State Mut. Life Ins. Co v. Forrest

Decision Date16 February 1917
Docket Number(No. 7354.)
Citation91 S.E. 428,19 Ga.App. 296
PartiesSTATE MUT. LIFE INS. CO. et al. v. FORREST.
CourtGeorgia Court of Appeals

(Syllabus by the Court.)

Error from City Court of Floyd County; W. J. Nunnally, Judge.

Action by C. M. Forrest, administratrix, against the State Mutual Life Insurance Company, and others. Judgment for plaintiff, overruling demurrer to petition, and defendants bring error. Affirmed.

Alex C. King, of Atlanta, and Maddox & Doyal, of Home, for plaintiffs in error.

Barry Wright, of Rome, and Sheppard Bros., of Edgefield, S. D., for defendant in error.

LUKE, J. This case arose as an action on a life insurance policy. It comes to this court on questions of construction. The policy was issued on January 19, 1907, for $5,000, in consideration of an annual premium of $190.40, payable in advance, the insured being allowed the privilege of paying a semiannual premium of $99 or a quarterly premium of $50.45, as he might elect at the time for paying any premium. The policy contains the following special provisions:

Grace clause: "An extension of thirty days will be allowed in the payment of any premium, except the first, and the company agrees to accept any premium, without interest charge, if tendered within thirty days of the time of default, during which thirty days the policy will remain in force."

Loan clause: "After this policy has been in force two years, the company will loan thereon, as sole security, the amount stated in the table on the third page thereof, at not more than five per cent, per annum, payable in advance. The loan shall be made in accordance with the company's loan agreement; the amount of loan available at any time shall include any previous loans then unpaid, and premiums under this policy shall be paid in full up to the end of the policy year succeeding the date when the loan is obtained. The company agrees that the loan may be renewed annually, if interest be paid for one year in advance."

"Automatic" nonforfeiture clause: "If the insured shall fail to pay any premium when due, and if there is no indebtedness to the company, the insurance will automatically continue from such due date as term insurance, if premiums have been paid for three months, for thirty days; if for six months, for forty days; if for nine months, for fifty days; and for the period specified in the table on the third page in the table hereof, if premiums have been paid for one year. If premiums have been paid for two or more years the company, upon failure of the insured to pay any premium, will charge the premiums as they fall due as loans against the policy until the loan value is consumed, and this policy shall thereby continue in full force. At any time while the policy is thus sustained, the payment of premiums may be resumed, without medical re-examination, and the accumulated debits may be paid or stand as a loan against the policy."

"Six Months" nonforfeiture clause: "If the insured make written application within six months after default in payment of premiums, the company will extend this policy as a term policy for its full amount; or, upon surrender of this policy, will issue a participating paid-up policy, or will pay the cash surrender value, as stated in the table on the third page hereof under the respective heads."

The table referred to in the foregoing clauses is printed in the body of the policy under the heading, "Table of Cash Loans and Guaranteed Surrender Values." It is there based upon a policy for $1,000, with a stipulation that certain figures therein shall be increased or diminished in proportion to the sum for which the policy may be issued. Reproducing that table on the basis of this policy, for the period here in point, we have the following:

Table of Cash Loans and Guaranteed Surrender Values.

                --------------------------------------------------------------
                |                   |       |       |Participating|        | |
                |                   |Cash   |Cash   |             |        | |
                |End of Policy Year.|       |       |Paid-Up      |Extended| |
                |                   |Loan.  |Value. |             |        | |
                |                   |       |       |Insurance.   |        | |
                |-------------------|-------|-------|-------------|--------|-|
                |Insurance.         |       |       |             |        | |
                |-------------------|-------|-------|-------------|--------|-|
                |Years              |Months.|       |             |        | |
                |-------------------|-------|-------|-------------|--------|-|
                |1st                |$——    |$100.00|$——          |        |2|
                |-------------------|-------|-------|-------------|--------|-|
                |2nd                |200.00 |100.00 |190.00       |1       |6|
                |-------------------|-------|-------|-------------|--------|-|
                |3rd                |300.00 |200.00 |380.00       |3       |1|
                |-------------------|-------|-------|-------------|--------|-|
                |4th                |405.00 |300.00 |560.00       |4       |5|
                |-------------------|-------|-------|-------------|--------|-|
                |6th                |510.00 |405.00 |740.00       |5       |9|
                |-------------------|-------|-------|-------------|--------|-|
                |6th                |620.00 |510.00 |940.00       |6       |7|
                |-------------------|-------|-------|-------------|--------|-|
                |7th                |730.00 |620.00 |1095.00      |7       |4|
                |-------------------|-------|-------|-------------|--------|-|
                |8th                |840.00 |730.00 |1265.00      |8       |5|
                --------------------------------------------------------------
                

The plaintiff's petition contains the following material allegations: The first seven annual premiums were paid as they fell due, carrying the policy in full force to January 19, 1914. Under the loan clause the insured, during the year 1913, borrowed from thecompany the sum of $592.87, paying the interest thereon in advance and making the principal due January 19, 1914. On May 27, 1914, the insured died, without having renewed or paid the loan, and without having paid any part of the eighth annual premium. On July 1, 1914, the plaintiff notified the defendants of the death of the insured, and demanded the usual form for making proof of his death. The defendant, however, refused to furnish such forms, claiming that the policy had lapsed prior to the death of the insured. The plaintiff, nevertheless, prepared such proofs and furnished them to the defendant, together with proof of her appointment as administratrix of the estate of the insured, and demanded payment of the amount due under the policy; but the defendant refused to pay. On July 6, 1914, the plaintiff, through her attorney, offered to pay to the receiver of the company all indebtedness which the insured owed the company at the time of his death, and demanded the benefit of the extended insurance provided by the "six months clause" of the policy; but the defendant has continually persisted in the original position taken by it, namely, that, the policy had lapsed prior to the death of the insured, and that it was no longer of force. The other allegations of the petition, based upon section 2549 of the Civil Code, are unimportant here. To this petition the defendant interposed a demurrer, insisting upon a construction of the several clauses of the policy above set forth, which, if sound, would leave the plaintiff without any cause of action.

The plaintiff contends (1) that she Is entitled to recover under the provisions of the "automatic" clause, because the loan value of the policy was sufficient to sustain it from its seventh anniversary to the death of the insured; and that even if the loan value was sufficient to sustain the policy only to a time within 30 days of such death, then the grace clause, in connection with the "automatic" clause, would prevent a forfeiture of the policy. The defendant contends, on the other hand, that even if the policy did have some small loan value left after the cash loan was obtained, the amount of it was insufficient to pay both interest on the loan and the premiums on the policy in accordance with the terms of the policy, because any amount of such loan value would be ineffective under the "automatic" clause of the policy, unless it should be sufficient to pay both a full year's premium on the policy and a full year's interest on the outstanding loan; and it contends that in no event would the insured be entitled to tack the benefits of the grace and "automatic" clauses in order to cover the period in point.

The plaintiff contends (2) that, without regard to either the grace or the "automatic" clause of the policy, she is entitled to recover under the "six months" clause, because the death of the insured occurred within six months after the due date of the unpaid premium; and, in this connection, she further contends that the conduct and attitude of the defendant, taking the position that the policy had lapsed and refusing the parol application of her attorney and his offer to pay the outstanding indebtedness, not on the ground that the application was in parol or the tender was not legal, but on the ground that it recognized no such right or rights in...

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