Thomas v. Equitable Life Assurance Society

ELLISON, P. J. Plaintiff’s action is to require defendant to specifically perform its contract of life insurance by issuing to Mm a paid-up policy for $1830. It is'based on a twenty payment tontine policy of life insurance issued by defendant dated tbe 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 — 535 — 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 th,e 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 how 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 — 536 — (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 “priv — 537 — ileges” extended to plaintiff, are found on the hack 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 s.aid 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” hy 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 — 538 — policy has earned and what belongs to him and convert the balance to its own nse. 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.] 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 found by the trial court. Prom the argument it would seem that defendant looks upon the slip as the individual matter of a local soliciting agent not binding on it; and that it is apparently at a loss to know how the slip became attached to the policy. In the first place the agent who solicited and obtained the policy for plaintiff and delivered it to him, was a general agent (he so testified in answer to a question by defendant), and the slip — 539 — attached to the policy when it was delivered, was signed “Grid E. Johnson Agent, Gen’l. Agent.” It is not denied that it was gotten ont in blank form by the defendant company, of course to be used, by agents; and it contains printed direction that the blanks therein are to be filled up from defendant’s “Book of Tables” issued by it during the current years, to be based on defendant’s experience up to 1893, the date of this policy. We think there can be no doubt but that it should be taken and considered as though the defendant itself had filled in the blanks and attached the slip to the policy and then delivered to the plaintiff. This, however, still leaves the effect of the slip to be considered, but it gets out of the way much of the discussion in the case. ■ Plaintiff testified that the agent had represented when he was seeking to get him to insure that the paid-up policy would amount to $1830 and that it was this which formed an inducement to him to enter into the contract and that when the policy was delivered he saw that the agent’s representation had been embodied in the slip and he accepted it. We cannot distinguish the case from that of Forman v. Mutual Life Ins. Co., 173 Ky. 547, where the entire question is discussed at length The statement of the facts in that case, the conduct of the parties, the influence that attaching the slip had in that case are practically the same as in this. It is true the slip in that case was signed by the “Assistant, Secretary” of the company, while in this it is by a “General Agent,” but we are satisfied it was the company’s act in each instance and we are only left to interpret the meaning of the representátion, or illustration, whichever it may be called. The court in that case said at page 563 of the report that, “No person of ordinary intelligence, receiving a policy under the circumstances Mr. Forman accepted this one, would have any reasonable doubt -that the ‘illustration’ was- intended to be and was a part of the contract. Nor can there be any reasonable doubt that the company intended he should so believe.” — 540 — In this case, as in that, aside from the amount stated in the green slip, there is no sum named as the surplus, neither in the policy itself, in the printed matter on the hack of it, or in the application. So that we have to depend on the slip alone for anything in this respect of definite character. "We therefore are confronted with the question exactly as the Court was in the Forman case, that is, whether the slip though a part of the contract, binds the company to issue the additional insurance in a certain sum (in that case to pay a certain surplus), or was it intended as a mere promise to issue an additional policy in whatever sum defendant might arjfftarily apportion ,as the surplus?. We think it hound to the former. The Court in that case said (p. 563): “that neither in the application nor in the policy is there any statement as to the amount of surplus that would be apportioned to the policy. The matter of distribution and apportionment was left by the terms of these papers to the good faith and honesty of the company. But when we turn to the ‘illustration’ we find, in option ‘D’, under the head of ‘options at the end of twenty' years,’ that he should have the right ‘to draw accumulated surplus in cash, . . . $998.08 cash surplus.’ It is very true that this ‘illustration’ also recites that: .‘What this surplus will he in future settlements will necessarily depend upon subsequent experience,’ and further states that: ‘The accompanying figures are correct as an illustration based upon the experience of the company.’ But if the company did not intend to practice a fraud on Forman or to deceive him — and it is urgently insisted that the company did not intend to do either — what was the purpose in making a part of the contract this ‘illustration’ and specifying in it that he should have the option at the end of 20 years “to draw accumulated surplus in cash, . . . $996.08?” But there is another phase of the case which determines it against the defendant. Leaving the “green slip” and going to the policy itself, we find on the hack thereof as we have already set out that at the end of the tontine period, plaintiff could elect to continue the — 541 — original policy as paid-np and “withdraw the accumulated surplus” with which he could purchase additional “paid-up assurance.” By this he was entitled to an amount of accumulated surplus to be invested in paid-up insurance; and that amount is unnamed. How is he to ascertain what it is — how is he to learn what it has grown to be in the twenty years it has been accumulating in defendant’s hands? At the trial the green slip made out by defendant was introduced in evidence. It showed according to defendant’s own theory what surplus similar policies had earned in the same period just preceding this one, viz., $334, which would purchase for plaintiff $830 additional insurance, being the amount he claims should be added to the original policy. Now that showing was of some probative force. The true amount was wholly unknown to plaintiff, but was fully known to defendant. It had data at hand from which it could, at any moment, furnish complete information. In these circumstances was not the onus thrown on defendant to show the true amount if it meant to dispute the “green slip Illustration?” There is a rule of evidence which has been formulated upon the most reasonable ground and which has the effect to prevent a failure of justice. It is that where knowledge of a material fact lies with one party he must prove it (Clifford v. Donovan, 195 Mo. 266, 285; Frame v. Sovereign Camp, 67 Mo. App. 127, 135); the other party being unable to produce evidence of it, it will be presumed to be that which would be most advantageous to the party who cannot produce it as against him who can. 1 Wigmore on Evidence, Sec. 285, pages 368, 369, and notes of decisions, among others the case of Armory v. Delamirie, 1 Strange 505, where the jeweler kept a jewel which the boy who found it gave him to look at. In an action of trover by the boy who claimed it was of finest quality, the jeweler refusing to produce it, the boy was allowed its value on his estimate of its quality. For closely related rule see Fifth-Third Nat’l. Bank v. McCrory, 191 Mo. App. 295, 297, 298; Cudahy v. Railroad, 196 S. W. 406. — 542 — The surplus arising on a policy like this is, as we have said, a trust fund in the hands' of the insurance company. It is the duty of such companies to keep a record of it, and it is common knowledge that they have a system, evidenced by their books, whereby they keep trace of its growth as well as its decline, so that they mqy at the proper time for accounting to the policyholder render to him, or produce to the court, a statement showing the fact. [Equitable Life Assurance Society v. Winn, 137 Ky. 641, 648.] It would be as unjust as it is absurd to say that an insurance company may apportion an arbitrary amount as the surplus and, when its correctness is questioned, to allow it to hide the fact by refusing to produce the evidence showing such' fact. Defendant makes technical complaint of the form of the judgment. The order contained in the judgment is that defendant execute an instrument of writing by the terms of which it will obligate itself to pay $1830 on the death of plaintiff; and that defendant may make such obligation by endorsement upon the policy, or by attaching thereto an instrument of writing executed by it; or by the execution of an’ entirely new obligation, etc. We do not see wherein this choice of mode of arriving at the result ordered can in any way harm defendant. It would appear that, if anything, it would probably be a beneficial convenience to it. We have not discovered any ground for disturbing the judgment and it is accordingly affirmed. Timble, J., concurs. Bland, J., dissents.