Day v. Connecticut General Life Insurance

Carpenter, J. This action is brought upon a policy of insurance upon the life of James B. Colt. The policy is recited in the declaration. It .is then averred that the defendants assumed and faithfully promised to perform all the stipulations and agreements in that instrument on their part to be performed, and to keep the policy in force for the term of the whole continuance of the life of the said Colt upon the terms and conditions therein set forth. It then alleges payment of the annual premiums until October 28th, 1872, on which day another payment fell due for the year then next ensuing, and a tender of the amount due that day, and a refusal of the defendants to receive it. It also alleges an express declaration by the defendants that they would not longer continue the policy in force, and that the same had ceased and determined and had become null and void. A — 490 — verdict was rendered for the plaintiff, and the defendants filed a motion in arrest of judgment for the insufficiency of the declaration. The questions arising on the motion were reserved for the consideration of this court. It is not claimed that the alleged promise to keep the policy in force is found in terms in the policy. The only express promise found therein is to pay the policy upon the death of the insured — a contract to pay in the future a certain sum of money. But it is claimed that there is an implied promise to receive the premiums and keep the policy in force, and a breach of this implied promise constitutes the plaintiff’s whole cause of action. “ Implied contracts,” says Blackstone, “ are such as reason and justice dictate, and which therefore the law presumes that every man undertakes to perform.” “ Implied contracts are those which are raised by operation of law.” 1 Swift’s Digest, 175. The law raises no contract by implication unnecessarily. Therefore when substantial justice may be done without it, if the party in Whose behalf it is claimed does not need it to protect him in the enjoyment of some legal right, and the party against whom it is claimed does not otherwise obtain some unfair and illegal advantage, no contract will be implied. Let us test this case by an application of these principles. The plaintiff purchased this policy with knowledge of. the nature of the contract, the conditions therein contained, and the obligations thereby imposed. He assumed the liabilities and the risks growing out of the conditions without any expectation of receiving any thing in return until the policy by its terms should become payable. When it does become payable the defendants must pay it unless they have a legal defense. If the policy had become null and void, as the defendants claimed, that would be a legal defense. But the jury found against the defendants on that claim, and the question recurs as to the legal effect of refusing to receive the premiums and improperly declaring the policy void. These were the defendants’ acts alone, not only without the concurrence of the plaintiff, but against his wishes. It certainly requires no argument to show that neither of these acts, nor — 491 — both combined, would be any defence to the action. The plaintiff then would possess all his legal rights unimpaired, notwithstanding the action of the defendants. But it may be said that the refusal of the defendants to accept the premium and recognize the continued existence of the policy raises a doubt as to its validity, and throws a cloud, so to speak, over the plaintiff’s property. This may be so; but the claim that a contract has become null and void by reason of the violation of some condition therein contained is not an invasion of the legal rights of the other contracting party. If the claim is not well founded the party claiming it will take nothing by it, and the legal rights of the other party will remain unimpaired. This must be true of most contracts; hence there will be no occasion to invoke the aid of the law to imply a contract in addition to that expressed by the parties. If however by reason of the peculiar nature of this contract, and the length of time which may elapse before a suit can be brought on the express promise, there is danger that the party may be prejudiced, perhaps a court of equity upon a proper petition might have power to determine the question of forfeiture in advance, and if found not to exist to declare the policy to be in full force. But however this may be, we think it is quite clear that justice may be done and the rights of the plaintiff fully protected without resorting to an implied contract. Nor can it be successfully claimed that the defendants by their action obtained any undue or illegal advantage. If they were mistaken in their claim that the policy was forfeited, and if it be true that the policy notwithstanding such claim remains in full force, and that the defendants in due time will be liable thereon, the result of the defendants’ course will simply be the loss of interest more or less on the premiums. The advantages of such a result would be with the plaintiff and not with the defendants. Again, the law raises an implied contract ordinarily and perhaps always for the purpose of carrying into effect the presumed intention of the parties. When therefore the consequence will be something entirely different from that contemplated by the parties, or if the court cannot clearly — 492 — see that the probable consequences were intended by the parties, no contract will be implied. Let us apply this test. We will suppose that the defendants really and in good faith claimed that the policy was forfeited by a breach of the condition. They could not receive the premium without thereby waiving the forfeiture; and if they could, common fairness would require that they should give notice of their intention to claim the forfeiture and decline to take the premium. Now according to the plaintiff’s claim they could not do this, if unsuccessful, without forfeiting all their advantages in the contract; yea more, they not only lose all profits, but they have actually carried the risk during all the time the policy was in force. It is in the nature of a penalty for making a legal claim in good faith in a court of justice. It cannot be presumed that the parties intended this. Penalties and forfeitures are odious to the law, and where they are necessarily involved in the consequences of an implied contract, no contract will be implied. But if there is no forfeiture in respect to just profits, the rule of damages being, instead of the premiums paid with interest, the plaintiff’s proportion of the reserve, even then the contract would seem to be terminated with a loss to the company of all future profits. The law will not presume that that was the intention of the parties. If the contract was not terminated then a more serious objection to an implied contract arises — a possible liability on both an implied and an express promise; in other words a liability to refund the premiums or pay the value of the reserve on an implied promise, and ultimately to pay the sum named in the policy on the express promise. We think therefore upon principle that the law raises no' such contract as the plaintiff contends for. We are also of the opinion that the authorities cited in support of the plaintiff’s claim aré not exactly in point, and do not support the conclusion arrived at. The leading cases are Hochster v. De la Tour, 20 E. L. & E., 157, and Frost v. Knight, Law Reports, 7 Exch., 111. The first was an action on a contract to employ the plaintiff as a courier, to commence at a certain day. Before the time arrived the defendant — 493 — repudiated tlie contract and declared lie would not perforin it. It was held that the plaintiff might treat that as a breach and sue as for a breach of the contract before the time appointed for it to commence. The ground of the decision will appear from the following, which we copy from the opinion of Lord Campbell, C. J. “But it cannot be laid down as a universal rule that where by agreement an act is to be done on a future day no action can be brought for a breach of the agreement till the day for the doing the act has arrived. If a man promises to marry a woman on a certain day, and before that day marries another woman, he is instantly liable to an action for breach of promise of marriage. If a man contracts to execute a lease on and from a future day for a certain term, and before that day executes a lease to another for the same term, he may be immediately sued for breaking the contract. So if a man contracts to sell and deliver specific goods on a future day, and before the day he sells and delivers them to another, he is immediately liable to an action at the suit of the person with whom he first contracted to sell and deliver them. One reason alleged in support of such an action is, that the defendant has before the day rendered it impossible for him to perform the contract at the day; but this does not necessarily follow, for prior to the day fixed for doing the act the first wife may have died; a surrender of the lease executed might be obtained; and the defendant might have re-purchased the goods, so as to be in a situation to sell and deliver them to the plaintiff. Another reason may bo that, when there is a contract to do an act on a future day, there is a relation constituted between the parties, in the mean time, by the contract, and that they impliedly promise that in the mean time neither will do anything to the prejudice of the other inconsistent with that relation. As an example, a man and woman engaged to marry are affianced to one another during the period between the time of the engagement and the celebration of the marjiage. In this very case of traveller and courier, from the day of the hiring till the day when the employment was to begin they were engaged to each other, and it seems to be a — 494 — breach of an implied contract if either of them renounces the engagement.” Here the words “impliedly promise” and “implied contract” are used in a very general sense, and not as indicating technically a promise or agreement on which an action can be brought. They seem to be used to indicate, not an independent agreement, but something incident to and forming a part of the express promise and inseparable from it, a breach of which was regarded as evidence of or equivalent to a breach of the express contract. The action it will be observed was not brought on an implied contract “not to renounce the engagement” but on an express promise to hire the plaintiff. So too of the examples put by way of illustration. . Lord Campbell does not say that an action will lie on an implied promise not to lease to another, or not to sell and deliver the goods to another, but on the express promise to lease or to sell and deliver goods to the plaintiff. The case of Frost v. Knight was an action on a promise to marry on the death of the defendant’s father. While the father was yet living the defendant broke off the engagement. It was held that an action would lie immediately. The court says that by the contract of marriage a “ new status, that of betrothment, at once arises between the parties. This relation it is true has not by the law of England the same important consequences which attached to it by the canon law and the law of many other countries. Nevertheless it carries with it consequences of the utmost importance to the parties. Each becomes bound to the other; neither can consistently with such a relation enter into a similar engagement with another person; each has an implied right to have this relation continued till the contract is finally accomplished by marriage.” Here too it will be observed there is no.intimation that a suit may be brought for a breach of an implied agreement, but substantially the same language is used, and in the same sense, and for the same purpose, as that used in Hochster v. De la Tour. It will be remembered also that the action was not brought on an implied promise not to marry another person, but on the express promise to marry the — 495 — plaintiff. In this case it is different. The action is not brought on the express promise which the defendants entered into to pay money, but on an alleged implied promise to receive the premiums and keep the policy in force. The cases referred to are leading eases on the subject of maintaining actions on promises before the time arrives for their performance. They have been followed by some of the American courts. In Burtis v. Thompson, 42 N. York, 246, they were apparently followed, but in Freer v. Benton, 61 N. York, 492, a majority of the court of commissioners hesitated, and it may be regarded as an open question in that state. In Dugan v. Anderson, 36 Maryland, 567, the question was discussed but not decided. In Massachusetts they have been rejected, and the soundness of the principle upon which they rest questioned. Daniels v. Newton, 114 Mass., 530. We have now no occasion to say whether in a case exactly in point we should or should not follow them, and purposely leave it an open question. We would remark however that the cases seem to establish the proposition that an action may bo brought upon a contract in advance of the time fixed for its performance, where the conduct of the other party has been such as to work a practical destruction of the contract or to deprive the plaintiff of all benefit to be derived therefrom. The execution of a lease, and the sale of goods to another party, and the marrying another, seem to be cases of this character, notwithstanding the criticism of Lord Campbell. The parties had placed themselves in a position in which it wás impracticable for them to fulfill the contract and which rendered it morally certain that they would not and could not perform it. Not so in the present case. Nothing done by the defendants rendered it impossible for them to perform their contract, or in any way interfered with the payment of money when it should become due. The cases referred to were not contracts for the payment of money. One was a contract for hiring, the other was an agreement to marry. When in the one case there was a declaration by one party that he would not hire, and that was accepted by the other as an end of the contract, and in the other case one party mar — 496 — ried another person, there was in each case an effectual and substantial breach of the contract. The thing agreed to be done could not or would not' be done, and nothing was left but for the party in fault to compensate the other in damages. The damages can be ascertained perhaps as well in an action brought before the time for performance as afterwards.’ Hence an action on the express contract for a breach has been maintained. In this case the contract is to pay money at a future day. Until that day arrives there can be no breach. The party promising may cease to exist or become bankrupt before the day, so that it will be morally certain that the contract will not be performed; but that is no breach, and will not justify the bringing of an action on the contract. No act of the promissor in a case like this without the consent of the promissee will rescind or terminate the contract, and no act of his before the time will amount to a breach. The declaration that he will not pay or cannot pay does not relieve him of his obligation. That still remains in force, and when the time arrives, if of sufficient pecuniary ability, he may be compelled to perform specifically, that is, to pay the money. The reason that he gives that he will not pay— that the promisee has done some act or omitted to do something whereby the contract is forfeited — does not strengthen the claim. The reason may or may not be true. If it is true that of itself ends the contract and no action can be maintained at any time. If it is not true the claim amounts to nothing. It is no invasion of the legal rights of the other party, as the contract still remains in force. The claim of the plaintiff therefore is really this: — if an insurance company makes a claim that the policy is forfeited by a breach of some condition contained in it, and the claim is not maintained, the policy is thereby converted into a contract to pay money at an earlier day, or that some obligation to pay money arises by implication of law dehors the express contract, and in some measure independent of it, which may be enforced immediately. Neither position is tenable, and neither can be maintained upon principle or by authority. — 497 — This case is also to be distinguished from a class of cases where both parties concur in treating a contract as rescinded, or, what is the same thing, where one party repudiates the contract and declares that he will not perform it, and the other thereupon elects to treat the contract as at an end and brings an action as for a breach. In such cases actions may be maintained either on the express contract or on an implied contract. Where one party has paid money or performed services for which he has not received a fair equivalent, the law will, if need be, imply a contract to refund or pay what is equitably due in order to prevent injustice. And this principle has been applied to insurance cases. In McKee v. The Phœnix Life Insurance Co., 28 Missouri, 383, it was held that “if the defendant company wrongfully determined the contract by refusing to receive a premium when due, then the plaintiff had a right to treat the policy as at an end, and to recover all the money she had paid under it.” In Howland v. The Continental Life Insurance Co., 121 Mass., 499, the premium #fell due on Sunday, and payment was tendered on Monday and refused. A suit was brought eleven months afterwards, with no previous notice to the company that the plaintiff elected to abandon the policy. The court held that the suit could not be maintained, on the ground that the election was not within a reasonable time. In McAllister v. The New England Mutual Life Insurance Co., 101 Mass., 558, the insured refused to pay a premium note, and declared that “ he would not have any thing more to do with the insurers and abandoned the whole thingbut he retained the policy and the insurers retained the note, nor did it appear that they consented to the abandonment. It was held that the policy remained in force. These authorities show, and that alone is the purpose for which we cite them, that in order to terminate the policy in such cases the concurrence of both parties is necessary. In Haynes v. The American Popular Life Insurance Co., 69 N. York, 435, the company refused to receive the premiums, claiming that the policy had lapsed. The plaintiff brought an action against the company to have the policy — 498 — adjudged in force, and obtained judgment. The judgment was affirmed by the Court of Appeals. In Cohen v. The New York Mutual Life Insurance Co., 50 N. York, 610, it was held that the court might exercise equity powers and declare the legal status of the parties. Thus it would seem that a person situated as the plaintiff was may choose between two remedies — 1st. He may elect to consider the policy at an end; in which case, with a declaration containing pi-oper averments, he may recover the equitable and just value of the policy. He ought not to recover more, as the policy was terminated by mutual consent, and it does not seem to be a case where either party ought to be subjected to penal consequences. Of course such a case should depend upon the question whether the policy was rightfully declared forfeited. If it was, the plaintiff can not recover; if it was not, he will recover the full value of the policy, 2d. If he desires that the policy shall continue, he .may institute a proceeding to have it adjudged to be in force, in which case the question of forfeiture may be determined. In chat case the rights of the parties will be determined in a reasonable time, the parties will be relieved of suspense, and if it is decided against the forfeiture both parties will have what they originally contracted for. Perhaps a third course is open to him, and that is, to tender the premium, and, if refused, wait until the policy by its terms becomes payable, and then test the forfeiture in a proper action on the policy. This course may involve delay for a long series of years, during which both parties will be in uncertainty as to their legal rights; and it will be attended .with this further disadvantage, that both parties may find it difficult to obtain proper proof. The plaintiff in this case pursued an entirely different course. He did not wait for the policy to become a claim, he did not resort to a court of equity to have the policy established, and he did not elect to consider the policy at an end. But he brought a suit on an alleged implied promise, and seeks to recover the full amount of the premiums paid with interest, leaving the question of the defendants’ liability on — 499 — the expreso promise contained in the policy an open one. This we think cannot be done. The plaintiff’s declaration is insufficient, and the Superior Court is advised to arrest tbe judgment. In this opinion the other judges concurred.