Citizens' National Life Insurance v. Morris

Wood, J., (after stating the facts). The whole course of dealings between the insurance company and Morris was such as to lead him or any other reasonable and prudent business man to believe that unless he paid the premium note at the times specified by the company his policy would be forfeited. Every time (except one, January 19, 1910) when the extensions of time for payment of the premium note were made the company distinctly notified him that unless the note was paid at the time specified his policy would lapse. The failure to give him such notice in the letter of January 19, 1910, in which the company notified him that the time for payment had been extended to February 15, 1910, would not constitute a course of dealing such as to warrant a belief on his part that the company would not insist on a forfeiture for a failure to pay the premium note at the time specified for such payment. As is said by Mr. Cooley: “Indulgence on one or two or a very few occasions is certainly insufficient to show a custom or course of dealing which will justify the insured in believing that indulgence will as a matter of course be granted as to subsequent premiums.” 3 Cooley’s Brief on Insurance, pp. 2706, 2709. The noté given for the payment of the premium falling due June 14, 1909, expressly provided that the policy was extended “until default is made in payment of this note, and all rights and benefits secured thereby shall cease and determine without notice and said policy shall be ipso facto null and void.” This was sustantially a reiteration of the provision of the policy that unless the premiums were paid when due the “policy should cease and determine.” This provision in the policy and note, constituting the contract between the parties as to the effect of the nonpayment of the premiums, was not waived by merely extending the time specified for the payment of such premiums. The indulgence on the part of the insurer towards the assured in extending the time for payment of a premium does not have the effect to waive a forfeiture for the nonpayment of the premium at the time when it is specified that same shall be paid. The extension of the time of payment does not do away with the provision terminating the policy if the premium is not paid according to the contract between the parties. The language of Mr. Justice Bradley, in Thompson v. Insurance Co., 104 U. S. 259, is quite pertinent here. He says: “As long as the assured continued in good health, it is not surprising, and should not be drawn to the company’s prejudice, that they were willing to accept the premium after maturity, and waive the forfeiture which they might have insisted upon. This was for the mutual benefit of themselves and the assured at the time; and in each instance without involving any waiver of the terms of the contract in reference to their future conduct. The assured had no right, without some agreement to that effect, to rest on such voluntary indulgence shown on one occasion, or on a number of occasions, as a ground for claiming it on all occasions. If it were otherwise, an insurance company could never waive a forfeiture on occasion of a particular lapse without endangering its right to enforce it on occasion of a subsequent lapse. Such a consequence would be injurious to them and injurious to the public.” The evidence shows that Morris did not pay the'premium at the time when the same was due, and that the company was willing to indulge him by extensions of time for such payments, but every extension was to a definite day, and in none of the letters granting the extensions was there any indication that the company would not insist on a forfeiture of the policy according to its provisions and the provisions of the note if the same were not paid at the time specified; but, on the contrary, Morris was unmistakably notified that a failure to pay the premiums at the time caused the policy to lapse. In the letters written him before the times for payment had expired they warned him that the policy would lapse if the payments were not made, and in the letters written him after the time for payment had expired they notified him that the policy had lapsed, but would be reinstated and continued with an extension of time for the payment of the premium note to a day certain upon a certificate of good health. The Supreme Court of Massachusetts, in Crossman v. Mass. Benefit Association, 148 Mass. 438, says: “The evidence shows that the deceased was habitually unpunctual in paying his assessments, and that, in many instances, the defendant received the assessments after they were due, and reinstated him as a member of the association. This was a waiver of these several forfeitures. But there is no evidence to show that the defendant intended to waive the future prompt payment of assessments as one of the conditions of the contract, or that the deceased, as a reasonable man, was led to believe by its actions that it had waived this condition.” See also other authorities in appellant’s brief to same effect. An examination of the cases of Moreland v. Union Central Life Ins. Co., 46 S. W. 516, and Union Central Life Ins. Co. v. DuVall, 46 S. W. 518, will discover that the facts in those cases differentiate them from the case at bar. In those cases, after there was a forfeiture for nonpayment of the premium note, the insurance companies indicated clearly their intention not to insist on a forfeiture of the policies, but on the payment of the notes. The appellee relies on those cases, but a reference to the facts stated therein will show that they are not in conflict with the doctrine here announced. The same may be said of Girard Life Ins. Co. v. Mutual Life Ins. Co., 86 Pa. St. 239, and Hartford Ins. Co. v. Unsell, 144 U. S. 449. The insurance agent testified that the company was trying to collect the note up until the 1st of March, but the letter written on the 2d of March, 1910, shows clearly what he meant by saying he “continued to try to collect it up until the 1st of March.” That letter states that the policy had lapsed, and that the company was expecting pay for the premium earned “for the time it was on the risk by reason of the extension of the premium by said note,” a period of eight months. The company had the right to retain the note after the forfeiture to collect this earned premium. True, the company in that letter urged him to pay the balance on his regular premium and continue the policy by reinstatement, “on signing the enclosed health certificate.” Nowhere in the record do we find that the company led Morris to believe that, without the payment of the premium at the time specified for such payment, his policy would be kept alive one moment. On the contrary, the undisputed evidence shows that the company advised him that the payment of the premium at the time specified for such payment was essential to the life of the policy. The appellee contends that, by analogy to declared dividends, Morris, on the 1st of January, 1910, had to his credit with the company the sum of $32.06, the amount of his compensation on his service contract. But under the express terms of this contract the amount credited to him was to be paid him “each year on the anniversary of date of this contract,” which was June 14, the date for the annual payment of premiums on the policy of insurance. Morris had already received on his premium accruing June 14,1909, all the credit that was due him for compensation under his service contract. In his application for that contract there was the following provision: “I agree that such contract shall terminate, and all compensation thereunder cease, should I fail or refuse to carry out the provisions of this agreement, except that, when I cease to be the authorized agent of the company, the compensation in said contract agreed to be paid shall continue to be paid annually so long as insurance to the amount of $5,000 placed by my efforts or assistance with the company while I was its authorized agent, on which the regular premiums shall be paid each year, shall remain in force.” And the further provision: “I shall not solicit insurance or make or transmit any application for insurance, or collect premiums or .deliver any policy after the present current calendar year.” There was no evidence that any insurance had been placed by the efforts of Morris, except his own, for the sum of $5,000, and under the above agreement no compensation was due him unless the $5,000 of insurance placed by his efforts “remained in force” by the payment of the regular premiums each year. It will be seen from the above that Morris was not entitled to compensation unless he paid the regular annual premium; and when he failed to pay that of 1909, before his death, the company owed him nothing on his service contract. The company, therefore, was not estopped from asserting a forfeiture by its conduct in failing to credit Morris on his premium note of 1909 with the amount that would have been due him on June 14, 1910, had he kept his policy of $5,000 in force by the payment of his premium. Dividends accruing under policies of insurance must be paid according to the contracts under which they accrue. The rule requiring accrued dividends to be applied to the payment of premiums to prevent forfeiture, as held in Union Cent. L. Ins. Co. v. Caldwell, 68 Ark. 505, has no application here because of the peculiar provisions of the insurance contract under consideration. We can not agree with learned counsel for appellee that the provisions of the policy and note as to forfeiture for nonpayment of premium were superseded by the contract of reinstatement, as set forth in the “certificate of health and renewal contract” executed by Morris on the 25th day of October, 1909, and approved by the company October 29, 1909. On the contrary, this renewal contract expressly provides that “such revival shall not constitute a precedent nor in any way change or modify any of the provisions of said policy contract.” The renewal contract simply revived the policy with all of its provisions. The court can not make contracts for the parties, and it is its duty to enforce them as the parties have made them. The plain and unmistakable meaning of the contract which appellee is now seeking to enforce only gave to appellee the benefit of the insurance under the policy provided Morris paid the premiums, which he did not do before his death; and to compel the company to pay it for him after his death in order that his widow may obtain the sum of $5,000, it seems to us, would be directly contrary to the provisions of the contract which the parties made for themselves. The court erred in its instructions and in not directing a verdict for appellant. The judgment is reversed, and the cause is dismissed.