Home Insurance Co. v. Thomas

McHaney, J. On January 12, 1938, appellant issued its policy of fire and tornado insurance to appellee, effective from noon January 18, 1938, to noon January 18, 1943, in the total sum of $4,250, for a total premium of $449.95, of which $89.99 was paid in cash and for the remainder appellee executed his installment note. The first installment of $89.99 was due and payable on February 1, 1939, and a like amount on February 1, 1940, 1941, and 1942. Said note provided: “And it is expressly agreed that in case any one of the installments herein named shall not be paid at maturity . . -. this company shall not be liable for loss during such default, and the policy shall lapse until payment is made to the company at the Farm Department at Chicago. ’ ’ Said policy also provided: “It is expressly agreed that this company shall not be liable for any loss or damage that may occur to any of the property herein mentioned while any promissory note, or obligation, or part thereof, given for the premium, remains past due and unpaid, which suspension of liability will not be waived by failure of the insured to receive notice from the company of the approaching due date of the note, or any part thereof, nor by any demand for the payment or collection thereof, in whole or in part, of any snch premium note or installment thereof, nor by any effort or action by the company to collect, in whole or in part, any such premium note or installment thereof. ’ ’ ‘‘The installment on said note due February 1, 1939, was paid by check dated February 13, 1939, and received and accepted by the company on February 15, 1939; installment due February 1, 1940, was paid by check dated February 9, 1940, and received and accepted by the company on Febriftary 12,1940; the installment due February 1, 1941, was paid by check dated February 12, 1941, and received and accepted by the company on February 14, 1941; and the installment due February 1, 1942, was not paid. “On February 5, 1942, the property described in said policy was damaged 'by tornado in the sum of $2,978.” On February 7, 1942, appellee mailed his check to appellant for $89.99 to cover the installment which, became due February 1; which payment was refused by appellant and it later denied liability for the tornado loss and this action followed, which resulted in a judgment against appellant for the amount sued for with attorneys’ fees. This appeal followed. The above facts were stipulated. . We think this case is ruled adversely to appellee by American Insurance Co. v. Austin, 178 Ark. 566, 11 S. W. 2d 475, where we very carefully considered an almost exactly similar situation and held the provisions in the note and the policy, such as are copied above, valid and enforceable, and that “failure to pay a premium note, or a note given for a part of the premium, when it is due, constitutes a complete defense to an action upon a policy to recover for a loss occurring while such premium note is overdue and unpaid.” We also said: “The undertaking of appellant in this case was not to insure appellee’s property from year to year, but for a period of five years, on the condition that he pay one-fifth of the premium for five years in cash, and the balance at stated intervals mentioned in the note.” We think this disposes of appellee ’s argument that on the payment and acceptance of an installment of a premium note, the policy is reinstated and is effective for one year from the date of the payment of such installment. “In other words,” says he, “appellee paid the 1939 installment on February 13, 1939. His property was insured for a full year from that date. The same is true of the payment in 1940 on February 9, and the payment in 1941-on February 12.” This contention cannot be sound and it is directly contradictory to the express language of the policy which provides, in this connection, “. . . such revival of liability to begin from the time of receipt of acknowledgment of said payment only and in no event to extend this policy beyond the original date of expiration.” The expiration date of this policy is noon January 18, 1943, and if appellee’s contention is correct it would extend this date to at least February 7, 1943, as February 7, 1942, is the date he tendered his check in payment of his installment due on February 1. At another place in his brief appellee adds the days he was delinquent in his previous payments, finds them to be 32 and says, if appellant’s contention is true, he had no insurance for those days, and this is true. During the days he was delinquent on his installments, his policy by clear and- express language, was suspended. It is a penalty appellee paid for breach of his agreement to pay on a certain day. See our quotation in the Austin case from Blackerby v. Continental Ins. Co., 83 Ky. 574, 12 Ann. Cas. 626, note. See, also, McCullough v. Home Ins. Co., 118 Tenn. 263, 100 S. W. 104, 12 Ann. Cas. 626, from which we quoted with approval in American Ins. Co. v. Austin, supra, where this same appellant was held not liable under exactly similar facts and circumstances. The trial court erred in not directing a verdict for appellant at its request and the judgment is reversed and the cause dismissed,