Cohen v. Continental Fire Ins. Co.

• Decision Date: 04 February 1887
• Citation: 3 S.W. 296
• Parties: COHEN and others <I>v.</I> CONTINENTAL FIRE INS. CO.
• Court: Texas Supreme Court

3 S.W. 296

COHEN and othersv.

CONTINENTAL FIRE INS. CO.

Supreme Court of Texas.

February 4, 1887.

Appeal from district court, Leon county.

Action on fire insurance policy. Judgment for defendant. Plaintiffs appeal.

Kirven, Gardner & Etheridge, for appellants. Hutcheson, Carrington & Sears, for appellee.

GAINES, J.

Plaintiffs' application for insurance contained the following clause: "It is also covenanted and agreed that, if default is made in payment at maturity of any one of the installments of premium to be paid as stipulated in premium note given herewith, the whole amount of all the installments remaining unpaid on said policy shall become immediately due and payable, and the policy of insurance issued hereon shall cease to insure, and said Continental Insurance Company shall not be liable for any loss or damage which may accrue to premises insured thereunder during such default, nor until such policy shall be renewed by written consent of the superintendent of said company's south-western department, or by an officer of said company on payment to him of all amounts due thereon." The policy issued in accordance with this application contained the following 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." It was also stipulated that the policy should become void if the assured should neglect to pay the premium. The policy also referred to the application, and to the premium note. It was to continue for five years, and was dated March 12, 1883. A cash premium of $8 was paid upon delivery of the policy, and a premium note for $32 executed, payable in installments of $8 each, on the first day of March of the years 1884, 1885, 1886, and 1887, respectively. The first installment was not paid, and on the ninth of November next after it matured the property insured was destroyed by fire.

In order to avoid the effect of the provision for a forfeiture of the policy, plaintiffs proved that, after the installment fell due, one Bridges, an agent of the company, frequently made demand for the premium upon blanks of the company issued for that purpose; that on one occasion he added, "Unless you pay now you will be without insurance;" and that about the middle of October he sent another demand and note, that if the premium was not paid by the twenty-fifth of that month it would be collected by an attorney, or through the bank. Plaintiffs were ready and willing to pay the note, had it been presented by a bank or an attorney. Bridges was agent of the company to solicit applications, and to receive and transmit premiums; but Dargan & Trezevant were the company's superintendents for the south-western department, and as such issued policies applied for as they saw fit.

There can be no doubt that an insurance company, through its authorized agent, may contract by parol for the renewal of a policy, although it may be stipulated on the face of the instrument itself that this shall not be done. There is no peculiar sanctity attached to such provision in contracts of this character, which makes them an exception to the general rule that parties to an agreement may, by mutual concurrence, change its terms at any time after its execution, so as to meet their pleasure or interests. A contract of insurance may be by parol, and its terms may be changed by parol, by mutual assent. It has accordingly been held, in numerous decisions, that though a policy be forfeited by the failure to pay the premiums according to its conditions, yet an agent duly authorized may waive the forfeiture, and thereby reinstate the obligation. The cases even go further, and decide that the authority of the agent may be implied from a previous waiver of a former forfeiture of the same policy, or from a general custom of such agent to exercise such power over the contracts of the company. Insurance Co. v. Norton, 96 U. S. 234; Chicago Life Ins. Co. v. Warner, 80 Ill. 410; Helme v. Philadelphia Life Ins. Co., 61 Pa. St. 107; Bowman v. Insurance Co., 59 N. Y. 521; Westchester Fire Ins. Co. v. Earle, 33 Mich. 143; Trustees, etc., v. Brooklyn Fire Ins. Co., 19 N. Y. 305.

It may also be considered as settled law that, where a policy provides for a forfeiture upon failure to pay premiums which are to fall due, but does not stipulate that, upon such failure, the overdue premium shall be considered as earned, a demand and payment of such premium constitute a waiver of the forfeiture. Joliffe v. Madison Mut. Ins. Co., 39 Wis. 111. This is upon the principle that, in such case, the insurance and the premium are obligations which depend each upon the other, and hence that a receipt of the latter necessarily implies that the insurer recognizes or renews the original contract, and thereby assumes the continuance of the risk. It is manifestly just that, if he takes payment of the premium, which is but the consideration of a contract of insurance on his part, he should be held responsible for the loss, if any occurs. Such is not the case, however, when the contract is that, upon default in any installment,...