New York Life Ins. Co. v. Smith

• Decision Date: 03 May 1897
• Court: Texas Court of Appeals
• Parties: NEW YORK LIFE INS. CO. v. SMITH.

41 S.W. 680

NEW YORK LIFE INS. CO. v. SMITH.

Court of Civil Appeals of Texas.

May 3, 1897.

Appeal from district court, Tarrant county; S. P. Greene, Judge.

Action brought by Nannie E. Smith against the New York Life Insurance Company to recover upon a policy for $10,000. Defendant appeals. Reversed.

On the 21st day of February, 1891, appellant, the New York Life Insurance Company, insured the life of Albert B. Smith, the husband of appellee, Nannie E. Smith, for $10,000. That policy was No. 393,005. The loss, if any accrued, was, by the terms of said policy, payable to the appellee, Nannie E. Smith. The policy recited the receipt of $472 as premium for the first two years' "term insurance," and of the annual payment of $318, being the life premium to be paid at the office of said company on or before the 9th day of February in every year during the continuance of the policy, commencing on the 9th day of February, 1893. By the terms of the policy, it began on the 9th day of February, 1891, at noon, and appellant promised and agreed to pay the amount of insurance, at its office in the city of New York, to Nannie E. Smith, wife of the insured, or, in the event of her prior death, to insured's executors, administrators, or assigns, upon receipt and approval of proof of death of Albert B. Smith during the continuance of the policy, deducting therefrom all indebtedness due the company, together with any balance of the year's premium remaining unpaid.

The provisions of chapter 347 of the Laws of 1879 of the state of New York were stated to have been waived in the application for the policy. The policy recited that it was accepted upon the following express conditions and agreements: "(2) That if any one of the premiums is not paid, as hereinafter provided, on or before the day when due, then this policy shall become void, and all payments previously made shall remain the property of the company, except that if this policy shall lapse or become forfeited for the nonpayment of any premium, after there have been paid thereon three full premiums as above specified (that is to say, the premiums for four years of insurance), a paid-up policy will be issued on demand made within six months after such lapse, with surrender of this policy, under the same conditions of this policy, except as to payment of premiums, but without participation in profits (and without mortuary dividend), for such an amount as the net reserve on this policy at the time of lapse, computed by the American table of mortality, and interest at four and one-half per cent. after deducting all indebtedness to the company, will purchase as a single premium at the present published rates of the company, at the age of insured at the time of lapse; and all right to any other paid-up policy or surrender value provided for by the statute of any state or country is hereby waived. (3) That the provisions, requirements, and benefits printed or written by the company upon the next page of this policy are a part of this contract, as if they were recited at length over the signatures hereto affixed." The provisions, requirements, and benefits referred to by the policy were, among others, as follows: "This policy is issued on the distribution policy plan. The distribution period for this policy shall be completed on the 9th day of February, in the year 1906. No dividend of surplus shall be allowed or paid upon this policy unless the insured shall survive until completion of its distribution period, and unless this policy shall then be in force. That the surplus or profits derived from such policies on the distribution policy plan as shall not be in force at the date of the completion of their respective distribution periods shall be apportioned among such other policies as shall complete their distribution periods. That after the completion of the distribution period, provided this policy shall not have been previously terminated, this policy shall secure to the insured one of the following benefits: (1) To apply the accumulated surplus apportioned by the company to this policy to the purchase of an annuity on the life of the insured, to be used in reduction of subsequent premiums on this policy, and, in case the amount accruing in any year from the annuity shall exceed the amount of premium due thereon, the excess to be paid in cash. (2) To continue the policy for the original amount, and withdraw, in cash, the accumulated surplus apportioned by the company to this policy. (3) To withdraw in cash the entire equity; that is, the net reserve, being twenty-six hundred and forty-nine and 80/100 dollars ($2,649.80), and, in addition thereto, the accumulated surplus aforesaid. (4) To convert the entire equity into a paid-up policy, without participation in profits, for an amount to be determined by the method then in use in the company in determining paid-up policies of this class, provided that this policy is legally surrendered during the lifetime of the insured, and within ninety days from the completion of the distribution period, and provided, further, that no paid-up policy shall be issued for any amount in excess of the original insurance, except upon a medical re-examination satisfactory to the company. (5) The conversion of the entire equity into a life annuity upon the life of and payable to the insured. (6) To continue the policy for the original amount, and convert the apportioned surplus into a reversionary addition, conditioned upon satisfactory re-examination." It was recited that these benefits were at the option of the insured, but it was further recited that it was understood and agreed "that not less than three months prior to the completion of the distribution period the said insured should notify the company, in writing, which benefit is selected, and that, if such notification shall be received, then and in that case the surplus apportioned in said policy should be applied to the purchase of an annuity, as stipulated in the first benefit named above." It was stipulated that, in the payment of premiums upon the policy falling due within the selected distribution period, a grace should be allowed of one month, provided that, in all cases when this grace is availed of, interest at the rate of 6 per cent. per annum should be paid to the company for the time deferred. It was provided that, if the policy continued in force after the distribution period, surplus would be apportioned to it at the expiration of each period of five years thereafter, such apportionments to be made in the form of reversionary additions; but that the value of the same might, at the option of the insured, be taken in cash, or applied to the reduction of premiums during the next five-year period, or to the permanent reduction of all future premiums; that, when the value is taken in cash, payment should be made to the insured, and his receipt should be a valid release to the company. It was provided that, if the policy was in force, it might be surrendered to the company at the expiration of any period of 5 years after the distribution period, upon 30 days' previous notice, and that, if so surrendered, the entire reserve at American 4 per cent., and, in addition thereto, the surplus then apportioned, would be allowed as the surrender value of the policy. It further provided for the premium loans and mortuary dividends, and stipulated that no agent had power, on behalf of the company, to make or modify the policy, or to extend the time for paying a premium, to waive any forfeiture, to issue a permit for residence, travel, or occupation, or to bind the company by making any promise or receiving any representation or information, and that such power could be exercised only by the president, vice president, or attorney of the company, and that it would not be delegated; that all premiums would be due and payable at the home office of the company (which was New York City), unless otherwise agreed in writing, but might be paid to agents producing receipts signed by the president, vice president, or actuary, and countersigned by such agent; that notice that each and every payment of premium should be due at the date named in the policy was given by the policy, and accepted by the insured, by the delivery and acceptance of the policy, and that any other or further notice required by any statute was thereby expressly waived; that the giving of any further notice, or the acceptance of any premium after it was due, was to be considered as an act of courtesy only, and should not be deemed as waiving or disturbing any of the conditions as to the payment of premiums thereafter due.

Appellant is, and was at the time of the issuance of said policy, a life insurance corporation duly incorporated under the laws of New York, and doing a life insurance business in the state of New York, as well as in the state of Texas. There is, and was at the time of making such insurance contract, a statute of the state of New York, enacted in 1876, and amended in 1877, which is in substance as follows: "No life insurance company doing business in the state of New York shall have power to declare forfeited or lapsed any policy hereafter issued or renewed, by reason of nonpayment of any annual premium or interest, or any part thereof, except as hereinafter provided. Whenever any premium or interest due upon any such policy shall remain unpaid when due, a written or printed notice, stating the amount of such premium or interest due on such policy, the place where said premium or interest should be paid, and the person to whom the same is payable, shall be addressed and mailed to the person whose life is assured, or the assignee of the policy, if notice of the assignment has been given to the company, at his or her last known post-office address, postage paid by the company, or by an agent of said company, or person appointed by it to collect such premium. Such notice shall further state that unless the said...