Banholzer v. New York Life Insurance

MITCHELL, J.

(After stating the facts of the case as they are given above). If any regard is to be given to the plain and unambiguous language of the parties, nonpayment of the premium according to the terms of the policy would ipso facto render the policy void, unless there had been some act of waiver on part of the company. No declaration of forfeiture would be required unless rendered necessary by some prior course of dealing. Unless we regard certain dicta in Mutual v. French, 30 Oh. St. 240, as an exception, the authorities seem to be unanimous to this effect in construing policies like the present. This is equally true under the subsequent modifications of the contract on September 16, 1896, and March 16, 1897, when the assured gave his promissory note for part of the second year’s premium. In each instance it was stipulated in the note itself that,

“This note is given in part payment of the premium due September 16, 1896, on the above policy, with the understanding that all claims to further insurance and all benefits whatever which full payments in cash of such premium would have secured, shall become immediately void and forfeited to the New York Life Insurance Company if this note is not paid at maturity, except as otherwise provided in the policy itself.”

This exception refers to the “nonforfeitable” provisions of the policy, which in this case had not taken effect. The contemporaneous receipt, which formed part of the contract, says,

“Which continues said policy in force until the 16th day of September, 1897, at noon, in accordance with its terms and conditions; provided the above note is paid at maturity.”

If there would otherwise be any doubt as to the construction of the contract of the parties, it is conclusively resolved in this case in favor of the defendant by the decision of the court of appeals in Holly v. Metropolitan, 105 N. Y. 437, 11 N. E. 507.

2. There was no waiver on the part of the defendant of this condition of the policy, either by a prior course of dealing or by its subsequent conduct. The fact that the defendant had granted the insured two extensions of time for the payment of part of the premium which fell due September 16, 1896, gave him no right to assume that the company would grant the third extension on the same premium; and certainly it gave him no right to assume that it would grant him a further extension on different terms, or waive a forfeiture already incurred.

In the transactions of September 16, 1896, and March 16, 1897, the insured paid part of the premium in cash, and gave his note for the balance, while his policy was still in force, but when the last note became due, on May 16, 1897, the insured did absolutely nothing until June 18, 1897, — 32 days after his policy was forfeited, unless kept alive by the failure of the company to give another “premium notice” in accordance with the provisions of the statute of New York.

There is nothing in the semblance of a waiver in the company’s letter of May 26 to the insured. A perusal of that letter will show that it assumes that the policy was already forfeited, and has reference solely to bringing about some arrangement by which the insured might be reinstated, and the policy put in force again, on terms to be thereafter mutually agreed upon.

Nor, under the circumstances, do we see anything in the mere retention of Banholzer’s note of March 16, 1897, which tended to prove a waiver of a prior forfeiture of the policy, whether the note fell with the policy or whether it remained in force by virtue of the provision that, if the policy became void by reason of the nonpayment of any premium “a.11 payments previously made shall remain the property of the company.”

3. The next and last contention of plaintiff is that the “premium notice” required by the statute of New York applied to the note which fell due May 16, 1897, and that the policy could not become lapsed or forfeited for the nonpayment of the note without the company giving the prescribed notice of not less than 15 nor more than 45 days prior to the day when the note, by its terms, became payable, notwithstanding the fact that the defendant had already given such notice before the premium became payable the preceding September. Even if the question was res nova, I am clearly of the opinion that, upon the facts, this statutory provision has no application to this note. But, as my brethren do not agree with me in this, it would be useless for me to enter into any discussion of the reasons for my opinion.

The parties mutually' agreed that this should be deemed a New York contract, and construed according to the laws of that state. The decisions of the highest court of that state as to the construction of such a contract and of the statutes of New York must, therefore, be accepted as conclusive upon the parties.

In Conway v. Phoenix, 140 N. Y. 79, 35 N. E. 420, upon a state of facts and under a statute which, in our opinion, are in no way distinguishable from those involved in the present case, the court of appeals held that the notice required by statute did not apply to the notes; that, the company haying served that notice before the premium became due, no further notice was required.

G. D. & Thos. D. O’Brien and Frederick W. Foot, for appellant.

Giving the notice required by Laws (N. Y.) c. 690, § 92, prior to the maturity of each note was a condition precedent to the declaration of a forfeiture. See Equitable Life Assur. Soc. v. Nixon, 81 Fed. 796, and New York cases cited. From the due date of the premium to the maturity of the note the insurance continued in full force. See Homer v. Guardian, 67 N. Y. 478; Thompson v. Insurance Go., 104 IT. S. 252; Michigan v. Ouster, 128 Ind. 25.

The question presented in this case did not arise, and Vas not decided, in Conway v. Phoenix, 140 N. Y. 79. In that case the court held that the agent had no authority to make the extension agreement for payment of the premium; that the premium note given by the insured had not changed the due date of the premium, and hence it was not evidence of any portion of the premium coming due upon the date of its maturity; and since notice had been given, as required by the statute, before the premium became due, according to the terms of the contract, the conditions of declaring a forfeiture had been complied with.

Counsel for the plaintiff do not claim that the facts of the two cases are in any respect distinguishable, but they seek to draw a distinction between the language of the statute considered in the Conway case and the statute applicable to the present case. The statute under consideration in the former was Laws (N. Y.) 1876, c. 341, as amended by Laws 1877, c. 321; the statute applicable to the present case is Laws (N. Y.) 1892, c. 690, § 92. This last act appears to be a compilation and revision of all the insurance laws of the state, and section 92 thereof is but an embodiment (with certain amendments) of the provisions of the act of 1876 as amended in 1877. We have compared the language of the two acts, and are unable to discover any difference between them that at all affects the question now under consideration. Even if the “one month’s grace” allowed by the policy for the payment of the premium was applicable to the notes (which I do not think it is), that fact would not aid the plaintiff, for the insured did not offer to pay the last note until 33 days after it matured.

Order affirmed.

Appellant having applied for a reargument, on December 21, 1898, the court granted a reargument upon the single question whether the “premium notice” required by the laws of New York applied to the notes given by the insured for part of the premium which became due in September, 1896.

Squires & Gutcheon, for respondent.

The following opinion was filed January 30, 1899:

MITOHELL, J.

Upon the original hearing of this cause, counsel for the plaintiff contended, in his oral argument, that the statute of New York applicable to this case was materially different from that considered in Conway v. Phoenix, 140 N. Y. 79, 35 N. E. 420, but did not suggest that that case and the one at bar were distinguishable in their facts. We therefore inadvertently assumed that he did not claim any such distinction. But, upon our attention being subsequently called to the matter, we discovered that we were in error, and that in his printed brief he did claim that the two cases were distinguishable; and for that reason we granted a reargument of the single question whether the premium notice required by the statute of New York was applicable to the notes which the insured gave for part of the premium which became due in September, 1896.

Upon examination, we are satisfied that the two cases are distinguishable in their facts, inasmuch as in the Conway case the court in the first part of the opinion held that the agent had no authority to grant an‘extension of time for the payment of the premium, and hence that the deceased was uninsured from the time that he defaulted in the payment of the premium, according to the terms of the policy. Hence the question of notice might have been disposed of on that ground. But we are now equally well satisfied that in what the court said on the subject of notice in the last part of the opinion it intended to and did decide the question upon the assumption that the company was bound by the agent’s acceptance of a time note for the premium. This is ma.de quite clear to our minds from an examination of the record and briefs in the case, copies of which have been furnished us by counsel for the defendant. While this shows the views of the court of appeals upon the construction of the statute, the doubt in our minds is whether, under the circumstances, it is a decision of the question which is binding on us. See Carroll v. Lessee of Carroll, 16 How. 275-287. We shall not decide that question, as we are satisfied that, if the construction of the New York statute is to be considered as res integra, the notice required by it was not applicable to the notes given by Banholzer for part of the September premium.

The statute was no doubt enacted for the benefit of the insured, recognizing the fact that very often they were people who were neither experts nor systematic in business matters and therefore liable to overlook or forget the due days of their premiums according to the terms of their policies, issued perhaps years, before, laid away and seldom examined or referred to. And, while courts are usually liberal in protecting the assured against forfeitures, this is always done in the interest of justice, and is no reason why any strained or forced construction should be placed upon this statute, which would be unreasonable or operate oppressively upon the insurers or which was not within the legislative intent. The premiums on life insurance policies are always- payable at stated periods, specified once for all in the policy during its life. They are usually payable yearly, sometimes every six months, and occasionally quarter-yearly.

It seems to us that it was these periodical due days, as fixed in the policy itself, which the legislature had-in mind, and to which the statute refers, and not to an extension of time for the payment of a particular premium after it has become due according to the terms of the policy. These extensions are usually, and probably always, granted at the instance, and for the accommodation, of the insured. They are always the result of a special and express agreement, which brings the whole matter presently to the mind of the insured. They are necessarily for a comparatively short time. They are therefore not within the mischief' of the statute, at least not to any considerable extent. The language of the statute is not very apt, if it was designed to include them, and in practice it would often be impracticable, if not impossible, to apply its provisions to such temporary and special extensions. To do so would often produce some very unreasonable results. For example, if the extension was for only 15 days, the insurer would have to give the insured notice of the date when the extension would expire on the very day it was granted. Every extension, although in terms for one day or for five days only, would, in effect, amount to an extension for at least 15 days. It can make no difference, in principle, whether the extension was for two days or two months, or whether a time note was taken for the overdue premium, or the extension granted in some other way.

For these reasons the opinion heretofore filed is adhered to.