Fischer v. Metropolitan Life Insurance

Rumsey, J.:

On the 22d day of January, 1895, the Metropolitan Life Insurance Company issued to the plaintiff its policy of insurance upon the life of Wilhelm Fischer, for the amount of $1,000, to be paid to the plaintiff upon the death of the insured.

The insured died on the 7th day of February, 1897. The proofs of loss, in the form required by the policy, were duly made out and delivered to the defendant on the 18th day of February, 1897, but the defendant refused to receive them, and thereupon this action was brought to recover the amount to which the plaintiff claimed to be entitled upon the policy. A copy of the policy, with all the conditions, was made a part of the complaint, and set out in full in that paper. The answer admitted that at the time mentioned in the complaint the defendant entered into a contract of insurance in writing with Wilhelm Fischer, of which a true copy was set out in the complaint. It contained a denial of certain other allegations of the comjfiaint, one of which was that Wilhelm Fischer performed all the terms and conditions of the contract of insurance to be done and performed by him. In addition to the denials, the defendant alleged, as a further and separate defense, the issuing of the policy of insurance, which was stated to have been issued and accepted upon the express condition that if any premium or installment of premium upon the policy should not have been paid on or before the date it became due, the policy should thereupon be and become void, and all premiums paid thereon should be forfeited to the company. It was further alleged that on the 22d day of April, 1896, there became due to the defendant as a quarter-annual premium on that policy the sum of six dollars and seventy-one cents, which was not paid. It further alleged that no premiums on that policy had been p.aid since the 22d of January, 1896, “ whereby by the terms and conditions of said policy the same became on the said 22d day of April, 1896, null, void and of no effect, and all premiums previously paid on said policy became forfeited to the company.”

Upon the trial, after the plaintiff had rested her case, the defendant proved that the last premium paid on the policy was paid on the 22d day of January, 1896. It further proved that on the 26tli of July, 1896, the policy was declared lapsed by the defendant. There was then offered in evidence by the defendant a notice and affidavit claimed to be such as is required by section 92 of the Insurance Law (Chap. 690, Laws of 1892). To this evidence the plaintiff objected upon the ground “ that there is no defense set up in the answer, as to sending any notice, such as the law required. It is incompetent, irrelevant and immaterial, and does not comply with the statute as to an affidavit that is permissible in such a case.” This objection was overruled and the evidence admitted, and the plaintiff thereupon excepted. The question presented arises upon this ruling of the court.

It is claimed by the plaintiff that the forfeiture of the policy constituted an affirmative defense in the nature of a confession and avoidance, and that to enable the defendant to take advantage of that defense all the facts necessary to constitute a forfeiture must be set up in the answer; that one of those facts was the service of a notice required by the statute, because, until that notice was served, the company had no right to declare the policy forfeited, and that as the service of this notice was not alleged in the answer, proof of it should not have been received.

There can be no doubt that the point was sufficiently raised by the objection taken on the part of the plaintiff when the affidavit was offered. As no application for leave to amend was made by the defendant, the plaintiff was entitled to a ruling upon the pleadings' as they stood, and if under those pleadings this evidence was not competent, the exception was well taken, and the plaintiff was entitled to stand upon it and to have her case judged by the sufficiency of the pleadings as they were presented to the court upon the trial.

Besides many other conditions, the policy contains a provision that if any premium or installment of premium shall not be paid on or before the date when it becomes due, the policy shall be and become void; and all premiums paid thereon shall be forfeited to the company, except under certain conditions, which are not necessary to be mentioned here. At the time the policy was issued there was in force in this State section 92 of the Insurance Law, referred to above, which provided that no life insurance corporation doing business in this State should declare forfeited or lapsed any policy thereafter issued or renewed, nor should any such policy be forfeited or lapsed by reason of non-payment when due of any premium or installment or any portion thereof required by the terms •of the policy to be paid, “ unless a written or printed notice, stating the amount of such premium, interest, installment or portion thereof, due on such policy, the place where it should be paid and the person to whom the same is payable, shall be duly addressed and mailed to the person whose life is insured, or the assignee of the policy, if notice of the assignment has been given to the corporation, at his or her last known post-office address, postage paid by the corporation or by an officer thereof, or person appointed by it to collect such premium, at least fifteen and not more than forty-five days prior to the day when the same is payable.

“ The notice shall also state that unless such premium, interest, installment or portion thereof, then due, shall be paid to the corporation, or to a duly appointed agent or person authorized to collect such premium by or before the day it falls due, the policy and all payments thereon will become forfeited and void, except as to the right to a surrender value' or paid-up policy as in this chapter provided.

“ If the payment demanded by such notice shall be made within its time limited therefor, it shall be taken to be in full compliance with the requirements of the policy in respect to the time of such payment, and no such policy shall in any case be forfeited or declared forfeited or lapsed until the expiration of thirty days after the mailing of such notice.” (2 R. S. [9th ed.] 1174.)

As the policy in question was issued after this statute was passed, the conditions of the policy were controlled by the provisions of the statute, and there could be no forfeiture until the company had served the notice required by this statute and the insured had had his thirty days given by the statute to pay the arrears of the premiums. To that extent the express conditions- of the policy were altered by the provisions of the statute. This alteration not only worked this change in the absolute right of the parties, but it made a very considerable change as to the proof necessary to be offered by the plaintiff to entitle her to recover upon the policy. The effect of the statute was that, after a policy had once been issued, no act of the insured by way of omission to pay the premium could, of itself, work a forfeiture of the policy. So far as it was concerned, the contract was a permanent one until some act of the defendant had been done by way of putting an end of it. Therefore, when any one entitled to sue upon it had occasion to bring an action, he was not compelled, as a condition of making out his cause of action, to show that the payment of' the premiums had continued after the policy had once taken effect, because, by the express terms of the statute, the policy remained a valid instrument between the parties until, after a default in. the payment of the premiums, the company had served the notice and taken certain action which was prescribed by this statute. As was said by the Court of Appeals in Baxter v. Brooklyn Life Ins. Co. (119 N. Y. 450, 455), the contract is not impaired by a failure to pay the premiums on the day fixed, but by a failure to pay within thirty days after the statutory notice had been served. The statute prescribes this notice as a necessary condition of forfeiture, and unless it was served the insured was not in default, because payment within thirty days after the notice is to be taken as a full compliance with conditions as to the payment of the premium. The allegation of the complaint, therefore, that the policy was an existing policy, was sufficiently established by the policy when read in the light of the statute.

Before the defendant could raise any question in regard to the non-payment of the premium, it was necessary to show that it had complied with the statute by serving the notice, as this step was essential to put the insured in default or to raise any point based on his omission to pay the premium. It was admitted by the pleadings that the policy was issued as alleged' ip. the complaint. The plaintiff began the trial of the action, therefore, with a conclusive admission that there was at one time a valid contract of insurance between herself and the defendant; and the burden of showing that the contract was invalid was imposed upon the defendant. Under the'Code of Procedure, it has been settled for many years that whenever it is necessary for the defendant, by way of defense, to show any fact which, starting with the proposition that there has been a valid contract between parties, operates to defend a claim under it by establishing a subsequent performance or a subsequent forfeiture of it, such performance or forfeiture is an affirmative defense and must be affirmatively set out before it can be proved. This doctrine was established in the case of McKyring v. Bull (16 N. Y. 297), and the argument is so well stated by Judge Selden in that case that it is not necessary to be repeated here.

The forfeiture of this policy was an affirmative defense. It could only be established by proof of the facts which warranted it. Those facts were two in number; one was that the premiums had not been paid; the other was that the notice required by the statute had been served more than thirty days before the policy had been declared forfeited. It was just as necessary to prove one of those facts as the other, because both of them together were required to constitute a forfeiture. No one would claim that it was not necessary to allege in this affirmative defense that there had been a failure to pay the premiums; but a failure to pay the premium is no more necessary to constitute the forfeiture than the service of the notice, and if it was necessary to allege one, it just as clearly was necessary to allege the other.

Under the rule laid down in the case last above cited, the affirmative defense must have been set up before the defendant could have any benefit from it. It was not sufficient to set it up in part, but it should have been fully set out in the answer, so that the plaintiff might know precisely what was claimed to constitute a forfeiture. All that she was notified of by this answer was that her husband had not paid the premium. Looking at the statute, she must have known, of course, that that was entirely insufficient to warrant the forfeiture of the policy, and she was entitled to stand upon that insufficiency in •the absence of any allegation that the notice had been served, which put upon him (lie duty of paying it within thirty days. Indeed, the allegation of notice was the much more important of the two, because that was the transaction which put Wilhelm Fischer in default, and of which, in the nature of things, this plaintiff could have had no knowledge nor any intimation of its existence unless it was set out in the answer. She came into court, therefore, for the trial of this case, without any notice that she would be called upon to meet an important fact not within her knowledge, and, therefore, we must assume that she was utterly unprepared to make any proof in regard to it, because it was not alleged. It is to be noticed that the statute not only says that no company shall declare a policy forfeited, but that no policy shall be forfeited. The allegation, therefore, not only lies at the basis of a declaration of the forfeiture, but the existence of the service of the notice is the foundation of the right to forfeit, and for that reason proof of it is absolutely essential.

Under the statute as it then existed, therefore, it was not necessary for the plaintiff to prove the payment of the premiums, and proof that they were not paid would not establish the forfeiture of the policy, because, by the express provisions of the statute, the failure to pay the premium does not forfeit the policy. Therefore, if the defendant had disproved the fact of the payment of the premium, it would not yet have been in a situation to forfeit this policy, for the non-payment of the premium worked no such result. The only effect of the non-payment of the premium, under the condition of the law as it existed at the time of this trial, was that it served as a foundation for subsequent acts of the defendant from which a forfeiture might accrue. But proof of the doing of those acts did not in any way disprove or contradict any statement that the plaintiff had complied with the conditions of the policy. Therefore, even had it been necessary to offer to. prove such a compliance, it would not have opened the door for any further proof by the defendant than to contradict the fact of the payment, and that was not sufficient to warrant the forfeiture.

But the plaintiff was not called upon, as the law stood at the time the policy was issued, and at the time of the trial, to prove the fact of the payment of the premium at all. That the policy was issued as an existing contract between the parties was admitted by the pleadings, and the effect of the statute was that that contract which had taken effect between the parties remained a good and efficient contract until a notice had been served requiring the payment of the premiums. (Baxter v. Brooklyn Life Ins. Co., 44 Hun, 184, 186; S. C., 119 N. Y. 450, 455.) Therefore, even had the issuing of the policy been denied, all that the plaintiff would have been required to do under this statute was to put the policy in evidence. But the issuing of the policy was admitted. Therefore, the plaintiff was not called upon by way of establishing the contract to make any proof whatever, and it could only be overthrown by affirmative proof on the part of the defendant given under a proper pleading.

The fact that the plaintiff alleged a performance of the conditions did not make it necessary to prove any such performance, except so far as such proof might be essential to constitute a cause of action. If any such essential fact was admitted, the plaintiff was not called upon to prove it at all, nor could the defendant disprove it, having admitted it in his answer. A fact alleged in the complaint which was not essential to establish the cause of action, could not be disprdved under the general denial, had one been pleaded, because the only evidence which the defendant has the right to give under a general denial is such as controverts any fact necessary to be established by the plaintiff to authorize a recovery, but not one to. prove a defense founded upon new matter. (Weaver v. Barden, 49 N. Y. 286, 297; MeKyring v. Bull, 16 id. 297.) In no aspect of these pleadings, therefore, was this evidence admissible, and, therefore, the plaintiff’s exception was well taken.

But we think that the affidavit offered in evidence was not competent for another reason. The statute prescribes: “ The affidavit of any officer, clerk or agent of the corporation, or of any one authorized to mail such notice, that the notice required by this section has been duly addressed and mailed by the corporation issuing such policy shall be presumptive evidence that such notice has been duly given.” (2 R. S. [9th ed.] 1175.)

The only proof in the case that this affidavit was made by one of the persons mentioned in that statute, was contained in the affidavit itself. We think that that was not sufficient to warrant the admission of the affidavit in evidence. Except as otherwise authorized by statute, only common-law evidence can be given upon the trial of an action. It is undoubtedly true that the rules of evidence in that regard are subject to modification and control by the Legislature and that body may declare an affidavit or any other certificate or statement prima faeie evidence of any fact necessary to be proved. (Howard v. Moot, 64 N. Y. 262.) But for the statute the proof of the service of this notice could only be made by the testimony of a witness who should be produced upon the trial, and be subject to cross-examination; but it was competent for the Legislature to say that an affidavit might be nsed as evidence of the fact of this service. Such a rule, however, would be in derogation of the common-law rule, and, therefore, must be strictly construed within the well-set-tied rules as to the interpretation of statutes. If the Legislature prescribes that the affidavit to be presented in proof of the fact must be an affidavit made by a certain person, that affidavit can be read only when proof shall have been given that the person making it was the person prescribed by the statute, and until that proof has been given in the case the affidavit is not competent evidence. When that proof has been given, the affidavit becomes competent because the fact necessary to make it competent has been shown to exist. So long as that fact is not in the case the affidavit is not competent evidence within the statute. The Legislature undoubtedly might have prescribed that a statement of that fact in the affidavit might be received as evidence of the competency of the person who made it. It has not made any such provision. It has prescribed that an affidavit made by a certain person shall be presumptive evidence of the giving of the notice, but it has not prescribed that the statement in the affidavit that- the person making it has the qualifications required by the statute to make the affidavit competent, shall stand in place of common-law evidence of that competency, which it is necessary to prove before the affidavit is received.

Whenever the existence of a fact is necessary to be shown to make some other fact competent, common-law evidence of the first fact is required. The fact to make this affidavit competent was that the person making it was one authorized to mail the notice. Until that fact was proved the affidavit was not within the statute, and could not stand in the place of common-law evidence. Therefore, when the objection was taken that the affidavit was not sufficient it was well, taken, and the affidavit should have been excluded, and for that reason also the plaintiff’s objection was improperly overruled.

For" this error, the judgment and order should be reversed and a new trial granted, with costs to the appellant to abide the result of the action.

Van Brunt, P. J., and McLaughlin, J., concurred; Ingraham, J., dissented.