Equitable Life Assurance Society of U. S. v. Golson

48 So. 1034, 159 Ala. 508, 1909 Ala. LEXIS 691

• Court: Supreme Court of Alabama
• Decided: February 4, 1909
• Status: Published

Opinion

ANDERSON, J.

It has been almost universally held that the failure to pay the premium on an insurance policy does not, of itself, forfeit the contract, unless the policy so provides. — 25 Cyc. 824, and authorities cited in note 64. It is true the policy may contain a valid condition, within the limitation of the statute, that it may be terminated or forfeited upon a failure to’ pay any premium or installment at the time specified in the contract, which would be a condition subsequent, and the nonperformance of which would avoid the policy, unless waived by the insurer. Such a condition, however, being for the benefit of the company, is to be strict ly construed, and a forfeiture will be enforced only when it appears that such is the plain intent and meaning of the contract; and if there are repugnant conditions the court will enforce such as are in favor of the insured and will prevent a forfeiture. — 8 Cyc. 821; Ferguson v. Union Mutual Co., 187 Mass. 8, 72 N. E. 358; McMaster v. Life Ins. Co. (C. C.) 90 Fed. 40.

The pleas in the case at bar do not attempt to defeat a recovery upon the policy entirely, as they concede the plaintiff’s right to recover the surrender value of the policy, but claim that the original policy was forfeited for nonpayment of the premium, which matured less than six months before the death of the insured. The forfeiture relied upon in the pleas is as follows: “If premiums upon the policy for less than three complete years of assurance shall have been duly received by the society, and default shall be made in the payment of a subsequent premium, the policy may be surrendered for a nonparticipating paid-up policy, for the entire amount which the full reserve on the policy, according to the present legal standard of the state of New York, will then purchase as a single premium, calculated by the regular table for single-premium policies, now published by the society, provided that the policy be returned to the society duly receipted within six months after the date upon which the last premium in default has fallen due; otherwise, the policy shall cease and determine, and all premiums paid thereon shall forfeit to the society.”

We do think that this clause provides for a forfeiture of the policy inside of six months after default in the payment of the premiums, unless the insured during that time surrenders the policy and gets a paid-up one under the terms of the contract, and thus releases himself from liability for unpaid premiums'. In other words, the clause means that after default in any premium, after the third one, the insured has six months within which to elect to surrender the policy and get paid-up insurance, to the extent of what he has paid in, or to pay the premium, should he decide not to surrender the policy, and when he has failed to so elect, notwithstanding the premium is unpaid, the policy does not become forfeited for six months after said premium becomes due. The policies considered in the Alabama authorities cited by counsel for appellant contained a clause making the life of the policy dependent upon the payment of the premiums.

The special pleas failing to show that the original policy had been forfeited before the death of the insured, the trial court properly sustained the demurrer thereto. The judgment of the circuit court is affirmed.

Affirmed.

Tyson, C. J., and Denson, McClellan, and May-field, JJ., concur.