Case Name: Charles A. Herbert v. Standard Life & Accident Ins.
Court: Lucas County Circuit Court
Jurisdiction: Ohio
Decision Date: 1901-10-26
Citations: 3 Ohio C.C. (n.s.) 7
Docket Number: 
Parties: Charles A. Herbert v. Standard Life & Accident Ins. Co.
Judges: Haynes, J.; Parker, J., and Hull, J., concur.
Reporter: Ohio Circuit Court Reports (new series)
Volume: 3
Pages: 7–22

Head Matter:
INSURANCE.
[Circuit Court of Lucas County.]
Charles A. Herbert v. Standard Life & Accident Ins. Co.
Decided, October 26, 1901.
Accident Policy — Taken by a Railway Employe — Premiums Payable on the Installment Plan — Insured Assigns Part of His Wages to Meet Premium — Afterward Collects All the Wages Hue Him — And is Injured Before the Insurance Company Would Have Received Its Premium Under the Assignment — When Did the Premium Become Due.
1. Where a railway employe assigns a part of his wages for a given month to an insurance company, to pay the premium on an accident policy, which premium would become due in the regular course during that month, and the insurance company accepts the assignment, and the wages so assigned by a custom of the railway company are not payable until the 15th of the following month, and the employe leaves the service of the railway company during the month in question and draws all the wages due him, and before the end of the month meets with an accident, he can not maintain a suit on the policy on the theory that the unpaid premium was not payable until the 15th of the following month. [To this holding Judge Parker dissents, his view being that it was the privilege of the insured to have paid the premium with other money than the wages earned in the service of the railway company, and at any time on or before the 15th.day of the following month.]
2. An accident insurance company can not avail itself of a provision in an application for insurance that the applicant has no other insurance, when it is in evidence that the insured told the agent of the company with whom he dealt that he had another policy, and the application was made out by the agent in his own handwriting. •
Haynes, J.; Parker, J., and Hull, J., concur.
This suit was brought upon a policy of insurance issued by the defendant company to Charles A. Herbert, and the case was tried and submitted to a jury in the court of common pleas, and a verdict was rendered for the defendant. Thereupon the plaintiff prosecutes this proceeding in error.
Affirmed by the Supreme Court, March 24, J.903.

Opinion:
The policy is a peculiar one, and was issued on the installment plan. The leading facts of the case are that Herbert was an engineer on a railroad in the state of Minnesota, and on March 28, 1900, he met an agent of that company whom he had met- before, at a hotel, and the agent renewed the subject of accident insurance and the issuing of a policy of accident insurance to him, and it was finally agreed that Herbert would take one. Thereupon the plaintiff wrote out the application, which was signed by the assured, and the agent then filled out the policy of insurance and delivered it to the assured on that same day. That policy was to commence on March 28, 1900, at noon. An assignment was made of the wages of the assured upon the railroad company, for four months, being $14.40 a month, which would pay the amount of the premiums, $57.60, under the terms of the policy, to which I will refer later.
The plaintiff continued in the employ of the company during the balance of March, the month of April, and until May 17, at which time he drew the money that was due him for the month of May, the money that was due the insurance copipany for the month of April having been paid to it by the railway company. On May 17 he drew the whole of his money, left the employ of the company, came to Toledo, Ohio, where he remained for some time, and on May 29 he was injured by a fall, breaking his leg. He then brought suit against the insurance company for the amount of certain monthly payments that he claims are due him under the terms of the policy.
The defense is, that under the peculiar terms of the policy and the action of the plaintiff, the policy had terminated on May 28, and was not in force at the time the plaintiff was injured on May 29.
That brings us to the terms of the policy. It is said to be a policy upon the installment plan; that is to say, it has been conceived and gotten up for the purpose of insuring persons who have no present means of paying the premiums, and who make arrangements to have the payment made from their wages. The policy starts out:
"In considerationo of the warranties in the application for this policy, and of an order which is to be considered an as signment of moneys therein specified on the paymaster of the C., St. P., M. & O. Ry., hereby insures Charles A. Herbert, of St. James, locomotive engineer by occupation, for the period or periods hereinafter specified, beginning at 12 o'clock noon, standard time, of the day this policy is dated, against bodily injuries sustained, through external, violent, and accidental means, and will pay to him, if surviving, or to Mrs. Anna Herbert, his wife, or, in event of her prior death, to the executors, administrators or assigns of the insured, the indemnity provided in the schedule hereinafter contained, styled, death and indemnity. ' '
In the application for the policy of insurance, after stating many other things, it is stated:
"Accident premium, $57.60. The premium to be paid by four equal monthly installments as follows: $14.40 from my wages for the month of April, 1900; $14.40 from my wages for the month of May, 1900; $14.40 from my wages for the month of June, 1900; $14.40 from my wages for the month of July, 1900; which shall apply to the respective insurance periods, and that the policy shall be considered binding only for such insurance period as is covered by an installment of premium actually paid, except as to the time fixed for payment of the first installment. ' '
Here is the peculiarity of the installment plan: "The payments made in the order of assignment are premiums for separate consecutive periods of two, two, three, and five months; and each is to apply only to its corresponding insurance period. All claims for injuries received during any period for which the respective premium shall not have been actually paid shall be forfeited to the company. Except that in case of a just claim before the first premium is due, if the sum due the insured be less than the sum.of all the payments called for by the order or assignment, the amount of the claim shall be credited thereon ; if greater, the order or assignment shall be receipted in full and the balance paid to the insured. In making settlement for any claim for injuries received during any insurance period for which the premium has been paid, the amount of the premium for later unpaid periods may be deducted from the amount found due."
It is further provided that "in ease the insured shall fail to leave in the hands of the paymaster any installment of pre mium as it shall fall due, as agreed in said order or assignment, this policy shall be void."
Then there is attached to it the written assignment:
"For value received, I hereby assign to the Standard Life & Accident Insurance Company, of Detroit, Michigan, or its authorized agent, four premiums, for separate insurance contracts, as follows:
"First premium, $14.40; to be paid and deducted from my wages, for the month of April, 1900.
"Second premium, $14.40, tO' be paid and deducted from my wages, for the njonth of May, 1900.
"Third premium, $14.40, to be paid and deducted from my wages, for the month of June, 1900.
"Fourth premium, $14.40, to be paid and deducted from my wages, for the month of July, 1900.
"Express Agreement. — The payments named in this assignment are premiums for separate and independent contracts for consecutive periods of two, two, three, and five months; and each shall apply only to'its corresponding insurance period. All claims for injuries received during any period, for which its respective premium shall not have been actually paid, shall be forfeited to the company. Except that, in case of a just claim, before the first premium shall be due, if the sum due the insured be less than the sum of all the payments called for by this assignment, it shall be credited thereon; if greater, the assignment shall be receipted in full and the balance paid to the insured."
The effect of that policy was to insure him for a year, if the payments were made. The first covered two months, and the next the two months following, and the next three months, and the next five. Under the terms of payment, the policy being issued on March 28, the amount taken out of the earnings of the month of April — $14.40—paid two months, to-wit, to May 28; then the payments taken out of the May earnings would pay two months more, to-wit, to July 28, and the June payment would pay to October 28, and the July payment would pay for the balance of the year, five months. This is the written contract. As a matter of fact, the railway company in the course of its business only made their payments monthly, on the fifteenth day of the following month; that is to say, the earnings for the month of April were paid to the plaintiff on May 15, and so on for each of the succeeding consecutive months.
The first payment of $14.40 in this case was paid on May 15, and on the seventeenth day he left the employ of the company, and took the whole of his May wages, leaving nothing whatever in the hands of the company, and on May 29 he was injured, and the claim is made now on the part of the assured that his policy was still in force at the time he was injured, and that he has a right to recover. The company, on the contrary, claims that inasmuch as he had drawn his money out of the hands of the railway company, and had left nothing there for the payment of the amount due, under the terms of the policy, the policy had ceased to exist and be in force on May 28.
We have examined the pase very fully, but we have not been able to agree entirely upon the rights of the parties, and the opinion that is now delivered will be the opinion of a majority of the court.
It will be observed that nothing whatever is said in the policy or application in regard to any extension of time when the payment of these sums assigned will or -may be made. It is only shown by extraneous evidence that as a matter of custom the railroad company did not make its payments until the fifteenth day of the following month for any month's wages, and the testimony shows that this was understood by the insurer, because this was not the only policy it held upon employes of this railroad' company similar to the one in controversy. It seems to have been the custom of the insurance company to send a list, prior .to the middle of the following month, of the policies that had been issued and the amounts that were due, to the railway company, and the company had been accustomed to leave in the hands of the paymaster money to a sufficient amount to pay the insurance premiums, and, as we understand, pay it to the insurance company. It amounted in one month that is shown here to something like $460 for that month.
The question here is whether this policy of insurance was in force on May 29. The majority of the court are of the opinion that it was not. In the first place, the assignment of the payments was an absolute assignment: "I hereby assign to the Standard Life & Accident Insurance Co.,' of Detroit, Mich., or its authorized agent, four premiums for separate insurance contracts as follows." It appears incidentally in the evidence that the assignment was recognized by the railway company. It consented to the separating of plaintiff's wages, and paid a part to him and a part to the insurance company; so that at least so far as he was able, he had vested in the insurance company those respective sums. It was provided in the tenth clause—
"In case the insured shall fail to leave in the hands of the paymaster any installment of premium as it shall fall due, as agreed in said order or assignment, this policy shall be void."
Herbert's wages for the month of May would not, in the course of the business, be paid to him until the middle of June, but it was the right of the company to expect, under this assignment, that so much of that amount that was earned during the month of May would be left in the hands of the railway company to meet the amount of this premium of $14.40. He had assigned it to the insurance company absolutely, on the face of the assignment, and it provided that he should leave this amount with the railway company, or his policy would be void. In this particular month he had earned more than sufficient to pay the $14.40, for at the time he left he drew out about $60 in money, that being all that was due him, and left no sum whatever in the hands of the company with which to meet this assignment that was outstanding. His contention is that he had a credit, by the course of their business, to the middle of the next month to make the payment for that period, and if at the time the money became due, on the fifteenth of the month, he should place that amount with the railroad company, or perhaps tender it to the insurance company in some other form, that then his policy would be good, and would be continued. But it is the opinion of the majority of the court that he had no credit to that time, save and except as he left for the insurance company the amount of money that was earned during the month, to cover the premium for the two months after March 28. Had he left that amount of his earnings in the hands of the railway company, for that month, the majority of the court have no doubt that then the insurance would have continued; that is to say, by the course of dealing of the insurance company, when the money was left with the railroad company, the insurance company was willing to wait until the middle of the month to receive it. But they had expressly agreed that unless the money was left there, the policy would be void. The plaintiff chose not to leave it, thus violating his assignment and his agreement, and his policy became void. The money being earned, it was a payment in advance. And that was anticipated by the insurance company, because there is a special agreement in regard to this month, that is to say, the month of April, the wages for which were unearned at the time the policy was issued, and he was permitted to have his .insurance, although the payment was .not to be made until later on.
Marshall & Fraser, for plaintiff in error.
Smith & Baker, for defendant in error.
The question is made as to whether a certain statement was made by the assured in regard to having other insurance, which would avoid his policy, there being no provision in the application that he had no other insurance. The testimony of the plaintiff that he told the agent at the time of filling the application (which was done by the agent himself, in his own handwriting) that he had another policy of $1,000 in a casualty insurance company in Detroit, and the agent'went on and drew the application, had him sign it, wrote the policy and delivered it to him, with full knowledge of that fact, we think under the policy of the law and the decisions, that that should not avoid the policy.
Other questions were made in the case, but inasmuch as the majority of the court are of the opinion that the policy of insurance was not in force at the time the accident occurred, it is unnecessary to discuss those.
The judgment of the court of common pleas will be affirmed.