Jones v. N.Y. Life Ins. Co.

• Decision Date: 19 March 1912
• Docket Number: Case Number: 1447
• Citation: 32 Okla. 339,122 P. 702,1912 OK 258
• Parties: JONES v. NEW YORK LIFE INS. CO.
• Court: Oklahoma Supreme Court

1912 OK 258

122 P. 702

32 Okla. 339

JONES v. NEW YORK LIFE INS. CO.

Case Number: 1447

Supreme Court of Oklahoma

Decided: March 19, 1912

Syllabus

¶0 1. INSURANCE--Forfeiture--What Law Governs. Where an application for life insurance provided that the contract contained in the policy and the application "shall be construed according to the law of the state of New York, the place of said contract being agreed to be the home office of said company in the city of New York," the provisions of the New York law, requiring a notice to be given as a condition precedent to forfeiting or lapsing the policy, apply to and govern the policy issued; and the policy remains in force until notice is given, or until it is cancelled by agreement of the parties, notwithstanding a premium is not paid when due, and notwithstanding a provision in the policy to the effect that, if any premium is not paid when due, the policy shall become void, and all payments previously made shall remain the property of the company.

2. SAME. Where, by stipulation contained in the application, the law of the state of New York applies to and governs a life insurance policy, and where the policy provides that the company will make loans on it, and that interest shall be paid on the loan, and where the loan agreement provides that all the conditions, limitations, and requirements of the policy, except as expressly modified in the loan contract, remain in force, the policy cannot be forfeited for nonpayment of the interest on the loan, or non-payment of a premium, or both, without notice, as required by the New York law, although the loan contract also provides "that in the event of default in payment of said interest, or of any premium on said policy, for one month after they shall respectively become due said party of the first part [company], which is hereby irrevocably appointed attorney for that purpose, is hereby authorized at its option to cancel said policy and its accumulations for the customary cash surrender value," and, retaining the loan and other indebtedness, to pay the balance of the cash surrender value to the insured.

3. SAME--Actions on Policies--Burden of Proof. The burden is upon the company, in a suit upon a life insurance policy, to show that it has given notice of forfeiture in accordance with the law of New York.

4. SAME--Question for Jury. Evidence in this case held sufficient to require the submission to the jury of the question whether or not the insured was in such a mental condition as to be incapable of agreeing to a cancellation of a life insurance policy.

5. SAME--Conditions Precedent--Tender. It is not necessary to tender money received from a life insurance company in settlement of the excess of the cash surrender value over a loan on the policy before bringing suit on the policy, where it is certain the tender will be refused.

Error from District Court, Logan County; Stilwell H. Russell, Judge.

Action by Mary G. Jones against the New York Life Insurance Company. Judgment for defendant, and plaintiff brings error. Reversed and remanded.

Dale, Bierer & Hegler, for plaintiff in error.

S. S. Lawrence, John H. Burford, and James H. McIntosh, for defendant in error.

ROSSER, C.

¶1 This is a suit by Mary G. Jones against the New York Life Insurance Company to recover upon a certain insurance policy issued by the company March 1, 1894, on the life of Edgar W. Jones for $ 2,500.

¶2 The premiums were paid each and every year until and including March 1, 1903. The premium was not paid March 1, 1904. The policy provided, among other conditions and provisions, that the company would make loans on the policy at the fifth or any subsequent anniversary of the policy within the accumulation period, provided that all premiums were paid in full, and that the policy should be assigned to the company as collateral security for any loan made. The policy also provided that "all premiums are due and payable at the home office of the company. * * * If any premium is not thus paid on or before the day when due, then (except as hereinafter otherwise provided) this policy shall become void, and all payments previously made shall remain the property of the company." The policy also provided for grace of one month in the payment of premiums, subject to interest charges, etc. The policy also had the following nonforfeiture clause:

"After this policy shall have been in full force three full years, in case of nonpayment of any premium subsequently due, and upon the payment within thirty days thereafter of any indebtedness debtedness to the company on account of this policy, and provided the policy has not been terminated by death within the month of grace allowed in the payment of premiums (1) the insurance will be extended for the face amount, as provided in the table below; or (2) on demand made within six months after such nonpayment of premium due, with surrender of this policy, paid up insurance will be issued for the reduced amount provided in the said table; or (3) the policy will be reinstated within the said six months, upon payment of the overdue premium, with interest at the rate of five per cent. per annum, if the insured is shown by evidence, satisfactory to the company, to be in good health."

¶3 The application for the policy contained the following agreement:

"That the contract contained in such policy and in this application shall be construed according to the law of the state of New York, the place of said contract being agreed to be the home office of said company in the city of New York."

¶4 In December, 1899, the insured, Edgar W. Jones, borrowed $ 122 from the company, giving his note therefor, the note also being signed by the beneficiary, Mrs. Mary G. Jones, and the policy was by them delivered to the company as security for the loan. The note was renewed from time to time, and became due on the 1st of March, 1904, at the same time that the premiums became due. Neither the note nor the interest was paid. After some negotiations between the company and the insured, the company, on the 14th of October, 1904, computed the cash value of the policy, and deducted therefrom the amount due upon the note, including interest thereon for one month after it became due, and mailed to Edgar W. Jones a check for $ 46.25, the difference in the amount due upon the note and the cash value of the policy at the time upon which the computation was based.

¶5 Edgar W. Jones died on November 4, 1904, and his mother, the beneficiary in the policy, afterwards brought this suit. At the close of the plaintiff's testimony, defendant demurred to the evidence, and the trial court sustained the demurrer, and rendered judgment thereon in favor of the defendant. This appeal is taken from that judgment. The case is well briefed upon both sides. The material question in the case is whether the company had the right to cancel the policy upon the nonpayment of the premium and interest on the note.

¶6 The plaintiff contends that the company could not cancel or forfeit the policy without first giving notice, as required by section 92 of the New York insurance law (Consol. Laws 1909, c. 28), and that, upon default in payments the policy remained in force, no notice of intention to forfeit having been given. It is also contended that, no notice of forfeiture having been given, it required an agreement of the parties to cancel the policy, and that Edgar W. Jones was in such a mental and physical condition as to be incapable of consenting to the cancellation.

¶7 Section 92 of the New York insurance law is as follows:

"No Forfeiture of Policy without Notice. No life insurance corporation doing business in this state shall declare forfeited, or lapsed, any policy hereafter issued or renewed, and not issued upon the payment of monthly or weekly premiums, or unless the same is a term insurance contract for one year or less, nor shall any such policy be forfeited, or lapsed, by reason of nonpayment when due of any premium, interest or installment or any portion thereof required by the terms of the policy to be paid, unless a written or printed notice stating the amount of such premium, interest, installment, or portion thereof, due on such policy, the place where it should be paid, and the person to whom the same is payable, shall be duly addressed and mailed to the person whose life is insured, or the assignee of the policy, if notice of the assignment has been given to the corporation, at his or her last known post-office address, postage paid by the corporation, or by an officer thereof, or person appointed by it to collect such premium, at least fifteen and not more than forty-five days prior to the day when the same is payable. The notice shall also state that unless such premium, interest, installment, or portion thereof, then due, shall be paid to the corporation, or to a duly appointed agent or person authorized to collect such premium by or before the day it falls due, the policy and all payments thereon will become forfeited and void except as to the right to a surrender value or paid up policy as in this chapter provided. If the payment demanded by such notice shall be made within its time limited therefor, it shall be taken to be in full compliance with the requirements of the policy in respect to the time of such payment; and no such policy shall in any case be forfeited, or declared forfeited, or lapsed, until the expiration of thirty days after the mailing of such notice."

¶8 It is claimed by the defendant that the New York law is in conflict with certain provisions of the policy, and also with the loan contract. It is further contended that, as the loan contract was an independent, separate agreement, made subsequent to the execution of the policy, it is not governed by the New York law, and that it constitutes a waiver of the provisions of the New York law, or a change in the conditions of the policy in that regard, so that the New York law does not apply...