Omaha Nat Bank v. Mutual Ben Life Ins Co.

• Decision Date: 19 November 1897
• Docket Number: 35.
• Citation: 84 F. 122
• Parties: OMAHA NAT. BANK v. MUTUAL BEN. LIFE INS. CO.
• Court: U.S. Court of Appeals — Third Circuit

84 F. 122

OMAHA NAT. BANK v. MUTUAL BEN. LIFE INS. CO.

No. 35.

United States Court of Appeals, Third Circuit.

November 19, 1897

Artemas H. Holmes and Edward Q. Keasbey, for plaintiff in error.

J. O H. Pitney and R. V. Lindabury, for defendant in error.

Before DALLAS, Circuit Judge, and BUTLER, District Judge.

DALLAS Circuit Judge.

This was an action upon two life insurance policies, which, except as to their distinguishing numbers, are precisely alike. They respectively bear date as of January 15, 1891, and by each of them, in consideration of the payment of a certain annual premium on each November 11th during the continuance of the policy, the defendant insured the life of Frank C. Johnson the amount insured being payable at his death. They also provided that, in case the premiums were not paid when due the policies should cease and determine, subject to the company's nonforfeiture provisions, which, with the accompanying table, is indorsed on the policies, as follows:

'The Mutual Benefit Life Insurance Company, Newark, N.J.

'Nonforfeiture Provisions.

'When, after two full annual premiums shall have been paid on this policy, it shall cease or become void solely by the nonpayment of any premium when due, its entire net reserve by the American Experience Mortality and interest at four per cent. yearly, less any indebtedness to the company on this policy, shall be applied by the company as a single premium at the company's rates published and in force at this date, either, first, to the purchase of nonparticipating term insurance for the full amount insured by this policy, or, second, upon the written application by the owner of this policy, and the surrender thereof to the company at Newark, within three months from such nonpayment of premium, to the purchase of a nonparticipating paid-up policy payable at the time this policy would be payable if continued in force. Both kinds of insurance aforesaid will be subject to the same conditions, except as to payment of premiums, as those of this policy. No part, however, of such term insurance, shall be due or payable unless satisfactory proofs of death be furnished to the company within one year after death; and if death shall occur within three years after such nonpayment of premiums, and during such term of insurance, there shall be deducted from the amount payable the sum of all the premiums that would have become due on this policy if it had continued in force.

'The following table shows the amount that the company agrees to loan (being one-half of the reserve) upon a satisfactory assignment of the policy as collateral security; also, the additional time for which the insured will be continued in full force after lapse by the nonpayment of premium, or the value of the policy in paid-up insurance upon surrender within three months from date of lapse. The figures given are based upon the assumption that the premiums (less current dividends) have been fully paid in cash. If there be any indebtedness upon the policy, the values as stated in the table would have to be reduced proportionately upon the principles stated in the policy. The indebtedness, if any, may be paid off in cash, in which case the figures in the table will apply.

Number of IN CASE OF LAPSE OF POLICY.

Years Pre- Extended Insurance.

mium Paid. Company will Loan. Years. Days. Paid-Up Policy.

2 $ 170 2 193 $ 690

3 250 3 258 1,030

4 340 4 287 1,360

5 440 5 274 1,690

6 530 6 217 2,010

7 630 7 121 2,320

8 720 7 340 2,630

9 830 8 160 2,930

10 930 8 310 3,230

11 1,030 9 62 3,510

12 1,140 9 152 3,790

13 1,240 9 216 4,060

14 1,350 9 258 4,320

15 1,460 9 279 4,580

20 2,000 9 160 5,720

25 2,540 8 191 6,650

30 3,040 7 116 7,390

35 3,500 5 320 7,980

40 3,930 4 92 8,480

'Cash loans not made for less than fifty dollars.

"B.J. Miller, Mathematician.'

The first three annual premiums were duly settled, but there was a failure to pay or settle the fourth premium when it became due, namely, on November 11, 1893. Consequently, the right of the plaintiff to recover turned upon the construction and effect to be given, under the admitted facts of the case, to the nonforfeiture provisions, in connection with a certain certificate of loan hereafter to be particularly mentioned; and the question was and is whether the insured was entitled to term insurance for a period continuing beyond the date of his death, or only for a shorter period, which expired while he was still living, namely, on February 23, 1896. The plaintiff contended in the court below, and in this court, that the term insurance should be held to have continued until after the death of the insured-- First, because there was no 'indebtedness to the company on this policy,' within the meaning of the contract and of the word 'indebtedness' as used in the nonforfeiture provisions; and, second, because, even if there was such indebtedness, a tender which was admittedly made on February 18, 1896, was a timely, and therefore sufficient, tender of that indebtedness. By considering these two propositions, the case may be disposed of.

1. The learned argument which has been addressed to us respecting the definition (common and technical) of the word 'indebtedness' does not go to the root of the matter. In our opinion, it invokes a too narrow and constrained view of the subject. No definition of the word 'indebtedness,' however authoritative and accurate could be accorded controlling force. The question is as to the actual meaning and intent of the parties, and this is not to be ascertained by defining a single word with scholastic precision. The nonforfeiture provisions unquestionably became operative upon the failure to pay the premium which fell due on November 11,...