Jeske v. Metropolitan Life Insurance Co

• Citation: 113 Pa.Super. 118,172 A. 172
• Decision Date: 23 April 1934
• Docket Number: 1-1935
• Parties: Jeske, Admx., Appellant, v. Metropolitan Life Insurance Co
• Court: Superior Court of Pennsylvania

172 A. 172

113 Pa.Super. 118

Jeske, Admx., Appellant, v. Metropolitan Life Insurance Co

No. 1-1935

Superior Court of Pennsylvania

April 23, 1934

Argued March 7, 1934

Appeal by plaintiff from judgment of C. P., Lackawanna County, March T., 1932, No. 256, in the case of Adele Jeske, administratrix of the Estate of Julius Jeske, deceased, v. Metropolitan Life Insurance Company.

Assumpsit on policy of insurance. Before Leach, J., without a jury.

The facts are stated in the opinion of the Superior Court.

The policy contained the following provisions:

"Options on Surrender or Lapse: -- Upon failure to pay any premium or any part thereof when due, this policy, except as otherwise provided herein, shall immediately lapse. If, however, the lapse occur after three full years' premiums shall have been paid, the owner hereof, provided there be no indebtedness hereon, shall, upon written request filed with the Company at its Home Office, together with the presentation of this Policy for legal surrender or for endorsement within three months from the due date of premium in default, be entitled to one of the following options:

"First -- A cash surrender value.

"The Company in its discretion may defer the payment of the cash value for a period not exceeding ninety days after the application therefor is received by the Company.

"Second -- To have the insurance continued for a reduced amount of non-participating paid-up endowment insurance (including any existing additions to the credit of the Policy) payable at the same time and under the same conditions as this Policy but without any Disability Benefits or any increased Death Benefits thereunder. Such paid up insurance shall have an increasing cash surrender value equal to the full reserve at the date of surrender, or a loan value up to the limit of the cash surrender value. Interest on loan under such paid-up insurance shall be payable annually in advance to the end of the Policy year at the rate of six per centum per annum.

"Third -- To have the insurance continued for its face amount as term insurance in whole number of months from due date of premium in default, without participation and without the right to loan, and if the sum applicable to the purchase of such term insurance shall be more than sufficient to continue the insurance to the end of the endowment period named in the Policy, the excess shall be used to purchase in the same manner non-participating paid-up pure endowment (in even dollars for each one thousand dollars of insurance) payable at the end of the endowment period and on the same conditions as this Policy. The extended contract under this option may be surrendered for its full reserve at the date of surrender. The continued insurance shall be without any Disability Benefits and without any increased Death Benefits hereunder.

"If the owner shall not, within three months from due date of premium in default, surrender this Policy to the Company at its Home Office for a cash surrender value or for endorsement for paid-up insurance or term insurance as provided in the above options, the Policy shall be continued for a reduced amount of paid-up insurance as provided in the second option.

"The values of these options are mathematical equivalents, and have been calculated on the basis of the American Experience Mortality Table with interest at three and one-half per centum per annum (omitting fractions of a dollar per thousand of insurance) less a surrender charge not exceeding in any case two and one-half per centum of the face of the Policy. These values as computed produce the results set forth in the table herein at the end of the respective years. Values for other years (after the twentieth) will be computed upon the same basis for the entire reserve in even dollars for each one thousand dollars of insurance and for even months in the event of election of term insurance, and will be furnished upon request of the Insured.

"On surrender or default any indebtedness to the Company under this Policy will be deducted from the cash value; and such indebtedness will also reduce the amount of paid-up insurance or the amount continued as term insurance and any other pure endowment payable at the end of the endowment term, in such proportion as the indebtedness bears to the cash value at the due date of premium in default.

"The reserve for which funds are to be held upon this Policy shall be computed upon the American Experience Mortality Table with interest at three and one-half per centum per annum."

The court entered judgment for plaintiff for $ 187. Plaintiff appealed.

Error assigned, among others, was the judgment of the court.

Reversed.

T. A. Donahoe of Donahoe & Helriegel, for appellant.

Edward W. Warren of O'Malley, Hill Harris & Harris, for appellee.

Before Trexler, P. J., Keller, Cunningham, Baldrige, Stadtfeld, Parker and James, JJ.

OPINION

Keller, J.

Julius Jeske on March 15, 1920, when forty years old, took out a policy of endowment life insurance in the defendant company in the face amount of $ 3,350, payable, as endowment insurance, when he attained eighty-five years of age, and, as a death claim, to his estate, if he died before reaching that age; with special provisions for increased insurance, (1) if he died before he became sixty years old, ($ 5,025 instead of $ 3,350), and (2) if he died by accidental means before he became sixty years old ($ 6,700 instead of $ 3,350). He was to pay a premium of $ 69.25 semi-annually, thereafter, on September 15 and March 15, of every year until 1940, if he so long lived, and $ 49.45 semi-annually, thereafter, until the policy matured either as an endowment or death claim. The policy contained provisions for loans which the insured was entitled to obtain on its security; for surrendering the policy for cash after the third year; for surrendering it for paid-up non-participating endowment insurance in a reduced amount; and for surrendering it for term life insurance for the face amount, $ 3,350, for certain fixed terms; and contained a table (referred to in the Surrender or Lapse Options printed in the Reporter's statement) of loan and cash surrender values per $ 1,000 insurance, paid-up endowment insurance per $ 1,000 of insurance, and extended term insurance for the face value of the policy, of which the following years only are material.

End of

Cash Value or

Paid up Endow-

Term Insurance

Year

Loan Value

ment Insurance

Continued for

11

$ 181

$ 346

12 yrs. 0 months

12

201

376

12 yrs. 6 months

The company subsequently voluntarily increased these loan, cash surrender and paid-up endowment insurance values.

The insured paid the premiums as they fell due up to and including March 15, 1931. He did not pay the premium payable September 15, 1931. He died November 7, 1931. He had borrowed on the policy on January 18, 1930, $ 623. The amount due to repay the loan on the day of default was $ 680.36. The cash surrender value of the policy on the day of default was $ 720.50, making the cash surrender value of the policy, after deducting the loan, $ 40.14. The paid-up endowment insurance after deducting the loan was $ 76.67. The cash surrender value of the policy after deducting the loan, $ 40.14, would have purchased term life insurance for the face amount of the policy, $ 3,350, for eight months, or until after the date of the insured's death.

The policy gave the insured, on default in payment of premiums, three options which he might exercise within three months, and, if there were no indebtedness on the policy, receive the privileges set forth in the table of values above set forth, as voluntarily increased by the company, to wit: (1) He could take the cash surrender value, $ 720.50; or (2) he could take paid-up endowment insurance for $ 1,365.13 payable as an endowment at eighty-five years of age, or at his sooner death; or (3) he could have the insurance continued as term life insurance for the face amount, $ 3,350, for twelve years and three months. If there was any indebtedness on the policy, it would have to be deducted, and the privileges correspondingly reduced; that is, in the present case, there being an indebtedness of $ 680.36, the insured could have within three months elected: (1) To take the cash surrender value of $ 40.14; or (2) to take paid-up endowment insurance for $ 76.67, payable as endowment when he was eighty-five years old or at his sooner death; or (3) to have the insurance continued for the face amount, $ 3,350, as term life insurance for eight months. He made no election and died before the three months option period had expired.

If the insured did not within three months from the due date of premium in default, make his election between these three options and surrender the policy in accordance therewith, the policy provided that "the policy shall be continued for a reduced amount of paid-up insurance as provided in the second option;" that is, in this case if the insured had lived more than three months after September 15, 1931 and had not, in the meantime, exercised his choice of options, the company would automatically have continued the policy as paid-up insurance for $ 76.67, payable as endowment when he became eighty-five years old, or at his sooner death.

The policy made no provision for what occurred in this instance, viz., the death of the insured before his three months option period had expired and before the company could invoke the automatic provisions which the policy applied at the end of his three months option period. What are the rights of the beneficiary under the policy, his estate -- that is, the administratrix of his estate -- in this situation, for which the policy makes no specific provision?

The case differs from ...