The Michigan Mutual Life Insurance Co. v. Custer

• Decision Date: 07 April 1891
• Docket Number: 14,785
• Citation: 27 N.E. 124,128 Ind. 25
• Parties: The Michigan Mutual Life Insurance Company v. Custer
• Court: Indiana Supreme Court

27 N.E. 124

128 Ind. 25

The Michigan Mutual Life Insurance Company v. Custer

No. 14,785

Supreme Court of Indiana

April 7, 1891

From the Tippecanoe Circuit Court.

Judgment affirmed.

W. S Hartman, W. H. Hamelle and J. H. Adams, for appellant.

P. S Kennedy, W. D. Wallace and T. H. Ristine, for appellee.

OPINION

Miller, J.

This action was instituted in the court below by the appellee Eliza A. Custer, against the appellant, the Michigan Mutual Life Insurance Company. The foundation of the action was a life policy issued by the appellant upon the life of Montgomery T. Custer, the husband of the appellee.

In the third paragraph of complaint it is averred, in substance, that Eliza A. Custer is the widow of Montgomery T. Custer, late of Montgomery county, Indiana; that appellant, the Michigan Mutual Life Insurance Company, is a foreign corporation, with its principal office at Detroit, Michigan; that June 2d, 1883, in consideration of the payment of $ 57, by Montgomery T. Custer, the appellant executed a policy of insurance, promising thereby to pay to him at the expiration of thirty-five years, the sum of $ 2,000, or in the event of his earlier death to pay such sum to his widow; that Montgomery T. Custer died at New Ross, Montgomery county, Indiana, May 9th, 1885, and on June 3d, following, appellee furnished appellant with proofs of death; that appellee and said Montgomery T. Custer performed all the stipulations imposed on them by such contract of insurance, except that Montgomery T. Custer did not pay the annual cash premium on said policy of insurance due June 2d, 1884; that in lieu of the payment of such premium in cash, Montgomery T. Custer executed, and the appellant insurance company accepted, on said day, a note bearing date June 2d, 1884, for $ 57, due seven months after date, bearing seven per cent. interest, and payable to the appellant at Darlington, Indiana.

In this paragraph it is averred that about three weeks prior to the maturity of the premium note in question the appellant insurance company, at the request of Montgomery T. Custer, consented and agreed that the time for the payment of the note should be, and it then was, extended to the 2d day of June, 1885; that thereupon the note was, by appellant's agents, returned to appellant's home office at Detroit, where it remained without demand of payment until after Montgomery T. Custer's death, and that Montgomery T. Custer relied on such agreement and extension of time until the time of his death.

The policy of insurance sued on and made part of the complaint, by proper exhibit, contains the following stipulation:

"3d. If the first or any subsequent premium on this policy shall be settled wholly, or in part, by note or other obligation, whether of the beneficiary, the insured, or any third party, such settlement shall not be deemed a payment but only an extension of the time for the payment of such premium; and if such note or other obligation, or any renewal thereof, shall not be fully paid when due, then, for any loss occurring while such note or other obligation remains due and unpaid, the company shall not be liable, but the whole amount of the premium included in such note or other obligation shall be considered as earned, and the company may collect the same."

A separate demurrer by the appellant was filed to the second and third paragraphs of complaint, challenging the sufficiency of the facts stated in each paragraph to constitute a cause of action.

These demurrers were severally overruled, and the appellant excepted to the ruling of the court.

An answer was filed in general denial, and two affirmative paragraphs. It is not important to note here the contents of the special paragraphs of answer.

A demurrer to the second paragraph of answer was sustained, and appellant excepted.

The cause was tried by a jury, and a special verdict returned, upon which verdict judgment was entered in favor of the appellee.

The errors assigned call in question the rulings of the court on the demurrers, and in overruling the motions of the appellant to require the jury to retire for further deliberation, and to return facts indisputably proved at the trial; for a venire de novo, for judgment for the appellant on the special verdict, and for a new trial.

No proof was introduced upon the trial to establish the second paragraph of complaint; and the finding of the jury was adverse to the plaintiff on the matters therein set forth.

The second paragraph of answer, while addressed to the whole complaint, refers only to matters contained in the second paragraph; and, therefore, the defendant was not harmed by the overruling of the demurrer to the second paragraph of complaint, and sustaining the demurrer to the second paragraph of answer.

The cause was tried on the third paragraph of complaint, and the answer of general denial.

The first question presented for our consideration relates to the sufficiency of the third paragraph of complaint as a cause of action.

The objections pointed out to this paragraph are twofold: 1. That the agreement to extend the time for the payment of the premium note, after its maturity, was without consideration, and was a mere indulgence to the maker. 2. That the extension of time was not inconsistent with a suspension of the company's liability during the time the note remained overdue.

The appellee does not contend that the agreement for an extension was a valid, binding contract, but that it constitutes a waiver by the company of the payment of the note at its maturity.

That a provision in a policy of insurance that the company shall not be liable for a loss occurring while a note given for premium is overdue and unpaid, is valid in law, and exonerates the insurer from liability while such delinquency continues, is well established. It is equally well settled that the provision in a policy of insurance providing for the forfeiture of the same for non-payment of the premium is for the benefit of the insurer, and may be waived by it. Home Ins. Co. v. Gilman, 112 Ind. 7, 13 N.E. 118; Sweetser v. Odd Fellows, etc., Ass'n, 117 Ind. 97, 19 N.E. 722; May Insurance, section 360; Bliss Life Ins., section 154.

The position assumed by this court upon this subject is stated in Sweetser v. Odd Fellows, etc., Ass'n, supra, in these words:

"It is abundantly settled that an insurance company will be estopped to insist upon a forfeiture, if, by any agreement, either express or implied by the course of its conduct, it leads the insured honestly to believe that the premiums, or assessments will be received after the appointed day. The decisions which hold and enforce this view are very numerous." And again:

"Forfeitures are not favored in the law; and courts, in order to avoid the odious results of a forfeiture, are not slow in seizing hold of such circumstances as may have been acted on in good faith, and which indicate an agreement on the part of the company, or an election, to waive strict compliance with the conditions and stipulations in the policy."

Applying these principles to the allegations contained in the complaint inevitably leads to the conclusion that...