New York Life Ins Co. v. Slocum

• Decision Date: 15 February 1910
• Docket Number: 1,263.
• Citation: 177 F. 842
• Parties: NEW YORK LIFE INS. CO. v. SLOCUM.
• Court: U.S. Court of Appeals — Third Circuit

177 F. 842

NEW YORK LIFE INS. CO. v. SLOCUM.

No. 1,263.

United States Court of Appeals, Third Circuit.

February 15, 1910

George B. Gordon and James H. McIntosh, for plaintiff in error.

George E. Shaw, for defendant in error.

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges.

LANNING Circuit Judge.

This is an action on a life insurance policy for $20,000. The jury rendered a verdict for the plaintiff below, the defendant in error here, for the sum of $18,224.02, which they ascertained by the following calculation:

Amount of policy . . . $20,000 00

Loan deducted . . . $2,360 00

Note deducted . . . 434 00

2,794 00

$17,206 00

Interest added from Jan. 17, 1908 . . . 1,018 02

$18,224 02

We think the errors assigned may all be disposed of by considering the single question whether, under the terms of the policy and the evidence, it was legally possible for the jury to find that the policy was, at the date of the death of the insured, a valid subsisting contract of insurance for any sum whatever.

The policy was dated January 16, 1900. It provided for the payment by the insured of a premium of $579.60 on the 27th day of November in each year during its continuance. It also contained the following provisions:

'This policy is automatically nonforfeitable from date of issue as follows: * * * Second. If any premium or interest is not duly paid, and if there is an indebtedness to the company this policy will be indorsed for such amount of paid-up insurance as any excess of the reserve held by the company over such indebtedness will purchase according to the company's present published table of single premiums on written request therefor within six months from the date to which premiums were duly paid. If no such request for paid-up insurance is made, the net amount that would have been payable as a death claim on the date to which premiums were duly paid will automatically continue as term insurance from such date for such time as said excess of the reserve will purchase according to the company's present published table of single premiums for term insurance, and no longer.'

'Grace in Payment of Premiums.-- A grace of one month, during which the policy remains in force, will be allowed in payment of all premiums except the first, subject to an interest charge at the rate of five per cent. per annum.'

'General Provisions.-- (1) Only the president, a vice president, the actuary or the secretary has power in behalf of the company to make or modify this or any contract of insurance, or to extend the time for paying any premium, and the company shall not be bound by any promise or representation heretofore or hereafter given by any person other than the above. (2) Premiums are due and payable at the home office, unless otherwise agreed in writing, but may be paid to an agent producing receipts signed by one of the above-named officers and countersigned by the agent. If any premium is not paid on or before the day when due, or within the month of grace, the liability shall be only as hereinbefore provided for such case.'

At the date of the issuance of the policy, the insured, Alexander W. Slocum, was a resident of Pittsburgh, and the policy was delivered to him by the insurance company's Pittsburgh agent. The premiums from 1900 to 1906, inclusive, were paid at the company's Pittsburgh office to the company's Pittsburgh agent. In May, 1906, Mr. Slocum took up his residence temporarily, for business purposes, in Houston, Tex. His wife remained, except during a part of the winter of 1906-07, in Pittsburgh. On December 1, 1906, she, acting for her husband, went to the company's Pittsburgh office and there obtained from the company for her husband a loan of $2,360, out of which the premium due the preceding November 27th was paid.

She thereupon delivered to the company a 'policy loan agreement,' signed by her husband, by which he admitted that he had that day, December 1st, received such loan in cash, and that he had pledged his policy with the company as collateral security therefor. It was stipulated by the agreement that interest on the loan at the rate of 5 per centum per annum should be annually paid in advance, and that the loan should become due and payable (inter alia) if any premium on the policy or interest on the loan should not be paid when due, in which event the pledge should be foreclosed by satisfying the loan in the manner provided in the policy.

The insured died December 31, 1907. His wife claims that on December 27, 1907-- that is, on the last day of the month of grace succeeding November 27, 1907-- she, acting for her husband, paid to the company's Pittsburgh agent the sum of $264.20 on an agreement hereafter referred to. It is conceded that nothing more was paid to the company during the lifetime of the insured. Passing, for the moment, the consideration of the alleged agreement under which the insured's wife claims to have paid the $264.20, it is clear that if nothing had been paid, and the case should be determined strictly in accordance with the terms of the policy and of the 'policy loan agreement,' there would be nothing whatever due on the policy. It is provided in the policy, as shown in the above quotations from it, that if the insured be indebted to the company, and any premium on the policy or interest on a loan is not duly paid, and a request for paid-up insurance is made, the policy will be indorsed for such amount of paid-up insurance as any excess of reserve held by the company over such indebtedness will purchase according to the company's published table of single premiums, and that, if there be no request for paid-up insurance, then 'the net amount that would have been payable as a death claim on the date to which premiums were duly paid will automatically continue as term insurance from such date for such time as said excess of the reserve will purchase according to the company's present published table of single premiums for term insurance, and no longer.'

In the case at bar, the excess of reserve over the loan of $2,360 was practically nothing. The reserve, on the American 3 per cent. basis, would have been $118.29 per $1,000, or $2,365.80 on the policy of $20,000. The company estimated the reserve at $118 per $1,000, or $2,360 on the policy of $20,000. It had loaned to the insured the whole of this estimated reserve. Giving to the insured, however, the benefit of a reserve of $118.29 per $1,000, the excess of reserve over the amount of the loan, $5.80, would have purchased term insurance for an extended period of not more than eight days after November 27, 1907. Such is the undisputed testimony in the case. If there had been no payment of any part of the premium which became due on November 27, 1907, and no loan against the policy by the company to the insured on that date, the reserve would have carried the policy for the sum of $4,000, according to one of its provisions not quoted, for a period of seven years and seven months beyond November 27, 1907. As there was a loan of $2,360 against it, and that loan exhausted the reserve, except as to the sum of $5.80, the policy, unless saved by the agreement presently to be considered, expired by force of its own provisions on December 27, 1907, since that was the last grace day and the excess of reserve ($5.80) would not have carried the policy beyond that day.

It is contended, however, by the counsel for Mrs. Slocum, that she paid the $264.20 to the Pittsburgh agent under an agreement that, by the payment of that sum, the policy should be continued in force until May 27, 1908. There is a dispute as to whether the $264.20 was paid by Mrs. Slocum to the company's agent at Pittsburgh office in the latter to the company's agent at St. Louis, and also as to the conversation between her and the Pittsburgh agent at the Pittsburgh office in the latter part of November and the latter part of December, 1907. We shall assume, as in view of the trial court's charge to the jury we think we must do, that the jury found the facts to be as stated by Mrs. Slocum. Her statement, in substance, is that on November 26, 1907, her husband then being returned to Pittsburgh from Houston, Tex., and being ill, she called at the office of the company's Pittsburgh agent, and was there given by the same person to whom she had in previous years paid the premiums for her husband a memorandum showing that upon the payment by the insured of $264.20 in cash, and the giving of a note for $434.90 payable May 27, 1908, the cash payment would carry the policy until May 27, 1908, and the note would carry it for the balance of the year; and that she took the memorandum to her home, and on December 27, 1907, returned to the office, gave the agent a check for $264.20, and received from him a blank note to be signed by her husband. This part of the transaction she states in the following language:

'I gave him the check for $264.20, and he handed me the blue note and another paper in an envelope, and he said that the note must be signed and I must return it. I told him Mr. Slocum was ill, and it might be several days before I could send it back, and he said that would be all right. ' Mail it as soon as you can."

The note was one of the form of notes prescribed by the company, called 'blue notes,' and was drawn for $435, payable on or before May 27, 1908, without grace and without demand or notice, with interest at the rate of 5 per centum per annum. It contained a recital that it was accepted at the request of the maker, together with $145.60 in cash, which, with the $435 for which the note was drawn, amounted, it will be observed, to $1 more than the premium due. The note contained, also, this provision:

'That although no part of the premium

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