Patch v. Phoenix Mutual Life Insurance

The opinion of the court was delivered by . PieRPOInt, Oh. J. The first question that naturally arises upon the case as made up and agreed upon by the parties, is whether or not the memorandum entered upon the policy of insurance prior to its execution and delivery, is to be treated as a part of the policy, to be considered and taken into account in determining the true meaning and effect of the instrument itself. We think the entry upon the margin of this policy, of the words, “ This policy is conditional on the interest on the two notes given in part payment for two premiums paid on No. 10,603 being paid in advance,” must be treated as a part of the policy, and the same effect given to them in determining the character and conditions of the policy, as would be given to them, if they had been inserted in the body of the instrument. The rule that entries so made upon the margin of an instrument are to be regarded as a part of it, has long been settled in this State, and elsewhere, and is not now seriously controverted in the case. Graham v. Stevens, 34 Vt., 166 ; 57 Maine, 170. Regarding this memorandum as a-part of the contract of insurance, what then is the true legal effect and scope of the whole instrument ? It appears from the agreed statement of facts, that on the 21st day of February, 1865, Charles W. Ripley, then the husband of Lucy B. Patch, the female plaintiff in this case, procured of the defendants what is called an endowment policy of insurance, for 15000, payable to the said Lucy B., when the said Charles W. should attain the age of 40 years, (he then being 24 years of age,) [488] or at the death of the said Charles W., should he decease prior to attaining that age, upon the condition, that he pay the defendants the annual premium of $279, on or before the 21st day of February, in each and every year, during the continuance of said policy. On this policy the said Charles W. paid two annual premiums, partly in money and partly by two notes, which two notes are the same that are referred to in the memorandum on the policy now under consideration. On the 30th day of March, 1867, the said Charles W. and the defendants entered into an arrangement by which the aforesaid endowment policy was surrendered, and the present policy, which is called a “ paid up policy,” issued in lieu thereof. The consideration of this last policy was the premium which had been paid upon the first; and as such premium was in part paid by the two notes referred to, the defendants sought to make this policy conditional upon the payment of the interest annually, and in advance, upon those two notes. This object we thiuk was fully accomplished by the memorandum upon the margin. But it is said that as the memorandum only refers to the payment of the interest in advance, and does not say annually, the terms of the condition were complied with when the interest was paid in advance for the first year. This we think is quite too narrow a construction. The interest upon the notes, by their terms, is to be paid annually, and it is such interest that the memorandum refers to and requires to be paid in advance. Any other construction would be a manifest violation of the meaning and intent of the parties to this contract. The defendants having taken the notes in the place of the money, it could not reasonably be expected that the defendants would do less than to secure the payment of the interest thereon, by making the new policy dependent upon its payment. Treating the memorandum as a part of the policy, and the whole to be considered the same as though it was included in the body of the instrument, the interest upon the notes becomes practically a premium upon the policy, payable annually in advance ; and on failure to pay the same, the company ceases to be liable and the policy is forfeited. [489] As in this case such interest or premium was not paid according to the terms of the policy, the plaintiffs cannot recover thereon. Baker v. Insurance Co., 43 N. Y., 283; Pitt v. Insurance Co., 100 Mass., 500. Judgment reversed, and case remanded.