Court Opinion

ID: 5364783
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:42:03.170361+00
Date Added: 2024-06-11T08:29:55.800574
License: Public Domain

Martin, P. J.
(dissenting). The respondent insurance company issued two policies of insurance on the life of John P. McCambridge. The amount payable on death under each policy was $250. The policies were dated March 28, 1928, and contained the following provision: “ Non-Forfeiture Benefits. — Automatic Extended Term Insurance After Three Years. After premiums shall have been paid on this policy for three full years, then, in case of failure to pay any subsequent premium, the policy, without any further stipulation or act, wfil be binding on the Company for its full amount as Extended Term Insurance, commencing from the date to which the premiums shall have been paid, the length of the term to be determined by the period of premium payments, according to Table A. The insurance will wholly cease and expire at the end of the term of extension to which the policy is entitled under its conditions.”
On January 1, 1929, there was added to the policies an accidental death benefit provision reading as follows: “ Accidental Death Benefit Provisions. Upon receipt of due proof that the Insured after attainment of age 15 and prior to the attainment of age 70, has sustained bodily injury, solely through external, violent and accidental means, occurring after the date of this Policy and resulting in the death of the Insured within ninety days from the date of such bodily injury while this Policy is in force, and while there is no default in the payment of premium, the Company will pay in addition to any other sums due under this Policy and subject to the provisions of this Policy an Accidental Death Benefit equal to the face amount of insurance stated in this Policy less the amount of any disability benefit which has become payable under this Policy on account of the same bodily injury, except as provided below: * * *.”
Premiums were paid by the insured up to and including December 1, 1937. The insured died July 14, 1939. The appellant has been paid the face amount of each policy. The question that has arisen is: Did the accidental death benefit issued in 1929 continue with full force and effect or did this provision automatically cease when this policy was converted into an extended term policy?
On behalf of the appellant it is argued that as the respondent failed to expressly exclude the accidental death benefit from the extended term policy the provision must be deemed an integral part of the policy in question, and from the exact wording of the policy itself it must be concluded that when the policy in suit was operating as extended term insurance said policy contained the exact wording and provisions of the original policy, plus the additional benefit issued in 1929 and the entire contract of insurance continued until the death of the assured.
*711Our attention is called to Cummings v. Phoenix Mutual Life Insurance Co. of Hartford (250 App. Div. 336) and Valenti v. Prudential Insurance Co. (71 F. [2d] 229) as examples of specific express provisions excluding accidental death benefits under extended insurance. We note that in each case (in the Cummings case by the policy itself and in the Valenti case by operation of statute) it was provided that when the insured stopped paying premiums the cash value was to be taken as a “ net single premium ” to pay for insurance for the extended term.
It is argued that the theory of extended insurance is that as long as there is some money in the reserve fund of the policy and the assured ceases paying premiums, then the company withdraws from that cash reserve and pays to itself the premiums then due for and on behalf of the insured. Formerly a default in payment of a premium resulted in a complete forfeiture of the policy and the benefits thereof. Section 88 of the Insurance Law of this State, as it existed at the time the policies in question were written, Was intended to remedy this inequitable situation. However, the defendant is a Massachusetts corporation and section 88 is inapplicable. (Cummings v. Phœnix Mutual Life Insurance Co. of Hartford, supra.)
On the policies before us the extended insurance did not come into effect until there had been failure to pay premiums after payment for three full years. When the accidental death benefit was added to the policies it was expressly provided that it would be effective “ while there is no default in the payment of premium.” “ Payment of premium ” means payment by an insured who understands that when he does not pay he is in default. The extended insurance provision could not take effect until there was a default in payment of premiums, and while there was a default in such payment the accidental death benefit was inapplicable. Whatever may be the mechanics of protecting the equities of an insured on Ms nonpayment of premiums, it is clear that, on the policies before us, he did not pay a premium for Ms extended insurance, and Ms beneficiary is bound by the terms of Ms contract. The death here occurred durmg the extended insurance period and the beneficiary is not entitled to accidental death benefits. Other courts have construed similar provisions for extended msurance as not rncludmg death benefits. (Orr v. Prudential Insurance Co., 274 Mass. 212; 174 N. E. 204; Henricks v. Metropolitan Life Insurance Co., 7 Cal. [2d] 619; 61 P. [2d] 1162.) In the latter case it was pointed out that the great weight of authority is in accord with the view that double indenmity benefits are not carried over to nonforfeiture insurance.
*712The order of the Municipal Court and the determination of the Appellate Term should be affirmed, with twenty dollars costs and disbursements.
Townley, J., concurs.
Determination reversed, with twenty dollars costs and disbursements to the appellant in this court, and ten dollars costs in the Appellate Term, and the order of the Municipal Court modified by directing summary judgment in favor of the plaintiff.