Gardner v. National Life Ins. Co.

• Decision Date: 02 December 1931
• Docket Number: 18.
• Citation: 161 S.E. 308,201 N.C. 716
• Parties: GARDNER v. NAT. LIFE INS. CO.
• Court: North Carolina Supreme Court

161 S.E. 308

201 N.C. 716

GARDNER v. NAT. LIFE INS. CO.

No. 18.

Supreme Court of North Carolina

December 2, 1931

Appeal from Superior Court, Beaufort County; Henry A. Grady, Judge.

Action by Juanita O'Brien Gardner against the National Life Insurance Company. From a judgment for defendant, plaintiff appeals.

Affirmed.

Where insured agreed dividends under policy should remain with insurer, unless otherwise ordered, insurer had no right to apply dividend as payment on premium or purchase of term insurance.

Insurer having applied dividends as elected by insured, and not to premiums or term insurance after policy lapsed, held not liable for insured's death during period dividend would extend policy.

Plaintiff is the widow of Claud G. Gardner, who died on August 24 1930. She is the beneficiary in a policy of insurance issued by the defendant on May 11, 1928, by which the defendant, in consideration of the application therefor, and of the payment of premiums as provided therein, promised to pay to plaintiff, as the beneficiary named in said policy, upon the death of the insured, Claud G. Gardner, the sum of $5,000.

This is an action to recover on said policy of insurance. The action arises out of a controversy between the parties, as to whether the policy was in force at the date of the death of the insured, to wit, August 24, 1930. The defendant contends that the policy lapsed prior to said date because of the nonpayment of the semiannual premium due on May 11, 1930; the plaintiff contends that by its terms the policy was extended beyond said date, because of the dividend due to the insured on May 11, 1930, and not paid to him prior to his death.

By consent, a trial by jury was waived. It was agreed that the judge should hear the evidence, and find the facts therefrom. The facts found by the judge from the evidence offered by both plaintiff and defendant, are as follows:

The policy was issued on May 11, 1928. The premiums were due and payable on May 11th, and November 11th of each year. All premiums due prior to November 11, 1929, were paid by the insured, and the policy was in force at said date.

The semiannual premium due on November 11, 1929, was paid by the insured, partly by cash, and partly by a sum of money advanced to the insured by the defendant for that purpose. This sum was secured by an assignment of the policy to the defendant by the insured. It was agreed that the defendant had a lien on the policy for the sum advanced by it to the insured on November 11, 1929, with interest at the rate of six per centum. This sum with accrued interest was $57.99.

The semiannual premium due on May 11, 1930, was not paid by the insured. The cash surrender or loan value of the policy at that date was $60.30. Upon default in the payment of the semiannual premium due on May 11, 1930, the defendant applied the sum of $57.99 of the cash surrender or loan value of the policy to the payment of the sum advanced by it to the insured on November 11, 1929. The balance, to wit, $2.31, was applied by the defendant to the purchase of term insurance as provided in the policy. This term insurance expired on May 30, 1930. The application by the defendant of the cash surrender or loan value of the policy on May 11, 1930, to the payment of the sum advanced to insured on November 11, 1929 and to the purchase of term insurance, was in accordance with the express provisions of the policy. It is conceded that this application was proper.

It is provided in the policy that it "shall participate in the surplus upon payment of the premium due on the first anniversary, and the company will annually determine and account for the portion of the divisible surplus applicable hereto. Dividends as declared shall become absolutely the property of the insured, and at his option may be; 1st withdrawn in cash; or 2nd, applied toward the payment of any premium; or 3rd, converted at net single premium rates into additional paid-up participating insurance, which may be surrendered for its cash value at any time on the sole signature of the insured; or 4th, deposited with the company subject to the payment annually of three per cent. interest thereon, and the share of surplus interest apportioned thereto by the Directors, which deposits may be withdrawn at any time, or will be included in any cash...