Rick v. John Hancock Mut. Life Ins. Co.

• Decision Date: 05 May 1936
• Docket Number: No. 23684.,23684.
• Citation: 93 S.W.2d 1126
• Parties: MARY M. RICK, PLAINTIFF, RESPONDENT, v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY OF BOSTON, MASS., DEFENDANT, APPELLANT.
• Court: Missouri Court of Appeals

93 S.W.2d 1126

MARY M. RICK, PLAINTIFF, RESPONDENT, v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY OF BOSTON, MASS., DEFENDANT, APPELLANT.

No. 23684.

St. Louis Court of Appeals. Missouri.

Opinion filed May 5, 1936.

Appeal from the Circuit Court of the City of St. Louis — Hon. James F. Green, Judge.

REVERSED.

Joseph C. Hopewell and Raymond J. Lahey for respondent.

(1) The insured had a contract right to the thirty-one days' notice under the loan provisions of the policy. McDonnell v. Hawkeye L. Ins. Co. (Mo. App.), 64 S.W. (2d) 748; Widdicombe v. Penn. Mutual Life Ins. Co. (Mo. App.), 241 S.W. 437; Cassville Roller Mills v. Aetna Ins. Co. (Mo. App.), 79 S.W. 720; Malin v. Netherlands Ins. Co. (Mo. App.), 219 S.W. 143; Halley v. Standard Life Ins. Co. (Ga. App.), 144 S.W. 674. (2) The insurance company, by its failure to give notice of cancellation prior to the death of the insured, could not do so after the death of the insured, and is now estopped to assert a forfeiture of the policy. Garvin v. Mutual Life Ins. Co. (Mo. App.), 79 S.W. (2d) 496; Francis E. Hunter v. Supreme Lodge, 150 Mo. App. 347, 130 S.W. 500; Shearlock v. Insurance Co., 193 Mo. App. 43, 182 S.W. 89; Cassville Roller Mills v. Aetna Ins. Co. (Mo. App.), 79 S.W. 720; Key v. Knights & Ladies of Security, 174 Mo. App. 671, 161 S.W. 345; Daniel v. Aetna Life, 225 Mo. App. 357, 36 S.W. (2d) 688; 13 C.J., p. 346; Gardner v. Standard Ins. Co., 58 Mo. App. 611; Chrisman & Sawyer Banking Co. v. Hartford Fire Ins. Co., 75 Mo. App. 313; Payne v. Insurance Co., 170 Mo. App. 85, 156 S.W. 52. (3) The unpaid dividend should have been applied to the purchase of extended insurance. Finley v. Mass. Mut. Life (La. Sup.), 134 So. 399; Mut. Ben. Life Ins. Co. v. Davis, 115 Ky. 404, 73 S.W. 1020; Emig v. Mut. Ben. Life Ins. Co., 127 Ky. 588, 106 S.W. 230; Mickleson v. Equitable Life Assur. Soc. (Minn.), 251 N.W. 1; Atlantic Life v. Pharr, 287 U.S. 647, 77 L. Ed. 559; United States Life v. Spinks, 126 Ky. 435; Northwestern Mut. Life v. Barker, 241 Ky. 490, 44 S.W. (2d) 292; Mut. Ben. Life v. Dunn, 106 Ky. 591, 51 S.W. 20.

Leahy, Saunders & Walther and Lyon Anderson for appellant.

(1) Where a policy of insurance lapses for nonpayment of premium the insurance company is not required to give the thirty-one days' notice of intention to foreclose the loan provided in the loan provisions of the policy and loan agreement for the reason that such notice is only required where the defendant elects to avoid the policy when the indebtedness equals the reserve and there is a failure to pay interest on the loan. Hawthorne v. Bankers Life Co., 63 Fed. (2d) 971 (C.C.A. 8); Bach v. Western States Life Ins. Co. (C.C.A. 10th Cir.), 51 Fed. (2d) 191; Minnesota Mutual Life Ins. Co. v. Cost, 72 Fed. (2d) 519 (C.C.A. 10); Halley v. Standard Life Ins. Co. (Ga.), 144 S.E. 674; Palmer v. Central Life Assur. Soc. (Minn.), 258 N.W. 732; Schoonover v. Prudential Ins. Co. (Minn.), 245 N.W. 476; Moss v. Aetna Life Ins. Co. (C.C.A. 6), 73 Fed. (2d) 339; Penn Mutual Life Ins. Co. v. Fiquett (Ala.), 155 So. 702; Mills v. National Life Insurance Co., 136 Tenn. 350, 189 S.W. 691; Pacific Mutual Life Ins. Co. v. Davin (C.C.A.), 5 Fed. (2d) 481; Elton v. Northwestern National Life Ins. Co. (Minn.), 255 N.W. 857; Columbus Mut. Life Ins. Co. v. Hines (Ohio), 196 N.E. 158. (2) The defendant was under no duty to apply the dividend, declared on November 9, 1931, to the purchase of extended insurance, or to the reduction of the policy loan. Dougherty v. Mut. Life Ins. Co., 44 S.W. (2d) 206; Hutchinson v. National Life Ins. Co., 196 Mo. App. 510; Union Cent. Life Ins. Co. v. Williams, 65 Fed. (2d) 240; Williams v. Union Central Life Ins. Co., 291 U.S. 170, 78 L. Ed. 711, 54 S. Ct. 348, 92 A.L.R. 693; Harden v. Occidental Life Ins. Co. (N.C.), 173 S.E. 617; Neighbors v. Union Central L. Ins. Co. (Tenn.), 69 S.W. (2d) 618; Joyner v. Jefferson Standard Life Ins. Co., 53 Fed. (2d) 745; Gardner v. Nat'l Life Ins. Co., 161 S.E. 308; McKinley v. Nat'l Ben. Life Ins. Co., 137 So. 450; See note, 92 A.L.R. 702. (3) Nor is an insured entitled to have a dividend applied to the purchase of extended insurance, where such dividend is conditional in that, although declared, it is not to become payable unless the policy is in force on its anniversary, and the policy lapses for nonpayment of the premium prior to the anniversary date at which said declared dividend would have been payable. Bryant v. Mutual Ben. L. Ins. Co. (C.C.A. 8th), 109 Fed. 748; Johnson v. Mutual Ben. Life Ins. Co., 143 Fed. 950. (4) Insured was not entitled to have said dividend applied to the payment of the premium due January 6, 1932, for the reason that it was not sufficient to pay same in full. Alexander v. Northwestern Mutual Life Ins. Co., 290 S.W. 452; Young v. Mutual Trust Life Ins. Co., 54 N.D. 600, 210 N.W. 177; Equitable Life Assur. Soc. v. Pettid, 40 Ariz., 239, 11 Pac. (2d) 833; Weinstein v. Mutual Trust L. Ins. Co., 116 Conn. 654, 166 Atl. 63; Metropolitan Life Ins. Co. v. Smith (Ga. App.), 172 S.E. 654; Eastman v. Northwestern Mut. Life Ins. Co., 169 Wash. 125, 13 Pac. (2d) 488; Bulger v. Wash. Life Ins. Co., 63 Ga. 328; Hallister v. Quincy Mut. F. Ins. Co., 118 Mass. 478; Wheeler v. Connecticut Mut. Life Ins. Co., 82 N.Y. 543, 37 Am. Rep. 594; Terry v. State Mut. Life Ins. Co., 90 S.C. 1, 72 S.E. 498; Cason v. Mut. Life Ins. Co. (Colo.), 184 Pac. 296; Price v. Northwestern Mutual Life Ins. Co. (W. Va.), 169 S.E. 613; See note: 6 A.L.R. 1400, 47 A.L.R. 452 and 92 A.L.R. 712.

BENNICK, C.

This is an action upon a policy of insurance which was issued on July 6, 1928, by defendant, the John Hancock Mutual Life Insurance Company of Boston, Massachusetts, upon the life of one Edwin G. Rick, the son of Mary M. Rick, the plaintiff herein, who brings this action as the beneficiary designated in the policy. The judgment rendered was for plaintiff for the sum of $1,927 (representing the face value of the policy of $2,000 less an indebtedness of $73 due from the insured to the company), together with interest upon the amount of the judgment from March 22, 1932, the date of the death of the insured. Defendant's appeal to this court has followed in the usual course.

The case was tried before the court alone upon an agreed statement of facts, and the issues as made up by the pleadings will be adverted to in connection with our decision of the points raised upon the facts.

It appears from the photostatic copy of the insured's application for the policy that he had elected to pay his annual premium in quarterly installments, one of which would fall due upon January 6 of each year. We mention this particular date because of the fact that it was the failure of the insured to have paid the premium installment due on January 6, 1932, either on or before such due date or within the grace period of thirty-one days thereafter, which was the occasion for defendant's contention that the policy lapsed for nonpayment of premium as of that date. Such contention of course necessarily embraced the further contention that the policy, by reason of the total outstanding indebtedness of the insured to the company, had no cash surrender value as of that date with which to have purchased extended term insurance under the applicable nonforfeiture option included in the policy.

Such option, designated in the policy as Option C, provided that after two full annual premiums had been paid upon the policy, and if the payment of any subsequent premium or installment was in default for more than thirty-one days, then upon written request of the holder made within ninety days from the due date of the premium in default the policy would be continued in force at its face amount, including any outstanding additions and less any indebtedness to the company thereon or secured thereby, for its value in participating extended term insurance dating from said due date, said value to be computed upon the basis of the surrender value applied as a single net premium at the attained age of the insured.

As a matter of fact there was no request in writing or otherwise from the insured for his policy to be continued at its face amount for its value in extended term insurance, but inasmuch as the insured died within ninety days after January 6, 1932, the due date of his unpaid premium, without having exercised his election as between the three options provided in his policy, the right to elect survived to his beneficiary, which right was not thereafter qualified by the time limitation imposed by the policy as to the insured himself, nor was it essential that the beneficiary had made an express election prior to the institution of suit to have taken extended term insurance for the full face value of the policy rather than some lesser sum under either of the other options afforded by the policy. [Knapp v. John Hancock Mutual Life Ins. Co., 214 Mo. App. 151, 259 S.W. 862; Hampe v. Metropolitan Life Ins. Co. (Mo. App.), 21 S.W. (2d) 926.]

Defendant in fact concedes the present right of plaintiff to such extended term insurance for the full face value of the policy less any indebtedness thereon or secured thereby if, upon the insured's default in the payment of the last premium, there was any surrender value under the policy to be applied towards its purchase; and it is expressly agreed in the stipulation of facts that if what was otherwise the value of the reserve of the policy as of January 6, 1932, was not extinguished by reason of the outstanding indebtedness of the insured to the company as secured by his policy, then such reserve, if applied as a net single premium towards the purchase of extended term insurance, would have purchased insurance for the full value of the policy for a term which would have extended from January 6, 1932, to a date beyond the time of the death of the insured.

Now the outstanding indebtedness of the insured to the company which we have heretofore...