Alexander v. Home Insurance Co.
| Decision Date | 14 July 1928 |
| Docket Number | 6020 |
| Citation | 220 N.W. 525,53 S.D. 305 |
| Parties | J. E. ALEXANDER et al., Plaintiffs and respondents, v. HOME INSURANCE CO., Defendant and appellant. |
| Court | South Dakota Supreme Court |
HOME INSURANCE CO., Defendant and appellant. South Dakota Supreme Court Appeal from Circuit Court, Jerauld County, SD Hon. Frank B. Smith, Judge File No. 6020—Affirmed Null & Royhl, Huron, SD Lord, Wire & Cobb, of Chicago, Ill Attorneys for Appellant. Charles R. Hatch, of Wessington Springs, SD Gardner & Churchill, Huron, SD Attorneys for Respondents. Opinion filed July 14, 1928
This action was brought to recover on an insurance policy. The policy was issued on the 14th day of July, 1923, and insured plaintiff against loss or damage by windstorm, cyclone, or tornado. The premium was not paid when the policy was issued, but, in lieu thereof, plaintiff gave defendant his promissory note for the amount of the premium payable on the 1st day of May, 1924. The policy went into effect on the loth day of August, 1923, and covered a period of three years from that date.
The policy contains the following clause:
“But it is expressly agreed that this company shall not be liable for any loss or damage that may occur to the property herein mentioned while any promissory note or obligation given for the premium remains past due and unpaid.
On the 1st day of April, 1924, defendant mailed to plaintiff from its office in Chicago the following notice:
“Please remit promptly, making draft or check payable to the Home Insurance Company, New York.
“Your attention is directed to the back of this notice whereon will be found statement of the conditions relating to payment of the premium.”
And on the back of said notice is the following:
“Conditions Relating to the Payment of the Premium.
“You have the right to either pay the premium as stated in this notice and keep the policy in full force, or to terminate the insurance by surrendering the policy and paying $28.94, the amount of the short rate earned premium lawfully due the company as of date corresponding with the day of maturity of the premium note.
“This right of cancellation is called to your notice because of a legal requirement o your state, and with no purpose or intention of suggesting that it will be to your interest to surrender the policy or that the company wishes you to take that action.
“Also, as required by law, your attention is called to the following condition of your policy, namely, ‘It is expressly agreed that this company shall not be liable for loss or damage that may occur to the property herein described while any promissory note or obligation, or part thereof, given for premium, remains past due and unpaid.’”
The premium note was not paid when due, nor at all, and it is the contention of the defendant that, because of the failure to pay said note, and because of the notice sent out, the policy became suspended on the 1st day of May, and was not in force on the 14th day of June when the loss occurred.
Section 9191, Code 1919, provides that:
“No policy of insurance shall, by virtue of any condition or provision thereof, be forfeited, suspended or impaired for nonpayment of any note or obligation taken for the premium or any part thereof, unless the insurer shall, not less than thirty days prior to the maturity of such premium note or obligation, mail, postage prepaid, to the assured at his usual post office, a notice stating:
“Such notice shall further inform the insured of his right, at his own election, either to pay in full and keep the policy in full force or to terminate the insurance by surrendering the policy and paying such part of the whole premium as it shall have earned, and must further state the amount which assured is lawfully required to pay, or which, on account of previous payment, may be ,due him in case of his election to terminate the insurance on the day of the maturity of the premium note or obligation.”
This section of the Code was in force when the policy was issued, and therefore is as much a condition of the policy as. though it had been incorporated into the policy itself. Epiphany Roman Catholic Church v. German Insurance Co., 91 N.W. 332.
The notice above set out was given pursuant to this provision of the law, and it is the contention of the defendant that the notice was sufficient to, and did, suspend liability on the policy. On the other hand, it is contended by plaintiff that the notice was insufficient to suspend such liability: First, because it was not mailed to plaintiff 30 days prior to the maturity of the note; and second, because it is not sufficient in substance to comply with the provisions of section 9191. If the second ground is good, the first is immaterial; therefore we shall consider the second ground first.
Subdivision 3 of section 9191 requires the notice to state the effect upon the policy of the failure to pay the premium note. This it does not do. It states the date of maturity of the note and the amount of principal and interest due. It also explains plaintiff’s option to pay the note and continue the insurance, or to pay the short rate earned premium and terminate the insurance. It also directs plaintiff’s attention to the condition in the policy providing that there shall be no liability on the policy if the note is not paid when due, but this provision is not self-executing, and can be made effective only by giving the notice required by section 9191. This question was involved in Epiphany Roman Catholic Church v. German Ins. Co., supra, and the notice was held to be insufficient. It is true, as claimed by defendant, that the notice in that case was defective in other respects, and such defects are treated collectively. But failure to state the effect on the policy of a failure to pay the note when due appears to be one of the ground’s on which the notice...
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