Insurance Company v. Dutcher

• Decision Date: 01 October 1877
• Citation: 24 L.Ed. 410,95 U.S. 269
• Parties: INSURANCE COMPANY v. DUTCHER
• Court: U.S. Supreme Court

95 U.S. 269

24 L.Ed. 410

INSURANCE COMPANY v. DUTCHER.

October Term, 1877

APPEAL from the Circuit Court of the United States for the Eastern District of Missouri.

This was a bill in equity filed by Clinton O. Dutcher and wife against the Brooklyn Insurance Company of New York, claiming that Mrs. Dutcher, under her contract with the company, and by reason of her payment of certain annual premiums, was entitled to a paid-up policy of insurance upon the life of her husband for $4,000, and praying for a specific performance. A decree was rendered for the complainants, and the company appealed here.

The facts are stated in the opinion of the court.

Submitted by Mr. J. O. Broadhead, for the appellant.

There was no opposing counsel.

MR. JUSTICE SWAYNE delivered the opinion of the court.

In order to reach the proper solution of the question to be decided, it is necessary at the outset carefully to analyze so much of the policy as bears upon the subject.

It was there stipulated, that, in consideration of the payment of the sum of $615.40, and the payment of that sum annually thereafter on the twenty-eighth day of February, until ten years' premiums should be paid, the life of Clinton O. Dutcher was assured for the term of his natural life in the sum of $10,000, with participation in the profits of the company.

The insurance money, upon his death, was to be paid to Annie C. Dutcher, his wife, or her legal representatives, the balance of the year's premium, if any, and all indebtedness to the company, to be first deducted.

If the stipulated premium should not be paid on the day fixed upon for its payment, or any note given to the company in part payment of any premium should not be paid on the day when the same became due, then the company was not to be liable for any part of the sum assured, and the policy was to become void.

The dividends of profits declared were to be applied towards the payment of the note taken for 'part premiums.'

If the policy should become void, Annie C. Dutcher or her legal representatives were to be liable to pay to the company the amount of all notes taken for premiums which should remain unpaid, except the balance remaining unpaid on the note taken for part premium, and made payable twelve months from date, and the last-mentioned note was to be cancelled upon the surrender of the policy.

After two annual payments, should it be desired to discontinue the policy, the company was to issue 'a paid-up policy for as many tenths of the amount originally assured as there had been annual premiums paid in cash.'

Such being the policy, we are next to consider the admitted facts, as shown by the agreement of the parties.

At the time of the execution and delivery of the policy, the parties agreed that the annual premium of $615.40 should be paid each year, as follows: $369.24 in money, and $246.16 in the promissory note of Annie C. Dutcher, payable twelve months from date, with interest at the rate of seven per cent.

On the payment of the money and the delivery of the note a receipt for $615.40, the amount of the premium for a year, was to be delivered to Annie C. Dutcher, the amount of the note to be a permanent loan to her, bearing interest at the rate of seven per cent per annum, until paid by dividends of profits.

At the maturity of the note, a new note, bearing the same rate of interest and covering the amount of the prior note (except as reduced by dividends), and the amount of $246.40 of premium for the current year, was to be given; and so on from year to year during the existence of the original policy.

Annie C. Dutcher did, accordingly, on the 29th of February, 1868, pay the company $369.24 in money, and $246.16 in her promissory note drawn as aforesaid.

The company thereupon gave her a receipt, specifying the payment of $615.40, in full of the premium for the ensuing year, and that $246.16 of the premium had been loaned to her. This arrangement was carried out also with reference to the premiums due Feb. 28, 1869, Feb. 28, 1870, and Feb. 28, 1871. This continued the original policy in force until Feb. 28, 1872. The amount due to the company after the adjustment of the premium of 1871 was, including the amount due upon the prior notes so given, $793.64.

Annie C. Dutcher thereupon, after due notice, demanded a paid-up policy. The company refused to issue it unless she would first pay the $793.64 so due from her, which was a lien against the existing policy. She declined to comply with this demand.

It is further agreed, that from the time the company began business to the 20th of January, 1871, it was the course of business of the company to issue paid-up policies to policy-holders on demand, without reference to their indebtedness to the company, arising as before stated, and to hold such indebtedness in each case as a lien against the paid-up policy, but that on and after that date the company refused to give a paid-up policy to any policy-holder, without the payment first by the policy-holder of the amount owing to the...