Court Opinion

ID: 6123263
Source: CourtListenerOpinion
Date Created: 2022-02-04 20:11:53.621987+00
Date Added: 2024-06-11T08:24:19.817630
License: Public Domain

DaNiels, J.,
dissenting:
This action has been brought upon two policies of insurance, issued by the defendant to John G. Yose upon his own life, on the 28th day of October, 1869. He assigned these policies to his children on the 4th of November, 1872, and in the assignments covenanted to pay the annual premiums upon them out of their moneys in his hands and to keep the insurance in force. At that time, and up to the period of his own decease, he was the general guardian of these children, who were minors, and the premiums on the policies were paid by him for the years 1870, 1871 and 1872, besides the sums required to be paid when the policies were issued. Before the premiums became due for the year 1873, he became insane, and continued to be so until the 17th of March, 1874, when he departed this life. When he became insane he had moneys in his hands belonging to his children, from which these premiums might have been paid; but they were not paid because of his insanity.
To the complaint, alleging these and other facts, the defendant demurred, on the ground that they were insufficient to constitute a cause of action. That was overruled by the Special Term, and in support of the appeal taken from the order, the point most elaborately argued was, whether there had been a forfeiture of the policies because of the non-payment of the annual premiums, when that resulted from the existence of this state of insanity, and it has been very ably and thoroughly considered in an opinion already -written by the learned justice presiding on the argument of the appeal; but whether the position there taken and maintained should be adopted in the disposition of the case will not now be discussed, for the demurrer can be properly disposed of without considering that subject.
These policies provided for other liability on the part of the defendants, besides that for payment of the amount mentioned in *330them, and for which they were primarily obtained, and the facts exhibiting these obligations have been set forth and averred in the complaint. One of them was the obligation to make and declare dividends out of its surplus earnings, in which the insured was entitled to participate; and in conformity to it the complaint shows such a dividend to have been declared to the extent of the sum of $210 in favor of the assured; but as it was not sufficient to meet the premium which afterwards matured, it was not obliged and does not seem to have credited the amount on this policy. Still no right of action for its recovery exists under the circumstances stated, for no demand of the amount has ever been made upon the defendant, and such a demand seems to be necessary before an action for the recovery of the dividend can be sustained. (Scott v. Central R. R. Co., 52 Barb., 45.) But as to another of these obligations, the plaintiff’s case stands in a very different condition; that was created and stated in the sixth condition to which the policies were subjected, and by that it was provided and declared: ‘1 Sixth. That if after the payment of two or more annual premiums upon this policy, the same shall cease and determine by default, in the payment of any subsequent premium when due, then, notwithstanding such default, this company will grant a ‘ paid-up policy ’ (payable as above) for such amount as the then present value of this policy will purchase as a single premium, provided that this policy shall be transmitted to and received by this company, and application made for such ‘ paid-up policy ’ within one year after default in the payment of premium hereon shall first be made.”
Three of the annual premiums were shown by the complaint to have been paid upon each of these policies, and by reason of that fact this provision had become operative in favor of the assured and his assignees, under the terms of the assignments made to them, for all moneys becoming payable under the policies were assigned, as well as the policies themselves ; and it has been averred that at the time when the proofs of death were presented to the defendant, which was on or about the 10th day of October, 1874, the policy for the sum of $20,000 was transmitted to and received by the defendant, but it refused to grant a paid-up policy for the amount of the value of the policy as a *331singlo premium on the 28th day of October, 1873, the day when the default was made in the payment of the annual premium. These facts constituted a compliance with what the defendant had prescribed to entitle the assured to a paid-up policy; and at that time they were the assignees of the policy. Their application was made within the year after the default, and in the mode described by the defendant, and it refused to perform this obligation, and that was sufficient to constitute a cause of action in the case.
For the purpose of justifying the defendant in its refusal, it has been urged that as the person whose life had been insured was dead at the time of this application, the condition itself could not be complied with by issuing a paid-up policy. But that was not a contingency to which the performance of this obligation had been subjected. It had been rendered dependent, on the contrary, on two circumstances only. They were that two or more annual premiums should be paid, and that the application should be made within one year after the first default, and both were shown to have been complied with in the case.
As a continuing insurance, the policy applied for would truly be inoperative; but the essence of the obligation was not of that nature. It was that the company would place itself in the position in which it would be obliged to pay the value of the paid-up policy for premiums received by it, and that it was shown to have refused to do.
The case, in this respect, is quite analogous to those in which insurance companies have been held liable, after losses have arisen on their contracts or those of their agents, to make and issue policies never made out or delivered. The fact that the policy could not afterwards be operative as an existing insurance was not allowed to exonerate the company from the effect of its obligation; but it was required to jiay the loss the same as though a formal policy had been executed to include it. These authorities have been cited in the case of Post v. Ætna Ins. Co. (43 Barb., 351, 362-364), and the same principle may well be applied to the disposition of this case.
The practical object of this condition was to place the assured in a position in which substantial benefit should be derived from *332the premiums paid, even though that should be followed by a subsequent default. It was to secure the same advantage as if an amount of money, equal to the value of the policy at the time, were paid over for a paid-up policy. This was the spirit and intent, as -well as the import, of the language used in the condition, and no such insuperable obstacle stood in the way of its performance as should deprive the assured of its benefit. The company had assumed this obligation and it could have been literally performed by it, and the effect of that performance would be to entitle the assignees to demand and receive the amount required to be paid to discharge the paid-up policy. Its refusal to perform rendered it liable in damages for an equivalent amount, and that the present plaintiff" has, by the facts stated, shown herself entitled to in this action. That is a good cause of action, although not very artistically set forth. In many other respects more precision should have been given to the allegations made; but while they may not be free from other objections, they are sufficient against the defendant’s demurrer, for the facts stated do show the existence of this cause of action. The case is an important one, and all the facts should have been more clearly and properly pleaded; but as it now stands the appeal from the order cannot be sustained.
The order accordingly should be affirmed; but as the cause of action upon which that result has been reached has not been separately set forth, it should be without costs of this appeal.
Judgment reversed.