Court Opinion

ID: 7329353
Source: CourtListenerOpinion
Date Created: 2022-07-25 22:07:21.773856+00
Date Added: 2024-06-11T16:20:09.040604
License: Public Domain

INGRAHAM, J.
I concur in the reversal of this judgment. The plaintiff’s intestate, on the 30th of December, 1893, signed an application for a policy of life insurance, and agreed “that the application and the policy hereby applied for, taken together, shall constitute the entire contract between the parties hereto; * * * that this contract shall not take effect until the first premium shall have been paid, during my good health; and that the distribution of surplus-which may be adopted and approved by the society is hereby accepted by me in my own behalf, and for every person who shall have any interest in the policy now applied for.” Upon this application, the defendant issued a policy which recited that “in consideration of the written-and printed application for this policy, which is hereby made a part of this contract, and of the payment in advance of one-hundred and thirty-eight dollars and forty-five cents, and of the semiannual payment of one hundred and thirty-eight dollars and forty-five cents, to be made thereafter, at the office of the society in the city of New York, on or before the first day of June and December in every year, during the continuance of this contract,” the defendant promised to pay to John A. Will, his executors, administrators,. *749or assigns, $5,000 upon satisfactory proof of the death of the said Will. This policy contained the following notice: “This policy and the application therefor, taken together, constitute the entire contract, which cannot he varied except in writing by one of the executive officers printed above.” The policy was delivered to the defendant, but no premium was ever paid- by Will or received by the defendant, the plaintiff claiming that the payment in advance of $138.45 was waived.
The complaint alleges, “if said first premium has not been paid, payment thereof has been duly waived by the defendant, or has been waived in such a manner by defendant, that the nonpayment of said first premium, if there was such a nonpayment, would not in any way affect or modify the said contract of insurance.” Upon the trial it was conceded that this first payment had not been paid, and the evidence to prove the waiver consisted of statements made by one Dr. Foster, who was a medical examiner for the company, and who, it was alleged, was an agent of the company. Dr. Foster asked Will to take out the policy, and upon Will’s saying that he did not want to, because he had already made an application to another company for insurance, Foster said: “If you take that policy, my friend will not charge you the first premium.” Then Will wondered about the present -that would be made to him, and' Foster said to him that it was very simple; that the agent had a big commission, and he could well afford it; and Will said, “All right, I will take the policy,” and he took it. This was the testimony of the present husband of the plaintiff, who was the widow of Will. The plaintiff, being examined, also testified that she was present at the interview; that Dr. Foster “told my husband to take a policy for such an amount (for $5,000), and that he would not have to pay the first premium.” This testimony was corroborated by another witness who was present, and who says that he heard Dr. Foster say, “Half a year’s premium for nothing.” The evidence sought to sustain the allegation of a waiver of the payment of the first premium was not that the prepayment was waived, but that any payment by the assured was waived,—in effect, a contract between the company and the assured, by which the company agreed to pay to the assured, or his executors, administrators, or assigns, the sum of $5,000 upon his death, without any obligation upon the assured to pay anything, or without there being any consideration for the promise of the company.
I do not understand that contracts of life insurance are exempt from the operation of the general rule that all contracts require a consideration before they can become binding. An agreement by this insurance company to pay to Will $5,000 upon his death, without any consideration for the promise, would be as incapable of enforcement as a contract to pay a sum of money during Will’s life where there was no consideration for the promise. Upon this evidence as it stands, it seems to me clear that there was no consideration for the promise contained in the policy. ¡Neither the policy nor the application contained any obligation on behalf of Will to pay this company any sum of money. The consideration stated in *750the policy is the prepayment by Will of a sum of money, and of subsequent payments semiannually of like sums during the continuance of the contract; but, until the contract had a legal inception based upon some valid consideration, it seems to me quite clear that no valid contract was made. The contract itself never became binding, and no obligation under it was imposed upon the defendant.
It has been quite frequently held that on a contract of this kind, which requires the prepayment of a sum of money as a premium upon a policy, the prepayment of the premium may be waived, either by an express agreement or by acts from which the court can imply such an agreement; but such an agreement, I think, must be an agreement to waive the prepayment of the premium, so as to substitute for such prepayment an obligation of some one to pay such premium in the future, and not an agreement that no premium at all should be paid by any one.
Thus, in the case of Trustees of First Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. 312, the rule is stated as follows:
“In any subsequent agreement for a renewal or continuation of the risks, it was competent for the parties to contract by parol, and to waive the payment in cash of the premium, substituting therefor a promise to pay on demand or at a future day. Proof of such an agreement would have no tendency to contradict or to change the written policy already in force between the parties, and which would be wholly spent before the new agreement could take its place.”
In the case of Bodine v. Insurance Co., 51 N. Y. 121, the same rule was applied, the court saying:
“Notwithstanding the condition in the original policy,—no insurance, whether original or continual, should be considered binding until the actual payment of the premium,—it was still competent for the insurance company to disregard this condition, and, upon any renewal of the policy, to waive by parol the payment in cash of the premium; and this waiver of payment could be shown by direct proof that credit was given, or could be inferred from circumstances, and the waiver could be by the company or any of its authorized agents. * * * An insurance agent can authorize his clerk to contract for risks, to deliver policies, to collect premiums, and to take payment of premiums in cash or securities, and to give credit for premiums, or to demand cash.”
And the court held that in that case there was some evidence tending to show that the plaintiffs accepted the certificate, and that it was arranged that Whelp, the agent, should hold it for them until a future day, when they would pay the premium.
In Wood v. Insurance Co., 32 N. Y. 620, the same principle was applied, the court saying:
“Boggs was a general agent of the company. If he had waived the condition of prepayment, the insurers would have been bound by his act, though it was in violation of their private instruction. The law would have implied such waiver if the policy had been delivered by the agent without requiring payment of the premium, and had been accepted by the plaintiff as a complete and executed contract. The company would have been held to its engagement, and the assured would have been liable for the premium, notwithstanding the acknowledgment of payment on the face of the paper.”
But it was held in that case that there was no such waiver. The policy was left with the plaintiff’s clerk on condition that, when the plaintiff came to town, the premium should be paid if he ac*751cepted them, or the policies returned if he declined them. When Wood came, he did neither; and, when either the premium or the return of the policy was demanded, he said he would call and see the agent in reference to a loss he had sustained on other property as to which he made some complaint; and it was held that by such a delivery the company waived nothing, for, even if the instrument be regarded as operative, it contained a stipulation that, until the payment of the premium, the insurers should not be bound by their undertaking; and, although there was a dissent from this decision, it was upon the ground that the act of the parties must be considered as a waiver of the obligation of prepayment, and that the liability of Wood to pay the premium was substituted for the actual prepayment in cash.
In Boehen v. Insurance Co., 35 N. Y. 134, the same principle was applied, where “the evidence, taken together, leaves but little doubt that the certificate was delivered to the plaintiff’s agent without exacting prepayment of the premium, with an understanding that it was to be paid on demand, or when the question of an additional insurance was settled by the company.”
In none of the cases cited by counsel for the plaintiff was it ever held that a contract could be valid without either the prepayment of a consideration or a promise to pay a consideration in the future. Here it is conceded that the defendant never did receive any premium for this policy; nor did the assured or any one else ever agree to pay a premium to the defendant. On the contrary, the policy was delivered to the assured, which, upon its face, expressly provided that the contract should not take effect until the first premium should have been paid, under an express understanding that no premium was to be paid at all. The consideration expressed in the policy was the payment in advance of $138.45. The evidence was uncontradicted that that sum of money was not paid, and that no sum was paid to the company. If there was any other consideration than that named in the instrument itself, it was incumbent upon the plaintiff or the party claiming under it to establish such other consideration. Such consideration must be some benefit moving to the obligor, or some injury or obligation assumed by the obligee. There is absolutely no evidence to show any fact from which such a consideration, other than that expressed in the instrument itself, existed; and it affirmatively appears that the consideration therein expressed was not actually given or promised.
In the case of Fargis v. Walton, 107 N. Y. 400, 14 N. E. 303, it was expressly held that, where it is shown that the consideration mentioned in an instrument not under seal was not actually given or promised, the instrument is void, and cannot be enforced; that, where a party to it claims that there was some other consideration, it is incumbent upon him to show it; and that, upon failure to show such other consideration, the agreement is invalid, and cannot be enforced.
In the case of Presbyterian Church v. Cooper, 112 N. Y. 520, 20 N. E. 353, the necessity of a consideration for an agreement to pay money was enforced, and it was there held that:
*752“It is, of course, unquestionable that no action can be maintained to enforce a gratuitous promise, however worthy the object intended to be promoted. The performance of such a promise rests wholly on the will of the person making it. He can refuse to perform, and his legal right to do so cannot be disputed, although his refusal may disappoint reasonable expectations, or may not be justified in the forum of conscience."
See, also, Purdy v. Railroad Co., 125 N. Y. 213, 26 N. E. 255.
I think it clear, therefore, that upon the evidence of the plaintiff, there being no consideration paid, nor promise to pay to the defendant, either by the plaintiff or by any one on his behalf, there was no consideration for the promise made by the defendant to pay to the plaintiff’s intestate the sum of ¡§5,000 upon his death, and that for that reason the complaint should have been dismissed.
I concur also in Judge RUMSEY’S opinion for a reversal of the judgment upon the grounds stated by him.