Burridge v. New York Life Ins. Co.

• Citation: 109 S.W. 560,211 Mo. 158
• Parties: BURRIDGE v. NEW YORK LIFE INS. CO.
• Decision Date: 26 February 1908
• Court: United States State Supreme Court of Missouri

109 S.W. 560

211 Mo. 158

BURRIDGE v. NEW YORK LIFE INS. CO.

Supreme Court of Missouri, Division No. 1.

February 26, 1908.

Rehearing Denied April 1, 1908.

1. INSURANCE—NONPAYMENT OF PREMIUMS— RIGHTS OF INSURED AFTER DEFAULT—EXTENDED INSURANCE—STATUTORY PROVISIONS.

Laws 1903, p. 208, in amendment of Rev. St. 1899, § 7897 (Ann. St. 1906, p. 3752), striking therefrom the restriction that the notes or other evidence of indebtedness to the company that may be deducted from the net value of a life policy as to which there has been a default in payment of a premium, before applying it to the purchase of temporary insurance, shall be limited "to notes or other evidence of indebtedness to the company given on account of past premium payments," and enacting in lieu thereof a broader provision that there shall be deducted from the net value not only "notes given on account of past premium payments," but also "any other evidence of indebtedness to the company," is not retrospective so as to cover a policy then issued, the rule being that an act must be construed as prospective unless its language calls for retrospective operation, and Const. art. 2, § 15 (Ann. St. 1906, p. 137), prohibiting laws impairing the obligation of contracts, or retrospective in their operation.

2. SAME—CONTRACT—LOAN AND PLEDGE CONTRACT.

A loan and pledge contract whereby a life insurance company advanced money on a policy to insured, and the policy was assigned as collateral security, was in no sense a contract distinct

and independent from the policy, but, on the contrary, such loan and pledge were contemplated by the policy, it providing that the company would make advances on the policy, and that thereupon the policy should be assigned to it as collateral security.

3. SAME—ACTIONS ON POLICY—EVIDENCE— SUFFICIENCY.

Evidence in an action on a life policy examined, and held not to show that an entire loan made by the insurance company on the policy was for the purpose of payment of past premiums.

4. SAME—NONPAYMENT OF PREMIUMS—RIGHTS OF INSURED AFTER DEFAULT—TEMPORARY INSURANCE.

Under Rev. St. 1899, § 7897 (Ann. St. 1906, p. 3752), providing that no life policy shall after payment of three annual premiums be forfeited because of nonpayment of premiums, but that the net value of the policy when the premium comes due and is not paid shall be computed with 4 per cent. interest, and after deducting from three-fourths of such net value any notes or other evidence of indebtedness to the company given on account of past premium payments the balance shall be taken as a net single premium for temporary insurance for the full amount of the policy, the indebtedness which may be deducted from three-fourths of the net value is restricted to that given "on account of past premium payments," and the company cannot, because of a loan and pledge contract, whereby it advanced money and the policy was assigned as collateral security, cancel the policy to pay the loan, and deduct indebtedness other than for past premium payments.

5. SAME—SUPRENDER—VALIDITY.

Where a life insurance company having foreclosed its lien as pledgee of a policy, and applied part of its surrender value to the payment of the debt for which the policy stood as security, sent the residue of such surrender value to the beneficiary and the insured by its check, which was never received by either, the policy was not surrendered to the company by the transaction "for a consideration adequate in the judgment of the holder," within Rev. St. 1899, § 7900 (Ann. St. 1906, p. 3755), providing that where a policy shall be surrendered to the company for a consideration adequate in the judgment of the holder, the article of which that section is a part shall not be applicable.

6. CONSTITUTIONAL LAW—DUE PROCESS OF LAW—DEPRIVATION OF LIBERTY TO CONTRACT.

Rev. St. 1899, § 7897 (Ann. St. 1906, p. 3752), providing that no life policy shall after payment of three annual premiums be forfeited for nonpayment of premiums, but that the net value of the policy when the premium becomes due and is not paid shall be computed with 4 per cent. interest, and after deducting from three-fourths of such net value any notes or other evidence of indebtedness to the company, given on account of past premium payments, the balance shall be taken as a net single premium for temporary insurance for the full amount of the policy, is not an impairment of the right of contract, in violation of Const. U. S. Amend. 14 and Const. Mo. art. 2, § 4 (Ann. St. 1906, p. 128), providing that all persons have a natural right to life, liberty, and the enjoyment of the gains of their industry.

7. CORPORATIONS—FOREIGN CORPORATIONS—SUBJECTION TO GENERAL LAWS AND POLICY OF STATE—IMPLIED ACCEPTANCE.

That section is impliedly accepted by a foreign insurance company when it accepts its license to do business.

Appeal from St. Louis Circuit Court; Moses N. Sale, Judge.

Action by Lee S. Burridge against the New York Life Insurance Company. Plaintiff was nonsuited, and the same having been set aside and a new trial granted, defendant appeals. Affirmed.

Judson & Green and Jas. H. McIntosh, for appellant. Jones, Jones, Hocker & Davis and Wellman, Gooch & Smyth, for respondent.

LAMM, J.

Defendant is a life insurance company incorporated in the state of New York. At the times in hand John H. Reifsnyder was a resident and citizen of Missouri and so was his wife, Frances A. On February 20, 1894, defendant, as insurer, issued to John H. Reifsnyder, as the insured, a policy for $5,000, naming his said wife as beneficiary. Her right was absolute, i. e., the policy itself contained no provision permitting the insured to change the beneficiary. The application for it was made to defendant's St. Louis agent. The policy was delivered by him in St. Louis, and the case proceeds on the theory that defendant was transacting a life insurance business in the state of Missouri under its laws in that behalf made and provided, that the policy is a Missouri contract, and hence the lex loci contractus governs. Reifsnyder died November 3, 1901. It stands admitted that payment of the policy was demanded, was refused, that defendant denied liability, and that by so doing it waived notice of proofs of death. Frances A. Reifsnyder on the 5th day of May, 1903, made a formal written assignment of her right, title, and interest in the policy, and of her right, claim, action, and demands thereon to the plaintiff, who sues. At the close of a trial before the Honorable Moses N. Sale, presiding judge of Division No. 2 of the St. Louis circuit court, and a jury, a peremptory instruction was given for defendant. Thereat plaintiff excepted and asked a nonsuit with leave. One going, he presented in due season his motion to set it aside. This motion was allowed. Thereat defendant in turn excepted and appeals from the order granting a new trial. The suit was for the policy face less a certain policy loan made the insured. The recovery sought was thereby put below our jurisdiction. Jurisdiction, however, is conceded here because by answer there are lodged in the case constitutional questions. No question is made on the pleadings, and it will do to say on that behalf that they were sufficient to raise all questions made by learned counsel.

The controversy turns on a policy loan, a default in a premium payment, a default in paying the interest on the loan, and an alleged surrender and cancellation of the policy under the terms of an alleged policy pledge made as collateral security for said loan. In a nutshell defendant's contention is that the policy with all its accumulations was pledged to it by the insured and the beneficiary to secure a policy loan, that under the terms of that pledge a default was made, and the policy was canceled to pay the loan, and surrendered. On the other hand, plaintiff (conceding the loan and default) contends that under the nonforfeiting clauses of the statutes of Missouri, then in force, the policy was alive at Reifsnyder's death, and that defendant must pay the face of the policy less the loan.

In the determination of the case, the following record facts, agreements, and statutes are involved, viz. (section 5856, Rev. St. Mo. 1889 [Ann. St. 1906, p. 2960]): "No policies of insurance on life hereafter issued by any life insurance company authorized to do business in this state, on and after the first day of August, 1879, shall, after the payment upon it of two full annual premiums, be forfeited or become void by reason of the nonpayment of premium thereon, but it shall be subject to the following rules of commutation, to wit: The net value of the policy, when the premium becomes due and is not paid, shall be computed upon the American experience table of mortality, with four and one-half per cent. interest per annum, and after deducting from three-fourths of such net value any notes or other indebtedness to the company, given on account of past premium payments on said policy issued to the insured, which indebtedness shall then be canceled, the balance shall be taken as a net single premium for temporary insurance for the full amount written in the policy, and the term for which such temporary insurance shall be in force shall be determined by the age of the person whose life is insured at the time of default of premium and the assumption of mortality and interest aforesaid." This statute in the Revision of 1899 is, so far as this controversy is concerned, substantially the same. It reads (section 7897, Rev. St. Mo. 1899 [Ann. St. 1906, p. 3752]): "No policies of insurance on life hereafter issued by any life insurance company authorized to do business in this state, on and after the first day of August, A. D. 1879, shall, after payment upon it of three annual payments, be forfeited or become void, by reason of nonpayment of premiums thereof, but it shall be subject to the following rules of commutation, to wit: The net value of the policy, when...