19 Mich. 451 | Mich. | 1870
This is a case made after judgment in favor of the defendant, in the Circuit Court for the County of Wayne.
The action was assumpsit upon a policy of insurance upon the schooner Stanley L. Noble, dated April 27th 1868, insuring the vessel from that date until the 30th day of November in the same year; the declaration alleging a total loss within that period.
The premium was not paid in cash, but an endorsed note was given for it at six months.
The policy contained an express stipulation that “in case the notes or obligations given for the premium or any part thereof, be not paid at maturity, the full amount of premium shall be considered as earned, and this policy becomes void, while said past due notes or obligations or any part thereof, remain overdue and unpaid,” and a mem
The note given was not paid at maturity and was duly protested for non-payment, so that the endorsers, who are shown to have been good, were legally bound to pay the note.
On the 12th day of November, after the note had become due and while it remained over due and unpaid, the vessel was totally lost, the loss exceeding the amount insured, and the plaintiffs’ interest being undisputed.
On the 19th day of November — after the loss and after the defendants’ agent had notice of it through the newspapers, the endorsers paid the note with interest and expenses to said agent who received it and delivered up the note to the endorsers. The agent transmitted the money to the defendants who received and kept it.
The defendants refused to pay the loss, and in this suit defend on the ground that, by the express provision of the policy, they were exempt from liability for any loss occurring while said note was overdue and unpaid.
Upon this statement of facts, three questions arise : 1st. What is the true interpretation of this provision of the policy ? 2nd. When properly interpreted, is it valid in law; and, if so ? 3d. What was the effect of the defendants’ receiving payment of the note, after default and after the loss ?
First, As to the interpretation — Was it the intention that the policy should become utterly and finally extinguished on failure to pay the note at maturity P If the provision had stopped with the clause “ and this policy becomes void,” such would have been the true interpretation. But the whole instrument, and especially the whole provision upon the same identical subject must be construed together to ascertain the intent; and the clause last cited is but a part of one entire provision, but one branch or member of the same compound sentence, and
In connection with this and as a necessary part of the provision, without which it could not have full effect, it was also stipulated that, in case of such default, the full amount of premium should be considered as earned. But this, it is quite evident, does not mean that the premium should in all cases be considered as fully earned at the date of the default, but was intended to have this full effect, only in case the policy should not be restored, and the risk revived for the future by payment after default, and within the period originally fixed.
And when the policy should be thus restored and the risk revived, the premium would cover this latter period of risk also; and this period would constitute • a part of the time during which the premium was being earned. The premium was, I think, evidently intended to be earned by
Such being the true interpretation of this provision of the contract, the next question is upon its validity. And I confess my entire inability to discover any ground upon which its validity can be questioned. It was certainly competent for the parties to' make their own contract and to fix for themselves all its terms and conditions, unleáfe there was something illegal or opposed to public policy either in the consideration or in what was agreed to .be done. Where is the law and wbat is the principle of public policy which this provision tends in any way to violate or impair ? I am aware of none.
The competency of the parties to have agreed upon a higher rate of premium, or for the same amount of premium for a shorter period of time, cannot be doubted. And upon the same principle, it must have been equally competent to agree that the period of time to be covered by the insurance, and for which the stipulated amount of premium should be paid, might be made shorter upon any contingency the parties saw fit to agree upon, without altering the amount of.the premium — especially upon any contingency, which the insured had it in their own power to prevent, and which it was t their moral and legal duty to prevent. If, therefore, the provision had been that in case of default in payment of the premium at the end of the six months, the policy should from that moment become utterly extinguished, or, what is the same thing, that the period of the risk should absolutely end then, and yet the whole amount of premium should be paid, I am inclined to think
Perhaps the nature of the provision and of the principle involved may be more easily understood by illustration. A, the owner of a vessel, applies to B, an insurer, for insurance upon his vessel for seven months. He is not prepared to pay the premium in cash, but offers to give his note with an endorser at six months. B replies, “I would be willing to insure your vessel for the seven months, at nine per cent, and give six months credit for the premium, if I
This supposed contract is identical in principle with that before us. And unless insurers, because they are in that business, are under some legal obligation to insure upon terms which may be desired by others, though not satisfactory to themselves, I can see nothing unfair or unreasonable in such a contract, nor any reason why it should be forbidden by the law. And I am aware of no law or any principle of public policy, which it tends to violate. Contracts identical in principle with that before us have been treated as valid by the highest Court in the State of New York and I think them unobjectionable.—See Wall v. Ins. Co., 36 N. Y., 157; and Reed v. Ins. Co.,—not yet reported, but a copy of which was read upon the argument.
If I am right in the views I have already taken of the nature and validity of the contract, the acceptance of payment of the note in no way affects the right of the parties in this suit. It was no waiver of any of the rights of the defendants, as they were entitled to its full payment in any event and in any aspect of the case.
As this disposes of the case and shows that the plaintiffs were not entitled to recover, upon the facts stated, it becomes unnecessary to consider the other points discussed upon the argument.
The judgment of the Circuit Court in favor of the defendant must be affirmed with costs.