Milburn v. Royal Union Mutual Life Insurance Company, a Corp.

• Decision Date: 07 November 1921
• Parties: ADELAIDE M. MILBURN, Respondent, v. ROYAL UNION MUTUAL LIFE INSURANCE COMPANY, a Corporation, Appellant
• Court: Kansas Court of Appeals

234 S.W. 378

209 Mo.App. 228

ADELAIDE M. MILBURN, Respondent, v. ROYAL UNION MUTUAL LIFE INSURANCE COMPANY, a Corporation, Appellant

Court of Appeals of Missouri, Kansas City

November 7, 1921

Appeal from the Circuit Court of Jackson County.--Hon. E. E Porterfield, Judge.

AFFIRMED.

Judgment affirmed.

Clarence L. Hogin and Ball & Ryland for respondent.

N. M Hubbard, Jr. and J. W. Perry for appellant.

OPINION

ARNOLD, J.

This is a suit on a policy of life insurance. From an agreed statement of facts it is learned that on or about the 1st day of November, 1915, the defendant, a corporation duly organized and existing under the laws of Iowa and licensed to do business in Missouri, issued its policy of insurance in the sum of $ 6000, payable in 240 equal monthly instalments of $ 25 each, on the life of Thomas A. Milburn of Kansas City, Missouri, in which plaintiff herein, wife of insured was designated as beneficiary. The policy was duly delivered and thereupon became effective.

The insured paid all the premiums under the terms of said policy up to, but not including the premium due January 1, 1919. That is, he paid three annual premiums on said policy. The premium due January 1, 1919, was not paid when due nor within the period of 31 days grace specified in the policy; nor was it paid at any time thereafter. The insured died on April 4, 1919.

On or about April 10, 1919, plaintiff furnished proofs of death of insured and made demand of defendant for the sum of $ 6000, under the terms of the policy. Defendant denied liability for the said sum of $ 6000, and asserted it was liable only for the sum of $ 428, under said policy, and tendered payment of this amount in full discharge of such liability, which tender plaintiff refused.

In an agreed statement of facts, it was specifically set out that "if as a matter of law the reserve on the policy is to be applied as a single premium to purchase extended insurance for the face of the policy, then it is agreed that the period of extended insurance so purchasable would extend beyond the date of the death of the insured; and the defendant would be liable for the amount of the face of the policy payable according to its terms. If on the other hand, under the law, and the terms of the policy, it is excepted and excluded from the provisions of the extended insurance law of Missouri, the defendant would be liable only for the amount of paid-up insurance provided for in the policy."

The two theories presented in the paragraph above quoted are the basis of the disagreement between the parties as to the proper construction to be placed upon that clause in the policy which reads:

"Guaranteed Surrender Value and Non-Forfeiture Benefits. At the end of the third or any subsequent policy year, and on default in payment of a subsequent premium or at any time within the period of grace thereafter, the owner of this policy shall be entitled to any one of the following guaranteed surrender and nonforfeiture benefits, the amounts of the same being stipulated in the table given below, for the number of full years for which premiums shall have been paid, the net value of which shall not be less than the legal reserve on the policy and any existing additions thereto at the end of such years, computed by the American Experience Table of Mortality and three and one-half per cent interest, less a sum of not more than two and one-half per centum of the amount insured by the policy and of any existing additions thereto: (a) the cash values stipulated herein shall be at least equal to the sums which would otherwise be available for the purchase of paid-up insurance under options (b) and (c), and shall be paid on surrender of the policy to the company, properly receipted; (b) the policy, on presentation to the company for the endorsement and on written request of the insured, will be continued in force for the full amount of insurance hereunder and without further payment of premiums or medical re-examination and without the right to loans or dividends, for the period specified herein; (c) the policy, on presentation thereof to the company for endorsement, will be continued in force for the reduced amount of non-participating paid-up insurance stipulated herein, payable as originally provided."

The differences arise from the inability of the parties to agree that the clause last above quoted is in harmony with the provisions of sections 6946-48-49, Revised Statutes 1909. A jury was waived and the cause tried to the court, resulting in a verdict for plaintiff in the sum of $ 6450. Defendant appeals.

The petition sets out plaintiff's contentions as stated in the agreed statement of facts, and asks judgment for $ 6000. The first amended answer denies liability in excess of the sum of $ 428, and sets up the provisions of the policy relative to guaranteed surrender value and non-forfeiture benefits.

The policy, which was introduced in evidence, provides that in the event of default after three full annual premiums have been paid the insured has three options, as follows: To accept (1) a cash surrender value of $ 292; (2) paid up insurance of $ 428; (3) extended insurance for 1 year and 10 months as shown by the "table of guaranteed loan and surrender value and non-forfeiture benefits," and provides that the owner of the policy, after default, shall be entitled to any one of the three options above indicated, modified, however, by the following: "(a) the cash values stipulated herein shall be at least equal to the sums which would otherwise be available for the purchase of paid-up insurance under options (b) and (c), and shall be paid on surrender of the policy to the company, properly receipted; (b) the policy, on presentation to the company for the endorsement and on written request of the insured, will be continued in force for the full amount of insurance hereunder and without further payment or medical re-examination and without the right to loans or dividends, for the period specified herein; (c) the policy, on presentation thereof to the company for endorsement, will be continued in force for the reduced amount of non-participating paid-up insurance stipulated herein, payable as originally provided.

"If no choice of other options has been made, option (c) becomes effective without action on the part of the insured; and whenever presented the policy shall be so endorsed."

Section 6946, Revised Statutes 1909 (sec. 6151, R. S. 1919) provides "No policies of insurance on life hereafter issued by any life insurance company authorized to do business in this State, on and after the first day of August, A. D. 1879, shall, after payment upon it of three annual payments, be forfeited or become void, by reason of nonpayment of premiums thereof, but it shall be subject to the following rules of commutation, to-wit:" The section then proceeds to define the manner of commutation: "The net value of the policy, when the premium becomes due, and is not paid, shall be computed upon the actuaries' or combined experience table of mortality, with four per cent. interest per annum, and after deducting from three-fourths of such net value, any notes given on account of past premium payments on said policy issued to the insured, and any evidence of indebtedness to the company, which notes and indebtedness shall be then canceled, the balance shall be taken as a single premium for temporary insurance for the...