Opinion
No. 34601.
May 26, 1941. Suggestion of Error Sustained September 22, 1941.
1. INSURANCE.
Where insured secured loan on life insurance policy in the amount of the full reserve or cash value of policy as of date of fourth anniversary thereof and no premiums were paid thereafter, the policy lapsed upon failure to pay next monthly premium when due or within the period of grace allowed therefor and all rights of parties under policy expired except right of insurer to deduct indebtedness from amount which would have then constituted the reserve value had loan not been made and right of insured to have policy reinstated during his lifetime upon compliance with terms of policy.
2. INSURANCE.
Where insured in January, 1935, borrowed full amount of reserve credited to his life insurance policy when all premiums were paid until April, 1935, after which no premiums were paid before insured's death in December, 1935, at which time policy would have been in force under extended insurance clause thereof if no loan had been made, policy was forfeited by such default in payment of premiums under policy provision that no loan should avoid the insurance unless loan and other accrued indebtedness should equal or exceed cash value when loan is due or when there is default in the payment of premiums.
3. INSURANCE.
Under provision of life insurance policy that no loan shall avoid insurance unless loan and other accrued indebtedness shall equal or exceed cash value when loan is due or when there is default in the payment of premiums, insured who had borrowed the full amount of reserve or cash value of policy, could keep such policy in force only by paying his premium thereon and the annual interest on his loan each year in advance.
ANDERSON, J., dissenting.
APPEAL from the circuit court of Lauderdale county, HON. ARTHUR G. BUSBY, Judge.
Jacobson, Snow Covington, of Meridian, for appellant.
The loan agreement and the policy must be construed together and the provisions of the policy and of the loan agreement interpreted one in connection with the other.
We find in paragraph captioned "Loan Privilege" the last sentence thereof reads as follows: "No loan made under this provision shall avoid the insurance hereunder unless the loan and other accrued indebtedness hereon shall equal or exceed the cash value when the loan is due or when there is a default in the payment of premiums."
In order for the cash or loan value of the policy to have increased after April 1, 1935, insured would have had to pay his premiums. Then it would not have increased unless premiums were paid for another year. Therefore, the loan at the time of insured's death was equal to the cash value of the policy, and if insured had lived until April 1, 1936, the cash or loan value on his policy would not have been greater than $33, for no premium was paid on the policy subsequent to March 31, 1935. There was a default in the payment of premiums after March 31, 1935, and the policy was avoided by "non-payment of premiums" subsequent to March 31, 1935, under that portion of the sentence above quoted reading as follows: "or when there is default in the payment of premiums."
Further, in the loan agreement it is provided "that the insured relinquishing the options of paid up and extended insurance" etc. This agreement is in keeping with and specifically further establishes that insured gives up his right to extend insurance so long as the loan equals the cash value of the policy, and default in the payment of premiums occurs.
This is in keeping with the provision of the constitution as regards loans to policyholders and their rights under loan privilege and non-forfeiture privileges.
It will be further noted under the heading "Non Forfeiture Privileges" it is said: "The values under each option are shown in the table below if there is no indebtedness against this policy." The values shown are only available "if there is no indebtedness against the policy." And it is further provided "any indebtedness will be deducted from the cash value if Option 1 is selected, and will reduce the amounts under either Option 2 or 3 in the proportion that the indebtedness bears to the cash value, but the extended term period will remain the same as set out in the table, unless the total indebtedness exceeds the reserve, in which event all benefits shall become null and void."
If any meaning is given this provision of the policy it will be readily seen no amount of extended insurance was provided when no premium was paid subsequent to March 31, 1935. The amount of the loan and the cash value, as provided in the table of non-forfeiture values, were the same. Both were $33. Insured took the full amount which he could borrow on his policy. By reducing the amounts "under either options 2 or 3 in the proportion that the indebtedness bears to the cash value" no insurance was carried for any period, for the proportion of the loan to that of the cash value of the policy was equal. If the loan had been less than the cash value of the policy then some amount would have been payable under the policy on the death of insured at any time within 4 years, 6 months from March 31, 1935.
This case is governed by the principles announced in the case of Neal v. Columbian Mutual Life Assurance Society, 138 So. 353, 161 Miss. 814.
Eugene Seale and Walker Broach, Jr., both of Meridian, for appellee.
To state appellee's theory in plain language at the outset, the proof is undisputed in this case that the insured paid premiums to April 1, 1935, which would have paid for his insurance until Oct. 1, 1939, under the continued insurance provisions of the policy. It is further undisputed that he paid interest on a loan until Jan. 14, 1936. It is also undisputed that he died on Dec. 20, 1935, before the time for which he paid was up on either the insurance or the loan and that the appellee kept the money insured paid and still has it. If the insured is to get what he paid for, this policy was in full force and effect for the face amount thereof at the time of the death of insured. It is further undisputed that appellant never offered to return the loan agreement as paid, never at any time claimed it as due or accelerated before insured's death, which claim if made at the time of the alleged default would have resulted in usurious interest above twenty per cent per annum and have released the entire indebtedness, nor did appellant at any time prior to the death of deceased do anything except allow the loan to be earning the unaccrued interest. Appellee insists that appellant cannot keep the loan in force to earn the interest without keeping the policy in force and appellee further contends that it was to the financial advantage of the appellant not to lapse this policy.
Appellee insists that she is entitled to recover for the reason first, that the appellant had no right under the policy and competent and material parts of the loan agreement to forfeit this policy without declaring the loan due and refunding the unearned interest, which appellee insists was not done and to this day appellant has made no offer to return any unearned interest. That as long as the loan was not paid from the reserve fund the full amount of the reserve continued the policy in force.
There must be an enforceable or matured indebtedness before the lender can take the security or attach. James v. Fisk, 9 Sm. Marshall 144; Thomason v. Wadlington, 53 Miss. 560. One cannot be said to be indebted until the day of payment. Lum v. Buckeye, 24 Miss. 564.
Demand is necessary to start the statute of limitations to running on a demand note (to mature it). Shapleigh v. Spiro, 106 So. 209.
Insurance policies, loan agreement and contract are to be construed most favorably to the insured. Morgan v. Sons and Daughters of Jacob, 90 Miss. 864, 44 So. 791; Columbia Woodmen v. Ramsey, 118 Miss. 454, 79 So. 351; Locomotive Engineers Acc. Ins. Co. v. Meeks, 157 Miss. 97, 127 So. 699; W.O.W. v. Thomas, 171 Miss. 99, 157 So. 83.
There seems to be no contention but that the continued insurance on this policy would automatically take effect, were there no loan involved. So let us examine the forfeiture provision of the loan provision in this policy. We quote the last sentence of the "Loan Privilege" contained in the policy, which is the only forfeiture provision in the loan provision: "No loan made under this provision shall avoid the insurance hereunder unless the loan and other accrued indebtedness hereon shall equal or exceed the cash value when the loan is due or when there is a default in the payment of premiums." Counsel for appellant claim that either of these alternatives will lapse this policy. But does it so read? Does it not mean that first the loan must be due before a default in the payment of premiums will avoid the insurance?
The payment of interest in advance, in the absence of agreement, extends the debt for the time interest is paid. Bank of British Columbia v. Jeffs (Wash.), 51 P. 348.
We respectfully submit that on a proper interpretation of this policy that it remained in force for its face amount as appellant had no right to forfeit it or reduce its benefits without first declaring the loan due and making an accounting for the unearned interest which even now appellant makes no offer to refund or account for. As the expression goes it "would eat its pie and have it too." It was never established by appellant that this loan was "due," nor that it at any time equaled or exceeded the pro rata amount of the Guaranty or Reserve Fund.
It can only be contended logically that the Praetorians loaned this money on the security of the policy with a lien thereon instead of the loan being a withdrawal of the reserve, in fact the loan agreement so reads: "an express lien being hereby given upon said policy and its accumulation to secure said loan and interest." Consequently this reserve fund remained intact as long as not applied to the debt and the lien enforced and as such maintained the policy in full force and effect for its full face amount. Jacobson, Snow Covington, of Meridian, for appellant, on suggestion of error.
It is difficult for us to see how the court could have misconstrued the policy here involved or the loan agreement. The same language has been construed by practically every appellate court in the nation, and there has been no difficulty heretofore. Our court, in other cases, had so readily accepted the plain interpretation of the language used, we felt it would have been an imposition upon the court to cite the numerous cases from other courts upholding these provisions when writing the original brief, and relied upon the outstanding case of Neal v. Columbian Mutual Life Assurance Society, 138 So. 353, 161 Miss. 814, which we humbly submit is on all fours with the case here under consideration.
The principles contended for were adopted by this court in the case of Fidelity Mutual Life Insurance Company v. Oliver, 71 So. 302, 111 Miss. 133.
The court by its holding has in effect held that the loan made to McCrary did not effect the cash surrender value of the policy, the amount of paid up insurance, nor the extended insurance, when every provision of the policy and of the loan agreement is to the effect that the loan governs each of these provisions of the policy. The opinion of the court in effect writes a new policy and ignores the contract in force when McCrary quit paying premiums.
The effect of a loan on a policy of this kind is simply an advancement, with the right in the insured to re-deposit this advancement and then take advantage of other benefits of the policy. The principle is aptly announced in Board of Assessors v. New York Life Insurance Company, 216 U.S. 517, 521, 522; 30 S.Ct. 385; 54 L.Ed. 597. In that case in deciding that advances made upon policies did not constitute taxable "credits" of the insurance company, the court explained such advances by saying that when premiums have been paid for a certain time, the company "becomes bound ultimately to pay what is called their reserve value, whether the payment of premiums is kept up or not; and this reserve value increases as the payments of premiums go on. A policy holder desiring to keep his policy on foot and yet to profit by the reserve value that it has acquired, may be allowed . . . to receive a sum not exceeding that present value, on the terms that, on the settlement of any claim under the policy, the sum so received shall be deducted with interest (the interest representing what it is estimated that the sum would have earned if retained by the . . . (company); and that, on failure to pay any premium or the above-mentioned interest, the sum received shall be deducted from the reserve value at once . . . As the . . . (company) never advances more than it already is absolutely bound for under the policy, it has no interest in creating a personal liability, and therefore the contract on the face of the (so-called) note goes on to provide that if the note is not paid when due, it shall be extinguished automatically by the counter credit for what we have called the reserve value of the policy . . . In form it (the advance) subsists as an item until the settlement because interest must be charged on it. In substance it is extinct from the beginning, because . . . it is a payment, not a loan." See, also, Williams v. Union Central Life Ins. Co., 291 U.S. 170, 179, 54 S.Ct. 348, 351, 78 L.Ed. 711, 92 A.L.R. 693.
There is a brief on the question in 113 A.L.R. beginning at Eugene Seale and Walker Broach, Jr., both of Meridian, for appellee, in reply to suggestion of error.
A careful analysis of appellant's brief on suggestion of error will reveal that no new matter whatsoever has been called to this court's attention from that presented to the court in appellant's original brief and that practically, if not all, of the authority cited by appellant is entirely in line with the holding of this court in the Neal v. Columbian Mutual Life Assurance Society case, 138 So. 353, 161 Miss. 814, so strongly depended upon by appellant and entirely relied upon by him in his original brief filed herein.
We respectfully submit that unless the loan was extinguished the reserve carried this policy in full force and effect and since appellant shows no action on its part extinguishing the loan, unless the policy did so automatically by the policy, such provision would have been for the benefit of the appellant and could have been waived by it. However we find no such provision in the policy and insist to the court that no debt was paid in this case and that therefore the reserve was with the appellant to extend this policy. But be that as it may, we find in this case most positive evidence of a waiver of such right, even admitting for the sake of argument (but which we do not otherwise admit) that the policy automatically applied the reserve to the payment of this loan.
Deceased paid enough premiums to provide insurance to October 1, 1939, and he paid enough interest to provide for the use of the money he obtained to January 14, 1936, both of which times expired after his death. We respectfully submit, that what a man pays for is usually a good guide to determine what he shall receive under the law, always admitting that he is governed by a valid contract, but here there is nothing in the contracts in this case (which is supported by lawful consideration) to prevent him getting what he paid for. Another elementary principle of law, we respectfully submit, is that parties intend to do the lawful thing. If as appellant contends, it forfeited the policy on April 1, 1935, it retained interest in excess of 20 per cent per annum which is illegal under our usury statutes, even to the point of forfeiting the principal. Having kept this unearned interest is it not reasonable to assume that appellant intended to let the loan run so as to earn what it already had collected. In fact it shows that it did so elect and if it did not do so its acts are so flagrantly unfair and discriminatory as to be forbidden by our statutes on usury and discrimination by insurance companies. (See Great Southern Life Ins. Co. v. Jones, 35 F.2d 122.) We humbly submit that no ordinary lender of money can resort to his security prior to a time the loan is due, that the loan in this case was due, and we also submit that an insurance company lending money has no greater rights than an ordinary lender of money.
The rights of an insurance company are the same as those of any other lender of money, at least as to the rate of interest which it may collect and the mode in which it may enforce payment, it having the right to foreclose only in the mode provided by law or agreed upon by the parties. 32 C.J. 1166; Travelers Ins. Co. v. Lazenby, 16 Ala. A. 549, 80 So. 25, 29; Emig v. Mutual Benefit Life Ins. Co., 127 Ky. 588, 106 S.W. 230, 32 Ky. L. 484, 23 L.R.A. (N.S.) 828; New York L. Ins. Co. v. Curry, 115 Ky. 100, 72 S.W. 736, 24 Ky. L. 1930, 103 A.S.R. 297, 61 L.R.A. 268.
We respectfully submit that a careful reading of the cases on the question of extended insurance will show to the court a few outstanding essentials, contained in all the cases, among which are, (1) that there must be an enforceable indebtedness (Occidental L. Ins. Co. v. Jamora (Tenn. Civ. App.), 44 S.W.2d 808), and that there has been an application by the insurance company of the reserve to the extinguishment of the debt with provision made for unearned interest and all proper applications of funds held by the insurance company for the insured. There was no such application nor accounting by the appellant. In fact it made its election under this contract with the idea of keeping all monies it had its hands on, and with good risks, if it did this in a thousand cases, considering the cost of writing new business and other features of the insurance business it was to its distinct advantage to carry this and similar risks for a few months to earn the interest and possibly have premium payments resumed. Now it is merely attempting to change its bet after death has thrown the dice. We further submit that under the facts of this case it devolved upon the appellant to show how it applied its security to this loan indebtedness and that it has wholly failed to show that it has so applied it at all.
It has kept the interest, without any other action. "It is generally held that the reception of interest in advance upon a note is prima facie evidence of a binding contract to forbear and delay the time of payment; and no suit can be commenced against the maker during the period for which the interest has thus been paid." 15 R.C.L. 12; Skelly v. Bristol Sav. Bank, 63 Conn. 83, 26 A. 474, 38 A.S.R. 340, 19 L.R.A. 599; Drew v. Towle, 30 N.H. 531, 64 Am. Dec. 309; British Columbia Bank v. Jeffs, 18 Wn. 135, 51 P. 348, 63 A.S.R. 875.
Inasmuch as counsel for appellant has cited the provisions of the policy regarding the loan privilege and the loan agreement, we will now take up his brief paragraph by paragraph and show that not only has he defined "ambiguous" but that in these policy and loan provisions is an illustration as stated by the decision of the court in this case. Counsel for appellant says that the following provision is clear, but we respectfully submit that it is not clear as we shall show.
We now come to the case of Fidelity Mutual Life Insurance Company v. Oliver, 71 So. 302, 111 Miss. 133, which we do not consider applicable to this case, because the facts of that case clearly show that the loan was past due and the company had by letter (affirmative action) notified the insured that his policy had lapsed.
Counsel makes much to do over "Past due" and over an indebtedness not having to be past due to reduce the amount of benefits. However, no clause of the policy nor the loan agreement is automatic until the aggregate of the principal and interest due on the loan exceeds the Reserve Fund and counsel has not shown that the loan was due at all, and has shown no demand and no crediting of the amount of the loan by appellant, indeed appellant's witness stated that the loan agreement was still valid and binding. Under our law there must be an enforceable indebtedness and an indebtedness is not an enforceable indebtedness until it is due. "There must be an enforceable or matured indebtedness before the lender can take the security or attach." 32 C.J. 1166; Travelers Ins. Co. v. Lazenby, 16 Ala. App. 549, 80 So. 25, 29; Emig v. Mutual Benefit Life Ins. Co., 127 Ky. 588, 106 S.W. 230, 32 Ky. L. 484, 23 L.R.A. (N.S.) 828; New York L. Ins. Com. v. Curry, 115 Ky. 100, 72 S.W. 736, 24 Ky. L. 1930, 103 A.S.R. 297, 61 L.R.A. 268.
"One cannot be said to be indebted until the day of payment." Lum v. Buckeye, 24 Miss. 564; and to quote the Neal v. Columbian Case, there must be a liquidation of the debt under the policy.
Hence we humbly submit that the reserve in the form of the personal liability under the loan agreement remained with the appellant and the automatic continued insurance took effect as long as this loan remained outstanding which continued until after the death of the insured and therefore the appellant is liable for the entire amount under this policy.
Additionally permit us to emphasize that the only way the advance interest deducted under this policy could become earned was for the appellant, the insurer, to leave the loan outstanding, and waive the right, if any, to enforce its security until January 14, 1936, one year after the loan was made; and until such date (prior to which insured unfortunately died) the aggregate amount of principal and interest (earned) could not and did not even equal, much less exceed, the Reserve Fund, and hence appellant is entirely precluded from the benefit of any such provisions.
No lender can both fully collect its indebtedness and also enforce the security therefor. If after default, the lender does not enforce the pledge, but elects to carry the indebtedness, the security is released upon full payment. This is exactly what happened in this case. The Praetorians, the appellant, elected to waive the default, refused to enforce any security against the policy, elected to earn, instead of refunding, its unearned interest, and was (by the death of insured while policy was being continued) repaid the full amount of its loan, prior to the due and extended date thereof; — and cannot now be heard to claim both its money and the security therefor.
Further, by the provisions of this policy and the loan agreement this was a loan and not an advancement as contended by counsel and we say that the case he cites of Board of Assessors v. New York Life Insurance Company, 216 U.S. 517, 522, 30 S.Ct. 385, 54 L.Ed. 597, does not meet the facts of the instant case and the instant case is under the same category of Provident Life and Trust Co. v. Gratz, 114 A. 498, 271 Pa. 133, which case cites the former case and distinguishes it on its facts.
Now turning to an analysis of the brief in 113 A.L.R. beginning at page 606, as we have previously stated this brief is not helpful to a solution of the present case as this brief expressly states "it is the purpose of the present annotation to present those cases dealing with the effect upon the computation of the amount of the cash surrender value, the amount of the paid up insurance, and the amount of the extended insurance, and the length of term of its continuance, of the extension of a loan against the policy," because as we have previously stated, the insuror, the appellant in this case, never at any time computed anything under this policy and put it in liquidation as described in the Neal v. Columbian Mutual case, the loan agreement standing at all times unsatisfied and in place of the reserve fund as aptly stated by the able opinion previously rendered in this cause. However, inasmuch as an analysis of these cases impresses the true principles underlying these transactions, we will analyze as many of them as possible although we are not dealing with the other briefs cited in A.L.R. which do not appear to have any helpful bearing upon this particular question.
Argued orally by Eugene Seale and Walker Broach, Jr., for appellee.
There was a peremptory instruction granted in the Circuit Court of Lauderdale County in favor of the appellee, Mrs. Julia McCrary, against the appellant, the Praetorians, a life insurance company, for the recovery of the face value of an insurance policy on the life of her son, D.L. McCrary, in the sum of $1,000, with accrued interest, less an indebtedness in the sum of $33, representing a full cash or loan value of the policy at the time the indebtedness was incurred.
The defense is that the policy was forfeited for nonpayment of the premiums at a time when no cash or loan value remained with which to continue the insurance in force until the date of the insured's death. The policy was issued on March 13, 1931, and at the end of four years thereafter, its cash or loan value is stipulated to be the sum of $33. On January 4, 1935, the insured secured a loan thereon for this amount in full, executed a loan agreement therefor payable upon written demand, and from which loan there was deducted the sum of $1.98 as interest for one year in advance, together with a further sum of $9.70 for five monthly premiums then accrued and to accrue up to and including the fourth anniversary date of the policy on March 13, 1935, and the payment of all of which premiums was therefore necessary in order to make the cash or loan value in the sum of $33 available to the insured as of its said fourth anniversary date, but the net proceeds of which loan was advanced to the insured prior thereto. Default was then made in the payment of the monthly premium due in April 1935, and no premium for any month was paid after the fourth anniversary date of the policy on March 13th of that year. Thereafter, the insured died on December 20, 1935, before the next annual payment of interest became due on the loan, and hence without any default having been made in the performance of the loan agreement.
It may be conceded that if the loan had not been made, the cash or loan value of $33, representing the full reserve on the policy would have been sufficient to keep the insurance in force some time beyond the death of the insured, notwithstanding the default in the payment of the monthly premium due in April, 1935, and thereafter, for the reason that it would have been the duty of the insurance company in such event to use the reserve for the purchase of extended insurance upon the failure of the insured to exercise either the option given him in the policy, (1) of surrendering the policy for cancellation and payment to him of its cash value, after default in the payment of any such premium; or, (2) to receive the paid-up insurance therein provided for. But, in view of the fact that he had already received the full reserve or cash value as a loan on the policy, there was nothing left with which the insurance company could purchase for him any extended insurance. The policy therefore lapsed upon default in payment of the monthly premium due in April, 1935, and within the period of grace allowed therefor. Thereupon, all rights of the parties under the policy expired except the right of the insurance company, reserved by the terms of the contract, to deduct the indebtedness from the amount which would have then constituted the reserve or cash value had the loan not been made, and except the right of the insured to have the policy reinstated during his lifetime "by submitting satisfactory evidence of health and insurability and upon payment of all arrears" at the time of any application for reinstatement, and under the terms and conditions thus stipulated for such reinstatement.
It is expressly provided by the terms of the policy that no loan "shall avoid the insurance hereunder unless the loan and other accrued indebtedness herein shall equal or exceed the cash value when the loan is due or when there is default in the payment of premiums." That is to say, if the indebtedness equals or exceeds the cash or loan value, either when the loan is due or at such time as there is a default in the payment of the premiums, the policy becomes of no further force and effect. When the default was made in the payment of the premium due in April, 1935, the indebtedness did in fact equal the then cash or loan value. If it had been less than the cash or loan value, the insured was given the option upon default in the payment of such premium, (1) to surrender the policy for cancellation and receive the difference; (2) to surrender the policy for paid-up insurance; and (3) to have the policy endorsed for extended insurance. And, it is provided that if the insured should fail for sixty days after such default in the payment of the premium to exercise either of the options above mentioned, then the third option would become effective automatically, but it is also provided that any indebtedness will be deducted if option number one is selected and will reduce the amounts under options two and three in the proportion that the indebtedness bears to the cash or loan value. Therefore, the indebtedness having equaled the cash or loan value, its deduction therefrom would of course have the effect of completely extinguishing the benefits that would have otherwise been available to the insured. In other words, if instead of either surrendering the policy and taking its reserve or cash value in settlement, or taking paid-up insurance or extended insurance, the insured decides to borrow the full amount of such reserve or cash value, he can keep his policy in force only by paying his premiums thereon and the annual interest on his loan each year in advance. If he makes default either in the payment of a premium after borrowing the full reserve or cash value or in paying the annual interest on his loan each year in advance, the policy becomes lapsed. Fidelity Mutual Insurance Company v. Oliver, 111 Miss. 133, 71 So. 302; Neal v. Columbian Mutual Life Assurance Society, 161 Miss. 814, 138 So. 353.
It is therefore necessary that we withdraw the former opinion rendered herein and set aside the judgment entered on May 26, 1941, sustain the suggestion of error, and reverse the action of the court below and render judgment herein in favor of the appellant, in accordance with the views herein expressed.
The suggestion of error is therefore sustained, the judgment of the court below reversed, and judgment is rendered here for the appellant.
It is so ordered.
DISSENTING OPINION.
I adhere to the opinion in this case affirming the judgment and adopt it as my dissenting opinion from the judgment of the majority of the Court sustaining the suggestion of error. The opinion referred to is as follows:
"Appellee, Mrs. Julia McCrary, brought this action in the circuit court of Lauderdale County against appellant, the Praetorians, a life insurance company, on a life policy payable to her, to recover the sum of $1,000 with interest, the sum payable to her by the terms of the policy upon the death of the insured, D.L. McCrary. The declaration made the policy an exhibit thereto and alleged that insured had died and the insurance company had refused to pay the plaintiff the amount provided in the policy. The cause was tried on the pleadings and evidence oral and written. At the conclusion of the evidence on request of the plaintiff, the Court instructed the jury to return a verdict for the amount sued for with interest, which was done. From that judgment the insurance company prosecutes this appeal.
"The defense was that the policy was forfeited by nonpayment of premiums. The material facts are undisputed. The insured was a son of the beneficiary. The policy had been in force more than four years. It was dated the 13th of March, 1931. On January 14, 1935, the insured secured a loan thereon of $33, executing a loan agreement therefor. At that time the cash loan value of the policy, according to its terms, was $33. The loan was made due January 14, 1936, one year after it was made. The premiums on the policy were annual, $22.35; semi-annual, $11.55; quarterly, $5.80; monthly, $1.95. The premiums on the policy were paid up to April 1, 1935. None were paid after that. On December 20, 1935, the insured died. His death therefore occurred before the loan was payable. The loan value of the policy, $33, was the amount of reserve credited to the insured under the terms of the policy. It is without question that if the loan had not been made the reserve of $33 was sufficient to keep the policy alive some time beyond the death of the insured. The question is whether the making of the loan and default in payment of the premiums after the first of April, 1935, voided the policy.
"The provisions of the policy particularly applicable are, the `Loan Privilege';
"And a part of the `Non-Forfeiture Privileges';
"And a part of the `Loan Agreement,' which are copied in the order stated:
"`Loan Privilege — At any time after two full years' premiums shall have been paid hereon and while this policy is in full force, The Praetorians will loan the insured upon proper assignment of this policy and on the sole security thereof any amount within the loan value shown in the "Table of Non-Forfeiture Values" opposite the year for which premiums shall have been paid. Interest at the rate of 6% for one year shall be paid in advance or deducted out of the proceeds of the loan, and shall be payable annually in advance thereafter as long as the loan remains unpaid. If interest is not paid when due, it shall be added to the principal and bear interest at the same rate. No loan made under this provision shall avoid the insurance hereunder unless the loan and other accrued indebtedness hereon shall equal or exceed the cash value when the loan is due or when there is a default in the payment of premiums.'
"`Non-Forfeiture Privileges — . . . but the extended term period will remain the same as set out in the table, unless the total indebtedness exceeds the reserve, in which event all benefits shall become null and void.'
"`Loan Agreement — . . . When the aggregate of the principal and interest due on this loan exceeds the pro rate amount of the Guaranty or Reserve Fund of The Praetorians accumulated to this Policy, the Praetorians shall not longer be liable thereon in any manner for benefits, options, paid up or extended insurance or otherwise, but the Policy shall in such event be automatically cancelled.'
"The case therefore is this: The policy of life insurance in force for more than four years; in January, 1935, a loan to the insured of the full amount of the reserve credit to his policy, its loan value, $33, due one year after date; all premiums paid to the first of April, 1935; default in the premiums thereafter; the death of the insured in December, 1935; if the reserve had not been borrowed it is without question that the policy would have been in force. Did the facts of the loan and default in the payment of the premiums forfeit the policy before the death of the deceased? We are of opinion that it did not, although the pertinent provisions of the policy and the loan agreement having to do with the question are somewhat ambiguous. Resolving the doubts, however, in favor of the insured as should be done under the law (Sovereign Camp, W.O.W. v. Thomas, 171 Miss. 99, 157 So. 83, and authorities cited in the opinion), we are of the opinion that the loan agreement took the place of the cash reserve. In other words, to forfeit the policy it was necessary that there be a default in the payment of both the loan and the premiums before the death of the insured. The loan agreement simply took the place of the reserve. Either one would have kept the policy in force.
"Affirmed."