Thomas v. Equitable Life Assurance Society

• Decision Date: 18 February 1918
• Citation: 205 S.W. 533,198 Mo.App. 533
• Parties: GENE THOMAS, Defendant in Error, v. EQUITABLE LIFE ASSURANCE SOCIETY, Plaintiff in Error
• Court: Kansas Court of Appeals

205 S.W. 533

198 Mo.App. 533

GENE THOMAS, Defendant in Error, v. EQUITABLE LIFE ASSURANCE SOCIETY, Plaintiff in Error

Court of Appeals of Missouri, Kansas City

February 18, 1918

Appeal from Adair Circuit Court.--Hon. C. D. Stewart, Judge.

AFFIRMED.

Judgment affirmed.

Campbell & Ellison for defendant in error.

Higbee & Mills and New, Miller, Camack & Winger for plaintiff in error.

ELLISON P. J. Timble, J., concurs. Bland, J., dissents.

OPINION

ELLISON, P. J.

Plaintiff's action is to require defendant to specifically perform its contract of life insurance by issuing to him a paid-up policy for $ 1830. It is based on a twenty payment tontine policy of life insurance issued by defendant dated the 15th of December, 1893. The judgment in the trial court was for the plaintiff.

The face of the policy proper is a simple promise to pay $ 1000 in consideration of the application and twenty annual payments of premiums of $ 27.60 each. Under the signatures to the policy is the following:

"Notice--This policy and the application taken therefor taken together constitute the entire contract which cannot be varied except in writing by one of the Executive Officers printed above."

On the back of the policy is the following:

"LIST OF PRIVILEGES."

"It gives to Gene D. Thomas a choice of six methods of settlement upon the completion of the Tontine Period, on the 11th Dec. 1913; First: The continuance of the policy, and the withdrawal of the accumulated surplus, Either in (1) Cash: (2) Paid up Assurance: (3) An Annuity. Or Second: The surrender of the policy for its full value consisting of the entire reserve amounting to $ 404. Four hundred and four dollars together with the surplus then apportioned by the Society,

Either in Cash, or

Paid-Up Assurance, or

A Life Annuity."

(Signed)

H. B. HYDE, Pres.,

W. ALEXANDER, Secy,

GID E. JOHNSON, Gen'l Agent."

Then the following:

"The Tontine Period ends December, 11, 1913. This policy if then in force may either be continued (after which dividends will be apportioned annually from surplus earned) or surrendered. See List of Privileges. No dividend will be declared on this policy until the 11th day of Dec., 1913. Amount, $ 1000 Term Life 20 A. P. First Payment, $ 27.60 A premium due 11th Dec., $ 27.60. At the end of twenty years, if this policy is then in force, premiums cease, and the policy becomes a fully paid-up life policy."

Pasted on and attached to the policy was the following paper, known as the "Green Slip:"

"Free to Illustration Blank. For a 2 Payment Life policy, with pending Tontine period. N. B. This blank must be filled up from the Book of tables issued during the current years by the Equitable Life Assurance Society of the United States, and based on the Society's experience on different form of Tontine assurance, up to 1893. It is impossible to predict the results of the future, but from the tables referred to above it is easy to show approximately the amount of surplus profits which would now be payable on a Tontine Policy of the Equitable Life Assurance Society of the United States if it had been issued in the past and ended its Tontine period at the present time. While the results of the future must necessarily depend on the experience of the future (and although some variation must be expected in view of a lower rate of interest and of other modified conditions which affect all life companies and, in a measure, all branches of financial business), figures based on past experience furnish the best attainable data upon which to judge the society and the value of its Tontine Policies. The following figures given on this basis, are therefore deserving of careful examination:

"ILLUSTRATION."

Amt. of policy, $ 1000. Tontine period, 20 yrs. Kind, 20 A. P. Age, 24. Annual Premiums, $ 27.60. Total premiums paid in 20 years $ 552.00.

OPTIONS AT END OF TONTINE PERIOD.

1. Cash value consisting of reserve

$ 404.00 and surplus $ 334.00,

$ 738.00

or, 2. Paid up value,

$ 1830.00

or, 3. Cash surplus,

$ 334.00

(Or Life Annuity for amount surplus will purchase. Original policy now being fully paid up).

GID E. JOHNSON, Agent, Gen'l Agent.

Dated at Kirksville, Mo., 11-12-1893."

Plaintiff completed his twenty annual premium payments.

It will be noticed from the foregoing that plaintiff had several privileges or options in the method of settlement of the contract. He elected to take paid-up insurance for $ 1830. But defendant has insisted from the first that the method claimed by plaintiff of taking a paid-up policy for $ 1830 is not one of his privileges. Defendant says that the privilege of settlement at the end of the twenty years given to plaintiff was that he could hold his present policy of $ 1000 as fully paid-up; and in addition thereto to convert the surplus accumulated on the policy " as then determined by the defendant" into additional nonparticipating insurance. And defendant further says it declared the amount of surplus, thus accumulated on plaintiff's policy during the twenty years it had run, to be one hundred and sixty-five dollars and six cents which would purchase him three hundred and seventy dollars additional insurance, making in all, thirteen hundred and seventy dollars. Defendant set up in its answer that plaintiff selected that form of settlement, and it tendered him a certificate for the additional insurance, which he refused to accept; whereupon defendant tendered it into court.

It is thus seen that plaintiff's claim is for paid-up insurance for $ 1830 and defendant's is that he should only have $ 1370. Plaintiff's claim is based on the above-mentioned "green slip" being a part of the contract. Defendant accounts for the "green slip" as being merely a suggestion based on past experience of the company with a like policy and not intended as an obligation on its part.

It will be noted that the face of the policy proper is nothing but a simple agreement to pay $ 1000 in consideration of the application and twenty annual payments of $ 27.60 each. Then what is denominated "privileges" extended to plaintiff, are found on the back of the policy. These privileges, so far as concerns this controversy, are that at the end of the twenty-year period plaintiff could keep the policy and take the surplus which had accumulated during these years, and with it purchase additional paid-up insurance.

It is at this point that the "green slip" attached to the policy as above set out, begins to affect the case, On that paper there is a heading in bold type composed of the word "Illustration," under which is the amount of the policy, premium, age, etc., which is followed by the words, in bold type, "Options At End of Tontine Period," followed by this: Either, 1st, Cash value consisting of reserve $ 404 and surplus $ 334, total $ 738; or, paid-up value of $ 1830; or, surplus payable in cash $ 334. As has been said plaintiff exercised the option to keep the policy and take the accumulated surplus in paid-up insurance, together amounting, as he claims, to $ 1830.

Plaintiff arrives at his amount from the statement of that amount in the green slip. Defendant arrives at the lesser amount in this way: The provision as to privileges set out on the back of the policy for paid-up insurance in addition to the original policy, is that plaintiff could withdraw the "accumulated surplus" by investing in it "paid-up insurance;" and it claims the right under the contract to itself "apportion," by naming the amount of this surplus, and insists that it did name the amount as $ 165.06, which, at plaintiff's age, would purchase the said sum of $ 370.

It is true that under subdivision VI of the application entitled "Tontine Profits," it is stated that at the end of the tontine period the policy shall participate in the surplus "as may then be apportioned by the Society." We do not interpret that as meaning that the insurance company may arbitrarily fix upon a sum of money though it may be far less than the real sum and say it apportions such wrong amount as the surplus. That would be to say that the company could defraud the insured by turning over a part of what his policy has earned and what belongs to him and convert the balance to its own use. The surplus is a trust fund in the company's hands and upon adjustment, it all must be accounted for. The words, "as may then be," in the expression, "as may then be apportioned by the Society," means, "to be." The expression is not permissive, but mandatory. "The company cannot satisfy its contract by saying that it apportioned to the policy all that was due under it. It must show what was due under it--how ascertained, and from what sources--else it becomes the judge as well as contracting party." [Equitable Life Assurance Society v. Winn, 137 Ky. 641, 646, 126 S.W. 153.]

We have not overlooked that it is a part of defendant's insistence that by use of the word "then" in the expression, it was meant that the apportionment was not to be made until the end of the tontine period, and therefore it could not have been intended to make a guaranty of a definite sum at the beginning of that period. The suggestion, we think, does not answer the position that to induce plaintiff to take the policy, defendant did agree that the sum to be apportioned at the end would be $ 1830.

So we deny that defendant has a right to fix the surplus contrary to what it is in point of fact in the instance of the plaintiff exercising his privilege of retaining the original policy and using the surplus to purchase other additional insurance; and we therefore come to a consideration whether the green slip is to be taken as a guaranty, or contract that the paid-up insurance, including the original policy, shall be $ 1830 as...