Holly v. Metro. Life Ins. Co.

• Decision Date: 19 April 1887
• Citation: 105 N.Y. 437,11 N.E. 507
• Parties: HOLLY v. METROPOLITAN LIFE INS. CO.
• Court: New York Court of Appeals Court of Appeals

105 N.Y. 437

11 N.E. 507

HOLLY

v.METROPOLITAN LIFE INS. CO.¹

Court of Appeals of New York.

April 19, 1887.

Wm. H. Arnoux, for appellant.

James M. Fisk, for respondent.

PECKHAM, J.

The defendant insured the life of the plaintiff, August 16, 1870, in the sum of $5,000, on payment of a premium of $247, and a premium of the same amount thereafter, payable on the sixteenth of August in each year. The policy was issued for the sole benefit of Charles F. Holly, Jr., and contained a clause of forfeiture if the premium were not paid at the time mentioned. It also contained a promise that if, after three annual payments of premiums were made, the assured should fail to make payment of any further premium when due, then, upon a surrender of the policy within 30 days after such unpaid premium should be due, the company would, in exchange, issue a paid-up policy for the amount of even dollars of premium received by it on the policy. The plaintiff had 30 days after a premium became due in which to pay it. By subsequent agreement, the payment of the premium was changed from annual to semi-annual periods, and as thus changed the premiums had been paid to February 16, 1877. The plaintiff did not pay the premium which became due on the date last named, and had not paid it on the fourteenth of March following. On that day he called at the office of the company in New York, and being, as he says, short of money, he asked for an extension of time, which resulted finally in his giving a note for the payment of the premium which had fallen due on the sixteenth of the previous February, and the note was payable in three months from its date, (March 14th,) and contained this condition: ‘This note is given in part payment of the annual premium on policy numbered as per margin, with the understanding that all claims to further insurance, and all benefits whatever which full payment in cash of said premium would have secured, shall become immediately void and be forfeited to said company if this note is not paid at maturity.’ Contemporaneously with this note, and as part of one and the same transaction, the defendant gave to the plaintiff the following receipt:

%‘metropolitan life insurance co./

%‘319 broadway, new york, m/arch 14, 1877.

Note 3 mo. due June 14, 1877. Chas. F. Holly.

‘Received from the owner of policy No. 9,609, $128 45-100, which continues said policy in force until the sixteenth day of August, 1877, at noon, in accordance with its terms and conditions. Not binding upon the company until the premium is paid, and this receipt signed by

%‘jno. r. hegeman/,

‘(Prem. Receipt,)

‘Vice-President.’

When this note became due, the plaintiff, not desiring to pay it, asked for its renewal, and the result was that the plaintiff signed another note, containing a condition precisely similar to that set forth in the first one, and payable August 14, 1877, and the defendant gave up the first note to the plaintiff. When the second note became due, the plaintiff failed to pay it, and on the twenty-fifth or twenty-sixth of August thereafter called at the office of the company, and offered to pay the note, which payment was refused, and the claim made that the policy was forfeited by the non-payment of the note when due. The plaintiff subsequently commenced this action to compel defendant to comply with its agreement, and give a paid-up policy for the amount of premiums paid by him (over $1,700) up to the time when he failed to pay the premium due August 16, 1877.

The plaintiff has succeeded thus far. In the argument of the case here for the plaintiff much stress was laid upon the rules governing the court in construing contracts between insurance companies and policy-holders, especially when any forfeiture is to be insisted upon by the former. A strict construction, it is said, must be insisted upon, and the contract resulting in a forfeiture cannot be extended beyond the strict and literal meaning of the words used. This is undoubtedly true. In cases where the meaning is not entirely plain, and where it is capable of two constructions, one involving a forfeiture, and the other being fair and reasonable, and supporting the obligation of the policy against the insurer, that construction is preferred by the courts which does not involve the forfeiture, not only because it is not so harsh, but also because, if the language be doubtful, it is that employed by the insurer, and should be taken most strongly against him. As is said by FINCH, J., in delivering the opinion of this court: ‘If a construction so literal and severe is intended by the insurer, he should at least say so by plain and appropriate language, and not ask the court to supply it by intendment.’ See Burleigh v. Fire Ins. Co., 90 N. Y. 220. This was said in relation to the construction to be given the words ‘detached at least one hundred feet’ in a policy of insurance upon a lot of goods in a frame store-house...