Lyke v. First National Life & Accident Insurance

POLLFY, J. This action was brought to recover on a life insurance policy. Plaintiff is the beneficiary named therein. The. policy was issued pursuant to a written application therefor made through an agent of the defendant company. At the time of making the application, the insured gave the agent his promissory note for $50.36 in payment of the first -year’s premium., and the company’s agent gave the insured the following receipt: “Received of Frank Lyke fifty and 36-100 dollars, being the first annual premium on a policy of insurance of $1,000 upon his life for which application is made this day. It is agreed and-understood that if said application is received and is approved by said company at its home office, the said applicant will Ibe insured from the date of such approval, subject to the terms and conditions of the policy contract of said company. * * *” The note and application were dated September 11, 1914. The application -was approved on the 19th -day of September, and the policy was issued and dated on the 21st day of that month. When it was delivered to the insured does not appear, nor is it material. On the nth day of iSeptember, 1915, the insured- gave the company his note for $50.36, payable one year from date, which by its terms was to continúe the policy in force -until .default should be made in the payment thereof, and provided that, in case of default in the payment of the note when due, the policy should--becomé void and all rights of the beneficiary should at once terminate without further notice. On or about the' 1st day of September, 1916, and before there was any default in the payment of said note, the insured renewed the same by giving a renewal note for the amount of the old note, plus the interest that hack [530] accrued thereon. The renewal note was .payable three months from date, which carried the date of maturity thereof-beyond the expiration of the second year of the policy but did not purport to be a payment of any part of the third year’s premium. The policy contained the following provisions: “This policy is issued in consideration of the application therefor, a copy of which is indorsed hereon, and the ■ sum of fifty and 36-100 dollars, the receipt of which is hereby acknowledged, and the payment of a like sum on or before the eleventh day of September, in every year until twenty full year’s premiums shall have been paid or until the prior death of the insured. * * * “Failure to pay any premium-, or any note given for any premium, when due, will void this policy without further notice, and forfeit all payments to the company except as herein provided.” The policy also contained the provision that, after it had been in force one year, the insured could have a grace of one month in which to pay the premiums as they came due. Upon these facts the trial court held that the policy had lapsed prior to the death of dhe insured — which occurred on the 20th day of October, 1916 — because of the failure to pay the third annual premium. Judgment was entered for the defendant, and plaintiff appeals to this court. [1,2] For the purposes of this case, the acceptance of the promissory notes by the respondent must be treated as payment of two annual premiums. This kept the policy in force for two full years, plus a grace of thirty days, after the expiration of the second year. The -question to be determined then becomes: 'When did the policy take effect ? Appellant contends that it 'did not take effect until the 21st day of September, 1914, the day on which it was issued. If this is correct, the payment of the second year’s premium kept the policy in force until one -month after the 21st day of September, 1916, or the 21st day day of October, the day after the insured died. On the other hand, respondent claims that the policy went into effect on the 19th day of September, the day the application was approved. If this is correct, the policy lapsed on the 19th day of October, 1916, the day before the insured died. In its -brief, respondent says: [531] “The -policy contained á provision to the effect that premiums shall be payable annually in advance on the 12th day of 'September of each year. Notwithstanding such- provision, it is probably the rule of law that the insured, by reason of having paid the first annual premium, would be entitled to a full year’s insurance from the time the insurance went into effect, and that a second or further premium would- not be due until such entire year had expired. This is the doctrine announced in McMaster v. New York Life Insurance Co., 183 U. S. 25, 22 Sup. Ct. 10, 46 L. Ed. 64; Halsey v. American Central Life Ins. Co., 258 Mo. 659, 167 S. W. 951; Stinchcombe v. New York Life Ins. Co., 46 Or. 316, 80 Pac. 213.” This much being conceded — and it is undoubtedly the correct rule of law — there was but one other date in the entire contract to show when the policy went into effect. This was September 21, 1914, the day the policy was issued. It is not claimed that the insured was notified of the date on which his application -was approved by the company, nor that he ever had any knowledge of such fact. The policy showed) on its face that it had been issued on the 21st day of the month, and the insured' would very naturally assume, and, in the absence of knowledge to the contrary, he had a right to assume, that the policy was issued and dated on the day the application was approved. To hold otherwise would be to hold the insured bound -by a fact of which he had no knowledge. [3> 5] The policy was not a contract in force for a single year with the privilege of renewal from year to year, but was a contract for the entire life of the insured, subject to forfeiture by failing to pay the annual premiums when they became diue. McMaster v. N. Y. L. Ins. Co., supra, and, -where a forfeiture is involved, a contract will be so interpreted, whenever it can, “within the bounds of reason and common fairness, as to elude the forfeiture, and secure to the parties that to which they are in justice entitled.” Stinchcombe v. N. Y. L. Ins. Co., supra. Tested by these rules, the policy had not lapsed at the time of the insured’s -death, and the judgment should have been for the plaintiff. ' - - - The judgment appealed from is- reversed, with directions to [532] the trial court to enter judgment for plaintiff upon the facts found at the trial.