Equitable Life Assur. Soc. of U.S. v. Brandt

• Decision Date: 10 October 1940
• Docket Number: 6 Div. 610.
• Citation: 240 Ala. 260,198 So. 595
• Parties: EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES v. BRANDT.
• Court: Alabama Supreme Court

198 So. 595

240 Ala. 260

EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES v. BRANDT.

6 Div. 610.

Supreme Court of Alabama

October 10, 1940

Rehearing Denied Nov. 22, 1940.

Appeal from Circuit Court, Jefferson County; J. F. Thompson, Judge.

Action on policies of life insurance by Mena Weil Brandt against the Equitable Life Assurance Society of the United States. From a judgment for plaintiff, defendant appeals.

Reversed and remanded.

Howze &amp Brown, of Birmingham, for appellant.

Bradley Baldwin, All & White, of Birmingham, for appellee.

FOSTER Justice.

This suit is by appellee, the beneficiary of two policies of life insurance on her husband, who died.

Policy No. 3,632,902.--Count No. 2.

The defendant, appellant, claimed in its pleas and evidence that the policy had lapsed for nonpayment of a quarterly premium due November 20, 1935, and that the surrender value at that time was not sufficient to extend its benefits to the time of his death,--all dependent upon certain quoted provisions of the policy, as follows:

"The Equitable Life Assurance Society of the United States, a mutual company organized July 26, 1859, hereby insures the life of Abrams Brandt (herein called the insured) and agrees to pay at its Home Office in the city of New York Ten Thousand Dollars (the face of this policy) to his wife Mena Weil Brandt beneficiary (with the right to the insured to change the beneficiary or assign this policy) upon receipt of due proof of the death of the insured, provided premiums have been duly paid and this policy is then in force and is then surrendered properly released. * * *

"This insurance is granted in consideration of the payment in advance of Two Hundred Fifty and 80/100 Dollars and of the payment annually thereafter of a like sum upon each 20th day of February until the death of the insured. * * *

"Payment of Premiums. All premiums are payable in advance at the Home Office, or to any agent or cashier of the society upon delivery on or before their due date, of a receipt signed by the president, a vice-president, secretary or treasurer, and countersigned by said agent or cashier. This policy is based upon the payment of premiums annually; but premiums may be paid, subject to the society's written approval, in semi-annual or quarterly installments at the society's adopted rates for fractional premiums, provided that in the event of the death of the insured any unpaid portion of the premium for the then current policy year shall be deducted from the amount payable hereunder.

"Grace. A grace of thirty-one days, subject to an interest charge at the rate of 5% per annum, will be granted for the payment of every premium after the first, during which period the insurance hereunder shall continue in force. If death occur within the days of grace, the premium for the then current policy year or any unpaid installments thereof shall be deducted from the amount payable hereunder.

"Except as herein expressly provided, the payment of any premium or installment thereof shall not maintain this policy in force beyond the date when the succeeding premium or installment thereof becomes payable.

"Reinstatement. If this policy shall lapse in consequence of the non-payment of any premium when due, it may be reinstated at any time upon the production of evidence of insurability satisfactory to the society, and the payment of all overdue premiums, with interest at 5% per annum, and upon the payment with interest or the reinstatement of any indebtedness to the society secured by this policy.

"Options on surrender or lapse. After three full years' premiums have been paid hereon, upon any subsequent default in the payment of any premium or installment thereof, and within three months after such default, this policy may be surrendered by the insured (or assignee if any) who may elect one of the following options:

"(a) To receive the cash surrender value of this policy; or

"(b) To purchase non-participating paid-up life insurance payable at the same time and on the same conditions as this policy, but without double indemnity or total and permanent disability benefits; or

"(c) To continue the insurance for its face amount (and any outstanding dividend additions) as paid-up extended term insurance for the period shown in the opposite table, or for such further period, as the dividend additions (if any) will purchase, but without future participation, or right to loans, or double indemnity, or total and permanent disability benefits.

"In the event of default in the payment of any premium or installment thereof after this policy has been in force three full years, if the insured (or assignee if any) does not select one of said options within three months of such default, the insurance shall be continued as provided under option (c).

"If there be any indebtedness against this policy, the cash surrender value shall be reduced thereby, the paid-up insurance shall be reduced proportionately, and the extended term insurance shall be for the face amount of the policy less the indebtedness and for such period as the reduced cash value will purchase.

"The insured's right to change, or assign or terminate this policy shall extend to any paid-up insurance accruing hereunder. * * *

"Loans. At any time, while this policy is in full force, after three full years' premiums have been paid, the society will advance to the insured (or assignee if any) on proper assignment and delivery of this policy, and on the sole security hereof a sum which, with interest, shall not exceed the cash value at the end of the then current policy year (as stated in the opposite table), less any indebtedness to the society hereon, provided all premiums or installments of the same have been fully paid to the end of the then current policy year. Interest shall be at the rate of 6% per annum, and shall be payable on the premium anniversary date of this policy. The loan may be increased by the cash value of dividend additions credited to this policy, if any. If the loan is for a purpose other than to pay premiums on policies in the society, the granting of the same may be deferred by the society for a period not exceeding ninety days after receipt of application therefor. Failure to repay such loan or to pay interest thereon shall not avoid this policy unless the total indebtedness hereon shall equal the total loan value, nor until thirty-one days after notice shall have been mailed to the insured and to the assignee of record, if any, to their addresses last known to the society."

It is alleged that insured had made a policy loan on August 2, 1935, of $1,121.68 which was wholly unpaid on November 20, 1935, when default was made. The anniversary of the policy would be February 20, 1936. He died February 3, 1936, within three months after the default, and after the thirty-one days of grace. There was a gross surrender value on November 20, 1935, of $1,157.50. If interest is computed on the principal of the loan from August 2, 1935, to November 20, 1935, at six per cent., it would be $20.28, making the loan with interest to that date amount to $1,141.96, and if that is deducted from the gross surrender value of $1,157.50, there is left only $15.54, which was sufficient to carry the policy for the amount of its gross sum of $10,000, less $1,141.96 or $8,858.04, from November 20, 1935, to, but not including, January 30, 1936, or four days prior to the death of insured, but not to that date.

Appellee contends first that under the terms of the policy and loan agreement, there should be no interest calculated in this transaction, since none was payable until the anniversary date of the policy, February 20, 1936, and that thereby the amount of the loan should be computed on the basis of its principal without interest as of November 20, 1935, and when so the balance of the surrender value would be sufficient to extend the policy to a date beyond that of the death of insured on February 3, 1936.

Appellee contends next that by virtue of the features of the policy which we have quoted, it was automatically extended for three months, in which option rights must be exercised, and since he died within that time, without exercising that right, his death is within the life of the policy thus extended.

The pleas 8 to 26 allege that the policy is to be interpreted by the laws of New York, to which there is no contention if that law is properly pleaded. Appellant in those pleas undertook to set out the laws of New York in connection with the contentions above noted. Demurrer to them was sustained. The case was then tried upon principles applicable to Alabama contracts of that sort.

Appellant contends that at least some, perhaps all of its pleas, were not subject to the demurrer. Our attention is first directed to the sufficiency of them in the light of the principles which control when an attempt is made to rely on the laws of another state. We will note those principles as we interpret our decisions on the subject.

One of our cases on that subject has been so often cited as to make it a leading case, and if it is understood and carefully followed, there ought not to be confusion on the subject. We refer to Cubbedge et al. v. Napier, 62 Ala. 518 from which we quote as follows: "The law is matter of fact, which must be pleaded with the certainty that any extrinsic fact must be pleaded, which is essential to a right of action, or to constitute a defense. The pleader may be well satisfied of his construction of the foreign law, and may assert it as the law itself; that is not his province. The law must be substantially stated; and the facts must be averred which are supposed to constitute its violation. Then, the court can determine whether the...