Evans v. United States Life Insurance — 10 N.Y. Sup. Ct. 587

Majority

p. 587

WILLIAM EVANS, Respondent, v. THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK, Appellant.

Headnote

Insurance policy—promise by company to contiime in force after forfeiture—when ■not enforced.

When a policy of insurance has been forfeited by a violation of one of its conditions, and not by the non-payment of premiums merely, so that the policy is void, a mere promise made thereafter, without consideration, to continue such policy in existence upon the payment of an additional premium, which is thereafter tendered to, but not accepted by the company, will not be enforced. ■

Appeal from a judgment for the plaintiff, entered in Kings county on the report of a referee.

Edgar 8. Van Winkle, for the appellant.

Wm. M. Northrop, for the respondent.

A company may waive any ground of forfeiture or defense. (Bliss on Life Insurance [2d ed.], § 266; Carrol v. The Charter Oak Insurance Company, 10 Abb. [N. S.], 166; Kolgers v. The Guardian Life Insurance Company, id., 176; Shelden et al. v. The Atlantic Fire and Marine Insurance Company, 26 N.Y., 460 ,465,466; Liddle v. The Market Fire Insurance Company, 29 id., 184; Boehen et al. v. The Williamsburgh City Insurance Company, 35 id., 131; Sherman v. The Niagara Fire Insurance Company, 46 id., 526; Bodine et al. v. The Exchange Fire Insurance Company of the City of New York, 51 id., 117.) Or the act relied upon must be substantially an estoppel. (Bliss on Life Insurance [2d ed.], § 267; Ripley v. Ætna Insurance Company, 30 N. Y., 136 ,164.) A consideration agreed to be paid is sufficient to uphold and enforce this agreement. The court, in the case of The Trustees of the First Baptist Church v. The Brooklyn Fire Insur

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ance Company (19 N. Y.), decided, that, “ In any subsequent agreement for a renewal or continuation of the risk, 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.” This parol agreement, for the payment of the extra premium of two and a half per cent, as a condition of keeping the policy in full force and effect, is not void by the statute of frauds. (The Trustees of the First Baptist Church v. The Brooklyn Fire Insurance Company, 19 N. Y., 305 , 307, 308.)

This is an appeal from a judgment entered in Kings county, on the report of a referee in favor of the plaintiff.

The defendants, on the 28th of October, 1869, issued a policy on the life of Charles A. Starr, for $6,500, payable at his death to Samuel Leddell. Shortly after this, Starr went to Louisiana, where he remained until his death, on the 18th of March, 1872, and Leddell thereafter assigned his claim on the policy to the plaintiff.

Starr had a written permit from the company, dated November 1, 1869, to go to New Orleans, to reside therein, and return, the permit to expire July 1, 1870. When payment of premium was due, October 27, 1870, Leddell sent an agent to the company’s office to pay it. The person in charge of the business at such office required an additional premium of two and a half per cent, because Starr was down south. This agent, the witness Plienix, testifies: “ I asked him if he would keep the policy alive until next day, when I would see Mr. Leddell. He said he would. There were two gentlemen inside the desk. I told Mr. Leddell the circumstances.” Another witness testifies that he, by Leddell’s directions, went the next day to the company’s office, and tendered all the regular and extra premium required by the company, and the company’s officer refused the money, saying the policy had lapsed, by non-payment of premium and extra risk, the day before. This officer then said that if they had promised to carry it over, they had no right to, and could not.

The defense is, that the policy, by its terms, became void for the non-payment of the yearly premium of $156.32, on the 28th of October, 1870, the day it became due; and further, that Starr’s

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residence south, after July 1,1870, was without the company’s consent, and avoided the policy.

One of the provisions of the policy was, that “if said Starr, without the previous written consent of the company, should * * between the first of July and first of November, visit those parts of the United States which lie south of the southern boundaries of the States of Virginia and Kentucky, this policy shall be null, void and of no effect.” The permit which expired July 1,1870, was not renewed. The plaintiff says, and the referee has .found, that Starr was unable to return north, being too feeble to travel. He did ride to and.from a plantation in a buggy wagon. There is no proof of any effort or intention on his part to return north. The policy, therefore, ceased to have any valid force against the defendants, after July 1, 1870. How, then, was it restored to life ? The plaintiff contends that the defendants waived the forfeiture, and, in effect, made a new agreement, that, if he paid the regular premium and an extra premium of two and a half per cent, they would accept it and continue the policy; and that they further agreed to extend the time of such payment one day after the premiums were due.

The regular yearly premium of $156.32 was tendered at defendants’ office, as before stated. The witness proving this tender, further testified: “ I had not authority to give more than Mr. Leddell gave me ($156.32); I asked if he (the person to whom the tender was made) would keep it good; that is, keep the policy alive until to-morrow, and let the matter stand so that I could see Mr. Leddell; .he said he would.” And Leddell sent the next “day, making full tender, as proven by a witness before quoted, and it was refused.

On the part of the defendants, the several officers of the company and their assistants who were such, and in charge of the office business during the period covered by the testimony, testify that they had no recollection of any such transaction; and some of them positively state, that, as to them, no such promise or tender was made.

Assuming that there is evidence to support the referee’s finding on that point in favor of the plaintiff, the promise was not binding on the defendants; it was a naked promise without consideration.

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It does not present the single question, whether the defendants' gave an extension of time to pay the premium, but whether the defendants, on such promise, can be held bound to reinstate a policy already void, and which had ceased,, several months previous to be of any force, not because of the non-payment of any premium, but because of the violation of an express condition forbidding a residence in a certain portion of the south, after a certain time of year. Within the case of Smith v. Saratoga Ins. Co.,^[3] the policy was dead, and the company had the right to insist upon an absolute forfeiture. A new creation was necessary to impart vitality to the policy. The company may waive any condition in its policy inserted for its own benefit, but there must be proof of such waiver, and of intent to reinstate the policy, and of a valid agreement effecting that purpose. A valid agreement is not established in this case.

This is not the case where a party has, impliedly, the company’s . consent to an extension of time to pay premium, and acts thereupon. In such case, the doctrine of forfeiture finds no favor with the court. Nor was it a waiver of prompt payment, within Buckbee v. United States Trust Co.;^[4] but it is the taking of a risk, the terms of which were the subject of a new agreement, arising out of the continued residence of the assured in a State or country prohibited by the policy; and, in such case the doctrine of waiver, if applied at all, should be applied with great care.

Here there was no policy in force, on the day plaintiff tendered the ordinary premium; a violation of its provision, commencing immediately after the first of the preceding month of July, had exempted the company from liability. On the day the plaintiff tendered the premium, and the defendants refused to receive it, the plaintiff could not then have compelled defendants to receive any premium, even at an enhanced rate, or to continue the policy in force on any terms. He therefore had no right which he could enforce against them, on the day he tendered the premium, and he acquired no new rights against them, by reason of any of the occurrences of that day; for the company had the right, long previous to, and on that day, and subsequently, to treat the policy- as void, by reason of the violation of a material condition on the part

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of Charles Starr; and that right was not lost to them from anything that was said or done at their office on the day in question.

Undoubtedly, forfeitures may be waived, and policies revived, but there must be some act from which the underwriter’s consent is to be fairly inferred.^[3]

The case is not brought within the rule of waiver, and no valid agreement reviving the policy or continuing the risk, is established.

There are two questions involved in the case: One arises from a positive breach of a condition as to residence, and, when established, it avoids the contract from the very nature of the agreement between the parties; the other arises from the non-payment of money on a specified day. Where money is in question, time is not the essence of the contract;^[4] and an acceptance after the day, or a promise made before, to accept payment after the day, will prevent a forfeiture^[5] Upon the first proposition, we think the judgment should be reversed, and a new trial had, costs to abide event.

Present — Barnard, P. J., Tappen and Donohue, JJ.

, Judgment reversed, and new trial granted, costs to abide event.

* Shearman v. Niagara Ins. Co., 46 N. Y., 530 .

† † Stone v. Ellis, 9 Cushing, 95.

‡ ‡ Dumpor’s case, 1 Smith’s Leading Cases,, 105.

Footnotes

* 3 Hill, 508 .
† † 18 Barb., 541 .