Vol. VII. Superior Court of Cincinnati. premiums paid in full; and where, for five years, such insurance company took, as such annual premiums, from the insured, sixty per cent. in cash, and forty per cent. in promissory notes of the insured, drawing six per cent. interest, Held: that five annual premiums were fully paid by the insured, so as to entitle him to a paid up policy for half of the amount for which he was originally insured; he, on electing to take such paid-up policy being required to provide for the payment of the outstanding notes by him given. 2. Where such policy provided that the failure to pay any annual premium in full should work a forfeiture of the policy, and of all right of the assured to demand anything under and by virtue of it; and where the insured and his assignee neglected and failed to pay any annual premium, either in cash or by note, after the first five premiums, and no demand for a paid-up policy was made for several years after payment of the fifth premium, nor until after the death of the insured, when such assignee made a demand upon the insurer for a paidup policy. Held: that the policy had become forfeited and void before such demand; that the demand could only be legally made during the life of the policy, and before any annual premium had become due, and was left unpaid; that 53 the payment annually of the cash, and the giving of the note for the credit part of the premium, where a condition precedent, the non-performance of which by the insured, or the assignee, worked a forfeiture of the policy; and that, thereafter, no paid-up policy could be required from the insurance company. YAPLE, J. On October 16, 11865, William P. Van Deursen insured his life in the sum of $5,000 in the defendant company, at an annual premium to be paid, for ten years, of $251.26, when he would have a paid up policy for $5,000, payable at his death without any further payments by him. The premiums were paid annually sixty per cent. in cash, and the other part by premium note drawing six per cent. interest. Those premium notes were subject to reduction to the extent of such dividends as from time to time might be declared in favor of the policy. In 1866 Nan Deursen assigned with the assent of the company, the policy to the plaintiff, Bussing. Premiums were paid as follows: First year, 1865, cash $150.75, note $100.51; second year, 1866, cash $151.26, note $100; third year, 1867, cash $151 26, note $100; fourth year 1868, cash 3151.26, note $100; fifth year, 1869, cash $151.26. note $100. The notes drew interest at the rate of six per cent. per annum, and the interest was, first year, $6.03; second, $12.03; third, $18.03; fourth, $24.03. The company at the end of the fifth year took a note in lieu of the foregoing $500.51, crediting the insured with $114.51 dividends, leaving a balance of $368, which was to draw interest from date, and was made payable twelve months after date. No other cash or note premiums were ever paid by the insured or plaintiff, his assignee, but the matter rested there without anything further being done by anybody, until after the death of the insured, which occurred on October 9, 1876. Then the plaintiff demanded $2,500, less the outstand ng premium note as upon a paid up policy; and the defendant denied any liability in the premises. The policy among other things stipulated: "That payments of premiums were to cease after ten years, and it is hereby understood and agreed, that after two or more said annual premiums have been fully paid, this policy may be exchanged for 54 a paid-up non-forteiture policy, for an amount equal to the sum of one-tenth of that hereby insured for each and every premium which shall have been so paid; requiring no further payments of premiums, subject to no assessments, but entitled to apportionment of the profits of the company," etc. "Provided especially, and this policy is made, and it is accepted by the assured upon the express condition, that if the amount of any annual premium herein provided for is not fully paid, with the interest due thereon, on the day and in the manner so provided for, then this policy shall be null and void and wholly forfeited." Also: "Special agreement. It is expressly understood and agreed, and this policy is accepted by the assured upon this condition-that if, at any time, any note, check, or draft (other than the usual premium note for one-half of the annual premium) shall be given in payment of any premium then due, or to become due, for or on account of this policy, and such note, check or draft shall not be paid according to the provisions thereof, then this policy shall become immediately void, and the company be thereby released from all obligations under it." All the notes for the non-cash parts of the premiums contained this stipulation. Bus-ing's Exrs. v. Insurance Co. Vol. VII. “And it is an express condition of the acceptance if this note by the said company in part payment of the annual premium, w ich condition is fully agreed to by the promisor herein, that such acceptance shall in nowise affect the condition in said policy respecting the forfeiture thereof, in case of the non-payment of any other portion of said annual premium." Now, it may be conceded, and we hold, that, up to October 16, 1870, the premiums upon this policy were fully paid according to the terms of the contract, and that the assured, or his assignee, up to that date, had a right to demand a paid up policy for $2,500; yet a majority of the vote hold that, as a condition precedent, in order to keep the policy from forfeiting, and thus to preserve the right to demand a paid-up policy, if no demand therefore had been previously made, the cash and note parts of the annual premium should have been paid or tendered on that day, otherwise, by its express terms, the policy became null and void; and no paid up policy can be required after forfeiture. Such demand must be made while the original policy is alive, in force and unforfeited. 55 A company organized as this one is should have its regular cash and note premiums from all its policy-holders in order to preserve its solvency and existence; and this policy makes the annual payment of the cash part and the giving of the note for the credit part of every annual premium a condition precedent to the continuance of the risk. If the insured fail to perform such condition precedent, he forfeits his policy and all his right under it." The application of this principle to the facts of this case, in the opinion of the majority of the court, is fatal to the plaintiff's right of recovery; for he should have demanded a paid-up policy during the life of the original policy. After he suffered that to forfeit by non-payment of the annual premium when and as it became due and payable, he lost his right to demand anything from the insurance company. A judgment will be rendered for the defendant. Force, J., concurred. Tilden, J., dissenting, said, that he wanted to be on the record as dissenting most distinctly from the reasoning and conclusion, announced by the majority of the court, and had prepared a dissenting opinion as follows: TILDEN, J. DISSENTING OPINION. I can not concur in the conclusion just announced. It is conceded, and we all agree, that, up to October 16, 1870, the premiums were fully paid, and that the assured, or his assignee, up to that date had the right to demand a paid-up policy for 2,500, and yet the decision is placed upon the distinct ground that the payment of the cash and note parts of the annual premium," or the tender of them, on that day, was a condition piecedent to the right of exchange for a paid-up policy, or, upon the death of the assured, to recover the assurance money. But as to the cash part of the premium it is clearly manifest that the proposition includes an element which is not at all in the case, because the cash part of the premium was fully paid up to October 16, 1870, having been so paid on the 16th of the previous October, for the ensuing year. The real question, then, is such as involves only the consequences of the non-payment of the note ($386) on the 16th of October, 1870 *My brethren are of opinion that a company, organized as this one is, 56 should have its regular cash and note premiums from all its policy holders in order to preserve its solvency and its existence. I am unable to feel the force of this reasoning, or even to understand its application to the case before us. It is the known, and a very general usage of these companies, in the investment of their surplus earnings, to prefer the holders of their policies, as borrowers, for a limited part of the annual premiums, and this expedient, while offering to the public a separate inducement for insurance, is offered upon terms as well adapted to the preservation of their solvency and existence, and with less expense and hazard than any other mode of investment can be. The note part of the premium is, generally, upon short time. In this case the note was pay ible in a year, and was negotiable, and might have been negotiated or enforced by action after its maturity, and its ultimate payment was abundantly secured. It was secured, in the first place, by the right of the company on the 16th of October, 1870, to require its payment, and to refuse to renew the policy for the sixth year, or to issue a paid-up policy including that year. And next, it was secured by the right of the company, on the event of the death of the assured, to set off the amount of the note and interest against the amount then payable under the policy. That event, according to the course of na2 609 2 A. L. R. Vol. VII. Superior Court of Cincinnati. ture, was sure to come, and the obligation to pay, if it existed at all, was absolute as the event was certain, and until the event occurred, the note was a security, incapable of impairment, at home in the hands of the company, and by the accession of interest, becoming constantly more valuable as long as the event was delayed. If, then, it be material tɔ the consideration of the case to maintain in the company its means of solvency and self-preservation, these are, in my judgment, amply supplied in the manner here explained. But the question which we have to decide is not that of the motives which the company had for entering into the contract, or afterwards for insisting upon its terms. What we have to consider is: what were the terms of the contract? And this question like every other question of interpretation, must depend upon the p oper application of lega principles. Passing, then, to the consideration of this question, I have, in the first place, to 57 observe that I am unable to reconcile the admission, namely, that up to October 16, 1870, the premiums were fully paid according to the terms of the contract, and that, up to that date, the assured, or his assignee, had the right to demard a paid up policy, with the proposition, on which the decision is rested, namely, that the non-payment of the note was a breach of the condition authorizing the forfeiture of the policy. For if the note was a payment so as to confer a right to demand a pid up policy, it appears to me not to be competent to say that the note was not paid for the purpose of working a forfeiture of the policy. I am as little able also to reconcile the theory upon which the decision proceeds with the clause in the policy which confers the right to demand a paid up policy, and by which it is provided, in express words, that after the payment of two or more annual premiums, the asssured "shall be entitled to a paid up policy, requiring no further payments of premiums and no assessments." Under this clause it was the payment of the premium for the five years, which expired on the 16th of October, 1870, which entitled the assured to demand a paid up policy. After that he was not, for that purpose, required to pay further premiums. Such further payments were required only for the purpose of keeping the policy alive for the ensuing year. As to the previous years, during which the premiums had been paid, the right to a paid up policy was absolute. As to these, the condition was fully performed, and it appears to me that it must necessarily follow that in order to prevent a recovery in the case, it must be shown either that the non-payment of the premium for the sixth year was a breach of the condition, operatin retrospectively so as to take away the right which became vested at the end of the first five years, or that an actual exchange of policies in the lifetime of the assured, or notice of his election to require such exchange and of his intention to discontinue the insurance for the subsequent years, were themselves conditions precedent to the right which I have supposed to have become vested. The first hypothesis, however, is directly in the teeth of the policy, one clause of which secures the right without any condition, after two years, to a paid up policy, and another of which, being the one already referred to, exempts the assured, 58 after the right of a paid up policy has accrued, from all obligations to pay further premiums. The non-performance of an act which no duty requires to be performed cannot be a breach of a condition, and there could have been no forfeiture because there was no right of forfeiture. As to the other hypothesis: it being admitted that the right to demand a paidup policy was perfect on the 16th of October, 1870, and there being nothing in the policy, and nothing in the nature of the case, as I understand it, to limit its duration, it seems to me that it would have been enforceable at any moment during the lifetime of the assured, and it may be admitted that for the purpose of so enforcing it, by an action at common law, a previous demand would have been necessary. But the death of the assured was an event which rendered the performance of the condition impossible, and, as I think, unnecessary. It is perfectly clear that the assignee of the original policy could not have compelled an exchange, because the substituted policy could not have operated to insure the life of a dead person. It appears to me also that the reasoning of the court confounds two things which are essentially different, and then, as to one assumes, as a fact, a proposition previously admitted in the opinion, and, as to the other, adopts an analogy where none whatever exists. The two things which appear to me to have been confounded are the provision for the payment of premiums and that for an exchange of policies. In relation to the former, I can well understand the language by which it is called a condition precedent, and the legal consequence of the non-performance of it. That provision was one intended for the benefit of the company, and its strict observance, in all cases, was essential to the preservation of its solvency and its existence, and, what is of still more importance as an argument, it was one upon which, Bussing's Exrs. v. Insurance Co. Vol. VII. 59 as it was made an express provision of the policy, the company had a right to insist. But I think it is illogical to conclude that, because this provision was a condition precedent, therefore, that the provision for an exchange of policies was also one, and I think it was not one in any sense which authorizes a judicial sentence of forfeiture of the insurance. This provision was one intended exclusively for the benefit of the insured, and was not included in the clause of forfeiture. It was one in which the company had no interest, and which *could admit of no possible use except the single one, which has been so effectivein the present case, of enabling it to evade an obligation, which upon every other ground, ought I think, in justice and equity, to be performed. This is manifest from the circumstance that for a period for which the assured was entitled to claim an exchange of policies, all his obligations had been fulfilled; and as to the period subsequently to ensue he was under no obligation whatever, a further renewal, which would require further payments, having been wholly optional with him. The right of his assignee, on the event of his death, to be paid the sum insured under the policy, having become absolute, and nothing remaining to be done which the policy required him to do, or which the company had any real or legal interest in having done, a mere formal exchange of policies, which would have effected nothing more than the substitution of one means of proof for another, both supporting substantially the same right, can properly be regarded only as an act which the assured had a right to require to be done, but not in justice and reason which he was under any obligation to do, or one, which after his death, it was any longer possible for his assignee to do. The provision for an exchange of policies, then, was not as to the right to be insured, and as to the consequences of such right, a condition precedent It would have been so far such, in an action in the life time of the assured, to compel a specific exchange, as to require notice of the election to make it. But not only is this action not such, it is not one even to enforce rights expressed in the precise terms which would have been those of a substituted policy had one been obtained in the lifetime of the assured. The object of the action is to enforce a contract of insurance in contradistinction to a policy of insurance. An action founded on a policy has been rendered impossible by the death of the assured; but it does not follow that the loss of the remedy by an action founded upon a policy, which is but one species of evidence of the terms of the contract, involves the repeal of the contract itself. If the contract survived the death of the assured, as it did, unless an exchange of policies was a condition precedent, and one against which equity would not relieve, it may be still enforced if its terms can be established by competent evidence, as they can be in the present case. one *On that subject I have to say that the contract of the 16th of October, 1869, 60 by which the policy was renewed for a year, simply supplemented the contract expressed in the original policy, and, so far as the former modified the terms of the latter, displaced them. In ascertaining them, the nature of the contract, as so modified, the terms of the original and those of the supplemented contract are to be taken together, and according to these, in my opinion, the contract now sought to be enforced was a contract by which the life of the assured was so insured absolutely, and in the sum of $2,500 The right of the assured, and which was a right merely coupled with no obligation, the period for the exercise of which depended wholly on the option of the assured and continued unimpaired down to the day of his death, and never could have ceased to exist, and was subject to no modification of form, but by the actual exchange of policies had passed to and become vested in the assignee. This view is, in my judgment, fully sustained by the settled principles of interpretation and abundantly fortified by the analogies of all the reported cases. It is especially enforced by the rule that a contract shall, if possible, be so construed as to uphold it and not avoid it, and so as to carry into effect the real and substantial intention of the parties. It shall be construed ut res magis valeat quam pereat, and not so as to go only skin deep with its meaning and purpose. See Glahoem v. Hays, 2 Scotts, U. R.; Rfs. 482; Olive v Brooks, 17 Law J. Exch R. 21; Furzee v Sharswood, 2 Q. B. 415 (E. C. L. 42); 17 Ohio Rep. 454: 3 Obio State 415; 13 Id. 474; Ritchie v. Atkinson, 10 East. 306. If, however, it were possible to entertain any doubt on the question as one of interpretation merely, it appears to me that none whatever can arise when considered on the principles which prevail in a court of equity and especially the principle upon which the substance of contracts as indicated by the conduct of the parties is habitually enforced, notwithstanding unimportant and non-essential deviations in the modes of performance. This is the principle which supports the doctrine in equity that a bond or covenant which is in its terms joint will be construed as being joint and several, and the doctrine that a provision having the form of a condition will be made to operate as an independent covenant. It is upon the same general princi61 *ple that equity relieves against for feitures and penalties, andthat which forms the sole foundation of the broad doctrine of specific performance. But the principle is not confined to these cases, If there is competent proof of the real intention of the parties, if they have themselves furnished sufficient evidence of their meaning, it is not material by what expression they convey their intention, and that intention will prevail against the ordinary and obvious meaning of the words. Lloyd v. Lloyd, 2 My. & Co., 202, 3 Ves., 692, and numerous other cases which might be cited. Hitherto, this opinion has assumed what all of us agree in hold ng that the premium was fully paid down to the 16th of October, 1870, inclusive, and I have not, therefore, thought it necessary to discuss that question; the correctness of that proposition could be easily maintained upo satisfactory grounds, and I have only in conclusion to refer to a case which, in my judgment, is substantially a direct authority in support of the conclusions I have reached. It is the recent case in the supreme court of the United States of the Brooklyn Life Insurance Company v. Dutcher, published in vol. VII (No. I) of the Insurance Law Journal, page 18. sidering the very high authority of the rulings of that distinguished tribunal, especially upon questions such as the case presents, nothing need be s id to justify its application. Con And see also the case of Symonds v. North Westean Mutual Life Insurance Co., vol. VI, No. 8, of Insurance Law Journal, page 605, where a case very similar to the one at bar was decided by the supreme court of Minnesota, and where it is held that whenever "language purports to create a condition of forfeiture, it is to be construed most strongly against the company for whose benefit such condition of forfeiture is attempted to be created," and that the giving and receiving "of the note for the cash part of the premiums for the fifth and sixth years had the same effect, so far as payment of premiums was concerned, as payment of cash. " C. D. Robertson, attorney for the executors of George H. Bussing. 76 *MORTGAGE-EQUITY-LIENS. [Holmes Common Pleas Court, April Term, 1878.] F. & G. ADAMS V. CHRISTIAN STUTZMAN, ET AL. Where a mortgage of real estate has been duly executed, a mistake in the attempted description of the mortgaged premises will be corrected in equity, and in its reformed state will attach as a lien from the date of its execution, and not from date of its reformation, and judgment liens attaching upon the premises between the dates of execution and reformation of the mortgage will be postponed to the for:ner lien.— [Ed. Am. Law Record.] VOORHES, J. The plaintiffs file their petition, averring that they are a firm doing busines in the state of Ohio, and stating as a cause of action that Christian Stutzman, on the 7th day of March, 1876, executed and delivered his promissory note to R. V. Pinkerton, for the sum of $2,075, payable on the 15th day of January, 1878, with interest at 8 per cent. The plaintiffs allege that said Christian Stutzman executed and delivered to said Pinkerton a mortgage to secure the payment of said note upon premises in the petition described, which was duly recorded. That Pinkerton duly indorsed the note and mortgage to the plaintiffs, and the same being past due, they ask a decree to sell the premises to pay the same. †This case was affirmed by the District Court. See note at end of case. |