Schmertz v. United States Life Ins. Co.

• Citation: 118 F. 250
• Decision Date: 24 September 1902
• Docket Number: 36.
• Parties: SCHMERTZ v. UNITED STATES LIFE INS. CO. IN CITY OF NEW YORK.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

118 F. 250

SCHMERTZ v. UNITED STATES LIFE INS. CO. IN CITY OF NEW YORK.

No. 36.

United States Court of Appeals, Third Circuit.

September 24, 1902

D. T Watson, for plaintiff in error.

Willis F. McCook, for defendant in error.

Before ACHESON and GRAY, Circuit Judges, and BRADFORD, District Judge.

BRADFORD District Judge.

This case is before us on a writ of error to the circuit court of the United States for the western district of Pennsylvania. Amelia E. Schmertz, the plaintiff in error, brought an action of assumpsit in the court of common pleas No. 1 of Allegheny County, Pennsylvania, to recover against The United States Life Insurance Company in the City of New York, a corporation of New York, the defendant in error, on two policies of life insurance, each for the sum of $10,000, issued to her husband Edmund C. Schmertz in the fall of 1896. After the filing of the statement and affidavit of claim, and before further pleadings were had, the action was, on the application of the defendant, removed to the circuit court for the western district of Pennsylvania, and, thereafter coming to trial judgment was by direction of the court entered for the defendant November 16, 1901. To reverse this judgment the present writ was taken. Each of the policies is in the same words, letters and figures as the other, save that one of them is numbered 87,280 and the other 87,281, and, aside from the application therefor, is in the following form:

'No 87,280

Amount $10,000.

The

United States

Life Insurance Company,

In the City of New York.

Copy of the application for this policy attached hereto.

Age 41.

Premium, $183.50.

In Consideration of the statements and agreements in the Application for this Policy on the life of Edmund C. Schmertz (hereinafter called the Insured) which are made part of this contract; and in

Further Consideration of the payment of the annual premium of One hundred and eighty-three Dollars and fifty cents on or before the seventeenth day of September in every year during the continuance of this contract:

Does Hereby Promise to Pay, at its office in New York City, to Amelia E. Schmertz (hereinafter called the Assured) if living; if not living then to the Executors, Administrators or Assigns of the Insured, the sum of Ten Thousand Dollars (less the balance of the year's premium, if any, and any other indebtedness to the Company), within 60 days after receipt at its said office of satisfactory proofs, upon the Company's blanks, of the death of the Insured, within the period of Ten years ending on the 17th day of September, nineteen hundred and six at noon; upon the conditions and agreements on the back hereof, which are made part of this contract.

In Witness Whereof, The said company has, by its president and secretary, signed this policy at its office in New York City, the seventeenth day of September, eighteen hundred and ninety-six. A. Wheelwright,

A. Wheelwright, Assistant Secretary.

(Wife's Continuable Term.)

Geo. H. Burford, President. Examined by E. N. H.

Edition 294-A.

Checked by H.

Conditions and Agreements Referred to in the Within Policy.

I. All premiums are payable in New York City at the company's office. This policy shall take effect only upon actual payment of the first premium hereon, and delivery of this policy to the assured (during the lifetime and sound health of the insured), in exchange for the company's receipt for said payment signed by the president, secretary, assistant secretary or actuary. Failure to make payment of any subsequent premium either to the company or to a duly authorized agent in exchange for receipt signed as above, or nonpayment of principal or interest on any note given in connection with this policy, when due, will render this contract null and void. Whenever this policy shall become null and void from any cause, all payments made hereunder shall become forfeited to the company, except that:

II. After being in force three full years, an extended insurance shall be allowed, in accordance with the requirements of Chapter 690 of the Laws of 1892, of New York.

III. In case of understatement of age, the amount payable shall be the insurance that the actual premium paid would have purchased at the true age of the insured. Any other breach of warranty or untrue or incomplete statement made in the application for this policy will render this contract null and void, provided that discovery of the same must be made and communicated to the insured or assured within two years from the date hereof.

IV. Within two years from the date hereof, death by suicide; impairment of health by narcotics or stimulants; travel or residence within the Torrid Zone; engagements in blasting, mining or sub-marine labor; manufacturing, handling or transporting inflammable or explosive substances; service upon any vessel or boat; or engagement in military or naval service in time of war; shall render this contract null and void.

V. This company shall not take notice of any assignment of this policy, until a duplicate original of such assignment be delivered to it at its office in New York City.

VI. Options for renewal, or change of policy, without medical examination.

(a) Upon written application and surrender of this policy, by the legal holder hereof, to the company, at its office in New York City, before the expiration of the term, this policy being in full force and effect, this insurance may be renewed upon the same plan, or upon any other plan then issued by the company, upon payment of the premium therefor corresponding to the then age of the insured.

(b) At any time while this policy is in force, the legal holder hereof may change it to a policy of the same amount, upon any plan then issued by the company, by the payment of the premium rate called for thereby at the then age of the Insured; or

(c) To a policy of the same amount and date, and at the premium rate required therefor at the original age hereunder, by payment of a sum equal to the difference in premiums, with interest at the rate of 4 per cent per annum compounded.

VII. The said company agrees, in case the life insured survive to the end of the specified period, if this policy be then in full force, to pay to the said Edmund C. Schmertz the dividend apportioned to this policy from its profits by said company. If desired, said dividend may be used in reduction of future premiums under a renewal of this policy.

VIII. After two years from the date hereof, if the premiums on this policy are duly paid as herein stipulated, the liability of the company under this policy shall not be disputed.

C. P. Fraleigh, Secretary.

George H. Burford, President.'

Policy No. 87,280 was delivered to Edmund C. Schmertz, the insured, October 22, 1896, and policy No. 87,281 was delivered to him November 30, 1896. Schmertz paid the annual premium on each policy for two years, and, while the payments were not, in point of time, made in those years as required by the express provisions of the policy, it is nevertheless conceded that the delay on his part in making them did not under the circumstances disclosed in the case render void or in any manner affect the validity of the policies or either of them. Schmertz died October 20, 1898; neither he nor any one for him having paid the third annual premium on either of the policies. Nor was such third annual premium paid by anyone after the death of Schmertz.

The first question raised by the assignments of error, and that on which much stress was laid by counsel on both sides, is whether, the annual premiums for the first two years having been paid to an accepted by the insurance company, the omission to pay the annual premium on the policies for the third year avoided them. Under each policy Schmertz was insured 'upon the conditions and agreements on the back hereof, which are made part of this contract. ' One of those conditions is as follows:

'VIII. After two years from the date hereof, if the premiums on this policy are duly paid as herein stipulated, the liability of the company under this policy shall not be disputed.'

It is claimed on the part of the plaintiff in error that the words 'if the premiums on this policy are duly paid as herein stipulated' have reference solely to the period of two years next following the date of the policy, and that the effect of the condition is that, if annual premiums were duly paid by him for that period, the policy could not be avoided by his failure to pay the third or any subsequent annual premium as stipulated in the policy. The policy on its face shows that a vital consideration for the contract of insurance was 'the payment of the annual premium of One Hundred and eighty-three Dollars and fifty cents on or before the seventeenth day of September in every year during the continuance of this contract. ' The consideration of the contract was not in whole or in part any promise or undertaking on the part of the insured to pay such premium every year, but his actual payment thereof every year until his death or the termination of the period of ten years, whichever event should first occur. The first condition in the policy is of controlling importance. It and the second condition are as follows:

'I. All premiums are payable in New York City at the Company's office. This policy

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