Prudential Ins. Co. of America v. Pearson

• Decision Date: 12 August 1938
• Docket Number: No. 9796.,9796.
• Citation: 24 F. Supp. 313
• Parties: PRUDENTIAL INS. CO. OF AMERICA v. PEARSON et al.
• Court: U.S. District Court — Western District of Missouri

24 F. Supp. 313

PRUDENTIAL INS. CO. OF AMERICA v. PEARSON et al.

No. 9796.

District Court, W. D. Missouri, W. D.

August 12, 1938.

Michaels, Blackmar, Newkirk, Eager & Swanson, of Kansas City, Mo., for plaintiff.

Edmond H. McVey (of McVey, Randolph, Smithson & Garrity), of Kansas City, Mo., for defendants.

OTIS, District Judge.

Learned counsel for defendants have urged upon us with great earnestness that we very clearly erred in the judgment entered in this case. The assurance which they so clearly have undoubtedly will lead to a review of this case by the learned Circuit Court of Appeals. We desire that the Court of Appeals shall have the benefit of our views on the disputed issues for whatever those views may be worth. It is entirely possible, of course, that our views will be worth nothing.

Without disparaging any part of the argument of counsel on the motion for a new trial, for it was all excellent, we refer here only to that part of the argument which was most vigorously presented. It concerns the effect in this case of Section 5741 of the Revised Statutes of Missouri, Mo.St.Ann. § 5741, p. 4388.

As the memorandum opinion heretofore filed in this case indicates, the first reference to this statute followed the oral argument of the case after its trial and after the submission of briefs by the parties. At the trial itself counsel, in response to the Court's inquiry, expressly denied that any reliance was placed upon any statute. The whole reliance of the defendants was on the very language of the policy of insurance itself. The elaborate and scholarly brief submitted by counsel for defendants after the trial and before the oral argument (which brief we have again searched carefully) contains not the slightest reference to any statute or to any reliance upon any statute. The only theory presented by the brief of defendants is that the language of the policy of insurance itself demands judgment for the defendants.

As the opinion filed shows, the first reference to Section 5741 was in a letter which followed the oral argument. This letter is now set out in full herein. From the letter the Court of Appeals will be able to gather the argument based on Section 5741 (the same theory which was developed and elaborated in the argument on the motion for a new trial). The letter is as follows:

"Hon. Merrill E. Otis "Federal Building "Kansas City, Missouri "Re: Prudential Insurance Company vs Kitsey M. Pearson and Agnes Means, No. 9796

"Dear Judge Otis:

"As we understand the question propounded by the Court during oral argument, it is this:

"Where is the provision of the policy granting to the assured automatic term insurance, other than under the table of loan and non-forfeiture values set out in the policy; and does not this table control?

"Our answer is this:

"First, the statute of Missouri, Sec. 5741, compels the application of the reserve to purchase automatic extended term insurance, and denies any right of forfeiture for non-payment of premiums after payment of three annual premiums. The statute is a part of the policy. Gooch v. Metropolitan Life Insurance Company, 333 Mo. 191, 61 S.W.2d 704, 705; Trapp v. Metropolitan Life Insurance Company, 8 Cir., 72 F.2d 374.

"It is clear then that the policy must provide for automatic term insurance. The theory and intent of the policy in suit does provide for automatic term insurance. The Court has inquired whether there is any provision for automatic term insurance other than the table set out in the policy. Our answer is that the policy provides that the reserve shall be computed upon the `net level premium method'. In the Gooch Case, the Supreme Court of Missouri held that under Sec. 5741 the amount of the reserve under the policy may be computed in accordance with the terms of the policy, and further that the statute may be applied to show the amount of the insurance the beneficiary is entitled to, which amount is the face of the policy, less indebtedness, for whatever period of time the reserve under the policy, applied as a single premium, will buy that amount of extended term insurance.

"Our answer further is that the provision of the policy saying that the reserve on this policy shall be (not has been) calculated on the basis of the net level premium method supersedes the tabulated values in the policy. That this provision is mandatory.

"Under the settled law, the statute requires the reserve to...