James v. Franklin Life Insurance

Mr. Presiding Justice Thompson delivered the opinion of the court. The policy issued by the appellee and the loan certificate executed by the appellant were executed and delivered at the same time and constitute one contract. The policy while a twenty payment policy makes the payment period expire in 1909, the same as if it had been issued in 1889, in consideration of the surrender of the association certificate and to make up for the ten payments that had not been made the loan certificate was executed by appellant, so that his policy would be on an equality both as to payments and age, with policies on which the full twenty payments are required to be made. The loan certificate was made by the insured and accepted by the company, so that there would be no discrimination in its policies and that the assets of the company would show to the insurance department of the state that the insurance company was solvent. The company accepted the new policy on the terms that “the loans, surrender values, options, privileges, and conditions stated on the second and third pages hereof form a part of this contract. ’ ’ On the second page is stated: “DISTRIBUTION OF PROFITS. The accumulation period of this policy ends on the 16th day of October, 1909, when its share of profits will be apportioned, provided the insured is then living and all premiums have been paid in full to that date, and this policy may then be continued or surrendered by the insured, or assigns (subject to any existing indebtedness) under one of the following OPTIONS. (1) Draw guaranteed cash value of Five hundred and fifty one Dollars ($551.00) together with the profits apportioned hereto; or,” The certificate signed by the insured recites that the company “has loaned on policy No. 26,071, the sum of two hundred seventy-five and 43-100 Dollars, which with any additional loan on said policy shall be a lien on said policy until paid; interest at the rate of six per cent, per annum to be added thereto until the end of the distribution period of said policy. * * * should the profits not fully pay the loan the amount remaining unpaid at the time may be continued as a loan, interest as aforesaid and the dividends accruing on the policy to be thereafter payable annually. In the event of my death or failure to make any payment when due to said Company before said loan is fully paid the amount remaining unpaid shall become due and be deducted from the amount payable under the said policy.” The amount of the certificate of loan being a lien on the policy until paid, the amount due under the certificate must be paid from the sum to be paid on the policy whether the policy is taken up by the company either on its- surrender under any of the options or because of the death of the insured. Appellant has offered in-evidence certain correspondence between himself and appellee in 1901, with reference to the conditions of the policy and this loan certificate, and insists that the company misled him as to the effect of the loan certificate on the policy. The .correspondence shows that the lien of this loan certificate with interest is to be deducted from the face value of the policy with its accumulated profits. Both the insured and the insurer are bound by the terms contained in the policy and the loan certificate contemporaneously executed and delivered. The evidence also shows that the state through its insurance officials placed the same construction on the contract as did the trial court, and that it would not have permitted the company to have done business under the construction contended for by appellant. The court correctly held that the appellee was entitled to offset the loan certificate, and the judgment is affirmed. Affirmed.