Michigan Mut. Life Ins. Co. v. Mayfield's Adm'r

• Decision Date: 26 January 1906
• Parties: MICHIGAN MUT. LIFE INS. CO. v. MAYFIELD'S ADM'R.
• Court: Kentucky Court of Appeals

90 S.W. 607

121 Ky. 839

MICHIGAN MUT. LIFE INS. CO. v. MAYFIELD'S ADM'R.

Court of Appeals of Kentucky.

January 26, 1906

Appeal from Circuit Court, Hardin County.

"To be officially reported."

Action by William Mayfield's administrator against the Michigan Mutual Life Insurance Company. From a judgment for plaintiff defendant appeals. Reversed.

O'Meara & James and Henry Burnett, for appellant.

S. M Payton, for appellee.

PAYNTER J.

On June 1, 1900, the appellant, Michigan Mutual Life Insurance Company, issued and delivered to William Mayfield a policy for $500 on his life, which sum was to be paid at his death if the policy was then in full force. The insured paid the premiums on the policy until July 1, 1905. On the 17th of that month he died. This is an action to recover the full amount of the policy. The payment is resisted upon the ground that the policy was not in force at the time of the death of the insured. He had paid three years and more of premiums before his death, but he did not make the payment of the premium which matured July 1, 1905. To ascertain the liability of the company, the court is called upon to construe clauses 6 and 8 of the policy, which appear under the heading of "Benefits and Provisions," which read as follows:

"Paid-Up Insurance. If the payments are not made as provided herein then in every such case the company shall not be liable for the payment of the insured sum, and this policy shall cease and determine, except, only, that after premiums shall have been paid for three or more full years, if default be made in the payment of any premium thereafter, and there be no indebtedness on account of this policy, it will be valid as a paid-up nonparticipating policy for a fractional part of the sum insured as shown in the table of paid-up insurance below. The amount so specified will be payable to the beneficiary or beneficiaries, upon the receipt by the company of satisfactory proof of the death of the insured and the surrender of this policy. Only the number of full-year premiums paid will be considered in the allowance of paid-up insurance. Any indebtedness on account of this policy will reduce the paid-up insurance provided for by the amount of said paid-up insurance that such indebtedness will purchase under the legal assumption as to interest and mortality."

"Extended Insurance. After the payment of three full annual premiums, if default be made in the payment of any premium thereafter, the insured may, by giving written notice to the company within thirty days after such default, elect, in lieu of the paid-up insurance provided for in this policy, to have the full amount insured carried as nonparticipating term insurance without further payment of premiums, for the time specified in the table of extended insurance below, provided there is no indebtedness to the company on account of this policy. This nonparticipating term insurance shall be subject to the condition of this policy, except as to the payment of premiums, and if death should occur within three years after the nonpayment of premiums, and during the continuance of the nonparticipating term insurance, there shall be deducted from the amount payable the sum of all premiums, with interest, that would have become due on this policy if it had been continued in force as originally intended.

The theory upon which the appellee sought to recover upon this policy is that it was in full force at the time of the intestate's death, it being claimed that he had 30 days after he failed to pay the premium in which to elect whether...