Case Name: HAZEL GRAY OWENS v. RESERVE LOAN LIFE INSURANCE COMPANY
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1934-07-11
Citations: 206 N.C. 864
Docket Number: 
Parties: HAZEL GRAY OWENS v. RESERVE LOAN LIFE INSURANCE COMPANY.
Judges: SohbNCK, J., took no part in the consideration or decision of this case.
Reporter: North Carolina Reports
Volume: 206
Pages: 864–873

Head Matter:
HAZEL GRAY OWENS v. RESERVE LOAN LIFE INSURANCE COMPANY.
(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 Xi 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 U 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.
Clarkson, J., dissenting.
Sohenok, J., took no part in the consideration or decision of this case.
Civil ACTION, before Ftizzélle, J., at February Term, 1933, of WlLSON.
By agreement of tbe parties tbe trial judge beard tbe evidence, found tbe facts and rendered judgment tbereon.
Tbe facts so found pertinent to a decision of tbe questions of law involved, are as follows:
On 22 November, 1923, tbe defendant issued and delivered to John Elverson Owens a certain policy of life insurance by tbe terms of wbicb it agreed to pay $1,000 to Hazel Gray Owens, tbe plaintiff in tbis action, upon receipt of due proof of tbe death of tbe 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 tbe insured, but, of course, on account of tbe death, sucb agreement was never signed. On 21 January, 1932, tbe defendant wrote tbe clerk of tbe Superior Court of "Wilson County, stating, among other things, “Tbe cash value of tbe policy at tbe end of tbe eighth year is $93.00, and Mr. Owens’ estate may surrender tbe policy for this amount, less tbe loan of $86.32, tbe surrender to net $6.68 in cash. Upon receipt of tbe enclosed release completed by tbe executor or administrator of tbe estate of John Elver-son Owens, accompanied by tbe policy, we will cancel and return tbe loan agreement of $86.32 with check for $6.68 to balance.” Tbe said sum of $6.68, if available for tbe purchase of extended insurance, would have been sufficient to purchase extended insurance beyond tbe date of tbe death of John Elverson Owens.
Tbe net “value of extended insurance” for tbe period of eight years and one month as set forth in tbe “table of guaranteed values,” in tbe policy, for tbe eighth policy year, amounted to $82.27.
There was evidence that tbe net value or money value of a period of extended insurance of eight years and one month under tbe policy based upon tbe American Experience Table of Mortality at 3% per cent interest, on tbe life of tbe insured, who was born on 12 September, 1887, and whose nearest birthday at tbe date of issue of said policy was 36 years, was $82.27. Tbe policy provided that “all surrender values contained therein are based on tbe American Experience Table of Mortality with 3% per cent interest,” etc.
Upon tbe foregoing facts tbe trial judge was of tbe opinion that tbe plaintiff was not entitled to recover and she appealed.
Finch, Rand & Finch and W. A. Lucas for plaintiff.'
Connor & Hill ancl Frank G. West for defendant.

Opinion:
BeogdeN, J.
Tbe insured failed to pay tbe ninth premium due on 22 November, 1931. On 21 December, 1931, be wrote a letter to tbe company, stating that it would be impossible to pay tbe premium at present and requesting an extension of time for ninety days in which to make tbe payment. One day after bis death, tbe company, not knowing of tbe death, wrote a letter, agreeing to extend tbe time upon certain conditions. Manifestly, tbe rights of tbe parties are to be determined at tbe time of tbe death of tbe insured. "What then, was tbe status of tbe parties at tbe time of tbe death of tbe insured? Tbe insured bad paid eight premiums on tbe policy and tbe ninth premium fell due on 22 November, 1931. Consequently, sucb premium was not paid either when due or within tbe grace period prescribed in tbe policy. Tbe insured bad borrowed tbe sum of $86.32 on tbe policy, and at tbe 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.
SohbNCK, J., took no part in the consideration or decision of this case.