Carey v. Nagle

MILLER, District Judge. A policy was issued for four years, under the amendment to the charter of the company, upon receipt of the note in suit for the payment of the annual premium. It is contended by the defendant's counsel that the premiums should be paid in cash simultaneously with the delivery of the policy, and that the company could not accept a note payable at a future time. The object of the amendment to the charter was to invest in the company the additional power to issue policies as a stock company for a specific rate of premium to be paid in cash. Insurance under this act may be made in the same manner as by other insurance companies not mutual. Policy holders stand in a different relation to the company from those under the mutual system. The insured under the amended charter are not members of the company, nor entitled to a share of the profits, premiums, or earnings of the company, nor subject to losses. I do not think the act requires premiums to be paid [in cash]3 simultaneously with delivery and acceptance of policies. The act authorizes the company to make insurance to any person for a specific rate of premium to be paid in cash, in the same manner as stock companies. The company was not prohibited from extending the time of payment of premiums in cash. The company could transact business in this respect. as other companies, and make its agreement with the insured as to the time of payment of premiums in cash. The note was a mere regulation of the time of payment, for the accommodation of the defendants. The premium was to be paid in cash, but the time of payment was extended. There is no statute law prohibiting such extension. The policy issued to these defendants imports a settlement of the premiums to the satisfaction of the company simultaneously with its execution and delivery, and binds the company in case of loss by fire, even if the note had not been given, or if the insured should become insolvent and unable to pay the premium.- It is an everyday practice with stock companies to issue policies upon credit, containing exemption from liability on non-payment of the premiums. A provision in a policy duly executed, that no insurance, whether original or continued, should be binding until the actual payment of the premium, and the written acknowledgment thereof, does not invalidate-a subsequent contract by parol, to renew such insurance for a premium not paid at the time the risk attaches, but postponed to a future day. Trustees of First Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. 395. in New York Firemen Ins. Co. v. Sturges, 2 Cow. 664, notes were received for premiums. See, also, Commercial Mut. Ins. Co. v. Union Mut. Ins. Co.. 10 How. [60 U. S.] 318; Furniss v. Gilchrist, 1 Sandf. 53; McIntire v. Preston, 5 Gilman, 48; Hamilton v. Lycoming Mut. Ins. Co.. 5 Barr [5 Pa. St.] 339. The contract between the insurer and the insured is mutual, but independent, and failure of one party literally to comply on his part does not exempt the other from liability. I am satisfied that under the amended charter, the company had lawful authority to issue policies, upon a simultaneous, payment of the premiums in cash, or upon an extension of the time of payment by taking a note, or even without a note or security. It is not necessary to consider the question whether the defendants are estopped from making this defense. The note in suit is a portion of the capital of the company for the-payment of losses by fire. If defendants’ property, covered by the policy, had been damaged or destroyed by fire, the company was bound by its contract of insurance to-pay the loss. And in case of distribution of assets among creditors under the bankrupt act, defendants would be entitled' to their-pro rata share. The note, being accepted by the company in lieu of cash paid at the date of the policy, is recoverable .as so much assets. and defendants are in no worse condition by giving the note in lieu of paying the premium. Hone v. Boyd, 1 Sandf. 481; White v. Height. 16 N. Y. 310; Sterling v. Mercantile Mut. Ins. Co., 32 Pa. St. 75; Sands v. Hill. 42 Barb. 651; Huntley v. Beecher. 30 Barb. 580; Alliance Ins. Co. v. Swift. 10 Cush. 433; Huntley v. Merrill, 32 Barb. 626; Clark v. Middleton, 19 Mo. 53. Upon the same principle, the insolvency of a corporation is no ground for restraining collection of subscriptions for stock. Dill v. Wabash Val. R. Co., 21 Ill. 91. And stockholders are liable on their subscription to the stock of an insolvent company. Ogilvie v. Knox Ins. Co., 22 How. [63 U. S.] 380. Judgment for plaintiff. Footnotes [3] [ From 2 Biss. 244.]