Opinion
June, 1905.
Fredric William Jenkins, for the appellant.
S. Mack Smith, for the respondent.
On the 2d day of August, 1889, the defendant in consideration of the payment of an admission fee and a quarterly premium of six dollars and twenty cents on each policy to be thereafter paid, issued to the plaintiff two policies of insurance upon his life for $1,000 each. The premiums were due on the second day of the months of August, November, February and May of each year, and, except on one occasion, the premiums on each policy were paid together. They were usually sent by the plaintiff to the home office of the defendant by mail, and during the fourteen years that the policies had run more than half of the premiums had been received from one to twenty-eight days past the day upon which they were due, but had been accepted by the company without question. The plaintiff did not live far distant from the city in which the defendant's home office was located, and having business there and supposing, as he says, that it made no difference, did not send the premiums due May 2, 1903, but waited until the fifth of that month, when he, in person, tendered to the proper officer of the defendant the premiums which should have been paid on the second. Some conversation was had as to the plaintiff signing a health certificate, which was usual when premiums were not paid on the exact day. Plaintiff signed it as requested, but was finally informed that his payment was too late, and that the company could not carry him any longer and that his policies were forfeited.
Each policy contained the provision that at the expiration of each period of five years of its continued existence an equitable division of the reserve fund of the company should be made, in the form of a bond, and that the policy of any member who had paid his premiums in advance as they came due, without using any portion of his accumulations in this reserve fund, should be non-forfeitable until all his share therein should be exhausted in payment of such premiums. During the first five years of the existence of the policies, plaintiff had paid many premiums after the day on which they were due, but notwithstanding this the defendant issued to him two bonds of twenty-seven dollars and twenty-eight cents each. No bonds were issued to him at the end of the ten years, but he had used none of those which had been issued to him, and still held them, and on May 11, 1903, he formally tendered them to the defendant in payment of the premiums due on the second of that month. Defendant refused to accept them and thereupon the plaintiff procured assignments of the interests of the beneficiaries of his policies and brought this action for damages for breach of contract.
The trial court submitted to the jury the question whether or not the defendant by its course of dealing with the plaintiff had waived payment of premiums on the exact day on which they fell due, and had led plaintiff to believe by such course that payment on a later day fulfilled the requirements of the policies. The jury found in plaintiff's favor on these issues and gave him a verdict for $1,289.78 damages.
The plaintiff proved he was not insurable, having applied for insurance and been rejected by several companies; and his damages were measured by discounting the amount of his two policies for the number of years of his expectancy of life, and deducting from that sum the discounted premiums for the same period.
The appellant insists that the plaintiff could have no right of action for general breach of contract during his own life, and that his only remedy was an equitable action to compel the receipt of his premiums and his restoration to membership upon the books of the company, and cites the case of Langan v. Supreme Council Am. L. of II. ( 174 N.Y. 266) as conclusive upon the proposition. We think such construction is a misapprehension of the scope of that decision, and that it does not decide that an insured has no right of action for breach of contract where the insurer wrongfully refuses to accept any premiums and insists that the contract is at an end and that it is no longer liable to pay the amount stipulated upon the death of the insured. In that case the insurer had sought by a by-law to reduce the amount of insurance. The court held that this was a futile attempt because the insured had a vested right to remain insured for the originally stipulated sum, and that such right could not be and was not affected by the action of the association, and, hence, there had been no actual breach of contract in such sense as gave the insured an action for damages.
Undoubtedly, the plaintiff could have brought his action in equity. Where a life insurance company, without just cause, declares a policy to have lapsed and to have become void by reason of the policyholder's default, and refuses to have any further dealing with him, a right of action accrues in equity to have the policy adjudged to be in life and force. ( Meyer v. Knickerbocker Life Ins. Co., 73 N.Y. 516.)
But this is not the only remedy. Where there has been an actual breach, and the tendered premiums have been wrongfully refused, and the insurer has declined to further recognize the insured as a policyholder and insists that his policy is no longer in force, the insured has at his election an action at law to recover the damages which he has suffered, if any, because of the broken agreement. Under such circumstances the policyholder need not necessarily resort to equity to be reinstated, nor need he remain silent and leave the question of the validity of his policy and the sufficiency of his tender of premium to be established by the beneficiaries thereunder. If there has been a breach he has sufficient interest in the policy to recover what damages he may have suffered, especially where, as in this case, he has procured an assignment of the rights of the beneficiaries. To such an effect was the holding in the case of Fischer v. Hope Mutual Life Insurance Co. ( 69 N.Y. 161), and the principle is distinctly enunciated in Speer v. Phœnix Mutual Life Insurance Co. (36 Hun, 322), and in Kenyon v. National Life Association ( 39 App. Div. 293).
But the appellant further insists that the policies were forfeited by non-payment of the premium on the day they were due, and that it was error to permit the jury to say whether the course of dealing between the plaintiff and the defendant had been such as to make a tender of payment on a subsequent day effectual.
If by its course of dealing the defendant had led the plaintiff to believe that there was an implied agreement on its part to receive the premiums after they became due, if made within a reasonable time, the defendant would be estopped from insisting upon a forfeiture if they were so made, and whether or not this agreement and understanding existed was a question of fact. ( De Frece v. N.L. Ins. Co., 136 N.Y. 144; Kenyon v. K.T. M.M.A. Assn., 122 id. 247.) But, in addition, it seems to us that the bond which had been given by the defendant to the plaintiff upon each of the policies for an amount more than sufficient to pay the premium then due prevented the defendant from declaring the premium unpaid, especially after the plaintiff demanded that the premium be taken therefrom, and offered to surrender the bonds for that purpose. The plaintiff had continuously paid the premiums for more than ten years, and by his agreement with the defendant the policies were non-forfeitable for non-payment of premium until the amounts due on the bonds had been applied for that purpose. If there was any error, therefore, in submitting the question of the course of dealing to the jury it was immaterial, for the plaintiff had an absolute right to have the premiums paid out of the bonds of the defendant. This the defendant flatly refused to do, and the plaintiff had a right to treat the contract as repudiated by the defendant and sue for the breach even though the premiums should be deemed in law to have been paid.
The defendant cannot complain that the plaintiff has not resorted to equity to show that it was wrong, but should be content to be taken at its word and stand by the forfeiture which it itself declared.
The rule of damages adopted is complained of principally upon the ground, as is asserted by the counsel for the appellant, that the Northampton annuity table, found in the court rules, was used to determine the expectancy of life of the plaintiff instead of the Northampton tables of mortality. The Northampton tables of mortality were introduced in evidence without objection. Two witnesses were called to prove computations. They testified that the computations they made, which formed the basis of the verdict, were from the "Northampton Tables." Nothing appears but what these witnesses used the proper tables, and we must assume that they used the tables which were put in evidence. The defendant made no proof that the expectancy of life of the plaintiff was different from that proved by the plaintiff. This could have been easily done if the plaintiff's figures were wrong. The plaintiff was uninsurable, and the rule of damages adopted we think was correct, and was substantially that indicated in Speer v. Phœnix Mutual Life Insurance Co. ( supra), and in Keyser v. Mutual Reserve Fund Life Association ( 60 App. Div. 297), and in Toplitz v. Bauer ( 161 N.Y. 325). Besides the defendant does not seem to have raised the objection that the proof tended to establish an improper measure of damages.
Objection was made to the second cause of action in the complaint, on the ground that it did not specifically set forth the allegations of tender of premium and refusal and repudiation of contract. These facts were alleged at length in the first cause of action as to one policy, and were referred to as repeated in respect to the other policy in the second cause of action, but were stated to be omitted for the sake of brevity and to avoid repetition. There could have been no misapprehension on the part of the defendant as to what the plaintiff intended to plead, and we think the court properly overruled the defendant's objection, especially as the pleading was allowed to stand in this form down to the time of trial.
We see no error calling for a reversal of the judgment, and it must be affirmed, with costs.
Judgment and order unanimously affirmed, with costs; SMITH, J., not sitting.