Court Opinion

ID: 5353704
Source: CourtListenerOpinion
Date Created: 2022-01-08 06:51:38.572079+00
Date Added: 2024-06-11T08:29:45.993243
License: Public Domain

Taylor, J.
The policy in suit is a twenty-payment life policy for $2,000, and default was made in payment of a premium after premiums had been paid for eighteen and a quarter years. The insured died five days after the default occurred.
*17The policy provides three separate options to the policyholder in case of default after premiums have been paid for three years. Only option A is involved here, since options B and C depend upon action by the policyholder, and no such action was taken in this case. Option A provides that in case of default, without action on the part of the holder, the policy will be continued for its value in participating paid-up life insurance. By a table printed in the policy, the value of participating paid-up life insurance is fixed according to the age of the policy, less any indebtedness secured by the policy. This amount for a policy for $2,000 on which premiums had been paid for eighteen years is $1,796, less any indebtedness secured by the policy, in this case $681.87, leaving a net value of paid-up insurance of $1,114.13. A later provision in the policy, to the effect that the paid-up insurance under option A shall be such as can be purchased by the cash surrender of the policy, less any indebtedness secured thereby, as a single premium, is an attempt to "limit or modify the provision made in option A, fixing the amount of paid-up insurance under that option; but this later provision cannot be given that effect. (Hart v. Travelers Insurance Co., 236 App. Div. 309; affd., 261 N. Y. 563.) Nor could the policy loan agreement have that effect, not only because of the ruling in the cited case, but because the assignment by its terms is subject to the provisions of the policy, including those relating to option A.
After the statement in the table of non-forfeiture values of the amount of the paid-up participating insurance to which the insured was entitled at the eighteenth year, there follow, on subsequent pages, some obscure and ambiguous provisions relating to surrender value and paid-up insurance under option A. The average person insured could gather no meaning from these provisions that would affect his rights given under the table and the provisions of option A. The natural interpretation would be that loans will be deducted from the sum due on the paid-up participating policy. This ambiguous language the insurer seeks to construe in its own favor so that the total loan and interest, together with the amount it proposes to pay to the beneficiary, will be a sum materially less than the amount of premiums actually paid by the insured, on which an additional sum of interest has been gained by the company. This in spite of the fact that the insured died much earlier than his natural expectancy of life.
Where a policy, written in the language of the insurer, is ambiguous in its terms, the construction will be in favor of the insured, not of the insurer. (Hart v. Travelers Insurance Co., supra.)
*18The order of the Appellate Term should be affirmed, with costs.
Lazansky, P. J., and Davis, J., concur; Adel, J., with whom Carswell, J., concurs, dissents, with memorandum.