Wilkins v. Metropolitan Life Insurance

*589 BENNICK, C. This is an action to recover the accidental death benefits under two policies of industrial insurance which were issued by defendant, Metropolitan Life Insurance Company, upon the life of one William Cooper, who died on August 1, 1936, as the result of bodily injuries sustained directly and independently of all other causes through external, violent, and accidental means. Plaintiff sues under the facility of payment clause contained in each of the policies; and defendant expressly disavows any question regarding her capacity to maintain the action. The one policy, which was for an amount of $210 with increasing benefits, was issued in 1903, and the other, which was for an amount of $258 with increasing benefits, was issued in 1908. Each policy provided for the payment of a weekly premium, and further provided that except for a grace period of four weeks, if any premium should not be paid when due, the policy should be void. Neither policy, when issued, contained a provision for the payment of an accidental death benefit, but in 1928 defendant prepared and sent out an announcement, effective December 1, 1928, granting accidental death benefits on all industrial policies then in force, including the two in question in this proceeding. Such announcement provided that upon due proof of the insured’s accidental death as therein defined “while this policy is in force, and while premiums are not in default beyond the grace period specified in this policy,” the company would pay, in addition to any other sums due under the policy, and subject to its provisions, an accidental death benefit “equal to the face amount of insurance then payable at death,” save that if the insured’s bodily injuries should be sustained while the insured was engaged in the course of certain excepted employments, then in that event, the accidental death benefit should be reduced to “one-half of the face amount of insurance then payable at death.” A still further provision of the announcement was that the accidental death benefit was granted without specific extra premium being charged therefor, the cost being included in the premium for the policy. Both policies lapsed for nonpayment of premiums on August 1, 1932, four years to the day before the death of the insured, which occurred under circumstances making defendant liable for the payment, not only of the principal amounts of the policies which were of course due regardless of the cause of death, but also of accidental death benefits “equal to the face amount of insurance then payable *590 at death, ’ ’ if the accidental death coverage provided by the announcement was carried over as temporary or extended insurance beyond the date of lapse. Defendant paid the principal amounts of the policies, but refused to pay the accidental death benefits upon the ground that such coverage had not been carried forward after lapse as temporary or extended insurance. Thereupon this action was instituted ; and from a judgment entered for plaintiff for the aggregate amount of $686.40, defendant’s appeal to this court has followed in the usual course. Thus we have the issue squarely drawn of whether, upon the lapse of the policies for default in the payment of premiums, the accidental death coverage was continued as temporary or extended insurance. It was admitted, incidentally, that if the net value of each policy at the date of lapse was computed upon the actuaries’ or combined experience table of mortality with four per cent interest per annum, and the proper proportion of such net value was taken as a net single premium for the purchase of temporary or extended insurance from the date of lapse, the term of such insurance, even for double the principal sum of each policy, would have extended well beyond the date of death of the insured. Defendant insisted, however, that such length of term could be calculated only by assuming that the full amount of insurance to be extended was straight life insurance, and that otherwise it was mathematically impossible to make the calculation. This upon the theory that the actuaries’ or combined experience table of mortality, as well as any similar table, is based solely upon experience as to the fact of death and not its cause or mode, and therefore, while accurate in predicting the probability of death itself in the case of a given number out of a large group of insured persons at a given age, would be wholly inappropriate as a basis for computing premiums and terms of insurance based upon the probability that any particular number of such persons would die by accidental means. While defendant has set out a number of assignments of error in its brief, it points out that all such alleged errors arose out of and were occasioned by the lower court’s ruling that upon the lapse of the policies for nonpayment of premiums, the accidental death coverage was thereafter continued as temporary or extended insurance. It follows, therefore, that we need only consider the single,, ultimate question of defendant’s liability for the payment of accidental death benefits, the decision of which question will be in turn dispositive of each and every one of the alleged errors specifically assigned. It is conceded that in the absence of any language in the original policies or subsequent announcement providing for the continuation of the accidental death coverage as temporary or extended insurance, plaintiff’s rights, if any, are purely statutory, that is, to be determined under our nonforfeiture statutes, which are as much a part of the *591 contract as though they had been expressly written into it. [Smith v. Equitable Life Assur. Soc. of the United States, 232 Mo. App. 935, 107 S. W. (2d) 191.] Moreover, since the. announcement granting accidental death coverage in addition to the straight life coverage amounted, in-legal effect, to an amendment of the original policies, the statutes to be considered are those in force at the effective date of the announcement (December 1, 1928), as of which date, and not before, liability for the. payment of accidental death benefits was contracted for by defendant. Those statutes are the present Sections 5852 and 5854, Revised Statutes of Missouri 1939 (Mo. Stat. Ann., secs. 5741 and 5743, pp. 4388 and 4394); and we must therefore look to their provisions in determining the question of whether, upon the lapse of the policies for nonpayment of premiums, the accidental death coverage was required to be carried forward as temporary or extended insurance. [Valenti v. Prudential Ins. Co. of America (D. C.), 1 F. Supp. 993, aff., (C. C. A. 8), 71 Fed. 229.] Section 5852 not only provides against the forfeiture of a life policy for nonpayment of premiums after payment upon it of three or more annual payments, but also expressly provides that the amount of temporary or extended insurance to be granted “shall be such as is specified in the policy, but never less than the face amount insured by the policy reduced by .the unpaid portion of notes and indebtedness. ’ ’ Section 5854 provides that if the death of the insured occur within the term of temporary or extended insurance as determined in Section 5852, and if no condition of the insurance other than the payment of premiums shall have been violated by the insured, “the company .shall be bound to pay the amount of the policy, the same as if there had been no default in the payment of premium, anything in the policy to the contrary notwithstanding. ’ ’' In this case there was no amount of extended insurance specified in either policy or in the announcement subsequently issued by defendant, so that upon lapse of the policies for default in the payment of premiums, the amount which was required to be extended in each instance under Section 5852 (there being no indebtedness) was “the face amount insured by the policy.” And under Section 5854, which provides the rule of payment upon a commuted policy and is obviously to be read along with Section 5852 to which it specifically refers, defendant’s obligation, upon the death of the insured, was to pay “the amount of the policy” being carried on temporáry or extended insurance) that is, “the face amount insured by the policy” as provided by Section 5852. In- other words, it is Section 5852 which fixes the amount and term of temporary or extended insurance; and Section 5854 can mean no more than that if the insured dies during the term so fixed, the compaony shall be required to pay the amount so fixed, the same as though there had been no *592 default in the payment of premium, anything in the policy to the contrary notwithstanding. [Smith v. Equitable Life Assur. Soc. of the United States, supra.] The whole question would therefore seem to resolve itself into one of what was “the face amount insured by the policy.” If such face amount was merely the original amount written in each policy as straight life insurance, then defendant has already discharged its full obligation; but if such face amount included the additional amount made payable only in the event of death by accidental means, defendant has not discharged its full obligation, and plaintiff should have the judgment which was entered in her favor in the court below. If nothing appears to show a contrary intention on the part of the contracting parties, the “face amount” of a policy of life insurance is commonly understood to mean the amount specified in the policy which is in all events payable as straight life insurance, without regard to any additional features of the policy such as accident or disability insurance made payable only in the event of the happening of certain specified contingencies, and usually determined, as to amount, by some relation which such additional coverage bears to the face amount fixed in the policy. [Smith v. Equitable Life Assur. Soc. of the United States, supra.] In this case, not only was there no language indicating a different intention on the part of the contracting parties, but on the contrary the wording of the announcement would seem to disclose that the term “face amount” was purposely employed in its usual and ordinary sense, and that the accidental death benefit provided by the announcement was not intended to constitute a part of the face amount of the policies. Instead, the “face amount” of insurance payable at death, that is, the amount fixed in the original policies, was expressly made the measuring stick by which to determine the amount of the additional benefit to be paid upon accidental death, which was to be a sum “equal to the face amount of insurance then payable at death.” In other words, the accidental death benefit was something granted in addition to the face amount of the policies; and while itself not constituting a part of the face amount, was to equal the face amount if the insured died by accidental means, unless death occurred while the insured was engaged in the course of certain excepted employments, in which event the additional benefit should be reduced to “one-half of the face amount of insurance then payable at death. ’ ’ The language employed by the company in writing its contract is of course of importance only in determining whether it' was the intention to grant an extended coverage over and above the minimum which the statute requires. -Had defendant expressly undertaken to include accidental death coverage within any temporary or extended insurance which was to be granted, Section 5852 would have *593 been no bar. As already pointed ont, such section clearly provides that “the amount of such temporary insurance shall be such as is specified in the policy,” which may exceed the face amount, “but never less than the face amount insured by the policy.” The latter is all the statute requires; and if more is to be given, it must be by virtue of private agreement between the parties. [Salamone v. Prudential Ins. Co. of America (Mo. App.), 103 S. W. (2d) 506.] In the present instance, the language indicates that the accidental death benefit, though to be measured in terms of equality to the “face amount,” was itself not intended to be regarded as a part of “the face amount insured by the policy” so as to be included within the amount of any temporary or extended insurance to be granted under statutory provisions in the event of the lapse of the policies for nonpayment of premiums. And as a still further indication that this is so is the fact that liability for payment of accidental death benefits was not assumed unless the accidental death occurred “while this policy is in force, and while premiums are not in default beyond the grace period specified in this policy.” Two concurring conditions were thus laid down as conditions precedent to the company’s liability for the payment of accidental death benefits, the one, that the policy should be in force, and the other, that premiums should not be in default beyond the grace period. Granting that the policy is in force (for limited purposes) when continued as extended insurance, the premiums are necessarily in default beyond the grace period, or else there would be no occasion for extended insurance which only comes into being when there is a default in the payment of premiums. The requirement making the current payment of premiums a condition precedent to the accidental death benefit coverage is wholly inconsistent with the idea of such a coverage on temporary or extended insurance which only follows after lapse; and this circumstance, considered along with the language of the announcement indicating an intention that the accidental death benefit was not to be regarded as a part of the face amount of the policy, leads inevitably to the conclusion that such accidental death coverage was not carried forward as temporary or extended insurance so as to have imposed liability upon defendant over and above that which it has already voluntarily discharged. [Valenti v. Prudential Ins. Co. of America, supra.} In support of her position, plaintiff relies chiefly upon the decision of this court in Fletcher v. Metropolitan Life Ins. Co. (Mo. App.), 137 S. W. (2d) 621, which involved the identical question at issue in this proceeding. In that case, taking note of the absence of any language specifically excluding accidental death coverage while the policy was running on extended insurance, the court held that there was ambiguity in the policy provisions when considered in the light of what is now *594 Section 5852; and that with such ambiguity resolved in favor of the insured, the company was to be held liable for payment of the accidental death benefit upon the death of the insured by accidental means during the term of temporary or extended insurance. Unquestionably the decision in the Fletcher ease lends full support to plaintiff’s theory of recovery. However, since its rendition, the Supreme Court, has handed down a decision in Cleaver v. Central States Life Ins. Co., 346 Mo. 548, 142 S. W. (2d) 474, which, in its effect, is the last controlling- decision upon the question of whether the nonforfeiture statutes require the inclusion of accidental death coverage within the amount of temporary or extended insurance, and which, in deciding the point in the negative, approved and cited the cases of Smith v. Equitable Life Assur. Soc. of America, supra, and Valenti v. Prudential Ins. Co. of America, supra. In the Cleaver case, as in the case at bar, the policy contained language disclosing the intention of the parties that the principal sum payable under the policy should be regarded as its “face amount. ’ ’ Under the further language of the policy, the company’s liability for double indemnity in the event of accidental death attached only if such death occurred “during the premium paying period, before default in the payment of any premium.” In its import and legal significance, that provision was no different than the language used in the ease at bar, where defendant expressly limited its liability for the accidental, death benefit to contingencies where the death of the insured occurred “while this policy is in force, and while premiums are not in default beyond the grace period specified in this policy.” In other words, in both instances the current payment of premiums was made a condition precedent to the company’s liability for double indemnity on accidental death, something foreign to the idea of such coverage on extended insurance, which only comes into effect upon the lapse of the policy for the nonpayment of a current premium. For the purposes of the Cleaver case, since the company’s liability on the double indemnity agreement required that the insured’s accidental death must have occurred “during the premium paying period, before default in the payment of any premium,” it was held essential, if the plaintiff was to recover, that it be shown that the policy had not lapsed for nonpayment of premium; and inasmuch as the insured himself had coneededly not kept up his premium payments, the fact of nonlapse could be shown only by recourse to the automatic premium loan provision of the policy, which, if valid, would have required that the company advance all premiums for the insured, as loans against -his policy, up to the date of his accidental death. However, as the court pointed out, if such automatic premium loan provision was invalid, then. Cleaver’s insurance, under the nonforfeiture statutes, became temporary or extended insurance for the face amount insured by the policy as of the date when Cleaver *595 himself ceased paying the premiums upon his policy; “but,” said the court, “the double liability agreement-terminated when such extended insurance began. ” This is an effectual holding by the Supreme Court that in the case of a policy which constitutes the accidental death coverage something additional to the face amount of the policy, and which makes the current payment.of premiums a condition precedent to the company’s liability for payment of the accidental death benefit, the lapse of the policy for nonpayment of premium terminates the company’s liability- for double indemnity, and merely requires that the policy, under Section 5852,. be commuted into one of temporary or- extended insurance for “the face amount insured by the policy,” that is, for the principal sum of straight life insurance which is in any event payable upon the -death of the insured. Moreover, this holding gives logical effect to what must have been the purpose of the amendment in 1923, which resulted in our present Section 5852. Prior to the amendment, the statute (Sec. 6151, R. S. Mo. 1919) had provided that upon the lapse of a policy for nonpayment of premium, the available net value should-be applied to the purchase of extended insurance “for the full amount-written in the policy;” and with this the statutory requirement, it was held in New York Life Ins. Co. v. Rositzky (C. C. A. 8), 45 F. (2d) 758, that an attempted exclusion of double indemnity coverage from the amount of extended insurance was illegal and in contravention of statute. However, since the amendment, the statute requires, not that the amount of extended insurance shall be “the full amount written in the policy,” but on the contrary that it shall be “such as is specified in the policy, but never less than the face amount insured by the policy.” As we have already pointed out, this permits the parties to contract for any amount of extended insurance they may wish so long- as such amount is not less than the minimum which the statute requires; but if (as in the case at bar) .no. amount of extended -insurance is specified in the policy, then the amount to be carried on temporary or extended insurance is “the face amount insured by the policy,” which is the principal sum payable as straight life insurance upon the death of the insured from any cause. [Cleaver v. Central States Life Ins. Co., supra; Smith v. Equitable Life Assur. Soec. of the United States, supra; Valenti v. Prudential Ins. Co. of America, supra.] It follows from all that has been said that the judgment rendered by the circuit court should be reversed; and the Commission so recommends. PER CURIAM: — The foregoing opinion of Benniok, C., is adopted as the opinion of the court. The judgment of the Circuit Court is accordingly reversed. Anderson, J., concurs; Hughes, P. J., concurs *596 in result only in separate opinion;