Taylor v. New York Life Insurance

148 A.D. 815, 133 N.Y.S. 746, 1912 N.Y. App. Div. LEXIS 6004

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: January 17, 1912
• Status: Published

Opinion

McLennan, P. J.:

On the 20th day of December, 1895, the defendant issued to plaintiff’s testator, Royal A. Johnson, two policies of life insurance, each for the sum of $5,000, numbered 709973 and 709974 respectively. Except as to number the policies were identical in terms and the annual premium on each was $304. The policies each contained provisions as follows:

“ This policy cannot be forfeited after it shall have been in force three full years as hereinafter provided.

“First. If any premium subsequently due is not paid as hereinbefore provided, this policy will be continued for its full amount as provided in the table below, subject to the conditions of this Policy, but without further payment of premiums, and without loans, participation in surplus and premiums return; or

“ Second. If any premium subsequently due is not paid as hereinbefore provided, this policy will be endorsed for the-reduced amount of paid up insurance provided in the Table below if demand is made therefor with surrender of this policy within six months thereafter, subject to the conditions of this Policy, but without further payment of premiums, and without loans, participation in surplus andpremiums-return.”

The table therein referred to is part of each of the policies and is headed: “ Table of Guarantees, if payment of premiums is discontinued. Provided there is no indebtedness against this policy. (Pursuant to the Insurance Law (Chap. 690, Laws 1892) of the State of New York.) ”

It provides that the policy will be continued for its full amount, of $5,000 until October 20, 1906, if the premiums are paid thereon to December 20, 1898, and until June 20, -1911, if the premiums are paid thereon until December 20, 1899. It also provides that the policy will be indorsed as in the policy provided for $1,000 of paid-up insurance if the premiums are paid to December 20, 1898, and for $1,333 of paid-up insurance if the premiums are paid to December 20, 1899.

The testator paid the premiums on both policies in cash for 1895, 1896 and 1897, and on December 20, 1898, instead of paying the premiums in cash, he gave the defendant a note for $304, the premium due on policy No. 4. He paid the defendant $76 in cash on account of the fourth annual premium on policy No. 3 and gave the defendant his note for the balance, $228, of which the following is a copy:

“Pol. 709973. Tucson, Arizona, 12/20/1898.

“Without grace, six months after date I promise to pay to the order of The New York Life Insurance Company, Two Hundred and Twenty-Eight and No-100 Dollars, at Phoenix National Bank, Phoenix, Arizona, value received, with interest at the rate of five per cent per annum.

“This note is given in part payment of the premium due Dec. 20th, 1898, on the above policy, with the understanding that all claims to further insurance, and all benefits whatever, which full payment in cash of said premium would have seemed, shall become immediately void and be forfeited to the New York Life Insurance Company, if this note is not paid at maturity, except as otherwise provided in the policy itself.

“ROYALA. JOHNSON,

“$228. P. 0. Address, Tucson, Arizona.”

The defendant in return delivered its receipt for the fourth annual payment on policy No. 3. On June 20, 1899, when the note last above, mentioned became due, the insured paid the defendant the further sum of $76 in cash on account of the annual premium, and gave the defendant a new note for three months for $152, the balance-of the premium, the interest in each case having been paid in advance. The new note, except as to date and amount, was identical in terms with the one above quoted. On September 20, 1899, when this note became due, it was not paid, and was never paid, and the insured' never paid any subséquent premiums on policy No. 3. No demand, was ever made upon the defendant that policy No. 3 be indorsed for a reduced amount of paid-up insurance and, therefore, under the forfeiture provisions the policy was entitled to be continued for its full amount as provided therein.

. The important question presented by.this appeal is whether or not the plaintiff is - entitled to recover under policy No. 3. The Court of Appeals- has passed upon the question of plaintiff’s right to recover on policy No. 4, and unless the facts as to policy No. 3 are different from the facts before the Court of Appeals as regards policy No. 4, the decision of this case must follow the decision of the Court of Appeals upon the other policy. I am, however, of the opinion that the facts in this case entitle the plaintiff to recover upon policy No. 3. Upon the former trial the trial court held that the note given for the payment of the premium on policy No. 4 was a payment, of the premium due December 20, 1898, and did not constitute an indebtedness against the policy, and for that reason that the plaintiff was entitled to recover the full amount, less the amount of the note. The Court of Appeals, however, held that it did constitute an indebtedness against the policy in the 'nature of an unpaid premium, as referred to in the statute. (Laws of 1893, chap. 690, § 88.) It there appeared that the reserve to the credit of policy No. 4, after deducting the amount of the indebtedness against it,- being the amount of the note on which nothing had been paid, was sufficient to purchase extended insurance only to the 20th day of October, 1906. The insured died on October 21, 1906, and the Court of Appeals, therefore, held, that the plaintiff was not entitled to recover the full amount of the policy. The defendant, however, was willing to pay to the plaintiff the amount of paid-up insurance purchasable by the reserve, amounting to $788, and on this trial the court has given the plaintiff judgment for that amount on policy No. 4. . Under the decision of the Court of Appeals and upon the pleadings in the action, we think, this is right as to policy No. 4.

Under the Insurance Law (Laws of 1892,, chap. 690, § 88) the insured was entitled to have his policy extended for the full amount from the date it lapsed for such length of time as the reserve on such policy, taken as a single premium, at the age of the insured at the time of the lapse or forfeiture, would purchase temporary insurance for that amount, after deducting from the reserve any indebtedness of the insured on account of any premium due. It is urged by the defendant, however, that by the terms of the note given in part payment of the premium on policy No. 3, the insured waived all his rights to any further or extended insurance whatever. We cannot concur in that proposition. The note, above quoted, expressly reserves to the insured all such rights as are contained in the policy itself. The policy purported to give to the insured the benefit of extended insurance as required by the statute above referred to. The insured was not entitled to have his note considered as no indebtedness against the policy, but such note did constitute an indebtedness to be deducted from the reserve, computed according to the statute. The table of extended insurance given in the policy is stated in the policy to be pursuant to the Insurance Law of this State and the chapter of the law is definitely referred to. The note reserves to the insured the benefit of the non-forfeiture provisions of the policy itself. It seems to us, therefore, that upon non-payment of the note the insured was entitled to have his policy automatically extended for the term purchasable by the reserve, upon computation made as provided in the statute referred to.

As above stated, the reserve on policy No, 3 after the payment of the three annual premiums was only sufficient to extend the policy to October 20, 1906, but, as we have seen, the insured had paid the defendant $152 in cash and given his note for the balance of $152, which the defendant accepted as payment for the fourth annual premium. So that the insured was entitled to have the computation of extended insurance made upon the basis of the reserve on the policy after the payment of four annual premiums, less the amount of any indebtedness against the policy by reason of any unpaid premium. The only indebtedness of that nature was the note of $152. The evidence given on this trial shows conclusively that such reserve was sufficient to purchase insurance extending several months beyond the death of the insured for the full amount of the policy. We think this is entirely in harmony with the decision of the Court of Appeals as to policy No. 4. The Court of Appeals in its opinion says (p. 330): “ The defendant placed at the head of the table the words: ‘ Provided there is no indebtedness against this policy/ and expressly referred to the statute, and we are of the opinion that the word ‘indebtedness/ as there used, was intended to include any indebtedness against the insured in favor of the insurer in all respects the samé as it is intended when used in the statute as quoted. The intention of the parties to the contract was to comply with the statute of 1892. The time that the' insurance would be extended or the amount of the paid-up insurance was definitely fixed and determined in the policy in all cases where it was possible so to fix and determine the time or amount in advance. In all cases of indebtedness the continued or paid-up insurance was dependent upon the amount of the indebtedness. The fact of an indebtedness to the defendant did not forfeit the right to continued or paid-up insurance, but simply left the time of the extension or the amount of the paid-up insurance dependent upon a computation to be made, when the amount of the indebtedness was determined. It appears by the record that the time for which the insurance could be extended when computed as the statute is construed by us expired prior to the death of the insured and the plaintiff is, therefore, not entitled to recover the full amount of the policy.”

As before stated, policy No. 4, there under consideration by the Court of Appeals, was identical in its terms with policy No. 3, and we can see no reason why the insured, by the payment of $152 in cash upon the fourth annual premium on policy No. 3 did not increase the reserve on the policy sufficiently to buy one day additional of extended insurance.

The respondent urged below, and argues here, that the plaintiff is barred from any recovery on policy No. 3, because of the fact that on the first trial the court rendered a written memorandum of decision to the effect that there could be no recovery on policy No. 3. The judgment as éntered, however, did not conform to the decision in this respect. No motion to correct it was ever made, and the Court of, Appeals wholly reversed the' judgment that was entered. We think the trial- court was right in holding that the plaintiff was not barred, on the new trial, from recovering on both policies set up in the complaint. In any event, the defendant has not appealed from the judgment under review, and so is not in a position to attack the finding of the court in that respect.

It follows that the judgment so far as appealed from should be reversed and a new trial granted as to plaintiff’s right to recover under policy No. 709973, set up in the second count of the complaint, with costs to appellant to abide the event. That part of the judgment which directs that the plaintiff recover of the defendant the sum of $788.82 is not appealed from by either the plaintiff or the defendant.

As to the order amending the judgment as to costs, from which both parties appeal, we are of the opinion that the trial court was right in holding that if the plaintiff is to succeed as to one count in the complaint and the defendant is to succeed as to the other, both parties should be entitled to tax the costs of this trial (Code Civ. Proc. § 3234), but that the defendant Was not entitled to tax the costs of the former trial and appeals, the Court of Appeals having left those costs to abide the event. But as our conclusions lead us to a reversal of that part of the judgment as to which the defendant succeeded in the court below, that part of the order appealed from which allows the defendant costs of this trial must fall with the judgment. As both parties appealed from the order, no costs should be allowed on the reversal of that part of the order.

That part of the judgment appealed from which dismisses the plaintiff’s complaint as to policy No. 709973 is reversed and a new trial granted as to that policy, on questions of law and fact, with costs to appellant to abide event. That part of the order appealed from which awards to defendant costs of the second trial is reversed, without costs.

All concurred, except Robson, J., who dissented.

Judgment, so far as appealed from by plaintiff, reversed upon questions of law and fact, and a new- trial granted as to policy No. 709973, with costs to plaintiff appellant to abide event. That part of the order which amends the judgment by directing taxation of costs of second trial in favor of defendant is reversed, without costs.