Home Ins. Co. of New York v. McFarland

• Decision Date: 12 April 1926
• Docket Number: 25611
• Court: Mississippi Supreme Court
• Parties: HOME INS. CO. OF NEW YORK v. MCFARLAND et al. [*]

107 So. 754

142 Miss. 558

HOME INS. CO. OF NEW YORK v. MCFARLAND et al. ^[*]

No. 25611

Supreme Court of Mississippi

April 12, 1926

Division A

1 INSURANCE.

Installment note for deferred part of premium is not without consideration because policy matures all installments on default in payment of one, and suspends, insurance during default.

2 INSURANCE.

Provision of policy for suspension on default of installment on premium note, and renewal or reinstatement on payment of arrearage is valid.

3. INSURANCE.

Policy for term of years is not separable and divisible contract for each year, though note for deferred part of premium be payable in yearly installments.

HON. W. H. POTTER, Judge.

APPEAL from circuit court of Hinds county, HON. W. H. POTTER, Judge.

Action by the Home Insurance Company of New York against C. E. McFarland and others. From a judgment for less than was asked, on appeal from the justice court, plaintiff appeals. Reversed and judgment rendered.

See, also, 107 So. 383, and preceding case in this volume, at page 555.

Judgment reversed.

Fulton Thompson and R. H. & J. H. Thompson, for appellant.

The only question is this: Can the makers of a promissory note or other contract to pay money, by their own default relieve themselves from their obligation to pay?

The supreme courts of many of the states of this Union and the federal appellate courts have passed upon substantially the identical questions presented by this record; and all of them, so far as we are informed, have decided adversely to the contentions of the appellees. The questions now before this court have been presented to other appellate courts in two classes of cases:

(1) In cases in which a loss had been sustained by the insured at a time when an installment was past due on the note given for the premium and after the loss the insurance company had collected the past due premium or an installment thereof and was sued upon the policy, the plaintiff in the suit claiming that the collection of the premium by the company was a waiver of its non-liability at the time of the loss. See Jefferson Mutual Ins. Co. v. Murry (Ark., 1905), 74 Ark. 507; Williams et al v. The Albany City Ins. Co. (Mich., 1870), 19 Mich. 451; Wall v. Ins. Co., 36 N.Y. 157; Duncan v. Missouri State Life Ins. Co., 160 F. 646; Cohen v. The Continental Fire Ins. Co., (Tex., 1887), 67 Tex. 325; Union Central Life Ins. Co. v. Chowning (Tex., 1894), 8 Tex. Civ. App. 455; Hooker v. Continental Ins. Co. (Neb., 1903), 69 Nebr. 754; Hill v. Farmers' Mutual Fire Ins. Co. (Mich., 1901), 129 Mich. 141; Sewell v. Continental Casualty Co. (Miss., 1908), 92 Miss. 857. 46 So. 714; Nimic v. Security Mut. Hail Ins. Co. (Nebr., 1909), 84 Nebr. 403; White v. New York Life Ins. Co. (Mass., 1909), 200 Mass. 510; Marshall v. Missouri State Life Ins. Co. (Mo., 1910), 148 Mo.App. 669; Phoenix Ins. Co. v. Bachelder (Nebr., 1891), 32 Nebr. 490.

(2) In cases, like the one at bar wherein the insurance company sued the insured for premiums due and unpaid where losses had not been suffered. See American Ins. Co. v. Klink (Mo., 1877), 65 Mo. 78; Robinson v. Ins. Co. (Ark., 1888), 51 Ark. 441; Minn. Farmers' Mut. Fire Ins. Ass'n. v. Olsen (Minn., 1890), 43 Minn. 21; St. Paul Fire & Marine Ins. Co. v. Coleman (Dakota, 1889), 6 Dak. 458, 6 L. R. A. 87).

We ask the court to reverse the judgment of the circuit court and render a final judgment in appellant's favor. This we do because the sum due on the note, if our contentions be correct, is only a matter of mathematical calculations; and the amount to be awarded our client as an attorney's fee for services in the justice of the peace court and the circuit court is uncontradictedly shown by the evidence to be twenty-five dollars.

Chas W. Crisler, for appellee.

Attorneys for the appellant state that the only question in this case is whether or not the makers of a promissory note or other contract to pay money, can by their own default, relieve themselves from their obligation to pay. We cannot see wherein this is applicable to the note herein sued on for the question was raised, and the question was determined, on the plea of the total failure of consideration to these appellees for the execution of said installment notes covering the premium for the remaining four years time.

While we admit that the weight of authority from the different courts of the various states construing the provision above referred to is decidedly against us, yet there has been no decision of this court relative to the interpretation of the provision contained in the note and policies herein sued on. There is no question whatsoever as to the non-liability of the insurance company after the suspension of the policy due to the non-payment of the premiums by the insured. Therefore, we say that the point in issue before the court as to the construction of the provision above set out is whether or not the insured, or maker of the note remains liable for the future installment after the company has elected to lapse the policy. It is, therefore, for this court to contradistinguish the cases favoring the contentions of the appellant and the case of Yost v. Ins. Co., 39 Mich. 531, and other cases similar to and following it. The appellee, therefore, relies on the following cases. Yost v. Ins. Co., supra; Ins. Co. v. Stoy, 41 Mich. 358; Mathews v. Ins. Co., 49 Ohio St. 131; Penn. Co. v. Geraldine, 31 Mo. 31.

Argued orally by R. H. Thompson, for appellant.

OPINION

MCGOWEN, J.

This suit originated in the court of a justice of the peace, and was based upon a note for one hundred sixteen dollars and sixty-four cents, payable in four installments for twenty-nine dollars and sixteen cents each, due, respectively, November 1, 1924, 1925, 1926, and 1927. The note was given in payment of premiums on two policies of insurance, which provide, if any single payment given for the whole or any part of the premiums shall not be paid promptly when due, the whole amount of installments or notes remaining unpaid on said policies may be declared earned, due, and payable, and may be collected by law. The insured, the defendant in the court below, made the first cash payment at or about the time the policy was delivered, and only one installment of the note was past due. The justice of the peace rendered judgment in favor of the defendant, and on appeal to the circuit court the case was tried de novo, resulting in a verdict of the jury and judgment in appellant's favor for one dollar and five cents, earned premium on the policy, and five dollars attorney's fees; the jury having found in accordance with the instruction of the court below. The insurance company, the plaintiff in the court below, appeals here.

This was fire insurance upon the dwelling house and other property of the defendant running for a term of five years, and also insurance against loss by windstorms, etc. The policy was for a certain indivisible time, subject to suspension only during the time of nonpayment of premiums, as agreed in the note and contract.

The following stipulations of the policy are set out:

"This policy is made and accepted subject to the stipulations and conditions printed on back hereof, which are hereby specially referred to and made a part of this policy, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto, etc.

"Two of the conditions printed on the back of said policy are respectively in these words:

"'(1) But it is expressly agreed that...