The Praetorians v. Fisher
| Citation | 89 So.2d 329 |
| Parties | The PRAETORIANS, Dallas, Texas, a fraternal organization, Appellant, v. Ila Virginia FISHER, Appellee. |
| Decision Date | 25 July 1956 |
| Court | Florida Supreme Court |
H. L. Killian and Cooper, Cooper & Killian, Tampa, for appellant.
V. R. Fisher, Tampa, for appellee.
Appellee, Ila Virginia Fisher, filed her complaint in the circuit court, alleging that The Praetorians, a fraternal organization, appellant herein, was indebted to her in the amount of $1,000, less an outstanding loan of $167, on a life insurance policy of which she was beneficiary. Both parties moved for summary judgment which, after hearing, was granted for the appellee.
It is undisputed that the appellee is beneficiary of a life insurance policy issued by appellant on November 15, 1939, on the life of one Roy E. Lewis, in the face amount of $1,000. On May 28, 1952, the insured obtained from appellant a loan upon the policy in the amount of $167. Thereafter, he continued to pay the full premiums on the policy until he permitted it to lapse for nonpayment on May 1, 1953. On June 15, 1953, the insured was killed in an automobile accident. Interest at six per cent accrued on the loan to the insured up to the date of his death in the amount of $2.50, thus making a total indebtedness against the policy of $169.50.
The non-forfeiture provisions of the policy, where pertinent, read as follows:
'Within one month after any anniversary date hereof, or at any time within thirty days after default in the payment of premiums, and after two full years' premiums shall have been paid hereon, the insured shall be entitled to select one of the following surrender options:
* * *
* * *
'Option 3 shall become effective automatically in the event the owner fails to make a selection during the thirty days after default in payments.'
A 'Table of Non-Forfeiture Values' followed the above provisions containing a column setting out the terms of extended insurance 'For Sum Insured on Face Hereof.' Since the insured did not select any option under the non-forfeiture provisions, Option 3, for extended term insurance, automatically went into effect.
The trial judge held that the provision reducing the amount of the policy in the proportion that the indebtedness bears to the cash value was null and void, because it discriminates against a borrowing insurant in contravention of F.S. § 638.02, F.S.A., which reads in pertinent part as follows:
'No life insurer doing business in this state shall make or permit any distinction or discrimination between insurants of the same class and equal expectation of life as to the amount or payment of premiums or rates charged for policies of life or endowment insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes. * * *'
Accordingly, it was held below that the amount of the loan plus interest thereon was to be deducted from the principal amount of the policy and would leave a balance due the beneficiary of $831.50, plus interest and costs.
Appellant contends that according to the weight of authority this non-forfeiture provision should be upheld, and should not be considered discriminatory. If this contention prevails, the face amount of the policy would be reduced in the proportion that the indebtedness against the policy bears to its cash value, which would leave something over $60 as the amount to which the appellee is entitled.
Appellee relies in great measure upon the case of Afro-American Life Insurance Co. v. La Berth, 136 Fla. 37, 186 So. 241, 246, wherein we held that a beneficiary under non-forfeiture provisions of a life insurance policy was entitled to elect to take extended term insurance where the net cash value of the policy was sufficient to purchase insurance to a date later than that upon which the insured died.
Appellant urges that our opinion in the La Berth case should be restrictively interpreted, and argues that we did not there pass upon the precise issue now presented. To demonstrate the scope of our consideration of the basic problem, we quote the following language from our opinion in that case:
'Defendant then contends that because there was an indebtedness existing on the policy at the time of default in payment of premium the insured by his representative is precluded from selecting option No. 3, under the non-forfeiture provisions of the policy. The policy contained the following provision:
"Any indebtedness to the Company under this Policy will be deducted from the cash value; and such indebtedness will also reduce the amount of paid-up insurance or the amount continued as term insurance in such proportion as the indebtedness bears to the cash value at due date of premium in default.'
'True it is that option No. 3 states that extended insurance may be received 'provided there is no indebtedness to the Company hereon', but this provision is explained by the above quoted lines showing that an indebtedness should proportionately reduce the value of all the non-forfeiture provisions. The period for which extended insurance is granted is reduced because of the indebtedness, and hwere there are still funds available to the credit of the insured, as is the case here, such funds must be applied by the insurance company to an election from the non-forfeiture provisions. [Emphasis supplied.]
'In addition to this, provisions in life insurance policies which discriminate between borrowing and non-borrowing insurants, as regards options allowed, have, in most cases where the question has arisen, been held to be invalid, either in that they violate a statute prohibiting discrimination between insurants of the same class, or because such discrimination is deemed opposed to public policy.'
The result of the La Berth case was that we declined to disturb a judgment for the beneficiary in the face amount of the policy less the amount of the indebtedness, i. e., a judgment reached by the application of the same formula used by the trial judge in the instant case. This result was reached in the La Berth case in spite of the language we there quoted from the policy and its similarity with the language of the policy here confronting us.
Appellant contends that there is no discrimination between borrowing and non-borrowing insurants in the policy in suit, because Option 3 would come into effect automatically after default on the premiums, where no other option is selected, whether the insured had borrowed...
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