Home Ins. Co. v. McFarland

McGowen, J., delivered the opinion of the court. This suit originated in the court of a justice of the peace, and was based upon a note for one hundred sixteen dollars and sixty-four cents, payable in four installments for tw'enty-nine dollars and sixteen cents each, due, respectively, November 1, 1924, 1925', 1926, and 1927. The note was given in payment of premiums on two policies of insurance, which provide, if any single *562 payment given for the whole or any part of the premiums shall not be paid promptly when due, the whole amount of installments or notes remaining* unpaid on said policies may be declared earned, due, and payable, and may be collected by law. The insured, the defendant in the court below, made the first cash payment at or about the time the policy was delivered, and only one installment of the note was past due. The justice of the peace rendered judgment in favor of the defendant, and on appeal to the circuit court the case was tried de novo, resulting* in a verdict of the jury and judgment in appellant’s favor for one dollar and five cents, earned premium on the policy, and five dollars attorney’s fees; the jury having- found in accordance with the instruction of the court below. The insurance company, the plaintiff in the court below, appeals here. This was fire insurance upon the dwelling house and other property of the defendant running for a term of five years, and also insurance against loss by windstorms, etc. The policy' was for a certain indivisible time, subject to suspension only during the time of nonpayment of premiums, as agreed in the note and contract. The following stipulations of the policy are set out: “This policy is made and accepted subject to the stipulations and conditions printed on back hereof, which are hereby specially referred to and made a part of this policy, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto, etc. “Two of the conditions printed on the back of said policy are respectively in these words: “ ‘(1) But it is expressly agreed that this company shall not be liable for any loss or damage that may occur to the property herein mentioned while any installment of the installment note, given for premium on this policy remains past due and unpaid; or while any single payment, promissory note (acknowledged as cash other *563 wise), given for the whole or any portion of the premium, remains due and unpaid. “ ' (2) This company may collect, by suit or otherwise, any past-due notes or installments thereof and a receipt from the said Chicago office of the company for the payment of past due notes or installments must be received by the assured before there can be a revival of the policy, such revival to begin from the time of said payment, and in no case to carry the insurance beyond the end of the original term of this policy.' ” The policy insuring against loss by windstorm is practically in the same language, and the provisions are in legal effect the same. There w|as no loss under either policy. The circuit court seems to have held that the notes were void and without consideration because of the condition that they owed the notes from default in payment thereof, and the insurance protection was likewise suspended during the time of said default, to which view) we cannot subscribe. We know of no reason why people cannot contract for the suspension of a contract and renewal or reinstatement of the provisions of the contract upon the payment of the arrearage; nor can we see that there is any merit in the contention that, because the insurance is for a term of years, each year named in the contract.in a separable and divisible part of the contract independent of the others. Such is not the fair construction of the language of this contract. Neither do we think there is any merit in the contention that, since the company was not liable on its contract of insurance during its suspension, the insured was not liable on his note. Counsel for appellee frankly admits that the weight of authority in the United States is against his contention that the note is void upon a suspension of the insurance upon his property, and that, therefore, there would be no longer consideration for the note nor liability thereon, and cites the case of Yost v. Insurance. Co., 39 Mich. 531, and Insurance Co. v. Stoy, 1 N. W. *564 877, 41 Mich. 385, a case from Ohio, and one from Missouri, all of which are based upon the reasoning of the court in Yost v. Insurance Co., and in that case the insured w'as held not liable because there was a stipulation in the contract of insurance that the policy upon default in payment was thenceforth to be null and void. There appears to be no such provision in the contract of insurance here under review. Further, it appears, in the Tost case that each installment of the note was given for insurance during a given and distinct year. As sustaining our view that, where the policy and note provide that, if the note was not paid when due, the policy should be suspended until payment is made, the insurance reinstated upon payment as provided in the note, and that the insured and maker of the note is liable under the contract for the note past due .and all future installments, and suit may be maintained for all the installments due and not due, we cite Robinson v. Insurance Co., 11 S. W. 686, 51 Ark. 441, 4 L. R. A. 251; Williams v. Albany Insurance Co., 19 Mich. 451, 2 Am. Rep. 95; American Insurance Co. v. Henley, 60 Ind. 515; Minn. Farmers’ Mutual Ass’n v. Olsen, 44 N. W. 672, 43 Minn. 21; St. Paul Fire & Marine Ins. Co. v. Coleman, 43 N. W. 693, 6 Dak. 458, 6 L. R. A. 87; and McCullough et al. v. Home Insurance Co., 100 S. W. 104, 118 Tenn. 263, 12 Ann. Gas. 626. The judgment of the court below will be reversed, and judgment will be entered here for the amount sued for as due on the installment note, with interest at the rate of six per cent, per annum, and proof in the court below showing that a fee of twenty-five dollars would be reasonable. Said amount is allowed as a fee for the total collection, as provided in the note. Reversed, and j'udgment here for appellant. Footnotes [*] Corpus Juris-Cyc. References: Insurance, 32 C. J., p. 1160, n. 96 New; p. 1214, n. 16, 18, 19; p. 1301, n. 99; p. 1357, n. 46; (1-3) Effect of provisions in policy of insurance for forfeiture for failure to pay installment premium when due, see 14 R. C. L., p. 977; 3 R. G. L. Supp., p. 325; 5 R. G. L. Supp., p. 790.