Haas v. Mutual Life Insurance Company of New York

• Decision Date: 11 June 1909
• Docket Number: 15,610
• Citation: 121 N.W. 996,84 Neb. 682
• Parties: IDA L. HAAS, APPELLANT, v. MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, APPELLEE
• Court: Nebraska Supreme Court

121 N.W. 996

84 Neb. 682

IDA L. HAAS, APPELLANT, v. MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, APPELLEE

No. 15,610

Supreme Court of Nebraska

June 11, 1909

APPEAL from the district court for Douglas county: LEE S. ESTELLE JUDGE. Reversed.

REVERSED.

Joel W West and Charles S. Elgutter, for appellant.

James McKeen and Montgomery & Hall, contra.

OPINION

FAWCETT, J.

Plaintiff declared on two policies of life insurance for $ 5,500 each, issued by defendant to her husband, Andrew Haas, the first on July 9, 1896, and the second on November 28, 1896, each of said policies being issued upon what was known as the twenty-year distribution life plan. The deceased paid four full years' premiums upon the first of said policies and three full years' premiums upon the second. The annual premium was $ 190.85 on each of said policies. The four annual payments upon the first policy continued it, according to its terms, until July 9, 1900, and the three payments upon the second continued that policy, according to its terms, until November 28, 1899. The assured died May 1, 1902. Plaintiff further alleges "that after payment of said four premiums, and on the 18th day of July, 1900, the time for payment of the fifth annual premium under the terms of said policy, there was accrued and on deposit to the credit of said insured, Andrew Haas, in the possession and under the control of said defendant company, the sum of $ 434.50, the property of said Andrew Haas; said sum being the accumulated surplus of the annual premiums paid by said Haas during said four years under the terms of the policy. No part of said sum has been returned or tendered by said company to said insured at any time during his lifetime or to this plaintiff after his death, and said sum has remained in the possession and under the control of said insurance company available as a premium to extend said policy in the sum of $ 5,500, as aforesaid, as extended insurance for more than four years after the 18th day of July, 1900, according to the tables and computations in use by said company at said time for said purpose"; and under a like allegation alleges that the defendant company had the sum of $ 280.50 under the second policy available as a premium to extend said policy for three years and ten months after the time for which the three annual payments had paid the premium. Plaintiff further alleges as to each of said policies that "on the 7th day of May, 1902, the plaintiff notified said defendant of the death of the said Andrew Haas and demanded payment of the amount due on said policy, and defendant, waiving proof of such death, refused to pay said policy upon the sole and only ground that the said policy had become forfeited and lapsed for the nonpayment of premiums." Plaintiff further alleges that said contracts of insurance contained no provision authorizing a forfeiture thereof for nonpayment of premium; that the failure to pay the premiums when due was a delay of performance of such payment, and that defendant by reason thereof has a lien on the amount of the insurance due plaintiff under said policies to the extent of said unpaid premiums and interest; and that on September 24, 1906, she tendered to defendant all premiums subsequent to those which had been paid by the assured up to the time of his decease, together with legal interest thereon, "which tender, although being refused by the defendant, the plaintiff has at all times and ever since kept good, and has been and is now ready, willing and able to pay, and all the conditions of said policy to be performed and fulfilled on the part of the said Andrew Haas or by this plaintiff have been duly performed and complied with." Both policies of insurance are set out in hoec verba in the petition. To this petition defendant filed a general demurrer, which the district court sustained, and, plaintiff electing to stand upon her petition, judgment was entered dismissing the same and for costs, from which judgment this appeal is prosecuted.

Plaintiff's claim for a reversal of the judgment and recovery upon the policies is based upon two grounds "(1) There is no express provision in the policies which provides for a forfeiture because of the failure to pay the annual premium on the date fixed for the payment thereof, nor any provision of like import or from which even an inference might be drawn that a failure to pay the premium ad diem would render the policies void or work a forfeiture thereof. (2) That nonpayment of premiums, in view of the incontestability clause in the policies, is not a valid ground of defense by the company, because nonpayment of premium is not named as an exception in the general provision of 'incontestability.'"

Defendant contends: "First. That, upon failure of Andrew Haas to pay the premiums when they became due, the policies in controversy terminated and ceased to be contracts for life insurance, though they remained in force for the period of six months from default, as contracts for the issuance of other policies for life, term or endowment insurance, at the election of the insured, if requested by him, and as provided in the policies. Upon his failure to exercise his option in this respect, the policies became absolutely void. Second. Regardless of other considerations, upon the death of Andrew Haas while in default of payment of premiums and not having exercised his options for other contracts, the policies, by their express terms, were without force in favor of the plaintiff, because the contract in each policy was to pay 'upon the following condition, and subject to the provisions, requirements and benefits stated on the back of this policy, which are hereby referred to and made a part hereof.' 'The following condition,' as stated in the policies, is that 'the annual premium shall be paid in advance on delivery of this policy and thereafter to the company, at its home office in the city of New York, on the eighteenth day of July in every year during the continuance of this contract.' Third. In view of the facts and circumstances disclosed by, and properly inferable from, the petition, it appears that Andrew Haas, the insured, declined to continue the policies of insurance, and abandoned the contracts evidenced thereby, hence no recovery can be had thereon by the appellant."

The result of our consideration of plaintiff's first contention above set out renders it unnecessary to consider her second contention, viz., the incontestability clause of the policy. Defendant seeks to avoid the consequences of the absence from their policies of any forfeiture clause, on the ground that "an express provision that such a policy of life insurance shall cease, terminate, become void, or be forfeited (the preferred term of counsel for appellee) is not necessary. Considering all of the provisions of an insurance contract, both singly and in relation to each other, whether definitely expressed or properly to be inferred, and having in view the particular character of a life insurance policy as exceptional, especially touching prompt payment of premiums and the necessity of certainty on the part of an insurance company as to the status of its contract obligations, it is sufficient if it appears from the whole contract that it was intended and understood by the parties that nonpayment of premium would terminate the policy, except as to the provisions therein for other insurance contracts if duly applied for." In order to sustain this contention of defendant, we would be compelled to hold that a forfeiture of an insurance contract may be created by construction, and need not be provided for by the strict terms of the contract. Such is not the law.

In Perry v. Bankers' Life Ins. Co., 47 A.D. (N.Y.) 567, 62 N.Y.S. 553, the court say: "It is alleged that a premium which was due on the 21st of March, 1898, was not paid; and for that reason it is said that the policy had become forfeited. The rule is well settled that no strained or forced construction of a contract will be resorted to for the purpose of establishing a forfeiture, but that, to warrant a party in insisting that his adversary has forfeited any rights which he would be entitled to by a contract between them, he must put his finger upon the specific provision of the contract which requires the party against whom the forfeiture is alleged to do the thing the failure to do which is relied upon to work a forfeiture." In Carson v. Jersey City Ins. Co., 14 Vroom (N.J.) 300 39 Am. Rep. 584, it is said: "A warranty in a policy of insurance excludes all argument in regard to its reasonableness or the probable intent of the parties. If the policy contains a condition which in law amounts to a warranty on the part of the assured, he can derive no benefit from the policy unless the condition has been literally performed. And it is immaterial to what cause noncompliance is attributable; for, if it be not in fact complied with, the assured will forfeit all his rights under the policy unless the forfeiture has been waived by the insurer (citing cases). Hence it has become a settled rule in the construction of contracts of insurance that policies of insurance will be liberally construed to uphold the contract, and conditions contained in them which create forfeitures will be construed most strongly against the insurer, and will never be extended beyond the strict words of the policy." In Burleigh v. Gebhard Fire Ins. Co., 90 N.Y. 220, it is said: "Each policy, after a description of the property, contained this statement: 'All contained in their frame storehouse with slate roof, situate, detached at least 100 feet on the east side of Lake Champlain.'" It appeared that there was at the time the policies were issued a small building about 75 feet distant from...