93 Ind. 7 | Ind. | 1884
— The appellant is an insurance company belonging to the class known as mutual insurance companies, and the plan of its organization, like that of all companies of that class, is that the policy-holders shall share in the dividends accruing from its business. On the 7th day of August, 1866, it issued to the appellee’s intestate, Eli A. Hall, the policy on which this action is based.
At a prominent place in the policy, and in large type, is printed the words “Non-Forfeiting Policy,” and in the introductory part of the instrument is this provision : “ This policy witnesseth that the Franklin Life Insurance Company of Indianapolis, Indiana, in consideration of the representations made to them in the application for this policy, and the sum of $349.40 to them paid by Eli A. Hall, and of the annual premium of $349.40 cents to be paid on or before 12 o’clock m. on the 7th day of August in every year for the period of ten years, or until the death of the insured, should that event sooner occur, do insure the life of Eli A. Hall.” This provision is followed by a promise to pay the amount of the insurance, and then follows a provision declaring the conditions upon which the policy is issued and accepted. The condition first set forth is that the assured shall not go beyond certain territorial limits; that he shall not engage in any of the kinds of business designated, and that he shall not do certain. other acts which are specified. After these conditions is written the following: “And it is also understood and agreed by the assured to be the true intent and meaning hereof, that if the declaration made by or for the
The answer alleges that the appellee’s intestate did not pay either of the annual premiums in money, but paid one-half of the first premium in money and executed his note for the remainder; that when the second annual premium became due he paid one-half of it in money and executed his note, including therein the amount for which the first note was executed and one-half of the second premium, and that neither the principal nor interest of the note has been paid. Appellee unsuccessfully demurred to the answer, and, upon the overruling of his demurrer, replied, in substance, that the note was received as a payment of the premiums; that it had long been the custom of the company to apply dividends due its members to the payment of notes such as that executed by the assured, and that it had in its hands dividends due the appellee’s intestate sufficient to pay the note.
We regard the reply as clearly good.
Forfeitures are never favored, and surely should not be in this case, where the assured received what professed to be a non-forfeitable policy. Importance should be attached to the
The note set forth in the answer reads thus:
“ Indianapolis, August 7th, 1867.
<c For value received I promise to pay to the Franklin Life Insurance Company three hundred and forty-nine dollars, with interest, at the rate of seven per cent, per annum, which interest shall be payable annually or the policy be forfeited ; this note, being given for part of the premium on policy No. 93, is to remain a lien upon said policy until it becomes due by limitation or by the death of E. A. Hall, when the note shall be deducted from the said policy unless sooner paid. The dividends on the policy to be applied to the payment of the note. (Signed) E. A. Hall.”
In determining the sufficiency of the reply, it is not necessary to decide whether the note received for the premium constituted a payment, for, treating the note as evidencing simply an unpaid premium, still the reply is good. The note, it will be observed, is not payable at any specified period, but continues, at least, as long as the policy endures, and is to be paid by applying the amount due upon it to whatever may be due upon the policy. It is the general rule, that courts will not permit a forfeiture of a vested interest where the party insist
In Manhattan Life Ins. Co. v. Hoelzle, 8 Ins. Law Journal 226, will be found a charge by Judge Treat, affirming that “A. forfeiture of a life policy can not be made if there is a dividend due the policy-holder sufficient to pay the premium or part of the premium due, which by custom of the company is applicable to the payment of premiums.” It is true that there was a division of the members of the Supreme Court of the United States upon the questions involved in the case, but we, nevertheless, deem the case entitled to weight as an authority in favor of the conclusion we have reached. Strongly in point, and, in truth, decisive of the question, is the ease of Phœnix Ins. Co. v. Doster, 106 U. S. 30.
In the present case, it is evident that the contracting parties did not intend-that the failure to pay the note should work a total forfeiture. This is manifested by the statement that the policy is a non-forfeiting one, by the provision in the note already referred to, by the provision that the note shall be a lien upon the polib, and be deducted from the amount due on the policy, and by the conduct of the parties under the contract. The policy and the note are to be read together, and in construing them, as we have already intimated, the acts of the parties done under them are to exert an important- influence. North-Western M. L. Ins. Co. v. Little 56 Ind. 504; Reissner v. Oxley, 80 Ind. 580; Phœnix M. L. Ins. Co. v. Hinesley, 75 Ind. 1; Willcuts v. Northwestern M. L. Ins. Co., 81 Ind. 300. It is averred in the reply that the custom of the company had always been to apply dividends in payment of premium notes, and this well comports with the tenor of the note, for it is therein provided that dividends shall be so applied.
As shown in North-Western M. L. Ins. Co. v. Little, supra, the note is,however, not an ordinary promissory note, but is, in fact, more in the nature of a receipt. In equity and justice, it should be regarded as an evidence of the loan of the money of the corporation to one of its members, and not as evidence that a premium remains unpaid. Its terms import that it represents a continuing indebtedness, the policy standing as its security, and the maker having a right to have dividends, accruing to him as a member of the company, applied to its payment. In view of the well recognized and eminently just principle of equity, that forfeitures are odious, and in view of the provision that the policy is non-forfeitable, the note (if it be proper to call it such) should be given the effect we have ascribed to it, even though its terms were ambiguous and its construction doubtful. To give it any other effect would be to defeat the evident intention of the parties, and make nugatory the only feature of the policy which gives it anything like a non-forfeitable character. Such a result plain principles of natural justice make it our duty to avert unless the rigor of the contract is such as compels ns to a contrary coui’se. That this result can be averted without doing violence to the language of the contract is, to our minds, not doubtful; for to us it seems clear, that the just conclusion from the language of the contract, taking, as we must, the' note and the policy together, is, that the failure to pay the note did not, of itself, deprive the assured of all rights under the policy, at all events, not while the company had dividends due him in its hands. Phœnix Ins. Co. v. Doster, 100 U. S. 30.
Much that has been said in discussing the rulings upon the pleadings applies to the ruling denying a new trial.
The provision, upon which the appellant relies as entitling it to declare a forfeiture, is found in a note executed a year after the policy was issued. This note was accepted for the premium, and the provision in it should be regarded as securing the note rather than as affecting the character of the policy. It was said in North-Western M. L. Ins. Co. v. Little, supra, in speaking of premium notes similar to the one before us, “ except in so far as these obligations provide for the payment of annual interest, they impress us as partaking more of the nature of receipts for money loaned or advanced out of a particular fund, in which the assured had an interest, to be thereafter accounted for on some future settlement with that fund, than of promissory notes.” If this be true, as we ■have no doubt it is, of notes executed contemporaneously with the policy, much more the reason for holding it so where the note was not executed until a year after the policy was issued. It is true here as it was in the case referred to, and we again quote from it, that “ It appears to us at all events not to have been intended that the principal of these notes would have to be paid as a condition precedent to a recovery on the policy.” This wo say because the note worked a payment of the premium and evidenced a loan of money, and the non-payment could not operate to revoke a right fixed the moment it was accepted. It seems clear to us, that when the note was accepted the rights then existing under the policy could not be swept away by something occurring in the future. Either the rights of the assured to $500 for each annual premium paid accrued at the time of payment or the provision in the policy is nugatory. This is the conclusion reached in North-Western M.L.Ins. Co. v. Little, supra, although expressed
It will be profitable to again recur to the condition written in the note, and, at the expense of repetition, we again give the provision: “ Which interest shall be paid annually or the policy forfeited.” This provision, taken in connection with the rule of law to which we have referred, and in connection with the terms of the policy and of the other provisions of the note, and considered in the light of the rule that equity will not permit a forfeiture, the-just construction should be that declared in North- Western M. L. Ins. Co. v. Little, supra, namely, that the forfeiture of the policy goes no further than to prevent the reaping of benefits which may thereafter accrue, and does not take away what had become fixed. An examination of the cases will show that we arc fully sustained in this conclusion, and, without repeating what we have copied from cases already referred to, we turn to other cases.
In Symonds v. Northwestern M. L. Ins. Co., 23 Minn. 491, the-action was upon a policy very similar to that here under discussion, except that it, as well as the premium notes, were more favorable to the insurance company, and the court held substantially the same doctrine as in our own case. The first proposition is thus stated: “ Conditions providing for diá
• In Insurance Co. v. Bonner, 36 Ohio St. 51, the premium note contained this provision, “ which interest shall be paid annually, or the policy forfeited,” and contains also other provisions like those in the note in this case. This court held, to quote the language of the opinion, that: “ The forfeiture operated to relieve the company of ‘the whole sum assured/ but left the policy binding for, ‘as many tenths of the original sum insured as there shall have been complete annual premiums paid, at the time of the default.’ ” The same view was taken of the character of the premium notes as was taken in North-Western M. L. Ins. Co. v. Little, supra. They were treated as payment, and the money represented by them
In Ohde v. Northwestern L. Ins. Co., 40 Iowa, 357, the provision in the notes given for the premiums were substantially the same as those in the note in this case, and the conclusion reached was the same as in the cases, we have cited.
There can be no doubt as to the right of the assured to his share of the dividends accruing from the business of the company, for this is the letter and spirit of the contract. It is written in the note: “ The dividends on the policy are to be applied to the payment of the note.” If this were not so, the character of the company is such as entitled him to a participation in the profits.
The cases to which we have referred all treat the ‘taking of the premium notes as a loan to the assured.by way of investment of the funds of the company. We think it perfectly clear that if the company had invested in the note of a third person taken by it from Hall as a payment of the premium, that payment would bo complete and would entitle him to all the benefit accruing from his policy until it ceased to live; and it certainly can make no difference in principle that the company took, by way of investment, the note of the assured instead of that of another person; so all the cases in effect decide, and counsel have cited none to the contrary, nor have we, after a somewhat diligent search, been able to find any. It seems quite plain, then, that Hall was entitled to all the
We have examined the evidence with care, and are satisfied that the court did not orr in awarding the appellee $481 damages. There is, it is true, an error in the computation of the actuary, but, allowing appellee the interest on his claim, to which he was justly entitled, the judgment was not for any greater sum than he was entitled to recover; 'it was, in fact, for less.
Judgment affirmed.