Straube v. Pacific Mutual Life Insurance
Before: Garoutte
Synopsis
Life Insurance—Construction of Policy—Forfeiture—Production of Receipt.—A life insurance policy providing that it shall be forfeited, “if the premiums shall not be paid within thirty days of the time they become due, at the office of the company .... or to other duly authorized agents, when they produce receipts signed by the president,” et cetera, is not to be construed as requiring the production of the receipt, as a condition precedent to the payment of the premium.
Id.—Surrender—Right to Paid-up Policy.—Under a policy providing that after three years’ premiums have been paid, the assured, upon surrender of the policy “while it is, by its terms, in full force and effect,” shall be entitled to a paid-up policy without profits for an amount allowed by the rules of the company, the right to a paid-up policy is dependent upon an original policy of present substantial value, and does not exist where the policy has become forfeited by its terms.
Id.—Construction of Code—Application of Net Reserve to Premiums —Requirement of Stipulation.—The provision of section 450 of the Civil Code requiring life insurance companies insuring residents of this state by policies delivered therein, to contain a stipulation that after three years’ annual premiums have been paid the net reserve shall be applied as a premium, and imposing as a penalty for failure to do so the cessation of the right of the company to do business in this state, is not made part of the contract of insurance, in the absence of such stipulation, and does not make the required stipulation a part of the policy as matter of law.
GAROUTTE, J. Plaintiff, Laura M. Straube, insured the life of her husband for her benefit in the sum of ten thousand dollars, under a contract of insurance known as the ordinary life dividend insurance policy. The premiums upon this policy were paid for several years, when a failure to pay the annual premium occurred. Some time thereafter the plaintiff surrend[678]ered the policy to the company for a cash consideration. Thereafter, and within eighteen months of the default in the payment of said premium, Straube, the insured, died. This action was thereupon brought against the company by plaintiff, the wife, upon a complaint claiming and alleging damages by reason of fraud and deceit practiced by the company in the procurement of the policy of insurance from her. A demurrer was sustained to the complaint and judgment for defendant rendered, no answer being filed.
The single question presented is, Does the complaint state a cause of action? As to the special grounds of demurrer, we pass them as involving questions of no great importance to the disposition of the appeal. It appears to be conceded that the question before the court is, Was this policy of insurance of substantial value to the plaintiff at the time the defendant company obtained it from her? It is insisted that the complaint shows the policy to have been of substantial pecuniary value at that time, and four specified grounds are relied upon to support this proposition. We pass to the consideration of these grounds of contention.
1. The policy of insurance provides: “This policy shall become forfeited and void if the premiums shall not be paid within thirty days of the time they become due, at the office of the company in the city of San Francisco, or to other duly authorized agents, when they produce receipts signed by the president, vice-president, secretary, or assistant secretary.” It is now contended that the policy remained in force because the agent did not produce the “receipt” mentioned by this provision of the contract, it being claimed that the proper construction of the policy did not demand that the premium should be paid until such event had taken place. In other words, it is claimed, the production of this receipt was a condition precedent to the payment of the premium. The language of the policy bears no such construction. ÍTo demand for the payment of the premium is nominated in the bond. It is provided that the policy shall be forfeited if the premium is not paid within thirty days after it is due, and the contract then declares that it may be paid either at the office of the company in the city of San Francisco, or to the authorized agent when he has pro
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