Court Opinion

ID: 8774617
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:56:36.153016+00
Date Added: 2024-06-11T17:02:27.214275
License: Public Domain

BUFFINGTON, Circuit Judge
(dissenting). The policy here in suit provided:
“If ¡my premium is not paid on or before the day when due, or within the month of grace, the liability shall only be as heretofore provided.”
And—
“Only the president, a vice president, the actuary, or a secretary has power in behalf of the company to make or modify this or any contract of insurance, or to extend the time of paying any premium.”
As the insured had borrowed on the policy to its full capacity, its automatically nonforfeitable clause, referred to above as “heretofore provided,” did not apply. Consequently the case turned wholly on forfeiture by reason of nonpayment of the annual premium.
The disputed facts in support of the alleged waiver of forfeiture, as testified to by the insured’s wife, were sustained by the verdict, and are therefore accepted as true. This court, in its opinion, holds there was no evidence from which a jury could infer waiver of forfeiture. From that conclusion 1 differ, and the importance of insistence on the legal principles applicable to waivers of forfeiture and to the right of a jury alone to determine the fact of waiver, in my judgment. warrants me in recording this dissent.
The policy in question was for the whole life of the insured. Upon it he had paid some eight annual premiums, -of $579.(50 each. The insurance company’s right to terminate the contract for nonpayment of premiums was a forfeiture. New York Life Ins. Co. v. Statham, 93 U. S. 24, 23 L. Ed. 789, where it was said:
This "is ¡in entire contract of assurance for life, subject to discontinuance and forfeiture, for nonpayment of any of the stipulated premiums. * * * Each installment is, in fact, part consideration of the entire insurance for life. It is the same thing, where the annual premiums are spread over the whole life.”
But such forfeitures may not only be waived, but the company— and this it seems to me is the crux of the present case — may by its conduct estop itself from setting up a stipulated ground of forfeiture. In Insurance Company v. Eggleston, 96 U. S. 572, 24 L. Ed. 841, Mr. Justice Bradley said:
“We have recently, in the case of Insurance Company v. Norton, 96 U. S. 234 |24 L. Ed. 6S9J, shown that forfeitures are not favored in the law, and that courts are always prompt'to seize hold of any circumstances that indicate an election to waive a forfeiture, or an agreement to do so ou which the party lias relied and acted. Any agreement, declaration, or course of action on the *850part of an insurance company which leads a party insured honestly to believe that by conforming thereto a forfeiture of his policy will not be incurred, followed by due conformity on his part, will and ought to estop the company from insisting upon the forfeiture, though it might be claimed under the express letter of the contract. The company is thereby estopped from enforcing a forfeiture. The representations, declarations, or acts of an agent, contrary to the terms of the policy, of course, would not be sufficient, unless sanctioned by the company itself. Insurance Company v. Mowry, 96 U. S. 544 [24 L. Ed. 674]. But where the latter has, by its course of action, ratified such declarations, representations, or acts, the case is very different.”
The case then tui;ns on the question: Are there in this case any facts, acts, conduct, or circumstances in evidence which “indicate an election to waive a forfeiture”? For, if there are, the courts, as said by Justice Bradley, “are always prompt to seize hold of any circumstances that indicate an election to waive a forfeiture, or an agreement to do so on which the party has relied and acted.”
Now, in the present case, the policy provided for the payment of the whole annual premium of $579.60, which matured November 27, 1907, on the extended grace day of December 27, 1907. Nonpayment of such entire amount on the latter day was a ground of forfeiture, and the question was whether the company by its conduct so misled the insured in reference to that premium by accepting a part of the premium that it could not set up nonpayment of the other part as a ground of forfeiture. What are the facts and circumstances of this case bearing on the dividing of this premium, and accepting a proportionate part? This company had originated, and in Mr. Slocum’s case had in three previous annual premium payments followed, a mode of dividing annual premiums and accepting proportionate parts through the use0of what were called blue notes. This system was in general use, and these blue notes were furnished to agencies as the regular printed blanks of the company. Indeed, it was shown by proof on the part of the company that this method of settlement was one which, the company authorized its agents to make. To that extent, and especially by its use in three settlements made previously on this particular policy, it impliedly' modified or impliedly waived the express provisions of the policy quoted above, which made omission to pay the whole annual premium on the annual due day an unqualified ground of forfeiture, which could only be waived by certain officers. Now, when these so-called blue notes are examined, it will be seen, strange as it may appear, that while ostensibly contracts for the payment of money, they absolutely impose no liability whatever on the maker and confer no right on the payee. Their terms are:
“If tbis note is not paid on or before the date it becomes due, it shall thereupon automatically cease to be a claim against the maker.”
An examination of the whole note discloses its purpose, and that purpose is the important, fundamental fact in this case. Under the terms of the policy, a failure of the insured to pay the whole of his annual premium, which in Mr. Slocum’s case amounted to $579.60, on the grace day, forfeited his policy. But the.insured might, as was the case with Mr. Slocum, in three previous blue note settlements, be unable to pay more than a proportionate part, say, for example, one-*851half the premium, or six months’ insurance. But the company could not unconditionally accept such part premium payment, since payment thereof left both insured and insurer in a debatable position. It was unfair to the company, because the insured might contend that such part premium payment was an extension of credit for the nonpaid premium part. On the other hand, it was unfair to the insured, because the company might insist — -just, by the way, as it is doing in this case — that the nonpaid part of the premium forfeited the six months’ insurance which the part paid premium had actually paid. Now. although the insured could not pay the entire premium, both parties, from the standpoint of their own interests, wanted the policy kept alive — the insurance company to get future premiums, and the insured to get future insurance. In order, therefore, to allow the insured to pay for a part of the year, to carry his insurance for such paid part, and permit him, at the expiration of such paid period, to pay for the insurance for the unpaid rest of the year, if he so selected, but imposing no liability if he did not, this blue note system was devised. Such intent is clearly outlined in the note in these provisions :
“On or before May 27tb, after date, without grace, and without demand or notice, 1 promise to pay to the order of the New York life Insurance Company four hundred and thirty-four dollars, at the Citizens’ Central National Bank of New York, value received, with interest at the rate of live per cent, per annum. This note is accepted by said company at the request of the maker. together with one hundred forty-live and <io/ioo dollars in cash, on the following express agreement: That, although no part of the premium due on the 27th day of November, 1907, under policy No. 3011158, issued by said company on the life of Alexander \V. Slocum, has been paid, the insurance thereunder shall he continued in force until midnight of the due date of said note; that, if this note is paid on or before the date it becomes due, such payment, together with said cash, will then he accepted l>y said company as payment of said premium, and all rights under said policy shall thereupon be the same as if said premium had been paid when due; yhat. if this note is not paid on or before the day it becomes due. it shall thereupon automatically cease to he a claim against the maker, and said company shall retain said cash as part compensation for the rights and privileges hereby granted, and all rights tinder said policy shall be the same as if said cash had not been paid nor this agreement made.”
Now it is clear that the insurance company, by establishing such a system and intrusting the carrying out thereof to its agents, as it did by furnishing them with its notes, either meant to empower the agent in proper cases to waive payment of the entire premium as a requirement to prevent forfeiture, or else was guilty, which, of course, is not the case, of an intent to mislead insurers. It follows, therefore, that, the agent being empowered to use this blue note system, the case resolves .itself, not into a question of law as to the existence of a power in the agent to waive forfeiture, but into one of fact, viz., whether the agent used such conceded power in a way to mislead the insured. The existence of a power is usually a question of law, on which a court will give binding instructions; but whether an agent used it, and by its use affected his principal, is as clearly a fact for a jury’s determination. In other words, the jury had a right, from the course of conduct of this company, to infer from the creation of this *852blue note system that the postponement of part of the premium was intrusted to their agents; and, such being the case, the question whether the agent had exercised that power in a way to mislead the insured was not a question of law for the court, but purely of fact, and therefore for the jury.
Now, the decedent, Slocum, having used this blue note system of settlement for the three preceding annual payments through his wife, she went to the Pittsburgh agency, as she had previously done, a few days before November 27, 1907, as she testified, or before December 27th, as the agent said, and discussed with him as to the payment of the coming annual premium. Pie suggested, for the determination of herself and her husband, the latter being then ill, two. different plans, one of which was the blue note method, which was for the payment in cash of $204.20, which was $118.60 for'interest at 5 per cent, in advance for six months from November 27, 1907, on a loan to Mi*. Slocum on his policy of $2,360, and $145.60, for the proportional part of the premium for six months. Mrs. Slocum testified the agent said:
“That if I paid $204.20, and gave a note for the balance, which was $434, to be paid on the 27th day of May, 1908, that that would carry it; the $204.20 would carry it until May, and the other would carry it for the rest of the year.”
At about 11 o’clock of the morning of December 27, 1907, which was the last due day of the premium, Mrs. Slocum again called at the office, told the same agent that they had decided to adopt the blue note plan, and then actually paid him $264.20, agreed upon, by a- check of that date of John P. Scott, a family friend, made to the order of Mrs. Slocum, and by her indorsed to the company. No receipt was given her for the money she paid; but the company proceeded to indorse and collect the check, which in itself evidenced her payment. Mrs. Slocum then says:
“I gave him the check for $2G4.20, and he handed me the blue note, and another paper in an envelope, and he said that the note must be signed, and X must return it. I told him Mr. Slocum was ill, and it might be several days before I could send it back, and he said that would be all right; ‘mail it as soon as you can.’ * * * I took it home, and before taking off my coat or hat I went upstairs to my room, and Mr. Slocum was lying on the bed. I told him that the insurance had been fixed, and that I had a note for him to sign, and he didn’t answer me. He was lying on the bed with his eyes closed, and I repeated it. He opened his eyes, and looked at me, and closed them again. He tried to answer, but he couldn’t; and it seemed too brutal, I couldn’t talk to him about it. Q. Hid he die? A. He died on the 31st. Q. And without signing the note? A. Yes, sir.”
Under such facts and circumstances, it seems to me the court' below was warranted in charging the jury as it did:
“If by any agreement, declaration, or course of action by and on the part of the representatives- of the company with whom this plaintiff was in the habit of dealing, the plaintiff was led honestly to believe that she could settle the piremium In the manner claimed by her,, and thereupon acted upon this theory and belief, and paid part of the premium due on the policy, as testified to by her, and agreed to return the note as directed by the defendant’s representative, that under such conditions, and the facts and- circumstances of this case, the defendant should not justly be allowed to interpose the defense of *853forfeiture of the policy, nor should the plaintiff thereby be prevented from recovering.”
The majority opinion gives no effect to the fact that the premium for six months was actually paid; that the conipany collected the money, and the transaction was closed, with the understanding that the noncontractual note was to be signed. It treats this case as though it were based on a contract o£ December 27th, and which was only to come into existence when the blue note was signed. If Mrs. Slocum had paid no money that day, or if the insurance company ha4 simply held the check, and said the closing of the transaction would await the signing of the blue note, there would be ground for giving-such effect to such an inchoate arrangement; hut we are not dealing with such a state of facts, but with a question of conduct evidencing a waiver of forfeiture founded on money paid by the insurer and collected by the insured, and not with a situation where no consideration had actually passed. The insurance company cashed her check, collected the money, which paid interest it had not earned and insurance for six mouths. The payment of the apportioned premium by the insured, and its acceptance by the company, were the substantial matters evidencing an intent to waive forfeiture, and not the signing of the blue note, which, as we have seen, imposed absolutely no liability on the insured, and conferred absolutely no right on the insurer. That was a mere matter of formality, and under the circumstances the jury was warranted in finding that both parties regarded it as such. The transaction took place in the city of Pittsburgh near noon on the last permissible day. The policy shows the deceased lived at Bellevue, some tniles away from the city. The agent was told Mr. Slocum was ill, and it might he several days before the note could be returned, and to- this he said:
“That will bo all rigid ; mail it as soon as yon -can.”
Mrs. Slocum omitted nothing she was called on to do. She took the paper to her husband at once, but his condition was such as to preclude him from signing it. No one contemplated it being signed that day, or that its signature was a prerequisite to either party enjoying the .benefits of the arrangement, viz., the company getting the premium by cashing the check, and the insured getting the insurance he had. paid for. If the omission to sign this noncontractual note is the missing link in the chain of events showing a waiver of forfeiture, then we have an effect given to it which neither the company nor Mrs. Slocum contemplated, else why, if the company regarded the arrangement as incomplete, did it cash the check? The vital question in the case is the fact of forfeiture, and evidence-of that is intent. That the .company, by the adoption of this blue note system, authorized its agent to accept proportional premiums, cannot he gainsaid.
It follows, therefore, that whether the agent did accept the proportional payment as a pro tanto waiver of forfeiture was a question of fact, depending, just as a question of négligence would, on inferences from conduct, facts, and circumstances, and one, therefore, peculiarly within the province of a jury.