Court Opinion

ID: 9811860
Source: CourtListenerOpinion
Date Created: 2023-08-31 22:30:52.775278+00
Date Added: 2024-06-11T15:21:59.275957
License: Public Domain

Douglas, J.,
dissenting. I can not concur in the opinion of the Court, because I am not certain that the facts have been understood. It is true, the policy provides that any indebtedness of the assured to the company shall be a lien on the policy and may be deducted from the reserve. But are the deferred premium notes an actual indebtedness ? I doubt it. All old line companies stipulate for premiums' largely in excess of what is reasonable or necessary, with a view to their reduction by so-called dividends. These dividends are no part of the surplus or reserve, but are payable annually to the assured, either in cash or by allowance in reduction of premiums. For instance, the stipulated annual premium on one of my life policies is $198.90, while this year’s dividend amounted to $54.40, reducing the net amount of premium I was compelled to> pay to $144.50. The reserve is entirely distinct, and is kept intact until the payment or expiration of the policy. In the latter event, it may be used under certain conditions for paid up or extended insurance.
I am under the impression that in the case at bar the assured was permitted to give his note for 30 per cent of his premium in lieu of dividends, with the expectation on both sides that the accruing dividends would pay the notes without recourse upon the assured. If this is true, and the notes have been or should have been paid by the accruing dividends, they are no longer an indebtedness, and can not be deducted from the reserve. This would leave the entire reserve belonging to the policy in a condition to be used for its extension. The defendant is said to be a mutual company,, but the policy in dispute is apparently based on “old line” methods. It is certainly not upon the assessment plan.
*393If these facts are true, and I am free to say they are by no means clear, it would be a gross imposition upon the assured to permit the defendant to charge up against the surplus notes wholly or partially paid from the dividends, and thus defeat the entire policy of insurance.