Johnson v. Mutual Benefit Life Ins.

HOOK, Circuit Judge, after stating the case as above, delivered the opinion of the court. The question in this case is whether the extended insurance was in force at the death of the insured, and this in turn depends upon the ascertainment of the date from which the period thereof should be calculated, whether November 11, 1893, or January 15, 1894, and also upon the amount of the credit of the insured applicable to the purchase of such insurance under the nonforfeiture provisions of his policy. The administratrix contends that although the insured made default in the payment of the premium due November 11, 1893, nevertheless the last premium paid by him continued the life of the policy until January 15, 1894, the anniversary of its date, and therefore the period of extended insurance commenced on that day and did not expire until after the death of the insured. The policy of insurance was issued and dated January 15, 1891, and one annual premium was then paid. The due date for the payment of subsequent premiums was fixed in the policy for the 11th day of November in each year, thus making the due date for the second premium November 11, 1891. When the application for the policy was made on December 24, 1890, and when the policy was issued, the nearest birthday of the insured was his forty-fifth. On the 11th of November, 1890, the forty-fourth birthday of the insured was the nearest by one day. The annual premium rate of the company at the age of 44 was $179.70, while the rate at the age of 45 was $187.10. .In his application the insured requested that the policy be issued to him as of the age of 44 and that the premiums be made payable [953] November 11th. This direction was observed in the policy; the age of the insured was recited as being 44, the premium as being $179.70, and the due date thereof as being the 11th of November in each year during the continuance of the policy. That both the insured and the company regarded the first premium payment as carrying the policy only to the 11th of November, 1891, and not to the loth of the following January, is conclusively shown by their subsequent course of dealing. Shortly prior to the 11th of November, 1891, the company sent to the insured a notice of the approaching maturity of the second premium containing a requirement that 70 per cent, be paid in cash and a statement indicating the balance to be carried as new premium loan after crediting the payment and a dividend declared by the company. The premium was settled in this way, and the insured received and retained a receipt dated November 11, 1891, setting forth the transaction in detail and providing that his policy was thereby “continued in force for one year from date, settlement of the premium having been made as per margin.” The same course was pursued in the settlement of the premium due November 11, 1892, and the receipt of that date contained a similar provision continuing the policy in force for one year thereafter. Default was made in the payment of the premium due November 11, 1893. In view of all of these things we are unable to sustain the .contention of the administratrix that the premium payments continued the policy in full force until the 15th of January, 1894. Such a construction is irreconcilable with that which the unambiguous conduct of the parties shows that they adopted for their own guidance. It is not of vital importance to determine their motives in the adjustment of the premium payments, but it is fairly inferable, unless we shut our eyes and ignore well-known methods, employed in the insurance business, that the rule of the company was to regard the age of the applicant for insurance as being that at his nearest birthday, and that as the insured desired to obtain a lower premium rate, which was to endure during the life of the policy, he was willing to allow His first premium payment to cover a short period anterior to the date of his policy so that he might be accepted as of the age of 44. The case of McMaster v. Insurance Co., 183 U. S. 25, 22 Sup. Ct. 10, 46 L. Ed. 64, upon which counsel rely, is not in point. There the request that the policies when issued be antedated was inserted in the application by the agent of the company for his own private purpose without the knowledge or consent of the insured, and after his signature had been obtained to the application. The policies subsequently issued provided that the due date of future premiums should correspond with the earlier date of the application, but this was neither desired nor authorized by the insured nor was he cognizant of it. On the contrary, when the policies were delivered to the insured untrue representations were made to him as to their purport in this particular. Methvin v. Life Ass’n, 58 Pac. 387, also relied upon, was decided by a department of the Supreme Court of California, but upon rehearing by the court in banc a contrary conclusion was reached and views were announced adverse to those pressed upon us by counsel. Methvin v. Life Ass’n, 129 Cal. 251, 61 Pac. 1112. [954] The administratrix also contends that if the insured'had been properly credited with a certain dividend declared by the company the net reserve of his policy after deducting his indebtedness would have been sufficient to purchase term insurance extending beyond the time of his death. Thirty per cent, of each annual premium was carried by the company as premium loan to the insured at 6 per cent, interest. On the premium- days there were credited against these loans the dividends declared by the company and apportioned to the policy of the insured; and the balance remaining on November 11, 1893, was indebtedness of the insured to be deducted from the net reserve of his policy to ascertain the amount applicable as a single premium to the purchase of term insurance. On January 30, 1893, the directors of the company adopted a resolution apportioning a gross sum of money “to the payment of dividends for the years 1892-1893 on all participating policies which shall be continued in force upon their anniversaries in 1893 according to the rules of the company and the computation of the mathematical, department made in pursuance of instructions of. the board.” Of this gross dividend $40.60 was apportioned to the policy of the insured. The contention is that this amount should have been credited on January 30, 1893. The company claims (1) that under the terms of the resolution the insured was not entitled to tnis credit at all because his policy was not continued in force upon its true anniversary in 1893; or (2) that if the right to credit existed it should not be given until the premium settlement day in November. The dividend contemplated by the resolution was applicable only to participating policies and to those which should be continued in force upon their anniversaries in 1893. The true anniversary of the policy in question was November 11, 1893. At that time it ceased and determined as a participating policy because of default in the premium, and the limited term insurance which then automatically arose was of a nonparticipating character. But even if the insured was entitled to the dividend, it is clear that it was proper to give the credit in November, not in January. This course was pursued at the premium settlements of November 11, 1891, and November 11, 1892, when he was credited with the dividends of 1891 and 1892, respectively, and nothing to the contrary appearing, it must be presumed that it was in accord with the rules of the company, the instructions of the board of directors, and the views of the insured himself. The remaining contention which need be noticed is that there was an interest overcharge of 58 cents at the premium settlement of November 11, 1891, a full year’s interest having been charged on the preceding premmm loan’instead of for a period from January 15th to the 11th of November; also that had this overcharge not been made the balance of net reserve at the lapse in 1893 would have purchased term insurance extending beyond the hour of the death of the insured though expiring on the same day. It is sufficient. to say that this settlement was made by the parties themselves, and remained unchallenged and unquestioned for years. In the absence of fraud or mistake, it will not now be opened up for the purpose of adding to [955] the term of insurance. For aught that appears the charge was part of the price paid by the insured for the less’er premium rate. The judgment of the Circuit Court is affirmed.