Court Opinion

ID: 5301992
Source: CourtListenerOpinion
Date Created: 2022-01-08 03:12:52.910192+00
Date Added: 2024-06-11T08:29:05.576356
License: Public Domain

Crouch, J. (dissenting).
The decisive question is whether or not the relation of debtor and creditor existed between the insured and the insurer at the time of the death of the insured. The policies themselves contain no provision relating to loans or giving *641the right to the insured to secure a loan thereon from the insurer. But the insurer at the time the loan was made had the right under the law to make it. And under the statute which gave it that right, it was to loan “ on the pledge to it of such policies and its accumulations as collateral security.” The extent of the loan was confined to the “ lawful reserve ” on the policy. There is nothing said here about personal liability. The language is not so clear as in the later statute, which uses the phrase “ on the sole security thereof.” I think, however, that the effect was the saíne. Since the loan was confined to the lawful reserve, there could never be any question of personal liability. The loan in substance and effect was merely an advance. No situation could arise which would demand resort to personal liability.
On the background of that legislation the court must construe the contract existing between the parties after the loan agreement was made. Reading together the statute, the loan offer, the loan agreement and assignment, and the acknowledgment, the contract is instinct with an understanding and agreement that the sole effect of the transaction was an advance on the policy, reducing the amount payable thereon upon maturity to the surplus above the amount of the loan and interest. The whole insurance contract Was reduced to that, subject to the right of the insured and beneficiary to repay the loan and thus restore the insurance contract to its original form.
The loan offer informed the insured that where a loan was made, then in case of death before the maturity of the loan, “ the cash balance, if any, after payment of the loan, will be [not may be] paid to the parties legally entitled thereto.” The language of the loan agreement was to the same effect. Upon maturity of the policy by death “ the excess value above the loan and interest shall be due and payable to the legal owner or owners of the policy on demand.” So, also, the loan acknowledgment accompanying the check for the amount of the loan, which says: “ In the event of the death of the insured before the maturity of the loan, any indebtedness to the Society by reason hereof will be [not may be] deducted from the amount payable under the policy, the balance being payable to the person or persons legally entitled thereto.”
My view is that notwithstanding the variations in the facts between this case and the Wagner case, the essence and effect of the contracts in both cases are the same. I, therefore, vote for affirmance.
Decree so far as appealed from reversed on the law and facts, and matter remitted to the Surrogate’s Court with directions to enter a modified decree in accordance with the opinion, with costs.