Lefler v. New York Life Ins. Co.

• Citation: 143 F. 814
• Decision Date: 15 January 1906
• Docket Number: 2,045.
• Parties: LEFLER v. NEW YORK INS. CO.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

143 F. 814

LEFLER v. NEW YORK INS. CO.

No. 2,045.

United States Court of Appeals, Eighth Circuit.

January 15, 1906

March 18, 1899, the New York Life Insurance Company issued and delivered to Henry C. Lefler two policies of insurance upon his life. Each policy was for $2,500, designated Sarah E Lefler as the beneficiary, and provided for the payment of the insured of an annual premium of $115.10 on the 18th day of March in each year, until 20 premiums should be paid. Each contained what is called an automatic nonforfeiture provision, under which, notwithstanding a failure to duly pay the second premium, the first having been duly paid, the insurance was to continue automatically for two months beyond the first year, and, notwithstanding a failure to duly pay the third premium, the first and second having been duly paid, the insurance was to continue automatically for two years and two months beyond the second year, and so on according to a table which was set forth. The premium for the first year was paid, one half in cash when the policies were issued and the other half six months later, according to the terms of two notes given therefor when the policies were issued. One half of the premium for the second year was paid when due and the other half was covered by two notes executed by the insured at that time and similar to those before given. Each policy provided: 'If any premium is not paid on or before due, or within the month of grace, the liability shall be only as hereinbefore provided for such case' the concluding words having reference to the automatic nonforfeiture provision. The words 'or within the month of grace' were explained by the following: 'A grace of one month during which the policy remains in full force will be allowed in payment of all premiums except the first subject to an interest charge at the rate of five per cent. per annum.' The notes given for the remaining half of the second premium were as follows:

'March 18, 1900.

'Without grace, six months after date I promise to pay to the order of the New York Life Insurance Company, 57.55 Dollars at First National Bank, Omaha, Neb. Value received, with interest at the rate of five per cent. per annum. This note is given in part payment of the premium due March 18, 1900, on the above policy, 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 forfeited to the New York Life Insurance Company, if this note is not paid at maturity, except as otherwise provided in the policy itself.

Henry C. Lefler.' These notes were not paid or offered to be paid on or before September 18, 1900, which was six months after their date; but three days later, September 21st, the insured tendered payment thereof and the tender was rejected because not made in time. About that time the company wrote to the insured saying: 'The notes which you gave in part settlement of premiums due March 18th, 1900, under policies Nos. 931,817-18 has been returned by our branch office unpaid, and the policies are now canceled in accordance with the agreement under which the notes were accepted. As the matter now stands, all claims to further insurance and all benefits whatever which a full payment in cash would have secured to you, have now become void and forfeited, except as otherwise provided in the policies or by statute. ' November 1, 1902, the insured died. In an action at law on the policies, the beneficiary in her petition set forth the facts just stated, and, in addition to other matters not here material, alleged that at the time of the issuance and delivery of the policies the company's agent at Omaha, Neb., through whom the policies were issued and delivered, told the insured that the company would permit the premium to be paid semiannually; that this could be accomplished by the insured paying one half of each premium in cash when due, and then giving notes like that before set forth for the other half; that this arrangement would give him the same privileges and rights which he would have obtained if the policies themselves provided for the payment of the premiums semiannually; and that the company would so construe the policies and notes. And it was alleged that the insured, relying upon these statements of the agent, did not read the notes before he signed them. A demurrer to the petition was sustained, and, plaintiff declining to amend, judgment was rendered for defendant.

Samuel L. Winters, for plaintiff in error.

Charles A. Goss (James H. McIntosh, on the brief), for defendant in error.

Before VAN DEVANTER and HOOK, Circuit Judges, and AMIDON, District Judge.

VAN DEVANTER, Circuit Judge, after stating the case as above, .

If the premium notes were payable, without grace, six months after their date, it is plain the insurance had terminated long prior to the death of the insured, and no recovery can be had upon the policies. But the plaintiff contends (1) that the provision in the policies relating to grace in the payment of premiums gave the insured a grace of one month within which to pay the notes after the expiration of the stipulated six months; and (2) that, if the notes contain any provision to the contrary, the defendant is estopped from enforcing it by reason of the statements made to the insured by the agent before the notes were given. The time within which the premiums on a policy of insurance shall be paid, and whether with or without grace, is a subject in respect of which it is competent for the insurer and the insured to make any contract which is satisfactory to them at the time; and such a contract is as obligatory upon the parties to it as is any other contract competently made.

What agreement do the policies and notes show was made in this instance? Each policy, after providing for the payment of premiums in regular course on the 18th day of March in each year declared that 'a grace of one month during which the policy remains in full force will be allowed in payment of all premiums except the first'; and that 'if any premium is not paid on or before due, or within the month of grace,' the liability of the insurer shall be only that stated in the automatic nonforfeiture provision of the policy. Each note, in extending the time for paying a portion of the second premium, provided that it should be paid, 'without grace, six months after date,' and that, if it should not be paid 'at maturity,' all benefits which full payment in cash of the premium would have secured should become 'immediately' void and forfeited, except as otherwise provided in the policy. These provisions of the policies and notes when read together, as it is conceded they must be, show without any uncertainty or ambiguity that it was the intention of the parties that the provision for a grace of one month should be applicable to the payment of all premiums in regular course according to the terms of the policies, but without application to that portion of the second premium which was taken out of the regular course and made the subject of a special agreement extending the time for...