Opinion
5 Div. 182.
January 24, 1935. Rehearing Denied February 21, 1935.
Appeal from Circuit Court, Chilton County; F. Loyd Tate, Judge.
Lawrence F. Gerald, of Clanton, and Martin, Turner McWhorter and J. C. Blakey, all of Birmingham, for appellant.
Nonpayment of premium rendered the policy null and void. Ross v. State L. I. Co., 225 Ala. 410, 143 So. 827. The provision for extended insurance on failure of insured to surrender policy after default is valid. The policy having lapsed for nonpayment of premiums, no obligation rested upon the insurer to notify insured under the loan provision of the policy. Penn Mutual L. I. Co. v. Fiquett, ante, p. 203, 155 So. 702; Pacific Mut. L. I. Co. v. Davin (C.C.A.) 5 F.(2d) 481; Bach v. Western States L. I. Co. (C.C.A.) 51 F.(2d) 191; Hawthorne v. Bankers' L. Co. (C.C.A.) 63 F.(2d) 971; Bryant v. Mutual Ben. L. I. Co. (C. C.) 109 F. 748; Schoonover v. Prudential Ins. Co., 187 Minn. 343, 245 N.W. 476; Mills v. Nat. L. I. Co., 136 Tenn. 350, 189 S.W. 691.
G. C. Walker, of Clanton, and Huddleston, Glover Jones, of Wetumpka, for appellee.
Forfeitures are not favored, and stipulations in contracts intended to work a forfeiture of a conceded right will not only be strictly construed, but strict compliance therewith by the party claiming the forfeiture will be exacted. Mutual R. F. Life Ass'n v. Hamlin, 139 U.S. 297, 11 S.Ct. 614, 35 L.Ed. 167; Butler v. Cortner, 42 Idaho, 302, 246 P. 314; Elberton Cotton Mills v. Indemnity Ins. Co., 108 Conn. 207, 145 A. 33, 62 A.L.R. 926; Protective L. I. Co. v. Thomas, 223 Ala. 106, 134 So. 488; Great American I. Co. v. Dover, 219 Ala. 530, 122 So. 658; Cirlot v. Stevens, 222 Ala. 271, 132 So. 163; Hunter-Benn Co. Company v. Bassett L. Co., 224 Ala. 215, 139 So. 348; Stonewall L. I. Co. v. Cooke, 165 Miss. 619, 144 So. 217; 6 R. C. L. 906; 3 Supp. R. C. L. 1855; 13 C. J. 541; 32 C. J. 1304.
Under the nonforfeiture provisions of the policy — "within one month from default in premium payments" — the insured had the right of election to surrender the policy and receive its cash surrender value or a paid-up policy payable at his death; but in default of such election, the policy provides:
"* * * The insurance will be automatically extended from date of default in premium payments for a sum equal to the amount of the policy and existing dividend additions, if any, less any indebtedness to the company hereon. The cash surrender value will be equal to the entire reserve, less any indebtedness, on this policy. * * * The amount of the paid-up policy, or the term of the extended insurance, will be such as the amount of the cash surrender value will purchase at net single premium rates. The paid-up policy or the extended insurance will participate in surplus and will be entitled to cash surrender values equal to the reserve thereon at the time of surrender, less any indebtedness to the company thereon. Except as provided in this policy any default in premium payments will immediately render the policy null and void. * * * All calculations of reserves and net single premiums will be on the basis of the American Experience Mortality with interest at the rate of three per centum yearly, and according to the attained age of the insured."
The evidence shows that the insured defaulted in the payment of the premium due April 3, 1931, after he had procured a loan on the policy; that the insured did not surrender the policy and elect to accept its cash surrender value or a paid-up policy, and, in consequence, the indebtedness due on the policy was satisfied out of the reserve, and the insurance extended, as provided in the nonforfeiture provisions, to February 24, 1932, and the insured died on February 3, 1933, after the expiration of the extended insurance.
The loan on the policy — the indebtedness against it — being automatically discharged, the provision of the policy for thirty days' notice under the loan clause became inoperative, and the case is governed by the decision, Penn. Mut. Life Ins. Co. v. Fiquett, ante, p. 203, 155 So. 702, wherein the case of Protective Life Ins. Co. v. Thomas, 223 Ala. 106, 134 So. 488, was differentiated from the case in hand, as well as the present case.
The defendant was due the general charge and the trial court erred in refusing same as well as giving the general charge for the plaintiff.
The judgment of the circuit court is reversed and the cause is remanded.
Reversed and remanded.
GARDNER, BOULDIN, and FOSTER, JJ., concur.