Court Opinion

ID: 5170739
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:54:41.76482+00
Date Added: 2024-06-11T08:26:04.608383
License: Public Domain

ON REHEARING.
2. An insurance company may waive forfeiture for noncompliance with the provisions of a policy by it's own conduct, and as a forfeiture is not favored, waiver will be inferred whenever it is a reasonable inference from the faets. The provisions of the policy alone do not of themselves work a forfeiture.
3. Ordinarily, evidence of a waiver is not admissible, unless waiver is pleaded; but this is true only where the party relying upon the waiver had an opportunity to raise it by proper pleading. It is not true if waiver is properly relied upon by plaintiff as rebuttal matter to meet a defense raised by defendant. Held, that in this case the point of waiver is raised in rebuttal to meet the defense of forfeiture attempted to be raised by defendant.
MCCARTHY, District Judge.
A rehearing was granted in this cause and the principal point urged in the argument on the rehearing is that the insurance policy issued by appellant to respondent had lapsed before the death of the insured for failure to pay an instalment of the premium.
It appears from the stipulation of facts that the policy was issued as of November 8, 1912, upon an application of the same date. In the application the insured agreed to pay a yearly premium of $60 in four instalments of $15 each. The following language is used in the application:
“I agree to pay therefor $60.00 in 4 instalments of $15.00 each. If paymaster’s order is given to provide for the payment of these instalments, I agree to pay them as therein provided, and do hereby make such order a part of my contract with the Company.....I further agree that if any payment be not made by 12 o’clock noon, standard time, of the day when due, as above specified, all my rights under said policy and the rights of the beneficiary thereunder shall then and thereby become void, and that my policy can be reinstated only at the option of the Company as provided in the policy and that no claim for loss arising between the time of such forfeiture and reinstatement shall be good against the Company. ’ ’
The insured also signed a pay order authorizing his employer, the Oregon Short Line Railroad Company, to deduct his premium in four instalments of $15 each from his wages *33for the months of December, 1912, and January, February and March, 1913. The pay order contains the following language: “ .... and further, at the option of the Continental Casualty Company, to pay any instalment, payment of which has been in default from any reason whatever, from my wages for any month thereafter succeeding.
“I understand and agree as to the duration of my insurance; .... (2) that if premium is payable in four instalments the payment of the first, second, third and fourth instalments shall continue my policy in force for respective periods of two, two, three and five months, .... all such periods to be computed successively from the date of the policy; (3) that the failure to pay any instalment of premium, from whatsoever cause it may arise, shall terminate my said policy at the expiration of the specified period without any notice; (4) that the paymaster is my agent and his action entirely at my risk; (5) that should default be made in the payment of any instalment and the defaulted instalment afterward be paid, then such payment shall reinstate my policy only from the date of acceptance of the overdue premium as provided in the policy.”
The insurance policy contains the following provisions:
“The Company shall not be liable for any loss occurring while the Assured shall be in default in the payment of any premium. If this policy shall lapse at any time by reason •of the failure of the Assured to pay premium as agreed the subsequent acceptance of the overdue premium by the Company .... shall reinstate the policy as to accidental insurance to cover disability or death resulting from accidental injury thereafter sustained
The pay order gave the insurance company option to collect any instalment, payment of which had been defaulted for any reason whatever, from wages for any month thereafter succeeding, and further provided: “should default be made in the payment of any instalment and the defaulted instalment afterward be paid then such payment shall rein*34state my policy only from the date of acceptance of the overdue premium as provided in the policy.”
The insurance company sent the railroad company a notice authorizing the deduction of the first instalment from the insured’s wages for December, 1912. The December wages were payable about the middle of January and the instalment was received by the insurance company on January 20, 1913. The instalment from the January wages was not paid. About February 20th the insurance company learned that the deduction from the January wages had not been made, and sent the insured a notice, marked exhibit “G,” reading as follows:
“This is to inform you that we have been unable to collect the 2nd instalment on order No. 2206520 given by you on paymaster of the Oregon Short Line Railroad Co.....to pay the premium on your insurance. This instalment of $15.00 should be sent to this company immediately. Otherwise you will be without insurance until the overdue premium is received in the usual way from your paymaster. No man can afford to he without insurance. ‘It is better to be safe than to be sorry.’ ”
The insurance company in making up the February paymaster’s list, included the name of the insured in order that the instalment from the January wages might be collected, and sent this list to the railroad company about February 20th. On February 24th, the "insured was killed and the insurance company learned of this fact on March 3d. It never recalled the demand made on the railroad company for payment, and received payment from the railroad company out of wages due the insured on March 20th. It kept this money until April 29th, and then tendered it back and attempted to declare a forfeiture of the policy.
The contention of the appellant is that the insurance policy was forfeited at the time of the insured’s death by reason of nonpayment of an instalment from the January wages.
It occurs to us that the first question is: How long did the payment from the December wages, received on January 20, 1912, continue the policy in force?
*35The pay order says that if the premium is payable in four instalments the payment of the first, second, third and fourth instalments shall continue the policy in force for respective periods of two, two, three and five months, all such periods to be computed successively from the date of the policy. This apparently contemplates that there shall be a first payment at the time the policy is issued which shall continue the policy in force for two months from that time, and that there shall then be a second payment which shall continue the policy in force for two months more. In this case it is apparent that the first payment was waived. The company gave McKune credit for the first payment, and if he had died during the first two months, the policy would have been in force upon payment of the premium after his death. The first payment which he made took the place of the second payment, in the ordinary case. In the ordinary case, the second payment would continue the policy in force for two months from its date.
It may thus be reasonably contended in this case, in accordance with the language of the pay order, that the payment made on January 20th continued the policy in force for two months from its date. The use of the language to the effect-that all periods are to be computed successively from the date of the policy furnishes some ground for an argument to the contrary, but this argument is met by the fact above pointed out that the first payment was waived and the payment made on January 20th is to be considered as similar to the second payment in the ordinary case.
If the construction of an insurance policy, as applied to the facts of the case, is a matter of doubt, then we are inclined to think that a construction is to be favored which prevents a forfeiture rather than one which favors a forfeiture. This is a reason for favoring the construction above outlined. There may be other provisions in the pay order and policy which favor a different construction, but in such cases, we hold that those provisions should be given effect which prevent a forfeiture, rather than those which favor one.
*36Since the payment on January 20th continued the policy in force for two months, or until March 20th, and the insured' was killed on February 24th, it is evident that he was not in default at the time of his death.
The construction of the contract which we have adopted disposes of the case, but we think it well to advert to the question of waiver which was also mentioned in the argument.
The respondent contends that even if the insured was in default at the time of his death, the insurance company waived its right to insist upon a forfeiture of the policy by its conduct in first demanding payment of the past-due premium; second, failing to recall that demand, even after learning of the insured’s death; and third, keeping the money for over thirty days after receiving it. It is, of course, the settled law that an insurance company may waive a forfeiture and that, a forfeiture being not favored, a waiver will be inferred whenever it is a reasonable inference from the facts. The mere provisions of the policy do not of themselves work a forfeiture. The question is whether the company so conducted itself that it is able to insist upon the forfeiture provisions of the policy.
Before referring to the merits of this question -of waiver, a question of pleading must be disposed of. The appellant contends that since the plaintiff does not plead a waiver in his complaint, the question of waiver cannot be considered. Ordinarily evidence of a waiver is not admissible unless waiver is pleaded. This, of course, is true only where the party relying upon the waiver had an opportunity to raise it by proper pleadings. It is not true if waiver is properly relied upon by a plaintiff as rebuttal matter to meet a defense raised by the defendant, because in this state no pleading by way of replication is necessary. In this case the point of waiver is raised in rebuttal to meet the defense of forfeiture, attempted to be raised by the defendant. The facts upon which the waiver is based are all contained in the stipulation without any objection on the ground of insufficiency of the pleading. Under these facts, we think that it *37would be tbe height of technicality to refuse to consider the question of waiver.
Beturning to a consideration of the question of waiver on the merits, we call attention to the case of Loftis v. Pacific Mutual Life Ins. Co., 38 Utah, 532, 114 Pac. 134, in which the supreme court of Utah held that the right to insist upon a forfeiture was waived in a case very similar to the present one, so far as the provisions of the policy and the conduct of the insurance company are concerned. Even if it should be held that the insured was in default at the time of his death, and that the company therefore had a right to insist upon a forfeiture, we think that that right was waived by the company in this ease by its conduct, as above outlined. The notice sent to him is to be reasonably construed as a demand for payment rather than a notice of forfeiture. The failure to recall the demand upon the railroad company after learning of the insured’s death is more consistent with an intention to waive the forfeiture than with an intention to insist upon it. Keeping the money for a length of time, which this court considers to be unreasonable under the circumstances, before returning it, is also inconsistent with an intention to declare a forfeiture.
We have reached the conclusion that the questions involved in the petition for rehearing and presented to the court upon the reargument were correctly decided in the original opinion in this case, which is accordingly adhered to.
Sullivan, C. J., and Morgan, J., concur.