Russum v. St. Louis Mut. Life Ins. Co.

• Decision Date: 28 February 1876
• Citation: 1 Mo.App. 228
• Parties: MARGARET D. RUSSUM, Respondent, v. ST. LOUIS MUTUAL LIFE INSURANCE COMPANY, Appellant.
• Court: Missouri Court of Appeals

1 Mo.App. 228

MARGARET D. RUSSUM, Respondent,

v.ST. LOUIS MUTUAL LIFE INSURANCE COMPANY, Appellant.

St. Louis Court of Appeals, Missouri.

Feb. 28, 1876.

1. A policy of life insurance, dated December 2, 1868, declared the life of A to be insured in the sum of $10,000, in favor of plaintiff, in consideration of a sum then paid, and a like sum to be paid annually thereafter for nine years. This policy was subject to two conditions: 1. That if default were made in the payment of any annual premium thereafter accruing, such default should not avoid the policy, but the sum insured should be proportionally reduced. 2. That if assured should fail to pay annually, in advance, the interest on any unpaid notes or loans, owing on account of the premiums, then the policy should be void. Part of two premiums was paid in cash, and a note given for the remainder. No payment was made of the premium accruing in 1870, and no interest on the note given; but a dividend was declared more than sufficient to pay the interest. In 1871 no payment was made, and no dividend declared, and in July, 1872, A died. Held, 1. The payment of the first premium in full, or of the two first premiums in full, would have given to the insured a full-paid policy corresponding in value to the amount paid; and the payment of part of these premiums in cash, and the payment, in accordance with the terms of the policy, of the interest on the notes taken for the unpaid portion, would have the same effect. But the failure to pay the interest avoided the policy altogether. 2. When, on December 2, 1870, assured failed to pay interest on his note, it was the duty of the defendant to apply to that interest any money in its hands standing to his credit. The balance of any such money was applicable to the reduction of the principal of the note. When interest became again due on the balance of the note, and remained unpaid, the policy was forfeited. 3. The two provisions of the policy are not inconsistent or contradictory. They may stand together, and it is the duty of a court to give effect to both of them.

APPEAL from St. Louis Circuit Court.

Reversed and remanded.

Cline, Jamison & Day, for appellant, cited: Patch v. Phœnix Life Ins. Co., 44 Vt. 481; Pitt v. Berkshire Life Ins. Co., 100 Mass. 500; Bliss on Ins. (2d ed.) 284-298, secs. 182-188; Baker v. Union Mutual Life Ins. Co., 43 N. Y. 283; Abb. Pr. 142.

Martin & Lackland, for respondent, cited: Metcalf on Con. 221; Gee v. Cheshire County M_____ Ins. Co., 14 Am. Law Rep. 706; Manhattan Life Ins. Co. v. Warrick, Ins. L. J., Oct. 1871; s. c., Gratt (Va.), 614; St. Louis Mutual Life Ins. Co. v. Grigsby, 18 Bush (Ky.), 310; Dutcher v. Brooklyn Life Ins. Co., 4 Big. 665; Ohde v. North Western Life Ins. Co., Ins. L. J., Sept. 1873, p. 702; Story Eq. Jur. 1314, 1316; Froelich v. Atlas Life Ins. Co., 47 Mo. 406; Robert v. Ins. Co., 2 Disney (Ohio), 100; McMaster v. Ins. Co., 3 Ins. L. J. 273, N. Y. Ct. App.

Farish & Griffin & Scott, for respondent, cited: May on Ins. 182; Waterfall v. Hudson, 2 Duer (N. Y.), 495; Pelly v. Royal Express Assn., 1 Burr. 341; Bayless v. Ringer, 7 Carr, 691; Hake v. Eddy, 15 Wend. 80; 2 Pars. on Con. 147; Paffy v. Greenwold, 2 Per. & Dav. 365; Hollins v. Palmer, 2 Bing. N. C. 466; Watkins v. Morgan, 6 Carr, 661; Grigsby v. St. Louis Mutual Life Ins. Co., C. L. J., Feb. 19, 1875, p. 123; McAlister v. New England Mutual Ins. Co., 101 Mass. 560; Mutual Benefit Life Ins. Co. v. French, 2 Bin. S. C. 321; Pars. on Con. 141, et seq., and authorities cited, 143; 3 Abb. Dig. 99.

GANTT, P. J., delivered the opinion of the court.

This was an action on a policy of insurance dated December 2, 1868. By it the defendant, in consideration of $1,066.80 then paid, and of the annual premium of $1,066.80 to be paid on December 2d for nine succeeding years, insured, in favor of the plaintiff, the life of William D. Russum in the sum of $10,000. This policy was subject to two provisos. First, that if default was made in the payment of any annual premium thereafter becoming payable, such default should not work a forfeiture of the policy, but the sum assured should be proportionally reduced. Thus, if only the first annual premium should be paid, then, in case of death, only one-tenth of the sum insured should be claimable. If two premiums only were paid, then two-tenths of the sum insured should be claimable, and so on.

The second proviso was a qualification of the first. It provided that, “if the insured shall fail to pay annually in advance the interest on any unpaid notes or loans which may be owing on account of the above-mentioned annual premiums, at the office of the company in St. Louis, or to agents when they produce receipts signed by the president or secretary, then and in every such case the said company shall not be liable for the payment of the sum insured, or any part thereof, and this policy shall cease and determine.”

When the policy was taken out (it was effected by William D. Russum for the benefit of his wife) he paid the sum of $711.80, being two-thirds of $1,066.80, in cash, and also the interest, in advance, for one year on the remaining third, being $355, making a cash payment on that day of $733.10. He gave his note at one year for this balance of $355. On December 2, 1869, he paid the further sum of $711.80 in cash; received on the policy a dividend of $129.89; gave a note for the remaining third of the second payment and for the unpaid balance of the old note, making the new note $580.11; and also paid in advance the interest on this note for one year. On December 2, 1870, he failed to make any payment, but a dividend was declared on his policy for that year of $129.89. In 1871 no dividend was earned, and in July, 1872, Mr. Russum died.

1. If he had paid the interest on his note on December 2, 1871, he would, we think, have been entitled to recover two-tenths of the sum insured, deducting the unpaid note. Having failed to make that payment, the policy is forfeited and the company discharged.

When, on December 2, 1870, he failed to pay the interest on his note for $580.11 then maturing, there was to his credit in the hands of the company $129.89. This sum the company was bound to apply, first, in such manner as to save the forfeiture--that is, to the payment in advance of the interest on this note. The balance was applicable to the reduction of the principal of the note. This left more than $480 of the principal of the...