Davis v. Home Ins. Co.

• Decision Date: 03 April 1913
• Citation: 155 S.W. 131,127 Tenn. 330
• Parties: DAVIS v. HOME INS. CO.
• Court: Tennessee Supreme Court

155 S.W. 131

127 Tenn. 330

DAVIS v. HOME INS. CO.

Supreme Court of Tennessee.

April 3, 1913

Certiorari to Court of Civil Appeals.

Bill by J. B. Davis against the Home Insurance Company. From a judgment of the Court of Civil Appeals, affirming a decree in favor of complainant, defendant brings certiorari. Decree of the chancellor and of the Court of Civil Appeals reversed and bill dismissed.

L. A Ligon and H. B. McGinness, both of Carthage, for plaintiff.

Vertrees & Vertrees, of Nashville, and Fisher & Fisher, of Carthage for defendant.

GREEN J.

This bill was filed to recover $725, the amount of a policy of insurance issued by defendant company on certain property of the complainant, which property was destroyed by fire. There was a decree below in favor of complainant, which was affirmed by the Court of Civil Appeals, and the case is before us on certiorari.

On May 7, 1909, this defendant issued upon the property in question a policy whereby it insured said property for a period of five years. In payment of the premium, complainant paid $12.60 in cash, and gave his note for $50.40, payable in annual installments of $12.60, each of said installments being due, respectively, on June 1, 1910, June 1, 1911, June 1, 1912, and June 1, 1913.

The installment of this note falling due June 1, 1910, was not paid, and in the fall of that year the note was sent for collection to Fisher & Fisher, attorneys at Carthage. Some negotiations were had between these attorneys and the complainant. Complainant first expressed a desire to obtain a cancellation of the policy and a release of liability on his note by payment of the shortterm rate, and was advised by the company what it would be necessary for him to pay to become so released. He did not pay the short-term rate, however, nor did he pay the past-due installment, and finally the company sued him for the full amount of the note, interest, and attorney's fees, and obtained judgment against him for $63.65 May 27, 1911. The note contained a provision for the payment of attorney's fees, and also contained a provision to the effect that the failure to pay any installment of said note when due rendered the whole note due and payable at the option of the company.

Judgment, as before stated, was rendered against the complainant May 27, 1911, before a justice of the peace, and this judgment was stayed. Before the expiration of the stay, to wit, on October 1, 1911, the property insured was destroyed by fire.

The following clause is contained in the application made by complainant Davis for this insurance.

"If any installment of premium for the policy that may be issued upon this application shall not be paid at maturity, or if any single payment, promissory note (acknowledged as cash or otherwise) given for the whole or any portion of the premium for the policy that may be issued upon this application, shall not be paid promptly when due, then said policy shall be suspended, inoperative, and of no force or effect until such installment or promissory note is paid. The company shall not be bound by any act done or statement made by or to any agent or other person, which is not contained in this my application."

In the policy issued to complainant are the following provisions:

"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 installments of this installment note given for premium on this policy remains past due and unpaid, or while any single payment, promissory note (acknowledged as cash or otherwise) given for the whole or any portion of the premium, remains past due and unpaid. Payments of notes and installments thereof must be made to the said Home Insurance Company at its Western Farm Department office in Chicago, Illinois, or to a person or persons especially authorized to collect the same for the company."

"The company may collect by suit or otherwise any past-due note or installments thereof, and receipt from the said Chicago office of the company for the payment of past-due notes or installments must be received by the assured before there can be a revival of the policy. Such revival to begin from the time of said payment, and in no case to carry the insurance beyond the end of the original term of the policy."

In a suit against this same company upon a contract, except in dates and figures identical in terms with this, the court said:

"Construing the contract evidenced by these instruments in accordance with the intent of the parties as therein plainly expressed, we are of opinion that the Home Insurance Company contracted with the complainants to insure their property described in the policy against loss by fire for five years, from March 19, 1902, to March 19, 1907, for the consideration of $60, $12 to be paid in cash and a like sum on the 1st day of each succeeding January until the entire premium was paid, with the express provision that the policy shall be suspended and the company be not liable for any loss occurring while any of said payments may be due and unpaid, with a further right in the company to declare all of the premiums then unpaid due and to collect same. *** The stipulation for a suspension of liability under a policy in case of default in payment of the premium is a reasonable one, made to enforce prompt payment of that part of the premium for which credit is given. It violates no principle of public policy or rule of the common or statute law, and is valid. Such a stipulation only becomes effective and injurious to the insured upon their own default in a matter of which they have full notice and about which they cannot be mistaken. These being the terms of the contract, the decision of the case is without difficulty. The well-settled rule, as stated and enforced in the adjudged cases of all courts of last resort to which we have had access, and laid down in the text-books of authority upon this subject, is that provisions of this character in insurance policies are valid and enforceable, and that, if the loss occurs while the insured is in default within the terms of his policy, no recovery can be had." McCullough v. Insurance Co., 118 Tenn. 263, 100 S.W. 104, 12 Ann. Cas.

...