Court Opinion

ID: 3962886
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:23:00.705333+00
Date Added: 2024-06-11T14:17:37.236708
License: Public Domain

The majority having based their conclusion solely on interpretation of the contract of insurance sued upon, which I view is in direct conflict with the opinion of the Commission of Appeals, in The Practorians v. Redmon Tex.Com.App., 123 S.W.2d 644, 648 (adopted by our Supreme Court), I deem it unnecessary to extend discussion of my adverse holding to that of the majority. In the cited case, the plaintiff sought recovery on an obligation in the policy to pay double indemnity, whilst in the instant case plaintiff sought recovery for the face value of the policy. In all other respects, the two policies are quite similar.
The Commission of Appeals, in the Redmon case, after relating the various provisions of the policy there involved, held *Page 431 
that the value of the reserve automatically extended term insurance and was not available to extend the obligation to pay double indemnity, saying: "The value to be applied in calculating the amount of extended term insurance that became effective automatically upon the death of the insured during the sixth certificate year is its cash value as of the end of that year, which is $103. The amount of insurance for which the beneficiary was entitled to have the certificate endorsed as extended term insurance under the third option is the face amount of the certificate reduced in the proportion of $73.88 to $103. Such reduced amount calculated in the manner stated is $282.72, and represents the amount of extended term insurance which became "effective automatically" upon the death of the insured. The trial court should have rendered judgment for plaintiff in such amount."
So, in the case at bar, the non-forfeiture provisions of the policy are: (1) "Non-forfeiture: After three full years premiums have been paid herein and within thirty-one days of default in the payment of any subsequent premium, one of the following equivalent options, subject to any indebtedness hereon, may be elected by filing a written request with the Company at its Home Office, accompanied by the policy." (2) "Cash Surrender Value: To surrender the policy for its cash surrender value in accordance with the `Table of Guaranteed Values.' Payment of such cash sum may be deferred by the Company for not exceeding ninety days after application therefor is made." (3) "Paid-up Insurance: If the Cash Value is not selected this policy shall be automatically continued as Non-Participating Paid-up Endowment Insurance payable in a single sum at the same time and under the same conditions as this policy, except as to premium payments, for the amount as shown in the `Table of Guaranteed Values.' But any indebtedness on the policy will reduce the amount of Paid-up Insurance in such proportion as the indebtedness bears to the Cash Value at the due date of the premium defaulted."
In the "Table of Guaranteed Values" the cash or loan value is $34 and the paid-up insurance $95 at the end of the third policy year. Following this table there appears:
"Basis of Computation: The reserve on this policy is based upon the American Experience Table of Mortality with No % additional mortality and Craig's extension and 3 1/2% interest, modified on the Twenty-Payment Life Preliminary Term Plan.
"The net value of each benefit is equal to the full reserve hereon, less a surrender charge not to exceed 2 1/2% of the amount insured. For policy years after the 20th the surrender charge not to exceed 1/10 of 1%.
"The payment of any portion of a year's premium over and above the full number of years' premium indicated will proportionately increase the values shown in table."
The cash value of $34 was equivalent to $95 paid-up insurance. At date of default of premium of May 15, 1935 the indebtedness against the policy was $20.59, reducing the net cash value to $13.41. Using such net cash value as a basis, it produced paid-up insurance of $37. It was admitted that the last premiums paid were from the proceeds of the policy loan.
The policy having been automatically continued as non-participating, paid-up endowment insurance for the amount shown in the table of guaranteed values, but reduced in such proportion as the indebtedness of $20.59, bears to the cash value of $34 at the date of default in payment of premium, at the date of the insured's death, the policy of insurance being in force as a paid-up policy in the amount of $37 and the defendant having duly tendered to plaintiff the amount of the paid-up insurance; therefore, the judgment of the court below should be reversed; the judgment set aside; and, judgment here rendered for the plaintiff for the sum of $37. All cost in this court and in the court below be taxed against appellee. *Page 432