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written by its superintendent to the stipulated for in the loan provision. local agent with whom the plaintiff It was a means of encouragement of negotiated expresses its purpose sales of policies and payments of and its construction of the contract premiums keeping them in force. in the following terms: "I note the There is an express forfeiture for interlineations in the loan agree- nonpayment of premiums and setment, but regret to say that the so- tlement on a basis which includes ciety cannot accept any loan agree- deduction of any indebtedness to the ments with changes made therein. defendant under the contract. This It is the form of loan agreement necessarily involves by the very carefully prepared by counsel, and terms of the agreement extinguishit is necessary that it be executed ment of the loan in consequence of without change in every case.
In nonpayment of any premium. Asthe matter of a renewal of the loan, signment of the policy as collateral
, the society would be very glad to security for the money loaned and furnish the beneficiary on this con- the interest necessarily
necessarily carried tract with an additional document right of cancelation for nonpayment in the shape of a letter agreeing to of the loan or the interest. continue the loan in accordance with A stipulation in the loan agreethe terms of the contract, although ment for renewal on payment of inthis is not necessary, as the con- terest in advance, provided the tract itself brings it out. The mat premium should have been, or ter of the notice is one the society should be contemporaneously, paid cannot consider any more than a for the period of the renewal, so as bank will consider requirements to to keep the policy in force for such give notice in its loan forms. As a period, would have been in exact acmatter of practice the society does cord with the reciprocal rights of send out notices in regard to re- the parties under a proper construcnewal of loans through the payment tion of the policy. The agreement of interest prior to their maturity, submitted and rejected by the plainbut we cannot and will not put our- tiff was a manifest departure from selves in position of perhaps com- it, since it would have made the plicating either the policy or the debt absolutely due and payable on loan through any claimed failure to
the date specified. It made no prodo so. We would be glad to state vision for the borrower's clear right what our practice in this matter is
of renewal, and by necessary impliin a separate communication, but
cation denied it. But the tender of will not bind ourselves to send any
a separate instrunotice."
ment giving the separate A fair and reasonable construc
right, though intion of the policy, considered as a
formal, was a sufficient compliance. whole, leaves no doubt as to the pur
The two papers, if exchanged, pose of the loan provision. It is a
would have been read and considpart of the policy, and must be interpreted in the light of the gener
ered together and so harmonized as al purpose of the contract in which to carry into effect the intention it is found. It cannot be assumed
clearly expressed. Pardee v. C. that the defendant intended to bind
Crane & Co. 74 W. Va. 359, 82 S. E. itself to make renewable loans at a
340. A deed absolute on its face fixed rate of interest below that may be held to have effected only a usually paid to any persons other conditional grant upon disclosure of than the holders of live policies. a defeasance in a separate paper There was presumptively a consid- executed by the grantee. . Hoffman eration for such an agreement. Aft- v. Ryan, 21 W. Va. 415; Kyger v. er the lapse of a policy for any Depue, 6 W. Va. 288. reason, there would be no real justi- The provision in the proposed fication for the favor or indulgence agreement for cancelation of the
(81 W. Va. 663, 95 8. E. 811.) policy without notice in case of de- than the loss of a merely pecuniary
fault in payment of demand. The rates of premium ad-Intention to
the loan was also vance with age, and physical incancel-notice.
inconsistent with firmities liable to occur at any time the policy contract. It does not call may have rendered it impossible for for a loan agreement of that kind. the insured in any case to obtain It binds the insured to make a due new insurance at even higher rates. assignment of the policy as collat- The principle of analogy fails for eral security, but it does not say total dissimilarity in situation and the assignment shall carry right to circumstances. the assignee to cancel it without no- Lack of proof of plaintiff's readitice and an opportunity to show ness, willingness, and desire to take lack of default or to pay the loan the loan upon proper conditions, and save the policy after a default. and deviation of the form as altered As the days of grace allowed in the by him from the true interpretation third clause of the division, entitled of the contract, in that it fails to "Privileges and Conditions," do not provide for continuance of the polapply to defaults in the payment of icy in force by payment of premiloans, the right to pay after default ums, are urged against the verdict. is not expressly provided for in the His application for the loan and expolicy. As to it, the policy is open pression of willingness to execute to construction, and the agreement his obligation for it and assign the proposed would have amounted to policy warranted the jury in finda practical construction by the par. ing his willingness and desire to ties, binding upon them. The as- take it. Nothing in signment stipulated for as a condi- his conduct indi. -refusaltion of the loan was not defined cated unwillingness otherwise than by the use of the to sign an agreement making the word "due," and the phrase "as maintenance of the policy a condicollateral security,” but it is contend- tion of continuance of the loan. ed such an assignment as banks At the very inception of the negocustomarily take in making loans on tiations, he was met with a flat recollateral was contemplated. The fusal to provide for notice of difference between the relations of default as a step preliminary to these parties and those obtaining cancelation. That excused further between a bank and a borrower is negotiation on his part, and he was very marked. This is a contract to under no duty to suggest conditions make a loan on certain conditions favorable to the defendant. It indicated in general terms. In the seems to have been amply able to other case there is no contract and take care of its own interests. no obligation to make the loan. An exception was taken to the Nothing has been previously settled overruling of a general objection to between the parties. Here there is the introduction of a letter from a contract to make a loan, and it is Thomas B. Sweeney, the local agent silent as to right of cancelation of the defendant, through whom the without notice for default. Such plaintiff negotiated for the loan, diright is deemed not to exist in the rected to the defendant's superinabsence of a waiver expressed or tendent, and urging compliance reasonably and fairly implied. with the conditions suggested by Jones, Collateral Securities, $8 730 the plaintiff. Some of the matter to 732. Moreover, the subject-matter contained in it may have been inadof the assignment stipulated for is missible, but it was clearly admissiwholly unlike commercial paper. It ble for proof of the plaintiff's efforts is an executory contract based upon to obtain the loan
Evidenceconditions that have changed and referred to in it. objectioncannot be restored, wherefore its Under such circumloss may be far more detrimental stances a general objection is un
availing. It must be special and collateral for the purpose, the testilimited to the inadmissible part of mony of two witnesses proving the the evidence or the purpose for customary rate paid for the use of which it cannot be considered. borrowed collateral was objected to, State v. Hood, 63 W. Va. 182, 15 but the court admitted it. L.R.A. (N.S.) 448, 129 Am. St. Rep. jority of the members of this court 964, 59 S. E. 971; State v. Calhoun, are of the opinion that the evidence 67 W. Va. 666, 69 S. E. 1098; was inadmissible. Judge Miller and Billups v. Woolridge, 80 W. Va. 13, I think the court properly admitted 91 S. E. 1082.
it. The collaterals were used to The policy under which the first accomplish the purpose of the deloan was applied for was issued in fendant's broken 1901. A provision of a form of agreement, and the breachpolicy used by the defendant in plaintiff's right to 1911, relating to loans, and allow- compensation for its use is, we think, ing the borrower all the conditions clear. In the absence of a precclaimed by the plaintiff, and even edent, the question turns on general more, was admitted over an objec- principles, and the owner of proption. As this tended to prove rea- erty used in the performance of a sonableness of the plaintiff's con- broken obligation of another to struction of the contract in the him is entitled to compensation. If estimation of the defendant, as dis- it had been a horse, an implement,
closed by its sub- or a machine so used, the right subsequent
sequent conduct would be clear and admitted. That
relating to the sub- the property used was of a different ject-matter, it was relevant and kind cannot logically constitute an material, wherefore the objection exception. was properly overruled. State ex The plaintiff cross assigns error rel. Mt. Hope Coal Co. y. White in the refusal of his proposed inOak R. Co. 65 W. Va. 15, 28 L.R.A. struction No. 4, which would have (N.S.) 1013, 64 S. E. 630. Although told the jury he had right to recover the provision was read from a book for the use of his collateral securinot prepared nor issued by the de- ties. The disposition of the assignfendant, nor used by the witness, ment of error relating to the evidefendant's local agent, the court dence adduced to prove this item permitted the reading thereof on sustains the refusal of the instructhe ground of the right of the wit- tion. ness to use it to refresh his memory.
His instruction No. 3 is founded He said he knew the company had upon the theory of right of recovissued policies containing the pro- ery for his time and labor devoted vision read since 1907. As it was to procurement of the loans from not the basis of the action, and the banks, and he proved by a witness evidence went merely to the defend- that brokers charged 1 of 1 per cent ant's conduct, it does not fall with- for procuring loans in the commuin the rule requiring production of nity in which he resided, but not that the best evidence. The witness's he had paid that rate. He procured knowledge of the conduct in ques- the loans himself. The argument
was admis- submitted in support of the assignsible. He said the ment of error, based on the giving provision was a
of the instruction, does not seem to standard one known in all policies question right to compensation for issued since some time in the year such services, but it denies suffi1907.
ciency of the evidence to warrant Inasmuch as the plaintiff borrowed the instruction. The evidence does the money from banks on collateral not detail the days or hours of servother than the policies owned by ice, and it proves the loans in queshim, and did not hire or borrow tion were only parts of larger ones
Witness insurance agent.
(81 W. Va. 663, 95 S. E. 811.) obtained. Notwithstanding these says he handled the $17,680 on circumstances, it justified the giv- about thirty loans, but this is qualiing of the instruction. As a general fied by an admission that some of rule, such services are not com- them were renewals. Just how pensated for on the basis of rates many were actual loans and how by the day or hour. Such compen- many renewals he does not say. sation is made ordinarily on a per- His evidence is too uncertain on this centage basis. Susceptibility of ap- point to justify recovery of the portionment of the value of the amount claimed and allowed for service required in procuring the services. larger loans of which those in ques
The letter of Thomas B. Sweeney, tion were parts is obvious.
agent, to the superintendent, transAll of the instructions requested mitting the form of agreement with by the defendant were contrary to interlineations made by the plainthe conclusion here expressed as to tiff, and dated March 30, 1911, was the interpretation of the contract admissible to prove and the rights of the parties there- transmission of the
correspondence. under, wherefore they were proper
altered form. In ly refused. In substance and effect view of other evidence of the fact, they would have been directions to it may not have been important, find for the defendant. The court but it was relevant and material. properly told the jury, in an oral The court should have admitted it. charge, they should find for the For reasons stated in the disposiplaintiff and assess his damages at tion of the assignment of error not less than $562, the amount of predicated on the admission of the interest he had had to pay in Sweeney's testimony, the loan clause excess of that stipulated for. used in the policy of 1915, issued by
Exclusion here of the item for the defendant, should have been adcompensation for the use of collat- mitted. No evidence offered to eral securities, which the jury
jury prove purpose on the part of the denecessarily included in their ver- fendant to discourage policy loans dict, makes it excessive. It is so for is pointed out in the cross assignanother reason. The proof of value ment of error pertaining to it or of services in procuring loans does elsewhere. The court will not not warrant recovery of $500 on
search the record for it. that account. The usual compen
The judgment will have to be resation to brokers for obtaining loans versed, the verdict set aside, and a in the plaintiff's community is, ac
new trial allowed. cording to the evidence, 1 of 1 per Petition for rehearing denied, cent and nothing for renewals. He May 9, 1918.
Breaches of loan agreements in insurance policies. As indicated by the title, this note instances is a potent factor in inducdeals with the question of breaches of ing the taking of a policy. It is a part loan agreements by the insurer as con- of the contract, and the insured is stituting a ground for an action for entitled to loans in accord with the damages, or as justifying a rescission conditions stated in such provisions, of the policy by the insured.
and clearly has the right to maintain Provisions giving the insured a an action for damages in case the inright to borrow on the policy after a surer refuses to make a loan accordcertain number of premiums have been ing to its contract. paid are now commonly found in life It will be noted that in the reported insurance policies. This right in many case (HUBBARD V. EQUITABLE LIFE ASSUR. Soc. ante, 886) the policy pro- him in rescinding the contract and vided that after it had been in force maintaining an action for a return of a certain time, the insurer would make the premiums. loans at stated interest, of amounts In Lewis v. New York L. Ins. Co. named in a table, upon assignment of (1910) 30 L.R.A. (N.S.) 1202, 84 C. C. the policy as collateral, and that it was A. 181, 181 Fed. 433, so holding, the decided that this agreement contem- court observed that the undertaking plated a continuance of the loans at was merely subsidiary to the main the option of the borrower upon pay- purpose of the contract, which was to ment of premiums and interest in ad- insure. vance until the maturity of the policy, It was further held in this case that, and the insured was therefore held en- assuming that the insured was en. titled to a provision in the loan agree- titled to rescind for a refusal to make ment giving him a right of renewal a loan, no case for rescission was upon payment of interest for such made, where the insured had not altime as he kept the policy alive up to lowed time between the making of his the time of maturity; but it was held demand for a loan and the bringing of that a provision in a separate paper suit, for the application to reach the was sufficient to give him this right, home office and a reply to be returned, and that he could not refuse the loan and had not executed a loan agreebecause it was not incorporated in the ment which the policy made a condiloan agreement proper.
tion precedent to the granting of a It was further decided that the in
loan, sured was entitled to a reasonable no- And under the pleadings in this tice of the insurer's intention to can
case, which set forth an action praying cel the policy for default in payment damages for a failure to make a loan of the loan, and that the insurer's re- on the policy according to its terms, fusal to make the loan without a pro- it was held that there could be no revision in the loan agreement giving it covery of premiums, and that it was the right to cancel the policy without immaterial that the complaint connotice was a breach of the loan pro- tained language indicating an intenvision of the policy.
tion on the plaintiff's part to repudiate A similar situation arose in Boze- the contract, where it also showed that man v. Prudential Ins. Co. (1908) 130 the insurer had no such intention. Ky. 572, 113 S. W. 836, where a policy In New York L. Ins. Co. v. Pope provided the conditions on which loans (1902) 139 Ky. 567, 68 S. W. 851, should be made, but did not include where the original policy provided for a provision that if the loan, with the loans to the insured, one of the conaccumulated interest, should become ditions being an assignment of the equal to the reserve value of the pol- policy to the insurer as collateral, a icy, the company might demand im
recovery of damages for a breach of mediate payment of the loan, or any the agreement was allowed, it appearpart thereof, and that, if not paid, the ing that the original policy had been policy should become void, and it was burned and that a copy had been deheld that such a provision, which the livered to the insured, and that he had insurer incorporated in a loan agree- applied for a loan, but had been rement, was not binding on the insured, fused, because the original policy was as it was without any consideration not delivered as collateral. A rescisto support it. It was further held, sion and a recovery of the premiums however, that if it were regarded as paid, however, was denied. valid, the evidence in the case failed And in Harn v. Missouri State L. to show that the amount of the loan Ins. Co. (1918) Okla.
173 Pac. and interest equaled the legal reserve. 214, where an endowment policy con
While a breach of the insurer's con- tained a provision giving the insured tract to make loans gives the insured the right to borrow money from the a right to maintain an action for dam- insurer on the security of the policy ages, it has been held not to justify in progressive sums as the policy