Court Opinion

ID: 3829017
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:00:57.70924+00
Date Added: 2024-06-11T14:13:59.155684
License: Public Domain

On March 17, 1919, Robert Newton Garritson bought a 20-payment life insurance policy in the amount of $4,000, the annual premium on which was $163.50. The premium was regularly paid up to June 17, 1927. As a part of the policy contract there was attached to said policy what is designated as "premium reduction coupons" for which no extra or additional charge was made or premiums paid. The insurance company made the insured a loan on his policy. The insured failed to pay the premium due June 17, 1927, or any premiums thereafter. On April 25, 1928, the insured died. At the time default was made in payment of the premium the insured owed the company $686.82 on his loan. At that time the cash surrender value of said insurance, policy was $690, leaving a balance to the credit of the insured of $3.18 after satisfying the loan. At the same time the value of the premium reduction coupons was $225.32. Demand was made by Carrie Kinnie Garritson, the surviving widow of the insured, who was the beneficiary under the policy and defendant in error here, for payment of the amount of the policy, claiming that notwithstanding default had been made, in payment of the premiums the insurance company had in its hands to the credit of the insured in the form of "premium reduction coupons" a greater sum than the delinquent premiums amounted to up to the death of the insured, and the policy was, therefore, in full force and effect. The insurance company refused to pay the amount claimed to be due under the policy, maintaining that the policy had lapsed and there was no obligation to pay anything other than the amount due under the premium reduction coupons. This the company offered to *Page 484 
pay upon surrender of the policy and the coupons. Suit for the amount of the policy was filed in the district court of Nowata county. Judgment was for the plaintiff, and the company appeals.
In the trial court and here, there was and is no disputed question of fact. The sole question before us is whether the policy lapsed when the insured failed to pay the premium due on June 17, 1927, thereby limiting the obligation of the company to the payment of the amount due under the premium reduction coupons, or whether the fact that the premium reduction coupons amounted to more than was due in premiums kept the policy in force and effect, thus obligating the company to pay the full amount of the policy.
In reaching our conclusion we are favored by an opinion of the Circuit Court of Appeals of the Eighth Circuit, Great Southern Life Ins. Co. v. Jones, 35 F.2d 122, wherein the facts were almost identical with the facts in the instant case. The plaintiff in that case brought suit in the district court of Grady county, Okla. The case was transferred to the United States District Court of the Eastern District of Oklahoma, where judgement was rendered for the plaintiff, and the insurance company appealed to the Circuit Court of Appeals. The opinion in that case, affirming the district court, is so exhaustive and the authorities there cited are so convincing that we deem it pertinent to quote from the opinion as follows:
"One Coupon matures annually in turn, as long as the premiums are paid. Each is a promise by the company that it will pay the insured the amount stated therein. The policy provides that they may be used by the insured in any one of five ways; that is, by applying each coupon as it became due on the annual premium, by paying all premiums in full, and leaving with the company the amount represented by the coupons as they mature, in which event the policy became fully paid in 14 years, by paying all premiums in full, without reduction, for 20 years, in which event the insured would be entitled to select from certain optional settlements offered that the amount of the coupons left with the company be payable at any time on presentation; and, lastly in the event of the death of the insured, the amount of the coupons not then cashed or surrendered would be added to the face value of the policy.
"They contain no other limitations, and the sums payable thereon may very properly be called dividends. Webster's Unabridged Dictionary; Corpus Juris 18, p. 1406. This term as used in insurance law has no narrow, technical signification, and is flexible enough to meet any state of facts. Clearly the face value of each coupon — unless cashed or applied on the premium — must be set aside annually by the company and held to the credit of the insured, subject to his demand, and constitutes dividends, irrespective of the designation given them in the policy.
"The insurance company in seeking to declare a forfeiture comes within the inhibition of the following well-established rule:
"The rule has been broadly laid down that a life insurance company cannot insist upon a forfeiture for the nonpayment of a premium, where it has in its possession dividends belonging to the insured sufficient to pay the premiums at maturity.' 19 Am  Eng. Cyc. of Law (2d Ed.) p. 50.
"And in C. J. vol. 32, p. 1308, the rule is stated in almost identically the same language, while in 37 C. J. 486, it is said the insurance company must use any funds in its hands due the to avoid a forfeiture. Another statement of the rule is found in the case note to Caywood v. Supreme Lodge,171 Ind. 410, 86 N.E. 482, 23 L. R. A. (N. S.) 304, 131 Am. St. Rep. 253, 17 Ann. Cas. 503, to wit:
" 'It may be laid down as the general rule, gathered from the cases reviewed in this note, though subject to some exceptions, as will be hereafter seen, that if an insurer has in its hands sufficient funds presently due the insured to pay assessment or premium upon his policy when due, it is the former's duty to apply the same so as to prevent a forfeiture of the policy.' "
Supplementing the authorities cited in the opinion above quoted from, we call attention to the eighth subdivision of section 10524, O. S. 1931, which reads as follows:
"That in event of default in premium payments after premiums shall have been paid for three years, the insured shall be entitled to a stipulated form of insurance, the net value of which shall be at least equal to the reserve at the date of default on the policy and on dividend additions thereto, if any."
Counsel for plaintiff in error call our attention to Union Central Life Ins. Co. v. Williams, 65 F.2d 240, the same being an opinion from Fifth Circuit Court of Appeals (a Texas case), which the facts are somewhat similar to the facts in the instant case and in which court arrives at the opposite conclusion. Counsel for plaintiff in error argue that since this is a later case than Great Southern Life Ins. Co. v. Jones, supra, it should be controlling. With this contention we cannot *Page 485 
agree. It will be remembered that in the Great Southern Case the cause of action arose within our own jurisdiction and the opinion the above-quoted section of our statute is referred to and, in a measure construed, and if there is a conflict in these two opinions, it is our view that our statute and the opinion coming from our own circuit should be given the greater consideration, particularly in view of the weight and reasoning of the authorities therein cited.
It is, therefore, our conclusion that the judgment of the district court of Nowata county should be, and the same is, hereby affirmed.
McNEILL, C. J., and RILEY, BUSBY, and GIBSON, JJ., concur.
                          On Rehearing.