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Missouri State Life Ins. Co. v. Langreder

January 22, 1937


Appeal from the District Court of the United States for the Southern District of Illinois, Southern Division; Louis Fitz Henry and Charles G. Briggle, Judges.

Author: Sparks

Before SPARKS, Circuit Judge, and LINDLEY and BALTZELL, District Judges.

SPARKS, Circuit Judge.

By this action appellee recovered a judgment of $12,000 upon a life insurance policy issued to her husband on September 28, 1920. It was issued by the International Life Insurance Company, through its agent at Edwardsville, Illinois, and liability thereon was assumed by the Missouri State Life Insurance Company prior to the insured's death. Both companies were Missouri corporations. The action was instituted against the latter company in 1931, and that company was dissolved by a state court of Missouri in 1933.

Appellee was named in the policy as sole beneficiary, and in case of accidental death of the insured, she was to receive $10,000. It was admitted that the insured died as a result of an accident, on October 6, 1930.

Certain provisions of the policy, which give rise to this controversy, are set forth in the margin.*fn1

Appellant's first plea was the general issue. Its amended second plea set forth the policy provisions relative to cash surrender, and averred that on March 31, 1925, the insured and appellee as beneficiary, in writing, assigned and transferred the policy, together with all benefit and advantage thereof, to the Bank of Edwardsville, of Edwardsville, Illinois; that contemporaneously therewith, the insured and beneficiary borrowed $300 from that bank, and executed a collateral agreement under which they deposited the policy as security for the note, and that when the insured died on October 6, 1930, the full amount of the note with interest was due; that prior to September 28, 1928, insured failed to make certain premium payments then due on the policy, and failed to make payment on notes theretofore given to appellant and its predecessor; that on January 19, 1928, insured gave his note to the International Company for $296.59, which subsequently became the property of appellant, and upon which there was due $335.65 at the time of insured's death, and that note provided that in case the policy were surrendered, the principal with interest should be deducted from any amount due under the policy; that insured did not pay the premiums due on September 28, in 1928 and 1929, and that under the automatic premium loan provision of the policy, those premiums were paid by charging them as a loan against the cash surrender value, and that thereby at the time of the surrender of the policy there was due the company the further sum of $376.10, and in addition thereto the sum of $184.10 for the premium falling due September 28, 1930, but with the privilege of thirty days grace.

It was further alleged that on October 6, 1930, the gross surrender value of the policy, plus the annual cash dividend for 1930, was $955.75, and there was chargeable against it the first two items just referred to, leaving a cash surrender value of $244, which would be further depleted at the end of the grace period on October 28, 1930, by the annual premium for that year of $184.10, thus decreasing the cash surrender value far below the amount due the bank; that on September 30, 1930, the bank, as assignee, demanded the net cash surrender value of the policy, which it delivered to appellant, and at the same time executed a written instrument whereby it surrendered the policy to appellant for its net cash surrender value, and it was cancelled by appellant prior to insured's death.

The amended third plea alleged the same facts and urged that appellee was thereby estopped from asserting that the policy was in force at the time of decedent's death.

The amended fourth plea was substantially the same as the amended second, except as to details of the surrender of the policy. It relied upon the assignment to the bank and its surrender of the policy prior to decedent's death.

The fifth plea was the only one, other than the general issue, to which the District Court did not sustain a general demurrer.In addition to allegations of the amended second plea, it alleged that the bank's surrender of the policy and its demand for, and its receipt of, the cash surrender value was with the knowledge and consent, and at the request of the insured and beneficiary.

The sixth plea upon substantially the same allegations as the second amended plea, contended that the insured and beneficiary had abandoned the policy and all intentions of redeeming it or of keeping it in force.

The seventh plea was precisely the same as the fifth except that it did not allege that appellee had knowledge of, or consented to, the bank's surrender of the policy.

To the fifth plea, appellee replied (1) that the policy was assigned to the bank only for the purpose of securing the payment of the indebtedness, (2) that the bank did not surrender the policy prior to the death of the insured with the knowledge and consent of insured and beneficiary, and (3) that appellant did not pay the net cash surrender value of the policy to the bank prior to the death of the insured. ...

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