7 F. 301 | U.S. Circuit Court for the District of Eastern Wisconsin | 1881
This is a bill to compel the defendant company, which is a corporation of the state of New York, to issue to the complainant a paid-up policy of life insurance of the amount of $600; and the controversy between the parties arises upon the following state of facts:
On the twenty-third day of May, 1868, the complainant procured from the defendant company a policy of insurance on his own life, for the sum of $1,000, payable to Honora Coffey on the twenty-third day of May, 1883, or in ease of complainant’s death before that day, then within 30 days after notice and proof of death. The policy required the premiums to be*302 paid in four instalments, of $14.26 each, on the twenty-third day of May, August, November, and February, in each year, and contained a condition tnat in case of default in the payment of either of the premiums the policy should become void, and all payments made thereon should be forfeited, except as further provided. By the terms of the policy it was further stipulated, that, in case of default in any payment after two full years’ payments had- been made thereon, the policy, might be exchanged for a paid-up endowment policy for an amount stated in a table given in the original policy, subject to the condition that the policy, duly receipted, shall have been transmitted to and received by the company within 60 days after such default, and that no condition of the policy shall have been violated.” By the table annexed it was made to appear that the complainant, after nine years’payment of premiums, would be entitled, under the conditions before stated, to a paid-up term polic3r for $600.
All premiums were paid to the twenty-third day of May, 1877, inclusive, covering a period of nine years from the date of the policy. Pa3ments were made to local agents of the company in Wisconsin. On the twenty-third day of August, 1877, the complainant went to the company’s agent in Milwaukee, as usual, and desired to pay the premium due on that day, but was told by the agent that the business of the company was in the hands of a receiver, or would be, and that he had no authority to receive the money. The complainant testifies that he offered to pay the premium due on that day, but was advised by the agent not to ma te an3' more payments until the business of the company was settled.
It appears that on the twelfth day of July, 1877, the attorney general of the state of New York filed an information against the company, in the supreme court of that state, alleging its insolvenc3r, and praying for an order to show cause why its business should not be closed, and for a decree dissolving the company and appointing a receiver. On the eighteenth da3r of July, 1877, an order was entered by the court in those proceedings permitting any policy-holder, until further order, to pay to the United States Trust Company any premiums thereafter becoming due on policies issued by the insurance company, with the same effect as if paid to said company. Afterward, and on the twenty-third day of August, 1877, which was the day when the premium on complainant’s policy was due, the court made an order restraining tl.e company from exercising any of its corporate rights, privileges, and franchises, except receiving and paying- moneys as thereinafter allowed, and from paying out, or in any way transferring or delivering, to any person, any of the effects, moneys, or property of the company, except salaries of employes and officers then due, and from collecting or receiving any debts or demands except interest, agents’ balances, and premiums, until the court should otherwise order. This order remained in force until October 29, 1878, with certain modifications,—such of which as are material here will be presently referred to. On the 1st day of September a further motion was made for the appointment of a receiver. Orders u ere duly entered postponing the-hearing of this motion from September 4th to September 8th, and from the latter date to September 14, 1877, on condition that none of the policies of, the company should be decreed tc have lapsed nor*303 become forfeited by reason of the non-payment of premiums due after September 3d and before the decision of the motion for a receiver; to winch condition the company consented. Again, on the fourteenth of September, the hearing of all motions in said proceedings was adjourned until November 17,1877. On the thirteenth day of October of that year an order was entered permitting the company to accept payment of debts due to it, including payments on mortgages, and restraining ail persons and corporations from commencing any action or proceedings against it. On the eighth day of December, 1877, an order was made postponing the hearing of the motion for a receiver until such time as it might be brought on by the attorney- general, on five days’ notice. This order also provided that the time of payment of all premiums due and to become due on outstanding policies be extended 30 days after the entry of the final order on the 'motion for a receivin'; and all injunctions theretofore granted were continued in force until the final order of the court, except in particulars further specified, but not material here. Various proceedings were thereafter had, until, on the twenty-ninth day of October, 1878, an order was made vacating the order of August 23, 1877, so far as it restrained the company and its officers from exercising any of the corporate rights, privileges, and franchises of the company, and the company, and its trustees and officers, were authorized to resume their powers in the business of the corporation and their control over its assets. This order required that a copy of the same be sent to every policy-holder, wi1 h a notice declaring the company solvent, and requiring such policy-holder to pay his premiums, past due and unpaid, within 90 (lays from the day of mailing a copy of the order and notion, and provided Unit the company should not forfeit any insurance, by reason of the non-payment of past-due premiums, until after the expiration of said 90 (lays; the court reserving the power to relieve from any forfeiture by reason of the non-receipt of a copy of the order and notice, on good cause shown.
It appears that about the twenty-first day of July, 1877, the company deposited in the mail at New York a postal card, upon which was printed so much of the order of the court in New York, of (late July 17, 1877, as permitted policy-holders to pay premiums thereafter becoming duo on their policies to the United Stales Trust Company, which was undoubtedly intended to be sent to the complainant, but was in fact, addressed to Honor» Coffey, Milwaukee, Wisconsin. Prior to August 2.8, 1877, a postal card was also mailed, giving notice of the amount of the premium failing due on the complainant’s policy on August 23d, and of the time when due, and that it could be paid at the office of the company, or to an agent, when such agent produced a receipt signed by an officer of the company; but this was also addressed to Jlonora Coffey. Neither of these postal cards was received by the complainant, but lie was informed by letter from the secretary of the company, of date March 9, 187s, of the, order of July 17, 1877. Correspondence between the attorneys for complainant and the company, extending from August 3,1878, to March 29, 1879, shows that about the twenty-fifth of February, 1879, the former wore informed of the entry of the order of the court, of date October 29, 1878, and that about the seventeenth day of March, 187.9, the com*304 plainant formally offered to receipt and transmit his policy to the company, and requested the issuance of a paid-up policy to him, or an opportunity to pay the back premiums then unpaid. The company declined to comply with either of these requests, on the ground that the notices before mentioned were duly sent; that the complainant was advised of the situation of affairs when the proceedings against the company were pending, and failed to seasonably take any steps either to keep his policy in force, or by receipt and transmission of the same to procure a paid-up policy. The complainant, in his testimony, says that he did not receipt and transmit the policy within 60 days after August 23, 1877, because he did not think the company was in existence, and because he had no instructions so to do.
Upon this state of facts it is contended in behalf of the complainant that by the payment of nine years’ premiums he purchased paid-up insurance to the amount of $600; that the transmission and receipt of the policy within sixty days after default in any payment of premium was not a condition precedent to the right to have a paid-up policy; that by the proceedings against the company in New York it was then disabled to issue such a policy, even if the original policy had been receipted and transmitted within the sixty days, and therefore strict performance of the condition by the complainant was excused; that, under all the circumstances, the ultimate offer to receipt and return the policy, and the demand of a paid-up policy, were seasonably made; and that the court ought not to make such a decree as would operate to enforce a forfeiture of the complainant’s rights under his policy. The grounds for relief thus urged are all combated by counsel for defendant, who insists that time was of the essence of the condition requiring transmission and receipt of the policy within sixty days after default in tlie payment of any premium ; that by the failure to make payment, and then the further failure to receipt and transmit the policy within the required time, the policy lapsed, and all right to a paid-up policy was lost; that the temporary, disability of the company did not excuse non-compliance, with the condition requiring action on the part of the insured within'the prescribed time; and that the offer to receipt and return the policy after such disability was removed was not seasonably made.
The case has been argued rather upon bare- propositions of
But cases of the general character of this, sometimes arise, in which the circumstances are deemed adequate to justify the courts in relieving a party from such consequences, and in which such relief is deemed consonant with proper observance of the rights of parties under their contract. Does this case fall within that category?
“We beg leave to state to you that no receiver lias been appointed for this company, and, further, to state to you that vve think it is quite unnecessary to answer the questions you propound to the receiver, for the reason that your policy lío. 4472 became absolutely forfeited, according to its terms, for the non-payment of the premium due August, 1877. Yon have, therefore, no such interest in the company’s affairs as would warrant any reply to your questions.”
Thus, after the company, by its own agent, had refused to accept the premium offered on the day it was due, and had given the assured no notice of opportunity to pay it elsewhere, and he had been led to rest inactive for months, when first lie sought information to which he was, under the circumstances, then clearly entitled, lie was curtly told, in substance, by the secretary of tlie company, that his policy had become absolutely forfeited for non-payment of the August premium, and that therefore he had no such interest in the company’s affairs as would warrant a reply to liis inquiries. In this manner was the assured dealt with at a time when, upon a showing of the facts then existing, no court deserving the name of a court of equity would have hesitated to compel either the acceptance of the unpaid premiums for the purpose of keeping the policy in force, or the acceptance of a surrender of the policy as the basis of a right to a paid-up policy, as the policy-holder might elect.
But the complainant, still persistent in efforts to obtain
“As the matter now stands the company is still, under the order of the court, prevented from entering into any agreement or reviving any policies which have lapsed, or doing anything except to the extent permitted by the special order of the court issued in reference thereto. However much disposed we might be,To re-instate your policy, we cannot do so until we are clear of the court proceedings. Then we can give the matter further consideration. ¥e, of course, canmake no promise to hereafter restore the policy on the payment of the premium, and can only say that we will consider such facts as you may have to present when we are able to act as a company.”
Here the matter was left to rest until August, 1878, when correspondence began between the company and the complainant’s solicitors. Now, if it be said that in March, 1878, the complainant was thus advised that the court in New York had in July, 1877, authorized the payment of premiums to
It is noticeable, also, that although the order of the court in New York, made October 29, 1878, by which the company was authorized to resume business, required notice of the order to be sent to policy-holders, and gave to the latter ninety days after sending such notice in which to pay past-duo premiums, no notice in obedience to that order was sent to the complainant, and it was not until about February 25, 1879, —nearly a month after the ninety days had expired,— that the complainant, by his counsel, was informed of that order, although his counsel had been in correspondence with the company since August, 1878. Finally, in March, 1879, the company was requested either to recognize the policy by accepting the past-due premiums or to issue a paid-up policy on transmission of the original, duly receipted. The reasons assigned by the company for refusing so to do wore that the notices before mentioned were duly sent to the complainant; that lie did not write to the company; and that be made no attempt to ascertain the facts, either from the company or its local agent in Milwaukee,—most of which reasons were,
I have carefully examined and thoroughly considered the authorities cited on the argument, and especially the case of Whitehead v. Universal Life Ins. Co., decided by the supreme court of Mississippi, unreported, and in which a manuscript copy of the opinion has been furnished. In that case the court held that the clause in the policies of this company requiring the policy to be transmitted, duly receipted, within sixty days after default in the payment of any premium, if a paid-up policy was desired, was a condition precedent; that time was of the essence of the contract, and that, to entitle the assured to a paid-up policy, he must have strictly complied on his part with- the literal terms of that condition, notwithstanding the company was disabled by the proceedings against it in the courts of New York to issue a paid-up policy. The question arose in that case on demurrer to a bill to enforce the issuance of a paid-up policy, filed by the representative of the assured after the latter’s death;.and it waa
Referring again to the proceedings in New York, it is, perhaps, worthy of observation that it appears from the order of the court made October 29,1878, by which the company was declared solvent, that ponding those proceedings the company procured releases of policies from the holders to the extent of over $7,000,000, and that policies which had become claims by the death of the insured and matured endowments, to the extent of over $600,000, had been released one-half by the holders thereof. These facts were recited in the order, in connection with the judgment of the court, that the company had become solvent, and show that there was cause for the institution of the proceedings, and that the disability of the company to act arose from its financial condition and the consequent intervention of the court; and that it was only removed when solvency was brought about by the cancellation of a large amount of its liabilities.
A decree will be entered requiring the defendant to issue and deliver to the complainant a paid-up policy for $600, on surrender of the original policy, properly receipted,—the special terms of which decree can be settled hereafter.
Note. The cases cited on the argument were Chase v. Phœnix Mut. Life Ins. Co. 7 Ins. L. J. 93; Dorr v. Same, Id. 368; Montgomery v. Same,, 8 Ins. L. J. 300; Desmuzes v. Mut. Benefit Life Ins. Co. 7 Ins. L. J. 926;
