Case Name: William Carey, Respondent, v. The John Hancock Mutual Life Insurance Company, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-07-24
Citations: 114 A.D. 769
Docket Number: 
Parties: William Carey, Respondent, v. The John Hancock Mutual Life Insurance Company, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 114
Pages: 769–771

Head Matter:
William Carey, Respondent, v. The John Hancock Mutual Life Insurance Company, Appellant.
Second Department,
July 24, 1906.
Life insurance—custom as to collection of premiums — when insurer estopped from asserting forfeiture.
When a policy of life insurance specifies no place for payment, but the custom of the insurer has been to send collectors for the premiums, the insurer is estopped from claiming a forfeiture. for failure to pay premiums when it appears that it instructed its collector to stop calling for the premiums and refused a tender thereof by the insured.
Appeal by the defendant, The John Hancock Mutual Life Insurance Company, from a judgment of the City Court of the city of Yonkers, entered in the office of the clerk of said court on the 26th day of May, 1905, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 27tli day of May, 1905, denying the defendant’s motion for a new trial made upon the minutes.
Frederick C. Tanner, for the appellant.
William Riley, for the respondent.

Opinion:
Hirschberg, P. J.:
Although the case is not free from error, I think the judgment and order may be affirmed. I find nothing calculated to affect the result in the rulings excepted to.
The action is upon a policy of life insurance issued for the plaintiff's benefit upon the life of the plaintiff's wife. The policy is for the sum of $250, and provides for weekly payments of 19 cents each. Ho place is specified in the policy for the payment of the pre miums, but the defendant's practice was to send a collecting agent weekly tq the house of the insured, where payments were made regularly by the plaintiff. The defense was that by the terms of the policy it had become void by failure to pay the premiums after December 7,1904. The insured died on the 22d day of March, 1905. The plaintiff made application to the defendant for blank proofs of death, and was informed by the latter in writing that it claimed that the policy had lapsed by reason of non-payment of premiums. It appeared, however, that the plaintiff was always prepared to pay the premiums; that he had the money at the house for that purpose; that after the last payment was received the collector failed to call again ; that the plaintiff inquired the reason why and was informed by the collector that he had been instructed not to call any more for premiums; and that he then went to the defendant's office with the money and tendered it to the superintendent, who refused to receive it, claiming that the policy had lapsed. The collector himself testified that he was notified by the defendant's assistant superintendent not to go to the plaintiff and collect the premiums, adding that the assistant superintendent further stated " that the woman was very sick and it looked as if she had the consumption and would likely die, and they wanted to get the policy lapsed."
Forfeitures are not favored, and good faith is required in the performance of contracts. The course of dealing between the parties in this case fully justified the jury in concluding that the policy had not in fact .lapsed, and in any event must be deemed sufficient to estop the defendant from asserting a forfeiture. The underlying principle has often been enforced in this State. In Attorney-General v. Continental Life Ins. Co. (33 Hun, 138) the company, had been in the habit annually of sending a notice to the insured of the maturity of a premium, stating the amount of dividend which was applicable in reduction, and on receipt of such notice the insured paid the net amount at a bank. Ho notice was sent at the time of the maturity of the premium shortly prior to the death of the insured, and that premium was accordingly unpaid. It was held .that the company could not set up the failure of the deceased to pay the premium as a defense to an 'action upon the policy, since from the course of dealing between the parties he had a right to believe that a notice would be given to him of the amount due when the company required it to be paid.
In Leslie v. Knickerbocker Life Ins. Co. (63 N. Y. 27) it was held that an insurance company could not by its own act effect a lapse of a policy, the general principle being asserted that where a party to a contract, who is entitled to a forfeiture in case of nonperformance by the other party of a condition therein, by his own act induces such other to omit strict performance within the time limited, he cannot exact the forfeiture if the party in technical default, with reasonable diligence, thereafter performs or offers to perform.
The same principle was enforced in Meyer v. Knickerbocker Life Ins. Co. (73 N. Y. 516), where the payment of premium was omitted because the company failed on request to inform the insured, in accordance with its custom, of the amount of a dividend which the insured was in the habit of deducting when declared, and it was held that the company was prohibited from claiming a lapse of the policy.
To the same effect are Whitehead v. New York Life Ins. Co. (102 N. Y. 143); Wyman v. Phoenix Mutual Life Ins. Co. (119 id. 274); Kenyon v. Knights Templar & Masonic Mutual Aid Assn. 122 id. 247), and De Frece v. National Life Ins. Co. (136 id. 144).
The judgment and order should be affirmed.
Woodward, Gaysor, Rich and Hiller, JJ., concurred. -
Judgment and order of the City Court of Yonkers affirmed, with costs.