Pace v. New York Life Ins. Co.

• Decision Date: 30 April 1941
• Docket Number: 451.
• Parties: PACE v. NEW YORK LIFE INS. CO.
• Court: North Carolina Supreme Court

14 S.E.2d 411

219 N.C. 451

PACE v. NEW YORK LIFE INS. CO.

No. 451.

Supreme Court of North Carolina

April 30, 1941

Separate actions upon two policies of insurance issued by defendant upon the life of William H. Pace, now deceased, were consolidated for trial. Under instructions from the court there was verdict for defendant, and from judgment thereon plaintiff appealed.

Wilbur H. Royster and Arthur I. Ladu, both of Raleigh, for appellant.

Pou & Emanuel, of Raleigh, for appellee.

DEVIN Justice.

The proofs were entirely documentary and there was no controversy as to the material facts. The questions at issue involved the construction of insurance contracts between insured and defendant, and the legal effect of the failure of the insured to pay the premiums on the policies since August 26, 1921. The only exception noted by the plaintiff was to the ruling of the court and the instructions to the jury that the insurance was not in force and effect at the time of the death of the decedent January 4, 1940.

From the insurance policies, the applications for insurance correspondence, and stipulations of counsel, we summarize these pertinent facts. On August 26, 1905, William H. Pace made written application to the defendant for a twenty-year dividend-accumulation policy in the sum of $2,000. This application contained these words:

"I agree, on behalf of myself and of any person who shall have or claim any interest in any policy issued under this application, as follows: *** 2. That in any apportionment of distribution of profits, the principles and methods which may be adopted by the Company for such apportionment or distribution, and its determination of the amount equitably belonging to any policy which may be issued under this application, shall be conclusive upon the Insured under said policy and upon all parties having or claiming any interest thereunder. 3. That the insurance hereby applied for shall not take effect unless the premium is paid and the policy delivered to me during my lifetime, and that, unless otherwise agreed in writing, the policy shall then relate back to and take effect as of the date of this application."

Thereupon the policy was issued accordingly, and delivered in due course some ten days later. The policy recited: "This policy takes effect as of the Twenty-sixth day of August Nineteen Hundred and Five. This agreement is made in consideration of the sum of Sixty Dollars and Sixty-two Cents, the receipt of which is hereby acknowledged constituting payment for the period terminating on the twenty-sixth day of August, Nineteen Hundred and Six, and in further consideration of the payment of a like sum on said date, and thereafter on the Twenty-sixth day of August in every year during the continuance of this Policy, until premiums shall have been paid for Twenty years in all from the date on which this Policy takes effect."

Subsequently on September 23, 1905, the insured made application for another similar policy in sum of $3,000, stating: "I hereby agree that any policy which may be issued on this application shall be based on the written application for insurance made by me on August 26th, 1905, on which Policy No. 5052732 was issued, and that such policy shall take effect as of the 26th day of Aug. 1905."

Shortly thereafter, in due course, and upon this application, the second twenty-year policy in sum of $3,000 was issued and delivered by defendant to the insured. This policy contained the identical provisions with the first policy, except in amount, that the policy should take effect Aug. 26, 1905, and fixing Aug. 26, annually thereafter, as the premium due date during the continuance of the policy, "until premiums shall have been paid for twenty years in all from the date on which this policy takes effect."

Insured paid the premiums on both policies up to and including the due date in 1921, and paid no premiums thereafter. At the time insured failed to pay the premiums due Aug. 26, 1922 his lien notes to the defendant in the aggregate sum of $797 (given for the premiums in 1915, 1916, 1917, 1920, and 1921) were due and unpaid. Upon the failure of insured to pay the premiums due Aug. 26, 1922, the amount of the lien notes was deducted from the sum otherwise available for the purchase of insurance in event of non-payment of premiums, and the balance was used to purchase paid-up extended term insurance of about $4,200 for a period of 17 years and 128 days. The insured was notified Jan. 19, 1923, that pursuant to the terms of the contract his insurance in the amount stated was extended for that period. Upon inquiry by insured in January, 1939, he was again advised of the exact period of extended insurance and of the amount payable if death should occur not later than January 1, 1940, and that if he survived the end of the period the policy would have no value. The insured died January 4, 1940, three days after the period of extension had expired.

By written stipulation, appearing in the record, it was agreed in effect that by reason of the failure of deceased to pay the premiums due for the year 1922, the policies lapsed, and that "in accordance with the terms of said two policies" the lien notes were satisfied by deducting the amount thereof from the sum available for the purchase of insurance in the event of non-payment of premiums when due, and the balance was used to purchase "paid-up extended term insurance under each policy." The computation of the amount and of the length of the extended term, for a period of 17 years and 128 days, was agreed as correct.

Upon this undisputed documentary and written evidence and the stipulation of facts agreed, it is apparent that, unfortunately for the plaintiff, the policies of insurance sued on had ceased to have any value at the time of the death of the decedent, and that there was no error in the instructions of the court below to the jury to answer the issue accordingly. In this situation the case presented a question of law rather than an issue of fact.

The facts in this case are strikingly like those in Wilkie v New York Mutual Life Ins. Co., 146 N.C. 513, 60 S.E. 427, 429. In that case a similar twenty-year policy was issued Dec. 2, 1901. The policy contained provisions designating the end of the accumulation period as Nov. 22, 1921, and fixing Nov. 22 in each year as the due date for the payment of premiums. After two full premiums were paid, insured in that case made no further payment and the policy lapsed. By the terms of...