Source: https://supreme.justia.com/cases/federal/us/297/672/
Timestamp: 2019-04-24 17:53:27+00:00

Document:
had lapsed. By its terms, even if the policy had lapsed, the insured would still be entitled to stipulated surrender privilege cash, or new insurance, and to full reinstatement upon proof within six months that the disability existed at the time of default.
(1) That the action of the insurance company, bon fide though mistaken, did not amount to a repudiation, renunciation, or abandonment of its entire contract but only to a breach of the obligation to pay benefits. P. 297 U. S. 676.
(2) The damages recoverable by the insured did not exceed the benefits in default at the commencement of suit. P. 297 U. S. 678.
2. In determining whether a breach of contract, short of repudiation or intentional abandonment, avoids the contract as a whole, the relation between the maintenance of the contract and the frustration of the ends it was expected to serve is of much importance, and that which is necessary to work out reparation in varying conditions must be considered. P. 297 U. S. 679.
3. Strictly speaking, an "anticipatory" breach of contract is one committed before there is a present duty of performance. P. 297 U. S. 681.
Certiorari, 296 U.S. 571, to review the reversal of a judgment dismissing, on demurrer to the complaint, an action for breach of an insurance contract. The ground of dismissal was that the possible recovery was less than the jurisdictional amount.
The case, which is here upon demurrer to a declaration, depends for its solution upon the nature of the breach of contract imputed to the defendant, the petitioner in this Court, and upon the measure of the damages recoverable therefor.
insurance or of participating paid-up insurance according to his choice.
"asserting to the plaintiff as its ground for such refusal that, since it appeared to the defendant that, for some time past, the plaintiff had not been continuously totally disabled within the meaning of the disability benefit provision of the policy, the defendant would make no further monthly disability payments, and that the premiums due on and after August 7, 1933, would be payable in conformity with the terms of the contract."
Later, upon the expiration of a term of grace, "the defendant, on or about September 19, 1933, declared the policy as lapsed upon its records." Plaintiff has elected to treat the defendant's acts "as a repudiation and denunciation of the entire contract," relieving him on his part from any further obligation.
lives that long and his disability continues. The damages so computed are $15,900. No deduction is made on account of future premiums, for, by hypothesis, the disability will continue during life. The defendant demurred to both counts, stating in the demurrer that the declaration sets forth a cause of action for the benefits and premiums accruing prior to the date of the writ, and for nothing in excess thereof. In that view, the recovery will be only $98, which is less than the jurisdictional amount. The District Court sustained the demurrer, and gave judgment for the defendant. The Circuit Court of Appeals for the First Circuit reversed. 78 F.2d 829. A writ of certiorari issued to resolve a claim of conflict with a decision of this Court.
Upon the showing made in the complaint, there was neither a repudiation of the policy nor such a breach of its provisions as to make conditional and future benefits the measure of recovery.
that stage of the transaction, there had been no renunciation or abandonment of the contract as a whole. Mobiley v. New York Life Insurance Co., supra; Dingley v. Oler, 117 U. S. 490, 117 U. S. 503; Roehm v. Horst, 178 U. S. 1, 178 U. S. 14-15; Pierce v. Tennessee Coal, Iron & R. Co., 173 U. S. 1, 173 U. S. 3, 173 U. S. 11.
had lapsed. We held that the breach fell short of an unconditional abandonment. On the other hand, following the notice and before the service of a summons, there were acts and declarations pointing to an understanding between insurer and insured that the lapse was not definitive, but was open to recall. These differences are such as to take from that decision the quality of a controlling precedent, though the analogy it offers is cogent and persuasive. Viewing the case before us independently, we hold that, upon the facts declared in the complaint, the insurer did not repudiate the obligation of the contract, but did commit a breach for which it is answerable in damages.
693, one of the few decisions to the contrary, was disapproved in Mobiley's case (p. 295 U. S. 639), and is now disapproved again.
a bilateral one with continuing obligations, as where a manufacturer has undertaken to deliver merchandise in instalments. Norrington v. Wright, 115 U. S. 188; Wolfert v. Caledonia Springs Ice Co., 195 N.Y. 118, 88 N.E. 24. Even then, the rights that are his may depend upon the grounds of the rejection or the nature of the default, whether unintentional or willful. Helgar Corp. v. Warner's Features, Inc., supra. On the other hand, a party to a contract who has no longer any obligation of performance on his side, but is in the position of an annuitant or a creditor exacting payment from a debtor, may be compelled to wait for the instalments as they severally mature, just as a landlord may not accelerate the rent for the residue of the term because the rent is in default for a month or for a year. McCready v. Lindenborn, 172 N.Y. 400, 408, 65 N.E. 208; cf. National Machine & Tool Co. v. Standard Shoe Machinery Co., 181 Mass. 275, 279, 63 N.E. 900; Wharton & Co. v. Winch, 140 N.Y. 287, 35 N.E. 589. With the aid of this analysis, one discovers the rationale of the cases which have stated at times, though with needless generality, that, by reason of the subject matter of the undertaking, the rule applicable to contracts for the payment of money is not the same as that applicable for the performance of services or the delivery of merchandise. Cf. Roehm v. Horst, supra, p. 178 U. S. 17; Moore v. Security Trust & Life Insurance Co., 168 F. 496, 503; Howard v. Benefit Association of Railway Employees, 239 Ky. 465, 470, 39 S.W.2d 657; Washington County v. Williams, 111 F. 801, 810; Restatement, Law of Contracts, § 316. The root of any valid distinction is not in the difference between money and merchandise or between money and services. What counts decisively is the relation between the maintenance of the contract and the frustration of the ends it was expected to subserve.
The ascertainment of this relation calls for something more than the mechanical application of a uniform formula. To determine whether a breach avoids the contract as a whole, one must consider what is necessary to work out reparation in varying conditions.
If that test be applied, the declaration will not stand. The plaintiff does not need redress in respect of unmatured installments in order to put himself in a position to shape his conduct for the future. If he is already in default for the nonpayment of a premium, he will not be in any worse predicament by multiplying the defaults thereafter. On the other hand, if his default is unreal because the premiums had been waived, the insurer will be estopped from insisting upon later premiums until the declaration of a lapse has been cancelled or withdrawn. Besides, if the disability is permanent, there will be nothing more to pay. The law will be able to offer appropriate relief "where compensation is willfully and contumaciously withheld." Cobb v. Pacific Mutual Life Insurance Co., 51 P.2d 84, 88.
to deal with the contract as if broken altogether. A loose practice has been growing up whereby the breach on such occasions is spoken of as anticipatory, whereas in truth it is strictly present, though with consequences effective upon performance in the future. The declaration in the case at hand makes a showing of a present breach. It does not make a showing of a breach so willful and material as to make acceleration of future benefits essential to the attainment of present reparation. Helgar Corp. v. Warner's Features, Inc., supra.
The judgment of the Court of Appeals should be reversed, and that of the District Court affirmed.
See the cases collected in Vance on Insurance, 2d ed., pp. 283, 301, 302.
Daley v. People's Building, Loan & Saving Assn., 178 Mass. 13, 18, 59 N.E. 452; Howard v. Benefit Association of Railway Employees, 239 Ky. 465, 468, 39 S.W.2d 657; Woods v. Provident Life & Accident Insurance Co., 240 Ky. 398, 42 S.W.2d 499; Indiana Life Endowment Co. v. Reed, 54 Ind.App. 450, 460, 461, 103 N.E. 77; Mutual Life Insurance Co. v. Marsh, 186 Ark. 861, 869, 56 S.W.2d 433; Massachusetts Protective Association, Inc. v. Jurney, 188 Ark. 821, 826, 68 S.W.2d 455; Cobb v. Pacific Mutual Life Insurance Co., 51 P.2d 84; Brix v. People's Mutual Life Insurance Co., 2 Cal.2d 446, 41 P.2d 537; Atkinson v. Railroad Employes Mutual Relief Society, 160 Tenn. 158, 167, 168, 22 S.W.2d 631; Atlantic Life Insurance Co. v. Serio, 171 Miss. 726, 730, 157 So. 474; Allen v. National Life & Accident Insurance Co., 228 Mo.App. 450, 452, 67 S.W.2d 534; Puckett v. National Annuity Assn., 134 Mo.App. 501, 114 S.W. 1039; Garbush v. Order of United Commercial Travelers, 178 Minn. 535, 539, 228 N.W. 148; Kimel v. Missouri State Life Insurance Co., 71 F.2d 921, 923; Menessen v. Travelers' Insurance Co., 5 F.Supp. 114; Ginsburg v. Pacific Mutual Life Insurance Co., 5 F.Supp. 296; Hines v. Fidelity Mutual Life Insurance Co., 6 F.Supp. 692; Kithcart v. Metropolitan Life Insurance Co., 1 F.Supp. 719; Wyll v. Pacific Mutual Life Insurance Co., 3 F.Supp. 483; Parks v. Maryland Casualty Co., 59 F.2d 736, 737; cf. Kelly v. Security Mutual Life Insurance Co., 186 N.Y. 16, 78 N.E. 584; Killian v. Metropolitan Life Insurance Co., 251 N.Y. 44, 48, 166 N.E. 798.
For a collection of the cases, see Williston, Contracts, vol. 2, §§ 864, 866, 867, 870, vol. 3, § 1290, and cf. Restatement, Law of Contracts, vol. 1, § 275.

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