Cook v. the Penn Mutual Life Insurance

SCHOTTKY, Acting P. J.

Plaintiffs as executors of the estate of Ruth E. Cook commenced two separate actions against The Penn Mutual Life Insurance Company to compel payment of certain sums they claimed were owing to them under the terms of two life insurance policies. The actions were consolidated for trial and the trial court found in favor of plaintiffs in each case and entered judgments from which defendant appeals.

The record shows that William Coburn Cook was insured by appellant under two insurance policies in which his wife, Ruth E. Cook, was named as payee. Since the policies are substantially identical, we will treat them as one policy. The policy provided that on the insured’s death the

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payee could elect to receive monthly payments pursuant to any one of several options in lieu of a lump sum settlement. “Option C” of the policy provided that the proceeds could he made payable as “An income for ten years certain and thereafter during the life of the Payee, terminating, after the certain period, with the last payment preceding death.” The amount of monthly income would be determined from tables set out elsewhere in the policy.

To provide for disposition of the payee’s interest in the event of her death the policy contained a clause entitled, "Death of Payee," stating:

“Upon the death of the Payee the commuted value of income payments still to become due under Option A, of in.come payments still to become due during the certain or refund period under Option B, C or PR, or the balance of Proceeds then held under Option D or B, with accrued interest, shall be paid in one sum to the executors or administrators of the Payee unless otherwise provided in the election and consented to by the Company. ’ ’

William Coburn Cook died in October 1953 and Ruth Cook became entitled to a lump sum death benefit in the amount of $8,321.27 under the policy. However, Ruth preferred to take the proceeds as a monthly income pursuant to the terms of “Option C.” Therefore, Ruth and appellant executed a settlement statement agreement which was specifically made subject to the terms of the insurance policy and which reiterated the various payment options. Ruth elected “Option C” which gave her a monthly income of $36.54 in lieu of the lump sum payment. A clause of the settlement statement entitled, “Payment to Contingent Payees upon or after Death of Payee,” gave the payee the right to determine the disposition of her interest on her death. There were several alternative methods of payment, depending on the option in force on the payee’s death for the applicability of each. Ruth Cook selected the alternative which provided that the unpaid balance of principal and any accrued interest or the commuted value of installments certain not yet due at the time of her death be paid in one sum to the executor or administrator of her estate. Ruth Cook died on September 28, 1960, prior to receiving the guaranteed minimum of payment for 10 years. Pursuant to the “Death of Payee” clause and the settlement statement, appellant paid respondents $1,246.24, which was the commuted value of the income payments to become due during the remainder of the 10-year period,