41 Conn. 372 | Conn. | 1874
This is an action on a policy of life insurance. The declaration sets out the policy, alleges the payment of the annual premium up to January 14th, 1862, the non-payment and an excuse for non-payment for that and the succeeding years, the death of the insured, proofs of death, and a refusal to pay. To the declaration there is a demurrer. The sufficiency of the declaration depends upon the legal effect of the non-payment of the premiums, considered •with reference to the facts alleged as an excuse.
A contract of life insurance is a peculiar contract. It has no parallel and few analogies in all the business transactions of life. An ordinary life policy, like the one in suit, requiring the payment of annual premiums, consists of two parts, and is divisible. The applicant, upon the payment of the first premium, effects an insurance upon his life for one year, and purchases a right to continue that insurance from year, to year, during life, at the same rate. Whether he will continue it or not is optional with him. The premium for the first year pays for the risk during that year, and for the right to subsequent insurance. The rate of insurance for a single year is less than the annual premiums on a life policy. The diffei’ence, continued, as it is supposed it will be, from year to year through life, may be regarded as the consideration for the right to continue the insurance.
As the time for which the party was insured by the actual payment of premiums had expired before his death, the case turns entirely upon the second part of the contract. In respect to that, what relation did the contracting parties sustain to each other ? The defendants, for a valuable consideration, made an irrevocable proposition to insure the applicant during life, upon certain terms and conditions. He was at liberty to accept or reject the proposition. If he accepted, he was to comply with the condition and pay the premium on or before a given day. If he neglected to pay within the time limited, according to the letter of the contract, he virtually rejected the proposition, and the contract was at an end.
In terms, the contract is a very simple one. The defend
But courts of high standing, both of our sister states and of the United States, have viewed these contracts differently, .and have come to a different result. They vary somewhat, however, in the reasons for their conclusions.
The case of Hilliard v. New Jersey Mutual Benefit Life Insurance Company, 35 N. J., 415, interpolates in the contract a provision, that if the law rendered the payment of the premiums impossible at the time, the insured was excused from paying, and might save the insurance by paying it subsequently.
In Hamilton v. Mutual Life Insurance Company, 9 Blatchford, 234, one reason given, among others, is, that the contract imported an agreement by the company to keep an agent in the state where the insured resided—one of the seceding states—during the war; and that the withdrawal of that agency was a wrongful act, which excused the insured from paying and saved the insurance.
In the case of Manhattan Life Insurance Company v. War
In the case of Clopton v. The New York Life Insurance Company, 7 Bush, 179, stress is laid upon the hardship of the case if the forfeiture is enforced.
We do not attempt to give all the points considered, nor even the substance of the argument; for in all the cases the whole question is elaborately discussed. Other points, however, and some of the arguments will be more fully noticed as we proceed. A due regard to these various decisions, and others of like import, requires us to examine with care the law bearing upon this case.
1. It will be seen from what has already been said, that we regard the payment of the premiums as a condition precedent to any subsequent liability on the part of the defendants. If this had been an absolute contract by the insured to pay a sum of money by a given time, neither accident, inevitable necessity, nor the act of God, would excuse a nonpei*formance. But if payment was unlawful, that would be an excuse. School District v. Dauchy, 25 Conn., 530. But that doctrine has no application to a case where it is at the option of the party to do or not to do the thing contemplated. He has a perfect right to do it or not to do it. He needs no excuse, whatever his action may be. The question is, if he omits to perform, from any cause whatever, does he - thereby obligate the other party precisely as he would if he had performed ? The answer to this question must be found in the contract itself. By a reference to it, it will be seen that there is nothing in it which gives, the slightest indication that such was the intention of the parties, and there is no legal ground on which we can interpolate in the contract such a We venture to that no can be
2. The ground taken, that the late civil war was such an extraordinary event, and so entirely unlooked for, that it will be presumed that it was not contemplated by the parties, and therefore the law will imply a qualification of the conditions in case of war, is hardly tenable. In the first place, the policy itself provides that the insured shall not, without the previous consent of the company, “ enter into any military or naval service whatsoever, -the militia not in actual service excepted.” So that, .in this case, war was in the minds of the parties, and therefore there would seem to be no room for the supposed presumption. On the contrary, the fact that war is clearly referred to, shows that the parties contemplated a state of war as possible ; and the fact that the qualification contended for is not inserted, affords some ground for presuming that the parties did not intend such a qualification.
But aside from this,—assuming that the possibility of a war between the sections was not contemplated by the parties,— is it clear that the law will imply the modification of the contract contended for ? In the case of written contracts, the law will imply nothing except what may fairly be presumed to have been intended by the parties. Hence, if an unlawful act is embraced in general Avords used in a contract, the law will presume that the parties did not intend it, and will imply an exception. A case in one of the English reports affords an illustration. A contract of marine insurance insured against capture. The vessel was captured by the government of the insurer. It Avas held that the capture, although within the letter of the contract, was not within its true meaning, on the ground that an express contract insuring against such capture Avould be void as against the policy of the government, and therefore the law presumed that the parties intended that such a capture should be excepted.
The business of life insurance has grown to immense proportions in the last fifty years. During that time it has engaged the attention of many of the best minds in this country and in Europe. It has been studied from every possible stand-point, and considered with reference to every possible vicissitude in human affairs, including a state of war as well as peace. Every element that enters into the chances of human life, and that affects the risk assumed, has been well considered and re-considered, and the policies of all well regulated companies have been prepared with great care, with a view to express clearly the precise intention of the parties, and to guard the rights of all concerned. With all the light that experience and thought have thrown on this subject, it never has occurred to any one connected with the business, so far as we know or believe, that a clause of this kind was needed to protect the rights of any one. On the contrary, we venture to assert that a life insurance policy containing a provision that in case of war between the government of the insured and the government of the insurer, the policy should be continued in force during the war, without the payment of the premiums, would be unprecedented in the history of life insurance ; and if a court of justice construe the contract as meaning that, they impute to the parties a meaning which they did not intend ; for it cannot be presumed that any company, managed by intelligent men, would knowingly and understandingly make such a contract.
3. -In two of the cases referred to, the decision rests in part upon an interpretation of the contract, which injects into it a provision binding the' company always to keep an
So far as the present case is concerned, we might dismiss this point with a simple allusion to the fact that the law of South Carolina is not made a part of this case ; and that so far as the inference is one of fact it hardly falls within the province of this court. But we choose not to rest our decision upon any narrow or technical ground.
We shall, therefore, assume that the laws of South Carolina in this respect are substantially like the laws of Alabama and Yirginia, and treat it simply as a question as to the proper construction of a written instrument, taking into consideration the local law and the circumstances attending the case. The obligation inferred is hardly a proper subject of legal inference. Whether the premiums should be paid in South Carolina or Connecticut, was a matter of indifference to the law. To justify a court of justice in drawing such an inference, the circumstances should be very strong. In this case they seem to be rather weak. The fact that the contract was made with, and the premiums paid to, an agent of the company in South Carolina, coupled with the fact that the insured, with the knowledge and consent of the company, always resided there, affords very slight grounds for presuming that the parties contracted that the defendants should always, and under all circumstances, during the life of the policy, keep an agent there for that purpose. On the other hand, the fact that the parties contracted expressly in refer
The principal if not the only provision in the statute which bears upon the question, is that which requires a sworn statement of the gross premiums received for insurance by the company at the agency during the preceding year to be annually deposited with the assessor. This was undoubtedly for the purposes of taxation, and is some indication that the legislature intended that the premiums paid by citizens of the state should be paid through the agency, that they might be reached for that purpose. If the legislature intended this it is a little surprising that they did not express that intention in plain language, instead of leaving it to be implied from language which may, with equal propriety, bear another construction, and be operative without resorting to the implication. This and other requirements of the statute were only operative in case the defendants chose to transact business in the state, and only so long as they continued to do so. There is nothing which, even by implication, requires them to begin business, and there is not enough to justify the inference that they intended to compel the continuance of business when once begun. Taking the statute and the circumstances together, the interpolation of such a provision in the policy seems more like the creation than the construction of a contract.
But let us test this interpretation by its fruits. The agency is continued during the war that the policy-holder may there pay his premiums from year to year. The moment the agent receives it, it is subject to the confiscation act, and immediately finds its way into the confederate treasury. This is conceded ; and the learned judge in Hamilton v. Mutual Life Insurance Company of New York, attempts to evade the force of it by suggesting, on page 256, that the insured “ could have tendered the premium, and the agent could have
But again; let us briefly consider the effect of the war upon such a contract as is here contemplated. It is now supposed to be a contract containing mutual obligations. The defendants undertook to keep an agency in South Carolina, and the insured, if he would continue his policy, undertook to pay his premiums at such agency. It must be remembered that the obligation to keep an agency is inferred partly from the previous course of business, and if it exists at all it obliges them to continue the agency during the war substantially as before. It must also be borne in mind that it is not a rule for an isolated case, but it is applicable to all life insurance companies, and all their agents, and to every
4. But it is said that the non-performance of a contract will always be excused when the intervention of the law forbids one party from performing and the other party from receiving performance. This is doubtless a sound proposition. But the difficulty is, it does not aid the plaintiff. The real question is, not whether the party is excused from performing, but what are the consequences of not performing ? In one of the cases the court says: “ Their ” (the defendants) “inability to receive the premium when due amounted to the same tiling as if the premiums had been actually tendered and the defendants had refused to receive them.” With all deference we submit that this cannot be true as a general rule. No case occurs to us in which it would be true when applied to an unconditional contract. To illustrate : a man contracts to erect for another a wooden building at a given place on or before a given day. Before performance the act becomes unlawful, by city ordinance, for
It is no answer to say that the premium may be subsequently paid or allowed when the policy is collected. The parties have a right to make their own contracts, and courts have no power to vary them or make contracts for them. They have fixed the time of payment and made it material. Time is of the essence of the contract. The law will no more postpone the payment in such cases than it will deprive the party of it entirely. In this as in unconditional contracts,
The only possible answer to this view of the case that we can conceive of, is, that the insured had a vested interest in subsequent insurance in consideration of the premiums paid for the preceding years, of which the law will not deprive him. If the law is driven to the alternative—either to destroy that right or vary the contract, or rather make a new one for the parties,—we submit that the former is less objectionable than the latter. Eor the latter we have no precedent, and there is no limit to the mischief which will follow the introduction of such a principle into our system of jurispru- , deuce. In respect to the former, it is neither the first nor the only instance in which war destroys private rights and vested interests. But no such alternative exists. It is not strictly correct to say that the law deprives the insured of a vested right. The law simply enforces, according to its letter and spirit, the contract which the party made. If that works a forfeiture, the hardship is attributable to the contract and not to the law. Neither the defendants nor the law guaranteed that performance by the insured should always be lawful.
Thus far in considering this point we have assumed that the law directly prohibited the payment of this premium. But such is not the fact. Payment in itself considered was not unlawful. The law simply prohibited intercourse between enemies. As a consequence payment which required" such intercourse was prohibited. If payment could be made without such intercourse it was perfectly lawful. Such payment was certainly possible. Had the insured come into the northern states and remained here, or employed an agent, as he had an opportunity to do, (for war, as a coming event, cast its gloomy shadow before, especially in South Carolina,) he, or his agent, might have paid, and the defendants might have received, the premiums without the violation of any law whatever. We cannot, therefore, attribute to the law consequences which the party, by his own act, has brought upon himself.
The rule of law that forfeitures are not favored is a salutary rule, and we have no disposition to weaken its force. We should be careful, however, to guard against its misapplication. In respect to contracts, it is usually, if not universally, applied to cases in which the party, by doing or omitting to do some act, forfeits an estate or a sum of money, in addition to losing the advantages of the contract. This is the first instance within our knowledge in which it has been applied to give the party the benefit of the contract without performance on his part. We contend that tins is not such a forfeiture as calls for or admits of the application of the rule. One man cannot forfeit the property of another. The thing forfeited must be his own. The argument assumes that the plaintiff had a vested right to the sum insured for; whereas he had no such right, not even contingently, unless he continued to pay the premiums. In this case the insured failed to pay the premiums, consequently he had no vested right to the insurance. Therefore there was no forfeiture, in the proper sense of the word, in respect to that.
The court also speaks of forfeiting the whole amount of -premiums previously paid. This is only partially true. To a considerable extent he received a valuable consideration for the amount paid, in the risk which the company assumed during the time the policy was in force. So that the real
Again. If this principle is to be applied to life insurance policies, there is no reason for limiting the application to cases of war. There is the same hardship, and, therefore, the same propriety in applying the rule to cases where the party, by accident, misfortune, or inevitable necessity, fails to pay the premiums. To apply the rule in such cases would make the companies insurers against all such contingencies, and that certainly will not be seriously claimed. This rule, too, if applicable at all, must be applied in all cases, whether few or many premiums have been paid. There is no room or reason for a distinction between the payment of one and many, except that each payment slightly increases the value of the right acquired. If but a single payment had been made, would any court seriously consider the propriety of straining the law or the contract for the purpose of saving a forfeiture ?
But this is not all. The application of this doctrine to cases where the payment of the premiums has been interrupted by war, fails to take a comprehensive view of the question at issue. It looks only to the immediate parties to the suit, and regards the policy as an isolated transaction; whereas, in fact, it is but one act, a small fraction indeed, of a vast system of business. It is a business, too, which is based upon a calculation of chances and a system of averages. The average duration of any number of insurable lives may be estimated with tolerable accuracy, and each person, of whatever age, in a healthy condition, has his “ expectation
The proportion of those who will allow their policies to be forfeited is also a matter of calculation, and can be determined with reasonable certainty in advance. It is doubtful, however, whether these forfeitures operate in the end to the advantage of the companies. As a rule,- the policies which lapse are the best risks for the insurers. As they drop out, the average of those which remain is materially reduced. But whether they gain or lose is not material. In ordinary times, the consequences of forfeited policies can be anticipated and provided for. The late war caused all policies subject to its operation to lapse temporarily. It will probably be found that a few only returned to pay their premiums at the close of the war. Of those, most, if not all, are eases in which the insured either died during the war, or survived it in impaired health. The application of the rule we are now considering to this class of cases, therefore, practically revives only the very worst risks for the company, and compels it to submit to the loss of all the better and more desirable i*isks. A court of justice should never relieve one party of a hardship, apparent or real, at the expense of the other. By so doing, possibly the court may impose a greater hardship than the one it relieves. If the contract relations of two persons are such that one or the other must suffer a hardship, each party being equally free from blame, the law will leave it precisely where the contract places it.
Let us consider the consequences of this doctrine to a single company. A large number of policies, many thousands perhaps, were outstanding in the seceding states. Some policyholders, doubtless, lost their lives in the field. In respect to them, the company is exempt from liability. Others were non-combatants. Of these, some, probably a small part of
6. One other question remains to be considered. To what extent was this policy abrogated by the war ? The general principles of international law, which determine the effect of war upon existing contracts, are well established, clearly defined, and not difficult of application. In the case of The Rapid, 8 Cranch, 155, Johnson, J., in speaking of the nature and consequences of a state of war, says: “ On this point there is really no difference of opinion among jurists; there can be none among those who will distinguish between what it is in itself, and what it ought to be under the influence of a benign morality and the modern practice of civilized nations. In the state of war, nation is known to nation only by their armed exterior; each threatening the other with conquest or annihilation. The individuals who compose the belligerent states exist, as to each other, in a state of utter occlusion. If they meet, it is only in combat.” After speaking of some rules which have been introduced into modern warfare, and which owe their existence alto
In Griswold v. Waddington, 16 Johnson, 479, Chancellor Kent referring to the case of The Rapid, says : “ Here then we have the final consummation of this discussion, and the sanction of the doctrine we have been tracing, solemnly given by the highest judicial authority in the United States. It reaches to all interchange, or transfer, or removal of property, to all negotiations and contracts, to all communications, to all locomotive intercourse, to a state of utter occlusion, to any intercourse but one of open hostility, to any meeting but in actual combat.”
In the case of The Julia, 8 Cranch, 181, Judge Story is equally explicit. On page 193 he says; “ At the threshold of this inquiry, I lay it down as a fundamental proposition, that strictly speaking, in war, all intercourse between the subjects and citizens of the belligerent countries is illegal, unless sanctioned by the authority of. the government, or in the exercise of the rights of humanity. I am aware that the proposition is usually laid down in more restricted terms by elementary writers, and is confined to commercial intercourse.”
We are aware that there is a tendency in modern times to soften the rigors of war, and relax the principles of international law, so far as they affect private property and rights. On this subject Chancellor Kent, in Gfriswold v. Waddington, says: “It is the business of government, and not of courts of justice, to relax the rules of war. The power that declares or carries on war may soften its evils, to every extent consistent with the public interest, of which it is in this instance the exclusive judge. It is its bounden duty to make war fulfill its end with the least possible mischief, and to hasten the blessings of peace.” This is sound doctrine and throws all the responsibility where it properly belongs— upon the war-making power. It is the business of the courts to administer international law, and not to relax or modify it according to their notions of propriety. It is much wiser and safer to leave that matter with the power that makes and carries on the war. But we need not dwell longer upon the general principles which govern this case.
The law as stated above is pretty uniformly accepted by the modern cases as the established doctrine of this country.
The theory that the premium as it becomes due is a debt, is a fallacious one, and leads to erroneous conclusions. It resembles a debt only in that it is a payment of money. A debtor is under obligation to pay; here no obligation exists. The payment of a debt may be compelled; payment of the premium is entirely optional with him who is to pay. The intent accompanying the act, the object aimed at, and the consequences resulting therefrom, are essentially and radically different in the two cases. The one discharges an obligation previously existing, and closes the transaction between the parties; the other creates an obligation which did not previously exist, continues in force an existing contract which otherwise would have terminated, and contemplates future dealings between the parties. While it is in form the payment of money, it is in substance the making of a contract. The payment of a debt is only suspended; the making of a contract is prohibited by the war.
Is the contract executed or executory ? Is the payment of the annual premiums a condition precedent or subsequent ? On these points there has' been little discussion. Courts
In relation to insurance after January 14th, 1862, which is the point that concerns this case, it is different. There is a manifest distinction between a right to insure and actual insurance. There was no actual insurance, and the party could obtain none, except by complying with the conditions, —an act to be done by him. It was an executory contract on his part, and the law preventing the execution of it by him, the contract was necessarily dissolved.
As to the nature of the condition. It has no reference to present insurance; that is unconditional. ’ The right to future insurance is an existing right, which may be defeated by non-payment of the premium. As to that, it is clearly a condition subsequent. But the right is of such a nature that its existence absolutely depends upon payment. Future insurance is not an existing fact, and cannot exist except upon the payment of the premium. As to that it is as clearly a condition precedent. The war, preventing its performance, dissolved that part of the contract.
We advise the Superior Court that the demurrer should be sustained.
In this opinion Park, C. J., and.Pardee, J., concurred; Poster and Phelps, Js., dissented.