Penn Mut. Life Ins. Co. v. Miller

• Decision Date: 06 December 1926
• Docket Number: No. 76.,76.
• Citation: 16 F.2d 13
• Parties: PENN MUT. LIFE INS. CO. OF PHILADELPHIA v. MILLER.
• Court: U.S. Court of Appeals — Second Circuit

16 F.2d 13 (1926)

PENN MUT. LIFE INS. CO. OF PHILADELPHIA v. MILLER.

No. 76.

Circuit Court of Appeals, Second Circuit.

December 6, 1926.

Winthrop & Stimson, of New York City (Allen T. Klots and Arthur E. Pettit, both of New York City, of counsel), for plaintiff in error.

Wilber, Norman & Kahn, of New York City (Mark W. Norman, of New York City, of counsel), for defendant in error.

Before HOUGH, HAND, and MACK, Circuit Judges.

MACK, Circuit Judge.

This writ of error is brought to reverse a judgment for the face amount, with interest, of five policies, of $25,000 each, of insurance issued by plaintiff in error (hereinafter called defendant) on the life of Arthur Miller, and payable to defendant in error (hereinafter called plaintiff), his wife.

The policies are dated the 29th day of October, 1923; premiums are payable quarter-annually in advance. Each policy contains the following clause:

"II. Grace in Payment of Premiums. A grace of thirty-one days, during which this policy shall remain in force, will be granted for the payment of premiums or regular installments thereof, after the first. If the death of the insured occur during the days of grace, the sum necessary to complete payment of premiums for the then current policy year will be deducted from the amount payable hereunder."

Five quarter-annual premiums have been paid; the due date of the sixth, if we disregard the quoted clause of the policy, was January 29, 1925, before 3 p. m. The insured committed suicide on March 2, 1925. The verdict of the jury has determined that death occurred before 3 p. m. of that date.

The only question presented for our consideration on this writ of error is whether, under the true construction of the contract of insurance, the time for payment of the sixth quarterly premium expired at 3 p. m. of March 2, 1925, or of March 1, 1925. The question arises, because March 1, 1925, was a Sunday.

These policies were unilateral obligations. Their continuance in full force, subject to certain provisions, applicable only after three years' premiums had been paid, was expressly conditioned upon prompt payment of the premium pursuant to the terms of the contract. Each premium is payable in advance. It is the consideration for the three months' insurance; there is, however, no obligation upon the insured to continue his payments, and if, until three years' premiums have been paid, he fails promptly to make his payment, the obligation of the insurer immediately ceases. He has obtained all that he has ever paid for during that time, namely, the insurance protection for the successive periods of three months, with the right by paying again to continue the policy in force.

But the so-called grace clause changes the condition as to the time of the quarterly payments. It in fact grants to the insured a credit. He is not thereby obligated to make the payment at the end of that period; he could not be sued therefor; the contract is still unilateral, not bilateral. Notwithstanding, however, the fact that the insurance period for which payment has been made has expired, and the uncertainty as to whether payment will thereafter be made for the new period, by virtue of the contract the insurance is nevertheless continued in force. If by reason of death before the payment of the premium, the policy should mature, the company is no worse off than if the premium had been paid in advance, inasmuch as, under the terms of the clause hereinabove quoted, it may deduct the entire year's premium from the face of the policy. If, however, the policy does not mature, and the premium is...