Construing the petition most strongly against the plaintiff I am of the opinion that the suit was predicated on the theory that the policy had admittedly lapsed, but that the company should be estopped from so contending for the reason that when it applied the reserve value to the purchase of extended insurance at the attained age of the insured, in exact accordance with the terms of the policy, it failed to notify the insured as to what time the extended insurance covered. This contention is wholly untenable because if the policy had lapsed and the extended insurance applied, the insured could not by the payment of an additional premium keep the policy in force as it was originally. Notice to him of how much extended insurance he had would not have benefited him in any way so far as the right to keep the policy in force was concerned, and he had notice that the policy had lapsed and was given the opportunity to reinstate it on proof of insurability. The contention that the extended insurance was applied voluntarily by the company and that it was not required by the policy would furnish no ground for estoppel. If the company wrongfully used the insured's money to pay for extended insurance the insured could ratify what it had done as his agent and stand on it, but he could not claim that the company should have otherwise applied the money, or given him more insurance, or insurance for a longer time, and then ratify what he contended should have been done when there was no contract of the company obligating it to do what the insured or beneficiary contends should have been done. The interpretation above placed on the petition is not the one adopted by the majority opinion, but it is the true one in my opinion, and the demurrer to the petition should have been sustained.
The next question is whether the court's decision is correct, construing the petition as the majority have construed it. The construction they put on the petition, as I understand it from the opinion, is that the policy did not lapse because the automatic premium clause had been applied to keep the insurance in force, and *Page 415 that since the policy had been kept in force automatically the company owed the insured the duty to advise him, before the policy lapsed, that when the next quarterly premium became due he would not have enough reserve to carry it another quarter.
The policy sued on provided that it would lapse upon the expiration of a grace period after a premium became due and was not paid without affirmative action by the company. The automatic premium provision would not go into effect unless there was enough reserve to pay at least a quarterly premium. I do not think the proposition will be questioned that where an insured, under such a policy, fails to pay a premium when due, and there is not enough reserve to pay a quarterly premium, the policy lapses without the company's being required to notify the insured that there was not enough reserve to pay the required premium under the automatic premium clause, or to notify him how much the reserve lacked of being sufficient to pay a premium, where the insured had not previously obtained the benefit of the automatic premium provision. This is true because the policy provides that it shall lapse if the premium is not paid, and because the company has the right to assume that the insured will pay the premium without using the reserve and that he will make inquiry rather than risk losing his policy. Notice as to when premiums are due is provided by the terms of the policy, and the insured knows when they are due as well as the company.
The question whether, when a series of premiums have been paid by the operation of the automatic premium clause, uninterrupted by the payment of a premium by an insured out of other funds, the company owes the insured the duty to notify him when the reserve falls below the amount required to pay a premium in time to enable him to pay in enough to meet the next accruing premium if he desires, is a troublesome question and the answer is by no means easy. It seems to me that the operation of the automatic premium provision is not a continuous operation. The operation is periodic. Each is separate and distinct. Each has a definite beginning and a definite end. The insured has notice when the next premium is due when the automatic clause has operated to pay the premium for a quarter. He is on notice that unless the next quarterly premium is paid his policy will lapse under its terms if not timely paid by him and the reserve is insufficient to pay it. It *Page 416 would seem that the insured is not entitled to a notice where an unbroken series of premiums are paid under the automatic clause, any more than he is where he fails to pay the premium and the reserve is insufficient to pay it in a first instance. If the automatic premium clause in the policy sued on were not one which operated periodically, each operation a separate and distinct one, I would conclude otherwise. I can see no distinction between the two instances I have discussed in view of the explicit terms of the policy. The course of conduct, required by the contract, in the performance of a contract, can not form the basis of an estoppel under the facts of this case, if it ever can. Much has been said in the briefs about the Brown and Cooper cases cited in the majority opinion. My view is that these cases are not authority for the majority ruling in this case. In those cases the automatic clause had actually attached, and had begun to operate during the premium period for which the full premium had not been paid. The insured had insurance under the policy as first written. It was not extended insurance purchased by a reserve. Under the facts of those cases there was no knowledge on the insured's part that the policy by its terms would lapse at a definite premium paying period stated in the policy. The operation of the automatic clause had created a new situation in which the company was in better position to know when the policy expired than was the insured, and the requirement of the notice did not contravene the provisions of the policy as to forfeiture because the operation of the automatic clause had superseded them and rendered them inapplicable. In those cases the automatic clause began to operate, and kept the policy in force beyond the premium paying period for a period of time unknown to the insured. So long as the clause operated the insured had the right to pay an additional sum as premium to finish out the period, the premium payment period during which the clause was operating, and keep the policy in force without evidence of insurability. Such is not the case with extended insurance. In the instant case the automatic clause was not operative during the quarter when the reserve was insufficient to pay the quarter's premium, and under the terms of the policy it lapsed. Under the extended insurance granted by the company the insured had no right to pay a premium and keep the policy in force without evidence of insurability. This he did not furnish. *Page 417
I do not think this court is authorized to decide the case otherwise than as made out by the petition. The petition admits that the $19.49 reserve was applied to the purchase of extended insurance. This was at the attained age of the insured. Of course, if the policy had not lapsed because the insured was not notified that his reserve was not sufficient to pay a quarter's premium, then it was immaterial whether the $19.49 was applied as premium or for any other purpose. The application of the $22.00 check sent in by the insured later would also be immaterial if the policy was in force anyway because of lack of notice. The vital question, and only question involved, in my opinion, is whether the policy lapsed when the quarterly premium due June 29, 1934, was not paid within thirty days from that date. Under the terms of the policy I think it lapsed. I dissent from the judgment.