Court Opinion

ID: 5202145
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:54:29.127482+00
Date Added: 2024-06-11T08:27:13.209812
License: Public Domain

Smith, J. (dissenting):
In the policies themselves ño provision is made authorizing the payment of these premiums otherwise than in cash. That such might be permitted, however, seems to have been contemplated by the conditions inserted in the policy relating to the non-forfeiture of any notes given for a part thereof. It is stipulated that the methdd of payment actually adopted was agreed to between the insured- and the company, and the first question for our determination is, -whether the inclusion of the principal of a premium note in each successive premium note constituted full payment of the premium within the terms of the non-forfeiture clause of the policy or that clause which provided for paid-up insurance to extend-to so many tenths of the principal as were represented by the premiums fully paid. Primarily the payment of a premium by a promissory note ■which is afterwards included in renewal notes ought not to constitute such payment as to give to the insured the benefit of a provision in the policy which is only given to him upon the full payment of & *423premium. If, however, the company intended to accept these notes as full payment of the premiums it had, the right so to do and it might lawfully contract to waive full payment in cash which in the policy is made a condition precedent to the right of the insured to claim a paid-up" policy.
But the intention o'f the parties is to be gleaned not alone from the policy itself, but from all of the papers then executed. Among the papers executed upon each settlement when the premium was provided for was the premium note. Upon July 1, 1869, the premium note contained this condition: “ And it"is an express condition of the acceptance of this Mote by the said Company in part payment of the annual premium for Policy Mo. 28615 — which condition is fully agreed to by the Promisor herein — that such acceptance shall in nowise affect the condition in said Policy respecting the forfeiture thereof in case of the non-payment of any other portion of said annual premium; and that if the interest on this Mote is not paid annually, or the Mote itself at maturity, then all benefits which full payment in cash of said annual premium would have secured, shall become immediately void and forfeit to said Company.” In view of the condition contained in the note it seems clear that it was not the intention of the company to waive the payment in cash and to consider the part payment by the premium note as entitling the insured to such benefits as would come from the full' payment of the premium unless such premium note were paid at maturity. The result of the transaction' was simply this: The policy was continued in force for another year and if the insured died within that time the beneficiary would be entitled to the full benefit of the policy. Upon' the giving of the premium note instead of the cash, however, in part payment of the premium the insured has in effect waived his rights under the non-forfeiture clause of the policy. If the premium notes given at the different settlements during the next five years had contained the same, conditions it would have to be held as matter of law that the insured by failing to pay the same had waived the benefits of non-forfeiture which the policy assured to him in case of full payment of more than two premiums.
In the settlement of July 1, 1872, however, the premium note contained the condition first specified in the premium note of July *4241, 1869, but the last condition therein specified, to wit, that if the interest on the note or the note itself is not paid at maturity all benefits which full payment in cash of said annual payment would have secured should become void and forfeited to the company, was omitted. The same is true of the premium notes given in 1873 and 1874... This omission, could not have been unintentional. For the first three, years the company required the insured to waive the benefit of the non-forfeiture clause if he would p>ay part of his premium with a premium note. Thereafter this waiver was not required of the insured. The inference is irresistible that thereafter the acceptance of the premium note was taken as full payment of the premium and was intended to give to the insured every benefit which the policy secured to one who had paid the full premiums thereupon. . . ■
This, inference is strengthened by the acts and declarations of the defendant evincing its understanding that the receipt of. these premium notes constituted full payment, except so far as such payment might be .qualified by the terms of the notes. The notes recited upon their face that ‘they were taken in part payment of the annual premium. The plan of payment of each premium by cash, cash notes and premium notes was designated in a receipt given-to the insured as the “figures of 1870 settlement,” etc., and in each year-thereafter a receipt in similar terms was given to insured. Moreover, tire policy itself acknowledges payment of the first year’s premium, though payment was made by this agreed plan. The word “settlement,” as used by this defendant, has received judicial construction in the case of Stewart v. Union Mutual Life Ins. Co. (reported in 155 N. Y. 266). Judge Haight, in wilting for the courtj says: “ Again, was the note accepted by the company in payment for He first year’s premium ? The cashier, in effect, states that it was. He.says: Your note for $123.10, given in settlement of premium due on pol. No. 93,094, will be due and payable,’ etc. It was given in settlement of the premium. Bouvier defines ‘ settlement’ to mean payment in full, so that it would seem that the company not only accepted the note in payment for the first year’s premium, but in accepting itand.holdingit the company recognized the power and authority of Crane to so contract with Stewart.” In each year the premium note of - the former year was" *425surrendered to the insured. In view of this surrender, of the recital in the note that it was taken in payt payment, of the receipt stating that the giving-of the notes constituted a “settlement” for each year, the change of the terms of the premium note by the omission of the condition that its payment should be essential to entitle the insured to the benefits of a paid-up policy, could only be intended either as a waiver of such' condition or to mislead the insured. It must be borne in mind that this characteristic of the policy was its chief attraction and the company should be held to the utmost good faith in treating with the insured concerning the same. The court will presume a waiver rather than an intent to mislead.
The same reasoning applies to the second policy. The first premium notes contained the condition that a failure to pay the same would forfeit any rights guaranteed by the policy to one who had paid full premiums. From the premium notes thereafter given was omitted this condition.
The defendant further contends that at least these premium notes should be offset against the amounts found due- upon the policy. The difficulty with this contention lies in the provision of the policy itself, which provides for an offset as. against the amount due upon the policy of all claims'against the assured. In the policy itself a distinction is maintained throughout between the insured and the assured. The premium notes were in no sense a claim against the assured, but were simply claims against the insured or his estate. The contract must be construed strictly against the insurer by whom the contract was drawn.
The defendant further contends that the significance which I attribute to the change in the terms of the premium note is not justified because the defendant without the right of set-off would be giving the full benefit of this policy to one who Only paid in cash a part of the stipulated premium. In those policies made payable to the estate of the insured the right of set-off would exist which would fully protect the company. Furthermore, the taking of premium notes was not part of the contract of insurance and was wholly discretionary with the company itself, and the company might well protect itself by.requiring full cash payments from those who were not responsible and from whose estates the premium notes could not be afterwards collected. The Special Term *426had found as a fact that five premiums upon the first policy and four upon the second have been fully paid. That finding ■ is, I think, sustained by the evidence and it follows that the interlocutory judgment entered should stand.
Judgment reversed on law .and facts and new trial granted, with costs to appellant to abide, event.