Inter-Southern Life Ins. Co. v. Zerrell
| Citation | 58 F.2d 135 |
| Decision Date | 30 April 1932 |
| Docket Number | No. 9323.,9323. |
| Parties | INTER-SOUTHERN LIFE INS. CO. v. ZERRELL |
| Court | United States Courts of Appeals. United States Court of Appeals (8th Circuit) |
Arthur L. Adams, of Jonesboro, Ark. (N. F. Lamb, of Jonesboro, Ark., on the brief), for appellant.
W. A. Leach, of Stuttgart, Ark. (M. F. Elms, of Stuttgart, Ark., on the brief), for appellee.
Before VAN VALKENBURGH and SANBORN, Circuit Judges, and DAVIS, District Judge.
This is an appeal from a judgment in favor of the appellee, who was the beneficiary named in a $5,000 policy issued by the appellant upon the life of her husband, Adolph E. Zerrell. The case was tried to the court without a jury. The policy was dated May 27, 1918. The insured secured a policy loan of $260 on July 28, 1922, which was never paid. Premiums and interest were paid up to November 27, 1924. The insured was then 32 years of age. He died February 15, 1930. The action was brought upon the theory that, under the terms of the policy, the insurance was automatically extended beyond the date of death. The only question in the case is, What amount was available for the purchase of extended insurance on November 27, 1924, at the time of default in the payment of premiums?
The policy was an Arkansas contract, and it is conceded that there was no statutory requirement that the insured have the benefit of the entire reserve in case of default in the payment of premiums. Therefore the amount available for the purchase of extended insurance depends upon the terms of the policy.
The policy provision relating to extended insurance in case of lapse reads as follows:
The options referred to in this clause, which appear under the heading "Options on Surrender or Lapse," gave to the insured, during the grace period after default in the payment of premiums and in case there was no indebtedness to the company, the right to surrender the policy and to take extended or paid-up insurance or the cash value of the policy. These options are set forth in paragraph 1 of "Options on Surrender or Lapse." The last sentence of that paragraph is: "The periods for which the insurance shall be extended and the amounts of paid-up insurance are set out in the table of loan and surrender values, and the cash value at the end of any year is the same as the loan value at the end of the preceding year."
Paragraph 2, which follows immediately after, provides that, in case there is indebtedness to the company, the insured shall have the same options, except that the indebtedness shall first be deducted from the amount which would otherwise be available as a cash value, and that the remainder may be used to purchase extended insurance for the full face value of the policy, less the amount of the indebtedness, or may be used to purchase paid-up insurance or taken in cash.
The "Table of Loan and Surrender Values" then follows and shows the loan value of the policy at the end of the fifth year to be $71 per $1,000 of insurance, and at the end of the sixth year $91 per $1,000 of insurance. There is a provision that, if the premium on the policy be paid in installments, allowance will be made, in computing the benefits, for that portion of the premium paid over and above the number of years indicated in the table.
At the foot of the "Table of Loan and Surrender Values" appears this statement: "The loan and surrender values under this policy shall be based upon the Actuaries' Table of Mortality, with four (4) per cent. interest per annum, and the net value thereof is the entire reserve, less not more than two and one-half (2½) per cent. of the amount insured by the policy."
The undisputed testimony was that the loan and surrender values shown in the table were based upon the Actuaries' Table of Mortality with four per cent. interest per annum, and that the net value was the entire reserve, less approximately 1½ per cent. of the amount insured...
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