Case Name: Gorton vs. The Dodge County Mutual Insurance Company
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1875-08
Citations: 39 Wis. 121
Docket Number: 
Parties: Gorton vs. The Dodge County Mutual Insurance Company.
Judges: 
Reporter: Wisconsin Reports
Volume: 39
Pages: 121–124

Head Matter:
Gorton vs. The Dodge County Mutual Insurance Company.
Insurance. Insurer not liable when premium note unpaid.
In an action on a policy of fire insurance, it appeared that plaintiff gave his note for the amount of the cash premium, with an agreement therein that if it were not paid at maturity, the whole amount of the premium should be considered as earned, and the policy be void while the note remained overdue and unpaid; and that the note matured before the loss complained of, and had never been paid. Held, that the insurer was not hable.
APPEAL from the Circuit Court for Eau Clcdre County.
Action upon a policy of insurance dated August 21, 1871, issued by the defendant company to the plaintiff, the term of insurance being five years. The insured property was destroyed by fire September 11, 1874. These facts appear from the complaint, and it is further alleged therein that the plaintiff paid for such insurance a premium of twenty-four dollars.
The second defense in the answer is to the effect that such premium was not paid in cash, but the plaintiff gave the defendant his promissory note therefor, payable May 1, 1872; that he never paid such note; and that it contained the following agreement: “And it is further agreed that if this note be not paid at maturity, the Whole amount of premium on said policy shall be 'considered as earned, and the policy be null and void so long as this note remains overdue and unpaid.
The plaintiff demurred- to snob second defense, for insufficiency; tire circuit court made an order %>ro forma, sustaining tbe demurrer; and the defendant appealed therefrom.
The cause was submitted by both sides upon briefs.
Dixon, Hooker da Palmer (L. 8. Dixon, of counsel), for appellant:
The condition that the policy should become void so long as the note remained overdue and unpaid, was a valid one; the breach of the condition was clear; and the obligation of the defendant was at an end long before and at the time of the fire. Baker v. Ins. Oo., 43 N. Y., 283; Wall v. Ins. Oo., 36 id., 157; Pitt v. Ins. Oo., 100 Mass., 500; Williams v. Ins. Co., 19 Mich., 451; Watrous v. Ins. Co., 35 Iowa, 582; Union Mut. Lif& Ins. Oo. v. McMiTlen, 24 Ohio St., 67; 8. O., 13 Am. Law Reg., N. S., 610; OardweTl v. Ins. Oo., Oh. Leg. News, May 22, 1875; Patch v. Ins. Oo., 44 Yt., 481; Ferebee v. Ins. Oo., 68 N. 0., 11. See also Heeler v. Ins. Oo., 16 Wis., 537; Dodge Oo. Mut. Ins. Go-, v. Pogers, 12 id., 338, as to the validity of similar conditions in a policy. Neither can an unsuccessful demand of j>ayment be construed into an abandonment or waiver of any of the terms or conditions of the note or policy, or as an alteration of the contract in any particular. Baker v. Ins. Oo. and Wall v. Ins. Oo., stipra.
Oousims <& Hoyt {H. Cousins, of counsel), for respondent:
The note was accepted in payment of the premium; and from the time of its delivery and acceptance and the delivery of the policy to the respondent in consideration of the note, the contract of insurance was in force, and must continue to the end of the term, unless annulled by the act of the parties. In talcing the note the company waived that clause of the policy which provides that “ no contract for insurance shall be binding until the actual payment of the premium has been made.” The note was payment, so far as that clause had any force. Its force once waived, its whole power was spent, and it ceased to be a part of tbe provisions of tbe contract as effectually as if it bad never existed. ETor could it be revived by tbe act or default of either party, any more than if it bad been erased from tbe contract entirely. Goit v. Ins. Go., 25 Barb., 189; Boehen v. Ins. Go., 35 1ST. Y., 131; Trustees First Bap■tist Ohureh v. Ins. Go., 19 id., 305. Tbe policy having once been a binding contract, it required tbe assent of both parties to rescind it. 2 Parsons on Con., 190. Even if tbe failure of plaintiff to pay tbe note at maturity placed defendant in a position to declare tbe policy void, yet this alone does not make it void, but only voidable at tbe option of tbe company. Hwntley v. Perry, 38 Barb., 569. The party having tbe right to rescind tbe contract must do it within tbe time specified, if there be such a time; if not, then within a reasonable time. O'Kell v. Smith, 1 Starkie, 107. Unless it clearly appears that tbe company bad exercised this right before tbe loss, tbe court ought not to infer it. Forfeitures are not favored, particularly where tbe delay can be compensated for in money. Boyd's. Talbert, 12 Ohio, 212; Smith v.WhitbeeIe,l?> Ohio St., 471.

Opinion:
Lyoít, J.
Tbe agreement contained in tbe note given for tbe premium is part of tbe contract of insurance; and tbe cases cited by tbe learned counsel for tbe defendant abundantly show that under such contract tbe liability of tbe defendant on tbe policy was absolutely suspended by tbe failure of tbe plaintiff to pay tbe note when due. Tbe note never having been paid, such liability was never restored; and tbe loss occurring after tbe plaintiff was thus in default, tbe defendant is not liable therefor. It is so held, and tbe reasons are sufficiently stated, in Joliffe v. Madison Mut. Ins. Co., ante, p. 111. Those reasons need not be repeated here.
Tbe portion of tbe answer demurred to states a perfect defense to tbe action; and tbe demurrer should have been overruled.
By the Court. — Order reversed, and cause remanded for further proceedings according to law.