Gen. Am. Life Ins. Co. v. Brown, Case Number: 26022
| Decision Date | 07 April 1936 |
| Docket Number | Case Number: 26022 |
| Citation | 56 P.2d 809,1936 OK 325,176 Okla. 500 |
| Parties | GENERAL AMERICAN LIFE INS. CO. v. BROWN |
| Court | Oklahoma Supreme Court |
1936 OK 325
56 P.2d 809
176 Okla. 500
GENERAL AMERICAN LIFE INS. CO.
v.
BROWN
Case Number: 26022
Supreme Court of Oklahoma
Decided: April 7, 1936
¶0 1. INSURANCE - LIFE POLICY - Provision for Lapse Upon Failure to Pay Premium Within Specified Time Binding in Absence of Estoppel or Waiver.
The provisions of a policy of life insurance that the same shall cease or lapse upon the failure of the insured to pay the premium, provided therein, on or before the due date or within the grace period specified, are valid provisions, and the insurer may rely upon and enforce the same unless, as a result of its conduct, it is estopped or has waived its right so to do.
2. SAME - Insured not Entitled to Paid-up Term Insurance Under Provision of Policy Where Indebtedness Against Policy Equaled Cash Value at Time of Default in Premium Payment.
Where the amount of indebtedness against a policy of life insurance was equal to or in excess of the cash value of the policy at the time of default in payment of a premium due, no credit is available to provide for paid-up term insurance under a provision of the policy that upon default in payment of a premium, insurance for the amount in force during the year preceding default would be continued as nonprofit sharing, paid-up insurance dating from the due date of the unpaid premium and remaining in force for the period of time which the cash value of the policy less any indebtedness due thereon, would pay for at the rate specified in the table set out in the policy.
3. SAME - Insurer's Conduct in Urging Payment of Premium or Reinstatement of Policy Held not to Constitute Waiver of Default in Payment or Estoppel to Cancel policy.
The insurers' conduct in recognizing the rights of insured under nonforfeiture provisions of a policy of life insurance, in urging the payment of a premium thereon before lapsing date, or urging reinstatement of the policy after it had lapsed, do not constitute a waiver of default in the payment of a premium due on the policy or an estoppel to cancel the policy.
4. SAME - All Provisions of Policy Construed Together.
All the provisions of a policy of life insurance should be considered and construed together.
5. SAME - Lapse of Policy for Failure to Pay Premium Within Specified Time not Prevented by Failure of Insure to Give Notice and Cancel Policy.
The provision of a policy of life insurance providing for the cancellation thereof after proper notice upon default in the payment of a note, or interest thereon, given in payment of a premium, does not modify or effect the provision of the policy providing that it should lapse for failure to pay premiums thereon, and the failure of the insurer to give notice and cancel the policy because of default in the payment of interest on a premium note does not prevent the policy from lapsing for failure to pay a premium due thereon within the proper time.
Allen May, J.R. Burcham, and Johnson, McGill & Johnson, for plaintiff in error.
Sigler & Jackson, for defendant in error.
PER CURIAM.
¶1 Charles J. Brown as purchaser and beneficiary, sued the defendant on a certain policy of life insurance issued by the defendent's predecessor on the life of his son, George R. Brown. The parties will be referred to as follows: George R. Brown, as insured; Charles J. Brown, as beneficiary, and Missouri State Life Insurance Company, as the company.
¶2 The material facts are: On March 23 1928, beneficiary purchased a policy of life insurance on the life of insured in the sum of $1,000, payable to beneficiary upon the death of the insured. The policy is what is commonly called a "Child's 20-Payment Life Policy." Premiums were paid, quarterly to December 23, 1930. A quarterly premium due on that date was paid by an automatic premium loan in the sum of $5.71, which included interest on the loan to March 23, 1931. A quarterly premium of $5,62, due March 23, 1931, and 34 cents interest on the outstanding premium loan were paid by increasing the automatic premium loan, which carried the policy to June 23, 1931. On May 16, 1931, the beneficiary signed a policy loan agreement for $28 to pay premiums and the automatic premium loans. This $28 would maintain the policy in force to March 23, 1932. On March 21, 1931, the cash surrender value of the policy was $16. If the annual premium had been paid on March 23, 1931, by cash, the cash surrender value available as of that date was $28, but this value had been consumed by the loan of $28 made May 16, 1931. On March 23, 1932, the quarterly premium of $5.62, loan interest of $1.68, and outstanding loan of $28 became due, of all of which the beneficiary was notified. None of these items were paid on the due date or within the days of grace provided in the policy. The company urged a reinstatement of the policy and two applications to reinstate were made but not completed, and the policy was never reinstated. The insured died January 12, 1933, and due notice thereof was given the company.
¶3 The provisions of the policy pertinent to these facts are as follows:
"Grace. A grace period of thirty-one days will be granted for payment of every premium after the first, during which this policy will continue in force. Death of either the insured or purchaser will not modify the obligation hereunder to pay any premium that shall have become due. If any premium is not actually paid when due this policy shall cease and determine, except as herein expressly provided. * * *...
"Non-Forfeiture Options. After two full Years' premiums have been duly paid, then upon default in payment of any subsequent
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