Opinion
May 26, 1911.
Samuel Silbiger [ R.W. Kathan with him on the brief], for the appellant.
Alfred M. Bailey [ Solon Weit with him on the brief], for the respondent.
Plaintiff's motion for judgment on the pleadings was properly denied.
The complaint alleges the issuing by defendant on the 9th day of February, 1900, of a policy insuring the life of Percy Elmore Perry, in the sum of $1,000, payable to the plaintiff.
The policy contained a provision that the insured might borrow from the company the amount specified in a table which was indorsed thereon, by making written application for the loan, and assigning the policy to the company as security, in accordance with the terms of the company's loan certificate.
The table referred to provided that a person at the age of twenty-five, after paying eight premiums, might borrow fifty-four dollars.
The policy also contained a provision that, if after being in force for three full years it should lapse or become forfeited for the non-payment of any premium, it might be surrendered for a non-participating paid-up life policy, or, if not surrendered for a paid-up life policy, the company would write in lieu of such policy and without any action on the part of the insured, a non-participating paid-up term policy for the full amount insured thereby, and to continue in force for the term indicated by another table described as a table of extended insurance.
This table of extended insurance provided that, where premiums had been paid for eight years, the insurance should be extended for seven years and twenty-six days.
The premiums were paid for eight years.
The insured died May 24, 1910, and within the time named as the extended period.
Plaintiff claims that the deceased was entitled to a non-participating paid-up term policy; that the period of extended insurance therein provided for had not expired, and, therefore, that she was entitled to recover.
Technical objection might have been made that this action is not brought upon the non-participating paid-up term policy but upon the original policy which had become forfeited. Inasmuch, however, as the answer alleges that such non-participating paid-up term policy was issued, we think that this question may be waived.
Defendant's answer sets up that on the 20th day of February, 1908, the insured borrowed from defendant the sum of fifty-four dollars and that he and the plaintiff executed in connection therewith a loan certificate and that the provision for extended insurance referred to in the foregoing table is modified by the loan agreement, the rules of the company and the terms in connection therewith, so that by reason of this loan the period of extended insurance was reduced to one year and eighty-one days from the date of the lapse of the policy, May 9, 1908, which period had expired before the death of the insured.
We think that this contention is correct. The agreement in the policy as to the loan was that it should be in accordance with the terms of the company's loan certificate. Defendant did not contract to make a loan upon any other terms.
The policy also provided that the tables, both as to amount to be loaned and the period of extended insurance, applied to the original sum insured only. It provided that, if the sum insured is increased by dividends or otherwise, the benefits will be increased, but any indebtedness placed on the policy will operate to reduce the benefits. The benefits referred to were, first, as to the amount of the loan, and then as to the extended period of insurance. The parties, therefore, agreed that in case of a loan on the policy these benefits would be reduced.
The loan certificate provided for an assignment of the policy, and among other things provided that, if the policy should lapse or become forfeited in any manner, the amount of the said loan should operate "to reduce the term of extended insurance guaranteed by the terms of said Policy, in accordance with the rules of the Company."
The answer also set out the rules in force providing for the calculation of such reduction, showing the period of extension, as hereinbefore set forth.
This was clearly within the contemplation of the parties and made a part of the contract, and, of course, there is a justice in this arrangement, for the reason that when the company makes its loan upon the policy the value of the policy has been thereby reduced, and it could ill-afford to carry the policy for as long an extended period as if it had advanced no money thereupon.
Appellant contends that this construction is in violation of section 58 of the Insurance Law, to the effect that nothing shall be incorporated in a policy by reference to the constitution by-laws, rules, application or other writings, unless the same are indorsed upon or attached to the policy when issued, and that, therefore, the terms of the loan certificate and the rules of the company adopted in connection therewith cannot be made a part of this contract. (See Gen. Laws, chap. 38 [Laws of 1892, chap. 690], § 58, added by Laws of 1906, chap. 326; now Consol. Laws, chap. 28 [Laws of 1909, chap. 33], § 58.)
It is enough upon that point to say that this policy was issued in February, 1900, and that section only applies to policies issued on and after the 1st day of January, 1907.
Upon the pleadings the defendant has a complete defense to the action.
The order appealed from should be affirmed, with ten dollars costs and disbursements.
JENKS, P.J., THOMAS, CARR and WOODWARD, JJ., concurred.
Order affirmed, with ten dollars costs and disbursements.