Heuring v. Central States Life Ins. Co. of St. Louis

• Citation: 120 S.W.2d 176,232 Mo.App. 731
• Parties: GEORGE HEURING, APPELLANT, v. CENTRAL STATES LIFE INSURANCE COMPANY OF ST. LOUIS, MISSOURI, A CORPORATION, RESPONDENT
• Decision Date: 03 October 1938
• Court: Missouri Court of Appeals

120 S.W.2d 176

232 Mo.App. 731

GEORGE HEURING, APPELLANT,
v.
CENTRAL STATES LIFE INSURANCE COMPANY OF ST. LOUIS, MISSOURI, A CORPORATION, RESPONDENT

Court of Appeals of Missouri, Springfield

October 3, 1938

Rehearing Denied October 20, 1938.

Appeal from the Circuit Court of Scott County.--Hon. Frank Kelly, Judge.

Judgment reversed and cause remanded. (with directions).

B. Hugh Smith and J. Grant Frye for appellant.

Ward & Reeves and Jones, Hocker, Gladney & Grand for respondent.

Frank W. McAllister, Allen May and Williams, Nelson & English as amici curiae.

FULBRIGHT, J. Allen, P. J., and Smith, J., concur.

OPINION

[232 Mo.App. 732] FULBRIGHT, J.

For the second time this cause is before us. The first opinion was written October 7, 1935, reported in 87 S.W.2d 661. On a proceeding in certiorari, reported in 112 S.W.2d 843, the opinion theretofore rendered was quashed. The cause was returned to this court and comes to the writer on reassignment. [120 S.W.2d 177]

The cause was tried in the Circuit Court of Scott County. The petition is in conventional form, and among other things alleges that on August 10, 1928, in consideration of an annual premium of $ 22.43, payable each year for twenty years, defendant issued its policy for $ 1000 on the life of Armela Louisa Heuring, then twelve years of age, and that her father, the plaintiff, was beneficiary; that on October 20, 1933, while the policy was in force, the insured died. Suit was instituted for the full amount of the policy, for ten per cent that amount for vexatious refusal to pay, for a reasonable attorney's fee, and for costs.

Defendant pleaded a special defense in which it alleges that upon the failure of plaintiff or the insured to pay the fifth annual premium, the reserve or net cash value at that time was applied by the company as provided in the special automatic loan privilege clause contained in the policy, which said privilege was requested by plaintiff in the application therefor; that the policy was thus continued to June 27, 1933; that the insured died October 20, 1933; that the policy was not in force at that time; and that there is no liability on the part of the defendant under said policy.

The plaintiff, in effect, admitted in his reply that defendant applied the reserve or net cash value of the policy as set forth in its answer, but denied that it had a right to do so, and denied that the policy expired June 27, 1933, alleging that said policy by its terms provided for extended insurance for the face amount thereof for the insured up to and beyond October 20, 1933, the date of the death of the insured.

The cause went to trial August 20, 1934, before the court and a jury. At the close of the evidence the submission to the jury was set aside and the cause submitted to the court which was by the court taken under advisement until November 20, 1934, when the issues were found against the plaintiff and in favor of the defendant. Being unsuccessful in his motion for a new trial, plaintiff duly appealed to this court.

The undisputed evidence shows that a twenty-year pay, non-participating insurance policy for the face value of $ 1000 was issued August 10, 1928, by the defendant on the life of Armela Louisa Heuring, that George Heuring, her father and plaintiff herein, was named beneficiary; that the insured was born on August 9, 1916; that she died October 20, 1933; that three annual premiums were paid on August 10, 1928, 1929 and 1930 respectively; that for the fourth annual premium, plaintiff executed and delivered to the insurer his promissory [232 Mo.App. 733] lien note dated August 10, 1931, for $ 23.86 which included the fourth annual premium and $ 1.43 interest, to become due August 10, 1932. The note provided that if not paid when due it "would be automatically extended from year to year as long as premiums on said policy were duly paid; that if any premium on said policy was not paid when due, said note and accumulated interest should immediately become due and payable, and should, without notice of any kind, be paid by deducting the amount due thereon from the sum which by the terms of said policy was applicable to the purchase of insurance in the event of nonpayment of the premium when due, the balance only of said sum, if any, to be available for the purchase of insurance under and pursuant to the nonforfeiture provisions of said policy." The note was never paid and no further premiums were paid by the insured or the plaintiff. It is also undisputed that the reserve or cash value of the policy on August 10, 1932, was $ 33, and after deducting the indebtedness there remained a balance of $ 9.14.

Plaintiff relies on our nonforfeiture statutes and contends that when the note due on August 10, 1932, in the amount of $ 23.86 was not paid, and default was made in the annual premium due on said date, that according to the terms of the policy defendant was required to deduct this amount from $ 33, the cash surrender value of the policy on that date, which would leave a balance in the reserve of $ 9.14, and that plaintiff was entitled to have this residue applied as a net single premium for the purchase of extended or term insurance for the face value of the policy, thereby extending the policy to November 2, 1933, twelve days beyond the death of the insured.

Defendant contends that under the terms of the note and policy it had a right to, and did, apply the cash surrender value as provided by the special automatic premium loan clause, as requested in the application for insurance. It concedes that three annual premiums were paid in cash and that for the fourth, due August 10, 1931, plaintiff gave a premium lien note for $ 23.86 which included $ 1.43 interest, from August [120 S.W.2d 178] 10, 1931, to August 10, 1932. The fifth premium due August 10, 1932 was not paid, and as the reserve, or cash value of the policy on that date was not sufficient, after deducting the outstanding indebtedness, to pay the full premium, it was applied in accordance with the automatic premium loan provision to pay a semi-annual premium of $ 11.66 from October 10, 1932, to February 10, 1933. Upon failure to pay the semi-annual premium due on the last named date, and the cash value of the policy being insufficient, after deducting the outstanding indebtedness, to pay that premium, the defendant applied a part of the residue to the payment of a quarterly premium of $ 5.94 from February 10, 1933, to May 10, 1933. Insured failed to pay the quarterly premium due May 10, 1933, and on that date the residue, or amount of the reserve [232 Mo.App. 734] or cash value of the policy over the outstanding indebtedness, amounted to only $ 1, which was insufficient to pay the quarterly premium of $ 5.94 due. This sum of $ 1 was applied on May 10, 1933 to the purchase of extended insurance which continued the policy in force for a period of forty-nine days from said date, or to June 27, 1933. As the insured died October 20, 1933, the period of extended insurance expired prior to her death.

The policy upon which the suit is based, and which was introduced in evidence, contains the following provision:

"Surrender Values: After three full years' premiums have been paid the insured may at the end of any policy year, or within thirty-one days after the due date of any premium in default, surrender the policy and receive one of the following Options:

"(1) Extended Insurance, Automatic: To have the insurance for the face...