Court Opinion

ID: 6905324
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:59:23.721298+00
Date Added: 2024-06-11T16:06:19.457153
License: Public Domain

Mr. Justice Bean
delivered the following dissenting opinion:
This is an action upon two life insurance policies issued by the defendant company upon the life of James M. French for $2,500 each, numbered 6551 and 6579, respectively. Upon the trial of the cause, at the close of all the evidence, the trial court directed a verdict in favor of the defendant. From a judgment thereon plaintiff appeals.
The following is shown by the record: In so far as material to this controversy, policy No. 6551, upon which the first cause of action is based, is, in substance, as follows:
“Columbia Life & Trust Company promises to pay, at the home office of the company, in Portland, Oregon, the sum of twenty-five hundred dollars (less any indebtedness hereon to the company, and any unpaid portion of the premium for the then current policy year), to James M. French, of Portland, county of Multnomah, State of Oregon, herein called the insured, on the eleventh day of March, nineteen hundred and thirty-two, if the insured be then living; or, to make such payment upon receipt at said home office of due proof of the prior death of said insured, to Elizabeth French, his wife, herein called the beneficiary, if said beneficiary be living; otherwise, to the executors, administrators or assigns of the insured, subject to the right of the insured to change the beneficiary, as hereinafter provided.
“This contract of insurance is made in consideration of the application for this policy, a copy of which is *447hereto attached, and which application is hereby made a part of this contract, and in consideration of the first annual premium of one hundred seventy and 13/100 dollars, the receipt whereof is hereby acknowledged, for insurance, as herein provided, terminating on the eleventh day of March, 1913, and in consideration of the further payment of one hundred seventy and 13/100 dollars, to be made on or before every eleventh day of March hereafter during the first twenty years of the continuance of this policy.
“This policy shall not take effect until the first premium shall have been actually paid during the good health of the insured. No premium after the first shall be considered paid unless a receipt shall be given therefor, signed by the president, a vice-president, or secretary, and countersigned by an agent authorized to receive such premium, nor shall any premium payment have the effect to continue this policy in force longer than for the period covered by such payment, except as otherwise provided herein. Agents are not authorized to make, alter, or discharge contracts, or to waive forfeitures, or to waive or postpone payment of premiums.
‘ ‘ Should default be made in the payment of any premium within three years from the date hereof, this policy shall cease and determine, and, unless reinstated, all payments hereon shall remain the property of the company. The first year’s insurance hereunder is term insurance and shall be valued as such.
“A grace of thirty-one days, during which the policy shall remain in full force, will be allowed in the payment of all premiums, except the first, subject to an interest charge of not to exceed six per cent per annum.
“The mode of premium payment may be changed on any anniversary date, from annual to semi-annual, or quarterly, or vice versa, at the. premium rates in use by the company at the date hereof.
“In the event of default in the payment of any premium hereon, this policy may be reinstated upon evidence satisfactory to the company of the insurability *448of the insured, and by the payment of all past-due premiums, with interest thereon at the rate not to exceed six per cent per annum. The policy reinstated will be subject to any unpaid indebtedness.
‘ ‘ Should there be any error in the statement of the age of the insured, it will be adjusted by the payment of such amount of insurance as the premium actually would have purchased at the correct age.
“This policy and the application therefor shall constitute the entire contract between the parties, and all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties, unless a copy of snch statement shall be used in. defense to a claim under this policy unless it is contained in the written application therefor.
“This policy shall be incontestable after one year from its date, except for nonpayment of premium.
“The insured, subject to the rights of any assignee, may nominate a beneficiary or beneficiaries, provided none be herein named, or may change the beneficiary or beneficiaries at any time, during the continuance of this policy, by filing with the company a written request accompanied by this policy, such nomination or change to take effect upon the indorsement of same on the policy by the company.”
The second annual premium upon the policy became due by the terms thereof on March 11, 1913, and was not paid on that day, but James M. French availed himself of the 31 days of grace, and on April 10, 1913, for the second annual premium of $170.13, executed and delivered to the company his promissory note as follows:
“170.13.
Portland, Oregon, April 10, 1913.
“On the 15th day of July, 1913, without grace, for valued received, I promise to pay to the order of Columbia Life & Trust Company, at its office, in the city of Portland, Oregon, one hundred seventy and 13/100 dollars in U. S. gold coin, with interest thereon in like *449gold coin, at the rate of six (6) per cent per annum, from the 11th day of March, 1913, until paid.
“This note is given on account of the renewal premium for the period of 12 months ending on the 11th day of March, 1914, on policy No. 6551, issued to me by said Columbia Life & Trust Company.
“If this note is not paid, principal and interest, at the maturity thereof, said policy shall thereupon and on the 15th day of July, 1913, without notice or other action by said Columbia Life & Trust Company, lapse and become of no further force or effect; and thereupon this note shall, without notice or other action by said Columbia Life & Trust Company, immediately become due and payable, to the extent of so much thereof as may be required to cover the pro rata premium of the insurance under said policy to the date of such cancellation thereof.
“[Signed] James M. French/'
Thereupon defendant executed and delivered to James M. French its receipt, as follows:
“Columbia Life & Trust Company, “Portland, Oregon.
“No. 1695.
“Premium for one year $170.13, subject to note given in payment hereof.
“Premium as above received this 10th day of April, 1913.
“T. H. Richey.
“Received the annual premium due March 11, 1913, as per statement in the margin hereof, on policy No. 6551, insuring the life of James M. French. This receipt must be countersigned before delivery by T. H. Richey.
“M. M. Johnson, “Secretary.
“ (For terms of mutual agreement see policy.) ”
On March 4,1914, the defendant presented its claim against the estate of French as follows:
*450Portland, Oregon, March 4, 1914. Estate of J. M. French to Columbia Life & Trust Company, Dr.
Note due March 1, 1913............$170 13
June 11, 1913, paid................ 62 50
$107 63
Interest to March 4, 1914.......... 7 46
$115 09
Note for premium policy No. 6551 to July 15, 1913................. 58 59
Interest to March 4, 1914.......... 3 46
62 05
Note for premium policy No. 6579 to July 24, 1913................. 28 35
Interest to March 4, 1914.......... 1 30
29 65
E. and O. E. $206 79
The mode of premium payment as originally provided in the policy was never changed to a semi-annual or quarterly payment.
In her complaint plaintiff alleges, inter alia, that the note was not paid at maturity, but that James M. French was assured by defendant that he might protect the interests of the beneficiary under the policy by agreeing to apply, upon the amount of notes given for the premiums, a claim held by French against the Johnson-Bradford Safe Company, on account of commissions previously earned by him through the sale of its stock to one Oswell; that the sum of $125 was still due to French for commissions upon the sale of the stock, and that the defendant company, French, and the Johnson-Bradford Safe Company, and one Troeh, who had an interest in the commissions, agreed *451that the same should he paid directly by the safe company to the defendant and credited upon the insurance premium due it from French; and, in consideration of French consenting to the application of the commissions to the payment of the notes, the defendant did orally extend the time of payment of the notes and continued in force the insurance policy until the next annual premium was due, and that defendant waived any forfeiture or lapse of the policy by reason of the failure of French to pay the notes when due, or at any time previous to his death; that under such arrangement the $125 was paid to this defendant and applied by it on account of the premium; that the insurance company retained possession of the notes and claimed and insisted that James M. French was liable thereon for the full amount thereof for the principal and interest until December 19, 1913, the day of his death; that on March 13, 1914, Elizabeth French, through her attorney, made a written demand upon the defendant, on behalf of the beneficiaries, for blanks on which to make due proof of the death of the insured, James M. French; that on March 14, 1914, the defendant answered this demand by letter stating in part that:
“Policy No. 6551, Jas. M. French, lapsed on July 15, 1913. Policy No. 6579, Jas. M. French, lapsed on July 24, 1913. Under these circumstances there is no occasion for furnishing blanks for proof of claim as there is no claim. ”
Plaintiff tenders defendant all moneys due upon the notes in payment of the premiums, and also a portion of one given for the first premium upon the policy dated May 24, 1912, and consents that the court may deduct from the amount due upon the policies of in*452surance the sum so due upon the notes, and any amounts to which defendant is lawfully entitled.
For a second cause of action plaintiff declares substantially the same upon policy 6579, issued May 24, 1912, to James M. French, in consideration of the payment to it of the premium of $170.13 upon his life, in which Irene C. French, his daughter, was named as beneficiary, which policy was assigned to plaintiff after his death. The note given for the second annual premium due on the May policy, which was dated June 24, 1913, for $170.13 is of the same tenor and form as the note set forth above. Upon the execution and delivery of such note the defendant company delivered to James M. French a receipt of substantially the same purport as the one above stated, but the note was referred to therein as follows: “Given in accordance with note dated June 24th, 1913.” In connection with sending this receipt to French, the vice-president of the company wrote him a letter on June 24, 1913, in which he made the following statement regarding the payment of the premium, to wit:
“We are in receipt of your valued remittance, in payment of the premium on your policy, and have the pleasure of handing you the official receipt herewith. ’ ’
The other allegations are practically the same as in the first cause of action except as to dates and name.
In its answer the defendant admits the execution of the two policies and the notes for the second annual premiums, but denies that the premiums were thereby paid, alleging that a conditional receipt was given therefor as set forth in plaintiff’s complaint. The defendant denies that the conditional promissory notes were accepted by it in payment of the premiums; that under and by the terms of the conditional promissory *453notes and the conditional receipts given therefor the March policy of insurance “was kept in force until only the fifteenth day of July, 1913”; and that the May policy was kept in force until July 24, 1913.
For answer to paragraph 9 of the first cause of action of the complaint the defendant “denies each and every allegation therein contained, except that this defendant denies any knowledge or information sufficient to form a belief as to whether or not there was still due to the said French for commissions on the sale of said stock in said paragraph set forth the sum of $125, and further except that this defendant admits that the conditional note in said paragraph referred to was not paid at the maturity thereof.”
For answer to paragraph 10 of the first cause of action the defendant “denies any knowledge or information sufficient to form a belief as to whether or not the said Oswell made his final payment upon the said corporate stock on December 1, 1913, and thereupon the said $125 due the said French on account of said commissions became immediately payable.”
Defendant admits that it still retains possession of the notes; that it refused to furnish blanks on which to make due proof of the death of James M. French, upon the ground that the policy had lapsed and was void, and that plaintiff had no claim thereunder; that this defendant was not liable theréfor; that at that time defendant wholly repudiated its alleged liability upon the policies; and that James M. French is dead.
In its further and separate answer the gist of the allegations of the defendant is:
“That the second annual premium upon the said policy of life insurance became due, by the terms thereof, on the 11th day of March, 1913. That the said James M. French wholly failed, refused and neglected to pay the same upon said date, and the said James *454M. French represented unto the said defendant that he would pay said premium on or before July 15,1913, and requested the said Columbia Life & Trust Company to take his conditional promissory note therefor, payable on or before July 15, 1913, and to keep said insurance in force until said date, to wit, July 15,1913. That the said defendant agreed to accept the conditional promissory note of the said James M. French in the sum of $170.13, as herein alleged, and agreed to keep said-policy of life insurance in force until July 15, 1913, but if said conditional promissory note was not paid on said date, that said policy of life insurance should, on said date, to wit, July 15, 1913, lapse and become of no further force and effect. It was mutually-understood and agreed by and between the said James M. French and this defendant that said conditional promissory note so to be executed as aforesaid was not payment of said premium-then due on said policy of life insurance, but, on the contrary, the said Columbia Life & Trust Company agreed to keep .said policy of life insurance in force until July 15, 1913, and thereafter for the current policy year, provided that the conditional promissory note was paid in full at the date of maturity thereof, to wit, July 15, 1913. That pursuant to the agreement aforesaid, and within the days of grace allowed by said policy, the said Jas. M. French made, executed, and delivered to the Columbia Life & Trust Company his certain conditional promissory note, as set forth in the complaint. That thereafter the defendant issued to James M. French its conditional receipt for the conditional promissory note as set forth' in the complaint, no part of which was paid when the same became due or at any time thereafter. That after the notes became due James M. French was repeatedly notified and told that his policies of life insurance had lapsed and were of no force and effect, and on November 12, 1913, the company notified French to that effect in writing. That on or about February 20,1914, and after the Columbia Life and Trust Company had knowledge of his death, a clerk of the company, through a clerical error and mistake, mailed a notice to French as set forth in the *455complaint. That by reason of the acts and facts herein set forth said policy of life insurance so issued on the life of James M. French lapsed and became void and of no further force and effect on the 15th day of July, 1913, and there is now nothing due on account of or by virtue of said policy of life insurance.”
For like reasons the May policy became void and lapsed on July 24, 1913. The reply puts in issue the new matter of the answer in so far as it varies from the complaint.
The substance of the evidence deemed necessary to note is as follows: Mr. S. P. Lockwood, vice-president of the company, was called as a witness by plaintiff, and testified in part that the first premium on the March policy was paid by note, and he believed the note was afterward paid; that when the premium on the March policy for the second year became due, it was not paid in money, but within the days of grace Mr. French gave a note in connection with that premium dated April 10, 1913; that the note was on that date entered on a record card as a premium payment and as a premium loan, and carried as an asset; that the company never offered to return the note to Mr. French before his death, to his knowledge, nor asked for a return of the policy; that it was not the practice of the company to demand a return of a policy ; that on February 22,1914, he had a talk with Mrs. French in regard to money due her husband from the Johnson-Bradford Safe Company, and said, “I told her the money had certainly not been paid to us, * * and did not know whether there was any money due,” but would inquire of Mr. Johnson, the secretary (who is also secretary of the Johnson-Bradford Safe Company, but not the Johnson for whom the safe company is named); that on the same day he, as vice-president of the company, wrote Mrs. French a letter which is in the record and states in part:
*456“Our Mr. Johnson informs me that about Dec. 1st, the second installment of $2,500 on the stock of the Johnson-Bradford Safe Co. was paid to the Johnson-Bradford Safe Co., but that up to the present time the commission which was due Mr. Troeh on this installment, and included in which is any amount which was due Mr. French, has not yet been paid to Mr. Troeh—there being some agreement between Mr. Troeh and the Johnson-Bradford Safe Company under which Mr. Troeh is leaving the amount with them.”
Mr. M. M. Johnson, secretary and actuary of.the company, was also called by the plaintiff, and he testified that the books of the Johnson-Bradford Safe Company show that the $2,500 due December 1, 1913, given by Mr. Oswell for stock, was paid November 28, 1913, upon which the $125 commission was due French; that the books of the insurance company regarding these two notes show as follows:
“Policy number 6551, twenty year endowment, $2,500.00, second year annual payment $170.13, March 11, entered on the 10th day of April. J. M. French, premium note entered under renewal premium, pure 163.67, load 6.56.”
“Description of policy number 6579, twenty year endowment, amount $2,500, year, second, fraction, annual, amount of premium $170.13, due May 24. Entered June 24. J. M. French, premium note. Under' renewal premium pure 163.57, load 6.56.”
A similar entry in regard to the note given for the first annual premium is also shown on such books. Mr. Johnson further testified that the company’s books do not show that the notes were “charged off,” but that they were “considered charged off November 29, 1913”; that first premium notes are usually given to the agent and indorsed by him to the company and second premium notes are made to the company direct; that they investigated the financial standing of Mr. French before taking the notes and making the exten*457sion, and understood Mm to be worth several thousand dollars.
Mrs. French, plaintiff, testified that Mr. French died December 19, 1913; that soon afterward she went to the office of the defendant and was told that the policies had lapsed; that she inquired of Mr. Johnson, the secretary, if a commission of $125 that Mr. French was to receive from the Johnson-Bradford Safe Company had not been paid and he said, “No”; that in three or four days she went to Johnson-Bradford Safe Company to get the commission, and Mr. Johnson informed her that the $2,500 note had been paid, but not the commission; that the $125 “belonged to the Columbia Life”; that her husband had left a check or arranged so “it was to be paid to the Columbia Life as soon as the note was paid,” the $2,500 note; that the $125 payment was for premiums already earned; that she asked if it “was usual for a man to pay on a lapsed policy”; and that afterward Mr. Lockwood wrote her the letter above referred to.
Edwin Lindstedt, witness for plaintiff, stated, in substance: That about December 23, 1913, he went to the office of defendant after the death of Mr. French and asked for blanks to prove the same. That Mr. Johnson said the policies were not in force, and when he inquired about the $125 commission, said “French made arrangement that that commission when (paid) should go direct to the Columbia Life to be applied upon the insurance policies.” That the $2,500 note has not been paid. The witness stated that after he talked with Mr. Oswell he went to Mr. Johnson and told him he understood the $2,500 note was paid. That Johnson said: “It may have been paid. I see there is a commission due in. the morning mail.” That witness claimed a part of the commission, but that French had a right to use it.
*458Howard C. French, plaintiff’s son, testified that in a conversation Mr. Johnson stated to him that there was no written statement, just a verbal agreement that this $125 commission was to be turned over to the Columbia Life when the $2,500 note was paid. The various letters and documents, to which reference has been made, including the written assignment of the May policy to plaintiff, were introduced in evidence.
A motion for a nonsuit was interposed by defendant and overruled, whereupon T. H. Richey, general agent of the insurance company for Portland, testified for defendant that it was his duty to see to the collection from policy-holders; that he had several interviews with Mr. French in respect to the payment of his premiums; that between the dates of maturity of the notes for the second premiums and about November 1, 1913, he tried to get him to reinstate his policies, and called his attention to the amount he would have to pay on a pro rata basis, even though he did not reinstate his policy; that Mr. French was very anxious to reinstate his policy, but was very hard up; that French said he was very sorry the policies had lapsed because of the terms of the note. The testimony of plaintiff’s witness in regard to the statements made by Mr. Johnson, secretary of the insurance company, in regard to the arrangement for the payment of the $125 commission to that company on the policies, was not contradicted.
It is contended by counsel for plaintiff that the second annual premiums on the policies were paid by the two notes given by French; that at that time French was under no legal obligation to pay the second annual premium, and there was then no preexisting debt owing to defendant; that in such case the presumption is that notes were taken in payment of the legal obligation created at the time the notes *459were given; that the provisions in the notes to the effect that if the same were not paid at maturity the respective policies should be forfeited were of no force, for the reason that neither of the policies provided for a forfeiture for the nonpayment of a premium note. It is maintained by counsel for defendant that the effect of the acceptance of the conditional notes was to extend the time of the payment of the premiums and keep the policies in force until the maturity of the respective notes; that the agreement between the insurance company and the insured contained in the notes, made in consideration of the extension of time for payment of the premiums until the maturity of the respective notes, to the effect that if payment was not made at the maturity of the note the policy should lapse and be of no further force or effect, is a valid binding contract, and that by virtue thereof, the notes not being paid, the policies lapsed on the 15th and 24th of July, 1913, respectively. Plaintiff also contends that if the right of forfeiture of the policies did accrue to defendant, it waived the same.
We will first take up the matter of the forfeiture clause in the premium notes, and for a better understanding will refer to some of the general rules of law as announced by the courts and text-writers. As has been stated, may times, the law does not favor forfeitures, and very slight circumstance will be taken advantage of to avoid the effect of a forfeiture: Security L. & A. Co. v. Underwood (Tex. Civ. App.), 150 S. W. 293; Insurance Co. v. Norton, 96 U. S. 234 (24 L. Ed. 689). It is said in 2 May on Insurance (4 ed.), Section 341, in effect, that if the policy by its terms is forfeitable for nonpayment of premium, or any note, given for a premium, when due, a failure to pay at maturity a note given for a premium, or any installment *460or interest thereon, when dne, works a forfeiture. In Section 342, Id., we find:
“But when the policy is forfeitable for nonpayment of the premium, but does not distinctly provide that the nonpayment of a note given therefor at maturity shall work a forfeiture, as this clause is inserted for the benefit of the insurers it must be taken most strongly against them, and the nonpayment of the note at maturity will not work as a forfeiture. The courts will not extend the operation of a condition, the breach of which involves a forfeiture, to a case not clearly within it. # * ”
Much to the same effect, see, also, 2 Joyce, Insurance, § 1211; 2 May, Insurance, §§ 468, 469; Dwelling-House Ins. Co. v. Hardie, 37 Kan. 674 (16 Pac. 92); Arnold v. Empire Mutual Ins. Co., 3 Ga. App. 685 (60 S. E. 470); McGehee v. Rinker, 9 Ga. App. 147 (70 S. E. 962); Fidelity Mut. Life Ins. Co. v. Goza, 13 Ga. App. 20 (78 S. E.. 735); Columbia etc. Ins. Co. v. Mulkey, 13 Ga. App. 508 (79 S. E. 482); Union Cent. Life Ins. Co. v. Buxer, 62 Ohio St. 385 (57 N. E. 66, 49 L. R. A. 737); Montgomery v. Phoenix M. Life Ins. Co., 14 Bush (Ky.), 51; McAllister v. Northeastern Mut. Life Ins. Co., 101 Mass. 558 (3 Am. Rep. 404); Insurance Co. v. French, 30 Ohio St. 240 (27 Am. Rep. 443); Thompson v. Insurance Co., 104 U. S. 252 (26 L. Ed. 765).
It has been held that where the policy provides for a forfeiture thereof for the nonpayment of the premium or a premium note, the right to declare such forfeiture may be waived by the insurer, and that whether the insurance company, has exercised its option to declare a forfeiture of the policy or waived its rights to do so, where such an issue is raised, is a question of fact for the determination of the jury under all the circumstances of the case: Security L. & A. Co. v. *461Underwood (Tex. Civ. App.), 150 S. W. 293; Massachusetts Ben. L. A. v. Robinson, 104 Ga. 256 (30 S. E. 918, 42 L. R. A. 261; Insurance Co. v. Norton, 96 U. S. 234 (24 L. Ed. 689); Hastings v. Brooklyn L. Ins. Co., 138 N. Y. 473 (34 N. E. 289); Id., 53 Hun, 631 (6 N. Y. Supp. 374); Shawnee v. Cannedy, 36 Old. 733 (129 Pac. 865, 44 L. R. A. (N. S.) 376); Insurance Co. v. French, 30 Ohio St. 240 (27 Am. Rep. 443); Grigsby v. Russell, 222 U. S. 149, 155 (56 L. Ed. 133, 32 Sup. Ct. Rep. 58, Ann. Cas. 1913B, 863, 36 L. R. A. (N. S.) 642); Oakes v. Manufacturing F. & M. Ins. Co., 135 Mass. 248; Cranston v. West Coast L. Ins. Co., 63 Or. 247, 438 (128 Pac. 427); Stringham v. Mutual Ins. Co., 44 Or. 447, 459 (75 Pac. 822).
It has also been held that an unconditional demand for payment followed by proceedings to collect a past-due premium note, operates as a waiver: 3 Cooley, Insurance Briefs, §§ 2724, 2726. See, also, Federal Life Ins. Co. v. Warren (Ky.), 181 S. W. 331.
We will hereafter refer to only one policy, as the same discussion will apply to both. In the present case the provisions in the policy plainly direct that any indebtedness thereon to the company shall be deducted from the amount to be paid to French or the beneficiary named. It is also clearly stipulated therein that the “policy and the application therefor shall constitute the entire contract between the parties.” A clause to the same effect is contained in the application. There is no provision for a forfeiture thereof on account of the nonpayment of a premium note. At the time the premium was due the company did not insist upon a forfeiture in case of nonpayment, as. it had a right to do. On the contrary, as set forth in the answer and claimed in the brief of defendant, the company extended the time of payment and accepted *462the note of the insured, conditioned, as stated above, that if not paid on the date of maturity, the policy should lapse and become of no force, and that by reason of the agreement alleged in the answer, the purport of which is shown in the note, the company claims that it is not liable on the policy. Apparently, in view of the fact that in most instances life insurance policies are intended for the protection of relatives after the decease of the insured, the legislature of this state in its wisdom saw fit to enact Section 4632, L. O. L. After declaring that no life insurance company shall permit any discrimination, the section continues :
“Nor shall any such company or representative thereof make any contract of insurance, or agreement as to such contract, other than as plainly expressed in the policy issued thereon.”
While there is some divergence in the opinions of the courts upon the question of forfeiture of an insurance policy, which is in the main due to the variant facts in the cases considered, our statute above noted directs with which line of decisions those of the courts of this state should be classed. In Mutual Life Ins. Co. v. Kelly, 114 Fed. 268 (52 C. C. A. 154), a case before the Circuit Court of Appeals, Judge Adams construes a statute of the State of Iowa, similar to ours, which contains this clause:
“Nor shall any company or any agent thereof make any contract of insurance or agreement as to such contract, other than is plainly expressed in the policy issued thereon.”
At page 272 of 114 Fed., at page 158 of 52 C. C: A., of the opinion he clearly states the purpose of this statute thus: -
*463“The act ox Iowa, supra, in onr opinion, creates no exception to the foregoing general rule governing the interpretation of contracts. That act was obviously intended for three purposes: (1) To prevent discriminations in favor of particular insurants; (2) to secure that certainty with respect to the rights and duties of the parties which is always best attained by written agreements; (3) to provide a ready and available method by which the insured or assured may, at all times have before them the covenants and agreements which they are required to observe or perform.”
We also find the following at page 274 of 114 Fed., at page 160 of 158 C. C. A.:
“It cannot be disputed that plaintiff, who was Kelly’s wife and beneficiary in the policy in question, had a certain vested interest in the policy immediately .upon its issue; such an interest, in fact, that neither Kelly nor the insurer, nor both, could, by appointment or agreement, take from her without her consent. Her rights were created by the contract, and she, as one of the parties thereto, must, on familiar principles, consent to any deprivation, modification or change of such rights before the same can be accomplished: Bank v. Hume, 128 U. S. 195, 206 (32 L. Ed. 370, 9 Sup. Ct. Rep. 41), and cases cited.”
In Bowyer v. Continental Casualty Co., 72 W. Va. 333 (78 S. E. 1001), we find:
“The purpose of statutes of this kind, as declared by the courts, in other states, is to require the contract to he so formed as to enable the insured or assured at all times to have before him the covenants and agreements which he is required to observe or perform and relieve him from the burden of relying upon his recollection of the terms of his contract.”
To the same effect, see Provident Sav. Life Assur. Sog. v. Puryear’s Admr., 109 Ky. 381 (59 S. W. 15). The Iowa Code provides that an insurance company which neglects to attach to or indorse on its policies *464a copy of any application or representation of the insured, which by the terms of the policy is made a part of the contract of insurance, or which may, in any manner, affect its validity, shall be precluded from setting up such representation in defense to an action on the policy. Under this section (1741) of the Code it was held in Summers v. Des Moines Ins. Co., 116 Iowa, 593 (88 N. W. 326), that an insurance company which fails to attach to or indorse on a policy a copy of a premium note given therefor will be precluded from setting up nonpayment of the note in defense, though the policy provides that it will be void if the premium is not paid when due: See, also, Lewis v. Insurance Co., 71 Iowa, 97 (32 N. W. 190); Id., 80 Iowa, 259 (45 N. W. 749). In this last case the policy provided in substance that it should be void if any premium note should be overdue and unpaid at the time of the loss: 1 Cooley, Briefs on Insurance, p. 664. Our statute in effect adopts the rule above quoted from the textbook. The legislature has the constitutional power to prescribe the form of a policy of life insurance and to provide that all contracts of the insurer and the insured shall, in some way, be embraced therein in order that the insurant may leave a complete written record of the- business when he can no longer tell his story: Considine v. Mutual Life Ins. Co., 165 Mass. 462 (43 N. E. 201); New Era Life Assn. v. Musser, 120 Pa. 384 (14 Atl. 155). That the note given for the second annual premium is a valid one, as treated by both of the parties, seems to us to be beyond the pale of discussion. There is no inhibition against an insurance company taking payment of a premium in commercial paper, or any other thing of value, or doing a credit business, as the policy issued by this company indicates it proposes to do: Amarillo L. I. Co. v. Brown *465(Tex. Civ. App.), 166 S. W. 658. The transaction was of the same force as though the company had loaned Mr. French $170.18 and taken his note therefor, and he in turn had paid the money to the company for the premium and received its receipt therefor. Neither does there appear to be any room for controversy as to the fact that when the premium became due the company waived its right to insist upon a forfeiture then, accepted the note, and thereby extended the time of payment until July. The question arises upon the forfeiture clause, contained in the note, which is no part of the policy. Had the latter instrument provided that upon failure to pay a premium note the policy should lapse, the case would be different. Independent of our statute, we think the rule founded upon the better reason, as well as sanctioned by the weight of authority, is that the courts will not declare a forfeiture of such a policy unless it distinctly provides therefor; that where such an instrument makes provision for a forfeiture for nonpayment of the premium, but in no way provides that the failure to pay a premium note at maturity shall work such a penalty, the courts should not extend the operation of the condition stipulated as a basis of forfeiture beyond the terms of the contract made by the parties as shown by the policy. The agreement set out in the answei and provided for in the note, to the effect that upon the nonpayment of the note given for the second annual premium the policy should be forfeited, not being contained in the contract of insurance, should not be enforced as against the beneficiary. To do so would be for the court to enforce a forfeiture “not nominated in the bond.’’ The parties should make their own contracts, and in the manner directed by the statute.
*466As to a waiver, aside from the questions noted: Neither the policy nor the clause attached to the note provides that if the latter is not paid at maturity the same shall thereby become a nullity. Under any phase of the ease, if it saw fit the company could retain the note and insist upon its collection, or, in other words, waive the right of forfeiture, if it had that right, when the note matured. The company retained the $170.13 note. The letter of November 12, 1913, in which the note is included among those mentioned, did not indicate to French that the company claimed only a pro rata part sufficient to pay the premium to the date of the maturity of the note. Not until after his death does it appear that the amount of premium to that date was ever computed. The note remained upon the records of the company as a valid claim against French during his life. About a month before he died it is stated that it was “considered charged off. ’ ’ The official receipt issued would indicate to the ordinary mind that the premium was paid for one year by the acceptance of the note. The letter stating that the company had received “remittance in payment of the premium on your policy” would naturally confirm the same belief. The arrangement as to the $125 as testified to by plaintiff’s witnesses, if made, would be quite a substantial compliance with the demand in the letter of November 12th for a “substantial payment,” and may have been a reason for the belief in the mind of French that his policy was still in force. All the evidence taken together tended to show a waiver of forfeiture, if there was one, and that question should have been submitted to the jury. The writer is Irmly convinced, however, that the case should be determined by the court upon the former point.
Mr. Richard W. Montague and Mr. Prescott W. CooJcmgham, for the petition.

Mr. Guy C. H. Corliss, contra.

In Banc.
James French, the insured, died on December 19, 1913, while the policy was still in force. The insurance company waived formal proof of death. There is no controversy in regard thereto. The trial court erred in directing a verdict and entering judgment in favor of defendant. Under the facts in this case the, judgment of the lower court should be reversed and the cause remanded for a new trial.
Mb. Chief Justice Moobe concurs in the result.