McAllister v. New England Mutual Life Insurance

Gray, J. The policy upon which this action is brought is expressed to be made in consideration of a premium already paid, and of a like sum to be paid annually during its continuance ; and “ does not take effect until the premium is paid.’ But it is agreed by the parties, in the case stated, that the defendants made and delivered the policy to the assured, and at the time — 561 — of the delivery took for the first premium a certain sum in cash, and two notes of the assured, one payable in six months, and the other on demand after five years. Whatever were the powers of the directors, the corporation itself might certainly take notes for part of the premium, instead of insisting on immediate payment of the whole. Hodsdon v. Guardian Insurance Co. 97 Mass. 144. The policy thus took effect as a binding contract, and the question is, whether it was terminated before the death of the assured. The defendants rely upon that provision of the policy, which declares that, “ in case any premium due upon the policy shall not be paid at the day when payable, the policy shall thereupon become forfeited and void,” except for a certain period which had expired before the death of the assured in this case. But the court is of opinion that this clause, which is inserted for the benefit of the insurers, and to be construed most strongly against them, and which merely provides that the policy “ shall become forfeited and void,” in case a premium “ shall not be paid at the day when payable,” can only apply to a policy which has once taken effect, and to nonpayment of a premium payable after that time, and cannot be held to refer to that premium which the policy contemplates and requires to be paid before the contract of insurance has any binding force. This policy does not provide that it shall be avoided or forfeited upon the failure to pay any note or obligation given for a premium, and differs in that respect from the cases of Pitt v. Berkshire Insurance Co. 100 Mass. 500, and Roberts v. New England Insurance Co. Disney, 355, cited for the defendants. The subsequent stipulation, by which the policy, and any sums that shall become due thereon from the company, are pledged *nd hypothecated to them to secure the payment of any premium on which credit may be given, and of any note or security therefor, expressly declares that “ this pledge and hypothecation shall in no respect affect the provisions respecting the forfeiture of the policy,” and cannot therefore enlarge those provisions. The difference also in the form of the two notes taken by the defendants for part of the premium — that for the smallest — 562 — amount and payable in the shortest time omitting the provision, which is carefully inserted in the other, of “ said policy being agreed to be subject to forfeiture and to become void in case of nonpayment of interest and principal of this note in compliance with the terms thereof” — accords with the construction that nonpayment of the first note was not intended to have the effect of avoiding the policy. The refusal of the assured to pay that note after it had become due, accompanied by the statement that “ he would not have anything more to do with the company, and abandoned the whole thing,” does not appear to have been assented to by the company; for the company continued to hold the notes, and the assured to hold the policy. The defendants, having admitted the death of the assured and due notice and proof thereof, and having failed to show that the policy was forfeited, cancelled, or in any way avoided or determined before his death, are liable to his administratrix in this action. Judgment for the plaintiff.