Hine v. State Life Insurance

DEIRUP, J., pro tem. This is an action to recover from the respondent certain sums of money, claimed to be due to appellant under bonus contracts executed as an inducement for the acceptance of a policy of insurance.

On February 24, 1902, respondent issued to appellant a •policy of life insurance in the sum of $10,000, which is still in force. The policy is of the type known as a 20-payment, deferred dividend life policy; that is to say, the respondent agreed in the policy that if the appellant paid the annual premiums for 20 years, he would then be entitled to receive all dividends that had accrued up to the end of said 20-year period and would be insured for the balance of his life without the payment of any premiums. The policy gave to appellant certain other privileges. He could leave the dividends with the respondent as paid-up life insurance; or he could withdraw not only the dividends but the cash surrender value as well and terminate the contract, or convert the cash value into an annuity. If he elected to keep the insurance in force, he would receive dividends annually and would have the right at any time to surrender the policy and collect its cash surrender value, which increased from year to year.

As an inducement for appellant to accept the policy the respondent issued to him two special agreements, called “D. of I.” contracts. Each of these contracts designated ap[659]pellant as a member of the “Department of Information and Inspection” of respondent and provided for the payment to him “as compensation for his services . . . each year during the continuance of this contract, one sixtieth of one per cent of all premiums it (i. e. the respondent) receives in cash, during the preceding year, on insurance it shall write in the State of California from the date of this contract up to and including the year 1921, so long as premiums shall be received as above”. There being two such contracts, the percentage to which appellant became entitled was one-thirtieth of one per cent of all such premiums on California insurance.

Appellant paid the 20 annual premiums called for by the policy contract. The policy matured on February 24, 1922. On January 25th of that year appellant wrote a letter to respondent, asking for a statement of the options to which he would become entitled upon the maturity of the policy. The letter was answered by C. H. Beckett, respondent’s actuary. Appellant wrote for further information and received a reply in detail from Beckett. Appellant then withdrew the accrued dividends, allowing the insurance contract to continue as a paid-up life policy.