Bothmann v. Metropolitan Life Ins. Co.

• Decision Date: 03 May 1921
• Docket Number: No. 17242.,17242.
• Citation: 231 S.W. 1007
• Parties: BOTHMANN v. METROPOLITAN LIFE INS. CO.
• Court: Missouri Court of Appeals

231 S.W. 1007

BOTHMANN v. METROPOLITAN LIFE INS. CO.

No. 17242.

St. Louis Court of Appeals. Missouri.

May 3, 1921.

Rehearing Denied June 7, 1921.

Appeal from St. Louis Circuit Court; John W. Calhoun, Judge.

"Not to be officially published."

Action by Emma Bothmann against the Metropolitan Life Insurance Company. From a judgment for plaintiff for an alleged insufficient amount, she appeals. Reversed and remanded, with directions.

James J. O'Donohoe, of St. Louis, for appellant.

Fordyce, Holliday & White, of St. Louis, for respondent.

BIGGS, C.

This action upon a life insurance policy by the beneficiary, Emma Bothmann, formerly wife, but now widow, of the insured William Bothmann, resulted in a judgment in favor of plaintiff for an alleged insufficient amount, from which she prosecutes an appeal.

We deduce from the record the following facts, which are not disputed:

Defendant, a life insurance company organized under the laws of the state of New York, and doing business in Missouri, issued to William Bothmann on the 30th day of July, 1912, a policy of insurance in the sum of $1,000, in consideration of the payment of an annual premium of $15.19 due on the 30th day of July in each year. Six annual premiums were paid on the policy, the last on the 30th day of July, 1917. The premium due on July 30, 1918, was not paid, nor were any premiums thereafter paid on the policy. Emma Bothmann, plaintiff, was the wife of the insured and the beneficiary of the policy. William Bothmann the insured, died on or about December 3, 1918.

On July 30, 1918, the date of the default, the policy had acquired a reserve or net value under the Combined Experience Table of Mortality at 4 per cent. per annum of $42.60. In addition said policy was entitled to a dividend of $2.97, which dividend had a reserve value of 87 cents, which gave to the policy a total reserve or net value of $43.47, and three-fourths of said reserve amounts to the sum of $32.60, which latter sum used as a net single premium for temporary insurance under the nonforfeiture laws of Missouri would purchase temporary extended insurance for the full amount, plus dividend additions, for 4 years and 164 days from the date of the lapse, or, if applied to the purchase of paid-up insurance according to the Combined Experience Table of Mortality with 4 per cent. interest, would secure a paid-up value of $112.86. The values guaranteed by the policy are founded on the American Experience Table of Mortality at 3½ per cent. interest, which gives a greater reserve or net value than calculated under the nonforfeiture statutes, which uses the rate of 4 per cent. per annum.

At the date of the lapse, July 30, 1918, the policy under its terms had a cash value of $35, and was then entitled to a dividend of $2.97, making a total value of $37.97, which applied to the purchase of paid-up insurance according to the tables at 3½ per cent. interest, secured a paid-up value of $112.97, which was also greater than the paid-up insurance provided for by the nonforfeiture statutes.

It was further conceded that the policy was never surrendered to the defendant at its home office within three months from July 30, 1918, for cash surrender value for indorsement for term insurance or paid-up insurance, as provided under the head of "Options on Surrender or Lapse" in said policy. And it was admitted upon the death of William Bothmann the defendant tendered to plaintiff the sum of $112.97, which tender was refused.

No question arises over the due notice of plaintiff's claim or over the question of proofs of death.

It appeared that prior to the institution of the suit plaintiff had demanded of defendant payment of the full sum of the policy (less forborne premium and interest thereon), and defendant disclaimed liability under said policy beyond the sum of $112.97, the sum tendered.

The only question involved in the case is stated by the plaintiff's counsel thus: Does the policy contain a provision "for the unconditional commutation of the policy for nonforfeitable paid-up insurance" within the meaning of section 6949, R. S. 1909, now section 6154, R. S. Mo. 1919? Or, as stated by defendant's counsel: There is but one question in the case, namely: Is the plaintiff entitled to have the nonforfeiture law of Missouri, being sections 6946-6949, R. S. Mo. 1909, applied to this policy and to have the same declared carried in extended insurance beyond the date of the death of the insured, or does the policy contain such a provision for unconditional commutation for nonforfeitable paid-up insurance that it is removed from the operation of the nonforfeiture law and the liability of the company limited under the policy to the payment of said paid-up insurance?

As heretofore shown, it was admitted that, if the nonforfeiture statutes apply to the policy, there was sufficient reserve value to carry the same in extended insurance beyond the date of the death of William Bothmann. And it was further admitted that the value of the paid-up insurance offered by the company under the policy is greater than that provided for in the nonforfeiture law.

Section 6949, R. S. 1909, now section 6154, R. S. 1919, provides that the preceding sections (nonforfeiture statutes) shall not be applicable in the event the policy shall contain a provision for an unconditional surrender value at least equal to the net single premium, for the temporary insurance provided for in said sections, or for the unconditional commutation of the policy for nonforfeitable paid-up insurance, etc.

The question presented involves a construction of the policy in suit, the material parts of which are these:

"Options on Surrender or Lapse.—Upon failure to pay any premium or any part thereof when due, this policy, except as otherwise provided herein, shall immediately lapse. If however, the lapse occur after three full years' premiums shall have been paid, the owner hereof, provided there be no indebtedness hereon, shall, upon written request filed with the company at its home office, together with the presentation of this policy for legal surrender or for indorsement within three months from the due date of premium in default, be entitled to one of the following options (italics ours):

"First. A cash surrender value, etc. * * * "Second. To have the insurance continued in force for its original amount as term insurance from due date of premium in default.

Third. To have the insurance continued for a reduced amount of nonparticipating paid-up endowment insurance, * * * which paid-up insurance shall have an increasing cash surrender value equal to the full reserve at the date of the surrender, or a loan value up to the limit of the cash surrender value, etc. * * * "

Immediately following the foregoing provisions is this paragraph:

"If the owner shall not, within three months from due date of premium in default, surrender this policy to the company at its home office for a cash surrender value or for indorsement for term insurance, or for paid-up insurance as provided in the above options, the insurance shall be continued for a reduced amount of paid-up insurance as provided in the third option. (Italics ours.)

Then follows a provision that the values of the options shall be the entire reserve according to the American Experience Mortality Table with interest at 3½ per cent.

Then follows a provision that:

"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 and any pure endowment payable at the end of the endowment term, in such proportion as the indebtedness bears to the cash value at due date of premium in default."

If William Bothmann, the insured, at the time he defaulted in the payment, of his premium on the 30th day of July, 1919, was invested under the terms of the policy with an unconditional right to Shave a paid-up policy, the net value of which was equal to that provided by the nonforfeiture statutes, then the judgment of the lower court was correct in holding that his beneficiary was only entitled to recover the sum of $112.97, the amount tendered her as paid-up insurance under the policy, and which it is conceded was greater than the amount provided for in the statutes. If the terms of such policy did not give to the...