Shira v. New York Life Ins. Co.

• Decision Date: 09 June 1936
• Docket Number: No. 2136.,2136.
• Citation: 15 F. Supp. 259
• Parties: SHIRA et al. v. NEW YORK LIFE INS. CO.
• Court: U.S. District Court — Northern District of Oklahoma

15 F. Supp. 259

SHIRA et al. v. NEW YORK LIFE INS. CO.

No. 2136.

District Court, N. D. Oklahoma.

June 9, 1936.

Roddie & Beckett, of Oklahoma City, Okl., for plaintiff.

Wilson & Wilson, of Oklahoma City, Okl., for defendant.

FRANKLIN E. KENNAMER, District Judge.

The defendant issued a policy of insurance on the life of Samuel F. Shira for $10,000 in consideration of a quarterly premium of $78.40. The policy was dated January 7, 1930, and delivered and the first quarterly premium collected on or about January 16, 1930. The assured died August 19, 1933, and the beneficiary has brought this action to recover on the policy.

The policy contained a provision, as follows: "This Policy takes effect as of the Second day of January, Nineteen Hundred and Thirty, which day is the anniversary of the Policy." The assured also signed a separate written instrument in which he acknowledged that the policy was to take effect as of January 2, 1930. The quarterly premium was paid for 3¼ years, the last payment of premium being made on January 2, 1933. On February 18, 1933, the assured contracted an indebtedness to the defendant on the security of the policy in the sum of $274.83, giving a "Premium Lien Note" on that date for said amount. The quarterly premium due on April 2, 1933, was not paid on said date, nor was it paid within the period of grace fixed by the policy and the Oklahoma statute. Thereupon, the defendant charged the amount of indebtedness evidenced by the note and a small sum as additional interest, against the reserve value of the policy, and converted the balance of the reserve into temporary paid-up insurance, which, under defendant's computation, gave the assured a paid-up policy in the amount of $9,724, for 113 days, or until July 24, 1933. The defendant claims it had the right to take this action by reason of the following provision of the policy:

"Surrender Values. — In event of default in payment of premium after three full years' premiums have been paid, the following benefits shall apply:

"(a) Temporary Insurance. — Insurance for the face of the policy plus any dividend additions and any dividend deposits and less the amount of any indebtedness hereon, shall, upon expiry of the period of grace, be continued automatically as Temporary Insurance as from the date of default of such term as the Cash Surrender Value less any indebtedness hereon will purchase as a net single premium at the attained age of the Insured, according to the American experience table of mortality and interest at 3 per cent. This Temporary Insurance will be without participation in surplus."

Consequently, the defendant asserts that the term of the temporary insurance having expired prior to the death of assured, which occurred on August 19, 1933, the beneficiary can take nothing by her action.

Plaintiff contends that the policy must be considered as taking effect on the date of its delivery, or in any event not earlier than its date of issuance. Assuming plaintiff's contention is correct as to either of said dates, the testimony of her actuary witness was to the effect that the reserve, after the deduction of the indebtedness and accrued interest, was sufficient to carry the temporary insurance beyond the date of assured's death. But plaintiff's position in this respect cannot be sustained. It is competent for the parties to a life insurance contract to agree upon dates of policy and of premium payments. It is clear that assured and defendant agreed that this policy should take effect January 2, 1930, and the quarterly premiums should be payable at three months' intervals successively thereafter. The ruling precedents are plain. New York Life Ins. Co. v. Tolbert (C.C.A.10) 55...