The New York herald., 1876-10-24
LIFE INSURANCE.


THE UNITED STATES SUPREME COURT DECIDES
IN Favor OF THE SOUTHERN POLICY HOLD
ERs-THEIR EQUITABLE VALUE NOT AZ
FEcTKD BY THE WAR.
WASHINGTON, Oct %. 1870
The following important opinions in several life In
delivered by the Supreme Court OF
the United States to-day
The New York Life Insurance Company, appellant,
VS.. William G. Statham and Parmeia A. Dudley. for
merly Pasmelia A. Statham.-Appeai from tho Circuit
Court Of tho United States for the southern District OF
the New York Life Insurance Company, plaintiff in
error, VI. Charlotte Scyms.-Error TO the Circuit
The Mammalian Lille Insurance Company plaintiff in
error, X. s. Buck, executor OF Charles L. Buck,
deceased Error TO the Circuit Court Of the United
States for tho southern District of Mississippi
Tho points decided are as follows policy Of le
nua premium py tho assured with condition to be
void non-paymentis not an insurance from year to
year like common dre policy, but tho premiums con-
stitute annuity, the whole OF which Is the consid-
Tor the entire for e and condi
ton q condition subsequent, making void the
policy by i,s non.perlormance But tho time
OF payment such policies Is material
and OF tho essence contract and failure 10 pay
involves an absolute forfeiture which cannot be ro-
eved against IN equity II the failure TO pay the
nua premium DC caused oy me Intervention q war
pany and the assured respectively reside which makes
It unlawful for them TO hold intercourse the policy Is
nevertheless forfeited, II the company insists the
condition. but In such the assured entitled the
equitable value OF III policy arising from the premiums
actually paid This equitable value Is tho difference
between the cost OF policy the present
premiums be paid the forfeited policy when
the forfeiture occurred, and may be recovered
action ut law or suit in equity. The doctrine OF the
revival Of contracts suspended during The
csnoos be iUvoS.d 70 revive con,rso w6ch i would
be unjust inequitable reviveas where tlmo Is Of
tho essence Of the contract ths parties cannot be
made equal The rate Of mortality Is the fun
damental basis OF life assurance, and this 10 sub
verted BY giving TO tho assured tho option to
their pocies not alter they have been suspended by
war. since but the sick and dying would apply
It would be unjust TO compel revival the
the Court
the nrst Of these cases bill equity fled to re-
cover the amount Of policy of iie Insurance granted
the life Of Dr. A. d. Statham, Of Mississippi, from
the proceeds Of certain funds belonging to the de-
tondants attached in tho hands 0f their agents
Jackson, In that State 1t appears from the
OF the bill that the annual premiums accrung
ing out civil war; but that in consequence
Of that event. the premium due on tho SIN OF Decem
Der, 1861 was not paid. The parties assured being
residents Of Mississippi and the defendants corpora
ton OF New York. Dr. Statham died IN July. 1862
same court against the same dsiendants 10 recover
the amount OF policy issued IN 1857 on the life OF
Henry > Seyms, The husband OF the plantin In this
breaking ou, Of the 'ar when, by reason thereof,
they ceased be paid, the plain.d and her husband
being residents OF Mississippi Seyms died in Nay,
1862
The third a similar action al law, brought In
the same court against the Manhattan Lilo Insurance
Company Of New York the amount Of q
policy issued by them in 1858 the lie OF c. L. Buck,
oil Vicksburg, Miss the circumstances being substan
italy the same as IN tho other cascs
The policies in all Of the cases were In the usual
form 81 such instruments, declaring the company, in
the assured, and OF an annual premium of the
amount, 10 be paid ON the same day and month in
every year during the continuance Of the policy, did
the life Of tho party named, In specified
amount for the term Of his natural ife
The policies contained various conditions, upon the
breach OF which they were to become lull and void,
and among others, the followinR:-
That in the said a.sure shall pay the said pre-
mum before the several days horenbei0r mentioned
for payment thereof then ana IN every such the said
tcrmine.
The Manhattan policy contained the additional pro-
vision that cvery case where the policy should
become null and void all previous pay ments
made thereon should DO forfeited to the company.
The non-pay ment OF the premiums arrear was set
up bar OF the acons, AMI the plaintiffs respectively
relied the existence OF the anscxcuse offer
ing 10 deduct the premiums In from the
amounts OF the policies.
We agree with tho Court below that the contract is
assurance Tor single yean with privilege or
renewal year year by paying the annual pre-
mium but that is entire Of for
lie subject to and forfeiture lor non
payment OF any Of the stipulated premiums. Such Is
of the contract and such character IL
beon con,cndcd that tho payment of premium
Is tho consideration Tor insurance during tho next
following year, rs in hrc policies; but the posi-
ton is untenablc. II often happens that tho
vance, in nve, ten or twenty annual
instruments Such nsualmenis clcarlynot intended
the consideration tho respective years which
they paid or after they are all paid, tho policy
stands good Tor the balance OF tho lie insurance
without any further payment Each instalmcnt is.
IN inct part consideration OF tho entire insurance Tor
life. It Is the Same thing where the annual premiums
spread over the whole life rho value OF assurance
Tor year Of a mans life, when lie young strong
as Is when ie is old anu dcsrepis There ss
is no proper relation between the annual
premium the risk assurance for the year IN
which n paid The idea OF from year TO
year the suggestion OF ingenious COUNSEL me an
nuxl premiums annuity, the present value OF
which calculated correspond with the prcscns
value Of the amount assured reasonable percentage
beng added to tho premiums TO expenses and
contingencies. Tho whole premiums balanced
against the whole but white tins is true II
Is essential IN the business of life insurance An tho
calculations Of the insurance company based on
the hypothesis OF prompt payments. They not only
calculate the receipt o The premiums when du..
but compromising interest upon them II ~ on
tnis bass that they enabled offer assurance at
favorable rates they Forfeiture for non-pay-
mcnt 10 necessary means OF protecting themselves
IRON embarrassment Unless II enforced the
business would be thrown into utter confusion. II
Ia like the forfeiture OF shares in mining
enterprises and all other hazardous Undertakings.
There must be power to cut oil Improbable members
The success OF tho whole scheme Is endangered.
The insured parties are associates in great scneme.
THIS associated relation whether The cpany be
u mutual not Each Interested iu the en-
gagemcnts Of ALL Tor out OF the cooxistence of many
risks arises tho law OF average, which underlics tho
whole business
An essential feature OF this scheme the n,athcmat
icaf calculations referred to- which tho premiums
and amounts based those caicuiat ions
again, based on the assumption OF average mortal
ity and OF prompt payments and compound
interest thereon. Delinquency cannot be tolerated
redeemed, except at The option OF the company.
This has AWAY been Inc understanding and practice
In this department OF business Some companies ft ts
true grace thirty days other liked period
within which tho premium in srrear may be paid on
certain conditions OF continued good health, &c but
this is matter OF stipulation, OF discretion on the
part OF the particular company. When stipulation
exists " IS the general understanding thct time is
material, and that tho forfeiture is absolute ii the
premium DO not paid. The extraordinary and even
desperate effort sometimes made when an insured per-
Is IN extremes TO meet a premium coming due
demonstrates Tho common view OF tins matter
The case, therefore, IL IN which time material
and OF the OF the contract and paymcn a
nvolvos abs olute forfeiture such In tho