Epperson v. New York Life Insurance

ELLISON, J. This action is based on a policy of life insurance issued to plaintiff’s deceased husband in his lifetime by defendant, an insurance company organized in the State of New York. Judgment was rendered in the trial court for plaintiff. The contest between the parties results from conflicting construction of the Laws of 1895, p. 197, repealing section 5859, Revised Statutes, 1889, and substituting a new section designated by the same number. It appears that the deceased, after paying two annual premiums, defaulted on the third and died with that premium unpaid. By the terms of section 5856, Revised Statutes 1889, no life insurance policy could become forfeited by reason of non-payment after two annual premiums had been paid thereon, but that the net value of the policy at the time the unpaid premium becomes due (to be ascertained in the way named by the statute) shall be taken as a premium for temporary insurance for a period to be ascertained as pointed out in said section. By the terms of section 5857, if the assured should die within the period of temporary insurance, the pol — 435 — icy was as valid as if there had been no default in the payment of premium. The deceased, in this case, died within such period, the net cash value of the policy being sufficient to buy insurance beyond the date of his death. Plaintiff is therefore entitled to recover unless she is cut off by the substituted law aforesaid. It would perhaps be more satisfactory to state our construction of sections 5856 and 5859 as they stood before the Act of 1895 and then state what changes were made by the latter act. Section 5856 provides, in the-first instance, that no life policy, whether local or foreign, shall be forfeited for i on-payment of premium after two annual payments have been made. But the net cash value of such policy shall be ascertained in the way pointed out by the statute and not here necessary to state, and that such net value shall be taken as a premium for temporary insurance for the full amount of the policy. So that although an assured fails to pay 'a premium falling due after the second payment, the policy may still be collected if the assured should die within the period, of the temporary insurance. Section 5859 provides that if, however, the company and the assured themselves contract in -the policy for a cash surrender value of the policy equal to a single premium for such temporary insurance, then section 5856 has no application. This evidently for the reason that the parties to the contract have, in their own way, contracted concerning the matter. In 1895 (Laws 1895, p. 197) section 5859 was stricken out and a new section enacted as above stated. It is in the following language, the words in italics being the changes made from what it was before: “Section 5859. The Foregoing Provision Not Applicable, When. — The three preceding sections shall not be applicable in the following cases, to-wit-:. If the policy shall have been issued by any company authorized to do business in this — 436 — State, and organized under the laws of another State of the United States which prescribes a surrender value or paid-up or temporary insurance in case of default in payment of premiums, and shall contain an agreement for such surrender value, temporary or paid-up insurance, as prescribed by such other State as a part of said policy, or if the policy shall contain a provision for an unconditional cash surrender value at least equal to the net single premium for the temporary insurance provided hereinbefore, or for the unconditional commutation of the policy for non-forfeitable paid-up insurance, or if the legal holder of the policy shall, within sixty days after the default of premium, surrender the policy and accept from the company another form of policy, or if the policy shall be surrendered to the company for a consideration adequate in the' judgment of the legal holder thereof, then, and in any of the foregoing cases, this act shall not be applicable: Provided, that in no instance shall a policy be forfeited for non-payment of premiums after the payment of three annual premiums thereon; but in all instances where three annual premiums shall have been paid on a policy of insurance, the holder of such policy shall be entitled to paid-up insurance, the net value of which shall be equal to that provided for in section 5856 of this articleP It 'will be seen that this act materially changes the old section, for it, in the first part thereof, clearly relieves the policy of a company organized in a foreign State, from the-effect or application of section 5856, if the laws of that State prescribe a surrender value or paid-up or temporary insurance-in case of default in payment of premiums, and the policy shall' contain an agreement for these things as they are prescribed by said laws. And the last part of said act by proviso makes a material addition to the old section. It extends the period in which a policy may be forfeited from two years, as provided in Section 5856, to three years. The first part of the act,. — 437 — printed in italics, has, by its terms, application only to policies issued by foreign companies; the balance of the act, including the proviso, applies to all policies, whether foreign or local. In this case it was shown at the trial that the laws of the State of New York did prescribe a surrender value or paid up or temporary insurance, in ease of default in the payment of premiums.' It was shown that the policy in suit contained an agreement for such surrender value, temporary or paid-up insurance as thus prescribed by the laws of said State. And it was also shown that the deceased had not made three payments of premium. It is therefore clear (unless the following points and suggestions made by plaintiff are sound) that the policy sued on was forfeited and void at the death of deceased. Plaintiff contends that in the statute- of 1895, above set out, the phrase, “as prescribed by such other State as a part of said policy,” makes it necessary for the policy itself to refer to and “adopt and submit to the Néw York law.” This is not the meaning of the statute. The policy need not mention the New York law. It is sufficient if it contains the agreement which is prescribed by that law. So that the evident meaning of the statute, as applied to this case, is that, the policy being issued by a company organized in the State of New York, the laws of which State provide for temporary insurance in case of default in premiums, and the policy containing an agreement for such temporary insurance as thus prescribed by such State,, the three preceding sections of the statute of 1889 do not apply to this policy. It will be noticed that just preceding the proviso of the Act of 1895 are the words (found in the original act) “then, and in any of the foregoing cases, this act shall not be applicable.” Plaintiff urges that the words, “this act shall not be applicable,” refer to the Act of 1895, and thus nullify it. But those words do not refer to the Act of 1895; They were put — 438 — in that act with, a knowledge that that act was to form a part of a'complete statute. The words evidently refer to the original law as it would stand, as a whole, with tire new section incorporated. It is a rule of construction and has been often held, that: “Where one or more sections of a statute are amended by a new act, and the amendatory act contains the entire section or sections amended, and repeals the section or sections so amended, the section or sections as amended must be construed as though introduced into the place of the repealed section or sections in the original act, and therefore, in view of the provisions of the original act as it stands after the amendatory sections are so introduced.” McKibben v. Lester, 9 Ohio St. 627; Holbrook v. Nichols, 36 Ill. 162; Green v. State, 22 Texas 588; Queen v. St. Giles, 3 E. & E. 224. Thus, in McKibben v. Lester, supra, the new section amendatory of the law used the words, “under the restrictions and limitations herein provided,” and it was held that these words “must be taken to refer to the restrictions and limitations provided in the original act, as it stands after all the amendments made thereto are introduced into their proper places therein.” We may remark that in the statute now being construed, the words were perhaps superfluous, since, at the beginning of the section the particular parts of the law which were not to be applicable, were named. It is further stated that “there can not be found in the policy an agreement for a surrender value, or for temporary paid up insurance as prescribed by the State of New York,” which, as we have seen, is necessary. If it is meant by that statement that the policy does not contain an agreement for surrender value and for temporary insurance, it is a mistake of fact It is true that what may be called the policy proper does not contain such agreements. But it is written in the policy proper, that “the special advantages, benefits and provisions printed or written by the< company on the following — 439 — pages are conditions precedent and are a part of this contract as fully as if they were recited at length over the-signatures hereto affixed.” Among such provisions on the aforesaid following pages are to be found those for a surrender value and for temporary insurance; and we consider them made as much a part of the policy by the above quotation from the policy as if they were actually embodied literally in the policy itself. If, however, it is meant by the statement aforesaid that the law of New York on that subject must be set out in the policy, we think it an unsound contention. It is not necessary to set out the law. It is sufficient to set out the contract demanded by the law; and proof of its being such contract as is demanded may be made by proof of the law and comparison with the policy. In the view here taken, it is unnecessary to go into the question whether the application in this case is a part of the policy; or whether it was received in evidence. It follows that the judgment for plaintiff must be reversed. All concur.