Ewald v. Nw. Mut. Life Ins. Co.

• Decision Date: 15 May 1884
• Parties: EWALD v. NORTHWESTERN MUTUAL LIFE INSURANCE CO.
• Court: Wisconsin Supreme Court

60 Wis. 431

19 N.W. 513

EWALD

v.NORTHWESTERN MUTUAL LIFE INSURANCE CO.

Supreme Court of Wisconsin.

Filed May 15, 1884.

Appeal from county court, Milwaukee county.

E. G. Comstock, for respondent, August Ewald.

D. G. Hooker, for appellant, the Northwestern Mutual Life Ins. Co.

ORTON, J.

This suit is brought upon a policy of endowment insurance, issued by the company to the plaintiff, bearing date June 3, 1867, to recover four-tenths of the $1,000 of insurance and interest, on the ground of full payment of the cash premiums and of the interest on the premium notes for such years. After the first four years from the date of the policy the plaintiff failed to pay any more cash premiums, or to give any more premium notes, or to pay any more interest upon the premium notes given for such years, and the defendant company declared a forfeiture of the whole policy, and notified the plaintiff thereof.

The plaintiff claims (1) that by the terms of the policy he is entitled to four-tenths of the whole insurance, because he has paid fully the cash premiums and interest on the premium notes for such years, if he had entirely failed to give the premium notes and to pay the cash premiums and the interest on the premium notes which he gave for the first four years thereafter, during the life of the policy; and (2) that there were dividends of surplus, from year to year, due him from the company, sufficient to pay such interest.

The defendant contends (1) that by the terms of the policy it could be forfeited in toto by the company upon the failure of the assured to pay the interest in cash upon such premium notes at the end of each year during the time of the policy; and that (2) the policy should have such a construction, if possible, because absolutely necessary and essential to the continued business of the company in this department of insurance, and to any estimates of future resources, dividends, or liabilities upon the basis of interest paid on all premium notes outstanding, and the anticipation thereof, as one of the certain and permanent resources of the company for such purposes.

The last consideration may reasonably effect the rule that forfeitures are not favored, and will not be judicially declared if the rights of the parties can be fully saved and secured without. Or the rule of forfeiture may be stated as in Hall v. Delaplaine, 5 Wis. 206, and Button v. Schroyer, Id. 598; it will be mitigated or relieved against when it can be done without violence to the contract of the parties. The law in respect to forfeiture of contracts is really elementary, and is as claimed by the learned counsel of the respondent. See authorities cited in his brief. With the rules in respect to forfeitures established in those cases, and the ordinary rules of interpretation “to give the language its just sense, and to search for the precise meaning to give the contract the sense in which the promisor believed the other party to have accepted it, or in which he had reason to suppose it was understood by the promisee,” and the practical interpretation of the contract, by the practice and conduct of the parties under it, in view, we shall endeavor to place the proper construction upon it. I will not incumber and confuse the question by quoting more of the language of the policy than absolutely necessary to its elucidation, or obscure it by redundancy.

The matter of difference between the parties has already been sufficiently stated, and I will first quote those clauses of the policy by reason of which the defendant claims it to have been completely forfeited and determined, and then the clauses by reason of which the plaintiff claims the policy to be valid to the extent of four-tenths of the whole amount of the insurance, as a paid-up policy of four years, and only forfeited as to the remainder: First. After stating the consideration of the annual premium note, the language in brackets is “ the interest upon which must be paid annually, in cash, at the date of the maturity of the annual premium.” Second. After stating the terms of such proportion of tenths, as the complete payment of the annual premiums at the time of the default, the language is: “But in order to secure such proportion of the policy, all premium notes must be taken up or the interest thereon be paid annually, in cash, on the date of the annual maturity of the premium, until the notes are canceled by returns of the surplus, or the whole policy will be forfeited.” This language has the effect as a condition (1) to the payment of any proportion of the insurance less than the whole, and (2) to avoid the forfeiture of the whole policy. If the notes are paid and taken up, or canceled by returns of the surplus or dividends, then, of course, the interest thereon ceases; but if they are not, the interest must all be paid when due. Third. The first premium note given at the date of the policy for the first year, and the other three notes also, after stating the interest at 7 per cent. per annum, the language is, “ which interest shall be paid annually or the policy be forfeited.” At the expiration of the policy by death, or limitation of time, the provision for payment is followed by the language, “the balance of the year's premium and all notes given for premiums, if any, being first deducted therefrom.” The fourth express condition of the policy is that “in every case where this policy shall cease, or become null and void, all payments thereon shall be forfeited to the company.” It will be seen that there are four express conditions, or four repetitions of the same condition, upon which the whole policy and insurance will become forfeited at the option of the company. These provisions are so plain, clear, and explicit that there can be no ambiguity, uncertainty, or doubt. If in any or all of these specified cases the policy may, notwithstanding, be valid and effectual to secure to the assured the proportion of tenths of the insurance so provided for in another part of the policy, then all the above conditions and provisions are rendered entirely nugatory, and are in effect stricken from the policy. For if the payment of the cash premiums and of the interest for the first year is not made, or the premium note given, the policy would, of course, not take effect for any purpose, and it would not be proper to call it a forfeiture. If, after the payment of the premiums and interest for the first year had been fully made, and no future premium notes given, or future premiums or interest paid, the policy would still be effectual for one-tenth of the insurance, then in no case can there be a forfeiture of the whole policy, as provided for in the above contingencies.

We will now consider the provision or provisions of the policy which are claimed to have such a sweeping effect upon all these express conditions of forfeiture:

1. The policy provides that if default be made in the payment of any premium, the company is to pay the assured “as many tenth parts of the original sum assessed as there shall have been complete annual premiums paid at the time of such default.” This clause is followed by the above specifiedcondition of forfeiture, begining with the qualifying words, “but in order to secure such proportion,” etc. In short, the provision so qualified is that on default of the payment of premiums the company shall pay as many tenths as the years in which all payments have been made; but, to secure such proportion, all the premium notes must either be taken up, or the annual interest thereon paid in cash when due, from year to year, “or the whole policy will be forfeited.” This disposes of one clause upon which the learned counsel for the respondent relies.

2. The policy provides that “if the said premiums or the interest upon any note shall not be paid on or before the days mentioned for the payment thereof, at, etc., or to, etc., the company shall not be liable for the payment of the whole sum assured, but only for such part thereof as is expressly stipulated above, and the remainder shall cease and determine.” On casual reading this might seem to conflict with these several explicit clauses of total forfeiture, by reason of the interest not being paid. But if this conflict can be avoided by any other reasonable construction of this provision from the language itself, it is of course the duty to so construe it. “If the premiums are not paid,” is followed by the disjunctive “or if the interest is not paid.” If either is not paid presupposes that one has been paid. Then what is the sense, on this necessary hypothesis? Why, most clearly, if the said premiums for any one year have been paid, or, if not so paid, the interest upon any note or upon all the notes outstanding has been fully paid,--that is, so long as such notes shall run and bear interest,--then the assured may be entitled to as many tenths as the years in which such premiums were paid. The interest on any one note cannot be said to be paid annually in cash, and fully paid, for only a small part of the time in which such note runs or is outstanding. This suit is brought after the expiration of the policy. The condition of recovery of anything upon the policy by this clause is that the interest on any or all of such outstanding notes shall have all been paid. Another form of the sentence, with the same sense, may be adopted, and that is, if the premiums up to the time of the default and the whole interest on any premium note have been fully paid, then a recovery may be had for such proportion as may be due by reason of the full payments of certain years. To illustrate: The plaintiff brings this suit long after the expiration of the 11 years' time of the policy, and demands $400, as the four-tenths of the whole insurance, because he has paid fully for four years. The defense is, that may be true, but he has not paid the interest on the first four premium notes, which has been accruing from year to year...