Bene v. New York Life Insurance Company

• Decision Date: 25 November 1935
• Docket Number: 4-4048
• Citation: 87 S.W.2d 979,191 Ark. 714
• Parties: BENE v. NEW YORK LIFE INSURANCE COMPANY
• Court: Arkansas Supreme Court

87 S.W.2d 979

191 Ark. 714

BENE v. NEW YORK LIFE INSURANCE COMPANY

4-4048

Supreme Court of Arkansas

November 25, 1935

Appeal from Pulaski Circuit Court, Second Division; Richard M. Mann Judge; affirmed.

Action by Sylvia Bene against the New York Life Insurance Company. From a judgment for defendant, plaintiff has appealed.

Judgment affirmed.

Isgrig & Robinson, for appellant.

Louis H. Cooke and Rose, Hemingway, Cantrell & Loughborough, for appellee.

OPINION

MEHAFFY, J.

The appellant brought this suit in the Pulaski Circuit Court to recover $ 1,969, 12 per cent. penalty, and a reasonable attorney's fee, against the appellee. Appellant was the beneficiary in a policy of insurance issued by the appellee insuring the life of appellant's husband, in the sum of $ 2,000. The insured died on March 11, 1933, and due notice was furnished the insurance company. There was an indebtedness due the company from the insured in the sum of $ 85.90, and a dividend due of $ 55.72, leaving a net indebtedness due the company of $ 30.18.

The appellee answered denying the material allegations in the complaint. It is agreed that the yearly premiums for the years 1925, 192.6 and 1927 were paid in cash, and that the premium due for the year 1928 was paid by a loan on the policy. It is agreed that the premium for 1929 was not paid.

The evidence introduced by appellee tended to show that, when the policy lapsed, there was not sufficient reserve to pay for extended insurance to the insured's death. Evidence was introduced showing that a surrender charge was necessary if the policy was surrendered or lapsed from the third to the ninth years.

The policy contains the following provisions:

"After three full years' premiums have been paid, the insured may, within three months after any default in payment of premium or within thirty days after any anniversary if the policy has become fully paid, surrender the policy, and

"1. Receive its cash surrender value; or

"2. Receive the amount of participating paid-up insurance which the cash surrender value at date of default, less any indebtedness hereon will purchase, payable at the same time and on the same conditions as this policy, but without disability or double indemnity benefits. The insured may at any time obtain a loan on such paid-up insurance, or surrender it for its cash surrender value; or

"3. If the policy be not surrendered for cash or for paid-up insurance within three months after default in payment of premium, its cash surrender value at date of default, less the amount of any indebtedness, shall automatically purchase continued insurance from the date of default for the face of the policy plus any dividend additions and less any indebtedness to the company. The continued insurance shall be without future participation and without the right to loans, cash surrender values, disability or double indemnity benefits.

"The cash surrender value shall be the reserve on the face of the policy at the end of the insurance year or, in event of default, at the date of default (omitting fractions of a dollar per thousand of insurance) and the reserve on any outstanding paid-up additions, plus any dividends standing to the credit of the policy, and less a surrender charge for the third to the ninth years, inclusive, of not more than one and one-half per cent. of the face of the policy. Such reserve will be computed on the basis of the American Table of Mortality and interest at three per cent., and the amount of paid-up insurance under (2) and the term of the continued insurance under (3) will be computed on the same basis at the attained age of the insured on the date of default.

"The values in the table opposite are computed in accordance with the above provisions, assuming that premiums have been duly paid for the number of years stated, that there is no indebtedness to the company, no outstanding paid-up additions, and no dividends standing to the credit of the policy; the surrender charge, if any, has been deducted."

It is unnecessary to set out the evidence because there is no dispute about the facts. The only question presented for our consideration is: Was the appellee justified in making a surrender charge in this case?

The policy provides that the cash surrender value shall be the reserve on the face of the policy at the end of the insurance year, or, in the event of default, at the date of default, and the reserve on any outstanding paid-up additions, plus any dividends, standing to the credit of the policy, and less a surrender charge for the third to the ninth years, inclusive, of not more than one and one-half per cent. of the face of the policy. It will be seen that the contract itself provides for a surrender charge. It is agreed that if this surrender charge is a proper charge, and not prohibited by public policy, the insurance was not extended to the time of the insured's death; but that if the surrender charge was prohibited by public policy, the insurance was extended beyond the death of the insured, and appellant would be entitled to recover.

The appellant states that the main question is whether appellee was justified in...