Opinion
September 14, 1910.
John G. Pembleton, for the plaintiff.
Israel T. Deyo, for the defendant.
February 19, 1900, the defendant issued a policy of insurance for the sum of $1,000 on the life of plaintiff's husband, payable at his death to the plaintiff if living, in consideration of the annual premium of $24.70 payable in advance on or before the nineteenth day of February in every year. In his application for the insurance the insured stated his age to be twenty-nine years on his nearest birthday which was the preceding December 7, 1899.
February 19, 1903, the insured gave to the defendant his note for the annual premium then due payable ninety days after date with interest. An agreement accompanying the note provided that if it was not paid at maturity the policy should at once become null and void and that in such case the insured was to pay the defendant "at the rate of premium stated in said policy for the insurance from the date when the premium fell due to the time when said policy ceased to be in force." Such note has not been paid.
Within six months after the maturity of said note and on November 17, 1903, the insured died. On the same day plaintiff notified the defendant by telephone of his death and on the following day informed it by letter of such fact, calling attention to the policy of insurance. To this letter the defendant made answer that the policy had lapsed by reason of non-payment of the premium in the preceding May when said note matured.
Defendant gave due notice under section 92 of the Insurance Law (Laws of 1892, chap. 690, as amd. by Laws of 1897, chap. 218) of the premium falling due February 19, 1903. Plaintiff, however, claims that the defendant is not at liberty to declare the policy forfeited or lapsed because under said section it was also its duty before such forfeiture could be declared to give a similar notice in respect to the maturity of the note. It was held otherwise in Conway v. Phœnix Mutual Life Insurance Company ( 140 N.Y. 79) under a statute which was no less favorable to the contention of the plaintiff in this respect than said section 92. We think that authority is controlling on this court in respect to this branch of the case. In Banholzer v. New York Life Insurance Company ( 74 Minn. 387) the same question arose under said section 92 as is here presented, and the court in that case applied and followed the Conway case.
Plaintiff further contends that the policy was in force for the full amount thereof at the time of the death of the insured because the reserve on such policy was sufficient to extend the same for such full amount until after his death. This contention is based on section 88 of the Insurance Law under the provisions of which section the reserve on this policy "on demand made with surrender of the policy within six months after such lapse or forfeiture" may be applied either to continue the policy in force at its full amount so long as such reserve would purchase temporary insurance for that amount at the age of the insured at the time of lapse or forfeiture or to purchase paid-up insurance, and such reserve may be "applied in either of the modes above specified at the option of the owner of the policy, notice of such option to be contained in the demand" required to be given. Said section 88 contains this further provision: "The reserve hereinbefore specified shall include dividend additions * * * after deducting any indebtedness of the insured on account of any annual or semi-annual or quarterly premium then due."
The insured died within six months after the policy lapsed and no demand was made that the reserve on the policy be applied either to extend the insurance for the full amount temporarily or to the purchase of a paid-up policy nor was any option exercised as to which of those two alternatives would be adopted. I do not think such demand or the exercise of such option is necessary to make effective the provisions of said section 88 where the insured dies within the period of six months allowed for that purpose. The death of the insured before the time limited for the exercise of his rights under the statute operates as a substitute for the requirements of the statute as to notice and the exercise of the option. The purpose of the statute in this respect has reference to the future rights of the parties based on the assumption of the continuance of the life of the insured and has no reference to a situation such as is here presented where the insured dies within the time specified for making his demand and exercising his option. The defendant was promptly notified, within the six months, of the death of the insured. The elements of a choice or option in such case do not exist. The situation left no occasion for the exercise of judgment as between extended insurance for the full amount or a paid-up policy for a part of the amount. Death has fixed the rights of the parties and if the insurance by virtue of the statute has been extended temporarily to the time of the death of the insured there is no difficulty on the part of the plaintiff in recovering the full amount of the policy.
This policy lapsed May 19, 1903, at the maturity of the premium note. By the terms of the agreement accompanying the note there was then due thereon not the full amount thereof but so much thereof as represented the "premium stated in said policy for the insurance from the date when the premium fell due to the time when said policy ceased to be in force." Payment of the full amount of the note was necessary to prevent a lapse of the policy, but if the insured elected to suffer his policy to lapse he was in that event liable to the defendant only for so much of the note as represented the premium on the policy to the time when it lapsed. In other words, there was due the defendant May 19, 1903, on said note six dollars and twenty-seven cents for premium on the policy including interest for the three months from February 19, 1903, to May 19, 1903, when the note matured and the policy lapsed.
The submission contains the following statement of facts: "The entire reserve on said policy at the end of the third policy year, February 19th, 1903, including all dividend additions, was fifteen dollars sixty-six cents ($15.66), of which amount (provided no deduction be made for the annual premium due on that date) the sum of ten dollars forty-four cents ($10.44) was available to continue said policy in force at its full amount at the age of the insured at that time, for a period of one year one hundred one days, * * * all according to the provisions of Section 88 of the Insurance Law then in force."
If on February 19, 1903, "the sum of ten dollars forty-four cents ($10.44) was available to continue said policy in force at its full amount at the age of the insured at that time, for a period of one year one hundred one days," it would seem to be logical that the same amount of reserve must have been available three months later, when the policy lapsed, to accomplish the same result, it appearing that the age of the insured at his nearest birthday remained the same, subject, however, to whatever indebtedness of the insured for premium existed at the expiration of said three months. As stated, there was then due on the premium note six dollars and twenty-seven cents, which under the statute must be deducted from the reserve amount of ten dollars and forty-four cents to form the basis for extended insurance ( Taylor v. New York Life Insurance Company, 197 N.Y. 324), leaving a balance of four dollars and seventeen cents. If ten dollars and forty-four cents would extend the insurance "one year one hundred one days," it would seem that four dollars and seventeen cents would extend it for a proportionate time; and if that be correct, a simple mathematical computation demonstrates that the reserve, after deducting the premium due, was sufficient to extend the policy until after the death of the insured. If these conclusions of fact are not correct, the statement of facts submitted should have so informed us. If our conclusions are correct, this policy was in force for the full amount when the insured died.
The parties have stipulated that if the policy was in force at the time of the death of the insured, plaintiff is entitled to recover $999.93, with interest from November 18, 1903, for which amount judgment is ordered in favor of plaintiff, without costs.
All concurred, except SMITH, P.J., and HOUGHTON, J., dissenting.
Judgment ordered in favor of plaintiff for $999.93, with interest from November 18, 1903, and without costs.