Mutual Life Insurance v. Bratt ex rel. Owings

Bowie, J., delivered the opinion of the Court. The question involved in this appeal is the proper construction of a policy of Life Insurance, issued by the appellant to the appellee, in the amount of two thousand dollars for the term of the natural life of the assured. The policy among other conditions and agreements contained the following, viz., 2nd. “If the said premiums shall not be paid on or before the days above mentioned, for the payment thereof, at the office of the company in the City of Baltimore, (unless otherwise expressly agreed in writing,) or to agents when they produce receipts signed hy the President or Secretary, then in every such case the said company shall not be liable for the payment of the whole sum assured, but only for an amount proportionate to the number of premiums paid.” At the trial before the Court upon submission without a jury, the plaintiff, to sustain the issues on his part offered in evidence the charter of the defendant, the policy of insurance and application for insurance thereto annexed upon the life of Henry Bell, and proved the death of said Bell on the third of July, 1878, and that due proof and notice of the same was given to the defendant more than ninety days before the suit was brought; the plaintiff also proved that prior to the decease of said Bell, twenty-seven quarterly premiums had been regularly paid from the date of the policy, and that, thereafter, default was made, and ²⁰⁸ no other- quarterly premiums had been paid, and four other quarterly premiums had after said default become due and were unpaid at the decease of the assured. The defendant then offered in evidence, subject to exception, certain printed pages of a volume entitled “The Principles and Practice of Life Insurance,” also a printed pamphlet entitled “The Charter and By-Laws of the Mutual Life Insurance Company of Baltimore,” and proved that the same had been printed and circulated prior to the application for said policy by the authority of the Company.

They also offered to prove by the actuary of the company, that he was for many years conversant as an actuary with the business and practice of life insurance, and thoroughly acquainted with- the principles, rules and modes of calculating and adjusting life insurances, and that said volume entitled “ The Principles and Practice of Life Insurance,” is a standard work of recognized authority in the business of life insurance, and the exposition of said rules and principles as read by the defendant from said volume, are recognized and accepted in the business of life insurance as authoritative and correct. The defendant further proved by the actuary, that condition numbered “ 2nd,” as printed in the body of said policy, which regulates the mode of payment by the company in case default shall have been made in the payment of premiums, is the regular and appropriate formula used in the cases of policies, where the whole premium on an insurance for life is provided to he paid up within a definite number of years upon the non-forfeitahle plan, and that in such cases, under that clause or formula, the mode of payment would he to pay to the party entitled such a proportion of the sum insured, as the number of premiums actually paid would hear to the whole number of premiums contemplated by the policy; for example, in a policy for life to he paid up in ten annual premiums, and default ²⁰⁹ made after the seventh, the proportion would he seventh-tenths of the amount insured, and so in similar cases. Testimony was further offered to show, that certain tables known as Expectation Tables are never used in the business of insurance, and that in ordinary life insurance the computation upon which all insurance is made and all premiums are calculated is, upon the probability of a life enduring to the utmost limit of human life, viz., to ninety-five years; that as an expert he would under the aforesaid condition of the policy calculate the sum to be paid the plaintiff by the ratio of the number of premiums paid, to the number which might have been paid in case the assured had survived to the age of ninety-five, and which, the age of the assured being given in the policy, would be the proportion which twenty-seven, the premiums actually paid, bears to one hundred and forty, the possible number, comparing the age of the insured to the limit of human life. The defendant also proved hy said witness that the equitable value of this policy at the time of the default made in paying its premiums, according to the known and recognized rule for computing such value would be $429.28, and thereupon the defendant rested.

The plaintiff then offered a series of prayers construing the policy, and defining the proportion of the whole sum •assured, which the plaintiff was entitled to recover; and excluding the evidence offered by the defendant to govern that construction. The defendant submitted two prayers maintaining his theory, founded upon the, principles laid down in the books offered by him in evidence, and the teslimony of the •actuary. The Court below, in lieu of the plaintiff’s first prayer, •substituted a ruling of its own; granted the plaintiff’s second prayer, excluding the book called Principles of Life Insurance, and the parts read therefrom by the defendant, as evidence in the cause, and granted the ²¹⁰ plaintiff’s third prayer with