| Ark. | Oct 9, 1916
(after stating the facts). The principle of law governing cases of this character is stated in the case of the Union Central Life Insurance Co. v. Caldwell, 68 Ark. 505" date_filed="1900-07-21" court="Ark." case_name="Union Central Life Insurance v. Caldwell">68 Ark. 505, as follows:
“The proof showed that the assured had the right to have the dividends applied otherwise. In the absence of any stipulation in the policy, and of any directions otherwise by the assured as to the application of dividends which have been declared, it is the duty of a mutual company to apply such dividends to the payment of interest on loans made on the policy, .when by so doing a forfeiture of all rights and benefits under the policy will be prevented. This is the rule in the case of premiums to keep the policy in force from year to year, and, of course, would be for the payment of interest on an ordinary loan, which prevents a sale of the policy.”
The court said that the doctrine had its origin in that fundamental principle of justice which will compel one who has funds in his hands' belonging to another, which may be used, to use such funds, if at all, for the benfit, and not to the injury, of the owner; for his consent to the one, and dissent to the other, will be presumed. Forfeitures are not favored either at law or in equity and so far as is reasonable contracts are to be construed so as to avoid a forfeiture. Policy holders’ in a mutual insurance company are members of the corporation, and are entitled to have the officers and agents give just and reasonable protection to their rights. Insurance contracts are written on printed forms carefully prepared by experts of the company and it is not necessary to cite authorities to sustain the proposition that forfeitures are only enforced when it appears that this is the plain meaning of the contract.
In the instant ease the premiums were payable annually on the 8th day of December and the policy contained a provision allowing thirty days of grace within which to pay the premium. The policy also contained a provision that the premium might be paid semi-annually or quarterly. Quarterly on the 8th day of December, March, June and September, in the sum of $12.45 for each quarter. The company had in its hands a dividend to the credit of the assured in the sum of $13.02. This was more than sufficient to pay the premium for the first quarter. But it is urged on the part of the insurance company that the assured had not elected to pay the premium in quarterly installments and that in the absence of such election the company was not required to apply the dividends to the payment of the premium because there was not sufficient amount on hand to pay the whole annual premium. We do not agree with counsel for the insurance company. In the application of the rule announced in the ease above cited, we think the consent of the assured to the appropriation of the dividend to the payment of the first quarterly installment may be presumed. The assured contracted with the insurance company to pay her a stated sum at her death. She became a member of a mutual insurance company, the duty of whose officers, as we have already seen, is to give just and reasonable protection to the rights of the members. Hence it is not to be supposed that a member and policy holder would object to the company applying the dividend in its hands to the payment of the quarterly installment of his premium and thereby forfeit his policy and thus defeat the end sought to be accomplished by him in making the contract of insurance. The amount of dividends in the hands of the company belonging to -the assured was $13.02. On the 18th of January, 1915, the husband of the assured sent his cheek to the company for $33.96, the balance of the annual premium. It had been the custom of the company to apply the dividend towards the payment of the annual premium.
When all the facts are considered in the light of the principles of law above stated, we think the court was right in holding there was no forfeiture of the policy and its judgment must be affirmed.