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

• Decision Date: 04 March 1918
• Docket Number: 19830
• Citation: 117 Miss. 479,78 So. 362
• Court: Mississippi Supreme Court
• Parties: MUTUAL LIFE INSURANCE COMPANY OF NEW YORK v. BRELAND

78 So. 362

117 Miss. 479

MUTUAL LIFE INSURANCE COMPANY OF NEW YORK v. BRELAND

No. 19830

Supreme Court of Mississippi

March 4, 1918

APPEAL from the chancery court of Harrison county, HON. W. M. DENNY JR., Chancellor.

Suit by Mrs. Harriet Breland against the Mutual Life Insurance Company of New York. From a decree for plaintiff, defendant appeals.

The facts are fully stated in the opinion of the court.

Decree affirmed, and cause remanded.

R. H. &amp J. H. Thompson and Frederick L. Allen, for appellant.

White &amp Ford, for appellee.

OPINION

STEVENS, J.

Appellee Mrs. Harriet Breland, widow of one Jacob E. Breland, deceased, sued in equity to recover upon a policy of life insurance issued by appellant, Mutual Life Insurance Company of New York, on the life of said Jacob E. Breland in the sum of two thousand dollars. A demurrer interposed to the bill was overruled by the chancellor, and from the decree overruling the demurrer appellant prosecutes this appeal.

The controversy grows out of the following state of facts, briefly outlined: Jacob E. Breland before his marriage to the complainant obtained from appellant a policy of life insurance in the amount of three thousand dollars. This first policy provided that after three full years' premiums were paid the policy, upon nonpayment of any subsequent premium, would become a nonparticipating paid-up policy in a sum depending upon the number of premiums paid by the insured. It is conceded that the insured failed to pay the annual premium due October, 1904, and on that account the policy automatically became a paid-up policy for six hundred dollars payable on the death of the insured, Jesse Breland, father of the insured, was named as the beneficiary. Approximately four years after the old policy became a paid-up policy for six hundred dollars, the agent of the insurance company entered into negotiations with Jacob E. Breland looking towards a surrender and release of the old policy and the taking out of a new policy for two thousand dollars, payable to the insured's wife, Harriet Breland, the complainant herein. It is averred in the bill that the agent represented to the insured that the old policy had a cash surrender value of one hundred forty-eight dollars and twenty cents, which was a sum sufficient to pay two annual premiums upon a new policy for two thousand dollars and to give the insured in cash sixteen dollars and forty-four cents; that upon representations made by the agent to the insured the latter accepted the statements of the agent as to the value or worth of the old policy, and agreed to take out, and did accept and receive, a new policy for two thousand dollars, payable to his wife, a receipt for two annual premiums, and sixteen dollars and forty-four cents in cash from the company. The new policy bears date November 12, 1909, and the stipulated premium is sixty-five dollars and eighty-eight cents. It is further shown that Jesse Breland, the beneficiary in the old policy, was a party to the agreement, and joined the insured in executing to appellant a full acquittance and release of the old policy. It is further charged that the actual cash surrender value of the first policy, if calculated according to the usual methods or rules for ascertaining such values, was the sum of two hundred and fourteen dollars and twenty-two cents, and not one hundred and forty-eight dollars and twenty cents, as represented by the agent of appellant; that the insured was ignorant of the true worth or value of the policy, and was not conversant with life insurance or the values of life insurance policies; that this representation of the agent as to the value of the policy was either a fraud on the rights of the insured, or that the second policy was accepted under a mistake. The appellee further charges that the insured died August 29, 1914, without making any payment of premiums further or in addition to the two premiums for which receipt was issued by appellant at the time the policy was delivered; that the third premium was due and payable November, 1911, and was not paid; that at the time the third premium became due appellant had in its hands fifty-six dollars accrued dividends which the policy had earned, and which had not been paid to the insured; that in addition to these dividends there had accrued at that time thirty-five dollars and forty-five cents as the insured's proportion of surplus. It is then charged that the duty devolved upon appellant to apply this dividend and the insured's share of the surplus toward the liquidation of the premium due November, 1911; that thirty days' grace was allowed for the payment of this premium, and that the company had ample opportunity, and that it was the duty of the company, to apply the funds in its hands belonging to appellant toward the payment of this premium and thereby avert a forfeiture. The policy sued on contains, among other provisions, the following:

"Participations.--The proportion of the surplus accruing upon this policy shall be ascertained and distributed annually and not otherwise.

"Amount of insurance payable at death. Premiums for twenty years or until prior death. Annual dividend period.

"Dividends.--Dividends at the option of the insured or the owner of this policy shall on the 12th day of November each year be either--

"(1) Paid in cash; or,

"(2) Applied toward the payment of any premium or premiums; or,

"(3) Applied to the purchase of paid-up additions to the policy; or,

"(4) Left to accumulate to the credit of the policy with interest at the rate of three per centum per annum and payable at the maturity of the policy, but withdrawable on any anniversary of the policy.

"Unless the insured or the owner of the policy shall elect otherwise within three months after the mailing by the company of a written notice requiring the election of one of the four above options, the dividends shall be applied to the purchase of paid-up additions, as per option (3). Such paid-up additions may be surrendered at any time for a cash value which shall not be less than the original cash dividends, as per option. (1)."

The bill charges that if the insured had received the true or actual value of the old policy there would have been sufficient funds to pay three annual premiums upon the new policy, and in that event, under the extended insurance feature or provision of the new policy, the contract would have been in full force and effect on the date of the death of the said Jacob E. Breland, and that if the company had applied the funds in its hands toward paying the third annual premium, the same result would have been accomplished. The prayer of the bill is:

"That the said policy may be decreed to be reformed by this honorable court so as to carry into effect the contract between the said Jacob E. Breland, deceased, and the defendant company in accordance with the terms of said policy," etc., and "that the said contract of insurance when so reformed shall be declared in equity to have been in full force and effect on the date of the death of said Jacob E. Breland, under the extended insurance feature thereof."

There is a further prayer that the court decree that appellant in fact had in its hands on November 12, 1911, a sum sufficient to pay the third annual premium, and consequently to decree that the policy was in force on the date of the death of the insured, and that the beneficiary, the complainant, be awarded the full sum of two thousand dollars with interest.

Without setting out the grounds of the demurrer, the sufficiency of the bill is questioned and complainant's right to recover at all challenged. The bill does not seek a reformation of the new policy, the one sued on, as a contract of insurance no objection is made to the terms and provisions of the policy. It is nowhere intimated that there is any mistake as to the amount of the insurance or any of the material provisions of the policy fixing the premium and defining the rights and obligations of the parties. The real end sought by the bill is...