I respectfully dissent from the majority opinion of this court. It is admitted that the policy of insurance issued to the deceased had been in effect for more than three years before he became delinquent in paying the premiums. It is likewise admitted that deceased, the insured, died within the three months' period after he became delinquent in paying the premiums and that the reserve was sufficient to pay for extending the policy of insurance for the full amount up to the time of death of the insured. The policy provides: *Page 753
"Nonforfeiture Provisions:
"This policy being issued by a company observing the legal reserve laws of the state of Louisiana is issued subject to the provisions of Act 193 of 1906, making life insurance policies issued by legal reserve life insurance companies to residents of this state nonforfeitable after three years' premiums have been paid.
"If this policy shall lapse for non-payment of premium after premiums have been duly paid for three full years or more, the insured, without any action on his or her part, will become entitled to paid-up insurance for a reduced amount, in conformity with the Combined Experience Table of Mortality with 4% interest, such paid-up policy to become payable by the death of the insured, as specified in this policy; or in lieu thereof the insured may surrender this policy within three months after such lapse and then will be entitled to receive an extended term policy for the respective term calculated as aforesaid, the amount of insurance payable if death occur within said term to be the same amount as that which would have been payable if this policy had been continued in force. If all premiums required by the terms of this policy have been paid, surrender for cash may be had at any time after the tenth anniversary of the policy for an amount calculated on the above standard. If there be any indebtedness under this policy, such indebtedness will operate to reduce the equity the insured or beneficiary may have in this policy, and all indebtedness on this policy shall be deducted from any settlement thereunder. For purpose of valuation, as required by law, the first 52 weeks under this policy is term insurance, and thereafter the policy shall be valued as a whole life policy."
Act No. 193 of 1906, §§ 1, 2, provides as follows:
"Section 1. Be it enacted by the General Assembly of the State of Louisiana, That every contract or policy of life or endowment insurance (other than a term policy for twenty years or less) issued on the life of a resident of this State by any corporation or association organized under the legal reserve laws of this State, or of any other State and delivered within this State, shall, after January first, nineteen hundred and seven, contain a stipulation that after three full annual premiums have been paid thereon it shall not lapse or become void or be forfeited for non-payment of any premium thereafter, or of any note therefor, or of any loan on such policy, or of any interest on such note or loan, and that it is issued subject to the provisions of this Act relating to non-forfeiture.
"Section 2. Be it further enacted, etc., That no policy of life or endowment insurance (other than a term policy for twenty years or less) issued by any legal reserve life insurance company on or after January first, nineteen hundred and seven, after being in force three full years shall by its terms lapse or become forfeited by the non-payment of any premium or any note therefor, or of any loan on such policy or of any interest on such note or loan. The reserve on such policy computed according to the standard adopted by said company, together with the value of any dividend additions upon said policy, after deducting any indebtedness to the company and one-fifth of said entire reserve, shall upon demand with surrender of the policy be applied as a surrender value as agreed upon in the policy, provided that if no other option expressed in the policy be availed of by the owner thereof, the same without any further act on the part of the owner of the policy, shall be applied to continue the insurance in force at its full amount including any outstanding dividend additions less any outstanding indebtedness on the policy, so long as such surrender value will purchase non-participating temporary insurance at net single premium rates by the standard adopted by the company, at the age of the insured at the time of lapse or forfeiture, provided in case of any endowment policy if the sum applicable to the purchase of temporary insurance shall be more than sufficient to continue the insurance to the end of the endowment term named in the policy, the excess shall be used to purchase in the same manner pure endowment insurance payable at the end of the endowment term named in the policy on the conditions on which the original policy was issued, and provided further that any attempted waiver of the provisions of this paragraph in any application, policy or otherwise, shall be void, and provided further that any value allowed in lieu thereof shall be at least equal to the net value of the temporary insurance or of the temporary and pure endowment insurance herein provided for. The term of temporary insurance herein provided for shall include the period of grace, if any."
In Watson v. Metropolitan Life Insurance Company (La.App.)156 So. 29, on page 33, the court said:
"But the statute makes no requirement that it be applied in any particular way, but *Page 754 expressly recognizes the right to apply it `as agreed upon in the policy.' It follows that, if there is in the policy any agreement as to the application of the reserve and if that agreement produces a result not repugnant to the statute, then the policy provision may be carried out unhampered and unaffected by the statute.
"It is only where no application is provided for in the policy, or where several optional methods are provided and none has been selected by the assured, that the statute requires that the reserve shall be applied to the purchase or extended insurance for a short time and for the full amount. This thought is expressed in the words `* * * if no other option expressed in the policy be availed of by the owner thereof. * * *'"
I fully agree with this statement of the law as made by our brothers of the Orleans circuit. The Watson Case appears to be the only case arising under Act No. 193 of 1906.
Clearly, to my mind, the nonforfeiture provision of the policy in question provides another optional method in the meaning of the statute, and the option was not exercised by the insured who died before the expiration of the three months' period provided for by the provision of the policy above quoted; and under the very plain wording of section 2 of Act No. 193 of 1906, the beneficiary in the policy was entitled to be paid the full amount of the policy.