McCall v. International Life Ins. Co.
| Decision Date | 05 March 1917 |
| Citation | 193 S.W. 860,196 Mo.App. 318 |
| Parties | NITA B. McCALL, Appellant, v. INTERNATIONAL LIFE INS. CO., Respondent |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. Daniel E. Bird, Judge.
AFFIRMED.
Judgment affirmed.
McVey & Freet for appellant.
Humphrey Boxley & Reeves for respondent.
This action is upon two insurance policies issued May 9, 1907, by the Great Western Life Insurance Company upon the life of Charles A. McCall in favor of Nita B. McCall, then his wife and now his widow, and plaintiff in this suit. Said policies numbered 63 and 64, were for $ 3000 and $ 2000 respectively. In November, 1912, the business of the Great Western was reinsured by the International Life Insurance Company, hence the suit is against the latter company, it having stepped into the shoes of the former.
The policies contain the same provisions and differ only in amount and in premiums, which, in each policy, was a stipulated sum payable annually on or before May 9, with thirty days grace, throughout insured's life. Hence, the issues, under both counts of the petition, are identical.
On March 30, 1912, and after paying six full annual premiums, insured borrowed on policy No. 63 its full loan value, to-wit, $ 183, and on policy No. 64 its full loan value, to-wit, $ 122. On May 9, 1913, insured defaulted in the payment of the premiums due on that date. It is undisputed that on said date the indebtedness due from insured on the loan made to him on each policy exactly equalled the cash value of said policy, namely, $ 183 in one and $ 122 in the other. After defaulting in the payment of premiums no other premiums were paid by the insured. He died May 19, 1915. Suit was instituted on the policies August 17, 1915.
There is no question but that, if there had been no loan on each policy, three-fourths of the net value of each, computed as directed in section 6946, Revised Statutes 1909, would have been sufficient to have carried the policy, as extended insurance, beyond the date of insured's death. And in March, 1915, insured made a tender of, or sent to the Insurance Company, the full amount of said loans with interest, which the company declined to accept, and returned to the insured. If the defendant had accepted payment of said loans at that time, or, if it was required or bound to do so in law, then it is unquestioned that there was more than sufficient reserve value in each policy to carry the same beyond the date of insured's death. The controversy herein, therefore, grows out of the situation created by the existence of said loans, and the conduct of the insurer and insured with relation thereto subsequent to the insured's default in premiums on May 9, 1913. The position of the respective parties hereto may be stated thus:
Plaintiff's view is that when default occurred, notwithstanding the fact that on the date of the default in premiums the loan on each policy equalled the value thereof, so that deducting said debt from said value nothing remained on which extended insurance could rest, nevertheless, defendant did not deduct such debt nor apply the net value in payment thereof, nor attempt to do so, until after insured had tendered full payment of said debt with interest, and, therefore, defendant was bound to accept payment of said loan and must now accept payment thereof (which is re-tendered in the petition), leaving the net value unincumbered by said debt and free to operate for the benefit of insured and his beneficiary by carrying said policy as extended insurance to the date of insured's death. In other words, plaintiff claims that the loan on each policy created the relation of pledgor and pledgee between the insurer and insured, wholly independent of and distinct from the policy and the relationships and rights created thereunder, and that such relation of pledgor and pledgee continued with no foreclosure on the part of the pledgee, and hence the policies continued with insured's right to extended insurance thereon, but subject to the lien of said pledge which insured, by his tender of the debt and plaintiff's renewal thereof, has removed, leaving plaintiff entitled to recover on the policies as extended insurance.
On the other hand, defendant's view is that since there was no value of the policies in excess of the loans thereon, there was no balance on which extended insurance could be based. Its contention is further that the relationships created by the loans were not independent of those created by the policies but are closely interwoven therewith and dependent thereon and must be so treated when considering the present rights of the parties. The defendant also contends that it did apply the net value of the policies to the payment of insured's debt and notified him of such action and that he acquiesced therein, but long afterwards attempted to create different rights for himself by making a tender of the debt, at the same time refusing to re-establish the policy by making the required showing as to health and paying up the defaulted premiums.
At the conclusion of the trial the court instructed the jury to find for defendant, which was done. Judgment being thereupon rendered in defendant's favor, the plaintiff appealed.
Prior to the amendment of 1903 (Laws 1903, p. 208), our non-forfeiture statutes, section 6946, Revised Statutes 1909, allowed only notes given for past premiums to be deducted from three-fourths of the net value of a policy leaving the remainder of such value as a basis for extended insurance. [Sec. 7897, R. S. 1899; Gillen v. New York Life Ins. Co., 178 Mo.App. 89, 161 S.W. 667; Smith v. Mutual Benefit Life Ins. Co., 173 Mo. 329, 72 S.W. 935; Christensen v. New York Life Insurance Co., 160 Mo.App. 486, 141 S.W. 6; Paschedag v. Metropolitan Life Ins. Co., 155 Mo.App. 185, 198, 134 S.W. 102.] But the 1903 amendment changed this and allowed any indebtedness due the company to be deducted. [Paschedag v. Metropolitan Life Ins. Co., supra; Burridge v. New York Life Ins. Co., 211 Mo. 158, 173, 109 S.W. 560.]
Each of the policies contained a provision that:
"In case of default in the payment of any premium or interest the company will reinstate the contract at any time, if not previously surrendered for its cash value, upon written application by the insured to the company at its Home Office with evidence of insurability satisfactory to the company, payment of all premiums that would have been paid in the intervening time if no default had been made, with interest thereon at the rate of five per cent. per annum computed from the premium due date, and payment of reinstatement, with interest at like rate, or any indebtedness existing at the time of default."
They further provided that:
"On demand in writing to the Home Office of the Company, the insured may borrow on the sole security of this contract the amount specified in the accompanying table for the year in which the loan is to be taken, subject to interest in advance, at the rate of five per cent per annum, provided the contract shall have been in force two years; the contract shall be assigned to the company as security according to the terms of the company's loan agreement, and the premiums on the contract shall be paid in full to the anniversary of the insurance next succeeding the date when the loan shall be made."
The policies each contained the following further provisions:
. . . .
. . . .
"If any premium shall not be paid on or before the date when due, the liability of the company shall be only as hereinbefore provided."
On March 30, 1912, the insured and the beneficiary signed a written application for a loan on each policy, and executed two "Policy Loan Agreements," one for $ 183 and the other for $ 122, which were delivered to the company along with the policies as collateral. Said "Policy Loan Agreements" were identical except in amount, so that only the material contents of one need be set forth. They recited that:
"Pursuant to the provisions of Policy No. (63 in one and 64 in the other), issued by the Great Western...
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