OHIO NISI PRIUS REPORTS NEW SERIES-VOLUME XVII. CAUSES ARGUED AND DETERMINED IN THE SUPERIOR, COMMON PLEAS, PROBATE AND INSOLVENCY COURTS OF OHIO. ACTION FOR REINSTATEMENT OF LIFE INSURANCE POLICY. Superior Court of Cincinnati. BENJAMIN HAAS ET AL V. THE MUTUAL LIFE INSURANCE Decided, September 1, 1914. Life Insurance-Loan Made on Joint Policy-Note Not Paid and Policy Surrendered-Company Could Not be Required to Retain Policy in Force Until Reserve Value Was Exhausted-Cancellation of Policy Terminated all Rights of the Insured Therein-Company Not Bound to Report Reserve Value to the Insured. A paid-up, non-participating joint life policy of insurance for $15,000 was pledged to the issuing company by the insured as security for the payment of a loan made to them by the company. The loan agreement provided that in the event of default in the payment of the loan at the time when it became due, the company might, without notice or demand for payment, cancel the policy, and apply to the payment of said loan the sum of $8,469, "the customary cash surrender consideration allowed by the company as the surrender value of policies issued upon like terms and conditions." The loan was not paid at maturity, but the insured consented to the surrender of the policy in the manner provided for by the contract. Held: [Vol. 17 (N.S.) Haas v. Life Insurance Co. 1. That since under the terms of the policy of insurance the insured were not entitled to the full reserve value of the policy they could not require the company to retain the policy in force until the amount of the loan with interest had exhausted the reserve value. 2. That if the "customary cash surrender consideration" represented the substantial value of the policy, the loan agreement was valid, and the surrender and cancellation of the policy effectually terminated the rights of the insured therein. 3. Under the facts of the case, the company was under no obligation to calculate and report to the insured the full reserve value of the policy so that the insured might determine whether it would be a profitable speculation for them to keep the policy in force. Robertson & Buchwalter, for plaintiffs. Stephens, Lincoln & Stephens, contra. OPPENHEIMER, J. On February 24th, 1886, the Mutual Life Insurance Company of New York issued its policy numbered 277,661, in the sum of $20,000, upon the joint lives of Benjamin and Adolph Haas, of this city. This policy, which is designated as a "Limited Payment Five Year Distribution Policy," reads as follows: "No. 277661 A. "THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK. "Age 37-35 Years Amount $20,000. "Annual Premium for 20 years only $1056. "IN CONSIDERATION of the application for this policy which is hereby made a part of the contract, the Mutual Life Insurance Company of New York promises to pay at its Home Office in the city of New York, unto the firm of B. and A. Haas, of Cincinnati, in the county of Hamilton, state of Ohio, their successors or assigns twenty thousand dollars, upon acceptance of satisfactory proofs at its said office, of the death of Benjamin or Adolph Haas, partners in said firm, the policy to mature upon the death of either of them, during the continuance of this policy, upon the following conditions; and subject to the provisions, requirements and benefits stated on the back of this policy which are hereby referred to and made part hereof; "The annual premium of ten hundred and fifty-six dollars. and cents, shall be paid in advance on the delivery of this policy, and thereafter to the company, at its home office in the city of New York on the twenty-fourth day of February in every year during the continuance of this contract, until premiums for 20 full years shall have been duly paid to said company. 1915.] Haas v. Life Insurance Co. "IN WITNESS WHEREOF, the said the Mutual Life Insurance Company of New York has caused this policy to be signed by its president and secretary, at its office in the city of New York, the twenty-fourth day of February A. D. one thousand eight hundred and eighty-six. "W. J. EASTON, "Secretary." "(Signed) RICHARD A. MCCURDY, President. The "provisions, requirements and benefits" referred to, which appear upon the back of the policy, are as follows: "PROVISIONS, REQUIREMENTS AND BENEFITS. "Payment of Premiums. Each premium is due and payable at the home office of the company in the city of New York; but will be accepted elsewhere when duly made in exchange for the company's receipt, signed by the president or secretary. Notice that each and every such payment is due at the date named in the policy, is given and accepted by the delivery and acceptance of this policy, and any further notice, required by any statute, is thereby expressly waived. That part of the year's premium, if any, which is not due and is unpaid at the maturity of this contract shall be deducted from the amount of the claim. If this policy shall become void by non-payment of premium, all payments previously made shall be forfeited to the company except as hereinafter provided. "Dividends. This policy is issued on the five year distribution plan. It will be credited with its distributive share of surplus apportioned at the expiration of each five years from the date of issue. Only policies in force at the end of such terms, and entitled thereto by year of issue, shall share in such distribution of the surplus, and no other distribution to such policies shall be made at any other time. All surplus so apportioned may be applied at the end of such periods to purchase additional insurance, or in payment of future premiums on this policy, if requested in writing, or may then be drawn in cash. "Paid-Up-Policy. After three full annual premiums have been paid upon this policy, the company will, upon the legal surrender thereof before default in payment of any premium, or within six months thereafter, issue a non-participating policy for paid-up insurance, payable as herein provided, for the proportion of the amount of this policy which the number of full years' premiums paid bears to the total number required. "Surrender. This policy may be surrendered to the company at the end of the fifth year from the date of issue, and eighty per cent. of the reserve computed by the American Table of Haas v. Life Insurance Co. [Vol. 17 (N.S.) Mortality and four and one-half per cent. interest, and the surplus as defined above, will be paid therefor. If surrendered at the end of the second or of any subsequent five year period, the full reserve by the same standard and the surplus as defined will be paid. No cash value will be paid for a surrender at any other time or date. "NOTICE. "Powers of Agents. No agent has power on behalf of the company to make or modify this or any contract of insurance, to extend the time for paying a premium, to bind the company by making any promise, or by receiving any representation or information not contained in the application for this policy. "Assignments. The company declines to notice any assignment of this policy until the original or a duplicate certified copy thereof shall be filed in the company's home office. The company will not assume any responsibility for the validity of an assignment. "The minimum cash surrender yalues referred to in the above surrender clause are as follows: 80% of reserve at end of fifth year Full reserve at end of tenth year Full reserve at end of fifteenth year $1,650,00 4,676.00 7,986,00 Full reserve at end of twentieth year 12,250.00 13,530.00." On March 20th, 1901, fifteen full annual premiums having been paid, the policy was surrendered, and a non-participating policy for paid-up insurance in the sum of $15,000 was issued, in accordance with Clause 3 of the aforementioned provisions. The following stipulation was thereupon stamped upon the face of the policy: "PAID-UP NON-PARTICIPATING LIFE INSURANCE. "NEW YORK, March 20th, 1901. "This policy having lapsed, for the non-payment of the premium due the twenty-fourth day of Feburuary, 1901, the same has been since that date, and is hereby continued as and for a paid-up policy for fifteen thousand dollars without participation in the surplus, and without any other right or privilege, whether of surrender value or otherwise, and said sum will be payable in one sum on receipt at the home office of satisfactory proof of the death of either one of the insured as stated. "W. J. EASTON, "Secretary." |