed that the company had not faithfully performed that trust, and it was this unfaithfulness that distinguishes that case from the one at bar where the company merely obtained the amount owing to it after allowing itself the .customary (which happened to be the statutory) cancellation charge.
We have examined the cases cited by respondent both in the brief and at the oral argument and find that they are clearly distinguishable from our case along the lines pointed' out in appellant’s supplemental reply brief.
The judgment was. for the wrong party and is accordingly reversed.