Eleogrammenos v. Standard Life Ins. Co. of the South

• Decision Date: 08 March 1941
• Parties: ELEOGRAMMENOS v. STANDARD LIFE INS. CO. OF THE SOUTH.
• Court: Tennessee Supreme Court

149 S.W.2d 69

177 Tenn. 328

ELEOGRAMMENOS v. STANDARD LIFE INS. CO. OF THE SOUTH.

Supreme Court of Tennessee.

March 8, 1941

Appeal from Chancery Court, Shelby County; L. D. Bejach, Chancellor.

Action on a life insurance policy by Sophia Eleogrammenos against the Standard Life Insurance Company of the South. From a decree of dismissal, complainant appeals.

Affirmed.

H. R Ratcliff, of Memphis, for complainant.

McDonald McDonald & Brown, and J. A. Osoinach, all of Memphis, for defendant.

CHAMBLISS Justice.

Complainant is the beneficiary of a twenty-pay life insurance policy for $2,000 on the life of her husband, who died in October, 1939. The policy was issued in 1920. He defaulted in payment of his premiums May 28th, 1938, after which no further payments were made. The policy carried the usual non-forfeiture provisions for certain options to the insured, to be exercised within thirty days after default, and conditioned that, if no election was made by the insured within thirty days, the "policy shall become paid-up non-participating life insurance from date of said default as provided in the first option." No option being exercised by the insured, his policy was converted into "paid-up non-participating life insurance," and following his death the sum which the company calculated to be due under this plan was tendered to the beneficiary. It was refused as less than that justly due, and was later paid into court.

This policy had been issued by the Independent Life Insurance Company, which had become insolvent, and its business had been taken over and its life insurance policy contracts assumed by the defendant Standard Life Insurance Company, in 1934.

In computing the amount due the company followed the table set out in the policy but deducted the amount of a loan which the insured owed the company, and also the sum of $94.23 as a lien thereon pursuant to the terms of the re-insurance agreement entered into between the Standard Life Insurance Company and the Independent Life Insurance Company.

The cause was heard on the pleadings and a stipulation of facts and the bill dismissed. Complainant appealed.

We do not understand that there is any serious dispute between the parties as to the correctness of the calculations involved, but counsel for complainant insists, in substance:

(1) That the cash value at the time of default was, after deducting the loan, interest and lien under the re-insurance agreement, sufficient to have kept the policy in effect for two years, which would have carried it beyond the time of the death of the insured. But, if this be conceded, the insured did not elect this option, which, if he had foreseen his death, he doubtless would have done. And we cannot escape the conclusion that unless he had done so, under the terms of the contract the company was not authorized to make this choice of options for him. This would have required application by the company of the net reserves to payment of premiums. The policy on its face plainly provided, under the subhead "Automatic Premium Loans" that, "On request of the Insured in writing" the company would change the policy from term insurance to a premium-paying basis and would charge premiums as due as loans against the policy, with interest. No such request was made and the company cannot be charged with failure in this regard.

(2) That upon lapse the extended term insurance option should have been applied, which, again, would have kept the policy in force until the death of the insured. Here it becomes material to quote and consider the provisions of the contract, plainly appearing on the face of the policy, setting forth the three options provided upon default:

"Non-Forfeiture Values. If this policy shall lapse because of non-payment of premiums, after two full years' premiums have been paid, the Company will...