Mutual Life Ins. Co. v. Sears - 178 U.S. 345 (1900)
U.S. Supreme Court
Mutual Life Ins. Co. v. Sears, 178 U.S. 345 (1900)
Mutual Life Insurance Company v. Sears
Argued March 14-15, 1900
Decided May 28, 1900
178 U.S. 345
In view of what has been already decided in Mutual Life Insurance Co. v. Phinney, ante, 178 U. S. 327, the Court holds that it is needless to do more than note the fact that, as shown by the answer, after the insured had once defaulted in May, 1892, and a second default had occurred in May, 1893, application was made to him by the company, through its agents, to restore the policy, and that he declined to make any further payments or to continue the policy, and elected to have it terminated, which election was accepted by the company, and the parties to the contract treated it thereafter as abandoned, and that there is nothing in the New York statute (if controlling at all) to prevent the parties from dealing with that as any other contract, and if they choose to abandon it, their action is conclusive.
This, like the case of Mutual Life Insurance Company v. Phinney, ante, 178 U. S. 327, is an action on an insurance policy issued by the company, the premiums on which were unpaid for years before the death of the insured. The facts, as disclosed by the pleadings (and the case went off on the pleadings, without any testimony), are that, on May 18, 1891, the insurance company issued a policy to Stephen P. Sears, he being the beneficiary named in the policy as well as the insured. He paid the first annual premium and received the policy, but neglected to pay the premium due on May 18, 1892, and all subsequent premiums. He lived until March 30, 1898, and thereafter his widow, the plaintiff below, was appointed his executrix. The answer alleged nonpayment of the premiums from 1892 onward, and also
"that subsequent to the failure of the said Stephen P. Sears to make payment of the said annual premium falling due on said policy May 18, 1893, and subsequent to the lapsing of said policy for failure to make said payment, and after the said Stephen P. Sears was fully informed and knew that said policy had been by it declared lapsed and
void for nonpayment of premium, this defendant, through its agents, applied to said Stephen P. Sears to make restoration of said policy by making payment of said defaulted premium and having the said policy restored to force, but that said Stephen P. Sears refused to make such payment, and refused longer to continue said policy or make any further payments thereon, and then and there elected to have the same terminated, and this defendant, relying upon the said election and determination of said Stephen P. Sears at all times subsequent thereto treated said policy as lapsed, abandoned, and terminated, and relying upon the said conduct of said Sears, abstained from taking any further action or step in relation to said policy, by way of notice or otherwise, in order to effect the cancellation and termination thereof."
A demurrer to this answer was sustained, and judgment entered for the plaintiff, which was affirmed by the court of appeals, 97 F. 986, and the case was thereupon brought to this Court on certiorari.