Cochran v. National Life & Accident Ins. Co.

• Decision Date: 13 January 1934
• Citation: 66 S.W.2d 996
• Parties: COCHRAN v. NATIONAL LIFE & ACCIDENT INS. CO.
• Court: Tennessee Supreme Court

Page 996

66 S.W.2d 996

COCHRAN v. NATIONAL LIFE & ACCIDENT INS. CO.

Supreme Court of Tennessee.

January 13, 1934.

Appeal in Error from Circuit Court, Hamilton County; Oscar Yarnell, Judge.

Suit by Joe Frank Cochran against the National Life & Accident Insurance Company. To review a judgment of dismissal, plaintiff appeals in error.

Affirmed.

H. M. Vaughn, of Chattanooga, for plaintiff in error.

Sizer, Chambliss & Kefauver, of Chattanooga, for defendant in error.

SWIGGART, Justice.

This is a suit on a contract of industrial life and disability insurance, to recover its stipulated cash or surrender value of $9.35. The suit was dismissed in the circuit court, upon the finding of that court that the plaintiff had not made demand for the surrender value within the time prescribed by the contract. The case is before us on the plaintiff's appeal in the nature of a writ of error.

Decision of the controversy turns upon the proper construction of the word "default," as used in the contract with reference to the payment of weekly premiums; whether the date of default was the date the first unpaid premium was due, or four weeks later when four weekly premiums were in arrears.

The material provisions of the contract are as follows:

"The first year's insurance under this policy is term insurance. Thereafter a reserve shall be accumulated upon the basis of the Actuaries' Table of Mortality with 4 per cent interest, and in the event of default in the payment of any premium when due, after premiums for three full years have been paid, this Policy, without action on the part of the insured, will be extended for the full amount of the natural death benefit only, for such length of time as the reserve hereunder at the anniversary immediately preceding the date of such default, less two and one-half per centum of the amount insured, will purchase according to the Actuaries' Table of Mortality with four (4) per cent interest; or in lieu thereof, provided premiums have been paid for ten full years, the Company will pay to the insured, upon written application therefor and the legal surrender of this Policy within sixty days from date of such default, as a cash surrender value the amount otherwise available for the purchase of extended insurance as aforesaid.

* * * * * *

"This Policy shall not lapse for nonpayment of premiums until the premiums for four (4) weeks are in arrears; the insured, however, shall not be entitled to sick or accident benefits when premium payments are in arrears for two (2) weeks or more, and the subsequent payment of such arrears shall not entitle the insured to benefits for sickness or disability beginning or occurring during the period of such arrears. Should the insured die when the premium payments on this Policy are four (4) weeks or more in arrears this Company shall not be liable for any sum under this Policy except as otherwise expressly provided herein."

No premiums were paid by plaintiff after June 13, 1932. The premium due June 20 and those subsequently due were unpaid. Demand for the surrender value was made on August 26, which was more than sixty days from June 20, but within sixty days from the due date of the fourth unpaid premium.

A diligent search by counsel and by the court has not disclosed a decision directly in point construing the phrase "date of default." The usual provision of insurance contracts, as revealed by the cases, seems to be to limit the right to demand the surrender value to a specified time from the "due date" of the first unpaid premium, or from the date the policy "lapsed."

The contract before us, being a contract of industrial insurance, written in 1920, is not one which the statute...