Protective Life Ins. Co. v. Thomas

• Decision Date: 26 March 1931
• Docket Number: 6 Div. 633.
• Citation: 223 Ala. 106,134 So. 488
• Parties: PROTECTIVE LIFE INS. CO. v. THOMAS.
• Court: Alabama Supreme Court

134 So. 488

223 Ala. 106

PROTECTIVE LIFE INS. CO. v. THOMAS.

6 Div. 633.

Supreme Court of Alabama

March 26, 1931

Rehearing Denied May 21, 1931.

Appeal from Circuit Court, Tuscaloosa County; Henry B. Foster Judge.

Action on a policy of life insurance by Jessie D. Thomas against the Protective Life Insurance Company. From a judgment for plaintiff, defendant appeals.

Affirmed.

Cabaniss Johnston, Cocke & Cabaniss, of Birmingham, and H. A. & D. K Jones, of Tuscaloosa, for appellant.

Livingston & Livingston, of Tuscaloosa, for appellee.

BROWN J.

This is an action on a policy of life insurance issued by the defendant to the plaintiff's husband, naming the plaintiff as the beneficiary. The policy in question is what is commonly known as a 20-payment participating policy, and it is shown without dispute that 20 full premiums had been paid, the last payment being made on the 27th of October, 1927, converting the policy into a "paid up" policy, by which the defendant engaged to pay to the named beneficiary $5000 on due proof of the death of the insured.

The evidence is also without dispute that the insured died on the 11th day of January, 1929, and no point was made on the trial or here as to the sufficiency of the proof of loss.

On December 27, 1927, the insured, in accordance with the provisions of the policy, obtained a loan of $2,770 from the defendant, and executed a "loan certificate with assignment of policy and agreement as to interest," and paid the interest thereon in advance up to the next anniversary of the policy-October 27, 1928.

The loan certificate, which embodies an assignment of the policy to the defendant as collateral security for the loan, stipulates:

"First-That the said loan shall bear interest at the rate of six per cent. per annum, payable in advance, and that the interest payable at the time the said loan is made shall be for the period up to the next anniversary of the said policy, beginning with which anniversary the interest shall be payable annually, in advance, and that the said interest, unless duly paid, shall be added to the above loan and bear interest at the same rate and on the same conditions.

"Second-That any dividend declared on said policy may be applied by the Company toward the payment of said loan and any unpaid interest, anything to the contrary in the policy notwithstanding.

"Third-That if said policy shall lapse or become forfeited in any manner, the amount of said loan, with interest accumulated and accrued thereon, shall be deducted from any cash surrender value of the said policy, or the said loan with interest accumulated and accrued thereon shall operate to reduce the amount of any paid-up life or endowment policy, or to reduce the term of extended insurance guaranteed by the terms of said policy, in accordance with the rules of the Company.

"Fourth-That if said policy shall mature before said loan (with interest accumulated and accrued thereon) shall have been fully paid, the total amount thus due the Company shall be deducted from the amount otherwise payable by the Company.

"Fifth-That if the said loan with interest accumulated and accrued thereon at any time shall become equal to the cash surrender value on the said policy, the policy shall be forfeited or void, provided such loan, with the interest accumulated and accrued thereon, be not reduced to less than the said cash surrender value within one month after notice to that effect shall have been mailed by the Company to the last known address of the insured, of the person to whom the loan was made, and of the assignee of record at the home office of the Company, if any." (Italics supplied.)

Some thirty or more days before the 27th day of October, 1928, the defendant mailed to the insured a notice on a form usually issued to policyholders previous to the date premiums would mature, with the following written on the face thereof:

Interest on policy loan .. $166.20 Due date of premium,

Deduct Dividend ............ 48.00 27th day of Oct. 1928.

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$118.20

On the reverse side of the notice was the following: "To the policyholder: According to the terms of your policy the premium referred to on the reverse side of this notice will be due on the date mentioned. If it is not paid by that time, or before, or within the extra time ...