Great Southern Life Ins. Co. v. Jones

• Citation: 35 F.2d 122
• Decision Date: 30 September 1929
• Docket Number: No. 8387,8388.,8387
• Parties: GREAT SOUTHERN LIFE INS. CO. v. JONES (two cases).
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

35 F.2d 122 (1929)

GREAT SOUTHERN LIFE INS. CO. v. JONES (two cases).^*

Nos. 8387, 8388.

Circuit Court of Appeals, Eighth Circuit.

September 30, 1929.

Bailey & Hammerly, of Chickasha, Okl., for plaintiff.

Embry, Johnson & Tolbert, of Oklahoma City, Okl., for defendant.

Before LEWIS and VAN VALKENBURGH, Circuit Judges, and SYMES, District Judge.

SYMES, District Judge.

Nina Bell Jones, widow of Walter Jones (now Kennedy), appellee in No. 8387, appellant in No. 8388, plaintiff below, and referred to here as plaintiff, brought this action in the state district court of Grady county, Okl. It was removed to the District Court of the United States for the Eastern District of Oklahoma.

She sues as beneficiary on an insurance policy for $5,000 on the life of her deceased husband, dated December 24, 1910, issued by the Oklahoma National Life Insurance Company, and later assumed by the defendant, the Great Southern Life Insurance Company. The policy called for the payment of 20 annual premiums of $205.80 each, including the first, or until the prior death of the insured. Eleven annual premiums were paid, continuing the policy in force until December 24, 1921. No premiums were paid thereafter. The insured died March 28, 1924, as the result of bodily injuries effected exclusively by external, violent, or accidental means.

The policy contained a double indemnity clause providing:

"In the event of the death of the Insured by bodily injury effected exclusively by external, violent, or accidental means, and occurring within 90 days after such injury, the amount payable hereunder, as above, shall be $10,000.00 Ten Thousand Dollars."

The action is to recover as for extended insurance under one of three provisions providing, (1) that upon failure of the insured to pay such premiums he became entitled to the cash surrender value; or (2) a nonparticipating paid-up life policy for a lesser amount and for a definite time; and (3) that, without action on the part of the insured, the first amount mentioned in the policy, $5,000, would be extended for a given time, stated in the table of guaranteed values, if policy in each case was free from indebtedness.

In July, 1921, and about five months before the expiration of the date that premiums were paid to, the insured borrowed the full loan value of the policy, $1,450. Interest on this loan was paid until December 24, 1921.

Attached to and forming a part of the policy were 19 guaranteed dividend coupons, discussed later, called "Premium Reduction Coupons."

A jury was waived by written stipulation, and all questions of fact and law submitted to the court, which made certain findings of fact and conclusions of law.

The court found, among other things, that the premium reduction coupons on December 24, 1921, had a then guaranteed cash value of $425.50 due the insured at the time of his death; that defendant had in its possession on said date sufficient funds — together with the increased values or increments to said policy during its continuation — which, if applied to continuing said contract in force, would have extended the same beyond the death of the insured; that its value at the time of default in payment of the twelfth annual premium, less the amount of the loan to the insured, was sufficient to continue the policy in effect for its face value for a period of more than six years on the basis of term insurance at the then age of the insured; that the defendant never canceled, and did not seek to cancel, the policy or declare it forfeited for nonpayment of premiums during the life of the insured; that the insured during his lifetime borrowed and withdrew the whole of the reserve and cash surrender value, and at the time of default in premium payment his indebtedness to the company equalled the reserve and cash surrender value, leaving nothing to pay for extended insurance, unless, as claimed by the plaintiff, the value of the premium reduction coupons, $425.50, were applicable to the automatic extension of the insurance.

The plaintiff and the defendant each moved for judgment upon the findings of fact and conclusions of law of the court. The motion of plaintiff was granted and judgment rendered in her favor for $3,550, with interest, being the face value of the policy, less the amount of the loan secured thereby.

The defendant, appellant in 8387, asserts here, as it did in its answer, that only the amount of the matured coupons, to wit, $425.50, is due; which amount it has in its answer offered, and now offers, to pay with interest as an obligation separate and distinct from the insurance, but it denies that this sum could or should have been used to buy up additional or extended insurance under the automatic extension clause.

The plaintiff, appellant in 8388, assigns as error the refusal of the court to permit recovery under the double indemnity provision. The one record is certified for both appeals.

Two questions are presented for our consideration: First, whether the so-called premium reduction coupons extended the insurance, as found by the lower court, and second, if so, did they extend it for $5,000 only, the first item in the policy, or for $10,000, in accordance with the double indemnity provision?

First. It is admitted by the defendant company in its brief that each premium is made up in part of a charge for these coupons, in addition to the carriage risk of the insurance.

In Metropolitan Life Ins. Co. v. Lillard, 118 Okl. 196, 248 P. 841, the Supreme Court of the state in a similar situation deducted the indebtedness from the cash surrender value of the policy, and then applied the balance, the net surrender value, as one premium in extending the whole policy for the time that such premium would pay for. If we apply that rule to the case at bar, there is nothing left to extend the insurance, unless the premium reduction coupons are held to be available for that purpose.

One coupon matures annually in turn, as long as the premiums are paid. Each is a promise by the company that it will pay the insured the amount stated therein. The policy provides that they may be used by the insured in any one of five ways; that is, by applying each coupon as it became due on the annual premium, by paying all premiums in full, and leaving with the company the amount represented by the coupons as they mature, in which event the policy became fully paid in 14 years, by paying all premiums in full, without reduction, for 20 years, in which event the insured would be entitled to select from certain optional settlements...