Davis v. Equitable Life Assur. Soc. of United States

• Decision Date: 01 September 1925
• Docket Number: No. 3786.,3786.
• Parties: DAVIS v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.
• Court: Missouri Court of Appeals

275 S.W. 353

DAVIS v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.

No. 3786.

Springfield Court of Appeals. Missouri.

September 1, 1925.

Appeal from Circuit Court, Dunklin County; W S. C. Walker, Judge.

Action by Cora V. Davis against the Equitable Life Assurance Society of the United States. From a judgment for plaintiff, defendant appeals. Reversed.

Smith & Zimmerman, of Kennett, for appellant.

Hal H. McHaney and Hugh B. Pankey, both of Kennett, and R. A. Cox, of Malden, for respondent.

COX, P. J.

Action upon two life insurance policies of $1,000 and $2,000, respectively, on the life of William J. Davis with the plaintiff, Cora V. Davis, as beneficiary A loan had been secured from the defendant by the assured in his lifetime, which had not been repaid by him. The trial was to the court, who found for plaintiff for the full amount of the policies, less the amount of the loan and interest, and defendant appealed.

The policies were identical in form except as to amount, and were issued December 29, 1894. They were participating policies, and were to become fully paid up in 20 years if all premiums were paid. This was done; so these policies were fully paid up December 29, 1914. At that time the policy for $1,000 had earned an accumulated surplus of $186.41. The policy for $2,000 had earned $372.82. At the end of 20 years the policy for $2,000 gave the assured the following options: First. The continuance of the policy and the withdrawal of the accumulated surplus either in (1) cash; (2) paid-up assurance; (3) an annuity. Second. The surrender of the policy for its full value consisting of the entire reserve amounting to $981 (together with the surplus then apportioned by the society) either in (1) cash; (2) paid-up assurance; (3) a life annuity.

The other policy for $1,000 contained the same provision except as to amount. The assured elected to allow the policies to continue, and with the accumulated surplus purchased additional paid-up nonparticipating insurance. On the $1,000 this additional assurance amounted to $351, and on the $2,000 policy it amounted to $702. The assured, desiring to secure a loan from the company upon these policies, applied for the full amount the company would loan and take these policies as collateral security. The company agreed to loan $653 on the $1,000 policy and $1,306 on the $2,000 policy. This loan was accepted by the assured, and on May 5, 1915, the money was furnished and the loan contract for each of the amounts aforesaid executed and the policies assigned as collateral to secure the loans. These loans were to be repaid on May 5, 1916, with interest at 6 per cent. The loan contracts each had the following provision:

"In the event of default in the repayment of said loan upon the date hereinbefore mentioned, the party of the first part is hereby fully authorized and empowered, without notice and without demand for payment by the party of the second part, to cancel said policy and to apply the cash surrender value of such cancellation to the payment of said loan and unpaid interest. * * * Should surrender value of said policy exceed the amount of above loan with interest thereon after such default at 6 per cent. per annum, then in that case the excess value above the loan and interest shall be due and payable to the legal owner or owners of the policy on demand."

The loan was not repaid when due, and in November, 1916, when the cash surrender value of the policies, including the additional assurance, which had been added to the policies by the apportionment of the accumulated surplus for that purpose at the end of the 20-year period equaled the amounts due on the loans, the company canceled the policies and paid the loans in accordance with the provision of the loan contract above set out.

An agreed statement of facts was filed which covered most of the facts, and then it was agreed that the other facts as set forth in depositions on file were true, except that plaintiff did not agree that notice claimed to have been sent by the company to the assured that it would cancel the policies and pay the loans if they were not paid by him was received by the assured. Since the loan contract provided that this cancellation and liquidation could be made without notice, it was not necessary for receipt of the notice, by the assured to be proven, and hence the essential facts are all agreed upon, and there is no question of weighing the evidence involved in this case.

The policies in this case were issued December 29, 1894, while section 5856, Stat. 1889 (section 7897, Stat. 1899), was in force. That statute made life insurance policies nonforfeitable after certain premiums had been paid, and provided that in case of default in payment of premiums thereafter, three-fourths the then cash value of the policy, less loans made to pay premiums, should be applied to purchase extended insurance. Under that statute the company could not enforce a provision in a loan agreement made with the insured that, in case of default in the payment of premium or interest or principal of the loan, the company could cancel the policy and apply the surrender value thereof to the payment of the entire loan. All the company could do was to deduct from three-fourths the surrender value of the policy the amount loaned...