Dale v. Continental Ins. Co.

• Decision Date: 20 May 1895
• Parties: DALE et al. v. CONTINENTAL INS. CO.
• Court: Tennessee Supreme Court

31 S.W. 266

95 Tenn. 38

DALE et al. v. CONTINENTAL INS. CO.

Supreme Court of Tennessee.

May 20, 1895

Appeal from circuit court, Shelby county; L. H. Estes, Judge.

Action by W. H. Dale & Co. against the Continental Insurance Company to recover on a policy of fire insurance. From a judgment for the defendant, plaintiffs appeal. Affirmed.

Smith & Trezevant, for appellants.

Carroll & Peres, for appellee.

McALISTER J.

This is a suit upon a policy of fire insurance, commenced in the circuit court of Shelby county. There was a verdict and judgment in favor of the insurance company. Plaintiffs appealed, and have assigned errors. The policy in suit was issued by the Continental Insurance Company, from its home office in Chicago, and insured the firm of W. H. Dale & Co. against loss or damage by fire upon certain articles of personalty to the amount of $2,175, for a term of five years commencing November 4, 1891, and expiring November 1, 1896. At the date of the application the assured executed their promissory note for $78.80, payable to the Continental Insurance Company at its office in Chicago, in equal installments, viz.: $19.70 on the 1st day of November, 1892 $19.70 on the 1st day of November, 1893; $19.70 on the 1st day of November, 1894; $19.70 on the 1st day of November 1895. It should have been stated that the first premium was paid in cash, November 14, 1891, when the policy was delivered, and the installment note for $78.80 executed for balance payable as already stated. The installment note contained this stipulation, to wit: "And it is hereby further agreed that, in case of nonpayment of any one of the installments herein named at maturity this company shall not be liable for loss or damage during such default, and the policy for which this note is given shall lapse unless payment is made to this company in New York or to the western department at Chicago; and in the event of nonsettlement for the time expired as per terms on short rates, the whole amount of installments remaining unpaid on said policy may be declared earned, due, and payable, and may be collected by law. Given in payment for a policy of insurance. [Signed] W. H. Dale & Co." It is provided in the policy in regard to the premium, viz.: "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, or part thereof, given for the premium, remains past due and unpaid." The policy provided "that the notes must be paid to the Continental Insurance Company at its office in Chicago, Ill., or at its office in New York, or to an authorized person having such note in possession for collection." The company may collect, by suit or otherwise, the premium note or notes, and a receipt from the office of the company must be received by the assured before there can be a revival of the policy, which shall in no event carry the insurance beyond the original term. It was further provided in the policy that no agent or employé of this company, or any other person than the general manager of the western department at Chicago, Ill., shall have power or authority to waive or alter any of the terms or conditions of this policy, or to make indorsement hereon; and all agreements by the general manager must be signed by him. These provisions all became important in determining the question whether there had been a forfeiture of the policy for nonpayment of premium prior to the loss incurred, and the further question whether the alleged forfeiture was waived. The fire occurred on the 9th of November, 1892, and plaintiffs sustained a loss amounting to $868.75. The installment due November 1, 1892, had not been paid by the assured at the date of the fire. The contention on behalf of the company is that, the fire having occurred while the plaintiffs were in default for nonpayment of premium, there is no liability. It is insisted, however, on behalf of the plaintiffs that the stipulations avoiding the policy for nonpayment of premium were waived by the company. The facts upon which the waiver is claimed are the following, namely: On the 18th of October, 1892, J. J. McDonald, the general manager of the company at Chicago, mailed a notice to plaintiffs, advising them that the second installment of their insurance premium would mature November 1-4, 1892. On the 31st October, the plaintiffs wrote to the company stating, viz.: "Our policy, 375,391, the premium $19.70, is due in November. We will remit as soon as we can sell some cotton and lumber." Dale testifies he mailed this letter at Tipton on the same day it was written, and proves by the assistant postmaster that the mail from Tipton would reach Chicago in one day. On the 9th November the company answered Dale's letter, stating, viz.: "We are in receipt of your letter in regard to the above policy, and in reply would state that it would be advisable to make the remittance spoken of in your letter to us at an early date, thereby reviving the insurance, and causing no uneasiness to yourselves in the case." This letter was written on the very day the fire occurred, and was received by Dale November 11th. He testifies that he supposed, from the fact of not hearing from the company earlier in reply to his letter of October 31st, that his request for delay had been granted, as otherwise he could have borrowed the money and sent it forward. On the 16th November, Dale & Co. forwarded, by express, notice of the fire, and inclosed $20 to pay past-due installment of premium. The $20 was received by the company November 22d, and returned November 28th, on the same ground that the policy was not in force when the loss was sustained.

The first question, then, presented is whether the nonpayment of the installment of premium due November 1, 1892, invalidated or rather suspended, the policy. That such should be the result of nonpayment of any part of the premium is expressly stipulated, both in the face of the policy and of the installment note. In the case of Roehner v. Insurance Co., 63 N.Y. 160, Folger, J., said: "It is, however, well settled that on the failure of the insured to pay the premium on a policy like this, at the time therein stipulated therefor, it becomes lapsed and void. It is then no longer a contract enforceable against the insurers. If the premium was not paid when the day for payment came, the policy was void, for the parties to it have said that so it shall be. The forfeiture results from the nonpayment alone, and from no other act. The payment is a condition precedent, which must be kept, or the policy falls. It is a rule of common law that if the terms of the contract violate no law of public policy, and have been freely entered into, a strict and exact compliance with them may be insisted upon. Beadle v. Insurance Co., 33 Hill, 161. Nor did the fact that the defendant took from the insured the note alter this rule in this case. The defendant was not required to make demand for the payment of the note, and on refusal to pay to declare the policy void. It lapsed per se upon the failure to pay the note at maturity, for the same agreement and intention of the parties are expressed in the note as are expressed in the policy. By the latter, the omission to pay the annual premium shall cause the policy to be void. By the policy, too, the same effects follow for a failure to pay at maturity any note given for premium. By the note itself the policy is to be void in case the note is not paid at maturity, according to the contract in the policy." In the case of McIntyre v. Insurance Co., 52 Mich. 188, 17 N.W. 781, the policy contained the following condition, to wit: "It is expressly agreed that this company shall not be liable for any loss or damage that may accrue to the property herein mentioned, while any promissory note or obligation, or part thereof, given for the premium, remains due and unpaid." The court held that, both by the terms of the policy and the note, there was no liability upon the part of the company. In the later case of Robinson v. Insurance Co. (Mich.) 43 N.W. 647, it appeared that the installment note was past due from February 1, 1886; that on March 30, 1886, it was sent by defendant company to the First National Bank of Port Huron, Mich., for collection. On the 9th October, 1886, two days after the fire, the plaintiff called at the bank, and took up the note, and the proceeds of the note were sent by the bank to the defendant at Chicago. Immediately after the defendant became advised of the fact that the note had remained unpaid until after the fire occurred, it returned the money to the plaintiff, who admitted he received it. Long, J., said: "The case falls within the ruling of this court in McIntyre v. Insurance Co., supra. The stipulation was one which the company had a right to make. It was inserted in the policy, and the language of it was also embraced in the note. It was not claimed there was any fraud, misrepresentation, or concealment in procuring the policy to be taken with this clause inserted in the...