Mceachern v. N.Y. Life Ins. Co

• Decision Date: 22 September 1914
• Docket Number: (No. 5271.)
• Parties: McEACHERN. v. NEW YORK LIFE INS. CO.
• Court: Georgia Court of Appeals

82 S.E. 820

(15 Ga.App. 222)

McEACHERN.

v.NEW YORK LIFE INS. CO.

(No. 5271.)

Court of Appeals of Georgia.

Sept. 22, 1914.

(Syllabus by the Court.)

Error from City Court of Atlanta; H. M. Reid, Judge.

Action by F. E. McEaehern, executrix, against the New York Life Insurance Company. Judgment for plaintiff for less than claimed, and she brings error. Reversed.

On October 22, 1898, the New York Life Insurance Company issued a 20 annual payment policy on the life of Robert A. McEachern for $10,000, payable to John H. McEachern, father of the insured, or, "in the event of his prior death, to the insured's executors, administrators, or assigns, " etc., in consideration of the sum of $489, to be paid in advance, and "of the payment of a like sum on the 22d day of October in every year thereafter, " during the continuance of the policy, "until 20 full years' premiums shall have been paid." Certain privileges were guaranteed by the terms of the policy under the head "Special Advantages." Under this heading was a "table of loans and surrender values, " showing the amounts that would be loaned on the policy, and the amount of paid-up insurance and extended insurance to which the insured was entitled at the end of each year from and after the end of the third year. According to this table, at the end of the tenth year the loan value of the policy was $3,600. At the end of the thirteenth year the loan value was $5,420, and the insured was entitled to paid-up insurance to the amount of $6,500, or to have the policy extended for seven years for $10,000. With reference to loans, the policy contained, on the page following the table above mentioned, these stipulations:

"The company will make advances to the insured as loans on this insurance bond within the month of grace allowed in payment of premiums, on application to the home office, at the third or any subsequent anniversary of the insurance within the accumulation period, under the terms of the company's loan agreement then in use. and the following conditions: First. That premiums have been paid in full to the time when the loan is made, including the premium for the entire insurance year then beginning. Second. That the amount loaned at any time shall be such as the insured may desire, not to exceed the sums shown on the table in the preceding page. The amount of any loan shall include any previous loan then unpaid. Third. That this insurance bond shall be duly assigned to the company as collateral security for the loan, and deposited at the home office. Fourth. That interest in advance at the rate of 5 per cent. per annum on all loans from the date of the loan to the next anniversary of the insurance, and annually in advance thereafter, if the loans are renewed, until they are paid off."

Next came a nonforfeiture clause, as follows:

"This insurance bond cannot be forfeited after it shall have been in force three full years, as hereinafter provided: First. If any subsequent premium is not duly paid, this insurance bond will be indorsed for the amount of paid-up insurance specified in the table on the preceding page, less the value of any indebtedness on this bond, provided demand is made therefor with surrender of this bond within six months after such nonpayment, such paid-up insurance being payable either if the insured shall die before the 22d day of October, 1918, or if the insured shall then be living: or, subject to the same conditions, this bond may be indorsed for the same amount of paid-up insurance, but payable at death only, with a guaranteed annual income, beginning on the date specified in the first 'accumulation benefit, ' on the preceding page, equal to 4 per cent. of the total amount of premiums paid, taken at the tabular annual rate. Or, second. If any subsequent premium is not duly paid, and if this insurance bond is not surrendered, as provided in the preceding clause, the insurance under this bond will, after the repayment of any indebtedness, be extended, without request or demand therefor, for the amount of $10,000, during the term provided in the table on the preceding page, payable only if the insured dies within said term. At the end of said term the insurance shall cease, and the amount provided in the last column in said table will become payable, if the insured is then living. Third. The insurance provided for in the two preceding clauses shall be based upon completed insurance years only, and shall be subject to the conditions of this insurance bond, but without further payment of premiums and without loans, participations in surplus, or premium return."

Further provisions of the policy material to the issues involved are as follows:

"Grace in payment of premiums. A grace of one month will be allowed in payment of premiums after this insurance bond shall have been in force three months, subject to an interest charge at the rate of 5 per cent. per annum for the number of days during which the premium remains due and unpaid. During the month of grace this insurance bond remains in force, and the unpaid premium, with interest as above, remains an indebtedness to the company, which will be deducted from the amount payable under this bond if the death of the insured shall occur during the month."

"Reinstatement in event of lapse. This insurance bond will be reinstated on written application therefor within six months after nonpayment of any premium, subject to evidence of good health satisfactory to the company, and payment of premiums to date of reinstatement, with interest at the rate of 5 per cent. per annum."

"General regulations. All premiums are dueand payable at the home office, unless otherwise agreed in writing, but may be paid to agents producing receipts signed by the president, vice president, second vice president, actuary, or secretary, and countersigned by such agents. If any premium is not paid on or before the day when due, this insurance bond shall become void, and all payments previously made shall remain the property of the company, except as hereinbefore provided. Any indebtedness to the company, including any balance of the current year's premium remaining unpaid, will be deducted in any settlement of this insurance bond or of any benefit thereunder."

The following appears from the agreed statement of facts in the brief of the evidence: John H. McEachern, the beneficiary named in the policy, died February 8, 1907, and thereupon the policy became payable to the executors, administrators, or assigns of the insured. On November 27, 1908, the insured obtained a loan of $2,620 from the company, and, to secure the loan, executed a "policy loan agreement, " as follows:

"Whereas the undersigned has this day duly received from the New York Life Insurance Company $2,620 in cash, as a loan upon policy No. 895, 953 [the policy in question], issued by said company on the life of Robert A. McEachern, therefore, in consideration of the premises, the undersigned hereby agrees as follows:

"1. To pay said company interest on said loan at the rate of 5 per cent. per annum, payable in advance from this date to the next anniversary of said policy, and annually in advance on said anniversary and thereafter.

"2. To pledge, and do hereby pledge, said policy as collateral security for the payment of said loan and interest, and herewith deposit said policy with said company at its home office.

"3. To pay said company said sum when due, with interest, reserving, however, the right to reclaim said policy by repayment of said loan with interest at any time before due, said repayment to cancel this agreement without further action.

"4. That said loan shall become due and payable: (a) Either if any premium on said policy or any interest on said loan is not paid on the date when due, in which event said pledge shall, without demand or notice of any kind (every demand and notice being hereby waived), be foreclosed by said company by deducting the amount due on said loan from the reserve on said policy, computed according to the American Experience Table of Mortality, and interest at the rate of 4 1/2 per cent. per annum; and, if after said deduction there is any balance of said reserve as so computed, said balance shall be taken as a single premium of life insurance at the published rates of said company at the time said policy was issued, and shall be applied to purchase on the life of the insured under said policy, at the age of said insured on said due date, paid-up insurance for such amount as said balance will buy, payable under the same conditions as the original policy, but without premium return, participation in profits, or further payment of premiums, (b) (1) On the maturity of the policy as a death claim or an endowment; (2) on surrender of the policy for a cash value; (3) on the completion of any tontine or accumulation dividend period. In any such event the amount due on said loan shall be deducted from the sum to be paid or allowed under said policy.

"5. That the application for said loan was made to said company at its home office in the city of New York, was accepted, the money was paid by it, and this agreement was made and delivered there; that said principal and interest are payable at said home office; and that this contract is made under and pursuant to the laws of the state of New York, the place of said contract being said home office of said company."

The annual premiums on the policy were paid to and accepted by the company until the one which became due on October 22, 1911. The insured died January 13, 1912. The plaintiff was appointed executrix of his will on January 27, 1912, and, if any one has a right to recover on the policy, the right is in her, as executrix. On November 29, 1911, a check was received by mail at the Charlotte branch office of the insurance company, as follows:

"Red Springs, N. C. Nov. 22, 1911.

"Carolina Bank & Trust Company, Red Springs, N. C: Pay to the order of New York Life Insurance Company six...