Promptness of payment of life insurance premiums is essential,
and although forfeitures are not generally regarded with favor,
they are necessary, and should be fairly enforced in regard to such
payments. A statute requiring notice of time of payment of premium
and effect of nonpayment thereof should not be construed so as to
make it a trap for either the company or the assured.
Page 199 U. S. 172
Where the assured has received the statutory notice, containing
in the words of the statute a statement as to the effect of
nonpayment of the premium, the fact that a mistaken additional
statement as to the forfeiture of the policy by reason of such
nonpayment was contained in the notice is not such a failure to
comply with the terms of the statute as will prevent a forfeiture
of the policy where it appears that, after default, the assured
received another notice in regard thereto, had an opportunity to
reinstate the policy by payment of the premium within a specified
time according to the policy, but made no payment for over three
years, and did not ask for any extension of time, and the company
had noted the forfeiture on its books.
Mrs. Meinert, the plaintiff below, filed in the Circuit Court of
the United States for the District of Indiana her amended
complaint, by leave of court, against the petitioner, the insurance
company, to recover $5,000 on a certain policy of insurance for
that sum on the life of her deceased husband, William Meinert. She
obtained judgment on the trial before a judge without a jury, which
was affirmed in the circuit court of appeals. 127 F. 651. This
Court allowed a writ of certiorari to review that judgment, and the
case is now here upon the return to that writ.
The material facts are the following: the company, on the fifth
day of March, 1896, issued the policy in suit in consideration of
the payment of quarterly premiums of $25.25, each, on or before the
fifth days of March, June, September, and December in each year for
five years; after that the payments were to be $64.25 for the
following fourteen years or until the previous death of the
insured, should his death occur before the expiration of the
specified period. Four quarterly payments of $25.25 each were made,
the last one having been made on or before December 5, 1896. No
other installment of premium was ever paid. The assured died on the
twenty-fourth day of March, 1900. Over three years and three months
had passed therefore since the last payment of any premium.
Meinert, up to the time of his death, lived at Evansville,
Indiana.
On the fifteenth day of February, 1897, the company sent him by
mail a written notice as follows:
Page 199 U. S. 173
"
Nederland Life Insurance Co. (Ld.)"
"
established in Amsterdam (Holland), 1858"
"
United States Branch, 874 Broadway, New York City"
"Pursuant to chapter 690 of the Insurance Law of 1892 of the
State of New York, you are hereby notified that the quarterly
premium of $25.25 on policy No. 58021 will fall due on the 5th day
of March, 1897, if the policy be then in force. The conditions of
your policy provide that, unless such premium shall be paid at the
United States branch office of the company, or to a person
authorized to collect such premium, holding the company's receipt
therefor, by or before that date, the policy and all payments
thereon will be forfeited and void, except as to the right to a
cash surrender value or paid-up policy."
"L. I. DuBourcq"
"
President of the U.S. Branch"
"If payment is made to the company directly, it can be done by
valid draft, check, postal or express money order, made out to the
order of the United States Branch of the Nederland Life Insurance
Co. (Ld.)"
This notice was duly received by the assured February 16,
1897.
On Saturday, April 3, 1897, the company sent him by mail another
notice, as follows:
"
Nederland Life Insurance Co., Limited"
"
Established 1858, Amsterdam, Holland"
"
United States Branch, 874 Broadway, New York"
"New York, April 3, 1897"
"William Meinert, 217 Law ave., Evansville, Indiana."
"Dear Sir: The premium on your policy which fell due on the 5th
March has not been paid, and the policy is therefore
Page 199 U. S. 174
null and void. I beg to inform you, however, that, if the same
is paid within ten days your policy will be reinstated."
"L. I. DuBourcq,
President"
"Policy No. 58021"
This notice was received by him in due course of mail on Monday,
April 5, 1897, but he never acknowledged its receipt, and never
took any steps to have the policy reinstated. On April 22, 1897,
the company entered on the appropriate records of its office the
declaration that the policy was forfeited and lapsed for failure to
pay installment of premium.
It was agreed between the company and the assured that the
provisions printed or written upon the back of the policy were to
be taken as part of it, as fully as if they were set forth at
length on its face, and signed by the parties. One of them was
article 2, which reads as follows:
"In case of nonpayment of any annual premium or installment
thereof within thirty days after the same shall fall due, this
policy shall be null and void, subject, however, to provisions as
to cash surrender and paid-up policy values. The company will,
however, as a matter of favor, and not of right, mail notice to the
insured or the assignee at the last address furnished by him or
them to the company, to the effect that the policy may be
reestablished by the payment of the annual premium or installment
thereof still due, within ten days after mailing notice."
The application for the insurance, which, by agreement, was also
made part of the contract, provided that
"this application shall be governed by the laws of the State of
New York, the place of said contract to be the principal office in
the United States of said company, in the City of New York. "
Page 199 U. S. 176
MR. JUSTICE PECKHAM, after making the foregoing statement,
delivered the opinion of the Court.
The judgment in favor of the plaintiff below for the recovery of
the amount found due upon the policy in question is based on the
above-mentioned facts, the courts holding that the policy was not
forfeited, but was in full force because of the
Page 199 U. S. 177
alleged failure of the company to comply with the law of New
York in relation to giving the notice provided for therein. The
provision in question is found in section 92, chapter 690, of the
Laws of New York for 1892. The section is set forth in the margin.
*
The alleged failure to comply with the terms of the section
consists in prefixing the words, "
the conditions of your policy
provide," to the notice required by the statute, which
provides that the notice shall state that "unless such premium . .
. then due shall be paid . . . by or before the day it falls
Page 199 U. S. 178
due" (March 5, 1897), "the policy and all payments thereon will
become forfeited and void," etc., whereas, by reference to the
policy, article 2, indorsed on the back thereof, it will be seen
that, if the premium is not paid
within thirty days after
the same shall fall due, the policy shall be null and void. The
notice thus mistakenly states that the policy "by its conditions"
will become void, etc., while in truth it is the language of the
statute which the notice uses.
The company contends that the law of New York does not, for the
reasons stated in the brief of counsel, apply to the particular
facts set forth herein, and it also contends that the notice which
was in fact given fully complied with the terms of the law. We pass
over the first contention without discussion, because we are of
opinion that, assuming the New York statute to apply, the notice
given by the company was sufficient, and the policy was forfeited
long before the death of the plaintiff's husband.
Referring to the statute, it is seen that, by omitting the
above-mentioned words, "the conditions of your policy provide," the
rest of the notice actually given does comply with the terms of the
statute. The notice informed the assured that, unless the premium
which would fall due on the fifth of March, 1897, if the policy was
then in force, should be paid by or before that date, the policy
and all payments thereon would become forfeited and void, except as
to the right to a cash surrender value or paid-up policy. This is
exactly what the statute required the notice to state. The statute
does not require the notice to state that the policy would become
forfeited only after the expiration of thirty days after the
payment became due, or notice was mailed, in case such payment were
not made, but it says distinctly that the notice shall state that
failure to pay the premium by or before the date it falls due will
forfeit the policy and all payments thereon.
Why should the mistaken statement as to the conditions of the
policy prove fatal when the exact language of the statute as to the
contents of the notice is used? The error of fact as
Page 199 U. S. 179
to the consequence of a failure to pay, as contained in the
notice, would be exactly the same if the words above referred to
had been omitted; because the statute provides that the assured
shall, nevertheless, have thirty days after mailing the notice
before a forfeiture can be asserted. There can be no doubt that the
premium did become due on the fifth of March, and the thirty days'
extension simply permitted a payment within that time to save a
forfeiture.
Now, whether the statement in the notice were incorrect because
of a failure to state accurately the conditions of the policy, or
because of a failure to tell the assured the subsequent provisions
in the statute as to forfeiture, is not in either case material so
long as the notice follows the statute, and if it do that, it is
good even though it contains such a mistake as is set forth herein.
The purpose of the statute was to prevent a forfeiture by the
nonpayment of the premium when due, because of inadvertence or
forgetfulness, and when the assured receives the very notice
required by the statute, its purpose is fulfilled although the
notice contains in another respect such a mistake as does this
notice. It is most unreasonable to hold that a statement of the
consequence of the failure to pay the premium when due, mistakenly
attributed in the notice to a provision in the policy, should be
held fatal when the same statement, without attributing it to a
provision in the policy, would be a fulfillment of the requirements
of the statute. In either case, there would be an error as to the
time of forfeiture, but there would also be a correct statement, in
the very words of the statute, of the time the premium was payable,
its amount, and where it could be paid. In such case, to assume
that an injury might follow is, as we think, to assume an ignorance
or carelessness on the part of the assured which is unreasonable as
well as improbable. A spark of intelligence on the part of the
assured would prompt him to refer to his policy, and he would then
see the mistake of fact made in the notice as to the length of the
time he had in which to pay in order to prevent a forfeiture. If he
thought the notice rightly stated the fact as
Page 199 U. S. 180
to forfeiture, the natural result would be greater care to pay,
or some application to extend the time of payment on or before the
day when the payment became due. Of that day he had the ample
notice provided in the statute. It is scarcely possible to imagine
any injury resulting from this error, although extraordinary and
wonderful things do sometimes occur. Courts, however, cannot
proceed upon the theory that policy holders are
non compotes
mentis, and that the natural result of such a mistake of fact
upon a person of ordinary intelligence cannot be assumed in the
case of a holder of a policy of insurance. It cannot reasonably be
assumed that the assured might be betrayed into not doing at all
what the notice tells him must be done on or before a certain day
in order to save a forfeiture, because the notice omits to tell him
of the extended time before the forfeiture can really be enforced,
nor can such failure be anticipated as the result of the mistake.
So long as the assured has in fact the notice required by law, we
are of opinion that such a mistake as was made in this case is
immaterial.
The cases from the New York courts do not decide contrary to our
decision herein. In
Phelan v. Northwestern Mutual Life
Insurance Company, 113 N.Y. 147, the notice was not like the
one in this case. The notice spoken of there, it was held, did not
comply with the statute, because it was not given in its words, and
the language actually used was held by the majority of the court to
be so far from complying with the statute in a material manner as
to render it of no use. The court said that the notice, instead of
saying that the policy would become forfeited and void, said that
"members neglecting so to pay are carrying their own risks," and
that the latter words, while they might be comprehensive to those
versed in the language of insurers and accustomed to their
phraseology, were not the language of the statute and did not
embody the notice which the statute required.
The other case,
Schad v. Security Mutual Life
Association, 155 N.Y. 640, affirmed without any opinion the
decision of the
Page 199 U. S. 181
appellate division of the supreme court reported in 11 App.Div.
487, where it was held that a statement that in case of the
nonpayment of the premium when it became due the policy would cease
to be in force did not comply with the notice required by the
statute, that, if the premium was not paid when due the policy and
all payments thereon would become forfeited and void.
In
McDougall v. Provident Savings Life Assurance
Society, 135 N.Y. 551, it was held that, where the policy was
out of the ordinary form, a notice which did not follow literally
the words of the statute, but contained a statement reminding the
assured of the time and place when and where to make any payments
required by the terms of the contract, the amount thereof, and the
effect of nonpayment, was sufficient.
A statute of this kind should not be construed so as to make it
a trap for either side. Forfeitures, though generally not regarded
with favor by courts of equity, yet are necessary, and should be
fairly enforced, in cases of life insurance. Promptness of payment
is essential in such business.
New York Life Ins. Co. v.
Statham, 93 U. S. 24,
93 U. S. 30.
Where, therefore, the assured has in truth received notice (as
provided by statute) of the time of payment of the premium, its
amount, and where it can be paid, and a statement is made in the
words of the statute itself as to the effect of nonpayment, a
mistaken additional statement like the one made here ought not to
be held a failure to comply with the terms of the statute, and thus
prevent a forfeiture which the assured evidently contemplated.
We are aware of the case of
New York Life Insurance Co. v.
Dingley, 93 F. 153, but we cannot agree with the views therein
expressed.
The case before us shows no evidence of any injury to the
assured on account of the notice. He received, as the record shows,
another notice on the fifth of April informing him that his policy
was forfeited, but that it could be reinstated by the simple
payment of the premium within ten days thereafter.
Page 199 U. S. 182
He made no acknowledgment of the receipt of the notice, failed
to pay the premium, and asked no extension of time. Finally, on the
twenty-second day of April, the forfeiture was noted on the books
of the company. We think that the statute was complied with and
that the forfeiture was legal.
The judgments of the circuit court of appeals and the Circuit
Court for the District of Indiana must be reversed, and the cause
remanded to the latter court with instructions to enter judgment
for the defendant.
Reversed.
* Laws of New York, c. 690, section 92.
"92. No forfeiture of policy without notice."
"No life insurance corporation doing business in this state
shall declare forfeited or lapsed any policy hereafter issued or
renewed, and not issued upon the payment of monthly or weekly
premiums, or unless the same is a term insurance contract for one
year or less, nor shall any such policy be forfeited or lapsed by
reason of nonpayment when due of any premium, interest, or
installment, or any portion thereof required by the terms of the
policy to be paid, unless a written or printed notice stating the
amount of such premium, interest, installment, or portion thereof,
due on such policy, the place where it should be paid, and the
person to whom the same is payable, shall be duly addressed and
mailed to the person whose life is insured, or the assignee of the
policy, if notice of the assignment has been given to the
corporation at his or her last known post office address, postage
paid by the corporation or by an officer thereof, or person
appointed by it to collect such premium at least fifteen, and not
more than forty-five, days prior to the day when the same is
payable."
"The notice shall also state that, unless such premium,
interest, installment, or portion thereof, then due, shall paid to
the corporation, or to a duly appointed agent or person authorized
to collect such premium, by or before the day it falls due, the
policy and all payments thereon will become forfeited and void
except as to the right to a surrender value or paid-up policy, as
in this chapter provided."
"If the payment demanded by such notice shall be made within its
time limited therefor, it shall be taken to be in full compliance
with the requirements of the policy in respect to the time of such
payment, and no such policy shall, in any case, be forfeited or
declared forfeited, or lapsed, until the expiration of thirty days
after the mailing of such notice."
"The affidavit of any officer, clerk, or agent of the
corporation, or of anyone authorized to mail such notice, that the
notice required by this section has been duly addressed and mailed
by the corporation issuing such policy, shall be presumptive
evidence that such notice has been duly given."
