Case Name: PEOPLE v. COMMERCIAL ALLIANCE INS. CO.; PLAIT v. GILBERT
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1897-11-05
Citations: 48 N.Y.S. 389
Docket Number: 
Parties: PEOPLE v. COMMERCIAL ALLIANCE INS. CO. PLAIT v. GILBERT.
Judges: 
Reporter: West's New York Supplement
Volume: 48
Pages: 389–395

Head Matter:
(21 App. Div. 533.)
PEOPLE v. COMMERCIAL ALLIANCE INS. CO. PLAIT v. GILBERT.
(Supreme Court, Appellate Division, First Department.
November 5, 1897.)
Lira Policy—Construction.
Where the terms of a policy of life insurance are so conflicting and ambiguous as to leave it uncertain whether premiums must be paid upon a given day in a month, or may be paid at any time during that month, the company will be bound by a practical construction given for a considerable period by its notices, and acted upon in accepting payments, and cannot of itself thereafter change the contract as thus construed.
Barrett, J., dissenting.
Appeal from special term.
Action by the people of the state of New York against the Commercial Alliance Insurance Company. William T. Gilbert was appointed receiver. From an order overruling exceptions to referee’s report on the claim of George F. Platt, the receiver appeals.
Affirmed.
Argued before VAN BRUNT, P. J., and BARRETT, RUMSEY, WILLIAMS, and PATTERSON, JJ.
R. B. Aldcrofft, Jr., for appellant.
A. S. Luria, for respondents.

Opinion:
PATTERSON, J.
The only question arising in this case relates-to the contention of the receiver that the policy on which the claim-presented by thése claimants was based was not upon an outstanding and valid risk at the time of the death of James H. Platt, the assured. Mr. Platt died August 13,1894. The policy was issued in June, 1890. Premiums were payable bimonthly, and it is an undisputed fact in the case that all premiums were paid up to and including that for the month of December, 1893, On the 29th of January, 1894, Mr. Platt sent by mail to the insurance company, in the city of New York, his check for the premium payable in February of that year, which check was not received until the 5th of February, 1894; and on the 17th of that month the company returned the check to Mr. Platt, with a notification that the remittance was too late, and that the premium was due on the 1st of February. Although not in terms a declaration that the company elected to forfeit the policy, its act in returning the premium was tantamount to such a notification. The insurance effected by this policy was yearly insurance, although the premium was payable bimonthly. It is so referred to in the policy, the reference to the premiums being made in connection with the statement that they are to be paid during each policy year of the continuance of the policy; and there is also a provision that, if the contract be terminated by death, the amount of unpaid premiums that might otherwise have fallen due during the policy year will be deducted from the sum insured. The referee found that the contract made by the policy was in full force at the time of Mr. Platt's death, and allowed the claim at the face value of the policy minus the premiums for the current policy year of 1894.
The conclusion reached by the referee was right. The policy was an outstanding one, and in full force, in February, 1894, at the time it was repudiated by the company, upon the pretext that the February premium was not paid in time. By the terms of the policy, it is provided as follows:
"The said company further agrees to renew and continue this insurance in full force during each period of two months thereafter so long as there shall be paid to the said company, as hereinafter provided, on the first days of August, October, December, February, April, and June, during each policy year of the continuance of this policy, the premium contained in the table on the margin of this policy."
There was also contained in the policy this specific statement:
"Premiums will be payable during the months of February, April, June, August, October, and December."
There was a further provision that, in case any further payment or premium required or agreed to be made at any time on account of the policy should not be paid when due, thereupon the contract should become and remain null and void and of no effect. In the table of premiums is contained a statement of what premiums are payable during the specific months for each $1,000 insured. It thus appears from the policy that in one of its provisions payment is required to be made on the first days of certain specified months, and in other provisions of the same policy that the premiums may be paid during those months. The construction of the policy, in view of these apparently inconsistent provisions, was given by the company itself in all of its dealings with Platt, the assured, prior to June, 1893. When the first premium fell due after the policy was issued, a notice was given by the company to the assured stating that the premium for August, 1890, would be due-on the 1st of August; and unless it were paid before the 1st of September, 1890, the policy would be void, and the payments under it forfeited. A similar notice, according one month's grace for each successive bimonthly premium, down to and including June, 1893, was given; and, pursuant to those notices, the assured made his payments on the policy some time within a period of 30 days after the 1st day of the month upon which such premiums were payable. Receipts for premiums were also given prior to August, 1893, upon the back of which was a written notification that the premium must be paid on or before the day it becomes due, "or within the thirty-days grace allowed." Subse quent to June, 1893, the words quoted as to grace were omitted from the indorsement of the receipts, but the receipts were in every other respect identical in shape and color of paper and general characteristics. In July, 1893, a notice was sent by the company to Platt, the assured, requiring payment for the August premium on the 1st •day of that month. No reference whatever was made to its payment during the month or to an allowance of 30 days' grace. Similar notices were sent after that month up to February, 1894. The October premium, 1893, was paid on the 28th of September, 1893; the premium for December, 1893, was paid on the 15th of November, 1893; and, as stated, the premium for February, 1894, was attempted to be paid by a check mailed on the 29th of January, 1894.
It is apparent from the foregoing statement of facts that in all of its dealings with Platt, the assured, prior to September, 1893, the insurance company placed its own construction upon the requirements of the policy respecting the payment of premiums, not only by its course of business in accepting premiums during the month upon the 1st day of which they were technically due and payable, but, by its express notices to the assured, informed him that he had SO days after the 1st day of the month in which to pay each of the premiums necessary to keep the policy alive. To this so-called "grace" the assured was entitled by the terms of his policy, under the construction given to it by the company itself. That such construction given by the company to this contract will be that adopted by the court has been held. Dodge v. Zimmer, 110 N. Y. 48, 17 N. E. 399; Dutcher v. Insurance Co., 3 Dill. 87, Fed. Cas. No. 4,202; Reynolds v. Insurance Co., 47 N. Y. 597; McMullen v. Hopper, 15 App. Div. 369, 44 N. Y. Supp. 63.
The terms of the contract cannot be changed by the simple act of the companv itself. It had no right to do so in the manner in which it sought to accomplish that end. The omission of the 30 days' margin of time from the printed indorsement on the receipts, and from the notices, cannot operate to make a new contract with the insured; nor can it be claimed that he acquiesced in a change of the contract simply because he paid some of the later premiums before the 1st day of the month on which they became due. That was a right he had under the original policy, and the mere fact that he availed himself of it in later instances is not to be construed as an assent on his part to a modification of the contract.
The order overruling the exceptions, and confirming the referee's report, must be affirmed, with costs.
VAN BRUNT, P. J., and RUMSEY and WILLIAMS, JJ., concur.