McCay, Judge.
1. Whatever would have been the right of the plaintiff below, against the defendant, had Mr. Gober died during the first year after the date of either the application or the policy, we are clear that the liability of the company ceased on the failure to pay the second premium. The application, signed by the party applying, clearly sets forth that the payments were to be annual, and the insured had full notice that if his application was accepted his insurance would begin from the date of the receipt. When the policy was issued and transmitted to the agent, the company was bound according to the terms of the policy. But only according to its terms. One of those terms was that payment of annual premiums was to be promptly made as they became due; this was not done, and by the express conditions of the policy the liability of the company ceased. In the very nature of things this payment is a sine qua non — a condition precedent to the continuance of the risk. There are, of late years, non-forfeiture policies issued, ¡but even these only continue the liability for what would be the surrender value of the policy. The risk ceases on the fixed amount nominated in the poticy. That a company may, if it pleases, when the premium is due, not take advantage of the forfeiture; that it may, for its own convenience, notify the policy holder, and remind him of the day of payment or call upon him, through its agents for it, cannot change the rights of the parties. Why should an insurance contract be different from other contracts in this respect? It is a common custom for banks to notify debtors that their notes wdll be due on the day of maturity. This is a mere matter of convenience and not a necessity. Both parties to a contract are presumed to know its terms.
[412]*4122. Nor is there, as we think, anything in the fact that Mr. Gober had never actually got his policy. It was in the hands of Mr. Johnson, the agent, for him. It was his duty to apply for it. If the receipt is to stand good until he gets his policy, he might refuse to take the policy, or go away, so that it could not be delivered. Obviously the business of life insurance would be impracticable on such terms. Mr. Gober knew that the policy was or was not to be issued in a short time. When that time passed, he was either insured or not insured. It was his duty to inquire. If he saw fit to lie still and consider himself insured because no application was made to him for the receipt, he had a right to do so; but only on the terms of the policy. By those terms, he was to pay promptly his annual premiums. He knew the receipt was only temporary, and that if his application was accepted, it would be by the issuing of a policy for a permanent contract. If he saw fit to let that lie in the hands of the agent, he must take the consequences of any want of knowledge he may thus have of its terms. He cannot, by this action of his, add to or detract from the terms of the policy. The very terms of the receipt are that the first annual premium only is acknowledged, and the application clearly notifies him of the same. This, too, is the common sense and common justice of the transaction. The funds of a life insurance company are the property of its patrons. The company is but a trustee for the persons — generally widows and orphans — who are to be the recipients of the money the company has; and, while the plaintiffs here have our sympathies, we must remember that the fund they are seeking is the property of other widows and orphans, and that it is the duty of Courts to see to it that justice be done to both parties.
Judgment reversed.
Free access — add to your briefcase to read the full text and ask questions with AI