Sheerer v. Manhattan Life Ins. Co.

• Decision Date: 15 July 1884
• Citation: 20 F. 886
• Parties: SHEERER, Guardian, v. MANHATTAN LIFE INS. CO. [1]
• Court: United States Circuit Court, District of Kentucky

20 F. 886

SHEERER, Guardian, v. MANHATTAN LIFE INS. CO. ^[1]

United States Circuit Court, D. Kentucky.

July 15, 1884

James S. Pirtle and Goodloe & Roberts, for complainants.

Fellows Hoyt & Schell and Young & Trabue, for defendant.

BARR J.

After the demurrer to the bill was overruled, the defendant answered, and upon the issues made has taken testimony. It appears from this evidence that the defendant holds the not of Duerson for $491.40, which is as follows, viz.:

New York, May 9, 1869.

'$491.40.

'Twelve months after date, for value received, I promise to pay to the Manhattan Life Insurance Company of New York, or order four hundred and ninety-one 40-100 dollars, with interest payable annually in advance. In case of the death of William F. Duerson, insured in policy No. 17,241, the amount of this note is to be deducted from the amount of the said policy, or canceled by profits.

'No 18,401

WM. F. DUERSON.'

This note is for the same amount as the annual premium due that day, and although the complainant exhibits a receipt for that premium paid in cash, the note was, no doubt, taken for a premium loan as of that date. The receipt of May 9, 1869, for the annual premium, acknowledges the receipt of cash, and nowhere indicates that it was paid with a premium loan, or that one was made. The receipt for the next year, May 9, 1870, has a memorandum at the bottom which would indicate that $42.65 had been paid as interest in advance, and as the premium loan of that date is stated at $163.80, this interest must have included another loan. The evidence is that neither the cash nor the note, given May 9, 1870, was received by the home office. This, however, does not affect the right of complainants, as the receipt for the premium is signed, and was delivered by the proper officers of the company. It appears that no interest has been paid after May 9, 1870, upon either note. The testimony also proves that the agreement under which complainants claim the right to a paid-up policy was executed and delivered simultaneously with the original policy, and that after the assured failed to pay the premium due May 9, 1871, the original policy was marked off on the company's books, and no longer considered an existing liability, and that the reserve which was intended to provide for the payment of the loss has been distributed among the policy-holders of the company, and that, by reason thereof, the company's ability and condition as to the payment of this loss has materially changed since May 9, 1871. In other respects the record remains as when heard on the demurrer.

The learned counsel for the defendant insist that complainants are not entitled to relief, because (1) the agreement made the right to a paid-up policy conditional upon the surrender of the original policy on or before it expired by the non-payment of the fourth or any subsequent annual payment, and the time of surrender is of the essence of the contract; (2) that the right to a paid-up policy is forfeited because of the neglect to pay the interest on Duerson's notes in advance.

The last proposition need not be considered further than to call attention to the fact that neither the policy nor the note declares that the non-payment of the interest in advance shall forfeit the right to recover a loss or to a paid-up policy. The only provision in the policy in regard to premium loan notes is that in adjusting the loss there shall be deducted 'therefrom the amount of all unpaid notes given for loans' on that policy. The note which is exhibited by defendant provides that the amount of it 'is to be deducted from the amount of said policy or canceled by profits,' and, although the interest is to be paid in advance, there is no penalty of its non-payment.

But the other is a much more serious question. In considering it on demurrer, the then court expressed much doubt, but, following the view expressed by the Kentucky court of appeals in Montgomery v. Phoenix Mutual Life Ins. Co. 14 Bush. 54, overruled the demurrer. It now appears that the agreement and the policy were delivered simultaneously, and for the same consideration. They must therefore be read together, and as one agreement. The two, thrown together, would read, upon the point under consideration, thus, viz.: 'In case the said Sallie W. Duerson shall not pay the said premiums on or before the day hereinbefore mentioned for the payment thereof, then, and in every such case, the said company shall not be liable for the payment of the sum assured, or any part thereof, and this policy shall cease and determine;' and 'it is hereby understood and agreed that after the receipt by the Manhattan Life Insurance Company of not less than three annual premiums, on within policy No. . . ., and on the surrender of said policy to said company on or before it shall expire by the non-payment of the fourth or any subsequent annual premium, the said company will issue a policy not subject to any subsequent annual premiums, ' etc.

It is insisted for the complainants that 'on or before it shall expire' must mean after the policy has expired, else the word 'on' is without meaning. The defendant's counsel, on the contrary, insist that the agreement requires the surrender while the policy is alive, and the surrender...