Southern Mut. Life Ins. Co. v. Montague

• Decision Date: 06 January 1887
• Citation: 2 S.W. 443,84 Ky. 653
• Parties: SOUTHERN MUT. LIFE INS. CO. v. MONTAGUE.
• Court: Kentucky Court of Appeals

2 S.W. 443

84 Ky. 653

SOUTHERN MUT. LIFE INS. CO. v. MONTAGUE.

Court of Appeals of Kentucky.

January 6, 1887

Appeal from circuit court, Taylor county.

In equity.

Rountree & Lisle, J. B. Temple, and Wm. Lindsay, for appellant Southern Mut. Life Ins. Co. A. Duvall and R. S. Montague, for appellee, Montague.

PRYOR C.J.

In the month of December, in the year 1866, the Southern Mutual Life Insurance Company issued its policy of insurance for $2,000 on the life of R. S. Montague. The annual premium was $70 and was paid from year to year until the year 1875, when a balance was left unpaid, for which Montague executed his note due in 11 months from the seventh of December, 1875, with 8 per cent. interest until paid. On the twenty-fourth of October, 1871, the company issued another policy for $2,000 on the life of Montague, the annual premium being $86.26, and payable to his wife. The first policy was No. 127, and the second policy No. 2,826. The premiums on this last policy were paid from its date, and annually thereafter, until October 24, 1874, when a note was given by the appellee to the company for $72.96, due in nine months, and bearing 8 per cent. interest. The two notes provided that, in consideration of their execution, the policies are continued until default of payment is made, when the policy shall cease and determine. When each of the notes for the premiums unpaid on each policy were executed, there was a written extension of each policy for 12 months, with the proviso that, if the notes were not paid at maturity, " the said policy shall at once become void, without notice to the assured." These notes were never paid, and the appellee, claiming that by the terms of the contract made between the appellee, Montague, and the general agent of the company, he was entitled to a paid-up policy to the extent of the premiums paid for the period covered by the original policies, demanded that the company should comply with its agreement; and, the latter refusing, this petition in equity was filed asking that the company be compelled to issue paid-up policies in accordance with their undertaking. The relief was granted, and the company has appealed.

It is contended by the appellant (the company) that nowhere in Policy 127 is to be found any provision for a paid-up policy but that, on the contrary, it is provided in the policy itself, "that, if the assured makes default in paying the annual premiums, the company shall not be liable to pay the policy, or any part of it, but it shall cease and determine, and all payments made thereon, and dividends accruing thereon, shall be forfeited to the company;" and that, in the extension of time given for payment, it was expressly provided that the policy should be void if the notes were not paid at maturity. We find no provision in policy 127, or in the application made by the assured, by which he is entitled to a paid-up policy to the extent of premiums paid, but in Policy 2,826 it is provided "that, after the payment of two full annual premiums, if the policy is surrendered within thirty days after default in payment of any subsequent premiums, the assured is entitled to a paid-up policy on the basis fixed by the agreement of insurance." As the two policies contain different stipulations, we will consider, first, the right of the appellee to the relief sought as to Policy 127.

It is maintained by the company that the import or meaning of this policy is plainly expressed in writing, and that its terms cannot be varied or changed in any manner by parol testimony; and, recognizing fully the importance of adhering to this principle in its application to written agreements, will proceed to notice the pleadings in this case, and the reasons assigned by the appellee for the relief he is seeking.

At the time the general agent of the company solicited the insurance from the appellee, (Policy 127,) he presented and delivered to him a pamphlet issued by the company with the names of its officers and executive committee indorsed upon it, setting forth the nature and advantage of life insurance, and particularly in the Southern Mutual Life Insurance Company; the pamphlet setting forth the benefits to be derived from a policy that would always be of value for surrender to the company when the assured was no longer able to pay.

This pamphlet reads: "Persons holding policies of insurance should never relinquish them without first communicating with the office, as policies have a money value. Those desiring to discontinue payments of the annual premiums may, after the payment of four annual premiums on the life plan, or two on the ten-year or endowment plans, dispose of their policies to the company, in which case they will receive the equitable value, either in cash, or a policy of insurance will be issued for a fixed sum payable at death." "During his life, his policy will always be of value for surrender." "All policies issued by this company for life participate in its surplus or profits, and the annual division of this surplus will be made in the most equitable manner among the policy-holders, under the provisions of the charter of the company." It is further expressly stated, as to ordinary life policies, that "after four annual payments have been received by the company, a paid-up...