Howard v. Continental Life Insurance Co.

By the Court, McKinstry, J.: After stating “in consideration of representations,” etc., the policy proceeds: “And of the annual premium of, etc., to be paid on or before the 31st day of October in every year during the continuance of this policy, or within thirty days after the payments as above shall be due and payable (or with the consent of the company, half, or quarter, or thrice yearly in advance, with interest,) one third of which may be indorsed as a loan, do assure,” etc. The learned counsel for respondent treat the provisions [233] of the the policy as extending a credit for the second and third installments to the end of the year. It must be admitted that this does not accord with the portion of the instrument above quoted. The assured elected to make thrice-yearly payments, and by the plain language of the contract the second and third installments became due in four and eight months after the first, if he should live throughout the year. It is said, however, the construction claimed must be adopted in order to give effect to the stipulation that the insurers should pay—within ninety days after proof of the death, etc.—the sum insured “any balance of the year’s premium (when not all paid at the commencement of the year,) or any indebtness to the company on account of this policy being first deducted therefrom.” It is urged that to hold the assured bound—under pain of forfeiture—to pay the second and third installments as agreed, would make the contract unilateral; that as the company, by the clause above recited, has secured to itself the whole year’s premium on the death of the assured, it would be a violation of the principle of mutuality to declare the policy forfeited, by reason of a failure, on the part of the assured, to pay a balance, the payment of which is made certain by the terms of the contract; that it is impossible there can be a balance due of the whole annual premium, without a reciprocal liability of the company for the entire year. The clause as to deducting any indebtedness on account of the policy is satisfied by reference to the circumstance that one third of each year’s premium could be indorsed as a loan. We agree that it was intended—in case of the death of the assured before one or both of the postponed installments would have become due, had he continued to live—that the company should deduct, from the amount insured, the balance unpaid of the year’s premium. But we do not think that, as a consequence of this right reserved by the insurers, the assured was relieved of the necessity of paying any installment when it was agreed it should be paid. The company was authorized to deduct any install [234] ment not due at the death, but was not compelled to pay the sum insured, with the right to deduct an installment overdue when death occured. Thus construing the several clauses, effect is given to all the stipulations of the contract; but to sustain the view of respondent it would be necessary to ignore the portion of the policy which fixes the thrice-yearly payments, making the policy read that the payments should be made one third at the commencement, and two thirds at the end of the year. Primarily, the whole of the annual premium was payable in advance. Passing the other incidents, the consideration for the policy was the payment of the whole of this premium; if it was not paid, the policy was to lapse. But the assured had the option—the company consenting—to pay thrice-yearly in advance. In the first case there was to be no obligation to pay the sum insured, unless the whole premium was paid; in the second, no such obligation unless each thrice-yearly payment was made as it became due. In both cases the company was entitled to receive the whole annual premium as the consideration for insurance' during the year. Such was the contract, and we see nothing inequitable in its terms. The subtraction of the installment, which would not have been due if the assured had continued to live, was the only way in which the company could be placed in a like position, with respect to the assured, to that they occupied with respect to others who had paid the whole of the annual premium in, advance. Judgment and order denying a new trial reversed, and cause remanded for a new trial. Mr. Justice Rhodes did not express an-opinion.