Pac. Mut. Life Ins. Co v. Turlington

• Decision Date: 18 December 1924
• Citation: 125 S.E. 658
• Court: Virginia Supreme Court
• Parties: PACIFIC MUT. LIFE INS. CO. v. TURLINGTON.

125 S.E. 658

PACIFIC MUT. LIFE INS. CO.

v.TURLINGTON.

Special Court of Appeals of Virginia.

Dec. 18. 1924.

Appeal from Circuit Court, Accomac County.

Action by S. James Turlington, administrator of the estate of Charles Devries Phillips, against the Pacific Mutual Life Insurance Company. Judgment for plaintiff, and defendant appeals. Reversed and rendered.

Roy D. White and H. Ames Drummond, both of Accomac, and William L. Marbury, of Baltimore, Md., for plaintiff in error.

James E. Heath, of Norfolk, for defendant in error.

HOLT, J. For convenience the plaintiff below will be called the plaintiff here and the defendant below the defendant here.

This action was brought by S. James Turlington, administrator of Charles Devries Phillips, to recover on a certain life insurance policy dated October 1, 1918, wherein the Pacific Mutual Life Insurance Company of California agreed to pay, upon proof of the death of the insured, the sum of $2,000. The beneficiaries in it when issued were the insured's wife, Carrie M. Phillips, and his two children, Garland D. and Catherine F. Phillips. Afterwards, in due course, the wife was made the sole beneficiary, with provision that should she die before the insured the policy should be for the benefit of his estate. She did predecease him, and so this action is properly brought in the name of his administrator, he having died intestate. There was judgment for the plaintiff for the amount sued for. This policy was issued through the Florida branch of the defendant company, and provides on its face in part as follows:

"In consideration of the application for this policy, a copy of which is attached hereto and made a part hereof, and of the payment in advance of the quarter-annual premium of $18, and of the payment of a like premium on the 1st day of January, April, July, and October, in each year during the continuance of this policy until the death of the insured; promises to pay, at the home office of the company in the city of Los Angeles, on receipt at said home office of due proof of the death of Charles Devries Phillips, here called the insured, $2,000, less any indebtedness hereon to the company and any unpaid portion of the premium for the then current policy year, to Carrie M. Phillips, wife of the insured. Garland D. Phillips and Catherine F. Phillips, children of the insured, equally, or to the survivors or survivor."

The insured returned to Virginia in December, 1919, and went to the home of his mother-in-law, Mrs. Clare Hornsby, at Quinby in said county. There he continued to live until late in September or early in October of 1920, at which time he was arrested and held to serve an unexpired term in the county jail for violation of the prohibition law. He was sent to the county road force, but was brought back to Accomac jail because of his mental condition. He was adjudged a lunatic and taken to the state hospital at Williamsburg on the Friday preceding his death, which occurred on the 13th of March, 1921. From the date of the policy to October 1, 1920, he paid his premiums promptly. The premium of October 1st was paid, but it was the last payment made. Notice that a quarterly premium would be due on January 1, 1921, was duly sent, and when payment was not received a tracer was sent out and thereafter a letter calling attention to the overdue premium; and after the grace period provided for in the policy had expired, he was invited by letter to apply for reinstatement. To none of these did he respond. All of them were addressed to Quinby, Va., his last-known address. Some must have reached him in the prison where he was held, for Mr. Turlington testifies in chief:

"I would like to state that I know that Mr. Phillips received correspondence from this company while he was incarcerated in jail, and all that correspondence was turned over to me, and I know that on one occasion he got a notice of the premium that was due from that company because it was handed to me."

About these facts there is no dispute at all. It is conceded that the last payment made was on October 1st; that the payment due on January 1st was never paid; and that the insured died after the expiration of the days of grace and on March 13th. The consideration for the policy was the continued payments of the premiums promised and these were not paid. Certainly the one due January 1st was not made, but it is said that it is not necessary that it should be. The plaintiff's position stated in his brief is:

"That is to say, the said Charles Devries Phillips had the right on October 1, 1920, to pay to the plaintiff in error $72, and then immediately to have the plaintiff in error turn back to him, upon the sole security of his policy, the cash surrender value available at the end of the third year of the life of the policy, after deducting from the said sum a year's interest thereon. Phillips did not pay to the plaintiff in error on October 1, 1920, the full year's premium, but, as stated, made only his regular quarterly payment of $18. It would therefore have been necessary for him to pay $54 more in order to obtain the loan mentioned. The amount of this loan was $84. [See table on p. 38 of the printed record.] So that if Phillips had at any time after October 1, 1920, paid the additional $54 to the plaintiff in error, he would have been entitled to get back from the plaintiff in error $84 less 6 per cent, interest thereon. This interest would have amounted to $5.04, so that he would have been entitled to get back the net sum of $78.-96. In other words, on October 1, 1920, and thereafter until his death, the plaintiff in error had in its hands belonging to Phillips the difference between $78.96 and $54, or $24.96."

In support of this is cited 14 R. C. L. 966:

"Subject to the exceptions hereinafter noted, the rule may be laid down broadly that an insurance company has no right to declare a policy of insurance forfeited for the nonpayment of a premium, assessment, or dues, when at the time the company is in any way indebted to the policy holder, either for dividends declared or other funds which it may have in its hands belonging to the insured."

To the same effect see Girard L. Ins. Annuity & T. Co. v. Mutual L. Ins. Co., 97 Pa. 15; State Mutual Life Insurance Co. v. Forest, 19 Ga. App. 296, 91 S. E. 428; Mutual Life Insurance Co. of New York v. Breland, 117 Miss. 479, 78 So. 362, L. R A. 1918D, 1009; Reliance Life Insurance Co. v. Hardy, 144 Ark. 190, 222 S. W. 12; and North v. Nat. Life & Accident Insurance Co. (Mo. App.) 231 S. W. 665.

These cases all hold that where anything is due to the insured and he is in default, it is the company's duty to apply the amount so due upon the premium in default, and, since it is the company's duty to do so, the courts will treat it as having been done and will not permit the policy to lapse so long as the amount which may be due is sufficient to carry it. This seems to be the general law on this subject, but it is entirely irrelevant to the instant case, unless there was at the date of the default on January 1, 1921, something due from the company to Mr. Phillips. There is nothing that inheres in the nature of a life insurance policy that gives it either a loan or cash value, and it has none unless the contract so provides or some valid statute so declares. Haskell v. Equitable Life Assurance...