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

• Decision Date: 07 November 1939
• Docket Number: No. 25068.,25068.
• Citation: 132 S.W.2d 1105
• Court: Missouri Court of Appeals
• Parties: LEGRAND v. CENTRAL STATES LIFE INS. CO. OF ST. LOUIS.

132 S.W.2d 1105

LEGRAND v. CENTRAL STATES LIFE INS. CO. OF ST. LOUIS.

No. 25068.

St. Louis Court of Appeals. Missouri.

November 7, 1939.

Rehearing Denied November 21, 1939.

Appeal from St. Louis Circuit Court; Joseph J. Ward, Judge.

Action by Rosa Legrand against the Central States Life Insurance Company of St. Louis, Missouri, for benefits due under life policy. From a judgment on a verdict for plaintiff, defendant appeals.

Reversed.

Jones, Hocker, Gladney & Grand and Vincent L. Boisaubin, all of St. Louis, for appellant.

Dubinsky & Duggan and Claude O. Pearcy, all of St. Louis, for respondent.

BENNICK, Commissioner.

This is an action by plaintiff as the beneficiary under a policy of insurance which was issued by defendant upon the life of her husband. Upon a trial of the case to a jury, a verdict was returned in plaintiff's favor for the aggregate amount of $7,087.50, comprising items of $5,000 as the face amount of the policy; $1,087.50 as interest from the date of the insured's death to the date of trial; and $1,000 as an attorney's fee which was allowed by way of a finding of vexatious refusal to pay. Judgment was rendered in conformity with the verdict, and defendant's appeal to this court has followed in the usual course.

The policy, which was issued by defendant on September 24, 1921, was thereafter kept in force by the insured by the payment of the successive premiums called for by the policy until September 24, 1933, when the insured defaulted in the payment of the premium due on that date. It appears that there was a loan outstanding against the policy in the amount of $1,490, and the broad question at issue between the parties is whether, at the time of the insured's default in the payment of premium, there was a sufficient reserve available under the policy, after the deduction of the amount of such loan, to have purchased extended term insurance for the full face amount of the policy for a term extending beyond the date of the death of the insured, which occurred on August 3, 1934. It was conceded that following default the insured had failed to exercise his option to receive either nonparticipating paid-up insurance or the cash surrender value of the policy, with the result that under the terms of the policy the nonforfeiture provision for extended term insurance had automatically become operative as of the due date of the premium in default.

Plaintiff's theory is, in brief, that the reserve value of the policy on September 24, 1933, the date of default, was $1,728.95, and that after deducting from this the sum of $1,490 as the amount of the loan outstanding against the policy, there was left the sum of $238.95 as a net reserve, which, if such sum was actually the amount of the net reserve, would have concededly purchased extended term insurance for the full face amount of the policy for a term extending well beyond the date of the death of the insured.

Defendant's theory, on the other hand, is that under the terms of the policy the cash surrender value at the time of default was only $1,635, and that after deducting from this the sum of $1,490 as the amount of the loan outstanding against the policy, there was left only the sum of $145 as the net reserve to be employed towards the purchase of extended term insurance, which sum, if it was actually the amount of the net reserve, would have concededly carried the policy forward only until April 22, 1934, which was more than three months short of the time of the death of the insured.

In other words, the whole controversy actually turns upon the question of whether, at the time of default, the reserve value of the policy was $1,728.95, as plaintiff claims, or only $1,635, as defendant claims. If it was the former sum, then plaintiff is concededly entitled to recover, at least for the face amount of the policy with interest; but if it was the latter sum, then the policy had concededly become void and of no value long prior to the time of the death of the insured, which would necessarily mean that no case was made for submission to the jury and that the court should have peremptorily directed a verdict in favor of defendant.

Whether the one or the other of such figures is correct is manifestly to be determined by recourse to the policy itself as the instrument embodying the contract which was entered into between the insured and the company. In other words, upon the lapse of the policy defendant was in all events obligated to give back only so much of the reserve as was allowed by statute (Sec. 5741, R.S.Mo. 1929, Mo.St.Ann. § 5741, p. 4388), and if there was actually a greater amount available to the insured than the minimum required by statute, it was only so because such an amount was accorded to him by virtue of the contract. Davis v. Mutual Life Insurance Co., Mo. App., 119 S.W.2d 488. Moreover, we may note in passing that even if the policy were to be construed according to plaintiff's interpretation of its character, the amount of reserve allowed or guaranteed by statute would not only have been materially less than that allowed by the policy, but indeed would have been less than the amount of the indebtedness outstanding against the policy so as to have left no value whatever for the purchase of temporary or extended term insurance. It follows, therefore, that since the amount allotted by the policy, however it may be construed as to character, was in excess of the amount to which the insured would have been legally entitled under the statute, the parties were bound by whatever may have been the true provision of the policy, and it alone is consequently to be looked to in determining the amount of reserve which was available to the insured for the purchase of extended term insurance.

Aside from the policy itself, the material evidence in the case consisted of the testimony of six insurance actuaries, two of whom were put upon the stand by plaintiff, and four by defendant, and all of whom testified, without difference of opinion, that in determining the reserve available at a given time upon a policy of life insurance, the kind or character of the policy itself is a necessary and essential factor. In other words, it was an admitted fact that the amount of the reserve would vary in accordance with the...