Joseph v. American Life Insurance

Gantt, P. J., delivered the opinion of the court. On March 5, 1870, Joachim Gaterman took out a policy -on his life, with defendant, by which he agreed to pay the ¡sum of $70 on the day of its issue, and a like sum on March 5th in each following year, for the period of ten years; in consideration of which the company agreed to jpay to him, should he survive and be alive on August 14, [303] 1896, the sum of $1,000; and, in case of his death, the •company agreed to pay that sum to Joseph, his son, within -sixty days of his death. It was provided in the policy that, -should the assured cease to pay the annual premium, the •company would, upon the surrender of the policy, issue in place of it a paid-up policy on the life of the assured, as follows, viz.: After the payment of two annual premiums, two-tenths ; after the payment of three annual premiums, 'three-tenths ; and so on, according to the number of years paid in, not exceeding ten years. It was further provided that the policy was to become void if the said premiums -are not paid, as hereinbefore mentioned, on or before twelve •o’clock (noon) on the several days specified and appointed for the payment of the same.” The assured died on March 11, 1873. The premium due on March 5, 1873, was nob paid. Several excuses were offered for this non-payment: 1. It was alleged that it was, and always had been, cus■tomary and usual with defendant, and its agents, to accept and receive such premium within thirty days after the same matured ; and the assured contracted with reference to, and 'relying on, this customary indulgence. 2. That it was customary for the company to notify .assured of the day of payment. That this was omitted in this instance, and the assured thereby misled. 3. That the assured was led to believe, from the commutation clause and the payment clause in the policy, that it was non-forfeitable. 4. That the assured was prevented by the act of God from paying the premium when due, he being then in a ■dying condition.- 5. That the payment was tendered on March 7, 1873, .and refused. It will be seen that these reasons were inconsistent. The ■first three may escape this criticism, as compared with each •other; but, if the fourth was true, the others could have fiad no infiuence on the conduct of the assured, while, if [304] the first three influenced his action, his state on March? 5th was not the reason of the non-payment of the premium. Looking at each one separately, however, we see no room for disapproving the action of the Circuit Court. 1. There was no evidence of any custom of which the< plaintiff could have the benefit, and no evidence was offered to show such a custom. It is conceded that if, on March 7, 1873, the assured had been in good health the premium: then tendered would have been accepted, and that suclracceptance would have conformed to the custom of the company in such cases. Obviously the assured could not have* any advantage from the establishment of such a custom. 2. As to the failure to give notice of the premium becoming due, no evidence was offered ; nor was evidence offered of the custom of the company to give such notice. It would have been immaterial if offered. Such notice is; always a mere voluntary courtesy, and the omission to give it entails no consequences. 3. No time need be spent on the third reason. The-assured cannot be allowed to set up a misunderstanding of a very plain provision of the policy given to him. The-sense in which, and the degree to which, his policy was not forfeitable was very clearly defined. 4. The fourth reason cannot avail the assured. The company insures him against certain hazards; but of others he takes the risk. It is obvious that, if casualties did not sometimes occur to the advantage of the insurer, the business of' insuring lives would inevitably lead to the bankruptcy of the company engaged in it; which is only another way of saying-that all those who effected insurance in such companies-would lose their money. It is of the essence of the business that the underwriters, making a judicious calculation of the* chances of mortality, should, on the average, gain more than they lose by taking risks on lives. Among the possibilities of gain, perhaps the largest is that which accrues, from lapsed policies. Here the complete lapse is waived.. [305] We say waived, because the company appears to have treated the insured as if the policy had been surrendered, and a paid-up policy claimed under the first clause in the instrument following the definition of the contract. There is no justification for demanding more than this. The company has a clear right to take advantage of precisely such contingencies as prevented the assured here fronl paying the premium on March 5, 1873. The case cited by counsel for respondent (Howell v. Knickerbocker Ins. Co., 44 N. Y. 276) has received the approval of the bench and bar throughout the country; and it is decisive, not only of the fourth point made by appellant, but of the first also. 5. The tender made on March 7, 1873, could not have any influence. At that time the legal right to pay the premium had expired, and the assured was confessedly dying. A neto contract of insurance, under such circumstances, was out of the question. The judgment of the Circuit Court is affirmed, all the judges concurring.