Oliver Wendell Holmes, Jr.

“ The socalled liability of the policy holder never exists as a personal liability, it never is a debt, but is merely a deduction in account from the sum that the plaintiffs ultimately must pay. In settling that account, interest will be computed on the item for the reason that we have mentioned; but the item never could be sued for, any more than any other single item of a mutual account that always shows a balance against the would-be plaintiff. ”

“ A policy holder desiring to keep his policy on foot, and yet to profit by the reserve value that it has acquired, may be allowed, at the plaintiff's discretion, to receive a sum not exceeding that present value, on the terms that, on the settlement of any claim under the policy, the sum so received shall be deducted with interest (the interest representing what it is estimated that the sum would have earned if retained by the plaintiff) ; and that, on failure to pay any premium or the above-mentioned interest, the sum received shall be deducted from the reserve value at once. ”

“ There is no dispute about the facts, and the issue as to each sum is upon matter of law.
The so-called credits arise out of transactions denominated policy loans and premium lien note loans, which are explained at length by the judge below, but which may be summed up more shortly here. When the plaintiff's policies have run a certain length of time and the premiums have been paid as due, the plaintiff becomes bound ultimately to pay what is called their reserve value, whether the payment of premiums is kept up or not; and this reserve value increases as the payments of premiums go on. ”