Court Opinion

ID: 8759900
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:01:53.066352+00
Date Added: 2024-06-11T17:01:29.839181
License: Public Domain

AMIDON, District Judge
(dissenting). In order to correctly understand the several provisions of the written instruments from which the court holds that the insured ought to have known that his policies would be forfeited on the 18th day of September, 1900, if his notes were not then paid, the parts of the policy bearing on that subject and the notes themselves ought to be brought together before the mind. The pertinent provisions of the policy are as follows:
“This policy is automatically nonforfeitable from date of issue as follows: First, if any premium is not duly paid, and if there is no indebtedness to the company, this policy will be endorsed for the amount of paid-up insurance specified on the second page in the table upon written request therefor within six months from the date to which premiums were duly paid; or, if no such written request is made, will automatically continue from said date for $2,500 for the term specified in said table and no longer. Said paid-up insurance or continued insurance shall be subject to the provisions of this policy, without further payment of premiums, but without participation in profits, or the right of securing cash loans.
“Second. If any premium or interest is not duly paid, and if there is any indebtedness to the company, this policy will be endorsed for such amount of paid-up insurance as any excess of the reserve held by the company over such indebtedness will purchase according to the company’s present published rate of single premiums; upon written request therefor within six months from the date to which premiums were duly paid; or if no such request is made, an insurance equal to the net amount that would at the time be payable under this policy as a death claim, will automatically continue for as long a period of time as any excess of the reserve held by the company over such indebtedness will pay for a single premium for term insurance, according to the company’s present published rates and for no longer. Such paid-up insurance or continued insurance shall be subject to the provisions of this policy, without further payment of premiums, but without participation in profits, or the right of securing cash loans.
“Third. If the nonforfeiture provisions, in either of the two preceding paragraphs become operative, the insured may resume full participating premium-paying membership at any time within five years thereafter, upon written application therefor, and the payment of premiums to date of resumption, with interest at the rate of five per cent, per annum, including interest due and unpaid on any loans, subject to evidence of insurability satisfactory to the company, and to payment or reinstatement of any loans.
“If any premium is not paid on or before due or within the month of grace, the liability of the company shall be only as hereinbefore provided for such case.
“Grace in the Payment of Premiums. A grace of one month during which the policy remains in full force, will be allowed in payment of all premiums except the first, subject to an interest charge at the rate of five per cent, per annum.”
The notes were in the following form:
“March 18, 1900.
“Without grace, six months after date I promise to pay to the order of the New York Life Insurance Company, 57.55 Dollars at First National Bank, Omaha, Neb.
“Value received, with interest at the rate of 5 per cent, per annum.
“This note is given in part payment of the premium due March 18th, 1900, on the above policy, with the understanding that all claims to further insurance, and all benefits whatever which full payment in cash of said premium would have secured, shall become immediately void and forfeited to the New York Life Insurance Company, if this note is not paid at maturity; except as otherwise provided in the policy itself. Henry C. Lcfler.”
I agree with the majority of the court that when all the foregoing language is examined by the trained judicial mind, aided by the argu*819ment of counsel, the conclusion is justified that the policy became immediately forfeitable on the 18th day of September, 1900, in case of the nonpayment of the notes. Conceding this, however, I do not think that the affirmance of the judgment necessarily follows. It is now elementary law not only in federal courts, but in all American and English courts as well, that the forfeiture of insurance policies is not favored, and that if the language which the insurance company has chosen is open to construction that construction will be adopted which will sustain the policy. Not only this, but it is also now settled that the language conditioning a forfeiture must be both plain and explicit. The policy holder cannot be required to bring together such complicated instruments as are presented by this record, and deduce from an analysis of their provisions the company’s right to the forfeiture of his policy. The rule that all the provisions of contracts will be examined to ascertain the rights of parties cannot be resorted to for the purpose of evolving a right of forfeiture. That right, if it exists, must be stated in express language, and not be found either by reference or as a deduction from combining numerous provisions. Any other doctrine makes an insurance contract a snare and a fraud on the assured. McMaster v. Life Insurance Co., 183 U. S. 25, 49, 22 Sup. Ct. 10, 46 L. Ed. 64; Royal Insurance Co. v. Martin, 192 U. S. 149, 162, 24 Sup. Ct. 247, 48 L. Ed. 385; and opinion of Judge Hook in Atlas Reduction Co. v. New Zealand Fire Ins. Co. (C. C. A.) 138 Fed. 509.
I cannot escape the conclusion that the court in the foregoing opinion has approached the question for decision in a mistaken light. The question is not what do these instruments say to a trained judicial mind, aided by the argument of counsel, after all of their relevant provisions have been sorted out and brought into such relationship as to make their meaning manifest. The question rather is what would these provisions mean, as they stand embodied in the instruments, to the average layman, untrained in the construction of written documents. When the question is thus looked at, it does not seem to me that the conclusion of the majority is either “clear” or “obvious,” as the opinion states. The words “without grace,” occurring as they do in a promissory note, are certainly as open to the construction that they refer to the 3 days of grace allowed by the law merchant as to the 30 days allowed by the policies. The concluding phrase of the note, “except as otherwise provided in the policy itself,” would be as likely to direct the mind of a layman to the provisions of the policy allowing 30 days additional time for payment as to the other provisions relative to paid-up insurance. The practice of allowing a period of 30 days for the payment of life insurance premiums is now universal. The payment of the notes in question was really the payment of such a premium. If the company seeks to take that payment out of the general practice as to the payment of insurance premiums and condition a forfeiture of the policy upon a failure to pay the notes promptly at their maturity, it ought to have declared this purpose expressly, and in plain language in the notes themselves, and not by dark and ambiguous reference to the complicated pro*820visions of the policy. Instead of framing the notes in the language adopted, some such language as this should have been used:
“This note is given in part payment of the premium due March 18, 1900, on the above policy. The thirty days of grace allowed by the policy for the payment of cash premiums will not he allowed for the payment of this note; on the contrary, if this note is not paid at the date of its maturity, Sept. 18, 1900, all claims to further insurance and all benefits whatever which full payment in cash of said premium would have secured will become immediately void and forfeited to the New York Life Insurance Company, except the right to paid-up insurance as provided in said policy.”
This language would have fully protected the company, and would have at the same time fairly and justly advised the insured that the note was excepted from the general practice as to the payment of cash premiums, and that his policy would be forfeited if the note was not paid promptly at its due date. If we are to adopt the doctrine that language which to the trained judicial mind, aided by the argument of counsel, expresses a right of forfeiture secures that right, what becomes of the rule that the right of forfeiture must be expressly stated and not by reference, and must be embodied in plain and unambiguous language? It is simply abolished. In my judgment the majority of the court has failed to give effect to this rule in the foregoing opinion, and the Supreme Court of Wisconsin fell into a similar error in Behling v. Northwestern Life Insurance Company (Wis.) 93 N. W. 800.