New York Life Ins. Co. v. Morris

• Decision Date: 08 December 1924
• Docket Number: 24522
• Citation: 102 So. 71,137 Miss. 101
• Court: Mississippi Supreme Court
• Parties: NEW YORK LIFE INS. CO. v. MORRIS. [*]

102 So. 71

137 Miss. 101

NEW YORK LIFE INS. CO. v. MORRIS. ^[*]

No. 24522

Supreme Court of Mississippi

December 8, 1924

Division B

1 INSURANCE. Life policy held not to remain in force after expiration of quarter, for which installment of premium has been paid, without payment of installment for succeeding quarter.

Where a life insurance policy provides for the payment of the premium in quarterly installments, which shall maintain the policy in force for three calendar months, and that the payment of such premium shall not maintain the policy in force beyond the date when the next payment becomes due, except as to benefits provided for after default in premium payments, the contract binds neither party beyond the quarter for which payment has been made, except at the option of the insured, and this is true, although the policy further provides that any unpaid premiums required to complete payment for the current insurance year in which death occurs shall be deducted from the amount payable thereunder.

2 INSURANCE. Policy held contract for insurance for one year only on condition that insured pays quarterly installments of premium when due.

Under such a contract the insurance is not for one year absolutely but for that period, only on the condition that the insured pays the premiums, when due under the terms of the policy.

3. INSURANCE. Life policy held not existing contract in case of voluntary default in payment of quarterly installment of annual premium when due, or within grace period.

Under such contract of insurance the insurer grants the insured the privilege of paying the annual premium in quarterly installments, but reserves the right to collect a full yearly premium in the event of the death of the insured while the policy is in force, but, the contract so providing, in case of a voluntary default in the payment of any installment when due, or within the grace period, the policy is no longer an existing contract, and the insurer has no right to collect the remaining installments, and no action can be maintained thereon by the beneficiary.

HON. E. L. DENT, Special Judge.

APPEAL from circuit court of Covington county, HON. E. L. DENT, Special Judge.

Suit by Isabelle K. Morris against the New York Life Insurance Company. Judgment for plaintiff, and defendant appeals. Reversed and rendered.

Judgment reversed.

A. H. Longino, for appellant.

By the terms of the contract sued on, the policy and the application therefor constitute the entire contract between the parties. Furthermore, the policy provides that: "All premiums are payable on or before their due date at the home office of the company or to an authorized agent, etc." It is admitted in appellant's declaration and shown by the evidence that the first premium, which was paid with the delivery of the policy, was all that the appellant ever received and that the second premium of nineteen dollars and fifty-six cents which became due on April 8, 1923, was not paid by the insured on its due date, or within the grace period of one month thereafter. It is further shown by the agreed statement of facts that the insurer before the second or April unpaid quarterly premium became due, gave due and proper notice of the date of maturity when said installment would become due and payable. And that the same nor any part thereof was paid on its due date or within the thirty days grace. There is therefore no question involved of the giving of proper notice of the due date of the premium.

We submit therefore, as an indisputable preposition that when the insured failed to pay to the appellant the second, or April 8th premium, he then and there was in default, and that by failing to pay the same, with interest, within the grace period allowed, the policy then and there elapsed. And as it had at that time no cash surrender or other value, it became a forfeited and dead contract and was without existence at the time of the bringing of the suit in controversy. The consideration for the policy sued on was the promise of the insured to pay the full annual premium, but for his accommodation, it was agreed between the parties that the annual premium should be broken up and divided into four quarterly amounts.

The appellee and the court seem to have been misled by an improper interpretation of that provision in the policy, above herein referred to, which says: "Any unpaid premiums required to complete payment for the current insurance year in which death occurs shall be deducted from the amount payable hereunder." But it must be observed that the court appears to have overlooked the provision of the policy immediately following the above, which says: "The payment of the premium shall not maintain the policy in force beyond the due date when the next payment becomes due, except as to the benefits provided herein after default in premium payment." The court below erred in failing to construe the said two provisions of the policy together, for when that is done no ambiguity or doubt exists as to the meaning of the contract in said particulars.

Corley & Cranford, for appellee.

Appellee maintains in this case, that this policy was not forfeited, for the reason that the premium was paid that started this policy into existence. It is our contention that an insurance year is twelve calendar months; that this policy went into effect on the date it was issued, and that the premium was for one year, or payable annually, but that it was agreed that this annual premium might be paid in quarterly payments, by adding six per cent interest to the agreed premium charged. In fact the policy specially provides: "The premiums always considered as payable in advance, but by agreement in writing and not otherwise may be made payable semi-annually or quarterly payments." Now we submit that it was the intent and purpose of this policy to run for a current insurance year, which we maintain is twelve months; the policy provides: "Any unpaid premiums required to complete payment for the current insurance year in which death occurs shall be deducted from the amount payable hereunder." Now if appellant's contention is correct, how could any unpaid premiums be due, during a current year? If the policy was subject to forfeit every three months, then this clause in the policy does not mean anything.

Now, our contention, we submit, is absolutely correct, and our construction of this policy is correct, or else this policy is ambiguous and contradictory in its terms, and we must then resort to the law for aid. If there is any doubt whatever about this construction, then it becomes the duty of the court to resolve that doubt in favor of the insured. Brink v. Merchants Ins. Co., 49 Vt. 457.

A. H. Lengino, in reply for appellant.

In determining the amount to be paid on the policy in question, we must look to it alone for information, and in doing that we find that the amount fixed is nineteen dollars and fifty-six cents to be paid every three months beginning with January 8, 1923. This amount having been specifically agreed to between the parties and written into the policy becomes conclusive, as to the amount of the premium to be paid and puts at rest appellee's speculations of undue addition of interest and expense charges, which were carried into the amount of nineteen dollars and fifty-six cents quarterly. 25 Cyc. 829.

As a rule of insurance, premiums must be paid cash in advance. But by agreement in writing between the parties in this case, under a provision in the policy, instead of paying the full amount in cash, the premium was divided into four equal quarterly installments. Stipulations in the policy fix not only the amount of the premiums to be paid but the time when they should be paid and in order to determine both of these points reference must be had to the policy. 25 Cyc. 829. The above announced rule of insurance as to the governing force of the policy stipulations, as to the amount of premiums and the time for payment thereof, seems to be the rule adopted generally by the courts. Ky. Mut. Life Ins. Co. v. Clancy, 111 Ga. 865; Tibbitts v. Mut. Ben. Life Ins. Co., 159 Ind. 671; Williams v. Washington Life Ins. Co., 31 Iowa 541; French v. Hartford Life Ins. Co., 169 Mass. 510; Gaterman v. A. Life Ins. Co., 1 Mo.App. 300; Gerard Life Ins. Co. v. N.Y. Mut. Life Ins. Co., 97 Pa. 15; N.Y. Life Ins. Co. v. Stratham, 93 U.S. 24, 23 L.Ed. 789; N.Y. Life Ins. Co. v. Odom, 100 Miss. 479; Alexander v. N.Y. Life Ins, Co., 122 Miss. 213; Howard v. Continental Life Ins. Co., 48 Cal. 229.

OPINION

COOK, J.

The appellee, Isabelle K. Morris, instituted this suit against the New York Life Insurance Company on an insurance policy issued for her benefit on the life of her husband, William E. Morris, now deceased, and from a judgment for appellee, this appeal was prosecuted.

To the declaration filed by appellee the defendant company pleaded all the various provisions of the policy in reference to the payment of premiums, and the provision for a forfeiture for nonpayment of premiums. The cause was submitted to the court, without the intervention of a jury on an agreed statement of facts. It was agreed that an annual premium on...