Fred Master v. New York Life Insurance Company

• Decision Date: 28 October 1901
• Docket Number: No. 29,29
• Citation: 183 U.S. 25,22 S.Ct. 10,46 L.Ed. 64
• Parties: FRED. A. McMASTER, Administrator of the Estate of F. E. McMaster, Deceased, Petitioner , v. NEW YORK LIFE INSURANCE COMPANY
• Court: U.S. Supreme Court

183 U.S. 25

22 S.Ct. 10

46 L.Ed. 64

FRED. A. McMASTER, Administrator of the Estate of F. E. McMaster, Deceased, Petitioner,

v NEW YORK LIFE INSURANCE COMPANY.

No. 29.

Argued March 18, 1901.

Decided October 28, 1901.

This was an action brought by Fred. A. McMaster, administrator of the estate of Frank E. McMaster, deceased, against the New York Life Insurance Company on five policies of insurance of $1,000 each upon the life of Frank E. McMaster.

The applications were dated December 12, and the policies December 18, 1893. The premiums for a year in advance were paid and the policies delivered December 26, 1893.

McMaster died January 18, 1895, and the defense was that the insurance had been forfeited by failure in payment of the second annual premiums on or before January 12, 1895, that is to say, within thirty days after December 12, 1894, when the company contended they became due.

The company alleged in a substituted and amended answer that the policies were executed and delivered December 12, 1893, and set forth:

'2. This defendant, for further answer, says that said application is dated the 12th day of December, 1893, and asked the issuing of five policies of $1,000 each upon the life of the said Frank E. McMaster, deceased. Said application also contained a request that said five policies each should be issued, dated, and take effect the same date as the application, namely, the 12th day of December, 1893, and said request was complied with, and the policies were so issued.

'This defendant grants to the insured in said defendant company a grace of one month on the payment of premiums, which extended the day of payment of premiums from December 12th, 1894, as in the policies issued to said Frank E. McMaster, deceased, late as the 12th day of January, 1895, but not later.

'3. This defendant, for further answer, says that payment of the premiums due upon said policies were not paid within the time prescribed as aforesaid, and that said Frank E. McMaster died on the 18th day of January, 1895, six days after said policies had lapsed and were forfeited for nonpayment of premiums as required.

* * * * *

'6. This defendant, further answering said petition, says that said application is a part of said policies, in each case, that said assured received and accepted said policies during his lifetime, and had them all in his possession for a long time, and was aware and knew, or could have known, the contents in each policy.

'That said assured had paid the premiums when said policies were delivered to him; that by reason of said assured's acceptance of said policies, his representative, the plaintiff herein, is estopped from denying the date of said policies or claiming that said policies should have a different date from the application, and is estopped for the reasons above stated from claiming that said words, to wit, 'Please date policy same as application, were not in said application when insured signed same, for by accepting said policies the assured waived said right to object, if said words were inserted, as alleged in petition, after the signing of the application, which this defendant denies.'

The case was tried by the circuit court without a jury; special findings of fact made; and judgment rendered in favor of defendant. 90 Fed. 40.

Plaintiff prosecuted a writ of error from the circuit court of appeals, and the judgment was affirmed. 40 C. C. A. 119, 99 Fed. 856. The writ of certiorari was then allowed.

Pending the trial below, plaintiff filed a bill in epuity for the reformation of the policies, and the circuit court granted the relief prayed. 78 Fed. 33. On appeal this decree was reveresed (30 C. C. A. 532, 57 U. S. App. 638, 87 Fed. 63), and an application to this court for certiorari was denied. 171 U. S. 687, 18 Sup. Ct. Rep. 944. The Circuit Court of Appeals expressed the opinion in that case that no recovery could be had at law or in equity, and accordingly the circuit court in this case, although of opinion that plaintiff was entitled to recover, gave judgment for defendant.

Separate opinions were given by the judges of the court of appeals, Sanborn and Thayer, JJ., concurring in affirming, and Caldwell, J., dissenting.

The findings of fact by the circuit court were as follows:

'1st. The plaintiff, Fred A. McMaster, was when the suit was brought and is now, the lawfully appointed administrator of the estate of Frank E. McMaster, deceased, having been appointed administrator of the named estate by the probate court of Woodbury county, Iowa; and furthermore said plaintiff was, when this suit was brought and is now a citizen of the state of Iowa, and a resident of Woodbury county, Iowa.

'2d. That the defendant, the New York Life Insurance Company, was when this suit was brought and is now a corporation created under the laws of the state of New York, having its principal office and place of business in the city of New York, in the state of New York, but being also engaged in carrying on its business of life insurance in the state of Iowa and other states.

'3d. That in December, 1893, F. W. Smith, an agent for the New York Life Insurance Company, residing at Sioux City, Iowa, solicited Frank E. McMaster to insure his life in that company, and, as an inducement to taking the insurance, pressed upon McMaster the provision adopted by the company, and set forth in the circular issued by the company, and printed on the back of the policies issued by the company, under the heading, 'Benefits and Provisions referred to in this Policy,' in the following words: 'After this policy shall have been in force three months, a grace of one month will be allowed in payment of subsequent premiums, subject to an interest charge of 5 per cent per annum for the number of days during which the premium remains due and unpaid. During said month of grace the unpaid premium, with interest as above, remains an indebtedness due the company, and in the event of death during said month, this indebtedness will be deducted from the amount of the insurance.'

'4th. Relying on the benefits of this provision and in the belief that if he accepted a policy of insurance upon his life from the New York Life Insurance Company, paying the premiums thereon annually, the company could not assert the right of forfeiture until thirteen months had elapsed since the last payment of the annual premium, the said Frank E. McMaster signed an application for insurance in said company, dated December 12, 1893, of the form which is made part of the policies sued on and attached to the petition, the same being made part of this finding of facts.

'5th. In the application when signed by Frank E. McMaster it was provided that the amount of insurance applied for was the sum of $5,000, to be evidenced by five policies for $1,000 each, on the ordinary life table, the premium to be payable annually.

'6th. There now appears on the face of the application, interlined in ink, the words, 'Please date policy same as application.' These words were not in the application when it was signed by McMaster, but after the signing thereof they were written into the application by F. W. Smith, the agent of the New York Life Insurance Company, without the knowledge or assent of Frank E. McMaster, and were so written in by the agent in order to secure to the agent a bonus which the company allowed to agents for business secured during the month of December, 1893; and it does not appear that Frank E. McMaster ever knew that these words had been written into the application, and it affirmatively appears that he had no knowledge thereof when the application was forwarded to the home office of the company and was acted on by the company.

'7th. By the express understanding had between F. W. Smith the agent of the New York Life Insurance Company, and Frank E. McMaster, when the application for insurance was signed, it was agreed that the first year's premium was to be paid by McMaster upon the delivery to him of the policies, and that the contract of insurance was not to take effect until the policies were delivered.

'8th. The defendant company, at its home office in New York City, upon receipt of the application, determined to grant the insurance applied for, and issued five policies each for the sum of $1,000 dated December 18th, 1893, and reciting on the face thereof that the annual premium on each policy was $21.00, and forwarded the same to its agent F. W. Smith, at Sioux City, Lowa, for delivery to Frank E. McMaster. These five policies are in the form of the one attached to the petition in this case, which is hereby made a part of this finding of fact, and each policy contains the recital: 'This contract is made in consideration of the written application for this policy, and of the agreements, statements, and warranties thereof, which are hereby made a part of this contract, and in further consideration of the sum of twenty-one dollars and _____ cents, to be paid in advance, and of the payment of a like sum on the twelfth day of December in every year thereafter during the continuance of this policy.'

'9th. The five policies inclosed in envelopes on or about December 26th, 1893, were taken by F. W. Smith, the agent of the defendant company, to the office of Frank E. McMaster, who asked the agent if the policies were as represented, and if they would insure him for the period of thirteen months, to which the agent replied that they did so insure him, and thereupon McMaster paid the agent the full first annual premium, or the sum of $21 on each policy, and, without reading the policies, he received them and placed them away. The agent did not in any way attempt to prevent McMaster from reading the policies, and he had the full opportunity for reading them, but in fact did not read them, and accepted them on the statement of the agent of the company, as hereinabove set forth.

'10th. That not later than November 17th, 1894, notice was sent to Frank...