McCampbell v. New York Life Ins. Co., Inc.

• Decision Date: 20 March 1923
• Docket Number: 3991.
• Parties: McCAMPBELL v. NEW YORK LIFE INS. CO., Inc. [1]
• Court: U.S. Court of Appeals — Fifth Circuit

288 F. 465

McCAMPBELL v. NEW YORK LIFE INS. CO., Inc. ^[1]

No. 3991.

United States Court of Appeals, Fifth Circuit.

March 20, 1923

Rehearing Denied April 13, 1923.

Hal Browne, of San Antonio, Tex., for plaintiff in error.

Eugene P. Locke, of Dallas, Tex. (Locke & Locke, of Dallas, Tex and Louis H. Cooke, of New York City, on the brief), for defendant in error.

Before BRYAN and KING, Circuit Judges.

BRYAN Circuit Judge.

This is a suit on a life insurance policy, in which the plaintiff Mary E. McCampbell, was named as beneficiary. The policy was issued by the defendant company on the life of plaintiff's husband, William T. McCampbell. The defense is that the policy lapsed for nonpayment of an annual premium. A jury was waived by stipulation in writing, and the trial was before the District Judge, in accordance with sections 649 and 700 of the Revised Statutes (Comp. St. Secs 1587, 1668). There was judgment for the defendant, and the plaintiff sues out this writ of error.

The court made special findings of fact, of which the following are considered material here:

The application for the insurance was dated January 31, 1901, and it was therein stipulated that the defendant should not be liable, unless the policy should be issued and the first premium paid during the lifetime and good health of the insured, but that the first premium, when paid, should relate back to the date of the application.

The policy was issued for $15,000 on the ordinary life plan. It was dated February 27, 1901, but the annual premiums of $478.65 were made payable January 31 of each year during its continuance. It provides: For the apportionment of the accumulated profits on January 31, 1921, if the insured should be then living and the premiums paid to that date, 'and not otherwise.' That if any premium or interest should not be duly paid, and if there should be an indebtedness to the company, the policy would be indorsed for such amount of paid-up insurance as any excess of the reserve over indebtedness would purchase according to the company's published table of single premiums, on written request within six months from the date to which premiums had been paid; but in the absence of such request for paid-up insurance the net amount that would have been payable as a death claim on the date to which premiums had been paid would automatically continue as term insurance from such date for such time as the excess of the reserve would purchase according to the company's table of single premiums for term insurance. That a grace of one month during which the policy should remain in full force would be allowed in payment of all premiums except the first, subject to an interest charge at the rate of 5 per cent. per annum. That the insured might secure a reinstatement of the policy at any time within 5 years after the nonpayment of any premium, 'under the following conditions: Written application to the home office with evidence of insurability satisfactory to the company, payment of premiums from the date to which premiums were duly paid to the date of reinstatement, with interest at the rate of 5 per cent. per annum, and payment of reinstatement of any loans, including payment of any interest due and unpaid. ' That 'in any distribution of surplus or apportionment of profits, the principles and methods which may be adopted by the company for such distribution or apportionment and its determination of the amount equitably belonging to this policy shall be conclusive upon the insured and upon all parties having or claiming any interest under this policy.'

The defendant is a mutual life insurance company. McCampbell received the policy March 1, 1901, and then paid the first premium. He paid all premiums thereafter, up to and including the premium due in 1917. February 28, 1917, McCampbell and his wife, the plaintiff, applied for and obtained a cash loan of $4,635 on the security of the policy, and executed and delivered to the company a loan agreement, whereby they agreed to pay interest at 5 per cent. per annum from that date until the next anniversary; that the loan should become payable if any premium or any interest on the loan should not be paid when due, in which event the indebtedness, without demand or notice, should be satisfied in the manner provided in the policy.

The premium for 1918, the loan, and the interest thereon remained unpaid on February 28, 1918. McCampbell by letter, dated February 18, 1918, requested of the company a statement of the best settlement he could make on the premium, 'due January 31, 1918,' and interest on the loan, and stated he did not think he would be able to pay the premium and interest in full. This letter was mailed from San Antonio, Tex., to the company's home office in New York City, and forwarded to its St. Louis office for attention. The cashier of the St. Louis office on February 27 wrote to McCampbell, acknowledging receipt of his letter, and stated that the maximum amount available as a loan on the policy was $4,950. The letter contained the statement requested, and shows the fact that after making a new loan there would be a balance of $412.87 due the company on the premium and loan. A form of loan agreement was inclosed. We quote from the court's findings the following paragraph:

'In due course of mail, it would have been possible for the defendant to have answered the letter written by McCampbell on February 18 in time for the answer to reach McCampbell before February 28. A letter mailed from San Antonio on February 18 would reach New York and be delivered on February 21 or 22; a letter mailed from New York to St. Louis would reach St. Louis and be delivered on the second day after its mailing; and a letter mailed from St. Louis to San Antonio would reach San Antonio and be delivered on the second day after its mailing. February 24, 1918, was Sunday.'

March 12 the St. Louis office again wrote to McCampbell that, inasmuch as he had failed to forward the loan papers or the remittance required, his policy had lapsed, and that before the company would accept any settlement it would be necessary for him to furnish his personal certificate of health. A form for such certificate was enclosed, and McCampbell was requested to remit $413.57 as the amount then necessary to pay premium and interest on loan. March 29, McCampbell acknowledged receipt of the company's letter of March 12, and inclosed his check, together with the loan papers, and the health certificate. March 31 was Sunday. April 2 the St. Louis office acknowledged receipt of McCampbell's letter of March 29, sent to him a temporary receipt for the remittance, and advised him that his answer to one of the questions in the health certificate was incomplete, and also that his remittance had been delayed so long that a small additional amount of interest was then due.

There was subsequent correspondence with reference to re-instatement of the policy, but it is unnecessary to review it. It is sufficient to say that McCampbell was in such physical condition that he was unable to furnish a satisfactory health certificate, and that he died May 10, 1918, at his residence in San Antonio. It had been defendant's custom to accept his checks in payment of premiums. No evidence was offered that any premium notice had been sent by the defendant to McCampbell.

McCampbell never lived in the state of New York. He had received no profits or dividends from his policy. The entire reserve on the policy, as of January 31, 1918, was $4,648.35, and exceeded the indebtedness thereby secured by $13.35. This last-named sum was applied by the company in extension of the insurance, and it was sufficient to extend the same for 17 days. McCampbell would have been 40 years old on August 13, 1901. The annual premium which he paid was assessed at age 39. It would have amounted to $495.15 at age 40, a difference of $16.50. McCampbell did not surrender the policy to the company when he obtained the loan. He had it in his possession when he wrote to the company to ascertain the amount which could be borrowed thereon. The policy itself discloses that its loan value on January 31, 1918, was $330 per thousand, or $4,950.

The contentions of the plaintiff upon her assignments of error are: (1) That the annual premium for 1918 was paid, and that such payment was made within the period of grace stipulated in the policy; (2) that the policy had earned sufficient reserve, or was entitled to be credited with sufficient profits, to extend the insurance beyond...