Afro-american Life Ins. Co. v. La Berth

• Decision Date: 27 January 1939
• Citation: 186 So. 241,136 Fla. 37
• Parties: AFRO-AMERICAN LIFE INS. CO. v. LA BERTH.
• Court: Florida Supreme Court

186 So. 241

136 Fla. 37

AFRO-AMERICAN LIFE INS. CO. v. LA BERTH.

Florida Supreme Court

January 27, 1939

Certiorari to Circuit Court, Duval County; Bayard B. Shields, Judge.

Action on a life policy by Bessie B. La Berth, a single woman against the Afro-American Life Insurance Company. Judgment for plaintiff for the face value of the policy was affirmed by the circuit court, and defendant brings certiorari.

Writ quashed.

BROWN J., dissenting.

COUNSEL

S. D. McGill, J. Leonard Lewis, and Wm. S. Robinson all of Jacksonville, for petitioner.

W. McL. Christie, of Jacksonville, F. R. Hocker, of Ocala, and Henry C. Berg, of Jacksonville, for respondent.

OPINION

PER CURIAM.

This Court is petitioned for a writ of certiorari to review the affirmance by an Appellate (Circuit) Court below of the judgment of the trial (Civil Court of Record) Court holding that the beneficiary of the life insurance policy here sued upon is entitled under its terms to collect its face value less an indebtedness thereon, when the insured died before the expiration of a three month period after default in premium payment given for the exercise of non-forfeiture provisions, one of which was the right to elect to take extended insurance, and when the cash value of the policy, minus all indebtedness thereon, was sufficient to continue the policy in force as extended insurance to a day later than that upon which the insured died.

The insurance policy contained the following non-forfeiture provisions:

'After three full annual premiums shall have been paid the Insured may within three months after default in the payment of any premiums surrender this policy and have the choice of the following options:

'(1) Receive its cash surrender value, less any indebtedness to the Company hereon. The cash surrender value shall be the reserve on this Policy at the date of default less a surrender charge, which in no case shall be more than two and one-half per cent of the sum insured; or

'(2) Receive paid-up insurance as is provided below, payable at the same time and on the same conditions as this policy. If no other option is selected this Policy will be continued in force under this option without any action on the part of the Insured; or

'(3) Receive extended insurance for an amount equal to the face of this Policy, provided there is no indebtedness to the Company hereon, and for such term in years and months from the date of default as is provided below, but without the right to loans and cash surrender values.

'The amount of paid-up insurance or the term for which the insurance will be extended shall be such as the cash surrender value, provided there is no indebtedness to the Company hereon, will purchase as a net single premium at the attained age of the Insured at the date of default, according to the American Experience Table of Mortality, and interest at the rate of three and one-half per cent per annum.

'Any indebtedness to the Company under this Policy will be deducted from the cash value; and such indebtedness will also reduce the amount of paid-up insurance or the amount continued as term insurance in such proportion as the indebtedness bears to the cash value at due date of premium in default.'

A stipulation was entered into by attorneys for plaintiff and defendant waiving a trial by jury and submitting a true and correct statement of facts to the trial judge:

'1. That the photostatic copy of the contract or policy of insurance which is attached to the declaration filed by plaintiff herein is a true and correct copy of that upon which this cause of action is based; further production or proof of the original of said contract is hereby waived for all purposes; and it is hereby admitted that said contract was duly and legally executed.

'2. That the defendant herein assumed the rights and obligations of the North Carolina Mutual Life Insurance Company, the insurer named in said contract, did collect and receive premiums due thereon, and is liable on said contract to the same extent that the said North Carolina Mutual Life Insurance Company would have been liable on said contract had no such assumption over taken place.

'3. That the plaintiff Bessie B. LaBerth, a single woman, is the same Bessie B. LaBerth named as beneficiary in said insurance contract.

'4. That Thomas W. LaBerth, the insured named in said contract, prior to the 28th day of July, A. D. 1935, duly fulfilled all of the conditions of said insurance contract on his part, including the payment of premiums up to but not including the premiums due on that date.

'5. That the said Thomas W. LaBerth did not pay the premiums due on said contract of policy of insurance on July 28th, 1935, and thereafter died on October 12th, 1935, without having paid such last mentioned premium and without having exercised any of the options provided in said policy.

'6. That prior to the time of his death the said Thomas W. LaBerth borrowed from the defendant the sum of $222.00, contracting with the said defendant that should he, the said Thomas W. LaBerth, die before the repayment of said loan to the defendant, the said policy of insurance should be charged therewith as in such case provided in and by such insurance contract or policy.

'7. That due proof of the death of the said Thomas W. LaBerth was furnished the defendant on October 31st, 1935.

'8. That on April 27th, 1936, the plaintiff Bessie B. LaBerth notified the said defendant that she did elect and make the choice of option No. 3 under the non-forfeiture provisions of said policy, that is to say, she elected the option to receive extended insurance.

'9. That the cash value of said policy at the date of the lapse thereof, and after deducting therefrom all sums owed the said defendant by the said Thomas W. LaBerth, together with interest thereon as provided by said policy of insurance, was sufficient to continue said policy in force as extended insurance from July 28th, 1935, to a day later than October 12th, 1935, if, under the terms of the policy, plaintiff is entitled to extended insurance.

'10. That the defendant tendered the plaintiff its check in the amount of $65.18, the sum which said defendant claimed to be the amount due said plaintiff under said policy, and which said check for such amount plaintiff refused to accept.

'11. That the plaintiff has been compelled to employ its undersigned attorneys and has thereby become obligated and liable for reasonable attorneys' fees to be paid her said attorneys for their services herein; and that $175.00 is a reasonable fee to be allowed plaintiff as such attorneys' fees.

'12. That, saving and excepting those matters of law submitted and argued to this Court in support of defendant's demurrer to plaintiff's declaration and in support of defendant's pleas to which plaintiff's demurrer has heretofore been sustained, defendant has no further defense to plaintiff's cause of action, and is liable to plaintiff, in addition to the costs of this suit and the aforesaid attorneys' fees, in the following amounts:

Principal amount of policy ....................	$1000.00
Less amount of loan ...........................	222.00
Less interest on loan, 7/28/35 to 10/12/35 ....	2.77
	----------
	$ 775.23
Plus interest on $775.23 10/12/35 to 8/12/37 @ 8% ........................................	80.34
	----------
Total amount due, 8/12/37 .....................	$ 855.57".

In its demurrer to plaintiff's declaration defendant alleged three grounds of defense to said declaration, to-wit: (1) That the insured may not elect Option No. 3, providing for extended insurance after the time limit of three months provided in the contract of insurance; that the plaintiff herein did not attempt to make an election until nine months after default in premiums; (2) That the plaintiff was not entitled to elect extended insurance since there was an indebtedness of $222 existing on said policy by the insured to the insurer; that the contract of extended insurance may not be elected if there is any indebtedness existing on said policy of insurance by the insured to the insurer; (3) That the election of option 3 in said policy is a right exclusive to the insured. This demurrer was overruled. Pleas filed by defendant setting up the same ground were stricken upon demurrer.

After the above stipulation was entered into, the Court upon motion of plaintiff granted a final judgment upon the demurrer to defendant's pleas.

If the insured did not, within three months from the due date of the premium in default, make his election between these three options and surrender the policy in accordance therewith, the policy provided that the insured shall receive 'paid-up insurance'; that is, in this case if the insured had lived more than three months after July 28, 1935, and had not, in the meantime, exercised his choice of options, the company would automatically have continued the policy as paid-up insurance.

The policy made no provision for what occurred in this instance, viz., the death of the insured before his three-month option period had expired and before the company could invoke the automatic provision which the policy applied at the end of the three-month option period.

The cases involving the right of the beneficiary to make an election between the three options when the insured died before the expiration of the three-month period without making such election are conflicting. However, some of the contrary decisions may, perhaps, be harmonized by reason of the fact that, in cases holding the right of election does not survive, the provision for paid-up insurance operated automatically upon default, subject only to subsequent...