Gillen v. New York Life Insurance Company

• Decision Date: 11 December 1913
• Citation: 161 S.W. 667,178 Mo.App. 89
• Parties: MARY C. GILLEN, Respondent, v. NEW YORK LIFE INSURANCE COMPANY, Appellant
• Court: Missouri Court of Appeals

161 S.W. 667

178 Mo.App. 89

MARY C. GILLEN, Respondent, v. NEW YORK LIFE INSURANCE COMPANY, Appellant

Court of Appeals of Missouri, Springfield

December 11, 1913

Appeal from Dent County Circuit Court.--Hon. L. B. Woodside, Judge.

AFFIRMED.

Judgment affirmed.

Jones Hocker, Hawes & Angert and J. Lionberger Davis for appellant.

(1) The question involved in this case is governed by the law announced in the case of Christensen v. New York Life Insurance Company, 160 Mo.App. 486. (2) The facts in this case are even stronger than those in the Christensen case, for here the amount of the loan equaled, if not exceeded, the net value or reserve of the policy. When therefore, the lien was foreclosed, and the loan thus satisfied and the indebtedness canceled, and when the insured and the plaintiff were notified of the cancellation of the policy and that it had no further value and they acquiesced therein for a period of eighteen months until the insured's death, the conclusion is irresistible that they surrendered the policy for a consideration (the satisfaction of the debt) adequate in their judgment, and hence the relation of insurer and insured was thus brought to an end.

James J. O'Donohoe for respondent.

(1) The policy in suit is a Missouri contract and to be construed according to the laws of this State in force when it was issued. Cravens v. Ins. Co., 148 Mo. 604; Reed v. Painter, 129 Mo. 680; Havens v. Fire Ins Co., 123 Mo. 417; State v. Grant, 79 Mo. 122; Wolff v. Berning, 74 Mo. 96; Brine v. Hartford Ins. Co., 96 U.S. 858. (2) Being a Missouri contract, the reserve value thereof could not be appropriated to repay the loan. Sec. 7897, R. S. 1899; Cravens v. Ins. Co., 148 Mo. 583; Smith v. Ins. Co., 173 Mo. 329; Burridge v. Ins. Co., 211 Mo. 158; Christensen v. Ins. Co., 152 Mo.App. 551; Paschedag v. Ins. Co., 155 Mo.App. 185; Christensen v. Ins. Co., 160 Mo.App. 486; Head v. Ins. Co., 241 Mo. 403. (3) Neither the insured nor beneficiary surrendered the policy and neither acquiesced in the appellant's attempt to apply the reserve value of the policy in repayment of the loan. Moreover, their acquiescence could not operate as an estoppel. Head v. Ins. Co., 241 Mo. 403; Paschedag v. Ins. Co., 155 Mo.App. 185; Christensen v. Ins. Co., 152 Mo. 551; Burridge v. Ins. Co., 211 Mo. 158; Smith v. Ins. Co., 173 Mo. 329; Cravens v. Ins. Co., 148 Mo. 583; Raymond v. Ins. Co., 86 Mo.App. 391; Price v. Ins. Co., 48 Mo. App 281. (4) Even in the absence of statute estoppel will not be allowed unless it appears that the party against whom it is invoked was "possessed of full knowledge as to his rights and all of the material facts and circumstances attending the particular transaction in respect of which the doctrine is invoked." Purdy v. Bankers' Life Assn., 101 Mo.App. 109; Head v. Ins. Co., 241 Mo. 403.

STURGIS, J. Robertson, P. J., concurs. Farrington, J., concurs.

OPINION

STURGIS, J.

The defendant appeals from a judgment recovered in the trial court on a policy of insurance issued by defendant on the life of Frank E. Gillen in favor of his wife, Mary C., the plaintiff herein, as beneficiary. The case was tried on an agreed statement of facts. The policy was issued in August, 1900, for $ 2000, and is conditioned on the payment of semi-annual premiums of $ 44.50 each, payable on the 28th days of February and August of each year. These premiums were paid until August 29, 1909, when default was made. In the meantime two loans were made to the assured under the term provided in the policy, but, as the first loan was paid out of the proceeds of the second loan, we are concerned with that one only. This loan was for $ 500 at five per cent. interest, payable in advance, and was made on April 29, 1909, and the interest then paid in advance to August 28, 1909; so that both the premium and interest on the loan became due on that date and default was made in both. No further premium was paid on the policy nor interest on the loan prior to the death of the assured on May 28, 1911.

The plaintiff's case proceeds on the theory that this policy, being a Missouri contract and governed by the provisions of the non-forfeiture laws of this State in force at the time the policy was issued, being sections 7897, 7898, 7899 and 7900, Revised Statutes 1899, and which are the same as section 6946, before the amendment in 1903, 6947, 6948 and 6949, Revised Statutes 1909, was not forfeited by default in the payments of premiums but was kept in force until after the death of the insured by automatically applying the net value of the policy available to purchase temporary insurance as a net single premium to that purpose. The defendant claims that such net value of the policy was with the implied consent of the insured used by it in discharging the loan of the insured, valid at least as a personal obligation, thereby surrendering the policy, and that nothing was left with which to purchase temporary insurance. It is conceded by both parties that this case is very similar to that of Christensen v. Insurance Co., 160 Mo.App. 486, 141 S.W. 6, recently decided by the St. Louis Court of Appeals after an opinion, though without authority, had been rendered by this court reported in 152 Mo.App. 551, 134 S.W. 100. As this is the same defendant and the policy, loan agreement, etc., are similar in both cases and the company used the net value of the policy at the time of default, in that case as in this one, to pay off the loan of the assured instead of applying the same to purchase temporary insurance, a reading of that case will assist in understanding both the law and facts of this one and make a more detailed statement unnecessary.

The policy itself provides that cash loans at five per cent. interest can be obtained by the insured on the sole security of the policy after the policy has been in force for two years or more, if the premiums are paid to the anniversary of the insurance next after the date of the loan, in varying amounts as shown by a table of cash loans based on the age of the policy. This is one of the rights of the assured under the policy. The loan agreement signed by the assured and this plaintiff acknowledges the receipt of the money, $ 500, agrees to pay interest on same in advance, pledges the policy as sole security for the loan and interest and deposits same with the company for that purpose and agrees to pay the loan when due, with the right to reclaim the policy at any time on repayment of the loan. It further provides that the loan shall become due and payable on maturity of the policy or on default in payment of any of the premiums on the policy or the interest on the loan, in which event the pledge shall be foreclosed without demand or notice by satisfying the loan out of the net value of the policy in the manner provided therein. The provision thus referred to in the policy is to the effect that if any premium or interest is not duly paid and if there is an indebtedness to the company, then paid up insurance will be issued on demand made within six months to such amount as any excess of the reserve over such indebtedness will purchase and "if no such request for paid-up insurance is made, the net amount that would have been payable as a death claim on the date to which premiums were duly paid will automatically continue as term insurance from such date, for such time as said excess of the reserve will purchase according to the company's present published table of single premiums for term insurance, and no longer."

The agreed statement of facts further cites: "In accordance with said loan agreement and policy, the defendant duly foreclosed the lien on said policy on the 26th day of November, 1909, and neither the reserve held by the company on said policy on said date or at the time of its lapse, nor the reserve or net value of the policy on said date, computed upon the Actuary's or Combined Experience Table of Mortality, with interest at four per cent per annum, nor the reserve or net value of the policy computed upon the American Experience Table of Mortality, with three per cent interest per annum, exceeded the sum then due on account of said indebtedness, and interest. Defendant, at the same time, canceled said loan and canceled the indebtedness of the insured and of plaintiff. Thereafter, on November 26, 1909, the defendant wrote and mailed the following notice: 'New York, November 26/09. Mr. Frank E. Gillen, 3540 a McKean Ave., St. Louis, Mo., Dear Sir: Re Policy No. 307116. By a loan agreement executed on the 29th day of April, 1909, the above policy on the life of Frank E. Gillen was pledged to and deposited with the New York Life Insurance Company as collateral security for a cash loan of $ 500. The premium and interest due on said policy on the 28th day of August, 1909, not having been paid, the principal of said loan became due and has been settled according to the terms of the policy, and the policy has no further value. Yours Truly, John C. McCall, Second Vice-President. By E. L. H.' Said notice was received by the insured and his beneficiary on or about December 1, 1909, and thereafter no steps were taken by either the insured, the plaintiff or the defendant until this action was begun. If the loan had not been made and if the loan agreement had not been executed, and if the foreclosure had not been made and the notice thereof given and received, said policy would have had sufficient net value to have purchased extended insurance for the full amount of the policy, to-wit, two thousand dollars, for a period beyond the date when the insured died."

It will thus be seen that the whole case turns on the right of the defendant to use the net reserve value of the policy at the time default was made in the payment of...