Methvin v. Fidelity Mutual Life Ass'n

GAROUTTE, J. This action is based upon a policy of life insurance. Plaintiff recovered, and the appeal is taken from the judgment and order denying a motion for a new trial.

[333]Had the policy lapsed‘and become forfeited at the time of the death -of the insured 1 These are the facts: "While the policy was dated July 30, 1895, it was not delivered to the insured until the third day of the following September, at which time the first quarterly premium was paid. There is a clause in the policy providing that it would be in no way binding, or of any force or effect, until delivered to the insured and the first quarterly premium paid. It necessarily follows that the contract of insurance went into effect September 3, 1895. A quarterly premium of $24.96 was to be paid for the period of twenty years, on or before the thirtieth day of July, October, June and April of each year. Upon this state of facts, it is manifest that when the insured received his policy and paid his quarterly premium he was insured for three months from September 3d, the date when the policy went into force and effect. The insured died in November, 1895, and we see no reason why his policy of insurance was not alive and in full force at that time.

It is claimed that the policy was forfeited eo instanti upon October 30, 1895, because the second quarterly premium was not paid upon that date. This contention is based upon a clause of the policy which declares that this policy “shall be ipso facto null and void if premiums are not paid when due.” The construction of the policy here contended for would recognize and approve a harsh doctrine indeed. It would be carrying the doctrine of forfeiture to unconscionable lengths. By payment of the first quarterly premium, the deceased was insured for three months. This was necessarily the contract between the parties. This clause of forfeiture for nonpayment of premiums was never intended to forfeit the privileges of insurance already paid for. No insurance policy ever attempted to do such a thing. This contention, if sound, would not only result in the forfeiture of present paid-up insurance, but would result in the forfeiture of a portion of the premium already paid. Upon rules of construction even liberal to defendant, it cannot be claimed that the forfeiture clause of the policy for nonpayment of premiums was any more than a forfeiture of the policy to take place upon the expiration of the period during which there existed paid-up insurance. The insured died at a time when the policy was in full force and effect, and, there being no forfeiture at that time, his representative has a good cause of action.