Court Opinion

ID: 6273350
Source: CourtListenerOpinion
Date Created: 2022-02-18 15:52:09.789352+00
Date Added: 2024-06-11T08:59:58.823260
License: Public Domain

Opinion by
William W. Porter, J.,
The decision of this case involves the construction of an unusual form of life insurance policy. It provides that the defendant “ does hereby insure the life of Samuel D. Hunter, hereinafter called the insured, .... in the sum of $3,000, for the term of his natural life, from and after the date hereof, the said sum insured to be paid at the office of the company in Hartford, Conn., to Mrs. Harriett E. Hunter, wife; or, in the event of her prior death, to the children of said insured, said payees being hereinafter called the assured; but if the said insured shall survive the said assured, then said sum shall be paid to the legal representatives of the said insured within ninety days after due notice and proof, as hereinafter required; that the death of said Samuel D. Plunter has taken place during the continuance of this policy. . . . the balance of the year’s premium, if any, when not already paid at the beginning of the year, and any other indebtedness to this company, either on the part of the insured or assured, being first deducted therefrom.” The interests of the assured are clearly indicated *183by the terms of the policy. Thus the wife is first entitled provided she survives her husband. The children are entitled provided they survive their mother. The legal representatives of the insured take in case the wife and children fail to survive the insured. This befalls if the policy becomes payable by the death of the insured. There is, however, another clause in the policy, as follows: “ Sixth. That this policy may be converted into cash at the option of the holder at any time after the expiration of fifteen years from the date hereof, for- the amount indorsed on the back of this policy corresponding to the age (nearest birthday) of the insured at the time of such conversion, provided that this policy shall have been first paid up by the payment of ten full annual premiums, as herein stipulated.” The plaintiff holds an assignment of the policy, executed by the insured and his wife. He claims to recover the cash provided to be paid by the sixth clause above quoted. The fifteen years have expired. Ten full animal premiums have been paid. The wife is still living, as is the insured. Four children of the insured are living; two of them of age, two of them minors. The insurance company declines to pay the cash to the assignee of the wife on the ground that the children have an interest in the policy, and have not joined in the assignment. The plaintiff contends that under the second clause quoted the wife is “ the holder ” of the policy, and that by assignment he has acquired her rights. The latter proposition is no doubt correct, but the question remains whether the wife is “the holder” of the policy within the contemplation of the clause quoted.
It is said that this clause is but a part of a printed form, and that in its construction this fact must be regarded. It, however, is an express provision of the contract of insurance, and must be given some effect. Its meaning is clear to the extent of providing for maturity of the policy (at the option of the holder) anterior to maturity by death. It is a right exercisable after a given time to require a payment of a specific sum in cash by the insurance company in discharge of the contract of insurance. If the interests of the children, born and to be born, are so vested as to require their joinder in the exercise of the option given, it prevents the exercise of the right created, since possibility of children continues so long as the insured lives. *184It is particularly to be observed that the right is not given in terms to the “ assured” or “ payees” which might include all of those included by the terms of the policy in that class. The person having the right to demand the cash is described as the “ holder.” This does not mean the person having merely the physical possession of the policy. It must mean one having rights under its provisions, that is, one of the several persons included in the class called the “ assured,” or persons claiming under them. But not all of the class called the “ assured;” otherwise there would be no reason for the use of the word “holder” instead of the word “assured” or the word “payee.” But who of the assured is intended by the word “holder?” We believe that it is the person who would take had the policy matured by the death of the insured. In such event, the wife (who still survives her children and her husband) would take the proceeds of the policy to the exclusion of •the children and of the legal representatives of the husband. "She is the primary beneficiary, and continues such until her death before the insured. She takes on maturity by death of the insured, and she is the “ holder” on maturity by operation of the sixth clause of the contract. This explains the use of the word “holder,” the new term of description, and makes the clause operative. It effectuates the intent to benefit the primary beneficiary.' True, it is a divestiture of the interests of the children, but only by virtue of the terms of the contract by which the interests were created and made subject to such divestiture, and in the same manner as their interests may be divested by the survival of the insured by their mother or their death during the life of their father. It has been suggested that “the holder” of the policy at the time of exercising the option to require payment of cash, as provided by the sixth clause, is the wife, together with such children as may then be living. The position is palpably untenable, first, because the wife and she alone, is the primary beneficiary, the children taking only in the event of her death. Second, because the children are designated as a class which must remain open until the death of the insured or at least until the death of the wife. There is nowhere in the policy a suggestion of intention that children of.the insured, living at a certain time, shall have a peculiar advantage.
*185It is also contended by tbe defendant that the insured is indebted to the defendant in a sum largely in excess of the cash value of the policy, and that this indebtedness, under the final clause of the first paragraph above quoted, may be set off against the demand made by the plaintiff in this case. It is to be observed that this indebtedness is general, and does not arise out of, nor has it any connection with, the policy upon which this suit is brought. Furthermore, the provision reserving the right to deduct indebtedness is contained only in the clause providing for payment on maturity of the policy by death, and affects the funds payable on such maturity. It is not embodied in the clause providing for maturity at the expiration of fifteen years, wherein a specific payment of cash is contracted to be made if the time has run and if ten full annual premiums have been paid. We think that the right to deduct indebtedness from such a payment is not reserved by the policy, and if the matter be doubtful, the rule that ambiguous provisions in policies of insurance are to be construed most strongly against the company, will resolve the doubt in favor of the assured.
We are of opinion that the assignments of error must be sustained, and judgment is now entered for the plaintiff in the sum of $1,065, with interest from July 24,1899.