Case ID: la_120/html/0609-01.html
Source: Caselaw Access Project
Author: {"author": "BREAUX, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(45 South. 522.)
    No. 16,696.
    LESSEPS v. FIDELITY MUT. LIFE INS. CO. OF PHILADELPHIA, PA.
    (Jan. 9, 1908.
    Rehearing Denied Feb. 3, 1908.)
    1. INSURANCE — Policy—Default in Premiums — Statement.
    The policy contained the forfeiture clause of which the defendant availed itself, when the insured failed to pay in accordance with the conditions and terms of the policy.
    [Ed. Note. — For cases in point, see Cent. Dig. vol. 2S, Insurance, §§ 891-900.]
    
      2. Same — Premium Note — Notice.
    The insured was notified and was called upon to pay the note representing the past-due annual premium. The uncontradicted testimony of the attorney representing the defendant was that time to pay the note representing the premium was given, and that after its maturity it was collected on the expressed understanding that it was paid in payment of a past due premium, and that he, the insured, had no claim on the policy.
    [Ed. Note. — Eor cases in point, see Cent. Dig. vol. 28, Insurance, §§ 932, 933.]
    3. Same.
    Written statement of the insured to the immediate members of his family proven.
    The testimony produced by plaintiff did not overcome the direct testimony produced by defendant. Payment of the note made by the late insured was demanded for asserted protection which the insured had received and in regard to which he consented. He (the insured) had a right to enter into this agreement, and so was bound by it and so is the beneficiary.
    [Ed. Note. — For cases in point, see Cent. Dig. vol. 28, Insurance, §§ 932, 933.]
    4. Same — Reinstatement oe Polict — Decisions Cited by Parties.
    The failure to pay the note for the third annual premium on a policy of insurance containing the forfeiture clause again expressed in a receipt, which was given by the defendant company to the insured, is fatal to a claim to recover on the policy.
    Failure to pay the needful premium to reinstate the policy and failure to furnish health certificate, as required by its terms and conditions, precluded the beneficiary from recovering. Fenn v. Union Central Life Ins. Co., 48 La. Ann. 541, 19 South. 623.
    The policy was rendered void. Resster v. Fidelity Mut. Life Ins. Co., 110 Tenn. 411, 75 5. W. 735; Phoenix Co. v. Stevenson, 78 Ky. 158.
    Time was of the essence of the contract, for it was stipulated. Iowa Insurance Co. v. Lewis, 187 U. S. 335, 23 Sup. Ct. 126, 47 L. Ed. 204; 25 Cyc. 828.
    (Syllabus by the Court.)
    Appeal from Sixteenth Judicial District Court, Parish of St. Landry; Edward Taylor Lewis, Judge.
    Action by Augusta S. Lesseps against the Fidelity Mutual Life Insurance Company of Philadelphia, Pa. Judgment for defendant. Plaintiff appeals.
    Affirmed.
    Merrick & Lewis, Philip Gensler, Jr., Ralph Jacob Schwarz, Hampden Story, and Gilbert Louis Dupre, for appellant. Denegre & Blair and Edward Benjamin Du Buisson, for appellee.
   BREAUX, C. J.

Plaintiff brought this suit on a policy in the sum of $40,000, issued to her late husband on the 7th day of December, 1900, in which she is named as the beneficiary.

The policy contained a nonforfeitable stipulation after the payment of the first three premiums, and it secured to the insured the right to demand from the defendant either a cash loan of $1,373, a paid-up policy for the $2,960, or to have the policy automatically extended for a period of three years and two months from the date of the payment of the third premium.

The insured did not demand the cash, or the paid-up policy, but chose to take advantage of the provision which enabled him to have the policy automatically extended for three years and two months from December 7, 1902.

Plaintiff’s husband died December 17, 1905.

She claims that at death the policy was binding on the defendant; that the time limit had not expired.

The defendant filed an exception of want of jurisdiction, ratione person®, which was overruled by the court.

The ground of the exception was that, under the general law, the company should be sued at the domicile of its general agent, or that of the Secretary of State, and not at the domicile of the insured.

St. Landry was the parish in which the insured resided at the date of his death. Of this, later.

The defendant also filed an exception of no cause of action.

This exception also will be considered later.

The plaintiff filed an answer, and pleaded the general issue.

After admitting the execution and delivery of the policy, defendant’s contention is that the policy had been forfeited and was¡ null and void by reason of the following:

Two premiums were paid, one-fifth of which was represented by premium loans, which were never paid. That payment of the third premium which was due December 7, 1902, was extended to June 1, 1903, and re-extended from the last-mentioned date to December 1, 1903. That on December 1, 1902, the insured executed his note for $721.61, being the amount of the annual premium due December 7, 1902, less 20 per cent, carried as a premium loan on the policy, payable December 1, 1903, and that on June 1, 1903, the insured in renewal executed a new note in favor of the defendant for the same amount, payable December 1, 1903.

Thp following is a clause on these notes written:

“This note is given for premium on policy No. 112,016 for forty' thousand dollars, issued by the Fidelity Mutual Life Insurance Company, and, if not paid at maturity, it is expressly agreed that the above numbered policy shall he ipso facto null and void without notice to the maker hereof, and without any act on the part of the company and shall remain so until reinstated as provided by its terms.”

That the note was not paid and that the policy fell. That the insured was duly notified of the forfeiture because of nonpayment of the note at maturity.

The claim was afterward set up by the defendant: That the insured none the less owed the note for the protection that the policy afforded before its forfeiture. That subsequently payment was insisted upon with the understanding that the policy had been forfeited by the nonpayment of the note at maturity.

That, because of the understanding before mentioned, defendant extended the time for payment of said note, and, after the expiration of the extension, it was paid.

That none of the premiums due on the policy subsequent to the one due December 7, 1902, were paid.

The defendant’s further ground is that plaintiff could not recover on the policy because it was not free from debt, by reason of the fact that the insured owed the premium loans, and for the further reason that after deducting the premium loans on the policy, the extended insurance which the payments actually made would have purchased under the terms of the nonforfeiture clause would have expired many months before the death of the insured, and that for that reason the plaintiff is not entitled to recover on the policy. It was not in force at the date of the death of the insured.

The facts being sufficiently detailed in the foregoing, we return to the exception of want of jurisdiction.

As relates to suits on a policy of insurance, the provision contained in No. 105, p. 132, Acts 1898, is that defendant may be sued either at the domicile of the insurance company or at the place where its principal agency is established, or in the parish where the loss has occurred, or, in the case of life insurance, at the domicile of the deceased, whether the loss be in a fire or on loss of life.

The defendant submits that the foregoing provisions were repealed by the first provision of the act of 189S, of which the following is a copy:

“Provided the provisions of this section shall not be construed to interfere with the rights to sue insurance companies at the place of loss, as provided by law.”

The position is that suit can be brought against the company on the policy it has issued in the parish of the domicile, the domicile of the assured, but that the place of “loss” might not necessarily be his domicile.

The plaintiff alleged that the insured died in the parish of St. Landry, in which he resided.

The correctness of the allegation was admitted for the trial of the exception.

As the suit was brought at the domicile, and as the place of “loss” was not different from the. domicile, defendant’s theory has nothing upon which to stand. There might be a ground for a moment’s argument when the insured dies away from the place of his domicile, and seeks to recover on a policy at the place of death.

That was not the case here.

On the Merits.

There is no necessity of passing upon the exception of no cause of action separately from the merits. We therefore take up the merits.

The policy sued on contained a forfeiture clause, and in another part of the policy a nonforfeiture clause. In event of noncom-plianee with the first part of the policy or of failure to pay at maturity as stipulated, the second clause provides for a nonforfeiture after three full years’ premiums shall have been paid, provided the insured owes no debt under one of its provisions:

“Upon the nonpayment of any subsequent premium within the thirty days of grace, this policy is automatically extended for the time indicated in the table, printed on the policy.”

The contention of the defendant is that the beneficiary’s claim does not fall within the terms of the nonforfeiture clause of the policy ; while, on the other hand, the contention of plaintiff is that the policy was never forfeited so as to render it possible for defendant to avail itself of the nonforfeiture clause.

The late Mr. Lesseps, the insured, was notified that, his note not having been paid at maturity, the policy under its terms was no longer of any value. A second notice was given to him to the same effect; and he was further informed: That the failure to pay and the consequent cancellation of the policy did not relieve him from his liability.

That he had been protected for a year, and, if he had died within that time, the company would have had to pay the amount of the policy.

He was also informed that the note had been placed in the hands of defendant’s attorney in the city of New Orleans to be collected. He was informed of that which was necessary to be done in order that he might be reinstated.

The insured knew that the company sought to hold him on the note for insurance prior to thé date that the policy became ineffective on account of the nonpayment before mentioned.

Mr. Denegre, attorney for defendant, in effect states that he said to the late Mr. Lesseps that the life of the policy was at an end. The reply of the insured was that, if the policy was forfeited, he did not see why he should owe the note. The witness Denegre, the record states, then said to him that he owed the note for the protection (as stated by the witness), that he had received from December 1, 1902, up to December, 1903, when the policy became null and void because of the nonpayment of the note. The witness adds that the insured asked for time, which he granted as representative of the company, with the distinct understanding between them that the policy had been forfeited, and that it would not be revived by the payment of the note; that to accomplish this revival of the policy he, the insured, would have to pay not only the note, but the premiums accruing in subsequent years which might be due on the policy, and, in addition, that he would have to undergo a physical examination, and furnish the company evidence of his good health.

It appears that the note was subsequently paid, less the fee of attorney stipulated.

Nothing was done by the insured to reinstate the policy, and no request of any kind was made by him of the company.

The stipulation for forfeiture is contained in the policy, and it is also expressed on the premium note and in the receipt.

The testimony shows that the treasurer of the company on the 5th day of February, 1904, addressed a notice to the insured, and called his attention to the relation which he, the insured, bore to the company, and explained to him that the note should be paid, as the premium had been earned. The testimony of the treasurer is about to the same effect. No part of the testimony of the witness before named suggests that defendant acted without notice.

To sustain her demand, plaintiff would have to prove that the late Mr. Lesseps, the insured, paid the defendant three annual premiums on the policy, and that, in' consequence of the payment, the forfeiture clause in the policy and in the note has no application, and could not be enforced.

The trouble with plaintiff is that she cannot succeed in making that proof for only two premiums have been paid in time. The third was not paid in accordance with the terms of the policy, which was paid after forfeiture and a number of months after the maturity of the note. Furthermore, it appears by the evidence that, even if according to plaintiff’s theory the payment on the note be taken as in satisfaction of the third premium, the extended insurance which that payment would have secured would have expired before December 19, 1905, the day of the death of the insured. By no construction would it be possible under the terms of the agreement to hold that the policy was revived because of a waiver of the defendant. There was no waiver. On the contrary, the defendant recognized the forfeiture clause.

Passing from a consideration of the issues of fact to the law, learned counsel for plaintiff quotes from Manhattan Life Ins. Co. v. Wright, 126 Fed. 82, 61 C. C. A. 138, in which it was said, in effect, that time is not of the essence of a contract to repay money borrowed, and an agreement to forfeit is of no effect where the lost money thereby is much in excess of interest during delay.

There is a great difference as relates to the facts in the cited case and the case here. In the former the question involved a loan, and not premiums which the insured had paid.

The insured, having failed to make payment of the note at maturity, was sued as a debtor of the loan secured by the policy as a collateral security. Time, of course, was not of the essence. It is different in matter of a premium on a policy. In regard to premiums the decisions hold that time is of the essence. The decision to which we are referring at present, cited by plaintiff’s counsel, expressly sustains that view. The rules of law applying to a loan do not apply to premiums as relates to time.

Learned counsel for plaintiff quotes article 1890 of the Civil Code, relating to stipulations for the benefit of third persons.

We can only say in answer that the stipulation pour autrui must be kept alive and payments made in accordance with agreement. If it loses vitality, the beneficiary cannot recover.

The next decision cited substantially holds that the insurer can make no statement or admission with a view to prejudice the rights of the beneficiary.

Statements prejudicial to the beneficiary are considered in a different light from failure to pay premiums at maturity or premium notes representing an extended term of payment. Both these failures to pay are subject to special agreement stipulated between the parties.

In Lawrence v. Mutual Penn Life Insurance Co., 113 La. 87, 36 South. 898, another decision cited by plaintiff’s counsel, who refers to that part of the decision in which the court held that the policy could not be returned without the consent of its owners, the point was made that the policy issued had been returned to the company, and that in consequence the right to recover on the policy was lost.

There is no analogy between the cited case and the pending ease. In the cited case the company claimed a right on account of the return of the policy to which it was not entitled as the policy was yet alive, and there was no good reason for the company to claim that there was forfeiture. Differently in the pending case, the policy has become useless in the hands of the beneficiary because of the -forfeiture to which we have before referred.

Learned counsel for plaintiff also cited a number of authorities to sustain the proposition that the policy could not be held forfeited before placing the insured in mora, and invokes the law that certain actions for a passive violation of a contract must be preceded by a placing in default, and that the present, if a violation at all, was a passive violation.

Under the terms of the policy, there was an active violation of the contract. Besides, the very language excludes all idea of the necessity for a default. The contract is filled with conditions against the necessity of a default. As stated before, there was some notice given to the insured and demand made upon him to comply.

This is doubtless a hard case, but we are constrained to hold that the insured was bound by the terms of his policy.

We have found no ground upon which we could base a conclusion favorable to plaintiff’s demand, and which would relieve her from the binding effect of clearly expressed stipulations of the policy.

The contention is, in the second place, that the insured elected to take advantage of the third provision contained in the policy, namely, to have the policy “automatically extended for three years and two months from December 7th, 1902.”

The insured had the right to extend insurance in the event of payment of three premiums.

We have already stated that the insured did not avail himself of that provision. His failure in that respect affects every part of plaintiff’s demand from first to last, and in consequence the beneficiary is without right to recover any of the claim. The note in question was accepted on condition that the policy would be forfeited in case of its nonpayment. To that forfeiture the insured gave effect by paying, as before stated.

The learned counsel have cited a number of decisions. Some of them go far toward sustaining their position, were it not for the emphatic terms of the policy and receipt, and the fact of a complete settlement on the basis of payment of the note for part protection on the policy.

As before stated, that is, doubtless, a hard case; at the same time it is not possible to set aside the acts and declarations of parties, and establish a precedent that would be deplorable.

For reasons assigned, the judgment appealed from is affirmed.