Opinion
No. 22592
Decided May 13, 1931.
Insurance — Life — Lapse for nonpayment within grace period — Premium payment dates — Policy terms govern, and not date of acceptance of policy.
ERROR to the Court of Appeals of Cuyahoga county.
Plaintiff in error, Helen Pearl Mougey, was the wife of one William A. Mougey, and was named as his beneficiary in the policy issued to Mougey for the principal sum of $15,000. As such beneficiary she brought suit against the company to recover that sum. The cause was submitted to the trial court which sustained a motion of the defendant insurance company for judgment upon the pleadings consisting of a petition, amended answer and reply. That judgment was affirmed by the Court of Appeals, and error is now prosecuted to this court, seeking a reversal of the judgments of the lower courts.
It appears that the insured, William A. Mougey, was born on February 17, 1869, and died on September 23, 1927. On August 14, 1925, he made application for a life policy in the sum of $10,000, at an annual premium rate of $566.10. On September 2, 1925, the defendant company executed to Mougey a policy of insurance on his life in the sum of $15,000, at an annual premium of $1,195.65, which the company offered to deliver to the insured upon the payment of that premium. On November 2, 1925, Mougey accepted the policy and paid the stipulated premium of $1,195.65. In the year following, to wit, on August 16, 1926, the insured paid a second annual premium of $1,195.65, being the amount of the annual premium stipulated in the policy. The third annual premium was not paid; the insured dying, as stated above, on September 23, 1927. The policy contained a stipulation providing for thirty-one days of grace for the payment of future premiums payable after the first.
Counsel for plaintiff in error claim that the policy was in full force and effect at the time of Mougey's death. The contention of the insurance company, sustained by the lower courts, is that by the terms of the policy all future premiums became due and payable on August 17th of each year, and that, since the insured did not pay the annual premium on August 17, 1927, or within thirty-one days thereafter, the policy lapsed in accordance with its terms.
The policy contained the following provision: "Premium: This policy is issued in consideration of a premium of eleven hundred ninety-five and 65/100 dollars and of the payment of a like amount annually on the seventeenth day of August in every year during the lifetime of the insured."
Messrs. Lamb, Vaughan Krauss and Messrs. White, Hammond, Brewer Curtiss, for plaintiff in error.
Messrs. Garfield, Cross, MacGregor, Daoust Baldwin, Mr. John H. Schultz, and Mr. Stanley K. Henshaw, for defendant in error.
The proviso in the policy stipulated that it was issued in consideration of a definite premium and of the payment of a like premium annually on the 17th day of August in every year during the lifetime of the insured. The policy also contained a proviso for its lapse in case of the nonpayment of subsequent premiums within a period of thirty-one days grace after they became due and payable.
In the case of Union Mutual Life Ins. Co. v. McMillen, 24 Ohio St. 67, a policy dated February 2, 1868, was issued at an annual premium of $33.32, insuring the life of the applicant from December 1, 1867. That policy contained a proviso that, if the amount of the annual premium was not fully paid "on the day and in the manner so provided for," the policy should be forfeited. In its syllabus the court held: "Where a life policy is made and accepted, upon the expressed condition that if the annual premium is not fully paid within the time specified, the policy 'shall be null and void, and wholly forfeited,' the failure to pay the premium avoids the policy." In that case the proviso relating to the time of the annual payment was less explicit than in this case, where the policy requires the "payment of a like premium annually on the 17th day of August in every year." We are of the opinion that the principle announced in the McMillen case, Supra, is controlling, and that the time for payment of future premiums is the time stipulated in the policy, viz. August 17th of each year with the added grace period. The policy contract is clear and unambiguous. No effort has been made to reform its terms on the ground of mistake; nor is there any allegation of fraud on the part of the company. When a policy is issued and accepted, containing a definite time for future premium payments, the parties to the policy contract can thereby determine when the period of lapse may ensue. If that period for payment be indefinite, depending upon the time of delivery and acceptance of the policy, or upon some outside arrangement entered into by the parties, it might prove to be a source of litigation; at any rate, it would effectively destroy the plain provision in policy contracts such as we have here. Attached to Mougey's policy is a receipt signed by the company on November 2, 1925, the date of the acceptance of the policy by the insured. This receipt recited that upon payment of the first premium the policy would continue in force to the 17th day of August, 1926. The insured paid the second premium on August 16, 1926, within the grace period. Presumably he knew of the time named in the policy for the payment of annual premiums, and acquiesced therein.
Counsel for both sides have cited voluminous authorities in support of their respective contentions. We think, both upon reason and authority, that, so long as such contracts are unattacked because of mistake or fraud, they should be upheld, if clear and unambiguous.
The judgments of the lower courts will be affirmed.
Judgment affirmed.
MARSHALL, C.J., JONES, MATTHIAS, DAY, KINKADE and ROBINSON, JJ., concur.
ALLEN, J., not participating.