Summary
In Schwenger-Klein, Inc. v. Pacific Mut. Life Ins. Co., 83 Ohio App. 126, 80 N.E.2d 696, a policy of insurance was issued on 3 January 1921 and the premium of $287.00 per annum was to be paid thereafter on 3 January of each year during the life of the insured.
Summary of this case from Long v. Insurance Co.Opinion
No. 20925
Decided May 24, 1948.
Life insurance — Construction of policy — Provision insurer entitled to deduct from proceeds, indebtedness due it — Insurer entitled to withhold current unpaid premium, when.
A policy of life insurance which provides for annual premium payments and which further provides that in the event the proceeds of the policy become due because of the death of the insured, any indebtedness due the insurer and any unpaid portion of the premium for the then current policy year shall be deducted from the proceeds of the policy in the event of death of the insured on the anniversary date of the policy, entitles the insurer, under such circumstances, to withhold from the proceeds of the policy the unpaid premium for the then current year.
APPEAL: Court of Appeals for Cuyahoga county.
Messrs. Miller, Daus Schwenger, for appellant.
Messrs. McKeehan, Merrick, Arter Stewart, for appellee.
This appeal comes to this court on questions of law from a judgment entered for defendant in the Municipal Court of Cleveland.
The plaintiff, appellant herein, is the beneficiary under a policy of life insurance issued by the defendant, appellee herein, on the life of one Arthur Malling. The policy was issued on January 3, 1921. The annual premium for the life insurance provided for in the policy was $287 per annum, the policy providing:
"In consideration of the application for this policy, a copy of which is attached hereto and made part hereof, and the payment in advance of the annual premium of two hundred eighty-nine and 50/100 dollars and the payment of a like premium on the third day of January in each year during the continuance of this policy until the death of the insured [the difference in premium above to be noted is occasioned by the fact that the policy provided for disability benefits up and until the assured reached sixty years of age]; promises to pay * * * on receipt of said home office of due proof of the death of Arthur Malling, herein called the insured, ten thousand dollars, less any indebtedness hereon to the company and any unpaid portion of the premium for the then current policy year to The Schwenger-Klein Company, a corporation, its successors or assigns beneficiary * * *."
The insured died at 10 o'clock a.m. on January 3, 1947. The premium had been paid for the policy year beginning January 3, 1946. The defendant, upon notice of the death of the assured, paid the face value of the policy, less the premium for the policy year beginning January 3, 1947. Such payment was received by the plaintiff without prejudice to its right to litigate the question here presented — whether the defendant, under the above facts, which are not in dispute, had the right to deduct the premium for the policy year beginning January 3, 1947, from the proceeds of the policy.
It is the contention of the plaintiff that "where a premium is to be paid on a day certain, but no particular hour is specified, the policy remains in force during the whole of the day and until midnight thereof without payment of an additional premium. The protection period purchased by the payment of the previous premium does not expire until midnight of the premium date. If the insured dies on such premium date, the company is liable for the face amount of the policy without right of deducting an extra year's premium."
The following authorities are cited in support of such claim: Douglas v. Mutual Life Assurance Co., 13 Alta. L.R., 18, 38 D.L.R., 459; Greulich v. Monnin, 142 Ohio St. 113, 50 N.E.2d 310, 149 A.L.R., 477; Bouvier v. Craftsman Ins. Co., 300 Mass. 5, 13 N.E.2d 619.
There can be no doubt that, by virtue of the contract of insurance calling for the annual payment of premiums, upon the expiration of a year for which the premium has been paid the policy is not in default on the first day of the succeeding year. But this is not because the premium paid for the previous year's insurance extends beyond the year for which it was paid. An annual premium payment is the consideration of one year's coverage for 365 days, not 366 days. The reason that on the anniversary day upon which the premium becomes payable the insured is not in default is because the insured has all of that day in which to pay if he desires to continue the contract of insurance.
In 39 Ohio Jurisprudence, 196, Section 10, under the heading, "Computation of Time," the rule is stated as follows:
"The term `day,' in law embraces the entire day, and refers to a day as a unit of time, not as an aggregation of a certain number of hours, minutes, or seconds. In this sense, and for the purpose thus used, a day is not capable of subdivision into hours, minutes, or seconds, but is to be taken as a whole. In such computations the hours are not counted to ascertain whether a period of twenty-four hours or a given number of such periods have elapsed between the act to be done and the day from which the time is to begin running. The fractions of the days are no more taken into consideration than are the fractions of the seconds. The consequence is that every day and every part of that day is, by this rule, one day before every part of the succeeding day. The last moment of any day is, in contemplation of law in such cases, one day before the first moment of the next day, although the elapsed time is infinitesimal. The rule is strictly one of convenience. Any other method of computation would require an accurate account to be kept of the exact hour, minute, and second of the occurrence of the act to be timed, would produce endless confusion and strife, and would prove impolitic, if not wholly impracticable."
The policy provision as quoted above, as to what shall be deducted from the face value of the policy, when, under the terms of the contract the insurance becomes payable, provides that in addition to other debts due the insurer, from the insured, there shall be deducted "any unpaid portion of the premium for the then current policy year." The current policy year at the time of the death of the insured on January 3, 1947, was the term of one year beginning January 3, 1947.
The plaintiff's contention that because the policy would not be in default (not giving consideration to the thirty-day grace period) until after the entire day of January 3, 1947, had passed, the current policy year did not begin until after such day had fully passed, cannot be supported. The beginning of the "current policy year" and the time when, because of the nonpayment of premiums, the policy is in default are not the same. Because there can be only one January 3 in any one year, and because the policy provides that the obligation of the insurer begins January 3, 1921, and for each subsequent year for which the premium is paid, the "current policy year" of each succeeding year begins on January 3.
For the foregoing reasons the judgment of the Municipal Court of Cleveland is affirmed.
Judgment affirmed.
MORGAN, J., concurs.
HURD, P.J., dissents.