Blackerby v. Continental Ins. Co.

• Decision Date: 02 February 1886
• Citation: 83 Ky. 574
• Parties: Blackerby v. Continental Ins. Co.
• Court: Kentucky Court of Appeals

83 Ky. 574

Blackerby v. Continental Ins. Co.

Court of Appeals of Kentucky.

February 2, 1886.

APPEAL FROM HENRY CIRCUIT COURT.

CARROLL & BARBOUR AND E. J. TYLER FOR APPELLANT.

STEPHEN D. PARRISH FOR APPELLEES.

JOHN D. CARROLL ON SAME SIDE.

JUDGE HOLT DELIVERED THE OPINION OF THE COURT.

The policy of insurance issued by the appellee, the Continental Insurance Company of the city of New York, to the appellant, Samuel J. Blackerby, contains this provision:

"This company shall not be liable for any loss or damage under this policy, if default shall have been made in the payment of any installment of premium due by the terms of the installment note. On payment by the assured or assigns of all installments or premiums due under this policy, and the installment note given thereon, the liability of this company on this policy shall again attach, provided written consent of the superintendent of the western department be first obtained, and this policy be in force from and after such payment, unless this policy shall be void or inoperative for some other cause. But this company shall not be liable for any loss happening during the continuance of such default of payment, nor shall any such suspension of liability under this policy on account of such default have the effect of extending such liability beyond the period of its termination, as originally expressed in writing hereon. It is further provided that no attempt, by law or otherwise, to collect any note given for the cash premium, or any installment or premium due upon any installment note, shall be deemed a waiver of any of the conditions of this policy, or shall be deemed in any manner to revive this policy; but upon payment by the assured or his assigns of the full amount due upon such note and cost, if any there be, this policy shall thereafter be in full force, unless the same be inoperative or void from some other cause than the non-payment of such note."

The premium or "installment note" which the appellant executed to the company reads thus:

"For value received in policy No. B, 219,992, dated the thirteenth of March, 1879, issued by the Continental Insurance Company, of New York, I promise to pay said company or order (by mail if requested) fourteen dollars and forty cents upon the first day of March, 1880, and fourteen dollars and forty cents upon the first day of March, 1881, and fourteen dollars and forty cents on the first day of March, 1882, and fourteen dollars and forty cents on the first day of March, 1883, without interest; and it is hereby agreed that in case of the non-payment of any one of the installments herein named at maturity, the policy for which this note was given shall cease and be void until revived by written permission of the Superintendent of the Western Department, Continental Insurance Company, and the whole amount of installments remaining unpaid on said policy shall be considered as earned."

The company for defense to the appellant's claim for a loss, which occurred on June 8, 1880, rely upon the fact that the installment of premium, which was due on March 1, 1880, had not been paid when the fire occurred; and that by the failure to pay it the policy became ipso facto void.

Upon the other side, it is urged that the company can not now claim that the policy ceased with the non-payment of the premium installment, because it yet holds the obligation for the entire premium; and that unless it surrenders it, it can not ask that the policy be considered as forfeited, because otherwise there would be no mutuality of obligation.

It is well settled, however, that a condition like this one in a policy of insurance is valid; and that in case of a breach of it by the insured, without a valid excuse, the obligation of the insurer is at an end, although the premium note of the insured remains binding upon him. The parties have the right to make their own contract, and to fix its terms and conditions; and unless they are illegal or in violation of public policy, they will be upheld. In this instance they could have agreed upon a higher rate of premium; and they had an equal right to agree that the period of time to be covered by the insurance should become shorter upon some contingency, without altering the amount of the premium — especially would this be reasonable and just as to any contingency, which the legal duty of the insured requires him to, and which he can prevent.

Any other rule would require the insurer to carry the risk, although the insured was at the same time violating the contract without excuse; and to require the company to waive its right to the premium, before it could insist upon a release from the risk, brought about by the failure of the insured to perform his part of a contract executory upon both sides, would establish a rule in favor of the latter resting upon his...