Jones v. Life Ass'n of America

JUDGE PRYOR delivered the opinion of the court. This was an action instituted by the widow and •children of Wood M. Jones, on an insurance policy issued by the Life Association of America,- on the life ■of Jones, for $5,000. The consideration was the annual payment by the insured of $145 and interest, "the premium to be paid on the 4th of March in [76] every year during the life of the insured; the' payments to be made at its office in the city of St. Louis, the policy providing- that if failure shall be made in the payment of any sum as stipulated in the policy, then, and in such case, the policy to be-null and void, etc. - ® A demurrer was filed to the petition and sustained on the ground that the policy had been forfeited by reason of the non-payment of the seventh premium, falling due on the 4th of March, 1877. It is alleged, in the petition that six annual premiums had been paid, and when the seventh premium became due tho insured was able, ready and willing to pay his money, but ascertained (alleging the fact to be true) that the-insurance company had failed and ceased to do business, and announced their purpose of making an assignment of its effects. That before the eighth premium became payable, and shortly after the death of the insured, in an action pending against the company in the State of Missouri by the Superintendent" of the State Insurance Department, an order was1, made by which the latter took charge of all the-assets of the company. Did the fact that the insurance company became insolvent and ceased to do> business excuse the insured from paying the seventh premium? is the only question to be determined in this case.” The demurrer is an admission of the truth of the’ facts alleged; and, therefore, we see no reason why the appellees should, not have been required to answer. In the first place it is alleged that the company had [77] •ceased to do business, and if so, there was no place .at .which the premium could have been paid, and with the further allegation of insolvency, it would have been unreasonable to have compelled the insured to pay his money year after year to an insolvent company that is admitted by the pleadings to have been unable to comply with its contract. If the money had .been paid it might have enlarged the assets so as to .increase the dividend in a final distribution between those entitled, without resulting in any benefit whatever to the insured. If insolvent, the amount of the seventh premium might and probably would have -exceeded the amount of the dividend to which the insured would have been entitled under a distribution made by the assignee ; and for this reason, if no other, it would be unjust to require the insured to part with his money in consideration of an undertaking that •could never be complied with on the part of the party receiving it. The obligation to comply with the contract of insurance was mutual, the one as much liable as the other, .and the insolvency of the company was a sufficient excuse for withholding the payment by the insured. In the case of the People v. Empire Mutual Life Insurance Company, 92 New York, 108, it is said: “The implied contract of an insurance company with its policy-holders is, that it will continue to do business, keep on hand the funds required by law. for the .security of its patrons, and remain in a condition, so long as its contracts continue, to perform its obligation, and when it fails to do this it has broken its •engagements.” [78] Here tlie company or the party representing it is claiming a forfeiture by reason of the non-payment of the premium, and at the same time admitting that, if the money had been paid it could not have complied with its contract. Such a defense will not be permitted in a court of' equity, and the court below should have overruled the-demurrer requiring the defense to make an issue, and upon a failure to do so a judgment should have been rendered for the plaintiffs. The extent of the recovery is a question not presented by the record. Judgment reversed, and cause remanded for proceedings consistent with this opinion.