National Mutual Insurance ex rel. O'Brien v. Home Benefit Society

Opinion by Mr. Justice McCollum, There is nothing in the allowance of the amendments complained of which furnishes ground for reversing the judgment. The use plaintiff is the beneficiary named in the policy issued by the National Mutual Insurance Company on the life of her husband. But for the contract of March 28,1894, her right to maintain an action against the insurer for the amount of the policy could not be questioned. If the insurer had unjustly declared the policy forfeited, and thereupon refused to accept from the insured the premium proffered in accordance with its terms, it could not while insisting upon the forfeiture set up the failure to tender the next quarterly premium as a bar to his suit for the enforcement of his rights : Girard Life Ins. Co. v. Mutual Life Ins. Co., 86 Pa. 236. In the case cited the company declared the policy forfeited for nonpayment of a quarterly premium on the day it was due, and on tender of'the same two days thereafter declined to accept it. This occurred more -than a year before the death of the insured, and there was no payment or .tender of quarterly premiums after the rejection of the one above mentioned. It was held in an action against the company by the administrator of the insured that “ where the company has declared a policy forfeited and refused to accept a premium the fact that the insured subsequently failed to pay premiums as they fell due will not affect the right to recover on the policy.” That which is not a bar to an action on the policy by the insured or his administrator is not a bar to a suit against it by the beneficiary named in it. If, therefore, the defendant in this case was bound by its contract with the National Mutual Insurance Company to reinsure Edward O’Brien on the basis of his original application to, and the terms of his insurance with, the latter, his failure to tender the July premium cannot operate as a defense. Its denial that it was bound to reinsure him and its refusal to accept the April premium rendered a tender of the next quarterly premium unnecessary. We cannot find in-the evidence anything which operates as a release of the defendant from any liability imposed by its contract. The respective rights of • O’Brien and the defendant under the contract were not extinguished or qualified by anything said or done by either of them. The case was tried in the court below on the apparently mutual theory of the parties [449] to it that the plaintiff was entitled to recover the amount of the policy or nothing. No claim or suggestion appears to have been made by either of them that there might be a recovery for a less sum. It was the existence of the liability claimed by the plaintiff aird denied by the defendant, and not the extent or measure of it, that was in dispute. The National Mutual Insurance Company agreed “ to transfer or cause to be transferred to the best of its ability ” the membership of it to the defendant. It could do no more in this direction because the New York statute under which the contract was made expressly conceded the right of every member of it, on giving the required notice to elect to be transferred to or reinsured by another company. The defendant agreed to reinsure the members of the National Mutual Insurance Company upon execution of satisfactory transfer applications on the basis of their original applications to it, and to rate them at the same amount with premiums payable at same dates as they were then paying in it. What effect has the requirement of a satisfactory transfer application upon the liability of the defendant ? Does it warrant the refusal of the defendant to reinsure a member on the ground that his application for transfer “ is not satisfactory on account of physical condition and age ?This is the distinct ground on which the defendant refused to reinsure O’Brien. If it is tenable ground for refusal, the agreement respecting the basis of reinsurance and the rating of members amounts to nothing, because the defendant may reject the transfer application of any member whose age or health may appear to it as presenting an undesirable risk. The contract as construed by the defendant fails to afford to the membership of the National Mutual Insurance Company the protection contemplated by the statute under which it was made. It was not so construed by that company when its members were requested to approve it. On the contrary their approval was obtained on the express assurance that they would be transferred without examination as at tbe age of entry in the National Mutual Insurance Company, and at the same rates and dates of payments as with it. This assurance was warranted, we think, by the terms of the contract. The words “ satisfactory transfer application, etc.,” considered in connection with what precedes and follows them, do not mean that the defend [450] ant will reinsure the applicant for transfer on condition that his age and health are satisfactory to it. To attribute to them this meaning is to defeat the obvious purpose of the contract and of the statute which authorized it. The paramount purpose of the contract was protection to the members of the National Mutual Insurance by reinsurance with the defendant. In our view of the contract it bound the latter to reinsure the members of the former who elected to have their insurance transferred in accordance with its provisions. The defendant sent an application for transfer to O’Brien who fully and correctly answered all the questions propounded in it, and signed it as instructed. It neither disclosed nor concealed anything which released the defendant from its obligation to him. It must therefore be regarded as a “ satisfactory transfer application ” within the meaning of the contract. Thenceforth the defendant was liable for the amount of his policy with the National Mutual Company on his compliance with its provisions respecting premiums and the payment of them. As we have already seen his failure to tender the July premium is not a bar to this action. The views herein expressed are in accord with the able opinion filed by the' learned court below on discharging the rule for a new trial. We infer from the record that the defendant was not allowed a credit for the April and July premiums amounting to $154.50. If this inference is in accordance with the fact, we direct that the court below cause a credit to be entered on the judgment for that amount. The judgment, subject to the above direction, is affirmed.