Cooper v. Foresters Underwriters, Inc.

McDONOUGH, Chief Justice.

Defendant is a fraternal benefit society which issued a certificate insuring the plaintiff against medical, surgical and hospital expense. The policy required payment in advance of monthly premiums and provided that all periods of insurance shall begin and end at twelve o’clock noon of the last day of the month beginning March 31, 1951. A grace period of 31 days after the premium was due was granted under the contract, during which time the insurance was to remain in full effect. Plaintiff did not pay her premium for the months of September and October until October 31, 1951, in the evening. She submitted a claim against the society for reimbursement of *375medical expenses arising from an injury sustained during the afternoon of October 31st. When the society denied liability, she brought suit and the lower court concluded that the certificate of insurance held by plaintiff was in full force and effect throughout the 31st day of October, 1951, when she was injured, and entered judgment against the defendant in the amount of $240 and interest. From this judgment, defendant appeals.

The first question confronted is whether the time of the grace period should be measured under this policy from noon of the last day of the preceding month, September 30th, or whether the grace period began on October 1st and continued through the entire day October 31st.

The parties to the contract agreed that the periods of insurance should begin at noon of the day of execution even though the premium was paid at 9:00 p. m. While this gave the insurer an advantage of receiving payment for nine hours when, in fact, the insured was not covered, we know of no public policy which would preclude the parties from antedating their contract so as to make the times of performance, liability, and termination more readily ascertainable. Thus, the first period of insurance began on March 31st at noon and ended April 30th at noon. Plaintiff’s policy lapsed at noon, October 1st, when she failed to make a payment due on August 31st for the month of September within the grace period allowed. By paying the premium on the afternoon of' October 1st, she reinstated the policy in accordance with a provision of the contract cited later. By accepting this premium due for the month of September, the company accepted the liability of the 31-day grace period which came into existence upon the termination of the September period, at noon on September 30th. Again, upon plaintiff’s failure to pay the October premium, the certificate lapsed on October 31st at noon and the effect of the subsequent reinstatement that evening must be governed by the contract.

It is plaintiff’s position that the certificate at no time lapsed, for, she contends, the 31-day grace provision is not governed by the provision making the period of insurance from noon on the last day of one month to noon on the last day of the following month. She claims, instead, that the 31-day grace period must be computed in accordance with U.C.A.1953, 68-3-7, which provides: “The time in which any act provided by law is to be done is computed by excluding the first day and including the last * * ” The difficulty with this view is that for one-half day between the termination of the period of insurance and the beginning of the grace period, she would not be covered. This "result is'so clearly against the intent of the parties that no citation of authority is needed to determine that the grace period begins to run immediately upon termination of the period of insurance. Plaintiff 'cites to us a number of cases holding that the time *376runs to midnight of the last day of the grace period, whatever its length, excluding the date when the premium was due and counting every day after that, but none of these cases concern policy provisions setting a time certain, as here. In the case of Penn Plate-Glass Co. v. Spring Garden Ins. Co., 189 Pa. 255, 42 A. 138, it was held that the provision beginning and ending the insurance period at noon did not control a provision requiring five days’ notice for cancellation where there was evidence as to the time of day that no notice was given. The distinction between the notice provision and the grace period provision is obvious; the former has no real relation to the period stipulated for insurance coverage whereas the latter is entirely dependent upon the expiration of the insurance period for its existence. Richardson v. American National Insurance Co., 18 La.App. 468, 137 So. 370.

As to the effect of the reinstatement of the policy, the certificate provides:

“(4) If default be made in the payment of the agreed premium for this Certificate, the subsequent acceptance of a premium by the Organization or by any of its duly authorized agents shall reinstate the Certificate, but only to cover accidental injury thereafter sustained and such sickness as may begin more than ten (10) days after the date of such acceptance.”

Plaintiff complains that she has paid premiums in the same amount as though she had kept current in her payments, but was excluded from coverage for the afternoon of her injury. This is true, but the court cannot rewrite the contract for the parties and, according to its unambiguous terms, a condition of the reinstatement was the exclusion of any injury sustained prior to the acceptance of the overdue premium.

Plaintiff further contends that the organization had waived its rights to demand payment in advance of premiums by accepting premiums late at other times. With the exception of the premium paid on October 1st, all prior payments were paid within the grace period before the policy lapsed. As to the October 1st acceptance, the contract was reinstated in accordance with the provision of the policy; likewise the payment made on October 31st. Plaintiff must be charged with the knowledge of her contract and we cannot find that any belief that the company would accept late payments as a continuation of the policy rather than a reinstatement could be reasonably induced by the company’s behavior. She had a right to reinstate subject to the exclusion of any accident occurring prior to the acceptance of the premium and could not reasonably have believed that the acceptance of the premium was to cover the •entire period of time preceding. An extensive discussion of waiver of prompt payments of premiums is to be found in Ballard v. Beneficial Life Ins. Co., 82 Utah 1, 21 P.2d 847; where the court held, upon facts somewhat similar to those of the present *377case, that there was no waiver. The case quotes from Cooley’s Briefs on Insurance, Vol. 5 (2d Ed.): “A waiver of default cannot he predicated on the acceptance of past-due premiums after the death of the insured, if the insurer is ignorant of the fact of death”; that “it may he said that as a general rule the acceptance of a past-due premium on the condition that the insured is in good health, or that he furnish a certificate of good health, is not such an acceptance as will waive the forfeiture, such condition not being complied with”; and that “a waiver of a default in the payment of premiums cannot be based on a mere expression of willingness to reinstate the policy on easy terms.” An insurance company which, by any course of conduct, induces in the mind of the insured an honest belief, reasonably founded, that strict compliance with a stipulation for prompt payment of premiums will not he insisted on, waives the right to a forfeiture for nonpayment. Ballard v. Beneficial Life Ins. Co., supra. However, in the present case, there were no acts on the part of the society which could be regarded as inconsistent with the contract nor as inducing a belief that the society did not intend to enforce the terms thereof.

Judgment reversed. Costs to appellant.

HENRIOD, J., and WM. STANLEY DUNFORD, District Judge, concur.