Opinion
(Filed 11 July, 1934.)
1. Insurance J b — Rights of parties under life insurance policy is to be determined as of date of death of insured.
The rights of the parties under a policy of life insurance are to be determined as of the date of the death of the insured, and where insured, a few days before his death, writes insurer requesting an extension of time for payment of premium, and insurer, without knowledge of insured's intervening death, writes insured, after his death, agreeing to grant the request upon insured's signing an extension agreement and the payment of a small interest charge, the rights of the beneficiary under the policy are not affected by the insurer's letter relating to an extension of time the terms of which were not complied with, and the beneficiary's rights under the policy will be determined according to its provisions for paid-up and extended insurance upon nonpayment of an annual premium.
2. Insurance L b — Held: under terms of policy extended term feature was eliminated by loan against policy in excess of extended term value.
The policy in suit contained an extension clause providing that upon nonpayment of an annual premium the policy should have a certain paid-up insurance value or extended insurance for a specified term, but that if insured had borrowed on the policy, the paid-up insurance should be reduced in the ratio of the indebtedness to the net value of such paid-up insurance, and that the extended insurance should be for as long a term as the balance, left after deducting the indebtedness from the net value of the extended insurance, would purchase as a net single premium. Upon competent evidence the trial court found that the "net value of the extended insurance" was in a sum less than the amount borrowed on the policy by insured during his lifetime. Held, by the terms of the policy there were no funds available for the purchase of paid-up or extended insurance, the loan against the policy being in excess of the net value of the extended insurance provided for in the policy, and the beneficiary was not entitled to recover on the policy under the extension feature thereof.
3. Evidence J a —
Parol evidence in explanation of the "net value of extended insurance" as used in a policy of life insurance involved in the case is held competent under the rule that parol evidence is competent to explain technical words as used in particular trades or vocations.
4. Insurance L c — Beneficiary may not recover cash surrender value of policy payable according to its terms to insured upon his request.
Where a policy of life insurance has, as of the date of insured's death, a certain cash or surrender value, which, according to the terms of the policy, is payable to insured upon his request and valid surrender of the policy, the beneficiary therein may not recover such cash or surrender value where it appears that insured, prior to his death, made no request therefor and did not surrender the policy, nor may a letter written by insured a few days before his death, requesting an extension of time for payment of a premium, be construed as a request for the cash or surrender value of the policy.
CIVIL ACTION, before Frizzelle, J., at February Term, 1933, of WILSON.
Finch, Rand Finch and W. A. Lucas for plaintiff.
Connor Hill and Frank G. West for defendant.
CLARKSON, J., dissenting.
SCHENCK, J., took no part in the consideration or decision of this case.
By agreement of the parties the trial judge heard the evidence, found the facts and rendered judgment thereon.
The facts so found pertinent to a decision of the questions of law involved, are as follows:
On 22 November, 1923, the defendant issued and delivered to John Elverson Owens a certain policy of life insurance by the terms of which it agreed to pay $1,000 to Hazel Gray Owens, the plaintiff in this action, upon receipt of due proof of the death of the insured; subject, however, to the conditions set forth in the policy. The quarterly premium required by said policy was $7.71 and the annual premium was $23.63. The policy contained a table of certain guaranteed values. This table shows that if the policy had been in force eight years it had a cash or loan value of $93.00, a paid-up insurance value of $208.00, and an extended insurance feature of eight years and one month. The policy further provided: "In the event of no indebtedness hereon, the values in the above table would apply. Any indebtedness hereon may be paid in cash and the values in the table will then apply, or if not so paid, the cash loan values will be reduced by the amount of the indebtedness; the paid-up insurance will be reduced in the ratio of the indebtedness to the net value of such paid-up insurance; and the extended insurance shall be for as long a term as the balance, left after deducting the indebtedness from the net value of the extended insurance as shown in the table, will purchase as a net single premium," etc.
Another clause in the policy was as follows: "At the expiration of three years from the date hereof, if any subsequent premium be not paid when due, the company will, without action on the part of the insured, extend this policy as nonparticipating term insurance, without loan values, for the term provided on the table of guaranteed values opposite the number of years for which annual premiums have been paid."
Owens, the insured, paid the annual premiums for the years 1923 to 1930, both inclusive. The ninth annual premium fell due and payable on 22 November, 1931. The usual grace period was allowed by the policy and due notice was given by the company of the date when the premium was payable. . . . On 13 November, 1930, the said John Elverson Owens obtained a loan on said policy, pursuant to the provisions thereof from the defendant, in the sum of $85.32. The interest on said loan was paid to 22 November, 1931. Said loan was outstanding at the time of the death of the insured. On 21 December, 1931, and during the grace period the insured wrote a letter to the defendant stating: "It will be impossible to pay the amount due on my policy at present. Please make arrangements for me to have ninety more days in which to pay this." Seven days later, to wit, on 28 December, 1931, the insured died. On 29 December, 1931, and after the death of the insured, the defendant, not having heard of the death, wrote a letter to John Elverson Owens, stating: "We shall be glad to extend the time for payment of premium as you requested. In order to secure the extension you are required to sign the enclosed agreement and return promptly with cash of ten cents for interest. If the premium is settled according to these terms, your policy loan will be extended to 22 February, 1932, at which time it will be $5.26." The said letter enclosed a premium extension agreement to be signed by the insured, but, of course, on account of the death, such agreement was never signed. On 21 January, 1932, the defendant wrote the clerk of the Superior Court of Wilson County, stating, among other things, "The cash value of the policy at the end of the eighth year is $93.00, and Mr. Owens' estate may surrender the policy for this amount, less the loan of $86.32, the surrender to net $6.68 in cash. Upon receipt of the enclosed release completed by the executor or administrator of the estate of John Elverson Owens, accompanied by the policy, we will cancel and return the loan agreement of $86.32 with check for $6.68 to balance." The said sum of $6.68, if available for the purchase of extended insurance, would have been sufficient to purchase extended insurance beyond the date of the death of John Elverson Owens.
The net "value of extended insurance" for the period of eight years and one month as set forth in the "table of guaranteed values," in the policy, for the eighth policy year, amounted to $82.27.
There was evidence that the net value or money value of a period of extended insurance of eight years and one month under the policy based upon the American Experience Table of Mortality at 3 1/2 per cent interest, on the life of the insured, who was born on 12 September, 1887, and whose nearest birthday at the date of issue of said policy was 36 years, was $82.27. The policy provided that "all surrender values contained therein are based on the American Experience Table of Mortality with 3 1/2 per cent interest," etc.
Upon the foregoing facts the trial judge was of the opinion that the plaintiff was not entitled to recover and she appealed.
The insured failed to pay the ninth premium due on 22 November, 1931. On 21 December, 1931, he wrote a letter to the company, stating that it would be impossible to pay the premium at present and requesting an extension of time for ninety days in which to make the payment. One day after his death, the company, not knowing of the death, wrote a letter, agreeing to extend the time upon certain conditions. Manifestly, the rights of the parties are to be determined at the time of the death of the insured. What then, was the status of the parties at the time of the death of the insured? The insured had paid eight premiums on the policy and the ninth premium fell due on 22 November, 1931. Consequently, such premium was not paid either when due or within the grace period prescribed in the policy. The insured had borrowed the sum of $86.32 on the policy, and at the end of the eighth policy year the loan value was $93.00, and at the end of such year there was an extension provision of eight years and one month. The policy provided that at any time "after three annual premiums have been paid hereon . . . the company will within ninety days after receipt of written request by the insured, with a full and valid surrender of this policy and all claims hereunder, pay a cash surrender value as indicated in the table of guaranteed values," etc. Hence, if the loan of $86.32 be subtracted from the cash of the loan value of the policy, to wit, the sum of $93.00, there would be a balance of $6.68. However, the policy provided that this cash surrender value was payable only "after receipt of written request by the insured, with a full and valid surrender of this policy and all claims hereunder." The letter written by the insured on 21 December, 1931, is in no sense a request for the payment of the cash value as contemplated by the plain terms of the contract. It was a request for time indulgence and no more.
The plaintiff, however, asserts that at the time of his death the insured had an extension contract extending the life of the policy for eight years and one month. The extension clause was as follows: "At the expiration of three years from the date hereof, if any subsequent premium be not paid when due, the company will, without action on the part of the insured, extend this policy . . . for the term provided in the table of guaranteed values opposite the number of years for which annual premiums have been paid." But the insured had borrowed $86.32 upon the policy, and it was provided in the contract that the "extended insurance shall be for as long a term as the balance left after deducting the indebtedness from the net value of the extended insurance as shown in the table, will purchase as a net single premium." The indebtedness is known. It is $86.32. But what is "the net value of the extended insurance" as shown in the table? There was evidence, and the judge so found, that the "net value of the extended insurance" was $82.27. Therefore, as the indebtedness was in excess of "the net value of the extended insurance," the extension feature disappears from the case.
The plaintiff excepted to the testimony upon which the finding as to the "net value of the extended insurance," was based, but it is generally accepted principle of law that parol evidence is admissible to explain technical terms. The principle was expressed in Neal v. Ferry Co., 166 N.C. 563, 82 S.E. 878, as follows: "It is well settled that where words or expressions are used in a written contract, which have in particular trades or vocations a known technical meaning, parol evidence is competent to inform the court and jury as to the exact meaning of such expression in that particular trade or vocation, and it is for the jury to hear the evidence and give effect to such expression as they may find their meaning to be."
The cash surrender value of the policy became effective only upon the "written request" of the insured and the "valid surrender of the policy." Hence, as this provision has never been complied with, the plaintiff as beneficiary, is not entitled to recover the cash or loan value of $6.68.
Affirmed.
SCHENCK, J., took no part in the consideration or decision of this case.