Mutual Life Ins. Co. of New York v. Allen

• Decision Date: 25 November 1909
• Parties: MUTUAL LIFE INS. CO. OF NEW YORK v. ALLEN.
• Court: Alabama Supreme Court

51 So. 877

166 Ala. 159

MUTUAL LIFE INS. CO. OF NEW YORK v. ALLEN.

Supreme Court of Alabama

November 25, 1909

Rehearing Denied Feb. 26, 1910.

Appeal from Circuit Court, Dallas County; Thomas D. Knight, Special Judge.

Action on a policy of insurance by Lula T. Allen against the Mutual Life Insurance Company of New York. Plaintiff had judgment and defendant appeals. Reversed.

The policy sued on was issued upon the life of Walter E. Allen and it is alleged in the complaint that Allen is dead, of which the company has notice, and that plaintiff is the owner of the policy. Numerous pleas were interposed, but in view of the opinion it is deemed unnecessary to set them out separately. The seventh plea was as follows:

"Defendant for answer to each count in plaintiff's complaint severally and separately, says that on the 26th day of October, 1902, the said defendant issued its policy of insurance upon the written application of said Walter E Allen, and in consideration of said application, which application the defendant avers was by the express terms of said policy made a part thereof; that in and by said policy the defendant in substance and legal effect promised to pay at its head office in the city of New York unto the said Lula T. Allen, who was the wife of said Walter E. Allen, if living, and, if not, to the executors, etc., of the said Walter E. Allen, the sum of $5,000, upon acceptance of satisfactory proof at its head office of the death of said Walter E. Allen during the continuance of the said policy, upon the conditions, among others, that an annual premium of $312.02 should be paid in advance of the delivery of the said policy, and thereafter to the said defendant at its head office in the city of New York on the 26th day of October in every year during the continuance of the contract evidenced by said policy, with a further provision to the effect, and in substance and legal effect, that after said policy had been in force one year 30 days of grace would be allowed in the payment of premiums, with interest for the time taken at the rate of 5 per cent. per annum, during which time the policy remain in force for the full amount thereof. And the defendant further avers that the said policy continued in force until, to wit, the 26th day of November, 1907; that on, to wit, the 20th day of November, 1907, the said Allen made an application to said defendant to have the amount of the said policy reduced one-half, that is to say from $5,000 to $2,500, thereby reducing the premium thereof in half, that is to say, from the sum of $312.02 to $156.01, with the further request that the then surrendered value of the one-half of said policy be applied towards the payment on account for a loan of $499, which the said defendant had previously made to him under the terms of said policy and the rules of said defendant, and as security for the payment of which the defendant then and there held said policy duly assigned to it; that the defendant granted such application, and thereupon the amount of said policy and of the annual premium to be paid therefor was reduced as applied for, the said reduction in the amount of said policy and in the amount of said premium to be on and from October 26, 1907, and the same was indorsed on such policy, and the said surrender value of one-half of the amount of said policy was applied in part payment of the said loan as requested, thereby reducing the amount of said loan to the sum of, to wit, $245, for the payment of which the defendant still held and retained said policy as collateral security. But the defendant avers that the continuance in force of said reduced policy was upon the condition and with the understanding that the said Walter E. Allen should pay the premium on the policy as reduced as aforesaid within the days of grace allowed as said policy, that is to say, on or before the 26th day of November, 1907; and defendant avers that said premium was not, nor was any part thereof, paid on or before the date last mentioned, and that thereupon and by reason thereof the said policy lapsed, and the liability of the defendant thereunder terminated, except as to the surrender value of the said policy provided for under the terms of the said policy, less therefrom the aforesaid loan due by the said Walter E. Allen to the defendant; and defendant avers that under the terms and agreement in said policy contained the surrender value of said policy at the time it so lapsed was the sum of $245. and that the amount of said loan to be deducted therefrom was the sum of $245; and the said defendant avers that thereafter, to wit, on the 21st day of December, 1907, the said Allen requested the said defendant in writing in substance and in legal effect to except the said premium on said reduced policy which became due and payable on the 26th day of October, 1907, with the interest thereon to date of payment, and to restore and establish said policy in full force and effect for said reduced amount of $2,500; and it avers that in and by said written request, which was duly signed by said Walter E. Allen, it was expressly stipulated by him as follows: 'And the undersigned (meaning thereby the said Walter E. Allen) hereby ratifies and confirms all the statements made in the application upon which the said policy was issued, and hereby makes said application and this request alike parts of the said contract of insurance, and further guarantees that he is of temperate habits, and that, except as noted below, his health is and has been good, and has remained unimpaired at all times since the last examination for policy No. 1,289,474; that he has not consulted a physician since that time.' And the said defendant further avers that there was no excepting as to his health noted below on said request so made by said Walter E. Allen as aforesaid, and it further avers that the number of the policy set out in said request was the number of the original policy issued by the defendant as aforesaid.

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