Merriman v. Keystone Mutual Benefit Ass'n

| NY | Apr 11, 1893

On the 26th day of February, 1881, the defendant issued a policy of insurance to Seth H. Merriman, by which, in consideration of certain payments to be made by him, it promised to pay him, nine years from the date thereof, the sum of $1,000, or if he died before the expiration of that time, then it promised to pay the same sum to his personal representatives or assigns, ninety days after his death. By the terms of the policy he was to pay, and did pay, at the time it was issued, the sum of $9.35, and he was to pay $6.25 annually after the date of the policy for the next succeeding four years; and thereafter, during the remainder of the nine years, he was to pay annually the sum of $3.25. He was also to pay mortality assessments according to the charter and by-laws of the association, and the terms stipulated in the application upon which the insurance was based. He made all the payments according to his policy, which became due prior to the first day of February, 1888. Prior to the second day of January, 1888, Richard W. Pascoe, who held a policy issued by the defendant, died, and an assessment was made to pay the amount due under his policy. Merriman's assessment therefor was $1.98, and on the second day of January the defendant caused a notice to be mailed to him, of which the following is a copy:

"ALLENTOWN, PA., Jan. 2, 1888.

"Mr. S.H. MERRIMAN, Hornellsville, N.Y.:

"You are hereby informed of the death of Capt. Richard W. Pascoe, of South Easton, Penna., who has been a member of this association under policy No. 1189, and died of exhaustion. The witnesses to the proof of death are Dr. John J. Detwiller, H.A. Sage and Z. Taylor, all of Easton, Pa.

"You are hereby required to remit to this office by draft, postal order or check (if made in any other way it is at risk of the sender), or pay to our authorized collecting agent your prorata mortality assessment $1.98 on policy No. 2705, which includes the amount stipulated in your application for collection, within thirty days from the date of notice, otherwise your policy will be forfeited.

"A.R. HORNE, Secretary."

By some default or accident of the mail this notice did not reach Merriman until the 7th day of February, and on the next day he sent his check to the defendant to pay the amount of his assessment, which it refused to receive, and it declared the policy forfeited because the assessment was not paid on the first day of February, as required by the notice. Thereafter, although Merriman tendered all the payments that fell due upon the policy during the nine years, it refused to receive them or to recognize the existence of the policy. After the policy had, by its terms, matured, Merriman assigned his claim under it to the plaintiff, and he brought this action to recover the amount due under the policy, and has succeeded in the courts below.

The sole contention of the defendant now is that the policy was forfeited because the assessment of $1.98 was not paid on the first day of February, as required by the notice. Neither the charter, the by-laws, nor the application upon which the policy was based, were put in evidence, and we are not informed as to their contents. The rights of these parties, therefore, are to be determined by the language used in the policy and the law applicable thereto. The only condition in the policy which is now pertinent is the following: "If any annual dues or mortality assessments on this policy shall not be paid when due, the consideration of this contract shall be held and deemed to have failed, and this policy shall be null and void, and the only evidence of payment shall be the receipt of the association signed by the president or secretary." The policy does not state that the mortality assessments shall become due immediately when made, nor when they shall be due. The policyholders must be notified of them, and payment required before it can be said that they are due. As the policy is to become null and void for the non-payment of assessments, it is obvious that the policyholder must be put in default before such a serious consequence to him can follow from his non-payment; and the only way that he can be legally put in default is by notice and demand, and an opportunity to pay after an assessment has been made. He cannot be said to have neglected payment of an assessment of which he had no knowledge. There is no provision in the policy that a policyholder may be notified of an assessment by mail; but it is a reasonable rule to apply to the situation, that such notice may be given by mail. If the service of the notice be questioned in any case, it would be sufficient for the company to show that it had mailed the notice, and in the absence of countervailing proof, it would be presumed that the notice reached the policyholder to whom it was addressed. But if the defendant uses the mail to convey notice, it takes the risk that the notice shall reach the policyholder. He must have notice, and he cannot have notice if it fails to reach him without his fault. Here the proof is undisputed that this notice did not reach Merriman until the 7th day of February, and he at once, on the next day, complied with the notice. Under such circumstances it cannot be said that there was any default on his part, or any ground for declaring the policy forfeited, if we consider the rights of the parties as they are regulated by the language contained in the policy.

But the defendant claims some advantage from the act chapter 321 of the Laws of 1877, which provides that "no life insurance company doing business in the state of New York shall have power to declare forfeited or lapsed any policy hereafter issued or renewed by reason of non-payment of any annual premium or interest, or any portion thereof, except as hereinafter provided. Whenever any premium or interest due upon any such policy shall remain unpaid when due, a written or printed notice stating the amount of such premium or interest due on such policy, the place where said premium or interest shall be paid, and the person to whom the same is payable, shall be duly addressed and mailed to the person whose life is assured, * * * at his or her last-known post-office address, postage paid by the company, or by an agent of such company, or person appointed by it to collect such premium; such notice shall further state that unless the said premium or interest then due shall be paid to the company or to a duly-appointed agent or other person authorized to collect such premium within thirty days after the mailing of such notice, the said policy and all payments thereon will become forfeited and void." The defendant claims that this act is applicable to this policy, and that the notice served by it was sufficient under the act to authorize it upon non-compliance therewith by Merriman to declare the policy forfeited. We do not think that the act is applicable to such a situation as this. It clearly has reference only to policies where premiums or interest become payable at stated times, and the purpose of the act is to require the insurers to give the notice so that the policyholder may not lose the benefit of the policy by forgetfulness or misapprehension as to the time of the stated payments. The mortality assessments required to be made under this policy are uncertain in amount and time of payment, and by the terms of the policy they can only become due after notice and demand, and hence they are not within the purpose of the act. These mortality assessments are in no proper sense premium or interest payments. There is in this policy an annual premium payment provided for and to such annual payments the act may have application. But to these small mortality assessments which may be made at any time, the act is not, either in its letter or spirit, applicable.

We are, therefore, of opinion that this very unjust defense to this action should not prevail, and that the judgment should be affirmed, with costs.

All concur.

Judgment affirmed.