Court Opinion

ID: 3232867
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:08:04.657504+00
Date Added: 2024-06-11T13:42:46.804048
License: Public Domain

On Rehearing.
The appellant contends that the pronouncement of the foregoing opinion is in conflict with the holdings of the court in Equitable Life Assurance Society of U.S. v. Golson, 159 Ala. 508,48 So. 1034; Manhattan Life Ins. Co. v. Parker, 204 Ala. 313,85 So. 298, 302; and North Carolina Mut. Life Ins. Co. v. Terrell, 227 Ala. 410, 150 So. 318, 320, 89 A.L.R. 1459.
The pertinent doctrine of those cases is: "That the failure to pay the premium on an insurance policy does not, of itself, forfeit the contract, unless the policy so provides." The policy dealt with in the case first cited contained no such express provision, but contained a provision that: " 'If premiums upon the policy for not less than three complete years of assurance shall have been duly received by the society, and default shall be made in the payment of a subsequent premium, the policy may be surrendered for a nonparticipating paid-up policy, for the entire amount which the full reserve on thepolicy * * * will then purchase as a single premium, calculated by the regular table for single-premium policies, now published by the society, providing that the policy be returned to the society duly receipted within six months after the date upon which the last premium in default has fallen due; otherwise, the policy shall cease and determine, and all premiums paid thereon shall forfeit to the society.' " (Italics supplied.) Equitable Life Assurance Society of U.S. v. Golson, 159 Ala. 508,511, 48 So. 1034, 1035.
The insured died within the six months allowed for theexercise of the option, and the court held that this clause did not provide for a forfeiture of the policy inside of six months after default in the payment of the premiums, unless the insured during that time surrendered the policy and got a paid-up one under the terms of the contract, and thus released himself from liability for unpaid premiums, to use the language of the opinion, "In other words, the clause means that after default in any premium, after the third one, the insured has six months within which to elect to surrender the policy and get paid-up insurance, to the extent of what he has paid in, or to pay the premium, should he decide not to surrender the policy, and when he has failed to so elect, notwithstanding the premium is unpaid, the policy does not become forfeited for six months after said premium becomes due." Equitable Life *Page 207 
Assurance Society of U.S. v. Golson, 159 Ala. 508, 511, 512,48 So. 1034.
In Manhattan Life Ins. Co. v. Parker, supra, while the doctrine of the Golson Case, supra, was restated, the holding was: (1) That in the absence of a provision in the policies that failure to pay notes for past-due premiums would forfeit the policies, a provision in such notes to that effect was "vain" and abortive; and (2) "Such right as the insurer had to forfeit and annul these policies accrued on Parker's failure to pay the second premiums maturing on April 19, 1914. It appears from the agreed statement of facts that approximately 46 days after that date, on June 5, 1914, the company accepted from Parker $51.60 in cash and $12.80, resulting from dividends on these policies, 'which was credited,' as the agreed statement recites, 'as a payment on said second premium on each of said policies'; and also accepted the several notes described in the quotation ante from the agreed statement. This action was a distinct waiver of the possible forfeiture that accrued, if at all, prior to June 5, 1914. The waiver thus effected was thereafter beyond recall;" that such payment carried the policies beyond the date of Parker's death. Manhattan Life Ins. Co. v. Parker, 204 Ala. 313, 317, 85 So. 298.
In Terrell's Case, supra: "The policy had been in force for more than six years when the insured died, on January 3, 1932, but there was default on the premium due November 14, 1931. Under the 'nonforfeiture provisions' of the policy insured had the right (three full annual premiums having been paid) within three months after default in payment of any premium to exercise certain options therein provided. But he died within the three-month period without having made any election as to such options." The court held that the policy, taking all its provisions together and applying the rule of reasonable construction, continued in force for three months after the default in the payment of the premium, and inasmuch as the death occurred within that period, the contention of the insurer that the policy had lapsed except as to the paid-up insurance purchasable by the reserve was without merit, and differentiated the case from Landis v. Metropolitan Life Insurance Company, 104 Ohio St. 589, 136 N.E. 193, 26 A.L.R. 98, "where the insured died after the expiration of the three months and without having exercised his option."
Appellant's insistence is, to be exact, that the nonforfeiture provisions of the policy were left dormant by their own terms that "if this policy shall lapse through non-payment of premiums after three years' premiums have been paid," and, therefore, although the insured defaulted in the payment of the premium due September 18, 1927, and the subsequent premiums due, annually for the succeeding five years before his death, yet the policy continued in full force, and that plaintiff, the beneficiary named, should be allowed to recover its full face value.
Courts, in the interpretation of contracts, seek to ascertain the intention of the parties, and where it is ambiguous and of doubtful meaning, doubt will be resolved against the party preparing and issuing the obligation, yet the construction must be reasonable, not arbitrary, and the court will look to all the provisions and the object to be accomplished. The interpretation contended for by the appellant is not reasonable, and to so interpret the contract before us would be to make a contract into which the parties did not intend to enter.
In the case at bar the insured did not die within the period provided for an election between the several options, and made no election. The holding of the opinion is not that the default in the payment of the premium, of itself, terminated the liability, but applying the rule of reasonable interpretation, the legal effect of such default and the failure of the insured to elect put in operation the "non-forfeiture provisions" extending the insurance in a reduced amount for a term which expired before the death of the insured.
Application overruled.
ANDERSON, C. J., and THOMAS and KNIGHT, JJ., concur.