Illinois Surety Co. v. Paoli

Guy, J. This is an appeal from a judgment rendered in favor of plaintiff by the court, without a jury, in an action to recover the annual premium on a bond, given by plaintiff pursuant to chapter 185 of the Laws of 1907, as amended by chapter 479 of the Laws of 1908, to the People of the State of Mew York, on behalf of defendant, who was engaged as a seller of steamship passage tickets and as a money forwarder. The application for the bond, signed by the defendant, which plaintiff introduced in evidence, provides that the defendant shall “pay the sum of $150 per annum to the plaintiff as premium for said bond.” It does not recite that the payment shall be in advance. Mo evidence was given as to the exact date of payment of the first year’s premium; but it is inferable from all the circumstances of the case that it was paid on or about the time of the issuance of the policy. The bond was dated August 19, 1908. On August 8, 1909, eleven days before the expiration of the year for which the [161] first premium was paid, plaintiff sent to defendant bill for a renewal premium. This was returned by plaintiff to the defendant with the word “ canceled ” written across the face of the bill. ISTo other evidence was introduced of the cancellation of the bond. Plaintiff subsequently demanded payment of the premium and, upon refusal, instituted this action. Plaintiff introduced the application, proved the issuance of the bond and the payment of the first year’s premium and rested. A motion was made by defendant for the dismissal of the complaint, on the ground that plaintiff had failed to prove a cause of action, which motion was denied with exception. Defendant then rested and renewed his motion to dismiss on the same-ground and on the additional ground that “ the premiums were to be paid per annum; that means at the end of the year, not in advance, not at the inception of the year, but at the completion of the year; and, therefore, the action is prematurely brought.” The motion was then denied and judgment rendered in favor of the plaintiff. Appellant relies mainly upon the contention that, as the premium was not due until the expiration of the year, the action was prematurely brought and cites authorities in oases dealing with leases of real property to support this contention. The very nature of the insurance business, however, negatives the presumption that by the words “ per annum ” it was intended to mean that the premium should become due at the end of each year; and the payment of the first year’s premium at or about the time of the issuance of the first policy is equally inconsistent with such a construction of the contract. The principle which underlies the insurance business is that the fund for the payment of losses occurring during the course of any given year shall be acquired by the insurance company from premiums paid in advance of such losses; and, while the obligation of the company is not limited or dependent upon the existence of a fund so acquired, the rates of insurance are established with such end in view; so that the capital of the insurance company, which is so jealously guarded and protected by the insurance laws of the State, shall not be impaired. The [162] general character of the insurance business and the laws governing insurance companies in this State must be deemed to have been in contemplation of the parties in making the contract in suit. In the absence of any competent evidence of the cancellation of the contract of insurance, it continued in effect; and, immediately after the expiration of the first year, the second year’s premium became due. The court properly, therefore, directed judgment in favor of the plaintiff; and said judgment is affirmed, with costs. Whitney, J., concurs. .