McElhone v. Massachusetts Benefit Ass'n

Mr. Chief Justice Alvey^

delivered the opinion of the Court:

On this appeal the defendant urges two grounds against the right of the plaintiff to recover:

1st That the policy or contract-of insurance, by the default of the assured, had lapsed and become null and void, and therefore no action can be maintained thereon; and, 2d. That, by reason of the express condition in the policy, limiting the right of action to one year, the right to maintain the suit was lost.

1. With respect to the first of these grounds relied on, the terms of the contract are very explicit. It is conceded, indeed, admitted on the face of the declaration, that the assessment was not paid or tendered within thirty days after it became due. It is also admitted that due notice was given the assured of the fact that the assessment was due, and that payment should be made within the time limited by the contract. In default of such payment, the contract declares such default to be conclusive evidence upon which the policy should lapse, and the contract become null and void, and all the rights of the assured under the contract become forfeited to the ■ association. The contract of insurance, like other contracts, must be construed according to the sense and meaning of the terms employed by the parties. The contract is of a nature to require punctuality in the payment of premiums and assessments, for without such punctuality it would be impossible to conduct the business of insurance with justice and fairness to all concerned. Hence it is that time is of the essence of a contract of insurance, and promptness very generally enforced by forfeiture of the rights of the defaulting party. This doctrine is not only just in itself, but it is generally maintained by the courts of the country, and especially by the Supreme Court of the United States. As said by that court, “ If life insurance companies are not allowed to enforce this forfeiture, they *402are deprived of the means which they have reserved by their contract of compelling the parties insured to meet their engagements. ... To hold the company to its promise to pay the insurance, notwithstanding the default of the assured in making punctual payment of the premiums, is to destroy the very substance of the contract.” Klein v. Ins. Co., 104 U. S., 91.

In the case before us, the excuse alleged for the default of the assured is his sickness ahd incapacity to attend to business, at the time the notice was received requiring payment of the assessment. But this forms no justification for the default made. For, as held by the Supreme Court in the case just referred to, and also in» the case 'of Thompson v. Ins. Co., 104 U. S., 258, sickness or incapacity-is no ground for avoiding the"'forfeiture of a life policy, or for granting relief in equity against forfeiture. The rule may, say the court, in many cases, be a hard one.; but it strictly follows from the position that the time of payment of premiums is material in this contract, as was decided in the case of N. Y. Life Ins. Co. v. Statham, 93 U. S., 24.

The matter alleged in the declaration, supposed to have the effect of waiving the forfeiture, and of re-establishing the contract, can clearly have no such effect. It is not alleged or pretended that the association had, at the time the letters were written, any knowledge of the fact of the sickness or death of the assured, and without such knowledge the letters were wholly without effect. Ins. Co. v. Wolff, 95 U. S., 326, 331.

It follows, that the default in making payment of the assessment within the time prescribed, operated to avoid the policy, and to forfeit ■all claim thereunder.

2. But, independ ;ntly of the ground j ust considered against the right of the plaintiff to recover, the second ground urged under the demurrer against that right is also fatal.

This action was brought nearly two years after the death of the assured. By the terms of the contract, the right of action was lost after the expiration of a year from the *403death of the assured. This is not a matter of statutory limitation of actions, but it is a matter of contract, to be enforced as any other term contained in the conditions embraced in the policy. The contract of insurance is a voluntary one, and the insurance company has a right to designate the terms upon which it will be responsible; and it is not an unreasonable term in the contract that, in case of controversy after the death of the assured, resort shall be had by the parties claiming to the proper tribunal,' whilst the transaction is recent, and the proofs respecting it are accessible. Riddlesbarger v. Ins. Co., 7 Wall., 386, 390. In the case just referred to, the court declared that the commencement of the action within the period designated in the contract was a condition essential to the plaintiff’s recovery.

It has been contended, however, on the part of the plaintiff, that this limitation in the contract to the right to maintain the action should have been specially pleaded, as the statutes of limitations of' actions are pleaded; and that no advantage of the limitation should be allowed in the absence of such plea. But in this we do not agree.

This limitation to the right to maintain the action is a condition in the contract, and that condition is set out and made part of the declaration, and is therefore reached by the demurrer. The conditions and qualifications specified in the policy attach to the right itself, and do not form part of the law of the remedy. If the supposed right is not assorted within the prescribed period, it ceases to 'exist, and cannot be claimed or enforced in any form. Or, as said by the Supreme Court of the United States, in Walsh v. Mayer, 111 U. S., 37, such limitation is a condition qualifying the right of action, and not a mere limitation on the remedy. The expiration of the time limited by the contract extinguishes the right.

The court below was right in sustaining the demurrer and entering judgment thereon for the defendant; and that judgment must be affirmed.

Judgment affirmed with costs to appellee.