Continental Insurance v. Daly

The opinion of the court was delivered by JOHNSTON, J.: It is agreed that the only consideration for the insurance policy in suit was the premium note of fourteen dollars. In the policy, as well as in the note, it was expressly stipulated that a non-payment of the premium note at maturity would render the policy void, and that the insurance company should not be liable for any loss occurring during the continuance of such default. The note had been due and unpaid for twenty days prior to the happening of the fire which destroyed the property insured, and payment had not been made at the commencement of this action. That the provision prescribing a forfeiture of the policy in case of the failure to pay the premium note when it became due was reasonable and just, and a contract the parties were capable of making, cannot be denied. The premium is the considei’ation that induces the insurer to assume the risk; its prompt payment is essential to the success of the insurance business, and necessary to enable insurance companies to comply with the contracts entered into with their patrons. To promote punctuality, in the payment of premiums, and enable them to meet their engagements, insurance companies usually contract with the assured that a neglect to pay the premium or premium notes when they fall due, will, if a loss occurs during the default, operate as a forfeiture of the insurance-money. In a policy containing a stipulation of this character, time is material and of the essence of the contract, and a failure to make payment at the time therein agreed, where there is no waiver of that condition of the policy, will absolve the insurance company from liability. (Critchett v. American Ins. Co., 53 Iowa, 404; McIntire v. Michigan State Ins. Co., 17 N. W. Rep. 781; Shake v. Hawkeye Ins. Co., 44 Iowa, 540; Garlick v. Mississippi Valley Ins. Co., 44 id. 553; Greeley v. Iowa City Ins. Co., 50 id. 80; Williams v. Albany City Ins. Co., 19 Mich. 451; [606] New York Life Ins. Co. v. Statham, et al., 93 U. S. 24; Wheeler v. Connecticut Mutual Life Ins. Co., 82 N. Y. 543; Klein v. Ins. Co., 104 U. S. 88.) The counsel for defendant in error are not, as we understand them, opposed to the validity or justness of such a contract, but they insist that there was no default; that the assured was not negligent, but that by the act of God it was rendered impossible for the insured to comply with his contract. They argue that the neglect was on the part of the insurance company in failing to present and prove up the premium note as a demand against the estate of J. L. Daly, deceased, which made it impossible for the administratrix, or anyone interested in the insurance policy, to pay the note. The claim is, that under our statutes no demand against any estate can be allowed or paid until the claimant first makes oath in open court, or files an affidavit with such demand, of its validity and justness; and that the insurance company having failed in this respect, the administratrix of the estate was absolutely prohibited from paying the premium note. This, then, is the excuse given for non-payment. We must briefly inquire of its sufficiency. It will be noted that the payment of the premium upon this policy was a condition, the performance of which was necessary to the continued liability of the insurance company. Under the rule invoked by counsel for defendant in error, it must appear that the thing to be done, or the condition to be performed, could not by any means have been accomplished, either by the insured or by any other person for him. As a general rule, where a person expressly contracts to do an act lawful and possible at the time, an inevitable accident or other unforeseen contingency not within his control, will not discharge him from the obligation of his contract, or relieve him or those claiming through him from the performance of its conditions, because such accident or contingency might have been provided against in the contract. If the payment of the premium note could have been properly made by .the administratrix, or by some one beneficially interested in the policy and in the performance of its conditions, such persons at least cannot be. relieved [607] from the consequences of a default. (Beebe v. Johnson, 19 Wend. 500; Wheeler v. Connecticut Mutual Life Ins. Co., 82 N. Y. 543; Evans v. United States Life Ins. Co., 64 id. 305; Roehner v. Knickerbocker Life Ins. Co., 63 id. 150.) Was the performance of the condition an impossibility iu this case? We think not. The duty of paying the premium note did not devolve upon the administratrix, but for reasons other than those stated by her counsel. The plaintiff below, in her character as administratrix, had no interest in the insurance-money, nor control over it. If it had been recovered it would not have been assets of the estate subject to the claims of creditors, nor to distribution under any law of the state. The property insured was exempt to the widow and children of the deceased; the dwelling house was occupied as a residence by Daly and his family at the time the policy was issued and until his death in August, 1883, and continued to be occupied by his widow and children after his death until the occurrence of the fire, on December 21, 1883. By the provisions of our statute— “A homestead . . . occupied by the intestate and his family, at the time of his death, as a residence, and continued to be so occupied by his widow and children, after his death,. together with all the improvements on the same, shall be wholly exempt from distribution under any of the laws of this state, and from the payment of the debts of the intestate, but shall be the absolute property of the said widow and children.” (Comp. Laws 1879, ch. 33, § 2.) It is also provided that— “In addition to her portion of her deceased husband’s estate, the widow shall be allowed to keep absolutely for the use of herself and children of the deceased, all personal property of the deceased which was exempt to him from sale and execution at the time of his death.” (Comp.Laws 1879,ch. 37, §49.) As before stated, all of the property embraced in the policy in question was exempt. Within the policy of our laws upon the question of exemptions, and the liberal interpretation given them, we think the insurance-money paid as compensation for the loss of exempt property stands in place of that property. [608] The policy in question contained a clause providing that the insurance company had the option, in case of a destruction of the property by fire or lightning, to rebuild and replace it. If it was so replaced, the widow and children would be entitled to enter upon its occupancy and hold it as a homestead exempt from the claims of any of the creditors of the deceased. But in case the company fails to exercise the option of rebuilding the property, it would seem that for a reasonable time at least, the money paid as compensation for the loss of such exempt property would also be exempt. (Mitchell v. Milhoan, 11 Kas. 617; Houghton v. Lee, 50 Cal. 101; Probst & Hild v. Scott, 31 Ark. 652; Cooney v. Cooney, 65 Barb. 524; Strouse’s Executor v. Becker, 44 Pa. St. 206; Thompson on Homesteads and Exemptions, §§ 750, 734.) Here, however, the property insured, upon the death of J. L. Daly descended to his widow and children, and absolutely vested in them and was subject to their disposition. And as we have seen that the insurance-money paid for the loss of their property would also vest in them, it follows that they alone were interested in the contract of insurance, and they alone could be affected by a failure to perform the condition of the contract. If they desired to avail themselves of the benefits of the policy, it was their duty, and not that of the administratrix, to have kept it alive and to comply with the conditions of the policy to be performed by the insured. There was no obstacle to prevent them from complying with this condition; and within the rule heretofore stated, they cannot avoid the consequences of their default. The question raised by counsel for defendant in error, that payment of the premium note could not be made by the ad-ministratrix because of the failure of the insurance company to present and prove up the note as a demand against the estate, is therefore not in the case. In view of the conclusions we have reached, the other question raised by plaintiff in error, as to who was the proper party to sue to recover upon the policy, becomes of no importance. It follows from what has been said, that the action might have [609] been brought by the widow and children, as they were beneficially interested in the policy. As the contract of insurance was made with J. L. Daly, his executors, administrators and assigns, it is claimed that the administratrix alone can sue. If suit can be maintained at all by the administratrix, it can only be as trustee of the widow and children of the deceased, who were alone interested in the fund sued for, (Civil Code, §28;) but whether it can be brought in the name of the ad-ministratrix, we need not and do not now decide. The judgment of the district court will be reversed. All the Justices concurring.