Miller v. Penn Mut. Life Ins. Co. of Philadelphia

• Decision Date: 09 February 1937
• Docket Number: 26483.
• Citation: 64 P.2d 1050,189 Wash. 269
• Parties: MILLER v. PENN MUT. LIFE INS. CO. OF PHILADELPHIA.
• Court: Washington Supreme Court

64 P.2d 1050

189 Wash. 269

MILLER v. PENN MUT. LIFE INS. CO. OF PHILADELPHIA.

No. 26483.

Supreme Court of Washington

February 9, 1937

Department 2.

Appeal from Superior Court, Pierce County; W. O. Chapman, Judge.

Action by Lulu B. Miller against Penn Mutual Life Insurance Company of Philadelphia. From the judgment, the plaintiff appeals.

Affirmed.

Gordon & Gordon, of Tacoma, for appellant.

Hartman & Hartman, of Seattle, for respondent.

HOLCOMB Justice.

In 1908, the husband of appellant, hereinafter called the insured, applied to respondent for a ten-year term life insurance policy, payable to appellant, as beneficiary, in twenty annual installments of $500 each. Respondent tendered its policy to the insured which included the insurance contract applied for, hereinafter termed the 'principal contract,' and, in addition, a contract for insurance of a different type, in the form of a rider attached thereto hereinafter called the 'rider,' providing for additional insurance payable in installments of $500 annually for the life of appellant after the payment of the twenty installments certain under the principal contract. The insured accepted the policy consisting of the principal contract and the rider and paid all annual premiums due thereon within the grace period of thirty-one days, for six years. He failed to pay the premium falling due on June 17 1914, within the grace period, or at all. He died on August 14, 1914.

The insurance provided in the principal contract was ten-year term insurance payable in twenty annual installments of $500 each, for which the annual premium was $106.40. The level premium charged therefor produced a surplus during the early years of the policy and a cash value which was applied under clause VII of the policy, the nonforfeiture clause, in the absence of an election by the insured under the first option providing for the automatic extension of the net amount of the policy as nonparticipating term insurance, the extended term being for ninety-seven days to September 22, 1914.

The insured died during the extended term and respondent has paid the twenty payments provided for under the principal contract. It denied liability under the rider and this suit was brought by appellant to recover installments claimed by her to be due under the rider.

The material portions of the policy in controversy are:

'The extended insurance, paid-up insurance, and cash surrender value privileges, benefits, and conditions stated on the second and third pages hereof form a part of this policy as fully as though recited at length over the signatures hereto affixed. * * *

'VII. Non-Forfeiture. If this policy shall lapse through non-payment of premium after three years' premiums have been paid in cash, the company, subject to the other conditions of the policy, guarantees at the end of successive policy years the following options of settlement:

'First:--The automatic extension of the net amount insured by this policy as nonparticipating term insurance payable in instalments for the number of years and days stated below, at the expiration of which time the insurance shall cease; or,

'Second:--Paid-up non-participating term insurance, payable at death occurring within ten years of the date of issue of this policy, upon written application therefor and the legal surrender of all claims hereunder to the company at its Home Office within one month after lapse. The amount of such paid-up term insurance is provided for in the table below. No paid-up value will be allowed for an amount less than $50, but the cash value stipulated in the third option will be paid; or,

'Third:--The payment of the cash surrender value provided for in the table below on surrender of the policy and all claims hereunder to the company within one month after the date of lapse.'

The succeeding paragraph sets forth a table of extension, paid-up term, and cash values provided for by the policy, which table showed that at the end of the sixth year the term of extension of the policy was ninety-seven days, the paid-up term insurance on surrender of the policy $50 per $1,000, and the cash surrender value $2.09 per $1,000.

The rider attached to the policy reads:

'The Penn Mutual Life Insurance Company, in addition to the provisions and privileges contained in its policy No. 410424 on the life of Frank S. Miller to which this agreement is attached, in consideration of the payment to said company for life of the extra annual premium of Twenty One 60/100 Dollars already included in the annual premium of $128.00 now named in and payable in accordance with the terms and conditions of the policy, hereby further promises and agrees, subject to the other conditions and provisions thereof, that should Lulu B. Miller, the beneficiary thereunder live to receive the Twenty yearly instalments of $500.00 each as payable to her by the terms thereof, it will continue to pay to said beneficiary annually thereafter the said yearly instalment sum of Five Hundred Dollars during the remainder of her natural life.

'It is mutually understood and agreed that the dividends, loan and surrender values payable or allowed under said policy shall be the same as if this supplemental agreement had not been made; and that any default in premium payments on said policy, or any over-statement in the application for it or for this agreement as to the age of said beneficiary, shall render this agreement null and void.

'It is also agreed that the company will cancel this agreement upon written application from the insured and the return of said policy and this agreement to the Home Office for that purpose, and the yearly premium on the policy will thereafter be reduced to the ordinary rate.

'This continuous Instalment contract can not be transferred to apply to any other life.'

Respondent admitted the allegations of appellant's complaint as to the contract and the death of appellant's husband, the nonpayment of the premium due June 17, 1914, and that it had not been paid when appellant's husband died. It denied liability on the ground that the rider constituted a second and separate contract between the parties and was void by reason of nonpayment of the premium.

Appellant sued for one of the $500 annual installments and later amended its complaint to sue for two installments amounting to $1,000 due at the time of the trial. After a trial to the court without a jury, the trial judge held in favor of respondent and, among other things, said.

'The main policy with its provisions is complete in itself, simply attached to, but not made a part of the policy is the rider containing another and an additional agreement, the phraseology of the rider expresses this when it says:

"The Penn Mutual Life Insurance Company, in addition to the provisions and privileges contained in its policy No. 410424, on the life of Frank S. Miller * * *.' agrees for a certain consideration to do a certain thing.

'In the policy itself the insurance company promises to pay Lulu B. Miller the principal sum of $10,000.00, payable in twenty yearly installments of $500.00 each. Then this other and further agreement was made, in consideration of the payment for life of an extra annual premium of $21.00, that if Mrs. Miller lived to receive the twenty yearly installments, it would continue to pay her annually thereafter, $500.00 yearly during the remainder of her natural life.

'The policy is dated June 17, 1908. Frank D. Miller died August 14, 1914, at which date the annual premium of $128.00, payable on or Before the 17th of June, 1914, remained unpaid. Because this death occurred within 97 days, the term of

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