Pope v. New York Life Ins. Co.

• Decision Date: 08 January 1916
• Docket Number: No. 1609.,1609.
• Citation: 181 S.W. 1047
• Parties: POPE v. NEW YORK LIFE INS. CO.
• Court: Missouri Court of Appeals

181 S.W. 1047

POPE v. NEW YORK LIFE INS. CO.

No. 1609.

Springfield Court of Appeals. Missouri.

January 8, 1916.

Rehearing Denied January 26, 1916.

Appeal from Circuit Court, Phelps County; L. B. Woodside, Judge.

Action by Martha J. Pope against the New York Life Insurance Company. From a judgment for plaintiff, defendant appeals. Reversed.

Jones, Hocker, Hawes & Angert, of St. Louis, and James H. McIntosh, of New York City, for appellant. Lorts & Breuer, of Rolla, and James J. O'Donohoe, of St. Louis, for respondent.

STURGIS, J.

This is an action on a policy of insurance on the life of plaintiff's husband; she being the beneficiary. The cause of action is bottomed on the nonforfeiture statute of this state providing for temporary insurance in case of failure to pay premiums, being section 7897, R. S. 1899, now amended section 6946, R. S. 1909. The policy is dated February 27, 1902. The payment of the amount, $6,500 in one sum, or $10,000 in deferred annual payments, at the death of the insured, is conditioned on the payment of the annual premium of $584.60. The first two annual premiums were paid in cash. Four more were paid in whole or in part out of successive loans made by the defendant to the insured. Default was made in the payment of the premium due February 27, 1908, and no premium was paid thereafter. The insured died January 25, 1909, and this suit was brought September 30, 1914. The plaintiff recovered, and defendant appeals.

The petition is based on the fact that this policy is a Missouri contract governed by the nonforfeiture statute above mentioned; that at the time of default in the payment of premium three-fourths of the net value of the policy, computed as therein provided, was sufficient, when applied as a single premium, to purchase temporary insurance to continue the policy in force for a period beyond the insured's death. The defendant concedes this to be true, provided no deductions are to be made from such three-fourths of the net value because of "notes or other evidence of indebtedness due the company on account of past premium payments on said policy" as provided by said statute. The petition concedes that at the time of default in paying the premium there was an indebtedness due the company amounting to $1,830, evidenced by a loan agreement signed by the insured and the beneficiary, and plaintiff offers to deduct this amount, together with the one unpaid premium and interest, from the amount of $6,500 alleged to be due on the policy. The defendant by its answer asserts that of the amount of the loan evidenced by this loan agreement the sum of $1,392.49 represents "indebtedness due the company," evidence of which, to wit, the loan agreement was given "on account of past premium payments on said policy," and therefore by the terms of the statute is to be deducted from the three-fourths of the net value of the policy before such sum can be applied to the purchase of temporary insurance, and that, the amount to be deducted being practically equal to the three-fourths of the net value, nothing was left to purchase temporary insurance, and the policy lapsed. The plaintiff concedes that such would be the result if such deduction is made, but denies that such evidence of indebtedness was given on account of past premium payments on said policy.

The Supreme Court, in Smith v. Insurance Co., 173 Mo. 329, 72 S. W. 935, followed by the Courts of Appeals in Paschedag v. Insurance Co., 155 Mo. App. 185, 134 S. W. 102, and Gillen v. Insurance Co., 178 Mo. App. 89, 161 S. W. 667, has established the law to be that, under the rule for determining the net amount to be applied in purchasing temporary insurance in case of failure to pay premiums on a life insurance policy, only notes or other evidence of indebtedness given on account of past premium payments shall be deducted from three-fourths of the net value of the policy, computed according to the statutory rule. The statute before amended is held to be restrictive in permitting the amount to be applied in the purchase of temporary insurance to be diminished by reason of then existing indebtedness of the insured to the company, and limited such deductions to the indebtedness arising on account of past premium payments. If the indebtedness is a loan made for any other purpose, it cannot be used to diminish the net value of the policy going to purchase temporary insurance.

The battle, therefore, is waged here to have determined whether sufficient of the insured's conceded indebtedness to the company, evidenced by this loan agreement, to consume the three-fourths of the net value of the policy, was given on account of past premium payments on this policy. On this point the evidence shows that after the payment of two premiums in cash four successive loans were made by defendant to the insured in connection with the payment of the premium for the years 1904 to 1907 inclusive; that each succeeding loan was in reality an increase of the preceding one and a consolidation of such preceding loan, which was then canceled, and the increase into one obligation. The third annual premium becoming due February 27, 1904, the first loan was applied for on February 20, 1904, in the sum of $820, which was applied as follows: $584.60 to pay the annual premium due February 27, 1904; $40.90 to pay advance interest; and $194.50 paid to the insured. The application for this loan was forwarded from St. Louis to defendant at New York, with directions to apply the loan in the manner stated. This loan agreement bears date of February 29, 1904. When the fourth annual premium became due February 27, 1905, the insured paid $354.85 in cash, leaving a balance due of $229.75. Application was made for the second loan on March 15, 1905, in the sum of...