Thompson v. Knickerbocker Life Ins. Co.

WOODS, Circuit Judge. The first replication presents the question whether tue payment of the premium note was a condition precedent to the continuance of the policy. If no time had been given for the payment of the premium there could be no question that its payment for a year in advance was a condition precedent to the continuance of the policy for that year. The terms of the policy as set out in the pleas make this perfectly clear. Does the taking of a note for a portion of the premium change this rule and make the payment of the note a condition subsequent? That, it seems to me, depends on the agreement of the parties. If the insurance company had simply agreed to continue the policy for a year, and instead of exacting the premium in cash, had consented to take the note of the assured, payable at a future day, undoubtedly the policy would be binding even though the note wore not paid at maturity. But according to the pleas, it was expressly stipulated that in case the note were not paid at maturity, the policy should become void without notice to any parry or parties interested thex-ein. Ordinarily the payment of the annual premium was a condition precedent. This was changed by dividing the annual premium for the accommodation of the assured into several payments, with the same stipulation in case of nonpayment. This was authorized by the terms of the policy. By the very terms of the contract between the parties, the nonpayment of any of the instal-ments into which the annual premium was divided rendered the policy void. The fact that a note had been given for the instalment does not change the case, for as soon as the policy became void the note also became invalid for want of consideration. What effect the transfer of the note by the insurance company before maturity would have upon the question it is unnecessary to decide, because no such fact appears in the ease. "By taking a note for a portion of the premium, the rights and duties of the insurer and assured remain unchanged. Nor could an admission in the policy that the premium was paid preclude inquiry into the real facts.” M’Crea v. Purmort, 16 Wend. 460; Robert v. New England Mut. Life Ins. Co., 2 Bigelow, Ins. Cas. 145; Slaughter v. Hamm, 2 Ohio, 271; 1 Greenl. Ev. § 26. We must give effect to the contract of the parties. It is plain and explicit, as set out both in the policy of insurance and in the note, that a failure to pay the note at matxirity avoids the policy. The payment is, there [1059] fore, a condition precedent to the continuance of the policy. Roehner v. Knickerbocker Life Ins. Co., 4 Daly, 512; Howell v. Knickerbocker Life Ins. Co., 44 N. Y. 276; Patch v. Phœnix Mut. Life Ins. Co., 44 Vt. 481; Pitt v. Berkshire Life Ins. Co., 100 Mass. 500; Anderson v. St. Louis Mut. Life Ins. Co. [Case No. 362]; Russum v. St. Louis Mut. Life Ins. Co. [1 Mo. App. 228]; Robert v. New England Mut. Life Ins. Co., 1 Bigelow, Ins. Cas. 634. If the payment of the premium was a condition precedent, the fact that the assured was prevented from making payment by illness or other cause beyond his control, does not relieve him from the consequences of nonpayment. Howell v. Knickerbocker Life Ins. Co., supra. The fact that the plaintiff, for whose benefit the insurance was made, did not know of the existence of the premium note, does not change the rights of the parties. Baker v. Union Mut. Life Ins. Co., 43 N. Y. 283. The first replication, therefore, which denies that payment of the note at maturity was a condition precedent to the continuance of the policy and avers the fatal illness of the party whose life was assured as an excuse for nonpayment, is not a good answer to the pleas. The demurrer to the second replication raises the question, whether, in a case where it has been the custom of an insurance company to give notice that the premium, or a premium note, is about falling due, the failure to give such notice saves the policy from forfeiture when the assured fails to pay the premium. As a general rule, no duty is imposed upon the holder of a note or bill of exchange to give notice to the maker or acceptor of the day of payment, or to demand payment when it is due. It is the duty of the debtor to remember when his obligations fall due, and to find his creditor and pay him. The fact that the creditor has once or twice, or in a great number of instances, given notice to his debt- or of the fact that his obligation was about to fall due, does not make it obligatory on him to continue the practice. A failure to give notice does not reheve the debtor from any of the consequences of nonpayment, unless it be averred that the custom to give notice and the omission were fraudulent, for the purpose of tnrowing the party off his guard. Leslie v. Knickerbocker Life Ins. Co. [63 N. Y. 27,] N. Y. Court of Appeals; Roehner v. Knickerbocker Life Ins. Co., supra; Appleman v. Fisher, 34 Md. 553. But, see contra, Mayers v. Mutual Life Ins. Co., 4 Bigelow, Ins. Cas. 62. The third replication alleges that after the failure to pay the premium note on October 24, IS74, the defendant company was, by its contract, required to elect, whether it would declare the policy forfeited or not, and that it made no election, and gave the plaintiff no notice of its election to forfeit the policy. A careless reader of the replication might infer that it had reference to some contract or stipulation not already referred to in the previous pleadings. But it is not so averred in the replication; and taking the pleading most strongly against the pleader, this replication only puts a construction on the contract of the parties already set out, and does not purport to set out any new agreement. The express stipulation of the policy was, that it was to become void without notice to any party or parties interested, i'n case the premium note was not paid at maturity. We cannot ignore this part of the contract. On nonpayment of the note at maturity, both the policy and the note became void. The policy might have been revived by consent of the insurance company during the life of the assured, but without such assent it remained void and of no effect. Mutual Benefit Life Ins. Co. v. French, 4 Bigelow, Ins. Cas. 369; Bliss, Ins. §§ 179, 180. The fourth replication sets up the fact that it wTas the custom of the defendant not to exact punctual payment of the premium notes, but to give thirty days’ grace for their payment, and defendant had repeatedly so done with said Thompson and others, and had thus led Thompson to rely on such leniency, whereby Thompson was deceived, and the note was not paid. This replication is clearly defective in not alleging that it was the custom of defendant to consider itself bound, without- payment of the premium, for thirty days, even in ease of the death of the assured within that time. When default was made in the payment of the premium note, at whose risk was the life of the assured during the thirty days’ grace? Was it the understanding of the company that if the assured died within thirty days after the maturity of the premium note, it would pay the policy whether the premium note had been paid or not? If such were the fact, it should have been so averred. As the replication now stands, its fair construction is, that it was the custom of the company to receive payment of the premium note at any ■ time within thirty days after its maturity, provided the assured were living at the time of payment. As there is no averment that -the assured paid the premium -within thirty days, and before his death, the replication is clearly bad. May, Ins. §§ 352-354; Mutual Benefit Life Ins. Co. v. Ruse, 8 Ga. 534; Ruse v. Mutual Benefit Life Ins. Co., 23 N. Y. 516; Pritchard v. Merchants’ & Tradesman’s Mut. Life Assur. Co.. 3 C. B. (N. S.) 622. In my judgment, the demurrer to all four replications should be sustained. The case appears from the pleadings to belong to that large class in which attempts are made to collect the insurance money without the payment of the premiums according to the contract of insurance. It is the duty of officers of insurance companies, who are acting as trustees for others, to resist all such attempts. The assured should comply with his part of the contract, or be excused therefrom by the act or agreement of the insurance company before any just claim can be set up to the insurance money. There is no ground for a re [1060] 'covery in this case upon tile pleadings as they' now stand. [The case was removed by writ of error to the supreme court, where the judgment of this court was affirmed. 104 U. S. 252.]