Case Name: MYRA A. WHEELER, Respondent, v. THE CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Appellant
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1878-12
Citations: 23 N.Y. Sup. Ct. 317
Docket Number: 
Parties: MYRA A. WHEELER, Respondent, v. THE CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Appellant.
Judges: Barrett, J., concurred.
Reporter: Supreme Court Reports (Hun)
Volume: 23
Pages: 317–332

Head Matter:
MYRA A. WHEELER, Respondent, v. THE CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Appellant.
Policy of insurance — insanity of assured, does not excuse non-payment of premiums— application for paid-up policy, must be made in life-time of assured.
October 28, 18G9, defendant issued a policy of insurance upon the life of J. Gr. Yose, who on the 4th of November, 1872, assigned it to his children, covenanting to pay the premiums and keep it in force. Before the payment of the premiums due in 1873, Yose became insane, and so continued until his death on March 17,1874. The premium falling due on October 28,1873, was not paid. On December 10,1875, the guardian of the children assigned the policy and all rights of action thereunder to the plaintiff. To excuse the failure to pay the premium falling due October 28, 1873, the complaint alleged, “ that previous to the last-mentioned day the said John G-. Vose became and was, by the visitation and act of God, insane, and was consequently unable to, and did not, pay the premium which was due on said last-mentioned day on said policy, and on the policy hereinafter mentioned, although he was possessed of money sufficient to pay the same of his own, and of and belonging to his said children, but he was bereft of reason, and in consequence thereof did not know or remember that said premium was then due, nor that he had agreed to pay the same.”
Held, that the facts alleged did not excuse the failure to pay the premium, and that a demurrer to the complaint should be sustained.
The policy provided “that if, after the payment of two or more annual premiums upon this policy, the same shall cease and determine by default in the payment of any subsequent premium when due; then, notwithstanding such default, this company will grant a “ paid-up policy ” (payable as above) for such amount as the then present value of this policy will purchase as a single premium, provided that this policy shall be transmitted to and received by this company, and application made for such “ paid-up policy ” within one year after default in the payment of premium hereon shall first be made.” Held, that the application for a paid-up policy must be made by the assured during his life, and could not be made after his death, by the then owner of the policy. (Daniels, J., dissenting.)
Appeal by tbe defendant from an order of the Special Term overruling a demurrer to the complaint.
The action was brought upon policies of insurance issued by the defendant upon the life of John Gr. Yose, deceased. The first count in the complaint set out the issuing of a policy for $20,000 to him on October 28, 1869 ; that on or about the 4th clay of November, 1872, for a good and valuable consideration, the said John.Gr. Yose sold, assigned and transferred the said policy of insurance and all the moneys to become payable thereunder, unto his children, Flora L. Vose, Raymond II. Vose, Myra H. Vose, and Louise Or. Vose, by an instrument in writing indorsed upon the said policy; that the said John G. Vose paid to the defendant the annual premiums falling due in the years 1870, 1871 and 1872 respectively; that on about the 1st day of January, 1878, the said defendant declared a dividend out of its surplus earnings and receipts for the preceding year, payable to its several policy-holders, and that the amount of such dividend, payable to the said John G. Vose, or his assigns, in respect of the said policy and of the policy hereinafter mentioned, was then the sum of about $210; that the said defendants did not pay the same to said John G. Vose or his assigns but retained the same, and the said dividend was in its possession on the 28th day of October, 1873; that the said John G. Vose, at the time of said assignment and up to the time of his death, was the general guardian of his said children, and had been duly appointed as such' by the Orphan’s court of the county of Essex, in the State of New Jersey, in which' county ho and they resided at the time of such appointment; that previous to said last-mentioned day the said John G. Vose became and was, by the visitation and act of God, insane, and was consequently unable to, and did not, pay the premium which became due on said last-mentioned day on said policy and on the policy hereinafter mentioned, although he was possessed of money sufficient to pay the same, both of his own and of and belonging to his said children, but he was bereft of reason, and in consequence thereof did not know nor remember that said premium was then due, nor that he had agreed to pay the same; that the said defendant did not, at the last-mentioned time, nor at any time until after the death of the said John G. Vose, claim nor insist that any forfeiture of said policy, nor of the policy hereinafter mentioned, had been caused by the aforesaid omission, but retained the said dividend in its possession, which, by the terms of said policy and by the agreement between the said Joím G. Vose and the said defendant, was applicable to the payment of the premium falling duo October 28, 1873; that thereafter, and on or about the 17th of March, 1874, the said John G. Vose departed this life at Atlantic City, in the State of New Jersey, leaving tbe said policy of insurance in force and effect, and that immediately thereupon bis said children became entitled to the said sum of $20,000, so insured as aforesaid, according to the terms of the said policy, and that they had an interest therein to the amount thereof, as and for so much money of their deceased mother in his hands, and also as his children, who were dependant upon him for their support and maintenance ; that thereafter, and on or about the 10th of October, 1874, at the office of the defendant, in the city of Hartford, dué notice and satisfactory evidence of the death df the said John G. Yose and of the appointment and .authority of John Yan Yechten as their guardian, hereinafter mentioned, was given to and served upon the defendant and payment of the said sum so insured under said policy to the said children was demanded ; but the defendant then and there refused to pay the same or any part thereof; that when such proofs of loss were presented to the defendant the said policy was transmitted to and received by the said defendant, but it refused to grant a paid-up policy for such amount as the present value of the policy, on the 28th day of October, 1873, would purchase as a single premium, or to pay such amount to said John Yan Yechten as general guardian of said children, and also refused to pay the amount of insurance to which said dividend, as an annual payment made on the 28th day of October, 1873, would have entitled the said John G. Yose for a year from that day; that said John G. Yose and his said children, at the time of his death, were, and his said children have ever since been, residents of Orange, in the county of Essex and State of New Jersey, and that thereafter, and on or about the 20th day of April, 1874, John Yan Yechten, of said Orange, was duly appointed general guardian of the said children by an order duly made by the Orphans’ court of the said county of Essex, to which court, by the laws of New Jersey, the appointment of general guardians of the estates of infants rightly belonged; and the said John Yan Yechten was also duly appointed general guardian of the said infants by an order duly made by the surrogate of the city and county of New York, on the 25th day of April, A. D., 1874, and as such had full power to dispose of the estate of said infants; and that the said John Yan Vechten, as such general guardian, by an instru ment in writing, under his hand and seal, assigned the said policy and the policy hereinafter mentioned, and the moneys due thereon, and all causes of action arising thereupon, and all their causes of action against the defendant to this plaintiff on the 10th day of December, 1875. The second count was similar to the first.
The policy provided, among other things, that this policy shall not take effect until the advance premium hereon shall have been actually paid during the lifetime of the insured, and that if any subsequent premium on this policy be not paid when due, then this policy shall cease and determine (except as hereinafter provided), and this company shall not bo liable for the payment of the sum insured herein nor of any part thereof, and that no premium on this policy shall be considered as paid, unless a receipt shall be given therefor, signed by the president or secretary of the company ; that if, after the payment of two or more annual premiums upon this policy, the same shall cease and determine by default in the payment of any subsequent premium when due, then, notwithstanding such default, this company will grant “ a paid-up policy” (payable as above) for such amount as the then present value of this policy will purchase as a single premium, provided that this policy shall be transmitted to and received by this company, and application made for such “ paid-up policy,” within one year after default in the payment of premium hereon, shall first be made.
W. A. Beach, for the appellant.
Everett P. Wheeler, for the respondent.

Opinion:
1'NGALLS, J. :
This action is brought upon a policy issued by the defendant October 28, 1869, insuring the life of John E. Yose. On the 4th of November, 1872, the policy was assigned by Yose to his four children, who were then infants, and for whom he was appointed guardian. Yose died March 17, 1874, and John Yan Yechten was, on the 20th day of April, 1874, appointed general guardian for said infants. On the 10th day of December, 1875, Yan Yechten, as such guardian, assigned such policy, and all rights of action under the same, to the plaintiff. The complaint does not state that the plaintiff is related to the children of said Yose, nor upon what terms she became the owner of said policy. Such statements are probably unnecessary, so far at least as the strict legal rights of the parties are concerned. By the terms of the policy a premium became payable on the 28th day of October, 1873, which was not paid. The policy contains the following condition : " And that if any subsequent premium on this policy be not paid when due, then this policy shall cease and determine and this company shall not be liable for the payment of the sum insured herein, or any part thereof."
The complaint alleges, as an excuse for such failure to pay, "that previous to said last-mentioned day the said John G. Yose became and was, by the visitation and act of God, insane, and was consequently unable to, and did not, pay the premium which became due on said last-mentioned day on said policy, and on the policy hereinafter mentioned, although he was possessed of money sufficient to pay the same of -his own and of and belonging to his said children; but he ivas bereft of reason, and in consequence thereof did not know or remember that said premium was then due, nor that he had agreed to pay the same." By demurring the defendant admits the truth of the facts, which are material and well pleaded in the complaint. It must be assumed that the parties to this contract of insurance entered into the same deliberately, and with a full knowledge of the terms and conditions thereof; and the obligations were created by express agreement, and not imposed by operation of law. This distinction is important in determining the rights of the parties to such contract. When the law creates the duty or charge, it more freely excuses a failure to perform than when the party expressly binds himself by contract. (Harmony v. Bingham, 12 N. Y., 99.) Edwards, J. (p. 107), remarks : " It is well-settled that where the law creates a duty or charge, and the party is disabled from performing it, without any default in himself, and has no remedy over, then the law will excuse him ; but where the party, by his own contract, creates a duty or charge upon himself, he is bound to make it good, notwithstanding any accident or delay by inevitable necessity, because he might have provided against it by contract. This rule has been uniformly followed, and that, too, even in cases in wbicli its application has been considered by the court as attended with great hardship." In the same case Judge Ruggles (p. 115,) says : " It is a well-settled rule of law that where a party, by his own contract, absolutely engages to do an act, it is deemed to be his own fault and folly that he did not thereby expressly provide against contingencies and exempt himself from responsibility in certain events; and in such a case, therefore — that is, in the instance of an absolute and general contract — the performance is not excused by an inevitable accident or other contingency, although not foreseen by, or within the control of the partyThe same doctrine is again asserted in Tompkins v. Dudley (25 N. Y., 275). In that case reference is .made to The School Trustees of Trenton v. Bennett (3 Dutcher [N. J.], 514), in which the court say: I! No rule of law is more firmly established by a long train of decisions than this, that when a party, by his own contract, creates a duty or charge upon himself, he is bound to make it good, notwithstanding any accident by inevitable necessity, because he might have provided against it by contract." "No matter how harsh or apparently unjust in its operation the rule may occasionally be, it cannot be denied that it has its foundation in good sense and inflexible honesty." (See also Story on Bail-ments, § 36.) This rule of law is applied with greater rigor to conditions incorporated in policies of insurance than to covenants in ordinary contracts. In Roehner v. Knickerbocker L. Ins. Co. (63 N. Y., 167), Judge Folger remarks : " The contract of life insurance is sui generis ; it is one-sided. By a strict observance of the conditions of it, the insured may hold the insurers to their contract, while they have not the power or the right to compel him to remain in contract relations with them longer than he chooses. Thus it differs widely from a lease. For this reason the clauses of forfeiture in policies of life insurance have been construed literally, and, on breach of condition, the 'policies have been held avoided in favor of the insurers, without demand or other notice of election on their partí Again, on p. 164, " the payment is a condition precedent which must be kept or the policy falls. It is a rule of the common law that if the terms of the contract violate no law or public policy, are sustained by sufficient consideration, and have been fairly entered into, a strict and exact compliance with them may be insisted upon." In Sparks v. The Liverpool Water-works Company (13 Ves., 428 [Sum. ed.] ), the Master of the Eolls, says : " This bill is founded in forfeiture, and upon the ground that the plaintiff did not consider himself as a partner, and offering compensation and praying to be relieved from the forfeiture. The parties might contract upon any terms they thought fit, and might impose terms as arbitrary as they pleased. It is essential to such transactions. This struck me as not like the case of individuals. If this species of equity is open to the parties engaged in these undertakings they could not be carried on. It is essential that the money should be paid, and that they should know what is their situation." " The party making default is no longer a member, but if a party can in equity enter into a discussion of the circumstances, each may bring his suit." "Why is not this equity open to contractors for the government loans ? Why may not they come here to be relieved when they have failed in making their deposits, and if they could have that relief how could government go on ? It would be just as difficult for these undertakings to go on." This reasoning applies to life insurance; the premiums are relied upon to furnish capital, with which to conduct the business, and meet obligations. Prompt payment thereof is indispensable to the existence of such companies. Every person who accepts a policy is presumed to understand the nature of the obligation which he assumes with the company, and the necessity of strict performance. Insurance companies should be hold to a strict accountability, and required to perform their contracts, and those who accept policies should be subjected to the same rule in regard to their engagements. When a party has deliberately entered into such an agreement, and bound himself by covenant or condition, and no fraud or imposition has been practiced upon him, he should certainly be required to perform in a case like this ; and a court of equity should be reluctant indeed, to lend its aid, and relieve a party from the consequences of a forfeiture, against -which he might have provided by his contract. While such rule may operate harshly in a particular case, it will bo salutary in its general effect. If it is understood that contracts will be rigorously inforced by the courts, they will be entered into with greater caution, and more faithfully performed. The condition m the policy before stated must be regarded as a condition precedent; upon its strict performance depended the life of the policy, and when a failure to pay a premium occurred, the obligation of the company to pay the sum specified in the policy ceased, and that too without any declaration of the company that it regarded the same forfeited. (Roehner v. Knickerbocker L. Ins. Co., supra; Evans v. The United States Life Ins. Co., 64 N. Y., 308.) In that case Judge Earle says: "The policy, therefore, became absolutely void after July 1, 1870. It was unnecessary for defendant to make any election, or to do anything else to render it void. It became dead by its own terms and could never again have any vitality, except by some sufficient act of the defendant reclothing it with life." In order to invoke successfully the equity powers of the court to relieve a party against forfeiture, even in an ordinary contract, where such party who made the contract has been stricken by disease, or prostrated by inevitable accident or casualty, so as to be unable to perform his agreement, it is not sufficient to show that the act or duty required to be performed was difficult; it must be shown to be impossible of performance without the personal intervention of such party. (Evans v. The U. S. Life Ins. Co., 64 N. Y., 305; Beebe v. Johnson, 19 Wend., 500.) In the last case the court (p. 502) say: 1 'To bring the case within the rule of dispensation it must appear that the thing to be done cannot by any means be accomplished, for if it is only improbable or out of the power of the obligor, it is not in law deemed impossible." (Story on Bailments, § 36 and note; Story's Equity Juris., § 1303.) The author remarks, " so if the thing is physically possible, but not physically possible for the party, still it will be binding upon him if fairly made, for he should have weighed his own ability and strength to do it." In Howell v. The Knickerbocker L. Ins. Co. (44 N. Y., 281), Judge Gray says : "The payment of the premium was an act which could have been performed by any other person than the plaintiff's husband; its payment did not necessarily depend upon his continued capacity or existence; and hence, although he was shortly prior to the •expiration of the policy, when about to pay the premium, rendered incapable by the act of God, she is without the rule that relieves a party from the consequences of an omission to do an act, rendered impossible by omnipotent power." Regarding the strict requirements of the law in reference to the performance of such a contract, can it be reasonably said, in view of the allegations of the coim plaint, that the premium could not have been j)aid by any other person than Mr. Yose ? It is not sufficient that he was the proper person to make payment, nor that he had money with which he could have paid it, but for the insanity. Any other person might have paid the premium, and thereby bound the company and prevented the forfeiture. The complaint does not even allege that the children were of such tender years, at the time, as to even raise a presumption that they did not possess a degree of intelligence sufficient to understand their rights, and to have performed' this act; nor that the existence of the policy and the necessity of paying the premium was not known to other persons, who could and would have paid the same upon request. The complaint does not even allege, in so many words, that Yose would have paid the premium if he had been sane. While pleadings are to receive a liberal construction, since the adoption of the Code, yet a cause of action must be stated. In this case the plaintiff was confronted at the threshold by the forfeiture, and was required to state facts which excused the failure to pay the premium, showing that the same could not possibly have boon paid by any person other than Yose. This may seem a severe rule, but we are dealing with a forfeiture under a contract where, as we have seen, the most stringent rule of construction obtains. Again, regarding the nature of this contract, and the adjudications which bear upon the question, whether the insamty of the insured will excuse the performance of a such a condition as is contained in this policy, we are of the opinion that the complaint does not allege facts which would justify a court of equity in granting relief against such forfeiture. (Howell v. Knickerbocker L. Ins. Co.; Evans v. United States L. Ins. Co.; Roehner v. Knickerbocker L. Ins. Co.) All before referred to. Reference has been made to the effect of the war upon such contracts, and the cases (Cohen v. N. Y. M. L. Ins. Co., 50 N. Y., 610; Sands v. N. Y. Life Ins. Co., 50 id., 626) among others have been cited. Jt is held that the war suspended such contracts, and the remedies to enforce the same; such result arose necessarily from the antagonism which existed between the citizens of the various sections of the councry, and the impiacti-cability of inforcing or performing the conditions of such contracts; such restriction operated, not only upon the contract, but upon the parties and the courts. This doctrine rests upon the ground of public policy, to prevent an enemy from deriving strength from commercial intercourse. We do not think that class of cases lends support to the plaintiff's case by analogy or otherwise. In the case of Sands v. N. Y. L. Ins. Co. (supra), it was suggested that an act of providence would not dispense with strict performance of a condition in a policy of insurance. Judge PeckhaM did not deny the soundness of the proposition, but remarked, "without stopping to question this position, it is clear that war in this respect, then, can accomplish what cannot be done otherwise. War extends the statute of limitation." This case certainly does not support the plaintiff's case upon this precise question. In Wilkinson v. First National Fire Ins. Company (9 Hun, 523), it is held to be no sufficient answer to the statute of limitations that the party was restrained by an injunction, and this decision has recently been affirmed by the Court of Appeals. Certainly the decisions of the courts do not show a tendency to relax the rule in regard to the strict performance of contracts. To obtain relief in a court of equity, the case must be brought within some acknowledged head of equity jurisdiction. It is not sufficient to show that relief cannot be obtained by the strict rules of the common law, and that the party will be subjected to great loss, unless a court of equity grants relief. If it were once established that a court of equity would interpose in all cases of extreme hardship, parties could not rely upon their contracts, and utter confusion would be the result. The complaint does not show but that the plaintiff purchased the policy, and the right of action, for a nominal consideration, and is engaged in a speculation. While this remark may not apply to her right of recovery at law, it is certainly an important consideration when a court of equity is asked to relieve against the effect of this forfeiture. From the frequency with which such questions arise, and no decision being discovered or produced, justifying the granting of the relief necessary to sustain the plaintiff's case, we may introduce here the remark of the Lord Chancellor in Peachy v. The Duke of Somerset (1 Strange, 452) : " This is a point of so great consequence that if relief could be given in this court, it is strange it should not have been found out long ago."
We are satisfied that the complaint cannot be sustained, upon the ground that it alleges a cause of action under the following provision of the policy : Sixth. " That if after the payment of two or more annual premiums upon this policy, the same shall cease and determine by default in the payment of any subsequent premium when due, then, notwithstanding such default, this company will grant a " paid-up policy (payable as above) for such amount as the then present value of this policy will purchase as a single premium, provided that this policy shall be transmitted to and received by this company, and application made for such 'paid-up policy' within one year after default, in the payment of premium hereon, shall first be made."
The pleading was framed upon no such theory. Two distinct causes of action are stated, in terms so unmistakable, that neither can be construed into the statement of a cause of action within the said provision. It is not even alleged that a demand was made of the defendant for a paid-up policy, nor is any such relief claimed in the complaint. Indeed, the entire pleading negatives the idea that any such cause of action or relief was contemplated by the pleader. While pleadings, under the Code, are to be liberally construed, yet it is not allowable to glean from an entire pleading one fact here, and another there, and then group them in such manner that a cause of action may possibly be spelled out, which did not enter the mind of the pleader when he framed the pleading, and which is also inconsistent with the entire scope of the pleading, and the relief demanded thereby. It would in effect be substituting a new cause of action. (Leeder v. Sayre, 70 N. Y., 181.) Independent of this question of pleading, there arises, inherent in the contract itself, an obstacle to the plaintiff's right to recover upon any such grounds when applied to the facts alleged. The agreement provides, in substance, that after the payment of two or more annual premiums, the policy may be transmitted to the company, and an application made for a paid-up policy, at any time within one year after default shall first be made m the payment of a premium; and the company will grant a paid-up policy. There is no pretence that any such application was made by John E. Yose, in his lifetime, or by any other person in his behalf or that of any other party who was interested. Consequently no right of action accrued against the defendant prior to the death of Yose. The contract of the defendant was to grant a paid-up policy, and there is no agreement to pay money as an equivalent therefor. Obviously the policy was to be issued to Yose, or at least to depend upon his life, and when he died such life ceased to be a subject for insurance, and surely no other could be substituted. From the nature of the contract, and the purpose sought thereby, the conclusion seems inevitable that the agreement in that respect was personal to John E. Yose, as there is nothing which indicates that a continuing covenant was intended. To whom could the policy issue ? Upon the termination of what life must payment depend ? With whom rested the right to elect whether the original policy should be surrendered, and a paid-up policy accepted in its stead ? It seems clear to my mind that it was intended by the parties that the contract in this particular should be performed in the lifetime of Yose, and that his death had the effect to terminate all right to a paid-up policy, or any equivalent therefor in money. Yose and his assignees relied upon the original policies, and a recovery is sought by the plaintiff by virtue thereof. Such are the causes of action stated in the complaint, and they are inconsistent with the pretence that any other cause of action is relied upon. The right to a paid-up policy depended upon a surrender of the original policies, as both could not be claimed or asserted with any semblance of right. We fail to discover any substantial ground, legal or equitable, which would justify a recovery by the- plaintiff upon any such pretended cause of action. As it is quite probable that a cause of so much importance, and involving questions so novel, will be presented to the Court of Appeals for final adjudication, we deem it best for all the parties that all the questions of law raised by the demurrer should be passed upon and the rights of the parties declared, so far at least as the law which should govern the case is concerned.
The judgment of the special term must be reversed with costs; but with leave to the plaintiff to amend her complaint within twenty days, upon payment of the costs of the demurrer to the defendant.
Barrett, J., concurred.