Winchell v. John Hancock Mut. Life Ins.

30 F. Cas. 285

• Court: U.S. Circuit Court for the District of Massachusetts
• Decided: May 15, 1879
• Status: Published

Opinion

LOWELL, Circuit Judge.

Equity will not reheve against a penalty or forfeiture imposed by statute, because It is presumed that the legislature would have inserted in an act any exceptions or mitigations which it intended to admit. A fortiori, when a new right is conferred by statute, and certain acts to be done within a certain time are made conditions precedent to the recovery, equity might perhaps even then relieve against a delay caused by the positive fraud of tlie defendant; but nothing short of that would avail. The plaintiffs admit this general rule, and distinguish this case by the fact that the statute is incorporated into the contract, and so becomes a right by stipulation. I do not think the policy intends any more in this respect than to remind the assured that he has the rights given him by the statute, and, indeed, I understand one of the statutes to require such a reference to be inserted in the policy. The plaintiffs, therefore, having failed to notify the loss until about one. hundred days after it occurred, cannot be relieved on the ground of their ignorance of the existence of the policy.

The construction of the clause of the contract which gives the assured an option to take a paid-up policy at any time after one annual premium has been paid, coupled with the other clause that the policy shall be void if any premium is not paid when due, saving as the forfeiture is restricted by the Massachusetts statute, is a nice and difficult one. The defendants, in support of their demurrer, maintain that the two clauses, taken together, mean that the option must be exercised before there has been a forfeiture; that is to say, during some current'year for which payment has been made, and before or on the day the annual premium is payable. The option, they argue, means a choice between the original and the paid-up policy, and there can be no choice between a forfeited policy and some other. The case of Bussing’s Ex’rs v. Union Mut. Life Ins. Co. [supra], is an authority for this construction, which seems to reconcile the apparent discrepancies in the two clauses, and to be consistent with all the words used. On the other hand, the plaintiffs insist that the policy is nonforfeitable after one annual premium has been paid, and that the assured may choose between the temporary extension of the policy under the Massachusetts law, or a paid-up policy for a less amount. They further say that the word “option” may be disregarded, or be read as meaning “right”; that is, the assured has the right, at any time after paying one or more annual premiums, to take a paid-up policy for an amount proportioned to the premiums paid.

After much doubt, I have concluded that the plaintiffs’ construction is the more obvious and natural one. I think the assured, in reading his policy, would suppose that he need give himself no uneasiness about the premiums, for that he could always be sure of a policy as large as those he had paid would warrant. That was my impression on first reading the policy, and I think, when that is the case, the other construction should be clear and decisive on a more careful consideration, before a court should venture to adopt it The policy itself, as a policy for $3,000, was forfeited by neglect to pay the premium, except as it was kept in force until the death of the assured by virtue of the' statute of Massachusetts; and that policy could not be revived or reinstated except by the consent of both parties. But it is not wholly inconsistent with that condition to hold that the right to a paid-up policy of less amount remained good. Such was the decision upon those words in two cases cited by the plaintiffs, which 1 agree are not otherwise specially like the present.

The defendants would import into the contract the words often found in such policies, that the paid-up policy must be applied for while the original policy is in force. The plaintiffs say that the very omission of those words is evidence that such is not the intent. I do not consider that form of expression to have become so universal that the court can supply it by implication, nor, on the other hand, that the omission has much bearing on the case. Nor do I consider that the words “at any time after” one premium has been paid refer to the present question at all. The meaning is the same as if “after” or “when” had been used, and points to a terminus a quo, to the beginning of the right, and not to its termination. But I do consider that one fair and reasonable, and, on the whole, the fairest, construction of the contract is that the forfeiture by nonpayment is of all rights not otherwise provided for. Even if we supplied the words, “while the policy is in force,” this policy was in full force for the whole amount. when the assured died. It was in force, in all respects, and to all intents and purposes, and subject to be forfeited, if the assured did any act prohibited by the conditions, such as traveling in certain countries, or engaging in certain occupations. In other words, up to this time it was not forfeited at all, except as to the right of extending it beyond the time to which the statute extended it. Why, then, should not the assured have the option to exchange it for a paid-up policy? If the assured had this right at the time of his death, the plaintiffs have it, because there was nothing of a personal character to die with the person. It was a right of property, which they would take, or, at least, which the administratrix would take, like other rights of that character.

I am inclined to think an action at law might at the present day be maintained on this claim; but, as the paid-up policy never was issued, and the defendants refused to issue it on demand, it seems to come directly within the cases cited by the plaintiffs, in which courts of equity have been held to have jurisdiction also; they having acquired it when courts of law were less liberal than nowi

Demurrer overruled.