New York Life Ins. v. Ware , 171 Miss. 341 ( 1934 )

Appellee, Mrs. Fannie D. Ware, was plaintiff in the court below and brought suit against the appellant on a twenty-year pay policy for two thousand dollars issued in 1900 upon the life of George L. Ware, husband of appellee. This policy had a loan value and a cash surrender value, and at the date the said George L. Ware obtained a loan on it, said policy had a loan value of one thousand four hundred twenty-four dollars. The policy had a provision that the insured might, at any time during the life of the policy, provided it has not been assigned, change the beneficiary by written notice to the company. Said policy had been in force twenty-four years when the loan was procured by George L. Ware. The application for the loan was not signed by Fannie D. Ware, the beneficiary in the policy, but the application for a change of beneficiary was made December 13th, prior to the application for the loan on January 9th, and by the change in beneficiary the policy was payable to the executor or administrator of George L. Ware; but immediately upon securing the loan the policy was changed back to Fannie D. Ware as beneficiary. Interest due on said loan was paid from January 9 to January 29, 1925, and on that date the annual interest at five per cent. of the amount of the loan was due and payable. This advance interest was not paid, and under the terms of the policy, the whole policy and loan became due and payable, and the loan was secured by a lien upon the policy.

On October 3, 1925, the Insurance Company wrote to George L. Ware the following letter:

"Mr. George L. Ware, "1520 Hewes Ave., "Gulfport, Miss.

"Dear Sir:

"Re. Policy No. 3,021,567 "Pursuant to a loan agreement executed on the 9th day of January, 1925, a cash loan of one thousand four hundred twenty-four dollars was made upon the security of the value of this policy on the life of George L. Ware. The interest due on said policy on the 29th day of January, 1925, not having been paid, the principal of said indebtedness became due, and has been settled according to the terms of the policy and the loan agreement, and the policy has no further value.

"Yours truly, John C. McCall."

George L. Ware died on August 2, 1931, without having repaid the loan on the policy and the interest thereon, or without taking, so far as the record shows, any further action in reference thereto, after receipt of the letter notifying him that the policy had been applied to the payment of his debt, according to the terms of the policy and the loan agreement, and that it had no further value.

It will be noted from this letter to George L. Ware that the words "premium and" were struck out before the word "interest," all showing that the interest on the loan had not been paid, and that the policy was canceled. Of course, no premiums were due on the policy, as it had become a paid-up policy having been in existence twenty years.

Shortly prior to the death of George L. Ware, an attorney, knowing that Ware was desperately ill, undertook to inquire into the status of all insurance held by him, and said attorney wrote a letter to the Mobile branch office in reference to this policy, among others, and received the following letter from C.L. Sullivan, cashier: "We are in receipt of communication from our Home office advising us that the above numbered policy (on the life of George L. Ware) lapsed for nonpayment of premium due January 29, 1925. It was charged with a loan of one thousand four hundred twenty-four dollars and was settled in accordance with the terms of the policy and the loan agreement and is without further value."

It will be noted from this letter that he was advised that the policy had lapsed for nonpayment of premiums on January 29, 1925. This letter was admitted over objections.

Suit was brought in the county court, which rendered judgment in favor of the plaintiff, Fannie D. Ware, for the difference between one thousand four hundred twenty-four dollars and two thousand dollars, the face of the policy, to-wit, six hundred one dollars and ninety-two cents, from which judgment an appeal was prosecuted to the circuit court and was there affirmed, and from the last-named judgment this appeal is prosecuted.

It will be seen that George L. Ware, on January 9, 1925, secured a loan for the full loan value of the policy, pledging the policy as security therefor, and was to pay interest on January 29, 1925, in advance, under the terms of the policy, and made default, whereupon the loan and interest all became due and payable. He was given indulgence from that date until October 3, 1925, when he was notified that the company had applied the policy to the payment of the debt, which debt was slightly in excess of the full value of the policy as of that date, and that said policy was canceled. He appears to have taken no action in reference to it for almost six years, when he died, without having paid or tendered anything. The full face value of the policy at death was two thousand dollars. No one could say how long it would be before he died, and before the policy became a matured obligation. Therefore, the only value the policy had at the time was the loan value and the cash surrender value, which were the same. It was error for the court to assume that, under the circumstances of this case, the policy continued in force. The policy having been changed as to the beneficiary, which change was available to the insured, and the change having been made on the application of the insured, it was not necessary for Fannie D. Ware to sign the application for a loan. Williams v. Penn Mutual Life Ins. Co., 160 Miss. 408, 133 So. 649; Bank of Belzoni v. Hodges, 132 Miss. 238, 96 So. 97.

It is manifest that the letter from the Mobile branch of the company, in referring to premiums, was a clerical error, and in addition there is no showing as to the authority of this agent to bind the company in reference thereto.

The deceased, George L. Ware, knew that the policy had been applied to his indebtedness, and made no objection thereto. Suppose he had lived twenty years, and the interest on his loan had accumulated; it would have exceeded the face of the policy. This shows that it clearly could not have been the contemplation of the parties to require the Insurance Company to pay the difference between the amount due on the face of the policy, and the amount due from the insured, principal and interest. It was clearly the meaning of the policy that the Insurance Company would only be due to pay the difference between the loan and interest, and the surrender value of the policy, if it should apply the policy to satisfy the debt, and there was none to apply.

Here the debt was slightly in excess of the loan and surrender value, and nothing was due under the policy to the insured, when its loan value was applied to liquidate the debt.

The judgment will be reversed and the cause dismissed.

Reversed and dismissed.