Opinion
No. 7,773.
Submitted February 28, 1938. Reargued April 18, 1938.
Decided July 20, 1938.
Life Insurance — Construction of Unambiguous Contract — Forfeiture — Fixing of Due Date of Premium — Date of Issue and Date of Delivery — Insured Bound by Terms of Contract — Time of Essence of Contract — Failure to Pay Second Premium Within Period of Grace — Nonpayment Voids Contract. Life Insurance — By What Rights and Liabilities of Parties Governed. 1. The rights and liabilities of parties to a life insurance policy are governed by the provisions of the policy and the application therefor, where such application is expressly made a part of the contract. Same — Forfeiture — Due Date of Premium Fixed on Day of Issue Instead of Delivery of Policy — Policy Held Forfeited for Nonpayment of Second Premium. 2. Where a life insurance policy holder agreed that the policy should take effect from the date of its issue (execution), instead of the date of delivery, it being so stated in the application, and the policy declared that on each such subsequent date, after the first premium payment, a premium in a like amount was payable, the insured being granted a grace period of 31 days in which to make it, and such second premium was never paid, but several days after expiration of the grace period the insured died, the policy held void for nonpayment of premium. Same — Construction of Nonambiguous Contract of Insurance — Rule. 3. Contracts of life insurance, like other contracts, in the absence of any ambiguity in their terms, must be construed according to such terms, and not so as to make new contracts for the parties contrary to the meaning expressed therein. Same — Alleged Shortening of First Year's Coverage by Fixing Date of Premium Payment at Date of Issue — Insured Bound by Contract as Made. 4. Where a purchaser of life insurance agreed to the fixing of the date on which premiums should be payable in such a way as to shorten the first year's coverage by several days and accepted the policy as so written, his beneficiary in an action thereon was in no position to assert that insured had been "short-changed" in that, while the policy provided for a full year's coverage for the first year, by fixing the premium due date as of the date of the issue of the policy instead of the date of delivery thereof (some nine days later) the insurer escaped liability for the death of insured because of alleged non-payment of premium. Same — Unambiguous Policy — By What Argument Supreme Court not Influenced in Construing Contract. 5. In construing an unambiguous contract of life insurance the supreme court may not be influenced by the argument that in purchasing such a policy the average man does not see the contract before delivery to him and that few purchasers take the time to read it or would understand it if they did read it. Same — Forfeiture — Cause Tried on Agreed Statement — Admission — Further Proof of Forfeiture not Required. 6. Where a life insurance company in defense to an action to recover on a policy pleaded forfeiture for failure to pay the second premium due, and the cause was tried on an agreed statement of facts which recited that after the first premium paid, no further premium was ever paid, additional proof of forfeiture was not required. Same — Time of Essence of Contract — Statute — What Sufficient to Meet Requirement of Statute. 7. While under section 7549, Revised Codes, time is never considered as of the essence of a contract unless by its terms expressly so provided, a provision in a life insurance policy that payment of a premium should not maintain the policy beyond the due date when the next premium is payable, was tantamount to a declaration that time should be considered as of the essence of the contract and sufficient to meet the requirement of the statute, and therefore failure to make prompt payment ipso facto voided the contract. Same — What Does not Constitute Unauthorized Change of Benefits Contracted for. 8. Where insured, in his application for a life insurance policy, under his signature agreed to the fixing of the date on which premiums should be due in such a manner as to shorten the first year's coverage by several days, his beneficiary in an action to recover on the policy in which the insurer defended on the ground that the policy had been forfeited by nonpayment of the second premium, was not in a position to contend that by so fixing the due date of the premium his benefits had been changed without his consent contrary to a provision contained in the application.
Appeal from District Court, Lewis and Clark County; George W. Padbury, Jr., Judge.
Messrs. Weir, Clift Bennett, and Mr. Newell Gough, Jr., for Appellant, submitted an original and a reply brief; Mr. Gough argued the cause orally.
Mr. Victor H. Fall, for Respondent, submitted an original and a supplemental brief, and argued the cause orally.
The United States Supreme Court has repeatedly held that forfeitures, though generally not regarded with favor by courts, are necessary and should be fairly enforced in life insurance cases where promptness of payment is essential. ( Nederland Life Ins. Co. v. Meinert, 199 U.S. 171, 26 Sup. Ct. 15, 50 L.Ed. 139; see, also, Bergholm v. Peoria Life Ins. Co. of Peoria, 284 U.S. 489, 52 Sup. Ct. 230, 76 L.Ed. 416.)
Coming now to the particular point involved, we wish first to call the court's attention to the majority rule in the United States, as clearly set forth in 14 Cal. Jur., sec. 44, p. 473: "The time of payment fixed in the policy is of the essence of the contract, if a forfeiture is provided for upon nonpayment at the day appointed. The days for payment stipulated in the policy control, no matter when the policy is delivered or the advance premium paid. Accordingly, the fact that a policy, the premiums upon which were payable quarterly in advance from its date, was not delivered until one month after its date, when the first payment was made, did not extend the operation of such payment for a period of three months after delivery." (See, also, Methvin v. Fidelity Mut. Life Assn., 129 Cal. 251, 61 P. 1112; Wolford v. National Life Ins. Co., 114 Kan. 411, 219 P. 263, 32 A.L.R. 1248; Mougey v. Union Cent. Life Ins. Co., 123 Ohio St. 595, 176 N.E. 455; Kurth v. National Life Acc. Ins. Co., Inc., (Tex.Civ.App.) 79 S.W.2d 338; McDaniel v. Missouri State Life Ins. Co., 185 Ark. 1160, 51 S.W.2d 981; Timmer v. New York Life Ins. Co., 222 Iowa, 1193, 270 N.W. 421, 111 A.L.R. 1412; 37 C.J., sec. 101, p. 416.)
For the court's information we are listing numerous decisions from all the various courts in the United States, upholding the rule which we are firmly convinced applies in this case, to-wit, that the correct date from which to compute premium payments is the 11th day of July, the date of issuance of the policy, and that insured's failure to pay his second premium on that day, or within the grace period of thirty-one days thereafter, forfeited and lapsed the policy and foreclosed the plaintiff herein, the beneficiary under the policy, of any right to claim the benefits thereunder: American Ins. Union v. Lowry, (1932, C.C.A.-5) 62 F.2d 209, cert. den., 289 U.S. 745, 53 Sup. Ct. 689, 77 L.Ed. 1491; Jones v. Jefferson Standard Life Ins. Co., (1935, C.C.A.-5) 79 F.2d 640, cert. den., 296 U.S. 646, 56 Sup. Ct. 310, 80 L.Ed. 459; rehearing denied, 296 U.S. 655, 56 Sup. Ct. 380, 80 L.Ed. 474; Travelers Ins. Co. v. Wolfe, (1935, C.C.A.-6) 78 F.2d 78; cert. den., 296 U.S. 635, 56 Sup. Ct. 158, 80 L.Ed. 452; Trapp v. Metropolitan Life Ins. Co., (1934, C.C.A.-8) 70 F.2d 976; cert. den., 293 U.S. 596, 55 Sup. Ct. 112, 79 L.Ed. 690; Sellars v. Continental Life Ins. Co., (1929, C.C.A.-4) 30 F.2d 42; New York Life Ins. Co. v. Silverstein, (1931, C.C.A.-8) 53 F.2d 986; New York Life Ins. Co. v. Tolbert, (1932, C.C.A.-10) 55 F.2d 10; Shira v. New York Life Ins. Co., (1937, C.C.A.-10) 90 Fed. 2d 953; McCampbell v. New York Life Ins. Co., 288 Fed. 465; Forbriger v. Metropolitan Life Ins. Co., (1934, D.C.) 9 F. Supp. 94; Moreau v. Massachusetts Life Ins. Co., (1934, D.C.) 7 F. Supp. 102; First Nat. Bk. v. New York Life Ins. Co., 192 Minn. 609, 255 N.W. 831, 258 N.W. 13, 592; Juster v. John Hancock Mut. Life Ins. Co., 194 Minn. 382, 260 N.W. 493; Kennedy v. Nat. Acc. Health Ins. Co., (1934, Mo. App.) 76 S.W.2d 748; Wilkinson v. Commonwealth Life Ins. Co., 176 Ky. 833, 197 S.W. 557, 6 A.L.R. 769; Mutual Life Ins. Co. v. Stegall, 1 Ga. App. 611, 58 S.E. 79; Kansas City Life Ins. Co. v. Harper, 90 Okla. 116, 214 P. 924; Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523, 80 A.L.R. 950 (1931); Scotten v. Metropolitan Life Ins. Co., 336 Mo. 724, 81 S.W.2d 313; Wilkie v. New York Mut. Life Ins. Co., 146 N.C. 513, 60 S.E. 427; Jewett v. Northwestern Nat. Life Ins. Co., 149 Mich. 79, 112 N.W. 734; Tibbits v. Mutual Benefit Life Ins. Co., 159 Ind. 671, 65 N.E. 1033; Painter v. Massachusetts Life Ins. Co., 77 Ind. App. 34, 133 N.E. 20; Rolertson v. Standard Life Ins. Co., (Tex.Civ.App.) 244 S.W. 845; Cantey v. Philadelphia Life Ins. Co., 166 S.C. 181, 164 S.E. 609; Weller v. Manufacturer's Life Ins. Co., 256 Mich. 532, 240 N.W. 34; Halliday v. Equitable Life Assur. Soc., 54 N.D. 466, 209 N.W. 965; McKenney v. Phoenix Mut. Life Ins. Co., 138 Wn. 315, 244 P. 560; Anderson v. Mutual Life Ins. Co., 164 Cal. 712, 130 P. 726, Ann. Cas. 1914B, 903; Martin v. New York Life Ins. Co., 30 N.M. 400, 234 P. 673, 40 A.L.R. 406; Rosenthal v. New York Life Ins. Co., 94 F.2d 675.
Respondent contends that the policy was in full force and effect at the time of death, due to the fact that no forfeiture was available to the company until the expiration of one full year plus the grace period from the time when the policy became effective, which date, it is conceded was July 20, 1929, and hence the policy would have been in effect until August 20, 1930, or four days subsequent to the death of the insured.
Interesting and important questions have arisen where the policy bears the date of the application or the date of issue but the risk itself did not attach until delivery. This practice occasions an inconsistency in the terms of the contract. It will be observed that the insured on accepting the policy, pays for insurance for a specified period but by the terms of his policy is required to pay another premium on penalty of forfeiture before the expiration of such period. One term of his policy insured him for a specified period and another for a portion of such period. Prior to the decision of the case of McMaster v. New York Life Ins. Co., 183 U.S. 25, 22 Sup. Ct. 10, 46 L.Ed. 64, it would appear that the weight of authority was to the effect that, as time is the essence of such a contract, the premiums must be paid on the date specified in the contract in order to avoid a forfeiture of insured's right to continue the insurance ( McMaster v. New York Life Ins. Co., 87 Fed. 63, 30 C.C.A. 532; Methvin v. Fidelity Mut. Life Assn., 129 Cal. 251, 61 P. 1112; McConnell v. Provident Sav. Life Assur. Soc., 92 Fed. 769, 34 C.C.A. 663). Of course, if the first premium is paid on the day the policy is dated and the insurance takes effect then, though the policy is not delivered until later, nonpayment on the date specified, forfeits all rights under the policy ( Thomas v. Northwestern Mut. Life Ins. Co., 142 Cal. 79, 75 P. 665). In view of the fact that the Methvin Case is based on the McConnell Case and the McConnell Case largely on the McMaster Case as decided by the Circuit Court of Appeals (87 Fed. 63, 30 C.C.A. 532), the rule can hardly be considered as controlling in that when the McMaster Case subsequently came before the Supreme Court of the United States ( 183 U.S. 25, 22 Sup. Ct. 10, 46 L.Ed. 64), that court reversed the decision of the Circuit Court of Appeals, and held that a nonpayment of premium made payable by a policy within a year from the time it became effective by the payment of the first annual premium, will not make a forfeiture available until the expiration of a full year from the time the policy became effective, by the payment of the first premium, plus any period of grace allowed.
It is the belief of the writer, after examining a great number of decisions relating to this question, that few of the courts have known or had their attention directed to the fact that the McConnell and Methvin Cases, supra, were based almost entirely upon the ruling in the McMaster Case when it was decided by the Circuit Court of Appeals. When the United States Supreme Court reversed the Circuit Court of Appeals it would follow that the McConnell and Methvin Cases were based upon a false premise, to-wit, that the original McMaster Case was good law. This is particularly unfortunate in view of the fact that almost without exception, the cases that rule for the company, when this question is involved, head their citations of authority with the McConnell and the Methvin Cases. The dates when these decisions were handed down are interesting. They are as follows: The McMaster Case, (C.C.A.) 1898, the McConnell Case, 1899, the Methvin Case, 1900, and the McMaster Case (U.S. Supreme Court) 1901. The ruling of the Methvin Case, supra, was based largely upon evidence that the insured knew the recited date in the policy and treated same as the true date which decision was fortified by the then recent ruling in the McMaster Case. It is submitted that the California court has in effect reversed this ruling in the decision of Hill v. Industrial Acc. Com., 10 Cal.App.2d 178, 51 P.2d 1126, wherein the court said, "That an insurance policy takes effect upon delivery which in absence of evidence to the contrary is presumed to have been on date of policy." The foregoing ruling in effect is an affirmation of the law as laid down in the McMaster Case as recited in 46 L.Ed. 64.
Before further discussing the authorities upon the questions involved, the writer wishes to say that he is mindful of the language employed by Justice Burke in the case of Shinall v. Prudential Ins. Co. of America, 91 Colo. 194, 14 P.2d 183, wherein the learned justice said: "We turn now to an examination of authorities on the specific point. A vast number are cited and we are urged to examine many of them with care because they are determinative of the question before us. We have, and they are not." Bearing the foregoing in mind, it is stated at the outset that all the cases herein cited have been selected with care and are submitted as "determinative of the question before us."
Here follows a discussion of the following authorities: Stinchcombe v. New York Life Ins. Co., 46 Or. 316, 80 P. 213; Stramback v. Fidelity Mut. Life Ins. Co. of Philadelphia, 94 Minn. 281, 102 N.W. 731; Halsey v. American Central Life Ins. Co., 258 Mo. 659, 167 S.W. 951; Chestnut v. Security Mut. Life Ins. Co., 208 Mo. App. 130, 232 S.W. 203; Hampe v. Metropolitan Life Ins. Co., (Mo.App.) 21 S.W.2d 926; Schwartz v. Northern Life Ins. Co., 25 F.2d 555; Shinall v. Prudential Ins. Co. of America, 91 Colo. 194, 14 P.2d 183; Purcell v. Washington Fidelity Nat. Ins. Co., 146 Or. 475, 30 P.2d 742. For text authority the court's attention is directed to volumes 5 and 6, Cyclopedia of Insurance Law by Couch, pp. 2044, 4795, 4796, 4797.
From the foregoing it will be seen that leading courts throughout the country, as well as the leading text authority, have recognized the fairness, logic and necessity for securing to the insured precisely what he pays for, in holding that an annual premium paid on a life insurance policy will not make a forfeiture available to the company until the expiration of a full year plus the grace period from the time when said policy went into effect. It necessarily follows that in the instant case that no forfeiture was available to the defendant Insurance Company until on or after August 21, 1930. In view of the fact that Richard O. White departed this life on August 16, 1930, the policy was in full force and effect at the time of his death and hence the learned court below committed no error in making its order and entering judgment for the full amount due the respondent herein under said policy.
We add the further list of supplemental authorities: Stout v. Missouri Fidelity Cas. Co., (Mo.) 179 S.W. 993; Newman v. John Hancock Mut. Life Ins. Co., (Mo.App.) 7 S.W.2d 1015; Bigalke v. Mutual Life Ins. Co., (Mo.App.) 34 S.W.2d 1019; Dougherty v. Mutual Life Ins. Co., 226 Mo. App. 570, 44 S.W.2d 206; Klinkhardt v. Crescent Ins. Co., (Mo.App.) 47 S.W.2d 210; Jefferson Std. Life Ins. Co., v. Baker, (Tex.Civ.App.) 260 S.W. 223; Jefferson Std. Life Ins. Co. v. Myers, (Tex.Com.App.) 284 S.W. 216; Halliday v. Equitable Life Assur. Soc., 54 N.D. 466, 209 N.W. 965, 47 A.L.R. 446; Parham v. National Relief Assur. Co., 33 Ga. App. 59, 125 S.E. 519; Johnson v. American Central Life Ins. Co., 212 Mo. App. 299, 249 S.W. 115; McDonnell v. Hawkeye Life Ins. Co., (Mo.App.) 64 S.W.2d 748; Great Southern Life Ins. Co. v. Alcorn, (Tex.Civ.App.) 80 S.W.2d 429; Gaugh v. Southern Life Ins. Co., 179 Ark. 842, 19 S.W.2d 1013; Lyke v. First Nat. Life Acc. Ins. Co., 41 S.D. 527, 171 N.W. 603; Cilek v. New York Life Ins. Co., 97 Neb. 56, 149 N.W. 49; Kennedy v. National Health Acc. Assn., (Mo.App.) 76 S.W.2d 748; Harlow v. North American Acc. Ins. Co., 162 Wn. 423, 298 P. 724; Haynes v. Midland Nat. Life Ins. Co., 60 S.D. 212, 244 N.W. 110; Prudential Ins. Co. v. Stewart, 237 Fed. 70, 150 C.C.A. 272, 6 A.L.R. 766; Landrigan v. Missouri State Life Ins. Co., 211 Mo. App. 89, 245 S.W. 382; Giddings v. Northwestern Mut. L. Ins. Co., 102 U.S. 108, 26 L.Ed. 92.
Only a few of the many cases cited by appellant support its contention herein. The great majority of its authorities cited as such are distinguishable from the case at Bar when the facts are closely examined.
This is an appeal from a judgment in favor of the plaintiff, Margaret Johnson, and against the defendant, Metropolitan Life Insurance Company. The suit was on a contract contained in a policy of life insurance issued to plaintiff's son, in which the plaintiff was named as beneficiary.
From a stipulation of facts entered into by the parties it is disclosed that on July 2, 1929, Richard O. White, the deceased, made application to the defendant company for a policy of life insurance. A policy was issued on July 11, 1929, and was delivered on July 20, 1929, on which date the insured paid the balance of the first premium, $12.88, the sum of $3 having been paid with the application. The insured died on August 16, 1930, no further premium having been paid.
The defendant specifies as error, that:
"1. The court erred in making its order dated August 9th, 1937, wherein the court found the issues involved in this case in favor of the plaintiff and ordered that the plaintiff have judgment against the defendant in the sum of One thousand four hundred and nine and 39/100 Dollars ($1,409.39).
"2. The court erred in entering its judgment, dated August 9th, 1937, wherein the court rendered judgment against the defendant in the sum of One thousand four hundred and nine and 39/100 Dollars ($1,409.39)."
The crux of the controversy is in determining the date on which the period of grace for the payment of premiums was to start. If, as contended by defendant, the grace period began one year from the date of issue as specified on the face of the policy, the thirty-one days of grace had elapsed before the death of the insured, and the policy had become forfeited because of nonpayment of premiums. If, however, as contended by the plaintiff, the grace period began a year from the date of delivery, July 20, the grace period for payment of premiums had not fully elapsed at the time of the death of the insured, and the policy was then in force.
The rights and liabilities of the parties are governed by the [1] provisions of the policy and the application which was expressly made a part thereof. The application, in addition to certain informative matter, contains the following language:
"It is understood and agreed: * * * 4. That the Company shall incur no liability under this application until it has been received, approved, and a policy issued and delivered, and the full first premium stipulated in this policy has actually been paid to and accepted by the Company during the lifetime of the applicant, in which case such policy shall be deemed to have taken effect as of the date of issue as recited on the first page thereof."
The face of the policy, in large type, contains the following [2] provisions:
"Metropolitan Life Insurance Company * * * hereby insures the life of Richard O. White herein called the Insured, in accordance with the terms of this policy, No. 1296484A and promises to pay at its Home Office in the City of New York One thousand dollars upon the surrender of this policy, to the Insured if living on the 11th day of July, 1995 or to Margaret Johnson, Mother Beneficiary, upon receipt of due proof of the prior death of the Insured. The right on the part of the Insured to change the Beneficiary, in the manner hereinafter provided, is reserved.
"This policy is issued in consideration of the application therefor, copy of which application is attached hereto and made part hereof, and of the payment for said insurance on the life of the above named Insured of Fifteen Dollars and Eighty-eight Cents, (Which maintains this policy in force for a period of 12 months from its date of issue, as set forth below) and of the payment hereafter of a like annual premium on each 11th day of July (hereinafter called the due date), until 66 full years premiums shall have been paid or until the prior death of the Insured."
On the face of the policy, on the first page, we also find the following words:
"In Witness Whereof the Metropolitan Life Insurance Company has caused this policy to be executed this 11th day of July, 1929, which is the date of issue of this policy."
Under the heading "Provisions and Benefits" in the policy the following provisions are found:
"All premiums are payable, on or before their due dates, at the home office of the Company, * * *.
"The payment of a premium shall not maintain this policy in force beyond the due date when the next premium is payable, except as hereinafter provided * * *.
"A grace period of thirty-one days, without interest charge, will be granted for the payment of every premium after the first, during which grace period the insurance shall continue in force. * * *.
"This policy and the application therefor constitute the entire contract between the parties, and all statements made by the Insured, shall, in the absence of fraud, be deemed representations and not warranties, and no statement shall avoid this policy or be used in defense of a claim hereunder unless it be contained in the application therefor and a copy of such application is attached to this policy when issued."
It is evident that in order to sustain the judgment and permit [3] recovery under this policy, we must first find that there is an ambiguity in this contract of insurance, in which event we would be justified under the ordinary principles of equity, and in line with sound decisions of this and other courts, in resolving that ambiguity in favor of the insured or his beneficiary, and against the defendant and insurer because it drew the contract and caused the ambiguity. On the other hand, if there is no ambiguity, and the provisions of the contract of insurance are plain and clear and lend themselves to but one construction, it is the duty of the court to give to the contract that one plain and clear construction, and not to attempt to rewrite for the parties a contract differing from the one to which the parties agreed. In this latter respect a contract of insurance does not differ in its construction from any other contract. It is incumbent on this court to examine the four corners of this contract to determine whether such ambiguity exists ( Union Mut. Life Ins. Co. v. McMillen, 24 Ohio St. 67; Kurth v. National Life Acc. Ins. Co., (Tex.Civ.App.), 79 S.W.2d 338), and if it does not, then this court is powerless to make a contract for the parties contrary to the one expressed in the agreement. (See Fratt v. Daniels-Jones Co., 47 Mont. 487, 133 P. 700; Story Gold Dredging Co. v. Wilson, 99 Mont. 347, 42 P.2d 1003.)
We believe that the language of the policy is so plain that it can admit of but one meaning. The application authorized the company to issue the policy and to specify upon the face thereof the date it shall be deemed to be effective for the payment of premiums. The face of the policy not only specifies the 11th day of July to be the date of issue of the policy, but also the due date for the payment of premiums. It further specifies that the policy shall be in force no longer than the due date when the premium is payable, except for a grace period of thirty-one days. It is apparent from these provisions that the policy was forfeited for nonpayment of premium thirty-one days after July 11, or before the death of the insured.
The basis of plaintiff's contention is that there was the [4] payment of one year's premium and that he was entitled to one year's coverage, and, as there was no coverage until he paid the balance of the first premium on July 20, he, if the defendant's contention is correct, is being short-changed to the extent of nine days' insurance. In support of this contention the plaintiff cites authorities to the effect that in deciding whether or not a policy was in force at the time of the death of the insured, the computation would begin with the time the insurance became effective, or, as in most cases, on the delivery of the policy to the insured. An examination of these cases fails to disclose one in which the language employed in this application and policy was used. In such cases the courts found the language of the contract — that is, the application and policy — ambiguous, and quite equitably resolved this ambiguity in favor of the insured.
The clear statement contained in the contract before us is that the insured shall receive insurance for twelve months, plus the grace period, from the date of issuance stated in the policy. It is true that the contract operates so as to shorten the first year's coverage by nine days; but this is the express provision of the contract. The insured authorized the company to place the date in the policy from which date the premium should become payable. The insured not only authorized that provision, but accepted the policy containing the language he had authorized, and we know of no provisions of law preventing him from so contracting and agreeing.
We have searched the record to find any language that would reasonably justify the contention that the assured would actually get a full year's coverage for the first premium. It is clear under the express terms of his own agreement that he would be short the period between the date of the policy and the date of delivery and payment. The cases cited by plaintiff are distinguishable in this respect. In each case which sets out the terms of the policy we find language which would infer that the insured was to get a full year's coverage for the first yearly premium. Landrigan v. Missouri State Life Ins. Co., (Mo.App.) 234 S.W. 1042, holds that the policy was ambiguous and that the calculation of the period for payment of premiums ran from the date of delivery and payment of premium. In the policy it was stated, after setting out the amount of the premium, "being the premium for the first year's insurance under this policy."
Lyke v. First Nat. Life Acc. Ins. Co., 41 S.D. 527, 171 N.W. 603. Facts in this case disclose that the receipt for the payment of the first premium was in the following language: "Received of Frank Lyke Fifty and 36/100 being the first annual premium on a policy of insurance * * *."
Stinchcombe v. New York Life Ins. Co., 46 Or. 316, 80 P. 213. In quoting the court as to the terms of the policy, it expressly stated that the payment of $70.40 (insured paid for two premiums), "being the premium for two years' insurance."
Jefferson Standard Life Ins. Co. v. Baker, (Tex.Civ.App.) 260 S.W. 223. In speaking of the policy involved, the court said: "As to the date of the policy, there was no stipulation in the policy, which was the sole contract between the parties, that the policy should bear a date prior to its actual springing into existence, and that any and all stipulations in the policy should be considered as from that date." The court further said in speaking of the terms of the policy: "It is apparent from the language found in the contract of issuance that the words `anniversary hereof,' mean `annually from now," or `annually from henceforth,' and that `from now' or `from henceforth' cannot refer to a time prior to the birth of the instrument, but does refer to the time from its delivery, or at least from a date not before the time it came into existence."
In the case of Shinall v. Prudential Ins. Co. of America, 91 Colo. 194, 14 P.2d 183, the court based its decision upon the fact that an ambiguity existed in a recital as to the annual premiums, and the insured should have gotten one year's coverage for the first payment. "If the premium then paid carried it only to March 21 of the following year, the insured obtained but eleven months protection for one year's premium, contrary to its recital as to annual premiums." The court further stated: "This decision as always is limited to the facts of this case. But as an additional precaution we say that it does not contemplate cases where * * * there was an unambiguous contract to pay a year's premium for less than a year's protection."
The plaintiff seems to rely strongly on the case of McMaster v. New York Life Ins. Co., 183 U.S. 25, 22 Sup. Ct. 10, 46 L.Ed. 64. The ambiguity found in the language of the contracts in the McMaster Case is very patent and justifies the holding in that case. The application there contained a request (which was, it was expressly found, inserted by the agent without the knowledge of the insured, for the purpose of making a certain quota of sales before a certain date) that the policy be dated the same day as the application. This request, however, was not complied with, but the policy did contain the provision that the premiums would be due and payable as of the date of the application. There were three dates involved — December 12th, the date of the application, December 18th, the date of the policies, and December 26th, the date of delivery of the policies. We quote from the decision of Chief Justice Fuller: "But the policies were not dated December 12, and were dated December 18, the day on which they were actually issued. The applications were in terms parts of the policies, and by them it was agreed that the policies, though issued, should not be in force until the actual payment and acceptance of the premiums. This was a provision intended to cover any time which might elapse between issue and delivery and payment. So that, notwithstanding the premiums in this instance were not actually paid and received and the policies delivered until December 26, it may be conceded that, and in accordance with the practice in such matters, the contracts of insurance commenced to run from December 18 rather than from December 26. They were certainly not in force on December 12, 1893." Taking all of these matters into consideration, the court found that McMaster was entitled to the six days' coverage between December 12 and December 18, the date of the policies, which brought the time of McMaster's death within the grace period.
The plaintiff also relies on the case of Hampe v. Metropolitan Life Ins. Co., (Mo.App.) 21 S.W.2d 926. This case arose in 1929 and involves a policy almost identical with the one under present consideration. The policies in both cases were those of the Metropolitan Life Insurance Company. The court in the Hampe Case held for the plaintiff on the proposition that the due date of the premiums should date as of the time of the delivery and payment of premiums. For authority this holding is based on the prior case of Halsey v. American Central Life Ins. Co., 258 Mo. 659, 167 S.W. 951. The court construed the cases as being similar on the point of fact. We cannot agree with this conclusion. In the Halsey Case there was an absence of a stipulation as to the due date of the premiums, while in the Hampe Case and in this case, it was specifically stipulated in the application and the policy that the policy should be deemed effective as of the date of the issue thereof, and that premiums would be due and payable as of the date of the policy. Also, in the Halsey Case there was language in the policy which strongly indicates that it was intended that the insured would get a full year's coverage for the payment of the first year's premium. The application stated "that all premiums on any policy issued on this application shall be annual premiums." In the Hampe Case and this case there is no such language as before stated. In fact, it is specifically stated in the provisions of the policy that the first premium would procure coverage from the date of issue and twelve months thereafter. These distinctions seem apparent to us and we do not feel bound to be guided by the Hampe Case. (As to the effect of the Halsey Case, see later decisions of the Missouri court: National City Bank of St. Louis v. Missouri State Life Ins. Co., 332 Mo. 182, 57 S.W.2d 1066; Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523, 80 A.L.R. 950; compare Scotten v. Metropolitan Life Ins. Co., 336 Mo. 724, 81 S.W.2d 313.)
Somewhere in the course of the argument the case of Parke v. New York Life Ins. Co., 95 Mont. 503, 28 P.2d 443, was cited. It is not necessary to enter into an extended discussion of this case. The same questions were not involved, nor were the facts similar, and we cannot see by any stretch of the imagination how anything said in this decision can have any bearing upon the questions of law decided in the Parke Case, or where there could be any conflict in the two decisions.
In Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 52 Sup. Ct. 230, 76 L.Ed. 416, the following language is used: "It is true that where the terms of a policy are of doubtful meaning, that construction most favorable to the insured will be adopted. * * * This canon of construction is both reasonable and just, since the words of the policy are chosen by the insurance company, but it furnishes no warrant for avoiding hard consequences by importing into a contract an ambiguity which otherwise would not exist, or, under the guise of construction, by forcing from plain words unusual and unnatural meanings. Contracts of insurance like other contracts, must be construed according to the terms which the parties have used, to be taken and understood, in the absence of ambiguity, in their plain, ordinary and popular sense. * * * As long ago pointed out by this court, the condition in a policy of life insurance that the policy shall cease if the stipulated premiums shall not be paid on or before the day fixed is of the very essence and substance of the contract, against which even a court of equity cannot grant relief."
In Rosenthal v. New York Life Ins. Co., 94 F.2d 675, we find the following language: "`While it is highly important that ambiguous clauses should not be permitted to serve as traps for policyholders, it is equally important, to the insured as well as the insurer, that the provisions of insurance policies which are clearly and definitely set forth in appropriate language, and upon which the calculations of the company are based, should be maintained unimpaired by loose and ill-considered interpretations.' * * * It is a sound and well established rule that the date of issue of the policy and dates when premiums are due are to be taken as those agreed upon by the parties to the policy. ( Klein v. New York Life Ins. Co., 104 U.S. 88, 91, 26 L.Ed. 662.)"
In the case now before us the facts of the case must control [5, 6] the decision in the light of the general applicable rules. We cannot be influenced by the argument of plaintiff's counsel that the average man, in purchasing a life insurance policy, does not even see the contract itself before delivery to him, and few of them take the time to read it or would understand it if they did read it. We cannot make contracts for competent parties. With the exception of the Hampe Case, supra, to the conclusion in which we cannot subscribe, there has no case come to our attention which contains the particular provisions here presented. The contract must stand upon its own provisions, and in them we can find no ambiguity.
Plaintiff makes the further contention that when a life insurance contract actually comes into existence it is presumed to continue, and that there is a presumption against forfeiture. The presumption, however, is that the contract is valid and subsisting and the company must show facts to avoid liability. In this case the fact was the nonpayment of premiums. There is no question as to defendant having pleaded the forfeiture. It is amply pleaded in paragraphs IV and V of the affirmative matter set out in the answer. The plaintiff contends that there is not "one scintilla of evidence" as proof of the alleged forfeiture. The only evidence outside of the contract itself is the stipulation entered into between the parties. This stipulation of facts sets out the facts surrounding the contract and especially states that "after the payment of the first premium on July 20th, 1929, no further premium was ever paid to the company under the said policy." The defense is forfeiture for the nonpayment of any premiums after the first. When this nonpayment was admitted in a stipulation of facts, there was no need for proof.
It might also be contended that because there is no proof as to notice of forfeiture and a cancellation of the policy, the insurance company has waived its right to now assert the defense here asserted. This brings up the proposition of whether or not the contract was ipso facto void on the nonpayment of premium thirty-one days after the due date.
Section 7549, Revised Codes, provides that "Time is never [7] considered as of the essence of a contract, unless by its terms expressly so provided." In this case the terms of the contract specifically state: "The payment of a premium shall not maintain this policy in force beyond the due date when the next premium is payable." It is true that the words, "Time is the essence" are not used, but there is no magic in the use of these words. It is sufficient if the intent is clearly expressed, and it has been so held in the case of Curtis v. Parkham, 49 Mont. 140, 140 P. 511. There the court said: "It is true, of course, that no set form or arrangement of words is necessary, but the contract must, upon its face, convey the meaning that time shall be of the essence." (See, also, Nelson v. Mutual Life Ins. Co., 58 Mont. 153, 190 P. 927.)
It has been urged that to construe the premium payment date as [8] being the date of the policy violates the provisions of paragraph 5 of Part A of the application, which reads as follows:
"In case of apparent errors or omissions discovered by the Company in Part A of this application, the Company is hereby authorized to amend this application by noting the change in the space entitled `Corrections and Amendments' and I hereby agree that my acceptance of such policy, accompanied by a copy of the application so amended shall operate as a ratification of such changes or amendments, provided, however, that no change shall be made as to the amount, classification, plan of insurance, or benefits unless agreed to in writing by me."
This appears over the signature of the applicant, and it is argued that his benefits have been changed because of the nine days during which he had no protection. But in the preceding paragraph of Part A of the same application, that is paragraph 4, set out in full heretofore, and likewise over the signature of the applicant, is the specific agreement that the company should incur no liability until the premium had been paid and the policy delivered, but that when so paid for and received, the policy should be deemed to have taken effect as of the date of issue as recited on the first page of the policy. We cannot see but what everything done was done in exact accordance with the insured's own agreement, over his own signature, and cannot support any contention that any changes or amendments have been made either with or without the agreement of the insured.
The judgment is reversed with direction to enter judgment for defendant.
ASSOCIATE JUSTICES R.J. ANDERSON and MORRIS, and HONORABLE R.E. McHUGH, District Judge, sitting in place of MR. JUSTICE ANGSTMAN, disqualified, concur.
Rehearing denied November 16, 1938.