Court Opinion

ID: 5373196
Source: CourtListenerOpinion
Date Created: 2022-01-08 08:22:43.877607+00
Date Added: 2024-06-11T08:30:02.335052
License: Public Domain

Callahan, J. (dissenting).
We hold that insured should have received credit for the cash payments made in connection with the “blue notes” in determining the amount of extended insurance available under the policies, otherwise they would conflict with the provisions of former section 88 (now § 208) of the Insurance Law. That section, in substance, states that if any insurance policy is lapsed for non-payment of any premium, or of any note given therefor, the reserves on said policy are to be applied to continue the insurance in force so long as said reserves will purchase temporary insurance at net single premium rates. The statute further provides that any attempted waiver of its provisions shall be void and requires that any value allowed in lieu of extended term insurance shall at least equal the net value of the temporary insurance provided for in the section.
Former section 84 (now § 205) of the Insurance Law provides that the reserve on a life policy must be measured by the net value of the premiums received thereon. Premiums are the moneys paid for insurance coverage. We find that items paid in cash in connection with the issuance of the “ blue notes ” totalling seventy-five dollars on each policy were in fact paid solely for insurance coverage, and were, therefore, payments *294on account of premiums. The statements in the “ blue notes ” that “ although no part of the premium * # * has been paid,” coupled with the provision that the company should retain the cash paid ‘ ‘ as part compensation for the rights and privileges hereby granted,” would be an attempted waiver of the right to extended term insurance unless the seventy-five dollars payments were treated as premiums, at least to the extent of crediting them as such in computing the purchasing power of extended term insurance under each policy.
That the sums making up the seventy-five dollars were in fact received on account of premium is indicated by all the evidence in the case, other than the bare denial of that fact found in the “ blue notes.” The “ blue notes ” provided that credit was to be given for such cash payments against the annual premiums when and if the notes were paid. The “ blue notes ” in each instance were for the exact difference between the annual premiums and the cash payments already made. The cash payments received were in each instance entered on the books of the company in its home office premium reports as “ premium ” received. When the policies were reinstated, credit was given for the cash payments against the annual premium due. To permit the parties to “ agree,” under such circumstances, that the cash payments were not on account of premiums, and that the company might retain same for the “ rights and privileges ” granted, was clearly an attempt to evade the provisions of section 88, unless credit be given for said cash payments in computing the net value of policy reserves. Examination of the note agreements discloses that no “ rights ” or “ privileges ’’were granted to the insured thereunder, except that the insurance provided in the policy was continued in force until midnight of the due date of the note. This was merely continued coverage under the policy for the period of the note, and the sums charged for this coverage were premiums. To treat them otherwise would be to deprive the insured of his statutory right to extended temporary insurance.
To give proper credit for this cash payment would not be placing any obstacles in the way of assisting an insured who was temporarily embarrassed for money, nor would it work a hardship on the insured. Quite to the contrary, it would afford him the benefits which the law says he should receive for all premium payments. We do not quarrel with the view that a valid consideration existed for the “ blue notes ” nor do we question their validity. We merely assert that after a policy is lapsed, the insured must receive credit for all premiums paid, *295and that all payments for insurance coverage are “ premiums.” Any agreement to the contrary would be an attempted waiver of the rights of the insured under section 88, which waiver was forbidden by the statute.
We think Taylor v. N. Y. Life Ins. Co. (209 N. Y. 29) supports our view. At the time that decision was rendered, the Insurance Law did not forbid any waiver of the right of extended term insurance, but merely required that such a waiver be expressly stated. In the Taylor case, a part payment was made on account of an annual premium and a note given for the balance. The note provided that “ all claims to further insurance and all benefits whatever, which full payment in cash of said premium would have secured, shall become immediately void and be forfeited to the New York Life Insurance Company if this note is not paid at maturity.” The decision held that, despite this attempted forfeiture of all benefits from the payments made, and despite the non-payment of the note, the insured was to receive credit for the cash paid in connection therewith in computing the value of policy reserves, and was entitled to such temporary insurance as this added net value would buy. The court held that public policy required that there be an express waiver of the right to such credit for extended term insurance, and that there had been no such explicit waiver in the above quoted provision as to forfeiture. The statute presently under consideration prevents any waiver whatever of an insured’s right to extended term insurance. What might have been expressly waived at the time of the decision in the Taylor case could not have been waived in any manner or form at the time that the present “ blue notes ” were made. Therefore, any agreement which, in effect, constituted such a waiver would be void as against the public policy expressed in the present statute. Any other construction would permit a company to receive money in fact paid on account of premiums, and to evade giving the insured the benefits that the law said he was to receive in the way of extended insurance, by the simple device of saying that the money was not a premium.
Talsky v. New York Life Ins. Co. (244 App. Div. 661; affd., 270 N. Y. 665) is not controlling in the present case. That decision merely held that the original annual premium date continued to be the date of default after non-payment of a “ blue note.” And Marek v. Mutual Life Ins. Co. of N. Y. (244 App. Div. 346) merely upheld the validity of a “ blue note.” It did not involve any question of the right to credit in computing policy reserves for cash payments made in connection with such notes,
*296Two cases from other jurisdictions have been called to our attention: Inter-Southern Life Insurance Co. v. Omer (238 Ky. 790) held that credit must be given in computing policy reserves for partial payments such as those involved here; Davis v. Mutual Life Ins. Co. (234 Mo. App. 748) expressed a contrary view, but there the “ blue notes ” contained the express provision that “ said extension fees shall in no event be considered as payment in full or in part of said premiums.” There was no statutory prohibition in that case against the insured’s waiving his rights to extended term insurance.
Both sides say in their briefs that only questions of law exist in the present case. Though we have not all the provisions of the policies before us, we assume that we have all the relevant provisions. It is conceded that only $21.50 was required in the way of additional net reserve value in order to carry the extended term insurance under each policy beyond the date of insured’s death. It seems apparent by comparison with net reserve value already allowed that the seventy-five dollars cash paid on each policy in connection with the “ blue notes ” would have created more than an additional $21.50 of surrender value under each policy if properly credited. Under these circumstances we find that plaintiff was entitled to summary judgment for the amount demanded in the complaint.
Martin, P. J., and Untermyer, J., concur with Townley, J.; Callahan, J., dissents in opinion, in which Cohn, J., concurs.
Order affirmed with twenty dollars costs and disbursements.