Home Insurance v. Hamilton

ELLISON, J. Plaintiff instituted this action on a promissory note, before a. justice of the peace. On appeal to the circuit court it obtained judgment on a trial before the court without a jury. The note was given for the sum of seventy-six dollars, payable in installments, and reads as follows: “$76.00. June 27, 1907. “For value received in policy No. F. I. 216094, B. 184495, dated the-day of-, 190 — , issued by The Home Insurance Company, New York, I promise to pay to said Company, or order (by mail, if requested), at the office of its Western Farm Department, in Chicago, Illinois, seventy-six dollars in installments as follows: “Nineteen dollars and-cents on the 1st day of July, 1908. “Nineteen dollars and--cents on the 1st day of July, 1909. “Nineteen dollars and-cents on the 1st day of July, 1910. “Nineteen dollars and-cents on the 1st day of July, 1911. “without interest. “And it is hereby agreed that in case any one of the installments herein named should not be paid at maturity, or if any single payment promissory note [241] (acknowledged as cash or otherwise) given for the whole or any portion of the premium for said policy shall not be paid promptly when due, this company shall not be liable for loss during such default, and the said policy shall lapse until payment is made to this company at the Western Farm Department at Chicago, and the whole amount of installments or notes remaining unpaid on said policy may be declared earned due and payable, and may be collected by law.” The policy of iñsurance mentioned in the note was delivered to defendant, insuring his property for a term of "five years, for a premium of ninety-five dollars. Nineteen dollars was paid in cash and the note in controversy for seventy-six dollars, payable in four annual installments, as shown above, executed for the balance. The defense was that defendant had cancelled the policy at the end of the first year and that, for the first year’s insurance he had paid in cash the aforesaid sum of nineteen dollars. The policy contained a provision permitting either party to cancel it in a way pointed out therein. The provision reads that: “This company reserves the right to cancel this policy or any part thereof, by tendering to the insured the unearned pro rata premium, after due notice to that effect, either by mail addressed to the assured at his, her or their postoffice address as named in this policy or otherwise; the assured may also' cancel when the premium or note or obligation given for such premium has been actually and fully paid in cash, in which case the company shall retain the expense of writing, procuring the risk, and the usual short rates from the date of the policy up to the time it is received for such cancellation.” It will be noticed that as a prerequisite to defendant’s right to cancel the contract of insurance he must [242] have first paid the premium, whether it be due iu cash or represented by a note for deferred payments. That when the premium was thus paid, the plaintiff would, after deducting expenses for writing, etc., and the usual premium for short terms of insurance up to the time of the cancellation, pay to him the balance. Defendant made no pretense of complying with this provision. Instead, some time prior to June 23, 1908, he enclosed the policy directed to plaintiff at Chicago, Illinois, to be cancelled, and plaintiff on that date returned it to him calling his attention to the provisions of the policy. Nothing further seems to have transpired until January, 1909, when this action was brought. A contract covering a certain period of time, but containing a conditional provision that it might be terminated before that time, will remain, effective the full term, unless the condition of termination is fully complied with. And this is especially applicable to an insurance policy containing a provision allowing a cancellation prior to the end of the term of insurance. [Chrisman-Sawyer Banking Co. v. Insurance Co., 75 Mo. App. 310; Van Valkenburgh v. Insurance Co., 51 N. Y. 465; Hollingsworth v. Insurance Co., 45 Ga. 294; Home Ins. Co. v. Curtis, 32 Mich. 402; White v. Insurance Co., 120 Mass. 330; Aetna Ins. Co. v. Weissinger, 91 Ind. 297.] Those cases represent instances where the insurer sought to cancel, but the rule is equally applicable to the insured. The conditions of cancellation were doubtless for the purpose of preventing an unjust advantage being taken of the insurer. It is well known that contracts of insurance may be had for a long term for a much less proportionate rate than for a short term. In this case the yearly premium for a five-year term was nineteen dollars, and it was shown that for a single year term the premium would have been twenty-eight and one-half dollars, which, at that rate, would be one hun [243] dred and forty-two and one-half dollars for five years, taken in single years; whereas, the entire five-year term in this case was given for ninety-five dollars. The effect of allowing the assured to cancel his policy covering a solid term of five years, after it had run, say, one year, by paying one-fifth of the sum charged for the whole term, would give him insurance for a short term at the same rate charged for a long term, and is too unreasonable to be seriously considered. And it is to be inferred that this would not he insisted upon here but for what is said to be an infirmity in the contract itself, as above set out, in providing that the rate to be charged in case of cancellation would be the “usual short rate,” and in plaintiff not showing what was that rate. The usual short rate was correctly interpreted by the court as “the customary rates charged for insuring like property, in a like amount, for original short term insurance,” which in this case was shown to be twenty-eight and one-half dollars. ' That part of defendant’s defense, and argument in support of it, that the term “usual short rate” was unreasonable, • and further that plaintiff should have been required to show' what it was and that it was just, can find no proper place in the defense as made. The defense is that the note is not owing because the policy was cancelled at a time when the nineteen dollars cash, which had been paid, covered the premium up to the time of cancellation. There was no offer in any way to comply with the provision of the contract which was the only thing giving defendant a right to cancellation; and he is in the position of wanting to take advantage of that.provision in his own favor without complying with any of the conditions put in it for the protection of the other party. We do not think the authorities cited by defendant, including Home Ins. Co. v. Burnett, 26 Mo. App. 175, apply to the case. It seems that by manifest clerical error the term of insurance was written from 1912 to 1912, instead [244] of from 1907 to 1912. We note the objection made on this bead by defendant, bnt think it not well taken. After due consideration of tbe points and suggestions made in defendant’s briefs, in connection with tbe oral argument,- we have concluded that tbe judgment of tbe learned trial judge was manifestly for tbe right party, and it is affirmed. All concur.