Bruce v. Continental Life Ins. Co.

• Decision Date: 26 February 1886
• Parties: NATHANIEL BRUCE, ADM'R, v. CONTINENTAL LIFE INSURANCE CO. (In Chancery.)
• Court: Vermont Supreme Court

2 A. 710

58 Vt. 253

NATHANIEL BRUCE, ADM'R, v. CONTINENTAL LIFE INSURANCE CO. (In Chancery.)

Supreme Court of Vermont, Montpelier

February 26, 1886

Bill in chancery. Heard on the report of a special master, June Term, 1885, Caledonia County, Ross, Chancellor. It was decreed: "That the orator is entitled to a paid-up policy, in the defendant company, upon the life of Merrill T Bruce, for the sum of $ 400, payable December 30, 1882, with an accounting for dividends, adjudged to apply upon the notes of Merrill T. Bruce, held by the defendant; and that, to avoid circuity of action, the orator recover of the defendant, as the sum due upon said policy, after adjusting said dividends, profits, and notes, the sum of $ 360.72, with interest thereon, from December 30, 1882, and the costs of this suit." It appeared from the report, that the policy was dated December 30, 1870; that it was a "ten year endowment policy"; that the annual premiums were $ 104.86; that, on the receipt of the policy, the assured paid $ 62.92 in cash and gave his note for $ 41.94, paying the interest on it in advance; that he paid his premiums in the same manner during the second, third, and fourth years paying the interest on all the notes in advance, "and all said premiums and interest were to the satisfaction of said company"; that said M. T. Bruce, on November 1 1875, made application to the company for a paid-up policy that the company changed from the percentage to the contributive plan on December 2, 1873; that said M. T. Bruce deceased January 20, 1883, and that the orator is administrator of his estate. The prayer of the bill was, that the defendant execute and deliver to the orator a paid-up policy for the sum of $ 400 with profits ascertained by accounting; and, to avoid circuity of action, that the defendant be decreed forthwith to pay the sum due upon said policy and said accounting, with interest. The master found as to the dividends: "If the court are of opinion that the orator is entitled to such dividends as the company paid on all endowment policies that have been in existence four years, from 1868, to 1873, inclusive, then the dividends would be 40 per cent. of the premiums, or just the amount of the notes; and the notes would be paid by the dividends and the orator would be entitled to $ 400, as of December 30, 1882, without deduction. To this, interest added to June 2, 1885, gives the sum of $ 458.12." "If the court are of opinion that the notes are in part paid by dividends, but that the dividends are only such as the company voted to pay in case the policy was renewed by successive payments, then the dividends would be four in number of $ 24.57, and should have been indorsed and allowed upon the notes December 30, on each of the four years, 1874, 1875, 1876, and 1877. These deductions would make the notes amount to $ 106.09, December 30, 1882, and that sum deducted from $ 400, leaves $ 293.91, due December 30, 1882, with interest since to June 2, 1885, in all, $ 338.08." "If the court are of the opinion that the orator is entitled by the terms of the policy and the facts reported to have a paid-up policy of $ 400 only upon condition of paying the notes and interest in full with no allowance or deduction for dividends, then the four notes, the interest having been paid in advance, up to December 30, 1874, would amount, with interest up to December 30, 1882, to the sum of $ 236.80, which sum deducted from $ 400, would leave due December 30, 1882, the sum of $ 163.20, which, with interest from that date to June 2, 1885, amounted to $ 245.30." The other facts are sufficiently stated in the opinion of the court.

Reversed and remanded, with directions.

C. W. Porter, for the defendant.

The interest upon the notes given for premiums was, under the agreement as claimed, to be paid in advance. The company contracted upon the basis of the prompt payment of interest and a failure to pay impaired the fund from which the payments of dividends and liabilities must be made. The failure to pay the interest in advance upon the notes falling due December 30, 1874, avoided the policy and all payments thereon; and all dividends were forfeited to the company. Patch v. Ins. Co. 44 Vt. 481; Atty. Gen. v. Ins. Co. 82 N.Y. 172; Ins. Co. v. Robinson, 40 Ohio St. 270; Nettleton v. Ins. Co. 6 Ins. L. J. 426. As the agreement was that dividends or profits should be applied to cancel the notes, they could not be applied in payment of interest. The company had a right to change its plan of distribution of surplus. It was under no obligation to Bruce respecting the amount of dividends, as he was informed by Farr that the amount "depended upon the success of the company."

Ide & Stafford, for the orator.

There has been no forfeiture of the policy. The defendant argues that we have not paid the premiums because we have not continued to pay the interest. But we have paid our premiums in the way directed by the defendant itself; and it is nowhere stipulated in the policy that a failure to pay interest shall work a forfeiture. Moreover, we have paid the interest on the premium notes for four years, and so have, even in that sense, made four complete annual payments. The profits held by the defendants should be applied upon the notes; and when these have been applied, and the notes thus reduced have been deducted from the face of the paid-up policy promised us, we are entitled to the balance as the amount of "the insurance paid for" by us. Franklin L. Ins. Co. v. Wallace, 93 Ind. 7; 4 Bigelow. Ins. Cas. 633; 5 Id. 137, 145, 559. The defendant's contention would make nugatory and senseless those other parts of the contract and representations of the agent, which informed the insured that he would be entitled to a paid-up policy, after the payment of two annual premiums. The dividends to be applied on the notes are those declared during the years in which the notes were given. These would be sufficient to pay the notes, as found by the master. Currier v. Ins. Co. 57 Vt. 496; Brooks v. Ins. Co. 8 Rep. 774, S. C. 16 Blatchf. 182; 20 F. 222. The question as to the admission of evidence is not before this court, as no exceptions were taken. Winship v. Waterman, 56 Vt. 181.

OPINION

POWERS, J.

It is quite clear that much inadmissible evidence was received by the master in the hearing before him. The testimony of Blodgett and Dewey and certain exhibits offered in connection therewith were objected to by the defendant, but the objection is not available in this court. Sec. 730 R. L. declares that "no questions in regard to the admission or rejection of evidence by the masters shall be heard in the Supreme Court, unless such objection is made by exception, duly filed, to the report, in the Court of Chancery."

No such exception was filed in this case and we must...