New York Life Insurance Company v. Lahr
| Decision Date | 16 March 1922 |
| Docket Number | 23,976 |
| Citation | 137 N.E. 673,192 Ind. 613 |
| Parties | New York Life Insurance Company v. Lahr |
| Court | Indiana Supreme Court |
Opinion Modified and Petition for Rehearing Denied January 9 1923.
From Posey Circuit Court; Herdis F. Clements, Judge.
Action by Adolph P. Lahr against the New York Life Insurance Company. From a judgment for plaintiff, the defendant appeals. (Transferred from the Appellate Court under § 1399 Burns 1914, Acts 1901 p. 565.)
Affirmed.
James H. McIntosh, Daniel A. Ortmeyer and Gavin & Gavin, for appellant.
George K. Denton, Spencer, Perkins, Nolan & Spencer and Moses B Lairy, for appellee.
OPINION
This action by appellee against appellant is upon an insurance policy issued by appellant to appellee.
The substantial averments of the complaint are that on March 17, 1892, appellant, in consideration of $ 326.50 paid by appellee, executed and delivered to appellee a policy of life insurance, whereby appellant agreed to pay to the executors, administrators, or assigns of appellee, called the insured in said policy, $ 5,000 upon proof of death, with the further provision that the tontine period in such policy should be completed on March 17, 1907, and that after the completion of such tontine period, if the policy had not been previously terminated, it secured to the insured, inter alia, one of the following benefits or options:
First: To apply the accumulated dividend to the purchase of an annuity on the life of the insured in one of the following forms: (a) an annuity for the number of years that premiums are payable beyond the tontine period, to be used in reduction of subsequent premiums on this policy, and in case the amount accruing in any year from the annuity, together with dividends that may thereafter be declared on this policy, shall exceed the amount of premium due thereon, the excess to be paid in cash; or (b) if the payment of premiums is completed, an annuity for the whole term of life.
Third: To withdraw in cash the entire equity (that is, the net reserve computed by the American Table of Mortality and interest at four per cent. twenty-eight hundred and twenty-two and 95/100 dollars [$ 2,822.95], and in addition thereto the accumulated surplus aforesaid).
Appellee performed all the conditions of such contract of insurance on his part to be performed. About April 28, 1898, appellant marked said policy upon its books as lapsed, and continuously after said date treated said policy as lapsed and as having been forfeited, and appellee as having no right to any of said options, and appellant about the year 1902, or 1903, notified appellee that it considered said policy as having lapsed in the month of April, 1898, and that it refused to recognize him as having any rights thereunder to any of such options, and thereby rendered it useless for him to elect one of said options, and waived any such election and any notice thereof. Appellee says that appellant waived notice of election of options on the part of appellee provided for in said policy more than three months prior to the completion of said tontine period, and waived the failure of appellee to make such election and give notice thereof by denying all liability on said policy on other grounds and notified said appellee that the same had lapsed in April, 1898; such notice having been given in February and March, 1912. The reserve and accumulated surplus mentioned in said option amounted, at the completion of said period, to $ 5,000 and appellee elected to take such option. Appellants have not paid appellee said sum or any part thereof, and the same is due, together with interest thereon, at 6 per cent. from March 17, 1907. Appellee has been damaged $ 5,000.
A copy of the policy is attached to the complaint. To this complaint appellant answered in five paragraphs, the first being a general denial, except an admission of its corporate existence, its business operation, and the contract of insurance with appellee on his life, dated March 17, 1892. It then avers, so far as concerns this action, that appellant was authorized to and was transacting business in the State of Indiana, with an office in said state. Appellee was a resident of Evansville, Indiana, and at the solicitation of appellant's agent made his application to appellant for $ 5,000 insurance on his life, on the ten payment fifteen year, non-forfeiting tontine plan, and agreed that any policy issued upon such application should contain an agreement that, if it should lapse or become forfeited for nonpayment of premium after being in force three full years, a paid-up policy would be issued on demand made within six months after such lapse, with surrender of the policy, under the same conditions as this policy, except as to payment of premiums, but without participation in profits, for such an amount as the net reserve on the policy at the time of the 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 appellant, at the age of insured at the time of such lapse, if an ordinary life policy, or for such an amount as shall be represented by as many proportional parts of the sum insured as there shall have been complete annual premiums paid thereon when the lapse or default above referred to shall first be made. Appellant received such application and accepted the same and delivered to appellee on March 17, 1892, at Evansville, Indiana, the policy of insurance here involved, as applied for by him, which was received and accepted by appellee and the first premium paid thereon. Said contract of insurance was made in consideration of said agreement and statements in said application, and the application referred to in said policy and made a part thereof, and in further consideration of the payment of the premium aforesaid, and of the annual payment of a like sum on March 17, in every year during the continuance of such policy until ten full years' premiums should thereby be paid. If any one of said premiums was not paid as therein provided, on or before the date when due, said policy should become void and all payments previously made should be forfeited to appellant, except that if said policy should lapse or become forfeited for the nonpayment of any premium after being in force three full years, a paid-up policy would be issued, on demand made within six months after such lapse, with the surrender of such policy, under the same conditions as said policy, except as to payment of premiums, but without participation in profits for an amount equal to as many tenth parts of the sum thereby insured as there had been annual premiums paid thereon when said default in the payment of premium was made. A grace of one month was allowed, and all premiums were due and payable at the home office in the city of New York, unless otherwise agreed in writing. Notice that each and every payment of premium was due at the date named in the policy was given and accepted by the delivery and acceptance of the policy, and giving of any further notice or the acceptance of any premium after it was due was to be construed as an act of courtesy only, and should not be deemed as establishing a custom or as waiving or disturbing any condition as to the payments of premiums thereafter due.
No premium was ever paid after that premium due March 17, 1897. Said policy lapsed for non-payment of the March 17, 1898 annual premium, and thereupon said policy as therein agreed became void, and all payments previously made were there and then and thereby forfeited to appellant, except as to the right to issue the paid-up policy, on demand made therefor, within six months after said lapse of said policy, with surrender thereof, for an amount equal to as many tenth parts of the sum insured by said contract as there had been complete annual premiums paid at the time of said default in the payment of premiums; but appellee failed, neglected and refused to make, or cause to be made, any demand for said paid-up insurance, and thereupon at the expiration of said six months said contract became void. Appellant was a mutual company and transacted business of life insurance on a purely mutual plan and under and pursuant to said principle of mutuality. Appellant in the year 1892, but after the making of the contract now in question, adopted the plan of voluntarily giving the policy holders who failed to pay their premiums on or before the date when due, and who also failed to make demand within six months after such non-payment, with surrender of the policy, for paid-up insurance in accordance with the terms of the contract, continued term insurance for the face amount of the policy for such period of time as the reserve thereon calculated upon the basis of the American Experience Table of Mortality and interest at the rate of four per cent. per annum would purchase at the age of the insured at the time of the lapse, according to the company's table rate of premium for term insurance. At said time of said lapse, said reserve on said policy was $ 1,371.40, and the rate of premium for term insurance for the term of seventeen years was $ 271.08, for $ 1,000 of insurance, and for eighteen years was $ 288.42 for $ 1,000 of insurance on a person age 49, which was appellee's age at that time. Said reserve, therefore, purchased continued term insurance for seventeen years and two months from March 17, 1898, and appellant duly extended said policy and credited appellee with said continued term insurance in the sum of $ 5,000, for seventeen years two months, or until May 17, 1915, after which time the policy had no further value....
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