Kimball v. N.Y. Life Ins. Co.

• Decision Date: 13 February 1922
• Docket Number: No. 352.,352.
• Citation: 116 A. 119
• Parties: KIMBALL v. NEW YORK LIFE INS. CO.
• Court: Vermont Supreme Court

116 A. 119

KIMBALL

v. NEW YORK LIFE INS. CO.

No. 352.

Supreme Court of Vermont. Chittenden.

Feb. 13, 1922.

COPYRIGHT MATERIAL OMITTED

Powers and Miles, JJ., dissenting.

Exceptions from Chittenden County Court; Fred M. Butler, Judge.

General and special assumpsit by Frank H. Kimball against the New York Life Insurance Company to recover on a life insurance policy. Verdict and judgment for the plaintiff, and defendant excepts. Judgment reversed, and cause remanded.

See, also, 94 Vt. 100, 108 Atl. 921.

Argued before WATSON, C. J., and POWERS. TAYLOR, MILES, and SLACK, JJ.

Charles H. Darling and Edmund C. Mower, both of Burlington, for plaintiff.

Theo. E. Hopkins, of Burlington, and Richard Hartshorne, of New York City, for defendant.

SLACK, J. On February 5, 1908, defendant issued to one Charles B. Kimball an ordinary life insurance policy on his life, payable to the plaintiff if he survived the insured. The premiums were payable semiannually on February 5 and August 5. The insured died January 13, 1916; and the main question is whether the policy was in force at that time. The policy provides that the payment of a premium shall not keep the policy in force beyond the date when the next premium is payable. The premium due August 5. 1912, was not paid. The rights of the parties, therefore, depend upon what occurred subsequent to that date. The policy provides that if default be made in the payment of any premium after the policy has been in force 3 full years, the owner may within 3 months thereafter, but not later, elect (a) to accept the cash surrender value of the policy, or (b) have insurance for the face amount of the policy, plus any outstanding dividend additions and less any indebtedness to the company thereon continued in force from the date of default for such time as is therein provided, etc., or (c) have paid-up nonparticipating insurance payable at the same time and on the same condition as the policy It further provides that if the insured does not, within 3 months from default, surrender the policy to the company at the home office for its cash surrender value, as provided in option (a), or for paid-up insurance as provided in option (c), the insurance to which he is entitled will be continued as provided in option (b), for such term as the cash surrender value of the policy will purchase at a net single premium at the attained age of the insured according to the American Table of Mortality, with interest at the rate of 3 per centum per annum. The cash surrender value of a policy is made up of the reserve on such policy and on any dividend additions thereto, at the date of default, computed according to the American Tables of Mortality, with interest at the rate of 3 per centum per annum, less the amount of any indebtedness to the company, and less a surrender charge, depending in amount upon the length of time the policy had been in force at time of default.

About the time the August 5, 1912, premium was defaulted, steps were taken by the insured and the defendant to reinstate his policy, and to that end he executed and delivered to the defendant a promissory note, referred to as the "blue note," for $19, and at the same time delivered to the defendant $9.62 in cash. The purpose of this transaction is stated in the note as follows:

"This note together with Nine and 6/100 Dollars in Cash deposited with said Company not as payment of premium either in whole or in part, but upon the following special agreement: First—That the above numbered policy has lapsed for the nonpayment of premium due on 8/5/12 and application is being made for its reinstatement; That evidence of insurability satisfactory to the Company and payment of all defaulted premiums with interest are conditions precedent to reinstatement which cannot be waived; That if, however, the Company find the evidence of insurability satisfactory, then, although the policy shall not be reinstated until the full payment required for reinstatement is made(l) the insurance called for by the policy shall be in force from the date of such findings until midnight of the due date of the note; and (2) if this note is paid on or before the date it becomes due, such payment, together with said cash, will then be accepted by said Company as payment of said premium with interest, and thereupon and thereby said policy and all benefits thereunder shall be reinstated; but (3) if this note is not paid on or before the date it becomes due, it shall thereupon automatically cease to be a claim against the maker and said Company shall retain said cash as part compensation for the rights and privileges hereby granted, and thereafter all rights under said policy shall be the same as if said cash had not been paid nor said application for reinstatement made."

This note fell due November 5, 1912, and was not paid. The insured also owed defendant $64, which defendant loaned him on the policy in November, 1910, and some interest thereon. This being the status of the policy, and the insured having failed to elect to accept its cash surrender value or to take paid-up insurance, the defendant, on or about August 4, 1913, foreclosed the policy which it then held as security for the $64 loan, and ascertained, or attempted to ascertain, the amount of extended insurance to which insured was entitled, and the time it would continue in force, and indorsed on the margin of the policy the following:

"On account of default in the payment of the August 5, 1912, premium and loan interest this policy is continued for the reduced amount of $1,479 for the term of 3 years 274 days from August 5, 1912, to May 6, 1916"

—and returned the policy to the insured. He retained it until the time of his death.

On the trial below plaintiff offered proof of the policy, of the indorsement thereon, and of the death of the insured, and rested. None of these facts were controverted by defendant, but it claimed, and its evidence tended to show, that the term of extended insurance shown by the indorsement was erroneous, due to a mistake in the computation.

At the close of the evidence defendant moved for a verdict on the grounds: (a) That the undisputed evidence showed that the policy expired before the death of insured; (b) that there was no evidence that defendant had waived payment of premiums or the blue note; and (c) that there was no evidence that the insured or the plaintiff had relied on the incorrect indorsement of extended insurance to their damage. The motion was overruled, and defendant had an exception. In disposing of this motion the evidence must be considered in the light most favorable to plaintiff. Fitzsimmons v. Richardson et al., 86 Vt. 229, 84 Atl. 811. He claims that the evidence made a case for the jury on the questions of mistake, waiver by defendant of its technical rights under the policy, and estoppel. The defendant's evidence tended to show that the computation which was the basis for the indorsement on the policy was made by clerks in one of the divisions of its' actuarial department from data furnished by another division of the same department; that this data erroneously included the regular dividend for 1913 and an extra dividend for the same year, the two amounting to $15.95, and that the insured was given the benefit of this amount in the computation; that had these dividends not been included in the computation, the term of extended insurance would have expired July 13, 1915: that insured was not entitled to the benefit of these dividends because his policy lapsed August 5, 1912; that the mistake in the data furnished for the computation was made by the person who prepared the same in copying the record and setting each year's dividend back one year; in other words, the 1910 dividend was marked as a 1909 dividend, the 1911 dividend was marked as a 1910 dividend, etc., with the result that the 1913 regular dividend and extra were marked as 1912 dividends; that insured's policy was not entitled to participate in dividends until 1910, and was not entitled to an extra dividend until it had been in force 5 full years.

This evidence shows conclusively that it is only by including the 1913 dividends in computing the continued insurance that the term can be extended to the time of insured's death; unless in this computation the net premium at insured's actual age at time of default, instead of the premium at his rated-up age, is used. This question is considered later. It appears with equal force that the insured was not entitled as a matter of right, at the time of default, to the benefit of these dividends. But whether they were included in the computation by mistake or because defendant waived its technical rights is not so clear. After the insured defaulted the August 5, 1912, premium, steps were taken, as we have seen, to reinstate his policy. The blue note and cash, together equal in amount to the semiannual premium, were delivered to the company under an agreement that if the insured furnished satisfactory evidence of insurability and paid the note when due his policy and all benefits thereunder should be reinstated. Satisfactory evidence of insurability was furnished, but the note was not paid, and, by the terms thereof, the rights of the insured under the policy then stood the same as though the cash had not been paid nor the application for reinstatement made.

This provision as to payment was, however, for the benefit of the defendant, and could be waived by it, so far as the insured was concerned, notwithstanding the provisions of G. L. 5575. If waived, and the policy treated as in force to February 5, 1913, the policy should be credited with the 1913 dividends, and the extended insurance should be computed accordingly. We think there was some evidence of waiver, at least evidence from which such waiver might fairly be inferred. Mr. Moore, superintendent of the division of policy briefs, was called as a witness by defendant, and testified that...