Raymond v. Metropolitan Life Insurance

BOND, L. On the 18th of May, 1894, defendant, a corporation, issued to plaintiff a policy of insurance on the life of her husband in the sum of $1,000. The premiums of $5.68 were payable quarterly on the 18th of May, August, November and February of each year. These were regularly paid by the assured up to and including the one due May 18, 1898. In order to make this and the next preceding payment of February 18, 1898, plaintiff and her husband borrowed from defendant $16, receiving for this sum quarterly premium receipts for February 18 and May 18, 1898, for $5.68 each, and $3.84 in cash, total $15.20, which with the five per cent deducted from the face of the loan, to wit, 80 cents, made up the sum borrowed. To secure the same plaintiff and her husband executed the following note and contract: “February 24, 1898. “$16.00. “One year after date we promise to pay to the order of the Metropolitan Life Insurance Company at their office in New York City, sixteen dollars with interest at the rate of five per cent per annum, being the amount of loan made upon the value of policy No. 74684 A., issued by said company on the life of Edwin "W. Raymond, and hereby made a first lien on the sum injured thereunder until paid. “And we hereby surrender to said company said policy and all profits thereon, the surrender to take effect only upon the nonpayment of the above loan when due; or at maturity if payment be extended, or upon the nonpayment of premiums on said policy when due; and in case of such nonpayment on either of them, we authorize the company to indorse a proper surrender and receipt on the policy, the balance, if any, of the surrender value beyond the amount of above loan and accrued interest to be paid over to us.” Neither the above note nor the premiums accruing on the policy August 18, [395] 1898, and thereafter were ever paid. The assured died March 28, 1899. It was shown by expert testimony that the balance of the net value of the policy in suit, after deducting the above note, computed as prescribed in section f89Y, Revised Statutes 1899, would suffice to purchase temporary insurance for the full amount of the policy for a term of one year and 134 26-100 days after 18th of May, 1898, the date of last payment of premiums. It was further shown that prior to this loan the loan value of the policy was $16, but after the payment of the two premiums with borrowed money its loan value was increased to $23. Defendant did not indorse receipt and surrender on the policy nor did it tender any balance of surrender value of the policy under the provisions of the foregoing collateral contract. Nnder these facts the court rendered judgment for plaintiff. Defendant appeals and assigns for error the refusal of declarations of law to the effect that nonpayment of the note of itself worked a forfeiture of the policy, and that there wai substantial evidence that the policy in suit was surrendered to the company for a consideration adequate in the judgment of the legal holder. There was no error in the refusal of these two declarations under the uncontroverted facts and the applicatory law. The statutes of this State in force when this policy was issued render life insurance policies upon which three annual premiums had been paidj nonforfeitable for failure to pay subsequent premiums, except in certain specified instances not shown by the proof in this record. Revised Statutes 1889, sections 5856-5859. Even these exceptions have been abrogated by the present statutes, Revised Statutes 1899, sections, Y89Y-Y900. Eor this reason, and from the further fact that defendant did not declare a forfeiture for nonpayment of the note and tender the balance of the surrender value of the [396] policy, the court did not err in refusing the first declaration of law requested by defendant to the effect that the policy was ipso facto forfeited by the mere nonpayment of the note for which it was a collateral security. The court was also right in refusing to declare there was any evidence that the policy in suit was surrendered or sold to the company for a full consideration to the holder. The terms of the contract and note utterly disprove this notion. They show conclusively that the transaction evi-denced by them was merely a loan, and that the policy was delivered as collateral security upon an express agreement that the surplus of the collateral security, or in the words of the contract, “the balance of the surrender value beyond the amount of the loan,” on nonpayment of the note, should be paid over to plaintiff and her husband. This language completely negatives the idea that there was any present sale or surrender in toto of the policy at the time the loan was effected. The judgment in this case is manifestly right, and is affirmed. All concur.