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Full text of "A treatise on the law of insurance of every kind"

ARTHUR IBLUM. ATTORNEY 

Lijie, Uttlti md i< 
INSURANCE LAW 




THE LIBRARY 

OF 

THE UNIVERSITY 

OF CALIFORNIA 

LOS ANGELES 

SCHOOL OF LAW 



A TREATISE 



ON THE 



LAW OF INSURANCE 

OF EVERY KIND 



By 

JOSEPH A. JOYCE 

Of the New York, California, and Connecticut Bars 



Second Edition 



In Five Volumes 
Vol. Ill 



THE LAWYERS CO-OPERATIVE PUBLISHING CO. 

ROCHESTER, N. Y. 

1917 






Copyright 1S97 

by 

Joseph a. Joyce. 

Copyright 1917 

by 

Joseph A. Joyce. 



vJ 



LAW OF INSURANCE 



CHAPTER XL. 



THE PREMIUM— PAID-UP AND NONFORFEITABLE POLICIES. 

§ 1178. Paid-up and nonforfeitable policies: extended insurance: gen- 
erally. 

§ 1178a. Paid-up, extended and temporary insurance distinguished. 

§ 1178b. Invalid contracts : surrender value : paid-up policies : loans. 

§ 1179. Nonforfeiture statutes. 

§ 1179a. Sucb statutes constitutional. 

§ 1179b. Whether policy becomes" automatically paid-up: extended in- 
surance. 

§ 1179c. Forfeiture rule not applicable to policy stipulating for loan value 
charge: "automatically nonforfeitable" clause. 

§ 1180. Death as affecting right to paid-up policy. 

§ 1180a. Insanity as affecting right to paid-up policy. 

§ 1181. When only paid-up policy can be claimed, and when the full 
amount of insurance. 

§ 1181a. Paid-up policy: surrender cannot defeat beneficiary's rights. 

§ 1182. Right to claim paid-up policy: demand: surrender value. 

§ 1183. Right of infants: paid-up policy. 

§ 1183a. Paid-up policy: husband and wife. 

§ 1184. When right to claim paid-up policy must be exercised. 

§ 1185. Right to paid-up policy must be exercised within specified time. 

§ 11S6. Exceptions to last rule and cases contra. 

§ 1187. Whether payment of note required to entitle to paid-up policy. 

§ 1188. When paid-up policy forfeited: cases. 

§ 1189. When paid-up policy not forfeited: cases. 

§ 1190. Whether it is new contract or continuation of old one. 

§ 1191. Amount of premium under statutes "deducting indebtedness." 

§ 1192. Amount of paid-up policy. 

§ 1193. Endowment policy: nonforfeiture statutes. 

§ 1194. Refusal to issue paid-up policy. 

§ 1195. Refusal to issue paid-up policy ; measure of damages. 

2283 



B67S42 



§§ 1178-1178b JOYCE ON INSURANCE 

§ 1178. Paid-up and nonforfeitable policies: extended insurance: 
generally. — Many questions of construction have arisen under what 
are known as nonforfeitable policies. Many policies provide that 
i fter the payment of a specified number of annual premiums the 
holder shall be entitled to a paid-up policy; or a life policy may be 
conditioned for specified annual payments during a term of years 
when it will be considered paid-up. The contract may provide the 
terms upon which such paid-up policy will be issued, stipulating for 
surrender of the old policy, demand for a new one within a specified 
period, or it may entitle the assured to a proportionate sum at all 
events, and so a policy may by its express terms be a nonforfeiture 
policy, and vet limit the condition as to nonforfeiture, by providing 
for a surrender within a certain time, and also contain a forfeiture 
i Lause, and the court in an opinion in one case declares that such 
seemingly conflicting provisions exact a construction against the 
company most favorable to the insured. 13 

§ 1178a. Paid-up, extended and temporary insurance distin- 
guished. — Paid-up insurance means that no more payments are re- 
quired: that is, it is an insurance for life, fully paid up, and the 
distinction between paid-up insurance and temporary and extended 
insurance is held to be clearly made and recognized under the Mis- 
souri statutes which also provide for extended insurance and paid-up 
insurance in different sections. 14 

§ 1178b. Invalid contracts: surrender value: paid-up policies: 
loans. — An agreement by letter, sent by insurer's agent, to pay a 
specified sum on surrender of the policy which contains no provi- 
sion for a cash surrender value is without consideration when made 
after the policy lias lapsed, and although the present cash value of 
the policy is stated with a promise to attend to the matter, there is 
no agreement to pay. 15 A contract by which an insurance company 
Loaning money on the security of a paid-up policy issued by it may, 
at its option, require a surrender of the policy for its cash value 
upon default in payment of the loan or interest thereon, is void. 18 

13 See Brooklyn Life Ins. Co. v. for paid-up insurance under Laws N. 

Dutcher, 95 U. S. 269, 24 L. ed. 410. Y. 1892, c. C90, sec. 88, providing 

As to paid-up or nonforfeitable for surrender value of lapsed or for- 

policies, see note 15 L.K.A. 449. feited policies. Examine McLeod v. 

As to power of mutual, etc., com- Jobn Hancock Mutual Life Ins. Co. 

panics or associations as to paid-up 190 Mo. App. 653, 176 S. W. 234. 
or extended insurance, and nonfor- 15 Armstrong v. Equitable Life 

feitable policies, see § 350g herein. Assur. Soc. of U. S. 14 Ga. App. 

"Nicliols v. Mutual Life Ins. Co. 353, 80 S. E. 694. 
176 Mo. 355, 62 L.R.A. 657, 75 S. W. 1C New York Life Ins. Co. v. 

664, 32 Ins. L. J. 790, Rev. Stat. Curry, 115 K v . 100, 61 L.R.A. 268, 

1889, sees. 5856-5859, as am'd by 24 Am. St. Rep. 1930, 72 S. W. 736. 
acts 1895, p. 197. Policy provided 

2284 



PAID-UP AND NONFORFEITABLE POLICIES § 1179 

And an agreement to apply the net revenue in payment of the loan 
is void and a failure to protest against such application of the pro- 
ceeds does not operate as an estoppel where insured was not fully 
cognizant of his rights. 17 

§ 1179. Nonforfeiture statutes. — There are nonforfeiture statutes 
in several states. 18 The repeal of such statutes cannot affect con- 

17 Gillen v. New York Life Ins. Co. 20 Sup. Ct. 062, aff'g Cravens v. New 
178 Mo. App. 89, 161 S. W. 667, un- York Life Ins. Co. 148 Mo. 583, 53 
der Rev. Stat. 1800, sec. 7897. Ex- L.R.A. 305, 71 Am. St. Rep. 628, 50 
amine Tyson v. Equitable Life As- S. W. 519; Mutual Reserve Life Ins. 
sur. Soe. of U. S. 144 Ga. 729, 87 Co. v. Roth, 122 Fed. 853, 59 C. C. A. 
S. E. 1055. 63, s. c. 191 U. S. 570, 48 L. ed. 

18 California.— Deering's Annot. 306, 24 Sup. Ct. 842); Rev. Stat. 
Civ. Code Cal. sec. 2766. 1009, sec. 6946 (construed in Pope v. 

Colorado.— 1 Mills' Stats. Colo. New York Life Ins. Co. 192 Mo. 

1891, sec. 2223. App. 383, 181 S. W. 1047) ; Rev. 

Maine.— Rev. Stats. Me. 1883, p. Stat. 1899, sec. 7897 (construed in 

460, sec. 91; and Pub. Laws, 1887, Munn v. New York Life Ins. Co. — 

c. 71. Mo. App. — , 181 S. W. 606) ; Rev. 

Massachusetts.— 1880, c. 232, sec. Stat. 1909, sec. 6949 (construed in 

6; 1882, c. 119, sees. 159, 160; 1887, McLeod v. John Hancock Mutual 

c. 217, sec. 76. Life Ins. Co. 196 Mo. App. 653, 176 

Michigan.— 1 Gen. Stats. Mich. S. W. 234; Rev. Stat. 1899 (sec. 

1882, sec. 4232. 7897) sec. 7900 (construed in Leeker 

New York. — Ins. Law, 1909, c. 33, v. Prudential Ins. Co. 154 Mo. App. 

sec. 88, as am'd L. 1909, c. 301; L, 440, 134 S. W. 676) ; Rev. Stat. 1899, 

1909, c. 595, L. 1910, c. 614. sees. 7897, 7899 (Ann. Stat. 1906, 

See also the following: pp. 3752, 3754) sec. 7900; Rev. Stat. 

California. — Civ. Code, sec. 450 1909, sec. 6946 (construed in Paseke- 

(construed in Straube v. Pacific Mu- daz v. Metropolitan Life Ins. Co. 

tual Life Ins. Co. 123 Cal. 677, 56 155 Mo. App. 185, 134 S. W. 102) ; 

Pac. 546). Rev. Stat. 1909, sec. 6946 (acts 1903, 

Kentucky— Act Apr. 5, 1893 p. 208) and Rev. Stat. 1899 (Ann. 
(construed in Metropolitan Life Ins. Stat. 1906, p. 3752) sec. 7897 (con- 
Co. v.. Clay, 158 Ky. 192, 164 S. W. strued in Cristensen v. New York 
968) ; Kv. Stat. 1909, sec. 659 (con- Life Ins. Co. 152 Mo. App. 551, 134 
strued in Mutual Benefit Life Ins. S. W. 100); Rev. Stat. 1899 (Ann. 
Co. v. Brien, — Ky. — , 116 S. W. Stat. 1906, pp. 3752-3755) sees. 
750). 7897-7900 (construed in Fuhle v. 

Massachusetts. — Pub. Stat. c. 119 Connecticut Mutual Life Ins. Co. 

(nonforfeiture L. of 1880) sees. 164, 155 Mo. App. 13, 134 S. W. 60, 40 

165 (construed in Hazen v. Massa- Ins. L. J. 602) ; Rev. Stat. sec. 7897 

chusetts Mutual Ben. Assoc. 170 (construed in Rose v. Franklin Life 

Mass. 254, 49 N. E. 119, 27 Ins. L. Ins. Co. 153 Mo. App. 90, 132 S. 

J. 242. W. 613, 40 Ins. L. J. 180) ; Rev. Stat. 

Missouri. — The construction of the 1899, sec. 7897, as am'd by L. 1903, 

statutes of this state has been the p. 208 and sec. 7900 (construed in 

source of much litigation as will ap- Burridge v. New York Life Ins. Co. 

pear from the following citations: 211 Mo. 158, 109 S. W. 560); Rev. 

Rev. Stat. 1879, sec. 5983 (construed Stat. 1889, sec. 5856 (canst rued in 

in New York Life Ins. Co. v. Cra- Horton v. New York Life Ins. Co. 

vens, 178 U. S. 389, 44 L. ed. 1116, 151 Mo. 604, 52 S. W. 356. 

2285 



§ 1179 JOYCE ON INSURANCE 

tracts made thereunder, 19 nor are such statutes retroactive. 20 This 
is in conformity with general principles, and a statute is to be 
deemed retrospective or retroactive where it takes away or impairs 
any vested right acquired under existing laws, or creates a new ob- 
ligation or imposes a new duty, or attaches a new disability in re- 
spect to transactions or considerations already past, 1 unless a policy 
is issued in violation thereof. 2 Such statutes are a part of the con- 
tract of insurance, 3 although it is held that a statutory provision 
that every contract of life insurance shall contain a provision for 
the application of the reserve to the purchase of extended insurance 
in case of forfeiture or nonpayment of premiums, under penalty of 
having the license of insurer withdrawn, does not become part of 
an insurance policy which does not contain the provision. 4 Wheth- 
er the provisions of such statutes can be waived by agreement is 
doubtful. The statute is, however, undoubtedly for the benefit of 
the assured; its purpose is merely to establish a rule which shall 
enable the assured to reap the full benefit of premiums paid before 
default on his part, and at the same time to secure to the insurance 
company, in case it is obliged to pay, the full amount of the pre- 
miums which the terms of the policy call for. 5 The general rule 
applicable to waiver of statutory provisions has, however, been al- 
ready considered. 6 Such statutes apply to foreign companies doing 
business in the state under compliance with its laws. 7 A proviso in 
a statute governing the adjustment of claims upon life insurance 
policies forfeited for nonpayment of premiums, that "in no in- 
stance shall a policy be forfeited . . . after the payment of 

19 McDonnell v. Alabama Gold Life When attached note as to paid-up 
Ins. Co. 85 Ala. 401, 5 So. 120. policy is part of policy. See Jan- 

20 § 1105 herein. der v. Mutual Life Ins. Co. 16 Ohio 

1 Hope Mutual Ins. Co. v. Flynn, Cir. Ct. Rep. 530, 40 Wkly. L. Bull. 
38 Mo. 483, 90 Am. Dec. 438. 536. 

2 Straube v. Pacific Mutual Life 5 Carter v. John Hancock Mutual 
Ins. Co. 123 Cal. 677, 56 Pac. 546. Life Ins. Co. 127 Mass. 1",:; (state- 
Paid-up policy and nonforfeiture ment made by the court in arguing). 
statute. See Cravens v. New York Life Ins. 

3 Nelson v. Provident Savings Life Co. 148 Mo. 583, 53 L.R.A. 305, 50 
Assurance Soc. 139 Cal. 332, 73 Pac. S. W. 519, aff'd New York Life Ins. 
168, rev'g 66 Pac. 663 (construing Co. v. Cravens, 178 U. S. 389, 44 
also the New York statute as to ex- L. ed. 116, 20 Sup. Ct. 762, 29 Ins. 
tended insurance). L. J. 876. 

* Equitable Life Assurance Soc. v. 6 See §§ 194 et seq. herein, "wheth- 
Babbitt, 11 Ariz. 116, 13 L.R.A. er common or statutory law part of 
( VS.) 1046 (annotated on effect of contract," and cases therein. 
statute providing for application of 7 Morris v. Penn Ins. Co. 120 
reserve to the purchase of paid-up Mass. 503. 
insurance, 89 Pac. 531. See §£ 194 
et seq. herein. 

2286 



PAID-UP AND NONFORFEITABLE POLICIES §§ 1179a, 1179b 

three annual premiums thereon ; " but in all such instances "the 
holder of such policy shall be entitled to paid-up insurance" the 
value of which shall be equal to that provided in another section of 
the statute, — does not give a right to extend temporary insurance, 
although the section referred to provides for the ascertainment of a 
premium which may be used to obtain temporary insurance for the 
full amount of the policy. 8 

§ 1179a. Such statutes constitutional. — A statute is constitu- 
tional which provides for non-forfeiture of a life policy after pay- 
ment has been made of a specified number of annual premium 
payments and that the balance shall be a premium for purchasing 
temporary insurance. 9 So an exemption of policies of life insur- 
ance issued by corporations of other states, which stipulate that 
they shall be governed by the laws of another state, from the opera- 
tion of the Missouri statute making policies nonforfeitable for de- 
fault, in payment of premiums, cannot be claimed by virtue of the 
Constitution of the United States, and on the ground that it inter- 
feres with the contractual liberty of the corporation, since the state 
has power to compel such corporations to be subject to such statute 
as a condition of the right to do business in the state. 10 

§ 1179b. Whether policy becomes automatically paid-up: ex- 
tended insurance. — Under a Georgia decision the policy becomes an 
automatically paid-up policy under its express provisions upon non- 
payment of the premium and a loan for which the policy was 
pledged as collateral. 11 This is also so held where it is stipulated 
that the policy will become automatically paid-up after being in 
force two years and premiums are defaulted in payment after be- 
coming due and insured is bound thereby in the absence of waiver. 12 

• 

8 Nichols v. Mutual Life Ins. Co. plan or tontine dividend policy. It 
176 Mo. 355, 62 L.R.A. 657, 75 S. provided for paid-up policy and stip- 
W. 661. ulated that it was to be construed ac- 

9 Mun v. New York Life Ins. Co. cording to laws of New York and 
— Mo. App. — , 181 S. W. 606, Rev. that the place of contract was the 
Stat. 1899, see. 7897 (Ann. Stat, home office of the company in the 
1906, p. 3752). See, as to foreign city of New York. 

statute, Washington Life Ins. Co. v. On conflict of laws as to paid-up 

Glover, 25 Ky. L. Rep. 1327, 78 S. insurance, see notes in 63 L.R.A. 862, 

W. 146. and 23 L.R.A. (N.S.) 980. 

10 New York Life Ins. Co. v. Cra- n Tyson v. Equitable Life Assur. / 
vens, 178 U. S. 389, 44 L. ed. 1116, Soe. of U. S. 144 Ga. 729, 87 S. E. 

20 Sup. Ct. 962, 29 Ins. L. J. 876 1055. 

(Mo. Stat. 1879, sec. 9583), aff'g 12 Crook v. New York Life Ins. 

Cravens v. New York Life Ins. Co. Co. 112 Md. 268, 75 Atl. 3S8. See 

US Mo. 583, 53 L.R.A. 305, 71 Am. also Union Central Life Ins. Co. v. 

Si. Rep. 628, 50 S. W. 519. Policy Wilkes, — Tex. Civ. App.—, 47 S. 

was nonforfeiting, limited tontine W. 546. 

2287 



§ 1179c JOYCE ON INSURANCE 

But under a Federal decision the policy was held to have expired 
on the last day of grace the excess of reserve not being sufficient to 
carry it beyond said date, although it was provided that "if no such 
request for paid-up insurance is made, the net amount that would 
have been payable as a death claim on the date to which premiums 
are duly paid will automatically continue as term insurance from 
such date for such time as said excess of the reserve will purchase 
according to the company's published table of single premiums for 
term insurance, and no longer." 13 Under a New York decision 
the death of insured within the time limited for demand automati- 
cal ly extends the insurance for the period which the reserve will pur- 
chase. 14 So in Kentucky it is held that insurance is automatically 
extended on default in payment of the premium as stipulated. 15 
But the insurance is not of itself extended as the effect of a failure, 
upon default, to exercise an election between a paid-up policy, a cash 
surrender, or extended insurance. 16 

§ 1179c. Forfeiture rule not applicable to policy stipulating for 
loan value charge: "automatically nonforfeitable" clause. — The 
rule above stated, that where the policy so provides, the failure to 
pay the premium on the day stipulated forfeits the insurance, does 
not apply to a policy stipulating for a loan value charge, under an 
"automatically nonforfeitable clause" w T hereby, upon failure of 
insured to pay the premiums, a loan value becomes immediately 
available and insured is required to charge against the policy as a 
loan the amount due for that premium and thereby retain the policy" 
in force and automatically extend it. 17 

"New York Life Ins. Co. v. Slo- 1892, c. G40, sec. 88. See § 1180 

cum, 177 Fed. 842, 101 C. C. A. 56, herein. 

modified by eliminating the direc- 15 Mutual Benefit Life Ins. Co. v. 
tion to enter judgment for defendant O'Brien, — Ky. — , 116 S. W. 750. 
notwithstanding the verdict and by See Balthaser v. Illinois Life Ins. Co. 
substituting a direction for a new 33 Ky. L. Rep. 283, 110 S. W. 258. 
trial (Mr. Justice Hughes and three 16 Blake v. National Life Ins. Co. 
other justices dissenting) in Slocum 123 Cal. 470, 56 Pac. 101. Examine 
v. New York Life Ins. Co. 228 U. Pense v. Northern Life Assur. Co. 9 
S. 364, 57 L. ed. 879, 33 Sup. Ct. O. W. R. 646, 10 O. W. R. 826, 14 
523, 42 Ins. L. J. 899. The princi- O. L. R. 613, 15 O. L. R. 131. Con- 
pal questions, however, before the tract provided for paid-up insurance 
court were upon the point on which or extended insurance or loan, 
the judgment was modified; partial 17 Perkins v. Empire Life Ins. Co. 
payment of premium and waiver. 17 Ga. App. 658, 87 S. E. 1094. The 
See Balthaser v. Illinois Life Ins. Co. svllabus by the court is as follows : 
33 Ky. L. Rep. 283, 110 S. W. 258. The suit was upon a policy of in- 

14 Bartholomew v. Security Mutual surance containing a clause known as 

Life Ins. Co. 124 N. Y. Supp. 917, an "automatically nonforfeitable 

140 App. Div. 88, N. Y. Ins. Laws clause," as follows: "If any pre- 

2288 



PAID-UP ASD NONFORFEITABLE POLICIES 



§ 1180 



§ 1180. Death as affecting right to paid-up policy. — If the in- 
sured has defaulted in paying premiums, and has become entitled 

mi urn hereon shall not be paid when th.3 insured to pay a note given for 
due, the company shall first apply the payment of the premium due 
any withdrawal surplus to pay the February 12, 1912, did not operate 
same, and the remainder of the pre- to void the policy or to lessen the 
miums due, if any, shall be charged duty of the company, on failure to 
against this policy as a loan, if the pay the note, to apply such loan value 
respective loan value specified here- to the payment of premiums as they 
in be sufficient to cover such ad- became due, until expended in accord 
vance, in addition to any existing with the "automatically nonforfeit- 
liens and accrued interest, provided, able clause" in the policy. The 
that if the credits be not sufficient to stipulation in the policy that "if any 
cover the entire premium then due, premium is not paid on or before the 
the company shall apply the same, day it is due, or if any note or other 
if sufficient to pay the premium for obligation that may be accepted by 
a shorter period, but not less than the company for the whole or any 
a full quarterly premium. At any part of the first or any subsequent 
time while this policy is thus sus- premium or any other payment un- 
tained in force, the payment of pre- der the policy be dishonored or not 
miums may be resumed without medi- paid on or before the day when due, 
cal examination, and the accumulated the policy shall, without any affirma- 
premiums may be paid or allowed to tive act, on the part of the company 
stand as a lien against the policy, or any of its officers or agents, be 
No grace will be allowed under this null and void except as herein pro- 
provision." The premiums were fully vided," does not apply when there is 
paid for three years (from February a loan value attached to the policy, 
12, 1909, to February 12, 1912) and sufficient to pay the premium due. 
on August 5, 1913, the insured died Policies of insurance will be liber- 
without having paid further pre- ally construed in favor of the object 
miums. The annual premium was to be accomplished, and the con- 
$346.05. The policy at the expira- ditions and provisions of every con- 
tion of the second year had a loan tract of insurance will be construed 
value of $420, and, if the premium against the insurer who prepares and 
due February 12, 1912, had been proposes the contract (Arnold v. 
pr id, would 'have had a loan value Empire Life Ins. Co. 3 Ga. App. 695, 
of $590. It was held, upon the fad- 60 S. E. 470), and the entire con- 
ure of the insured to pay the pre- text of the nonforfeitable clause 
miums due February 12, 1912, un- above set out, when construed in con- 
der the "automatically nonforfeitable nection with the terms of the policy 
clause" above quoted, the loan value as a whole, indicated an intention to" 
of $420 became immediately avail- carry the policy automatically, by tb 
able, and it was the duty of the com- consumption of the loan value, 
pany to charge against the policy, as fully and completely as though 
a loan, the amount due for that pre- sured had paid the premiums P " 
mium, and thus to retain the policy money secured from any other s£ ' " 
of full force, and the policy was thus It was therefore error to str J* • 
automatically extended for an addi- plaintiff's petition on deming* • J ■ 
tional two years and eight months Slocum v. New York Life ' 
without further payment, in accord 228 U. S. 364, 57 L. ed. 8" _„„_;„_ 
with the "table of cash loans and Ct. 523, 42 Ins. L. J. 89£j£ J^f™. 
guaranteed surrender value," con- New York Life Ins. £L - a 
tained therein; and on the failure of 177 Fed. 842, 101 C °!™?* n ^T " 

Joyce Ins. Vol. III.-144. 22 89 C tv Wood, 32 K^ 



§ 1180 



JOYCE ON [NS1 EtANCE 



to a paid-up policy, provided an application therefor is made with- 
in a specified nine and the original policy transmitted, his death 
after such defaull and within such period does not defeat his right. 
The owner of the policy maj after such death comply with .-aid 
conditions, and become entitled to such paid-up policy, and. upon 
;l to issue it. a liability is created for the amount for which it 
should have been issued. 18 And when a policy of life insurance stip- 
ulates that the reserve shall be applied as shall have \>r^w agreed in 
the application, either to eontinue the insurance or purchase a paid- 
up policy, and neither the application nor the policy contains any 
agreement with reference to the application of the reserve, the as- 
sured must, nevertheless, be given the benefit of the reserve or sur- 
plus by having it applied upon an extension of a reinsurance, in- 
-ic.id of having it returned to him, and on his death, without any 
npplication or agreement, on his part, the right 40 recover the in- 
surance cannot be successfully resisted on the ground that he did 
not exercise his option of having the reserve applied for the pur- 
pose of keeping the policy in force. 19 So where a statute gives in- 
sured, whose policy has lapsed for nonpayment of premium, the 
option to surrender the policy within six months and have the net 



18 Wheeler v. Connecticut Mutual 
Life Ins. Co. 82 N. Y. 543, 37 Am. 
Rep. 594, rev"- s. e. 1(5 Hun (N. 
Y.) 317. In the ease below, Daniels, 
J., dissented. In this case the court 
said: "The tacts stated establish a 
demand for a paid-up policy. The 
tact that the insured was dead does 
rot relieve the defendant from lia- 
bility. The conditions were that two 
or more annual premiums should be 
paid, and then the application should 
be made within one year from de- 
fault. This had been done. Al- 
c though the insured was dead, the 
v -right to a paid-up policy or its value 
"• villained to his assignees. A refusal 
v£o, perform thus created a liability 
P a * l . the amount for which the paid-up 
court .y might have been issued." See 
the 3 ue Tyson v. Equitable Life Assur. 
payment" tj. S. 144 Ga. 729, 87 S. E. 
See Balth.-,,.,] v> Security Mutual Life 
33 Ky. L. le, Ga . App . > 2 1, 65 S. E. 
14 Bartholc n v> New Yo rk Life Ins. 
Life Ins. Co. ,. 60 4 > 52 S. W. 356; 
140 App. Div. . Mutual Security Life 
Y. Supp. 917, 140 



2290 



App. Div. 88 (N. Y. Ins. Laws 1892, 
c. 690, sec. 88); Beaudette v. Provi- 
dence Savings Life Assur. Soc. Q. R. 
30, S. C. 160. See Johnson v. New 
York Life Ins. Co. 109 Iowa, 708, 
50 L.R.A. 99, 78 N. W. 905; John- 
son v. Mutual Benefit Life Ins. Co. 
113 Fed. 950, 75 C. C. A. 22 (the 
policy lapsed and the non-forfeiture 
provisions operated to secure to in- 
sured extended insurance to the full 
amount of the policy but only for a 
limited term. Premiums were pay- 
able Nov. 11th, policy was issued and 
dated Jany. 15, 1891. It was held 
that extended insurance should be 
coin 1 uited from Nov. 11, 1893. In- 
sured died Sept. 28, 1896. Nonfor- 
feiture provisions were not of force 
unless payment of two i ill annual 
premiums were made). Examine 
Blake v. National Life Ins. Co. 123 
Cal. 470, 56 Pac. 101; Jander v. Mu- 
tual Life Ins. Co. 15 Ohio Cir. Ct. 
Ren. 536, 40 Wkly. L. Bull. 536. 

19 Nielsen v. Provident Sav. Life 
Assur. Soc. 139 Cal. 332, 96 Am. St. 
Rep. 146, 73 Pac. 168. 



PAID-UP AND NONFORFEITABLE POLICIES §§ 1180a, 1181 

accumulated reserve on the policy applied as a single premium in 
extending the policy as such term as the reserve will purchase, the 
beneficiary of the policy may make such surrender and demand, 
after the death of the insured, within the period named. 20 If a 
policy on a husband- life is payable to the wife, her executors, ad- 
ministrators, or assigns, or, in case of her death, then to her chil- 
dren, and she is entitled to claim a paid-up policy after payment of 
two annual premiums on surrender of the policy, the husband is not 
entitled, on tendering payment, to a paid-up policy when she dies 
leaving no children before the payment of the second premium. 1 
Again, it is decided that the rule of construction against insurer 
should be strictly applied after insured's death. 2 

§ 1180a. Insanity as affecting right to paid-up policy. — If the 
right to a paid-up policy extended insurance is dependent upon the 
exercise of an option within a specified limited time, insanity of in- 
sured during said period is no excuse, and where he continues in 
that condition and dies within a year after default in paying pre- 
miums and a loan, the right of the administrator to exercise the 
option is precluded especially when based upon insured's good 
health. 3 

§ 1181. When only paid-up policy can be claimed, and when the 
full amount of insurance. — If the policy provides for nonforfeiture 
after payment of the first premium, and in case of default in pay- 
ment of subsequent premiums, that the company will, upon sur- 
render within thirty days after such default, issue a paid-up policy 
for an amount which could have been purchased with the net value 
of said policy, the contract is an insurance for the full amount of 
the policy until the time for the payment of the premium defaulted 
has expired. After such default it is only an insurance for such an 
amount paid up as the net value of the policy would then purchase. 4 
But it is held that if the prompt payment of the premium is waived 
by the company, it cannot then maintain a claim that the policy is 

20 New York Life Ins. Co. v. lated, see notes in 8 L.R.A.(N.S. 

Noble, 34 Okla. 103, 45 L.R.A.(N.S.) 193, and 51 L.R.A.(N.S.) 1044. 
391, 124 Pac. 612. 4 Mound City Mutual Life Ins. Co. 

1 Continental Life Ins. Co. v. Ham- v. Twining, 12 Kan. 475. 

ilton, 41 Ohio St. 274. See chapters When only amount of paid-up in- 

on beneficiaries herein. surance and not paid-up term insur- 

2 Mutual Benefit Life Ins. Co. v. ance for full amount may be had. 
First National Bank of Louisville, Sugg v. Equitable Life Assur. Soc. 
24 Kv. L. Rep. 580, 69 S. W. 1. See 117 Terra. 658, 94 S. W. 936, 35 Tn<. 
§§ 220 et seq. herein. L. J. 790. 

3 Tyson v. Equitable Life Assur. When only entitled to receive 
Soc. of U. S. 144 Ga. 729, 87 S. E. amount of paid-up insurance and not' 
1055. required to elect between paid-up 

On effect of failure to apply for and extended insurance. United 
paid-up insurance within time stipu- States Life Ins. Co. v. Wood, 32 Kv. 

2291 



§§ 1181a, 1182 JOYCE ON INSURANCE 

only a paid-up one where it has not treated it as such by entry upon 
its books or otherwise, and has not notified the policy holder that it 
will so claim. 6 A demand for a paid-up policy and failure there- 
after to pay premiums when due is declared to he an abandonment 
of a righl to claim the full amount specified in the policy. 6 

§ 1181a. Paid-up policy: surrender cannot defeat beneficiary's 
rights. — One taking a paid-up policy upon his life for the benefit 
of a named beneficiary cannot, in the absence of reservation of 
fiowcr to revoke, modify, or surrender the contract, effecl a surren- 
der which will defeat the rights of the beneficiary. 7 

§ 1182. Right to claim paid-up policy: demand: surrender value. — 
Nil righl to claim a paid-up policy exists against the company, nor 
is the company obligated to issue one unless it has so contracted, 8 
hut the contract is presumed to have been made in reference to valid 
statutes in force at the time of contracting. 9 and if the policy does 
not stipulate for a paid-up policy, but only that a default in payment 
of the premiums shall not work a forfeiture, and upon such default 
the amount due shall be reduced to the amount of premiums 
paid, equity will not decree issuing a paid-up policy in case the 
assured fails to pay his premiums. The rights under the policy 
may be obtained by an action after death. 10 It is held that the giv- 
ing and accepting a note for the premium due on a policy after 
default may operate to destroy the right of the insured to a paid-up 
policy, although stipulated for in the policy, if the note is con- 
ditioned for absolute forfeiture of the contract if not paid at matur- 
ity. 11 If a life policy payable to the assured's children merely stip- 
ulates that after full payment of two or more premiums it becomes 
a paid-up nonforfeiture policy for certain "tenths," and also pro- 
vides that there shall be no further liability for premiums therein, 
but that it is entitled to an apportionment of the surplus in the ratio 
of its contribution thereto, neither the right to a paid-up policy nor 
the children's or company's rights can be enforced until after the as- 

L. Rep. 1120, 107 S. W. 1193 (un- 8 Packard v. Connecticut Mutual 
der N. Y. L. 1879, c. 317, p. 427). Life Ins. Co. 9 Mo. App. 469. 

5 Ranley v. Life Assn. of America, 9 See §§ 194 et seq. herein. 

69 Mo. 380. 10 Earlow v. St. Louis Mutual Life 

6 Ashbrook v. Phoenix Mutual Life Ins. Co. 54 Mass. 425, 28 Am. Rep. 
Ins. Co. 94 Me. 72, 6 S. W. 462, 3 358. 

Mo.(L. ed.) 907. n Holly v. Metropolitan Life Ins. 

7 Ferguson v. Phoenix Mutual Life Co. 105 N. Y. 437, 11 N. E. 507. 
Ins. Co. 84 Vt. 350, 35 L.R.A. (N.S.) On payment of premium by prom- 
844 (annotated on surrender of poli- issory note as entitling insured to 

'cy of ordinary life insurance without benefit of paid-up insurance, see note 
-consent of beneficiary), 79 Atl. 97. in 5 B. R. C. 376. 

2292 



PAID-UP AND NONFORFEITABLE POLICIES § 1182 

sured's death. 12 The right to the surrender value of a policy is not 
lost where the assured surrenders the original policy to an agent 
with a request for a paid-up policy immediately after payment of 
a premium, but does not hear from the same until after the next 
premium becomes due, when it is given back to him, indorsed as 
forfeited, by another company to which the business of the original 
insurer has been transferred without the insured's knowledge. 13 
The terms of the contract are not changed by representations of the 
agent, at the time the contract is made, that it is nonforfeitable 
when it does not so provide, 14 and the fact that the assured fails to 
read the policy does not aid him. 15 The failure of assured to pay a 
note given by him for unpaid premiums, and in consideration of 
which the company extended the policy for twelve months, with the 
proviso that if the note was not paid at maturity the policy should 
"at once become void without notice to the assured" does not deprive 
him of the right to a paid-up policy to which he was entitled by 
the original contract. Such note was but a continuation of the 
original contract, and not a new contract whereby he forfeited all 
rights under the original contract. 16 A failure to pay the premium 
due does not defeat the right to demand a cash surrender value, and 
an offer of absolute surrender and demand for payment is unneces- 
sary where insurer refuses payment of any cash or surrender under 
a claim that there was no cash value. 17 If insured's demand for a 
cash surrender value is sufficient under the stipulations of the policy 
technical informalities are waived insurer having failed to pay such 
cash value on demand. 18 A demand for a paid-up policy by an 
assured will not be denied in equity, because his policy has been 
stolen and he is unable to surrender it as conditioned for, where he 

12 Lyon v. Union Mutual Life Ins. lington Ins. Co. v. Young, 58 Ala. 
Co. 63 Hun (N. Y.) 629, 44 N. Y. 476, 29 Am. Rep. 770. 

St. Rep. 581, 17 N. Y. Supp. 756. 15 Attorney General v. Continen- 

13 It appeared in this case that the tal Life Ins. Co. 93 N. Y. 70. 
contract provided for a paid-up pol- 16 Southern Mutual Life Ins. Co. 
icy upon default in payment of a v. Montague, 84 Ky. 653, 4 Am. St. 
premium, and the suit having been Rep. 218. 

brought against the original com- 17 Hill v. Bankers' Life Ins. Co. 
pany which had deposited certain 112 N. Y. Supp. 120 (insurer 
moneys with the state authorities as stated in letter that policy had no 
an indemnity fund, he was held en- cash value but insured had option to 
titled to recover out of the fund: take paid-up or extended insurance). 
Lowell v. St. Louis Mutual Life Ins. When demand unnecessary for ex- 
Co. Ill U. S. 264, 28 L. ed. 423, 4 tended insurance, but right thereto 
Sup. Ct. 390. vested. New York Life Ins. Co. v. 
"Nashville Ins. Co. v. Matthews, Van Meter's Adinr. 137 Ky. 4, 121 
8 Lea (76 Tenn.) 499; Attornev Gen- S. W. 438. 

eral v. Continental Life Ins. Co. 93 "Majestic Life Ins. Co. v. Win- 

N. Y. 70. But see Piedmont & Ar- field, 58 Ind. App. 402, 108 N. E. 249. 

2293 



\ 1183 JOYCE ON [NSURANCB 

has used due diligence to reclaim it and is still the owner. And he 
need not plead the execution of some instrument operating as a 
surrender of the policy and a discharge of the defendant's liability. 19 
An insurer as assignee of a policy as security for a loan, who is 
given the right in case of insured's death to exercise any option 
which the latter might have exercised, is not compelled thereby to 
make an election. 20 Conceding that the beneficiary of a life in- 
surance policy should have offered to surrender it as a condition 
precedent to having the reserve applied in continuation of the pol- 
icy, such condition is waived if the insurer, immediately after the 
death of the insured, denies and disclaims all liability under and 
by virtue of the policy, and informs the beneficiary that it will not 
pay the amount named in the policy, or any part thereof. 1 

§ 1183. Right of infants: paid-up policy. — If an infant whom the 
company may lawfully insure, and who is insured, elects to rescind 
after four years, payments of premiums under a policy for one 
thousand dollars, stipulating that after the payment of three of four 
annual premiums he will be entitled to a paid-up or nonparticipat- 
ing policy for as many twentieths of the amount insured as there 
have been annual premiums paid, said assured is entitled to a paid- 
up nonparticipating policy for two hundred dollars, or may recover 
its cash "surrender" value. 2 A change of a policy on a minor's life 
to a paid-up policy cannot be effected by consent of his father and 
mother as guardians by nature. 3 A provision in a policy of life 
insurance to the effect that a failure by the insured for three months 
after default in the payment of premiums to surrender the policy, 
and request to have his interest applied to the purchase of a paid-up 
policy payable at the time the original policy would have been pay- 
able if continued in force, amounts to an election to have such in- 
terest applied to the purchase of term insurance for the full amount 
named in the policy and is not affected by the fact that the assignees 
of the policy are minors. 4 

19 Wilcox v. Equitable Life Assur- 189, 57 N. W. 934. Where election 
ance Soc. 173 N. Y. 50, 93 Am. St. is to take term insurance: That 
Rep. 579, 65 N. E. 857. minors are beneficiaries does not pre- 

20 Tyson v. Equitable Life Assur. vent enforcement of policy con- 
Soc. of the U. S. 144 Ga. 729, 87 S. ditions. Mutual Benefit Life Ins. Co. 
E. 1055. v. Harvey, 117 Ky. 834, 79 S. W. 

1 Nielsen v. Provident Sav. Life 218. 

Assur. Soc. 139 Cal. 332, 96 Am. St. 3 Burke v. Prudential Ins. Co. of 
Rep. 146, 73 Pae. 168. America, 221 Mass. 253, 108 N. E. 

2 Johnson v. Northwestern Mutual 1069. 

Life Ins. Co. 56 Minn. 365, 378, 379, 4 Mutual Benefit Life Ins. Co. v. 
39 Cent. L. J. 337; 59 N. W. 992; Harvey, 117 Ky. 834, 111 Am. St. 
45 Am. St. Rep. 473, 26 L.R.A. 187, Rep. 269, 79 S. W. 218. 

2294 



PAID-UP AND NONFORFEITABLE POLICIES §§ 1183a, 1184 

§ 1183a. Paid-up policy: husband and wife. — Where a policy of 
life insurance was obtained by one on his life for the benefit of 
his wife, and he, being unable to pay the premium, released a 
part of the policy and took a policy for a lesser amount, applying 
the sum allowed for such release to the payment of the premium 
on the remaining amount, and, again not being able to pay the 
premium on the new policy, surrendered the same and received a 
paid-up policy for a portion of the amount payable to his wife, which 
release and surrender were without her authority, — the wife could 
subsequently, on the death of the husband, recover of the company 
on the first policy, provided she had kept up the payments of the 
premium on it. 5 There is no such interest in a paid-up policy in 
the life of her husband as will pass by the wife's will to him. 6 But 
a paid-up life insurance policy taken by a man for the benefit of 
his wife, is within a statute providing that upon divorce the court 
shall restore any property which either party may have obtained 
directly or indirectly from or through the other during marriage 
and in consideration or by reason thereof. 7 

§ 1184. When" right to claim paid-up policy must be exercised. 8 — 
The stipulation of the policy must determine when the right of 
election must be exercised. The policy may contain no limitation 
as to the time of election, but may provide only that upon default 
in the payment of the premiums the party will be entitled to a paid- 
up policy, or it may stipulate for compliance with certain conditions, 
such as surrender and demand within a limited specified time, or 
that demand and surrender must be made while the policy is in 
force. 9 It is held that if the paid-up policy is to be issued upon re- 
quest upon default after payment of a specified number of annual 

s Miles v. Connecticut Mutual Life tice at the same time with the de- 
Ins. Co. 147 U. S. 177, 37 L. ed. 128, mand, unless there be an agreement 
13 Sup. Ct. 275. Cited in Mutual to the contrary expressed in the ap- 
Benefit Life Ins. Co. v. Dunn, 106 plication or policy: 3 N. Y. Rev. 
Ky. 591, 599, 51 S. W. 20 ; Weather- Stats. 8th ed. p. 1688. "On demand 
bee v. New York Life Ins. Co. 182 made, with surrender of the policy 
Mass. 342, 344, 65 N. E. 383. within six months after such lapse or 

6 Piatt's Ex'r v. Locke, 139 Ky. forfeiture . . . either to continue 
72, 129 S. W. 329. the policy in force at its full amount 

7 Sea v. Conrad, 155 Ky. 51, 47 so long as such single premium will 
L.R.A.(N.S.) 1074, 159 S. W. 622. purchase temporary insurance at that 

8 See next section. amount," etc. New York Laws 1909, 

9 The New York statute provides c. 33, sec. 88, as am'd by L. 1909, 
for demand and surrender within six c. 301, L. 1909, c. 595; L. 1910, c. 
months after lapse, and also for the 614; Parker's N. Y. Ins. L. (ed. 
exercise of an option for temporary 1915) p. 136. 

or paid-up insurance, by giving no- 

2295 



§ 1185 



JOYCE OX LXSIKAXCE 



premiums, and no time is specified, 10 or if no time i^ fixed, 11 the 
right of the assured to claim a paid-up policy is limited to the time 
during which the policy is in force. 18 But it is decided in a Ken- 
tucky case thai a provision lhat the insured shall forfeit his right 
to a paid-up policy unless he surrenders the policy within thirty 
days is not enforceable where a prospectus issued at the same time 
u ith the policy represents that the latter is nonforfeitable, and that 
i he failure to pay a note at maturity, although the contract stipu- 
lated for forfeiture of the policy for its nonpayment, does not de- 
stroy i- right to a paid-up policy, though it was terminated in other 
respects. 13 It is also decided that if the contract merely stipulates 
for ;i paid-up policy upon default in payment of the premiums, such 
policy may he demanded at any time. 14 

§ 1185. Right to paid-up policy must be exercised within specified 
time. 15 — If is expressly stipulated that the policy must be surren- 



10 Smith v. National Life Ins. Co. this or any other reason, it ceased to 
L03 Pa. St. 177, 19 Am. Rep. 121. exist as a valid contract upon which 

11 Bussing \. Union .Mutual Life this or any other application could be 
Ins. Co. .".1 Ohio St. 222, 8 Ins. L. based." In a later- case in the same 
.1. 218. See Metropolitan Life his. state (Attorney General v. Continen- 

. Clay. L58 Ky. 192, 164 S. W. tal Life Ins. Co. 93 N. Y. 70) de- 
vils, cided in 1883, the policy was con- 

12 In a New York case (People v. difioned that after the payment of 
Widows' & Orphans' Benefit Life three or more annual premiums and 
Ins. Co. 15 Hun [N. Y.] 8, decided a failure to make further payments 
in 1878), it was provided that 'the when due, the company would, upon 
company should not be liable in case surrender within thirty days after 
of default in nonpayment of the pre- said failure to pay, issue a paid-up 
miums when due, but that the policy policy for the proportion of the 
in such case should be forfeited, con- amount of insurance paid for. The 
ditioned that upon surrender duly re- policy was not surrendered or offered 
ceipted of the policy the company to be, and no paid-up policy was de- 
would issue a paid-up policy during manded. The company failed, and 
the life of the person insured. De- a receiver was appointed, and it was 
fault was made, and a paid-up pol- held that nonpayment of the pre- 
icy was not demanded until some mium and failure to surrender within 
years had elapsed; in the meantime the stipulated time absolutely for- 
the corporation had dissolved and fcited the policy. It was also de- 
receivers been appointed, and the cided in this case that the fact that 
court said that the application came the company had suffered no damage 
too late; that if the petitioner could by the assured's neglect to give no- 
demand a paid up policy alter neg- tice of his election could not aid the 
led to pay tlio premium when due, latter. 

it could only l>e within a reasonable 13 Southern Mutual Life Ins. Co. v. 

time thereafter, and adds: "Bui we Montague, 84 Ky. 653, 2 S. W. 443, 8 

are inclined to think no paid-up pol- Ky. L Hep. 579, 1 Am. St. Rep. 218. 

icy could legally be demanded alter 14 Lovell v. Mutual Life Ins. Co. 

the forfeiture of the petitioner's pol- 111 U. S. 264, 28 L. ed. 433, 4 Sup. 

icy by nonpayment of the premium. Ct. 390. 

When the policy was forfeited for 15 See preceding section. 

2296 



PAID-UP AND NONFORFEITABLE POLICIES § 1185 

dered and receipted in full within a specified time after default in 
payment of a premium to entitle the assured to a paid-up policy, 
such provision must be complied with, and the option must be ex- 
ercised within the time designated, otherwise it is lost, for time is 
of the essence of the contract. This rule accords with the weight of 
authority. 16 But insured has the entire period limited within which 
to exercise his option. 17 So under a policy provision that in case of 
lapse for nonpayment of premium, the insured may within six 
months surrender the policy and take paid-up insurance for the 
cash surrender value, surrender of the policy within the specified 
time is necessary to preserve the right to the option, and in the 
absence of such surrender all rights under the policy will cease. 18 
And where the condition was that the paid-up policy should be 
issued for a proportionate amount on surrender of the policy "on or 
before it shall expire by the nonpayment of" certain premiums, the 
word "on" was held to mean that the right was lost to claim a paid- 
up policy the instant the policy expired by the nonpayment of said 



16 Knapp v. Homeopathic Mutual 
Life Ins. Co. 117 U. S. 411, 29 L. ed. 
960. 

Alabama. — Equitable Life Assur. 
Soe. of U. S. v. Golson, 159 Ala. 508, 
48 So. 1034. 

Georgia. — Tyson v. Equitable Life 
Assur. Soe. of U. S. 144 Ga. 729, 87 
S. E. 1055. 

Illinois. — Phoenix Mutual Life Ins. 
Co. v. Baker, 85 111. 410; Blume v. 
Pittsburgh Life & Trust Co. 183 111. 
App. 295, affd 263 111. 160, 51 
L.R.A.(N.S.) 1044, 100 N. E. 1031. 

Kentucky.— Metropolitan Life Ins. 
Co. v. Clay, 158 Ky. 192, 164 S. W. 
968 (industrial policy: time for de- 
mand for cash surrender value eight 
weeks). See Michigan Mutual Life 
Ins. Co. v. Mayfield's Admr. 121 Ky. 
839, 90 S. W. 607 ; Koehler v. Phoenix 
Mutual Life Ins. Co. 4 Ky. L. Rep. 
903. 

Maine. — Chase v. Phoenix Mutual 
Life Ins. Co. 67 Me. 85. 

Mississippi. — Bonner v. Mutual 
Life Ins. Co. — Miss. — , 36 So. 538 ; 
Universal Life Ins. Co. v. Whitehead, 
58 Miss. 226, 38 Am. Rep. 322. 



Missouri. — Cravens v. New York 
Life Ins. Co. 148 Mo. 583, 53 L.R.A. 
305, 71 Am. St. Rep. 628, 50 So. 
519, affd New York Life Ins. Co. v. 
Cravens, 178 U. S. 389, 44 L. ed. 
1116, 20 Sup. Ct. 962, 29 Ins. L. J. 
876. 

New Jersey. — See Hudson v. 
Knickerbocker Life Ins. Co. 28 N. J. 
Eq. 167. 

Pennsylvania.— Smith v. National 
Life Ins. Co. 103 Pa. St. 177, 49 Am. 
Rep. 121. 

Texas. — Equitable Life Assur. 
Soe. v. Evans, 25 Tex. Civ. App. 
563, 64 S. W. 74, 30 Ins. L. J. 852. 

Virginia. — Universal Life Ins. Co. 
v. Devore, 83 Va. 267, 270, 2 S. E. 
433, 88 Va. 778, 14 S. E. 532, 21 
Ins. L. J. 337, 16 Va. L. J. 114. 

On effect of failure to apply for 
paid-up insurance within time stipu- 
lated, see notes in 8 L.R.A. (N.S.) 
193, and 51 L.R.A. (N.S.) 1044. 

17 Clappenback v. New York Life 
Ins. Co. 136 Wis. 626, 118 N. W. 
245. 

18 Blume v. Pittsburg Life & Trust 
Co. 263 111. 260, 51 L.R.A. (N.S.) 
1044n, 104 N. E. 1031. 



2297 



LL86 JOYCE n.\ ENS1 EtANCE 

premiums. 19 So the right to a paid-up policy after a default caus- 
ing a forfeiture of insurance according to the terms of the contract, 
which also provides that ;i paid-up policy may be had on surrender- 
ing the original policy withiD six mouths after default and satisfy- 
ing all indebtednesSj is lost by failure to make such surrender and 
satisfaction within the time limited. 20 So if the policy provides for 
the return duly receipted within thirty days to entitle assured to a 
paid-up policy, such condition must be complied with; 1 and one 
who has insured his life for the benefit of his children with the 
option of surrendering the policy for its cash value within thirty 
days of the termination of the term, or of the five-year periods there- 
after, can exercise the option only within one of the several periods 
of thirty days specified. 2 And the fact that the insurer was enjoined 
during the specified time from issuing any policies is held not to 
excuse compliance with such condition as a condition precedent. 3 
If the paid-up policy is to be demanded within one year from the 
time an accrued premium falls due, such provision refers to an 
accrued premium, for the nonpayment of which the company can 
determine the policy. 4 

§ 1186. Exceptions to last rule and cases contra. — It is held in 
Vermont that a demand within the specified time is not required. 
a reasonable time being sufficient. 5 If the failure to pay the pre- 
miums when due and to forward the policy within the specified 
time rests upon good and sufficient reasons, as where the company 
misdirected certain notices to the insured, and proceedings for dis- 
solution and a receivership were instituted, and the neglect was also 
attributable to the company's agent, equity will relieve, and order 
the issuance of a paid-up policy. 6 In Arkansas the surrender of 
the policy within the six months is not of the essence of a contract 
of insurance providing that if, after a specified number of pay- 
ments, the policy is forfeited for nonpayment of premiums, upon 

19 Sheerer v. Manhattan Life Ins. ceipted would be forwarded. Uni- 
Co. 20 Fed. 886 ; contrary held in versal Life Ins. Co. v. Devore, 8S Ya. 
same case, 16 Fed. 720. 778, 14 S. E. 532, 21 Ins. L. J. 337, 

20 Northwestern Mutual Life Ins. 16 Va. L. J. 114. 

Co. v. Barbour, 92 Ky. 427, 15 2 McCutchen v. Townsend, 127 Ky. 

L.R.A. 429, 17 S. W. 796. 230, 16 L.R.A.(N.S.) 316, 105 S. W. 

1 The fact that a letter was writ- 937. 
ten to the secretary by the attorneys, 3 Universal Life Ins. Co. v. White- 
stating that the policy had been left head, 58 Miss. 226, 38 Am. Rep. 322. 
with them for the purpose of pro- * Michigan Mutual Life Ins. Co. v. 
curing such policy, and demanding a Bowes, 42 Mich. 19, 51 N. YV. 962. 
paid-up policy, is not a sufficient 5 Bunce v. Life Ins. Co. 58 Vt. 
complaint, although the letter also 25:5. 

provided that on receipt of the term 6 Coffey v. Universal Life Ins. Co. 

policy the original policy duly re- 10 Biss. (C. C.) 354, 7 Fed. 301. 

2298 



PAID-UP AND NONFORFEITABLE POLICIES § 1186 

the surrender of the policy "within six months," a paid-up policy 
will be issued for such an amount as the reserve on the policy will 
purchase, so that the paid-up policy may be demanded upon sur- 
render of the old one with in a reasonable time after the expiration 
of the six months. 7 So whore the policy provided not only for it- 
surrender within twelve months, but also that, in case of a default 
in payment of the premiums, the insurers should only be liable for 
the loss in a sum proportionate with the annual payments made, 
it was held that the insurers were liable for such proportionate 
amount, although the policy was not surrendered within the speci- 
fied time. 8 In another case, where the facts were very similar to 
those in the last decision, the same ruling was made. 9 In the first 
of these two cases, however, the action was brought by the ben- 
eficiary of the policy, the insured having died nearly three years 
after the fifth annual premium became due, the insured then having 
paid a certain sum in cash, and given his note for the balance at 
three months, and received a renewal certificate, which note was 
never paid. In the latter case the policy was canceled by the com- 
pany, although this was held not to affect the assured's right. It 
is also held that a surrender made in five years is sufficient. 10 
Again, in so far as time is not of the essence of the contract if a 
surrender and demand are made within a reasonable time, fixed in 
Kentucky cases as five years, will be sufficient although the statute 
limits the time to within six months after the lapse. 11 So one in- 
sured under a policy entitling him to a paid-up policy in propor- 
tion to the premiums paid, after payment of three annual premiums, 
provided he surrenders the policy before making default or within 
six months after default in the payment of premiums, is entitled 
to a paid-up policy after making three payments although the 
original policy is not surrendered or a demand made for the paid- 
up policy within the six months after the default if such demand is 
made during his lifetime. 12 Lapse of the limitation period after 

7 Lenon v. Mutual Life Ins. Co. 80 W. 146 (insured paid three annual 
Ark. 563, 8 L.R,A.(N.S.) 193, 98 S. premiums and defaulted and two 
W. 117. years thereafter demanded a paid-up 

8 Montgomery v. Phoenix Life Ins. policy) : Metropolitan Life Ins. Co. 
Co. 14 Bush (77 Ky.) 51. v. Clay, 158 Ky. 192, 164 S. W. 968; 

9 Chase v. Phoenix Mutual Life Ins. Equitable Life Assur. Soe. of U. S. 
Co. 67 Me. 85. See Dorr v. Phcenix v. Warren Deposit Bank, — Kv. — , 
Mutual Life Ins. Co. 67 Me. 438. 75 S. W. 275; New York Life Ins. 

10 Southern Mutual Life Ins. Co. v. Co. v. Warren Deposit Co. 25 Kv. 
Montague, 84 Ky. 653, 2 S. W. 443, L. Rep. 325, 75 S. W. 234. 

8 Kv. L. Rep. 579, 4 Am. St. Rep. "Mutual Life Ins. Co. v. Jarboe, 

218.* 102 Ky. 80, 39 L.E.A. 504, 42 S. W. 

11 Washington Life Ins. Co. v. 1097. See also Manhattan Life Ins. 
Glover, 25 Ky. L. Rep. 1327, 78 S. Co. v. Patterson, 109 Ky. 624, 95 Am. 

2299 



§ lis; .M.N CE ON [NSURANCE 

demanding the issuance of a paid-up policy in accordance with the 
contract after forfeiting a life insurance policy for nonpayment of 
premiums, without taking steps to compel an insurance of the pol- 
icy, will not bar an action to enforce the amount duo under it upon 
the death of the insured. 13 

§ 1187. Whether payment of note required to entitle to paid-up 
policy. — Where the payment of premiums for a certain period is 
accessary to sustain a claim for a paid-up policy, and a note is given 
for a part or the whole of said premiums, the question whether pay- 
ment of said note is a prerequisite to claiming said paid-up policy 
must necessarily depend upon the terms of the particular contract 
in question. It is pertinent to inquire in all cases what constitutes 
payment of an annual premium. Sometimes a note is accepted in 
place of cash. Such note may constitute payment so far as to pre- 
vent a forfeiture, or it may be accepted conditionally, a forfeiture to 
occur if it is not paid at maturity; in other cases the premium is 
paid partly in cash and partly in premium notes. Again, the pre- 
mium may he payable partly in cash, partly by payment of interest 
on outstanding notes, and partly in other notes, the notes to be 
canceled by application of dividends, and there are other schemes 
of insurance, 14 so that the court is bound in every case to closely 
examine the contract, and apply the rules of construction governing 
in like cases as far as possible in order to discover the intent of the 
1 duties. If a policy provides that the assured shall be entitled 
to a paid-up policy after the payment of two annual premiums, 
and notes are given for the second year's premium, the assured 
is not entitled to a paid-up policy until the notes are satis- 
fied. 15 But where the agreement is that the assured is to make cer- 
tain semi-annual cash payments, execute annual notes for a portion 
of the premium, and to pay annually the interest falling due on 
such notes, and the payment of the principal of the notes is other- 
wise provided for by the application of dividends and by a deduction 
of the unpaid portion of the notes from the amount due on the 
policy when payable, the two complete annual payments of pre- 
mium required are made when said annual cash premiums, to- 
gether with the annual interest on the notes, are paid and notes 
given for the balance of the premiums as stipulated. Such premium 
notes need not be paid to entitle the assured to a paid-up policy. 16 

St. Rep. 393, 53 L.R.A. 378, 60 14 See §§ 1320 et seq. herein. 

S. \V. 383. 15 Moses v. Brooklyn Life Ins. Co. 

13 Lenon v. Mutual Life Ins. Co. 50 Ga. 196. 
80 Ark. 563, 8 L.R.A. (N.S.) 193, 98 16 Olule v. Northwestern Mutual 
S. W. 117. Life Ins. Co. 40 Iowa, 357. 

2300 



PAID-UP AND NONFORFEITABLE POLICIES § 1187 

And to the same effect is an Ohio case. 17 In another case in that 
state a condition in a life insurance policy to the effect that "in case 
of default for nonpayment of premium after three years, and no 
legal surrender having been made, the insured having paid at 
maturity all notes given for premiums, then this policy shall, with- 
out surrender, but upon payment of all outstanding premium notes, 
become a paid-up policy without change of terms or conditions," 
requires the payment of all outstanding premium notes, though 
given after three annual premiums have been paid, and is a con- 
dition precedent to such policy becoming a paid-up term policy. 18 
So in another case an endowment policy for ten years stipulated 
that upon default the assured should be entitled at its maturity to 
as many tenths as there had been complete annual payments, pro- 
vided that all the premium notes should be taken up or the interest 
thereon paid in cash when the premium matured, until the notes 
were canceled by dividends, otherwise the policy would be forfeited, 
unless one or more annual payments had been fully made in cash 
or by application of the surplus. It was held that the assured could 
either pay the premium in cash and take up the notes for the 
specified years, and thereby become entitled to said "tenths," or 
that, if he was in default for payment of premiums, he could pay 
the annual interest on the notes until they were satisfied by the 
dividends, and would be entitled to as many tenths as he had so 
paid, and so much of the notes as were unsatisfied after the return 
of application of dividends should be deducted. 19 So it is held that 
if the note only extends the time of payment of an overdue pre- 
mium, and there is an express stipulation that its nonpayment at 
maturity shall absolutely forfeit all claims of the insured under the 
contract, its nonpayment at maturity deprives the assured of all 
right to demand a paid-up policy within thirty days from the time 
its falls due, even though the policy provides for such paid-up pol- 
icy upon demand within thirty days after default in payment of a 
premium. 20 

17 Northwestern Mutual Life Ins. Mutual Life Ins. Co. 120 La. 610, 45 
Co. v. Bonner, 36 Ohio St. 51. Al- So. 522; Bank of Commerce v. New 
though it was held in this case that York Life Ins. Co. 125 Ga. 552, 54 
by the nonpayment of further an- S. E. 643 ; Paschedag v. Metropolitan 
nual premiums, and the annual in- Life Ins. Co. 155 Mo. App. 185, 134 
terest due on prior notes, the right S. W. 102. 

of the policy holders to share in fu- 19 Van Norman v. Northwestern 
ture dividends was lost. Mutual Life Ins. Co. 51 Minn. 57, 52 

18 Union Central Life Ins. Co. v. N. W. 988. 

Buxer, 62 Ohio St. 385, 49 L.R.A. 20 Holly v. Metropolitan Life Ins. 
737, 57 N. E. 66. Examine Rife v. Co. 105 N. Y. 437, 11 N. E. 507. See 
Union Central Life Ins. Co. 129 Cal. Duteher v. Brooklyn Life Ins. Co. 3 
455, 62 Pac. 48; Lesseps v. Fidelity Dill. (U. S. C. C.) 87 Fed. Cas. 

2301 



§ 1188 JOYCE UN L\SIKA\< E 

It is also held that if notes are given of a third party in payment 
of the annual premiums, and renewal receipts are given, the pay- 
ment of the notes is not a condition to be complied with as one 
precedent to claiming a paid-up policy. 1 Under a Federal Supreme 
Court decision where a policy of life insurance provided for a paid- 
up policy after two annual payment-, for as many tenths of the 
amount originally assured as there had been annual premiums paid 
in cash, in the event of the assured desiring to discontinue it, the 
assured was held entitled to a paid-up policy without paying a note 
given for part of the premiums, but the note to be a lien on the 
paid-up policy until the entire amount due the company is paid. 2 
Under a Kentucky decision surrender of the right to extended in- 
surance for the term earned by the premiums paid, is not effected 
by the execution of, and failure to pay, a premium note, a clause 
in which provides, that such failure shall work a forfeiture of the 
policy, "except as to the right to a surrender value or paid-up policy, 
which may be provided in the policy," where the policy provides, 
under the head of surrender values, for either a paid-up policy or 
extended insurance, and states that, in case of a failure to demand a 
paid-up policy within six months after default, the policy will be 
extended without request or demand for the time specified in the 
schedule annexed.* 

§ 1188. When paid-up policy forfeited: cases. — Where the origi- 
nal policy was conditioned for the payment of interest on the pre- 
mium notes, and the new policy is made subject to the conditions 
of the original policy, a failure for two years to pay said interest 
forfeits the paid-up policy. 4 So if the new policy provides for for- 
feiture for nonpayment of the interest on the premium note, notice 

No. 4,202; aff'd Brooklyn Life In- Life Ins. Co. 5 Fed. 430, 433; Klein 

surance Co. v. Duteker, 95 U. S. 269, v. National Benefit Assoc. Ill Ind. 

24 L. ed. 410, cited in Gardner v. 462, 466, 60 Am. Rep. 703, 11 N. E. 

Central Life Ins. Co. 5 Fed. 430. 620; Franklin Life Ins. Co. v. Wal- 

On payment of premium by prom- lace, 93 Ind. 7, 17; Tate v. Mutual 

issory note as entitling insured to Benefit Life Ins. Co. 131 N. Car. 389, 

benefit of paid-up insurance, see note 391, 42 S. E. 892; Northwestera IMu- 

in 5 B. R. C. 376. tual Life Ins. Co. v. Bonner, 36 Ohio 

1 Michigan Mutual Life Ins. Co. v. St. 51, 64. 

Bowes, 42 Mich. 19, 51 N. W. 962. 8 Drury v. New York Life Ins. Co. 

2 Brooklyn Life Ins. Co. v. Dutch- 115 Ky. 681, 61 L.R.A. 714, 74 S. 
er, 95 U. S. 269, 24 L. ed. 410. Cited W. 663. 

in Hogue v. Northwestern Mutual 4 Holman v. Continental Life Ins. 
Life Ins. Co. 114 Fed. 778, 782; Co. 54 Conn. 195, 1 Am. St. Rep. 
Omaha National Bank v. Mutual 07, 6 Atl. 405 (two judges dissent- 
Benefit Life Ins. Co. 84 Fed. 122, ing). See also Ewald v. Northwest- 
126, 28 C. C. A. 300, 303, 55 U. S. ern Mutual Life Ins. Co. 60 Wis. 431, 
App. 73; Gardner v. Union Central 443, 19 N. W. 513. 

2302. 



PAID-UP AM) NONFORFEITABLE POLICIES § 1189 

of the maturity of said interest is not required to be given. 5 So if 
a paid-up policy is issued, and the insured gives his promissory note 
in form of a loan for the amount of the credit portions on the origi- 
nal policy, and the new policy stipulates for the payment of interest 
thereon each year, otherwise that the policy will be void without 
notice, a default in payment of said interest operates to forfeit the 
policy. 6 So the paid-up policy is forfeited where the insured never 
pays anything, on either the note or interest, notwithstanding the 
policy is expressed as a paid-up policy, and has on its margin the 
words, "nonforfeiture" policy, 7 and where the new policy was in- 
dorsed as being conditional on the payment of interest on two 
certain notes given in part payment of premiums in advance, non- 
payment thereof as specified forfeits the policy. 8 A paid-up policy 
of life insurance may be forfeited by nonpayment of interest on 
premium notes given for premiums accruing while the original 
policy remained in force. 9 

§ 1189. When paid-up policy not forfeited: cases. — Where a paid- 
up policy is conditioned upon the payment of a certain amount of 
interest annually and of all outstanding loans,. and such sum is the 
interest only on a loan, and not a premium, the policy is not for- 
feited by its nonpayment; 10 nor is a "nonforfeiture, paid-up" pol- 
icy of life insurance forfeited by a failure to pay interest on 
premium notes regarded by the company as a loan to the assured ; n 
and failure to pay a note for the premium given after a ri 'it to a 
paid-up policy has accrued does not forfeit the policy. 12 So if the 
policy is "nonforfeiting," it is not forfeited for failure to pay notes 
given for premiums on the original policy for which the paid-up 
policy is exchanged, where it is also stipulated that any indebtedness 
of the assured to the company may be deducted upon payment of 
the policy. In such case the amount of said notes is to be deducted 
from the paid-up policy. 13 A policy is not forfeited in Kentucky 

5 Helm v. Metropolitan Life Ins. 5 Fed. 430, citing St. Louis Mutual 
Co. 7 Daly (N. Y.) 536. Life Ins. Co. v. Grigsby, 10 Bush (73 

6 Knickerbocker Life Ins. Co. v. Ky.) 310; Brooklyn Life Ins. Co. v. 
Harlan, 50 Miss. 512. See Alabama Dutcher, 95 U. S. 269, 24 L. ed. 410. 
Gold Life Ins. Co. v. Thomas, 74 Ala. u Bruce v. Continental Life Ins. 
578. Co. 58 Vt. 253, 2 Atl. 710. 

7 McQuitty v. Continental Life Ins. 12 Tutt v. Covenant Mutual Life 
Co. 15 R, I. 573, 10 Atl. 635. Ins. Co. 19 Mo. App. 677, 681. 

8 Patch v. Phoenix Mutual Life Ins. 13 Eddy v. Phoenix Mutual Life 
Co. 44 Vt. 481. See Moser v. Phoenix Ins. Co. 65 N. H. 27, 28, 23 Am. St. 
Mutual Life Ins. Co. 2 Mo. App. 408. Rep. 17, 18 Atl. 89. "It contains a 

9 Holman v. Continental Life Ins. provision for the payment of any in- 
Co. 54 Conn. 195, 1 Am. St. Rep. 97, debtedness to the company by deduct- 
6 Atl. 405. ting it from the amount of insurance 

10 Gardner v. Central Life Ins. Co. secured by the policy, and the fail- 

2303 



§ 11 DO 



JOY( i; ON INSURANCE 



by the failure to pay interest on premium notes at maturity whore 
the company is entitled to recover on the notes. 14 A.gain, where a 
paid-up policy is issued subject to the payment annually in advance 
dI-' interest on the premium notes, otherwise to be forfeited, payment 
thereof on the day following thai specified is not in time, although 
reliance has been placed, in making such delay, upon a pamphlet 
issued by the company, and which accompanied the original policy, 
and which stated that all the company's policies were nonforfeitable, 
ami thai it allowed thirty days' grace in the payment of premiums; 
the company nol being estopped in such case to claim a forfeiture 
for nonpayment. 15 

§ 1190. Whether it is new contract or continuation of old one. — 
Sometimes an indorsement is made upon the old policy, which is 
equivalent to a conversion into a paid-up policy. 16 Such indorse- 
ment is in connection with the provisions of the policy relating to 
forfeiture for nonpayment of premiums; 17 and where the company 
wrote across the fact of the policy that it was binding for two- 
tiftccnths thereof, "subject to the terms and conditions expressed in 
this policy," it was held that the paid-up policy was only the orig- 
inal policy reduced to an amount corresponding to the premiums 
paid. 18 And it is held in other cases that the paid-up policy is 



ure to pay the interest in advance 
upon the notes given on the original 
policy is to be treated as an indebted- 
ness to the company, and not as a 
forfeiture of the 'paid-up' policy:" 
Id. 28, per Clark, J., citing: 

Indiana. — Franklin Life Ins. Co. 
v. Wallace, 93 Ind. 7; Northwestern 
Mutual Life Ins. Co. v. Little, 56 
Ind. 504. 

Iowa. — Ohde v. Northwestern Mu- 
tual Life Ins. Co. 40 Iowa, 357. 

Kentucky. — Montgomery v. Phoe- 
nix Mutual Life Ins. Co. 14 Bush (77 
Ky.) 59; Northwestern Life Ins. Co. 
v. Fort, 82 Ky. 269, 6 Ky. Law Rep. 
271; St. Louis Mutual Life Ins. Co. 
v. Crigsby, 10 Bush (73 Ky.) 310. 

Minnesota. — Svmonds v. North- 
western Life Ins. Co. 23 Minn. 491. 

Neir II 'am pshire. — Cowles v. Con- 
tinental late Ins. Co. 63 N. H. 300. 

New York. — Cole v. Knickerbocker 
Ins. Co. 63 How. Pr. (N. Y.) 442, 
! 15. 

Wisconsin. — Hull v. Northwestern 
Life Ins. Co. 39 Wis. 397. 



14 Northwestern Mutual Life Ins. 
Co. v. Fort, 82 Ky. 269, 6 Ky. L. 
Rep. 271. 

15 Fowler v. Metropolitan Life Ins. 
Co. 116 N. Y. 389, 5 L.R.A. 805, 22 
N. E. 576, reversing 41 Hun (N. Y.) 
357; Howell v. Knickerbocker Life 
Ins. Co. 44 N. Y. 276, 4 Am. Rep. 
675, and Ruse v. Mutual Benefit Life 
Ins. Co. 23 N. Y. 516, 24 N. Y. 653, 
distinguished. 

16 See Holman v. Continental Life 
Ins. Co. 54 Conn. 195, 1 Am. St. Rep. 
97, 6 Atl. 405; Alabama Gold Life 
Ins. Co. v. Thomas, 74 Ala. 578 ; Mc- 
Quitty v. Continental Life Ins. Co. 
15 K. I. 573, 10 Atl. 635. 

17 Alabama Gold Lite Ins. Co. v. 
Thomas, 74 Ala. 578. 

18 McQuitty v. Continental Life 
Ins. Co. 15 R. I. 573, 10 Atl. 635. 
See Holman v. Continental Life Ins. 
Co. 54 Conn. 195, 1 Am. St. Rep. 97, 
6 Atl. 405, 8 East Rep. 181; People 
v. Knickerbocker Life Ins. Co. 103 N. 
Y. 480, 9 N. E. 35. 



2304 



PAID-UP AND NONFORFEITABLE POLICIES § 1191 

a continuation of the old one, so far as the stipulations of the 
former are applicable. 19 So, in general, a new policy may con- 
tain a provision in conformity to the original for which it is 
substituted, providing for forfeiture, if the interest on the pre- 
mium note is unpaid, although there are exceptions; 20 for the 
company may validly insert such a condition where it has au- 
thority to impose an obligation on the assured to pay such in- 
terest on notes outstanding at the issue of the new policy. 1 But 
otherwise not, for it cannot insert such a provision where it is 
not in the original policy and it unwarranted by its terms. 2 It is 
decided, however, that the company may make the new policy 
strictly forfeitable for a default in paying premiums or premium 
notes, and is not obligated to insert a provision in the original "non- 
forfeitable" policy which stipulates differently. 3 It is held that a 
forfeiture condition as to residence under the original policy does 
not affect the new policy. 4 

§ 1191. Amount of premium under statutes "deducting indebted- 
ness." — Some discussion has been had upon question as to what con- 
stitutes an "indebtedness" to be deducted under the statutes provid- 
ing therefor, in ascertaining the "single premium" remaining to 
the credit of the insured. Under a Massachusetts statute providing 
for the continuance and validity of the policy for a limited period 
after failure to pay the premium, to be determined as therein pro- 
vided, the net value is to be ascertained in a certain manner, and 
from it is to be deducted "any indebtedness to the company or notes" 
of the assured held by it, which if given for the premium are to be 
canceled, and "four-fifths of what remains" constitutes a net single 
premium for temporary insurance for a term. to be determined as 
specified therein. 5 The New York statute provides for "deducting 
any indebtedness of the insured on account of any annual or semi- 
annual or quarterly premiums then due, and any loan made in 
cash on such policy, evidence of which is acknowledged by the in- 

19 McDonnell v. Alabama Gold Life the paid-up insurance purchased 
Ins. Co. 85 Ala. 401, 5 So. 120 ; Mer- shall be payable at the same time and 
ritt v. Cotton States Ins. Co. 55 Ga. under the same conditions, except as 
103. to the payment of premiums, as the 

20 See cases cited in two preceding original policy: 3 N. Y. Rev. Stats, 
sections. 8th ed. p. 1688. That new policy is 

1 People v. Knickerbocker Life Ins. not new contract in case of endow- 
Co. 103 N. Y. 480, 9 N. E. 35. ment policies, see § 1193, note 3, 

2 Cole v. Knickerbocker Life Ins. herein. 

Co. 23 Hun (N. Y.) 255, 63 How. Pr. 4 Cotton States Life Ins. Co. v. Ed- 

(N. Y.) 442. wards, 74 Ga. 220. 

3 People v. Knickerbocker Life 5 Mass. Stats. 1861, c. 186, sec. 1; 
Ins. Co. 103 N. Y. 480, 9 N. E. 35. Stats. 1882, c. 119, sec. 159. 

The New York statute provides that 

Joyce Ins. Vol. III.— 145. 2305 



§ 1191 JOYCE ON INSURANCE 



sured in writing." 6 The words "dividend additions," as used in 
New York Laws providing for the application thereof to lapsed 
policies, refer to that part of the premiums charged which was 
"loaded" on to the premium in excess of its share of expenses and 
losses sustained; and such additions and the earnings thereon, which 
constitute the "surplus/' must bo valued and applied in buying 
extended insurance for lapsed policies in force three years or 
Longer, in the same way that the "reserve" of the policy is required 
to be valued and applied in purchasing such extended insurance. 7 
Such statute is not violated by a stipulation in the policy that the 
unpaid portion of the year's premium shall be considered an in- 
debtedness to the company, and the failure to pay any premium 
when due operates to forfeit the policy except as provided by the 
statute. 8 And where such a condition exists, the unpaid portion of 
the premium must be deducted from the net value at the date the 
premium becomes due in ascertaining the net single premium under 
the statute. 9 But where there is no such stipulation an unpaid 
por! ion <»(' a half year's premium is not an "indebtedness," and can- 
not be deducted. 10 An insurance company will not, in computing 
the amount of cash surrender value or the sum applicable to the 
purchase of extended insurance after default of payment of pre- 
miums, be permitted to discriminate against policy holders who 
have borrowed on their policies, by exacting more than the loan 
with legal interest, and therefore a method of settlement by which 
the amount to be deducted from the reserve applicable to the pur- 
chase of extended insurance is ascertained by finding the sum which 
bears the same relation to such reserve as the amount borrowed 

6 N. Y. Laws 1909, c. 33, see. 88, tion between a premium of insurance 
as am'd by L. 1909, c. 101; Id. e. 595; and a debt. The policy itself also 
L. 1910, c. 614; Parker's N. Y. Ins. provided that whatever was due to 
L. (ed. 1915) p. 136; 3 N. Y. Rev. the company should be deducted 
Stats. 8th ed. p. 1688. from the net value of the policy, in- 

7 United States Life Ins. Co. v. eluding any unpaid premium notes 
S] 'inks, 126 Ky. 405, 13 L.R.A. with interest, but no notes were held 
(N.S.) 1053, 96 S. W. 889, see last by the defendant against the insured, 
preceding note for N. Y. Stat. and there was no direct promise by 

8 Van Creelen v. Massachusetts him to pay any amount, nor any ob- 
Mutual Lite Ins. Co. 35 La. Ann. 226, ligation so to do. One-half year's 
under Mass. Laws, 1861, c. 186. premium had been paid upon the 

9 Van Creelen v. Massachusetts policy when issued, and when the in- 
Mntual Life las. Co. 35 La. Ann. surer died said period had elapsed, 
226; Howard v. Continental Life and the other half year's premium 
Ins. Co. 48 Cal. 229; 2 Deering's Di- was unpaid. It was claimed that the 
o-est, L542. policy lapsed when the first six 

10 'Goodwin v. Massachusetts Mu- months expired: Sec also I'itt v. 
lual Life Ins. Co. 73 N. Y. 480. This Berkshire Life Ins. Co. 100 .Mass. 
latter decision rests upon the distinc- 500. 

2300 



PAID-UP AND NONFORFEITABLE POLICIES § 1192 

bears to the cash surrender value, and thereby arbitrarily shortening 
the time of extended insurance, is invalid. 11 Again, insurance com- 
panies must keep accurate accounts with their policy holders as 
classes, failing which, no presumption will be indulged in the com- 
pany's favor when it comes to valuing and applying "surplus" or 
"dividend additions" to lapsing policies. 12 

§ 1192. Amount of paid-up policy. — In estimating the amount 
for which a paid-up policy should issue, the holder is not entitled 
to the full amount of the premiums paid, but only to an equivalent 
of the present value of the policy, nor should a method of computa- 
tion be used which deprives the company of its earnings for carry- 
ing the risk. 13 Accordingly it is error to require the company to 
issue a policy for the aggregate amount of the premiums paid subject 
to the amount due on the note. 14 If annual premium notes are 
given on which only the interest, together with cash premiums, is to 
be paid annually, they need not be deducted in determining the 
amount, where the insured is entitled to a paid-up policy, for as 
many "tenths" as complete annual payments have been made. 15 
But where an endowment policy with premiums payable for ten 
years was so worded that complete annual payments might be made 
in cash, and cash payments of the interest on annual premium 
notes, the payment of the notes being provided for by application 
of the surplus, it was held that the notes, so far as uncanceled, 
might when the policy became due be deducted from the amount 
payable under the paid-up policy ; 16 and in another like case it was 
held that the premium notes with their accrued interest should be 
deducted, it being so provided by the policy, from the amount pay- 
able, 17 and it is so decided in a Georgia case with similar provisions. 18 
It is also so decided in an Ohio case. 19 Where the policy provided for 

11 Emig v. Mutual Benefit Life Ins. Ins. Co. 4 Mo. App. 386 ; Brooklyn 
Co. 127 Ky. 588, 23 L.R.A.(N.S.) Life Ins. Co. v. Duteber, 95 TJ. S. 
828n, 106 S. W. 230. 269, 24 L. ed. 410, affirming 3 Dill. 

On computation of paid-up insur- (C. C.) 87, Fed. Cas. No. 4202. 

ance where insured has borrowed on 16 Van Norman v. Northwestern 

policy; see note in 23 L.R.A.(N.S.) Mutual Life Ins. Co. 51 Minn. 57, 52 

828. N. W. 988. 

12 United States Life Ins. Co. v. 17 Ohde v. Northwestern Mutual 
Spinks, 126 Ky. 405, 13 L.R.A. Life Ins. Co. 40 Iowa, 357. 

(N.S.) 1053, 96 S. W. 889. "Northwestern Mutual Life Ins. 

13 Mound City Mutual Life Ins. Co. v. Ross, 63 Ga. 199. 

Co. v. Heath, 49* Ala. 529; Farley v. 19 Northwestern Mutual Life Ins. 

Union Mutual Life Ins. Co. 41 Hun Co. v. Bonner, 36 Ohio St. 51. In a 

(N. Y.) 303. New York case an option was given 

14 Farley v. Union Mutual Life to receive, after payment of two an- 
Ins. Co. 41 Hun (N. Y.) 303. nual premiums, a paid-up policy for 

15 Fittnan v. Northwestern Life I he full amount of the premiums 

2307 



1103 



JOYCE UN INSURANCE 



an amount proportionate to the number of premiums paid, and 
prim- to bis death twenty-seven quarterly premiums were paid by 
the assured, who then defaulted, and four quarterly premiums be- 
came due and were unpaid, a recovery for twenty-seven thirty-oneths 
of the amount of the policy, with interest in the discretion of the 
court on said amount from the commencement of the action, was 
adjudged.? A provision for paid-up insurance, in a statute gov- 
erning the adjustment of claims upon policies forfeited for nonpay- 
ment of premiums, will not be construed to mean paid-up temporary 
insurance for the full amount of the policy. 1 

§ 1193. Endowment policy: nonforfeiture statutes. — Tn a Massa- 
chusetts case the policy was payable in case of death within the ten 
years, but to the insured if he survived that period. The policy 
was conditioned to be forfeited for nonpayment of premiums when 
due, subject, however, to the provisions of the Massachusetts stat- 
ute. 2 The insured survived the endowment period, of which the 
company had due notice, but he had failed to pay the last premium. 
It w;is held that he was entitled to recover the full amount of the 
policy, less the amount due the company with interest thereon. 3 



paid. The policy was for three thou- adopted in an endowment policy for 

sand dollars, and the annual pre- the purpose of qualifying the forfei- 

mium three hundred and eighty-nine ture clause, the clause thus qualified 

dollars and sixteen cents. After ten is to be so construed as to give the 

annual payments a demand was made insured its full benefit, without aller- 

for a paid-up policy for the amount ing any other provision of the policy, 

of premiums paid. The court held if this can be done without violating 

that as the policy contained no words any rule of law. In the endowment 

ill' restriction, the plaintiff's right was policy the expiration of ten years 

not limited to the amount of the orig- from its date is the occurrence of an 

inal insurance, but that he was en- event on the happening of which the 

titled to a paid-up policy as stipulat- policy becomes payable," and that in 

ed. Christy v. Homoeopathic Mutual this ease the policy was not payable 



Life Ins. Co. 93 N. Y. 345. 

20 Mutual Life Ins. Co. v. Bratt, 55 
Bid. 200. 

1 Nichols v. Mutual Life Ins. Co. 
176 Mo. 355, 62 L.R.A. 657, 75 S. 
\Y. 11(11. 

2 Stats. 1861, c. 186. 

3 Carter v. John Hancock Mutual 



only in case of death within the term 
of temporary insurance, and the New 
York statute, so much of it as is ap- 
plicable to endowment insurance, 
contemplates a payment at the end 
of the term of the poliey in case the 
insured survives the term. "If the 
reserve upon any endowment policy. 



Life Ins. Co. 127 Mass. 153. The applied, according to the preceding 

court said that the effect of incor- section, as a single premium of tem- 

porating the statute into such a pol- porary insurance, be more than suf- 

icy was not "to make a new contract ficient to continue the insurance till 

between the parties, nor to make any the end of the endowment term 

change in the time when the amount named in the policy, and if the in- 

of the policy becomes payable. . . . sured survive that term, the excess 

When the statute provisions are shall be paid in cash at the end of 

2308 



PAID-UP AND NONFORFEITABLE POLICIES § 1194 

The provisions of the Missouri statute which concern temporary in- 
surance and the amount thereof, as well as the length of time that 
it shall in each case, continue; which makes policies of insurance 
nonforfeitable after the payment of two or more full annual pre- 
miums thereon ; and which declare that, in case of the death of the 
insured within the terms of temporary insurance, to be ascertained 
as provided by the statute, the company shall be answerable for the 
full amount of the policy, less the unpaid premiums with interest 
thereon, apply to a case in which an insurance company has issued 
its fifteen year endowment policy, where four annual premiums 
have been paid ; where default is made when the next annual pay- 
ment becomes due in May, and the insured dies in the following- 
November; and where the policy provides, in case of nonpayment 
of premiums, for the issuance, upon demand, of a nonforfeitable 
paid-up policy after the original policy has been in force for three 
years; but those provisions of the statute concerning the paid-up 
policy are inapplicable where the insured declines his right to it, 
and makes no demand therefor. Statutory provisions of exemptions 
from the control of certain statutes are also inapplicable where there 
is nothing to bring the policy within the exempted matters. Hence, 
if the insured dies, as in this case he did within the term of tem- 
porary insurance, thus fixed or ascertained by the statute, the 
amount of the policy, less such unpaid premiums and interest must 
be paid, notwithstanding any waiver in the policy by the insured of 
his statutory rights.* 

§ 1194. Refusal to issue paid-up policy. — As a rule a party has a 
right to insist upon the issue of a paid-up policy where the contract 
stipulates therefor, provided he himself has performed the condi- 
tions of the contract on his part necessary to be performed to entitle 
him to claim the enforcement of the terms of the contract, unless 
of course such nonperformance by the insured has been waived, or 
an estoppel has arisen, or the case is otherwise one where relief could 
be granted, 5 and where the failure to pay the premium on a policy 
at the specified time terminates the contract, and no application for 
a paid-up policy is made, the contract will not be continued in force 
for the full amount, even if the company refuses to issue a paid-up 
policy. 6 

such term on the conditions on which Cravens, 178 U. S. 389, 44 L. ed. 

the original policy was issued: " 3 N. 1116, 20 Sup. Ct. 762, 29 Ins. L. J. 

T. Rev. Stats. 8th ed. p. 1688. See 876. 

N. Y. Stat, cited in note 9, p. 2295 5 Standley v. Northwestern Mutual 

herein. Life Ins. Co. 95 Ind. 254. 

4 Cravens v. New York Life Ins. 6 Ashbrook v. Phoenix Mutual Ins. 

Co. 148 Mo. 583, 71 Am. St. Rep. Co. 94 Mo. 72, 6 S. W. 462, 12 West. 

628, 53 L.R.A. 305, 50 S. W. 519, Rep. 613. 
aff'd in New York Life Ins. Co. v. 

2309 



L95 JOYCE (>\ LXSIKANCE 

§ 1195. Refusal to issue paid-up policy; measure of damages. 7 — If 
there is an existing risk and the premiums paid are earned, and the 
party demanding the sunt' is entitled to have a paid-up policy is- 
sued, the measure of damages is the value of the policy al the time 
of the demand and refusal, with interest. 8 And where the assured 
under a uon forfeitable policy is entitled to participate in the profits, 
and an action is broughl to recover damages for a breach of con- 
tracl to make a settlement, it La error to withdraw from the con- 
dderation of the jury the reserved fund and financial standing of 
the company. The equitable value of the policy being dependenl 
on the reserve, it is material to -how the financial standing in order 
to ascertain how much of the reserve could be safely applied in 
settlement. 9 

7 See § 1191 herein. 200; Nashville Life Ins. Co. v. Mat- 

8 Rumbold v. Pennsylvania Mutual thews, 8 Lea (76 Tenn.) 499. 
Life Ins. Co. 7 Mo. App. 71. See 9 Nashville Life Ins. Co. v. Mat- 
Mutual Life Ins. Co. v. Bratt, 55 Md. thews, 8 Lea (76 Tenn.) 499. 

2310 



CHAPTER XLI. 



NOTES FOR PREMIUMS, AND PREMIUM, ETC., NOTES. 



§ 1202. 
§ 1202a. 
§ 1202b. 
§ 1202c. 
§ 1202d. 
§ 1202e. 

§ 1202f. 

§ 1203. 
§ 1204. 

§ 1204a. 
§ 1205. 
§ 1206. 
§ 1206a. 

§ 1206b. 
§ 1206c. 
§ 1207. 

§ 1208. 
§ 1208a. 

§ 1209. 

§ 1210. 
§ 1211. 
§ 1212. 

§ 1213. 
§ 1213a. 
§ 1214. 
§ 1215. 



Payment by note. 

Same subject: to what extent note constitutes payment. 

Same subject: when note does not constitute payment, 
receipt for premium, 
note as equivalent to or in lieu of cash.' 
effect as loan where agent advances premium and 



stipulation that note not payment but extension 



Same subject: 
Same subject: 
Same subject: 

takes note. 
Same subject: 

only. 
Premium note and policy one contract. 
Condition as to forfeiture for nonpayment of note at maturity : 

generally. 
When such condition not applicable to note. 
Validity of such provisions. 

Payment by negotiable paper : demand or notice, etc. : forfeiture. 
Same subject: that policy not ipso facto void for nonpayment 

of note. 
Same subject : statutory notice. 
Same subject : place of payment. 
Payment by negotiable paper: cases holding no demand or notice 

necessary: forfeiture. 
Same subject : the rule. 
When insurer not bound to notify assignee of maturity of note 

of assignor. 
When stipulation is that policy void or risk suspended for non- 
payment of note. 
Note for entire premium : suspension risk. 
When condition for forfeiture is in note only. 
When there is no condition as to forfeiture for nonpayment of 

note. 
Subsequent parol agreement: nonpayment of note: forfeiture. 
Right to loan after nonpayment of note. 
Power of mutual company to take note. 
Validity of notes for premium and premium notes. 
2311 



§ 1202 



JOYCE ON INSURANCE 



§ 1216. Premium note given unauthorized company. 

§ 1217. Premium, etc., notes: generally. 

§ 1218. Negotiability of notes for the premium and premium, etc., note6. 

§ L219. When note is payable. 

§ 1219a. Same subject: conflicting dates: erroneous date. 

§ 1219b. Same subject: extension of time. 

§ L219c. Same subject: days of grace. 

§ L219d. Payment of note by mail. 

§ 1220. Validity of provisions as to liability on premium, etc., notes. 

§ 1221. Lien on premium notes and funds. 

§ 1221a. When insured liable on note for premium. 

§ 1221b. When insured not liable on note for premium. 

§ 1222. Liability on premium, etc., notes: generally. 

§ 1223. When liability absolute on premium, etc., notes: when not. 

§ 1224. Liability for losses prior to membership. 

§ 1225. When liability continues until policy surrendered and all assess- 
ments paid. 

§ 122G. Liability after termination of contract or surrender of policy. 

§ 1227. Liability after suspension on note for entire premium. 

§ 1228. Extent of liability after part payment of note. 

§ 1229. Liability after loss. 

§ 1230. Liability incurred by default in payment of assessment. 

§ 1231. Liability in case of insolvency of company. 

§ 1232. Insolvency of maker of note. 

§ 1233. Interest on premium notes: forfeiture. 

§ 1234. Tender: premium notes. 

§ 1235. Payment of premium notes or interest thereon by dividends or 
profits. 

§ 1235a. Application to unpaid notes, of amounts due for claims for in- 
juries: accident policy. 

§ 1236. Effect of nonpayment of note upon beneficiary. 

§ 1237. Deduction of note from loss. 

§ 1238. Counterclaim on note of owner of vessel insured for benefit of 
mortgagee. 

§ 1239. Amount of recovery on premium notes. 



§ 1202. Payment by note. — Insurance companies have implied 
power to accept promissory notes in payment of the premium, and 
such payment is good, and an agent with the necessary authority 
therefor may accept such note, 10 even though the policy provides 

10 Arkansas. — Home Eire Ins. Co. 966; Jacoway v. German Ins. Co. 49 
v. Stancell, 94 Ark. 578, 127 S. W. Ark. 320, 5 S. W. 339. 

2312 



PREMIUM NOTES 



§ 1202a 



for a cash payment, 11 So the note of a third party may be accepted 
as payment of the premium. 12 So the company may accept the 
notes of a husband as payment of the premium due on a policy on 
his life for bis wife'.- benefit, 18 and in such case the company is pre- 
cluded from insisting that such notes do not constitute payment, 14 
And a note given for the premium on an open marine policy exe- 
cuted to cover such risks as may be afterward indorsed thereon 
becomes valid as fast as risks are assumed to the extent of the pre- 
miums actually earned by the company, and to this extent only 
the maker of the note becomes liable to the company. 15 

As a general rule, the premium note of an insurance broker re- 
ceived by the insurers in payment of a policy for his principal dis- 
charges the principal from liability to the insurers on account of the 
premium. 16 

An agent cannot, without authority therefor, receive payment of 
premium notes which he has received and sent to the insurer. 17 

§ 1202a. Same subject: to what extent note constitutes pay- 
ment. — Whether or not or to what extent a note given for the pre- 
mium constitutes payment involves many factors, including au- 



Georgia. — Williams v. Empire of insurance premium, see extensive 

Mutual Annuity & Life Ins. Co. 8 Ga. note in 5 B. R. C. 365 ; on commer- 

App. 303, 68 S. E. 1082. cial paper as payment thereof, see 

Illinois. — Mclntire v. Preston, 5 note in 35 L.R.A.(N.S.) 84. 
Gilm. (111.) 48, 48 Am. Dec. 321. "Mississippi Valley Life Ins. Co. 

Kansas. — New York Life Ins. Co. v. Neyland, 9 Bush (72 Ky.) 430; 

v. McGowan, 18 Kan. 300. Cary v. Nagel, 2 Biss. (U. S. C. C.) 

Kentucky. — Mississippi Valley 244, Fed. Cas. No. 2403. 
Life Ins. Co. v. Neyland, 9 Bush (72 12 Franklin Life Ins. Co. v. Wall- 

Ky.) • 430. ace, 93 Ind. 7 ; Shaw v. Republic Life 

Louisiana. — Lawrence v. Penn Ins. Co. 69 N. Y. 286; Timayens v. 

Mutual Life Ins. Co. 113 La. 87, 36 Union Mutual Life Ins. Co. 21 Fed. 

So. 898. 223. But see Mutual Ben. Life Ins. 

Massachusetts. — Pitt v. Berkshire Co. v. Davis, 12 N. Y. (2 Kern.) 569, 

Life Ins. Co. 100 Mass. 500. ' as to right of mutual company to 

Michigan. — Home Ins. Co. v. Cur- take note of third person having no 



interest in policy. 

13 Michigan Mutual Life Ins. Co. 
v. Bowes, 42 Mich. 19, 51 N. W. 962. 

14 Michigan Mutual Life Ins. Co. 
v. Bowes, 42 Mich. 19, 51 N. W. 962. 

15 Furniss v. Gilchrist, 1 Sand. (N. 
Y.) 53; Maine Mutual Marine Ins. 
Co. v. Stockwell, 67 Me. 382. 

16 Union Ins. Co. v. Grant, 68 Me. 
229, 28 Am. Rep. 42. 

17 Long Creek Building Assoc, v. 
See §§ 76, 197, 550, 553 State Ins. Co. 29 Oreg. 569, 46 Pac. 

366. 



tis, 32 Mich. 402 

Neiv York. — Marcus v. St. Louis 
Mutual Life Ins. Co. 68 N. Y. 625; 
Farmers' Bank v. Maxwell, 32 N. Y. 
579. 

Rhode Island. — Mowry v. Home 
Ins. Co. 9 R. I. 346. 

Emerigon (Emerigon on Ins. 
[Meredith's ed. 1850] c. iii. sec. 6, p. 
68) referring to Pothier, notes a cus- 
tom to give promissory notes for the 
premium 
herein. 



On promisssory note as payment 

2313 



§ L202a J01 CE ON [NSURANCE 

thority of insurer's agents, ratification, waiver and estoppel, varying 
according to the circumstances of each case. But it may be stated 
generally thai the intent of the parties evidenced by the terms of 
the contracl and such explanatory circumstances as are properly 
relevanl and admissible, having also in view the rules of construc- 
tion, musl govern. Thi • will appear from the decisions considered 
throughoui this chapter. So it is held that the sole question in 
-mil cases is whether the note was accepted as actual payment. 18 
And as we have stated elsewhere if a note is accepted conditionally 
it is not a payment and the intent that it should not be con- 
sidcred a payment unless paid when due may be shown. 19 Again, 
even though a promissory note does not of itself constitute pay- 
ment of a debt, nevertheless where it is accepted by the insurer 
'in payment" of premiums due it constitutes a payment to the ex- 
tent that such acceptance makes the note a separate and independent 
t ransaction so as to preclude, in the absence of a stipulation therefor, 
a forfeiture of the policy in case said note is not paid at maturity. 20 
So the policy is not forfeited for nonpayment of premiums where 
a note is taken therefor even though it is held to constitute merely 
a waiver of the form of payment. 1 Another view is that by accept- 
ing notes for the premium the primary condition of forfeiture for 
nonpayment of an annual premium is waived but that a secondary 
condition thereupon comes into operation where it is stipulated that 
the policy is to be void if the notes are not paid at maturity. 2 

An insurer is presumed to know the terms of a contract entered 
into by its agent with respect to the payment of the first premium 
by a note, notwithstanding a provision in the policy that it shall 
not take effect until the first premium is paid. 3 So a note may be 
taken by an agent under such circumstances as to constitute an 
absolute payment, as it is not necessary that the premium be paid 
in cash and it may be paid by note or otherwise as the parties may 
agree. 4 So the agent may be authorized by custom or a course of 
dealing to accept notes for the premium and render himself liable 

18 Home Fire Ins. Co. v. Stancell, Thompson v. Knickerbocker Life Ins. 
94 Ark. 578, 127 S. W. 966. Co. 104 U. S. 252, 26 L. ed. 765. 

19 See § 1204 herein. On effect of express stipulation 

20 Massachusetts Benefit Life As- suspending or avoiding policy in case 
soc. v. Robinson, 104 Ga. 256, 42 of nonpayment of note at maturity, 
L.R.A. 261, 30 S. E. 918, 27 Ins. L. see note in 5 B. R. C. 389. 

J. 1003, 1026. 3 Stewart v. Union Mutual Life 

1 State Life Ins. Co. v. Chownring, Ins. Co. 155 N. Y. 257, 42 L.R.A. 
27 Okla. 722, 113 Pac. 715. 147. 49 N. E. 876. 

2 Iowa Life Ins. Co. v. Lewis, 187 4 Devine v. Federal Life Ins. Co. 
U. S. 335, 23 Sup. Ct. 126, 47 L. ed. 250 111. 203, 95 N. E. 174, 10 Ins. L. 
204, 32 Ins. L. J. 1, relying upon J. 1513. 

2314 



PREMIUM NOTES § 1202a 

therefor to the insurer for its share of the premium. 8 And this is 
so where the insurer permits the agent for several months to accept 
notes for (he premium payable to himself, notwithstanding written 
instructions to the agent to the contrary. 6 And where an agent 
authorized to accept notes, takes one for the first premium and he 
is held liable therefor by insurer it will constitute a payment where 
the contract is completed by mailing it to insured even though he 
dies before receiving it. 7 And as between insurer and insured, 
although agents are forbidden by the insurer to take notes for first 
premiums, the taking of a note will constitute a payment thereof, 
where the custom or common practice is for the agent to take the 
note in his own name and charge it to himself in his account with 
the company, being responsible for its collection. 8 So where a note 
is given the agent but insurer does not consent to take it in lieu of 
money, it constitutes, in so far as insurer is concerned, a payment 
to the agent who holds it in place of the amount of the premium, 
with which he thereby becomes chargeable, but said note does not 
constitute an extension of time for payment of the premium ; and 
the above especially applies where the note does not in any way 
refer to either the premium or policy. 9 So a provision that a life 
insurance policy shall not take effect until the payment of the first 
premium, is waived, or the insured estopped from setting it up, 
if a promissory note for the premium is accepted and representations 
made to the applicant that the insurance takes immediate effect. 10 

50 payment of the first premium by note is sufficient where the 
agent takes the note himself and advances the amount to the com- 
pany. 11 Again where payment has been made to a local agent by 

5 Cranston v. West Coast Life Ins. Ins. Co. 155 N. Y. 257, 42 L.R.A. 
Co. 72 Oreg. 116, 142 Pae. 762. 147, 49 N. E. 876. 

6 Godfrey v. New York Life Ins. u Krause v. Equitable Life Assur. 
Co. 70 Minn. 224, 73 N. W. 1, 27 Ins. Soc. 99 Mich. 461, 58 N. W. 496. It 
L. J. 300. i s held in the superior court in Ken- 

7 New York Life Ins. Co. v. Pike, tucky that if the insured gives a note 

51 Cal 9 38 117 Pac 900 f° r ^ ne ^ rs ^ premium payable to the 

8 Kimbro' v. New York Life Ins. a f ent as "agent," and this is accept- 
Co. 134 Iowa, 84, 12 L.R.A.(N.S.) ed by . * he J^Pany, ^ « » note re- 
421, 108 N. W. 1025. See § 1204a ceived f f or f the P^mmm and its non- 
, '. ° payment at maturity forfeits the pol- 

£ e * n ' , „ „ . T .„ T icy; the latter stipulating that if 

Griffith v. New York Life Ins. no t es for premiums be not paid, there 

Co. 101 Cal. 627, 40 Am. St. Rep. shall be a forfeiture, and it is also 

96, 36 Pac. 113, 26 Ins. L. J. 212. i le ia that this ruling is not changed 

See § 1204a herein. by the fact that the agent had re- 

On giving of note as a transaction ceipted for the premium as for a cash 

with agent personally, see note in 5 premium paid. Union Cent. Life Tns. 

B. R C. 436. Co. v. Duvall (Ky. Sup. Ct. 1895) 

10 Stewart v. Union Mutual Life 16 Ky. L. Rep. 398. 

2315 



§ 1202a JOYCE ON INSURANCE 

a note which is received by him as cash, and he has become liable to 
the insurer for the amounl thereof, such note, as against insurer, is 
equivalent to paymenl to said agent so as to preclude a forfeiture 
for nonpayment of the note al maturity. 12 And as between insured 
and insurer the premium is paid where the agent in the ordinary 
course of business gives insured credit therefor, especially so where 
the agent is given notes for the premium including those on other 
policies issued to insured at the same time and on other policies on 
other property, and the agent obtains the proceeds of said note and 
thereafter takes up the same at its maturity, and the agents pay 
insurer the lull amount of said indebtedness, and insurer on 
return to it of the policy credits its agents with the amount of the 
unearned premium. 13 So where the agent who is entitled to the 
first premium on a policy as his commission takes, in part payment 
of such premium, the note of the insured, sells it, and reports to 
the company that the premium is paid, the insurer cannot, in an 
action on the policy, avail himself of a default in the payment of 
the note, where it also purchases the note from the agent's indorsee 
after the death of the insured. 14 A note may also be taken for the 
premium by the agent who delivers the policy where the insurer, 
with knowledge thereof, fails to repudiate the agent's acts. 16 And 
where the insurer accepts and retains a note for the premium it 
constitutes a payment so as to preclude cancelation of the policy 
even though the policy had been returned to insurer at its request 
made in a notice of cancelation. 16 A general agent may also accept 
a third party's note as payment, even though the policy provides 
for a cash premium. 17 

It is decided that if a question arises whether or not a note is 
given as mere evidence of a debt, or as part payment of the first 
premium on an application for insurance, the burden is upon him 
who asserts that it was taken as payment of the premium, and if 
the circumstances relied on to prove the contract point one way as 

12 Griffith v. New York Life Ins. S. W. 786. Compare Mutual Re- 
Co. 101 Cal. 627, 40 Am. St. Rep. serve Fund Life Assoc, v. Simmons, 
96, 36 Pac. 113. See § 1204a herein. 107 Fed. 418, 46 C. C. A. 393, con- 

13 Buckley v. Citizens Ins. Co. of sidered under 1202h herein. 

Mo. 188 N. Y. 399, 13 L.R.A.(N.S.) I6 Penn Mutual Life Ins. Co. v. 

889, 81 N. E. 165, 36 Ins. L. J. 752, Norcross, 163 Ind. 379, 72 N. E. 132. 

rev'g 98 N. Y. Supp. 622, 112 App. 16 Buckley v. Citizens Ins. Co. 98 

Div. 451. N. Y. Supp. 622, 112 App. Div. 451. 

14 Union Life Ins. Co. v. Parker, 17 Mississippi Valley Life Ins. Co. 
66 Neb. 395, 62 L.R.A. 390, 103 Am. v. Nevland, 9 Bush (72 Ky.) 430. 
St. Rep. 714, 92 N. W. 604. See Rep- See also Home Fire Ins. Co. v. Stan- 
pond v. National Life Ins. Co. 100 cell, 94 Ark. 578, 127 S. W. 966. 
Tex. 519, 11 LR.A.(N.S.) 981, 101 

2316 



PEEMIUM NOTES § 1202b 

reasonably and significantly as the other, there is presented a ques- 
tion of law for the court to decide. 18 

§ 1202b. Same subject: when note does not constitute payment. — 
It is decided that if the insurer's agent takes assured's promissory 
note for the amount of the first premium on a life policy it does not 
constitute payment thereof within the intent of the contract where 
it is expressly stipulated that no agent has power to granl credit or 
extend time for payment of any premium. 19 It is also determined 
that a note given to insurer's agent to procure insurance of the Life 
of the maker is held without consideration and void if the contract 
for insurance provides that it shall be void, unless the premium is 
paid in cash, and that none but certain designated officers have 
authority to waive the condition, and the agent receiving the note 
did not himself pay the premium to the insurer nor do anything 
except to charge himself and credit the insurer with the amount 
of such premium and the latter did not know that the payment had 
not been made in cash nor in any way w T aive the condition requiring 
such payment. 20 It is likewise decided that notes cannot be accepted 
by a sub-agent instead of cash where the policy stipulates against 
waiver except by certain agents and the insurer did not credit pre- 
miums to its agents until actual receipt thereof. 1 It is further deter- 
mined that there must be proof that the note was given for the full 
amount of the premium and not merely to cover the insurer's share 
thereof, even though the agent was allowed by custom to retain his 
commission and had sent the amount of the note to the insurer, and 
that there could be no recovery on the policy where the insurer 
repudiated the transaction after insured's death while the note was 
unpaid. 2 And it is held that it is not sufficient where the premium 

"McDonald v. Provident Sav. ing premiums, waiver by, see §§ 76 

Life Soe. 108 Wis. 213, 81 Am. St. et seq., 550 et seq. herein. 
Rep. 885, 84 N. TV. 154. See also Agent may waive conditions not- 

Manhattan Life Ins. Co. v. Meyers, withstanding inhibition in policy, see 

109 Ky. 372, 22 Ky. L. Rep. 875, 59 § 439 herein. 

S. W. 30, as to burden of proof in Ratification of agent's acts: the 

such case ; London & Lancashire Life premium, see § 460 herein. 
Assur. Co. v. Fleming, App. Cas. Note not a payment when accepted 

[1897] L. R. 499. Burden of proof conditionally, see § 1204 herein, 
on insured to show cash payment 20 Dunham v. Morse, 158 Mass. 

where note taken. 132, 35 Am. St. Rep. 473, 32 N. E. 

19 Batson v. Fidelity Mutual Life 1116. 
Ins. Co. 155 Ala. 265, 130 Am. St. Pennsylvania Casualty Co. v. Ba- 

Rep. 21, 46 So. 578. Examine Towa con, 133 Fed. 907, 67 C. C. A. l!'7. 
Life Ins. Co. v. Lewis, 187 U. S. 335, 2 Mutual Reserve Fund Life As- 

23 Sup. Ct. 126, 47 L. ed. 204, 32 Ins. soc. v. Simmons, 107 Fed. 418, 46 C. 

L. J. 1. C. A. 393. See Robinson v. Union 

As to authority of agents concern- Central Life Ins. Co. 144 Fed. 1005, 

2317 



§ L202e J03 CE ON INSURANCE 

lias nol been actually paid to allege the execution of notes therefor 
where said notes show on their face that they were not accepted as 
payment of the premium bul were conditioned that if they were not 
paid ;il maturity the policy would be void. 3 Again, if an insurance 
agenl agrees with another who holds Ins note that he secure an ap- 
plication, and thai the premium be paid by an indorsement on said 
note, there is no payment of the premium where the policy is not 
delivered and no indorsement made on the note, the insured having 
deceased before said acts are done, especially where the policy is re- 
quired to be delivered and the premium paid during insured's life- 
time. 4 

A partnership is not bound by a note given by a member of a 
firm in the firm name for the premium on an insurance of such 
member's property, such act not being within the scope of the part- 
ner's authority to bind the firm. 5 

§ 1202c. Same subject: receipt for premium. — If a note is taken 
for the premium due and a renewal receipt is given, it constitutes 
a p ivmeiit sufficient to prevent a forfeiture. 6 There is also a waiver 
of actual payment of the initial premium where insurer accepts 
notes therefor, delivers the policy and gives a receipt stating that 
the premium is settled by the notes. 7 And where insurer's agent 
accepts a note for the premium and the policy is delivered it be- 
comes of full force and effect the same as if cash had been paid. 8 
And it is held that the insurer is liable on a policy acknowledging 
receipt of the premium, where the statute so provides, even though 
a note for the premium is overdue and unpaid and notwithstanding 
the policy stipulates for forfeiture in such a case. 9 

rev'd 8 L.R.A.(N.S.) 883, 148 Fed. • Michigan Mutual Life Ins. Co. v. 

358, 78 C. C. A. 208. Compare Bowes, 42 Mich. 19, 51 N. W. 962. 

Union Life Ins. Co. v. Parker, 66 7 Hipp v. Fidelity Mutual Life Tns. 

Neb. 395, 62 L.R.A. 390, 103 Am. St. Co. 128 Ga. 491, 12 L.R.A.(N.S-) 

Rep. 714, 92 N. W. 604 (considered 319n, 57 S. E. 872. See Williams v. 

under § 1202a herein); Reppond v. Empire Mutual Annuity & Life Tns. 

National Life Ins. Co. 100 Tex. 519, Co - 8 Ga - A PP- 303 > 68 s - E - 1° 82 ; 

11 L R A (N S ) 981 101 S W 786 Jacobs v - Omaha Life Assoc. 146 Mo. 

As to discrimination as to rates of g*, 48 S - W " 462 > 142 M °- 49 > 43 £• 

premium: rebates of premium, see §§ JJ" 37 A 5 ' Mo ,°^J\? om ? InS " £°" ?° 

K. inQ1 , nm - , " 3S Mo. App. 192, 2 Mo. App. Reptr. 

-In 1091-10911 herein iESsteo i. Felter, 132 N. Y. 

1 ^: llli ;" 1 1 '!' h f ?,°- V - ^ e S Supp. 267, 75 Misc. 349. 

TJ 3 5n S *i f i" t T 8?5 ' 5 A ° t0 e ^ °f r^ipt >» Policy for 

S. W. 30, .JO Ins. L. ,). 1.54. premium, see § 86 herein. 

*Hawley v. Michigan Mutual Life 8 Muhia] Lif( , Ins Co v A]]on> U3 

Ins. Co. 92 [owa, 593, 61 N. W. 201, m. App. 89, affd 212 111. 134, 72 N. 

24 Ins. L. J. 216. E. 200. 

5 Lime Rock Fire & Marine Ins. 9 Palmer v. Continental Ins. Co. 

Co. v. Treat, 58 Me. 415. 132 Cal. 68, 64 Pac. 87. 

2318 



PREMIUM NOTES §§ 1202d, 1202e 

But it is also decided that such receipt may be explained by show- 
ing that a note was given for the premium under a policy stipulation 
for forfeiture for nonpayment at maturity of said note. 10 

§ 1202d. Same subject: note as equivalent to or in lieu of cash. — 
The acceptance by the agent of a note for the premium operates as 
payment to the extent of putting the policy on force from the date 
of acceptance of said note, and the agent is, in case of nonpayment 
of the note liable therefor, as the note is to be deemed so much cash 
which should have been received by him for account of insurer, 
especially so where the insurer approves the agent's act by taking 
the note as its own. 11 So where a note is given by assured for a 
premium and accepted by the insurer as payment it is equivalent 
to a cash payment and no forfeiture results from nonpayment of 
said note at maturity, in the absence of an express stipulation there- 
for entered into at the time such note was given and received. 12 A 
note may also constitute a cash payment of the premium as where 
it is made payable to the agent discounted by him and the premium 
accounted for to the insurance company, a receipt given by the 
agent for the premium and the policy delivered thereafter also 
acknowledging the receipt of the premium. 13 So a note given for 
a part of the first annual premium is based upon a sufficient con- 
sideration and stands in lieu of cash for that year, precluding, 
under the forfeiture clause for nonpayment of the note at maturity 
a default until the expiration of said year. 14 

But it is decided that the premium is not paid in cash by a note 
for the renewal premium, with interest added, given to the agent 
who fails to pay the amount thereof to the insurer although he has 
the note discounted and credited to his account at a bank, and in 
such case although insured pays a part of the note at its maturity 
and gives a note for the unpaid amount thereof which is unpaid 
at the time of his death. No renewal receipt was, however, de- 
livered to assured and the policy provided for forfeiture for non- 
payment when due of notes for premiums. 15 

§ 1202e. Same subject: effect as loan where agent advances pre- 
mium and takes note. — The transaction is held to constitute in ef- 

10 Williams v. Empire Mutual An- 13 Jacobs v. Omaha Life Assoc. 146 

nuity & Life Ins. Co. 8 Ga. App. 303, Mo. 523, 48 S. W. 462, 142 Mo. 49, 

68 S. E. 1082. 43 S. W. 375. See § 1202c herein. 

"Lawrence v. Penn Mutual Life 14 Union Central Life Ins. Co. v. 

Ins. Co. 113 La. 87, 36 So. 898, 33 Zihlman, 68 W. Va. 272, 69 S. E. 

Ins. L. J. 788. 855. 

12 Massachusetts Benefit Life As- 15 Hutehings v. National Life Ins. 

soc. v. Robinson, 104 Ga. 256, 42 Co. 26 Canadian L. T. 187. Two 

L.R.A. 261, 30 S. E. 918, 27 Ins. L. judges dissented. 
J. 1003. 

2319 




§§ L202f-1204 JOYCE ON INSURANCE 

feci a loan by the agent to insured where the former pays the in- 
surer the amount of the premium and lakes the insured's notes 
therefor. 16 

§ 1202f. Same subject: stipulation that note not payment but 
extension only. — It may be provided that a note for the premium 
shall not constitute payment, 17 but only an extension of time there- 
for, 18 and this is decided to be the effect, in the absence of waiver, 
where it is stipulated in the policy or note for forfeiture for non- 
pax ment of a premium note. 19 And if the policy provides that the 
note shall not be a payment, but only an extension of the time of 
payment of the premium, and that if not paid in full when due 
the company shall not be liable while the note remains unpaid, 
such payment by note is good until the note is dishonored, and the 
delivery of the policy is a sufficient consideration for the note. 20 

§ 1203. Premium note and policy one contract. — A premium note 
and life policy executed at the same time are one contract. 1 And 
a marginal provision as to the payment of the premium partly in 
notes is part of the contract. 2 

§ 1204. Condition as to forfeiture or nonpayment of note at ma- 
turity: generally. — Although a note may be given and accepted as 
payment of the premium, it is not a payment when accepted con- 
ditionally. Thus, the policy may provide for forfeiture upon non- 
payment of the note at maturity or within a limited time thereafter, 
and in case of a breach such condition controls, where it is the 
contract intent of the parties that it shall so operate. But what 

16 Hudson v. Compere, 94 Tex. c. 49, sec. 27. See also Russell v. Ox- 
1 H', (il S. W. 389, 30 I. L. J. 464. ford County Patrons of Husbandry 

17 Ressler v. Fidelity Mutual Life Mutual Fire Ins. Co. 107 Me. 362, 78 
Ins. Co. 110 Tenn. 411, 75 S. W. 735 ; Atl. 459, under Me. Rev. Stat. c. 49, 
Guetzkow v. Michigan Mutual Life sec. 30, expressly providing that de- 
Ins. Co. 105 Wis. 448, 81 N. W. 652. posit note and policy are one con- 

18 Rurnham v. Michigan Mutual tract. Premium note with policy 
Life Ins. Co. 149 Mich. 84, 14 Det. constitutes contract which is not sev- 
Leg. N. 370, 112 N. W. 704; Guetz- erable, a cancelation of one part 
kow v. Michigan Mutual Life Ins. without consent of both parties pre- 
Co. 105 Wis. 448, 81 N. W. 652. eluded, Campbell v. Adams, 38 Barb. 

19 Occidental Life Ins. Co. v. (N. Y.) 132. 

Jacobson, 15 Ariz. 242, 137 Pac. 869. Whether premium note part of pol- 

20 Marskly v. Turner, 81 Mich. 62, icy: statutory provisions: standard 
45 N. W. 644. policy, see §§ 197, l!)7a herein. 

1 Laughlin v. Fidelity Mutual Life Policv to contain entire contract, 

Ins. Co. 8 Tex. Civ. App. 448, 28 S. see § 190b heroin. 
W. 411. A policy issued by a life, 2 Pierce v. Charter Oak Ins. Co. 

fire, or marine insurance company, 138 Mass. 151. See Iowa Life Tns. 

domestic or foreign, and a deposit Co. v. Lewis, 187 U. S. 335, 23 Sup. 

note given therefor, is one contract, Ct. 126, 47 L. ed. 204, 32 Ins. L. J. 

under Rev. Stats. Me. 1883, p. 447, 1. 

2320 



PREMIUM NOTES § 1204 

constitutes a conditional acceptance is frequently not clear from the 
terms employed or language used, and courts may permit it to be 
shown that the parties did not intend that a note should be con- 
sidered payment unless paid when due, or that it was the intent, thai 
it should so operate to the extent at least of preventing a forfeiture 
for nonpayment of the note at maturity. 3 Frequently the policy 
only provides for a suspension of the risk, as that it shall he void 
while the note remains overdue and unpaid, 4 or that the company 
shall not bo liable for a loss occurring while such note remains due 

3 Shultz v. Hawkcye Ins. Co. 42 tion of payment of premium in ad- 
Iowa, L'.'lD. • vanee). 

See the following decisions: Massachusetts.— Pitt v. Berkshire 

I T in led States. — Knickerbocker Life Ins. Co. 100 Mass. 500. 

Life Ins. Co. v. Pendleton, 112 U. S. Missouri. — Sims v. State Ins. Co. 

696, 28 L. ed. 866, 5 Sup. Ct. 314 47 Mo. 54, 4 Am. Rep. 311. 

(usage and course of business may New York. — Holly v. Metropolitan 

be shown for purpose of raising Life Ins. Co. 105 N. Y. 437, 11 N. E. 

prima facie presumption of fact in 507; Baker v. Union Life Ins. Co. 43 

aid of collateral testimony) ; Thomp- N. Y. 283, 6 Abb. Pr. N. S. (N. Y.) 

son v. Knickerbocker Life Ins. Co. 144, 37 How. Pr. (N. Y.) 126; Roeh- 

104 U. S. 252, 26 L. ed. 765, 2 Wood ner v. Knickerbocker Life Ins. Co. 4 

(U. S. C. C.) 457 (a condition in the Daly (N. Y.) 512. 

policy for forfeiture for nonpayment Ohio. — Roberts v. New England 

of premium or of note therefor and Life Ins. Co. 1 Disn. (Ohio) 355, 12 

the acceptance of a note for the pre- Ohio Dec. 668, 2 Disn. (Ohio) 106. 

mium, although a waiver of payment West Virginia. — Muhlman v. Na- 

of premium brings into operation so tional Ins. Co. 6 W. Va. 508. 

much of the condition as relates to Wisconsin. — Kirk v. Dodge Coun- 

the note, and nonpayment thereof ty Mutual Ins. Co. 39 Wis. 138. 

forfeits the policy without notice. • England. — Neil v. Union Mutual 

See §§ 1206 et seq. herein). Life Ins. Co. 45 U. C. Q. B. 593. 

Illinois.— Devine v. Federal Life See §§ 1202a, 1202b herein. 
Ins. Co. 250 111. 203, 95 N. W. 174, On effect of express stipulation 
40 Ins. L. J. 1513. The nature of suspending or avoiding policy in 
the transaction may be shown where case of nonpayment of note at ma- 
notes are given for the premium ; but turity, see note in 5 B. R. C. 389. 
in this case nonpayment of note at 4 Indiana. — Continental Life Ins. 
maturity was held not necessarily to Co. v. Dorman, 125 Ind. 189, 25 N. 
operate as a forfeiture notwithstand- E. 213. 
ing policy condition therefor. Michigan. — Robinson v. Continen- 

Indi-ana.— Majestic Life Assoc. Co. tal Ins. Co. 76 Mich. 641, 6 L.R.A. 

v. Tuttle, 58 Ind. App. 98, 107 N. E. 96, 43 N. W. 647; Williams v. Re- 

22, 45 Ins. L. J. 737. public Ins. Co. 19 Mich. 469; Wil- 

Io wa.— Shakey v. Hawkeye Ins. liams v. Albany City Ins. Co. 19 

Co. 44 Iowa, 540. Mich. 451, 2 Am. Rep'. 95. 

Kansas. — Continental Ins. Co. v. Missouri. — Sims v. -State Ins. Co. 

Daly, 33 Kan. 601, 7 Pac. 158; Man- 47 Mo. 54, 4 Am. Rep. 311. 

hattan Life Ins. Co. v. Myers, 22 Ky. New York. — Wall v. Home Ins. 

L. Rep. 875, 59 S. W. 30, 30 Ins. L. Co. 36 N. Y. 157, 8 Bosw. (N. Y.) 

J. 134 (notes provided for forfeiture 597. 

and policy was issued in considera- Wisconsin. — Kirk v. Dodge Coun- 
Joyce Ins. Vol. III. — 146. 2321 



§ 12ii4a JOYCE ON INSURANCE 

and unpaid. 5 Sometimes the note itself contains such provision for 
forfeiture in case of its nonpayment when due, although such con- 
dition does not have the same force as if contained in the policy. 6 
The policy sometimes also provides that in case a note given for a 
premium shall not be paid at maturity, the policy shall be void 
u ithout notice to any person or persons interested therein ; 7 or both 
policy and note frequently stipulate for forfeiture in case of such 
nonpayment of the note. 8 In sonic cases there is no provision in 
either note or policy for forfeiture in case of nonpayment of the 
note, either at maturity of within a limited time thereafter, 9 and in 
one case a printed memorandum on the margin of the policy pro- 
vided that the same should be forfeited on nonpayment of a prom- 
issory note given for the premium. 10 So in another case the con- 
dition for forfeiture for nonpayment of a note at maturity may 
also be contained in a memorandum on the back of a premium 
receipt and it is as effective in such case as if contained in the policy 
itself as it is immaterial whether it appears there or in the policy. 11 
§ 1204a. When such condition not applicable to note. — A pro- 
vision in a life policy making it void in case of failure to pay a 
premium note, is held not to apply to a note taken by the agent 
for his share of the first premium, the share belonging to the com- 
pany being paid by the applicant in cash, although the note is 
afterwards turned over to the company for collection. 12 And there 
is no forfeiture for nonpayment of an installment on a note for the 

ty Mutual Ins. Co. 39 Wis. 138, 20 Chi. Leg. News, 282; Pitt v. Berk- 
Am. Rep. 39. shire Life Ins. Co. 100 Mass. 500. 

5 Robinson v. Continental Ins. Co. 9 New England Life Ins. Co. v. 
76 Mich. 641, 6 L.R.A. 16, 43 N. W. Hasbrouck, 32 Ind. 447; Trade Ins. 
647; Continental Life Ins. Co. v. Co. v. Barraeliff, 45 N. J. L. 543, 46 
Miller, 4 Ind. App. 553, 30 N. E. 718. Am. Rep. 792; McAllister v. New 

6 Dwell ing-House Ins. Co. v. Har- England Life Ins. Co. 101 Mass. 558, 
die, 37 Kan. 674, 16 Pac. 92; Mutual 3 Am. Rep. 404. 

Life Ins. Co. v. French, 30 Ohio St. 10 Baker v. Union Life Ins. Co. 6 

240, 27 Am. Rep. 443; Montgomery Rob. (N. Y.) 393. 

v. Phoenix Mutual Life Ins. Co. 14 H Iowa Life Ins. Co. v. Lewis, 187 

Bush (77 Ky.) 51; Hastings v. U. S. 335, 23 Sup. Ct. 126, 47 L. ed. 

Brooklyn Life Ins. Co. 44 N. Y. St. 204, 32 Ins. L. J. 1. 

Rep. 37, 17 N. Y. Supp. 333, rev'd "Reppond v. National Life Lis. 

138 N. Y. 473, 34 N. E. 289, 53 S. R. Co. 100 Tex. 519, 11 L.R.A. (N.S.) 

63. 981, 101 S. W. 786. Sec Union Life 

7 Thompson v. Knickerbocker Life Ins. Co. v. Parker, 66 Neb. 395, 62 
Ins. Co. 2 Wood (U. S. C. C.) 547, L.R.A. 390, 103 Am. St. Rep. 714, 92 
Fed. Cas. No. 13,964; Pendleton v. N. W. 604; Mutual Reserve Fund 
Knickerbocker Life Ins. Co. 5 Fed. Life Assoc, v. Simmons, 107 Fed. 
238, 112 U. S. 696, 28 L. ed. 866, 5 418, 46 C. C. A. 393, and other cases 
Sup. Ct. 314. considered under §§ 1202a, 1202b 

8 Cardwell v. Republic Ins. Co. 7 herein. 

2322 



PREMIUM NOTES § 1205 

first year's premium where such note has been discounted by the 
agent and he has paid insurer his share of that premium. 13 

§ 1205. Validity of such provisions. — It is undoubted that such 
conditions may be validly entered into between the parties, and be- 
come a part of the contract of insurance, binding upon the parties 
and enforceable ; 14 they are neither against public policy, unwise, 
illegal, nor unreasonable, nor is it against public policy for the 
insurer to take advantage of such clauses. 15 So an agreement that 
the premium note shall bind assured even though insurer is re- 
lieved from liability for default in payment of any sum due is not 
illegal or contrary to public policy. 16 So a condition in a premium 
note is valid and binding that the policy shall be null and void so 
long as the note remains overdue and unpaid, and that the premium 
shall be considered earned in case of nonpayment when due. 17 So 
a condition is valid in a mutual company's policy that if a note 
taken for a cash premium is not paid within sixty days after due, 
"all obligations of the company to the insured until such note is 
paid are suspended." 18 And a stipulation that insurer shall not 
be liable for any loss or damage incurred while any promissory 
note given for the premium remains past due and unpaid is not in- 
valid. 19 And a stipulation in the note that judgment may be taken 

13 United States Annuity & Life Colorado. — New Zealand Ins. Co. 
Ins. Co. v. Peak, 122 Ark. 58, 182 S. v. Manz, 13 Colo. App. 493, 59 Pac. 
W. 565. 213, 29 Ins. L. J. 47. 

14 Continental Life Ins. Co. v. Georgia.— Neal v. Gray, 124 Ga. 
Daly, 33 Kan. 601, 7 Pac. 158; 510, 52 S. E. 622, 35 Ins. L. J. 121, 
Shakey v. Hawkeye Ins. Co. 44 Iowa, 123. 

540; Blackerby v. Continental Ins. Missouri. — German American Ins. 

Co. 83 Ky. 574, 7 Ky. L. Rep. 653, Co. v. Divilbiss, 67 Mo. App. 500. 

15 Ins. L. J. 756, per the court; Phe- Nebraska.— Home Fire Ins. Co. v. 

nix Ins. Co. v. Bachelder, 32 Neb. Garbacz, 48 Neb. 827, 67 N. W. 864. 

490, 29 Am. St. Rep. 443, 49 N. W. Oklahoma— Shawnee Mutual Fire 

217, per Norval, J. "The parties Ins. Co. v. Cannedy, 36 Okla. 733, 44 

may insert what conditions they L.R.A. (N.S.) 376, 129 Pac. 865. 

please in a policy, provided there be 15 Roehner v. Knickerbocker Life 

nothing in them contrary to criminal Ins. Co. 63 N. Y. 160, 164, 167, per 

law or public policy. This is con- Folger, J. 

stantly done in marine policies, and 16 St. Paul Fire & Marine Ins. Co. 

the principle extends to all other pol- v. Coleman, 6 Dak. 458, 6 L.R.A. 87, 

icies." Beadle v. Chenango Mutual 43 N. W. 693. 

Ins. Co. 3 Hill (N. Y.) 161, cited 17 New Zealand Ins. Co. v. Manz, 

with approval in Robert v. New Eng- 13 Colo. App. 493, 59 Pac. 213, 29 

land Mutual Life Ins. Co. 1 Disn. Ins. L. J. 47. 

(Ohio) 355, 12 Ohio Dec. 668, s. e. 2 18 Joliffe v. Madison Mutual Ins. 

Disn. (Ohio) 106. Co. 39 Wis. Ill, 20 Am. Rep. 35. 

See also the following cases: 19 Robinson v. Continental Ins. Co. 

California.— Palmer v. Continental 76 Mich. 641, 6 L.R.A. 95, 43 N. W. 

Ins. Co. — Cal. — , 61 Pac. 784. 647. 

2323 



§ 1206 JOYCE ON INSURANCE 

without legal notice to assured by whom the note was given is 
enforceable. 20 

A.gain, a provision as to forfeiture for nonpayment of interest on 
premium notes when due is Valid. 1 

§ 1206. Payment by negotiable paper: demand or notice, etc.: 
forfeiture. — In a number of cases a question has been raised whether 
when a note or other negotiable paper has been given for the pre- 
mium a presentment and demand or notice is necessary to enable 
the company to declare a forfeiture. In a Wisconsin case it is held 
that if the maker of a note given for the premiums promises abso- 
lutely to pay to the order of the payee a certain sum at a fixed time, 
its negotiable character is not affected by the fact that it is also 
agreed in such note that in case of its nonpayment at maturity the 
entire premium shall be considered as earned, and the policy void 
during such time as the note remains overdue and unpaid. 2 The 
Federal court has decided that the insurance company is bound to 
present a draft at maturity where it has taken the same in payment 
of a premium, and that it must not only present the bill for accept- 
ance or payment, but must give the necessary legal notice on refusal 
to accept or pay the same as would be required of any other holder 
of commercial paper; that such bill is negotiable under the law 
merchant, and entitled to protest and notice, which must be given 
or excused to entitle the company to claim a forfeiture, even though 
the policy and bill itself both provide that the policy shall become 
void if the bill is not paid at maturity, and the policy provides that 
notice need not be given to any party or parties interested therein. 3 
And the supreme court of the United States has declared that pre- 
sentment must be made in such case, even though the drawer of the 
bill has refused acceptance, and has no funds for payment, but that 

20 Hutchinson v. Palmer, 147 Ala. Ins. Co. 5 Fed. 238. The charge of 

517, 40 So. 339. the court in this case was affirmed in 

x Nettleton v. St. Louis Life Ins. s. c. 7 Fed. 169, 173 (case rev'd 

Co. 7 Biss. (U. S. C. C.) 293, Fed. in Knickerbocker Life Ins. Co. v. 

Cas. No. 10,128; Attorney General Pendleton, 112 U. S. 616, 28 L. ed. 

v. North American Life Ins. Co. 82 866, 5 Sup. Ct. 314). The draft in 

N. Y. 172. See also Knickerbocker this ease was as follows: "325 Au- 

Life Ins. Co. v. Dietz, 52 Md. 16. burn, Ark., July 14, 1871. Three 

But see Northwestern Mutual Life months after date, without grace, to 

Tns. Co. v. Fort, 82 Ky. 269, 6 Ky. the order of the Knickerbocker Life 

L. Rep. 271. Insurance Company, three hundred 

8 Kirk v. Dodge County Mutual and twenty-five dollars, value re- 
ins. Co. 39 Wis. 138, 20 Am. Rep. ceived, for premium on policy No. 
39. See Joliffe v. Madison Mutual 2346, which policy shall become void 
Tns. Co. 39 Wis. Ill, 119, 20 Am. if this draft is not paid at maturity. 
Rep. 35. S. H. Pendleton, to Messrs. Green- 

3 Pendleton v. Knickerbocker Life wood & Co., New Orleans, La." 

2324 



PREMIUM NOTES 



§ 1206a 



no protest is necessary for nonacceptance or nonpayment. 4 In Iowa 
the assured does not waive the failure to give the required notice by 
applying for extension of time on a note, 5 and the notice is com- 
plete and the time begins to run when the letter containing the 
notice is mailed according to law. 6 Again, although a policy stip- 
ulates that failure to pay any premium or note, or interest thereon 
when due, will forfeit without notice the policy and all payments 
thereon "excepting as herein provided," and it is not shown what 
the exceptions are, still a forfeiture does not necessarily result where 
insured is in default at the time of his death in the payment of a 
note given for the premium if the note is taken under such circum- 
stance as to constitute an absolute payment of said premium. 7 

§ 1206a. Same subject: that policy not ispo facto void for non- 
payment of note. — A marine policy stipulating that it shall be void 
for failure to pay the premium note within a certain time after 
maturity and demand, is not rendered void ipso facto, but is void- 
able at the company's option, and the insurer may elect to continue 
the policy in force notwithstanding the default. 8 In Missouri it is 
held that mere nonpayment of the note does not ipso facto forfeit 
the contract even though it provides for forfeiture on such nonpay- 



4 Knickerbocker Life Ins. Co. v. 5 Boyd v. Cedar Rapids Ins. Co. 
Pendleton, 112 U. S. 696, 28 L. ed. 70 Iowa, 325, 30 N. W. 585. In Iowa 
866, 5 Sup. Ct. 314. See s. c. 115 U. the statute provides that when a 
S. 339, 29 L. ed. 432, 6 Sup. Ct. 74. promissory note is given and accept- 
The court gave plaintiff (insured) ed by a fire insurance company for 
verdict; upon appeal the lower court the premium, written notice must be 
decision was reversed; on rehearing, given to the insured of its maturity, 
same opinion. In the case reported and that notice must be given of the 
in 7 Fed. 173, the cases are distin- intention to suspend the policy, and 
guished of Thompson v. Knickerbock- of the amount required to pay the 
er Life Ins. Co. 2 Wood (U. S. C. C.) customary short rates: McKenna v. 
547, Fed. Cas. No. 13,964; Pitt v. State Ins. Co. 73 Iowa, 453, 35 N. W. 
Berkshire, 100 Mass. 500 ; Roehner v. 519 ; Laws Iowa, 1880, c. 210, sec. 
Knickerbocker Life Ins. Co. 63 N. Y. 2 ; McLain's Annot. Code Iowa, p. 
160; Howell v. Knickerbocker Life 299; Boyd v. Cedar Rapids Ins. Co. 
Ins. Co. 44 N. Y. 276, 4 Am. Rep. 70 Iowa, 325, 30 N. W. 585. See §S 
675 ; Baker v. Union Mutual Life Ins. 1 320 et seq. herein, as to notice of 
Co. 43 N. Y. 283; Roberts v. New forfeiture and statutes requiring no- 
England Mutual Life Ins. Co. 2 Disn. tice that premium is due and unpaid. 
(Ohio) 106, s. c. 2 Big. 141, s. c. 1 6 Ross v. Hawkeye Ins. Co. 83 
Big. 634. See Seamans v. North- Iowa, 586, 50 N. W. 47. 
western Mutual Life Ins. Co. 3 Fed. 7 Devine v. Federal Life Ins. Co. 
325; Mutual Life Ins. Co. of New 250 111. 203, 95 N. E. 174, 40 Ins. L. 
York v. Young, 23 Wall. (90 U. S.) J. 1513. 

85, 23 L. ed. 152; Young v. Mutual 8 Louisville Underwriters v. Pence, 

Life Ins. Co. of N. Y. 2 Saw. (U. S. 93 Ky. 96, 40 Am. St. Rep. 176, 19 

C. C.) 325, Fed. Cas. No. 18,168. S. W. 10, 14 Ky. L. Rep. 21. 

2325 



§§ 1206b, 1206c JOYCE OX INSURANCE 

ment, but the insurer must declare his intent to forfeit. 9 Under a 
Georgia decision the policy is nol forfeited by nonpayment of the 
note at its maturity notwithstanding a stipulation in said note that 
such nonpayment should ipso facto, without notice, render the pol- 
icy void, and even though it was also provided that payment of the 
premium in advance was the consideration on which the contract 
was made. 10 It is also decided that failure to pay a premium note 
at its maturity does not make the policy absolutely void where the 
policy contains no clause for forfeiture for nonpayment of notes 
given for premiums although it provides for forfeiture for non- 
payment of premiums when due, the clause being introduced only 
for insurer's benefit makes the contract voidable at its election. 11 

§ 1206b. Same subject: statutory notice. — No forfeiture can be 
claimed where the statute prohibits a forfeiture unless notice is 
given of the maturity of the note within a certain number of days 
prior thereof and even then if the required notice is given a for- 
feiture cannot be claimed for nonpayment where a copy of the note 
is not attached to the policy as required by statute in cases of in- 
struments affecting the validity of the policy. 12 And a policy in a 
mutual fire assurance association is not suspended for failure to pay 
a note at maturity where the statutory requirement of notice by a 
fire association that a premium is due when a note is given therefor 
is not complied with. 13 

§ 1206c. Same subject: place of payment. — The words "place of 
payment" when applied to notes in general means a place where 
the holder can present the note and the maker can deposit or pro- 
vide funds to meet it, and where a legal offer to pay can be made. 14 
And where a note for the premium is payable at a particular place 
and the policy stipulates that the contract is terminated by failure 
to pay any premium note or interest when due, such forfeiture pro- 
vision is made operative by having the note at the designated place 
at the proper time for payment, so as to enable assured to pay the 
same if he desires, and his failure to do so terminates the policy 
in accordance with its provisions. 15 Again, where a note is made 
payable in a certain city, presentation at the address which the 

9 Raymond v. Metropolitan Life As premiums and statutory notice, 
Ins. Co. 8(i Mo. App. 391. see §§ 1320 et seq. herein. 

10 Fidelity Mutual Life Ins. Co. v. "Bradford v. Mutual Fire Ins. Co. 
Goza, 13 Ga. App. 20, 78 S. E. 735. 112 Iowa, 495, 84 N. W. 693, acts 

11 Mutual Life Ins. Co. v. French, 18th Gen. Assemb. c. 210, sees. 1, 2. 
30 Ohio St. 240, aff'ff 2 Cin. Sup. Ct. 14 Montross v. Doak, 7 Rob. (La.) 
321. 13 Ohio Dec. 927. 170, 41 Am. Dec. 278. As to place 

12 Robey v. State Ins. Co. 146 of payment of premium, see § 1168 
Iowa, 23, 124 N. W. 775, 39 Ins. L. herein. 

J. 491; Iowa Code sees. 1727, 1741. 16 Behling v. Northwestern Nation- 

2326 



PREMIUM NOTES § 1206c 

maker appended to his signature, is sufficient, in the absence of 
any change of address and notice thereof to the payee, although the 
maker was on that day absent from the city. 16 If the place of 
payment of a note for the premium is at the company's office, and 
the policy stipulates for nonliability while the note is due and un- 
paid, the insurer, even though there may be a question of waiver 
by the agent, may enforce such stipulation by subsequently giving 
notice to insured to pay at said office, especially so where the act 
claimed as a waiver is a mere voluntary agreement without con- 
sideration. 17 And where the brother of one who had given a note 
for a life insurance premium, but who was absent from home when 
it fell due, voluntarily, and not as insured's agent went to the 
bank and to the office of the local agent of the insurer, with the 
intention of paying the note, but found both places closed, a for- 
feiture of the policy for nonpayment is not thereby prevented. 18 
If no place is designated in the note as that of payment, it is held 
that the maker binds himself thereby to seek the payee and offer 
payment, and that no demand is necessary, and that mere non- 
payment is default, although the court declared that the maker 
might have made the note payable at his residence. 19 In a Ken- 
tucky case the note was given to a foreign company. Both the 
policy and note were conditional that the insurance should be void 
in case of nonpayment of the note when due, although the policy 
provided certain terms on which it might be revived; no place of 
payment was specified in the note, and neither the policy nor ap- 
plication fixed a place for payment of the premium, nor named 
the person to whom it must be paid. The company had an office 
in New York City and a branch office in Chicago, and it was held 
that no forfeiture resulted from the failure of the plaintiff to pay 
the note when due at New York or Chicago, and that he was 
not obligated to seek the defendant out of. the state. 20 But the 
fact that there is written upon a note for the premium the words : 

al Life Ins. Co. 117 AVis. 24, 93 Knickerbocker Life Ins. Co. 104 U. 

N. W. 800, 32 Ins. L. J. 433. S. 252, 26 L. ed. 765. 

16 Hipp v. Fidelity Mutual Life 20 Blackerby v. Continental Ins. 
Ins. Co. 128 Ga. 491, 12 L.R,A.(N.S.) Co. 83 Ky. 574, 7 Ky. L. Rep. 653, 
319. 57 S. E. 892. 15 Ins. L. J. 756. Where a negotiable 

17 Home Ins. Co. v. Wood, 139 Ky. note was payable at a particular 
657, 24 Ky. L. Rep. 1638, 72 S. W. city, but at no specified place therein, 
15, 32 Ins. L. J. 420. and it provided for an additional 

18 Hipp v. Fidelity Mutual Life rate of interest in case of nonpay- 
Ins. Co. 128 Ga. 491, 12 L.R.A. ment at maturity, and the note was 
(N.S.) 319, 57 S. E. 892. not paid because of the inability of 

19 Mclntyre v. Michigan State Ins. the maker, by the exercise of reason- 
Co. 52 Mich, 188, 17 N. W. 781, 13 able diligence, to ascertain where the 
Ins. L. J. 216, citing Thompson v. note was kept, and he was ready to 

2327 



§ 1207 JOYCE ON INSURANCE 

"Send to the office for collection," is held not to necessitate com- 
pliance therewith by insurer but the policy is voided by nonpay- 
ment of the note when due <o as to preclude recovery upon assured's 
death after said due date. 1 . 

§ 1207. Payment by negotiable paper: cases holding no demand 
or notice necessary: forfeiture —In Roehmer v. Knickerbocker 
Life Insurance Company, 2 the policy was conditioned that the 
failure to pay any premium on the specified day when due, "failure 
to pay at maturity any note (other than the annual premium note) 
given for the premium, interest, or other obligation on this policy," 
should render the policy void, "without notice to any party or par- 
ties interested therein." The promissory note in question was 
given for a portion of the annual cash premium payable to the or- 
der of the company, and was conditioned that the policy should be 
void "in case this note is not paid at maturity according to contract 
in said policy." The note was not paid when due, but the fol- 
lowing day tiie amount of the note was tendered and refused, and 
about four months thereafter the insured died. It was claimed 
that there could be no forfeiture of the policy, unless the intention 
so to do was. after failure to pay the premium, made known by 
the company to the holder of the policy; that is, the policy became 
only voidable at the option of the defendant, and not co instanti, 
and that defendant was bound to demand payment of the note 
before forfeiture could be enforced. The question was thereby 
directly put at issue, but the court held that the policy lapsed per se 
upon failure to pay the note at maturity, and that the defendant 
was not required to make demand for payment of the note, and on 
refusal to pay to declare the policy void. That the note and 
policy should be construed together, and that it was plainly mani- 
fest that it was the intention of the parties that the omission to pay 
on the day stipulated should cause the policy to become void. That 
it was undoubtedly the intent that if the premium were not paid 
on the day specified in the policy, that the policy became void by 
force of the agreement made by the parties themselves, the con- 
dition being a condition precedent to the continuing life of the 
contract, for the insured was bound to a strict performance, unless 
the same was waived or the contract modified. It was also said 
that although the note was payable to order and negotiable, its very 
terms gave notice of the consideration and purpose of it, and of the 
conditions attached, and that it was dependent upon the terms of 

pay, it was held that he was relieved Life Ins. Co. 149 Mich. 84, 14 Det. 
from the penalty. Ansel v. Olson, Leg. N. 370, 112 N. W. 704. 
39 Kan. 767, 18 Pac. 939. 2 63 N. Y. 160, 4 Daly (N. Y.) 512. 

1 Burnham v. Michigan Mutual 

2328 



PREMIUM NOTES 



§ 1207 



the policy, both being one continuing transaction. 2 * So in another 
New York case it is held that if the policy provide for a forfeiture 
on nonpayment of the premium, and the note is also conditioned 
that all claims under the policy shall become null and void if the 
note is not paid at maturity, and the note is renewed and the 
second note is not paid when due, the company may insist upon a 
forfeiture. 2 * Under a Federal supreme court decision no affirma- 
tive action is necessary on the part of the insurer of I lie note is not 
paid at maturity where for such nonpayment the contract stipu- 
lates that the policy shall be forfeited. In this case the condition 
for forfeiture was not in the policy or note but upon the back of a 
premium receipt which memorandum was held a part of the con- 
tract the court refused to review the state cases stating that: "We 
prefer to follow our own decisions." 3 Again, in a West Virginia 



2a The court, per Folger, J., fur- 
ther says that: "But in this ease it 
is plain that the policy provides for 
a lapse of it upon mere nonpayment 
of the annual premium, and for a 
like lapse upon the mere failure to 
pay at the maturity any note given 
like this for an accrued premium; 
and it is plain that the parties in- 
tended that these provisions of the 
policy should apply to and control 
that part of the transaction between 
them represented by the giving and 
taking of the note, and the extension 
thereby of the time for the pay- 
ment of the premium. It was just 
as much the case with the contract 
embodied in the note as the contract 
embodied in the policy, that one of 
its conditions was that a mere omis- 
sion to pay at maturity did not cause 
the policy to be void. The taking of 
such note as a means for providing 
for the premium was contemplated 
by the policy, and hence by the par- 
ties at the inception of their relation 
of insurer and insured, and there- 
fore the payment of it at maturity 
was a consideration precedent to the 
continuance of the policy, for so are 
the terms of the policy in reference 
to it, and so are the terms of the 
note itself." It was further said 
that the defendants, on the day after 
maturity of the note, did "signify 
their election to avoid the policy be- 
cause of nonpayment." What seems 

23 



to us the principal point of the case, 
and one upon which it ought to turn, 
was the fact that no place of pay- 
ment was named, and the note was 
in the possession of the defendants 
at their place of business, and was 
consequently payable there. The 
court, however, declares in this con- 
nection that it must "not be under- 
stood to admit that in such a case 
as this a demand would be necessary 
if a place of payment other than the 
office of the defendants had been 
named in the note." This case is 
distinguished in Pendleton v. Knick- 
erbocker Life Ins. Co. 7 Fed. 169, 
173, case rev'd Knickerbocker Life 
Ins. Co. v. Pendleton, 112 U. S. 696, 
28 L. ed. 866, 5 Sup. Ct. 114. 

2b Holly v. Metropolitan Life Ins. 
Co. 105 N. Y. 437, 11 N. E. 507. See 
How v. Union Mutual Life Ins. Co. 
80 N. Y. 32; Attorney General v. 
North America Ins. Co. 80 N. Y. 
152. See Baker v. Union Life Ins. 
Co. 43 N. Y. (4 Hand) 283, rev'g 
6 Bob. (N. Y.) 393, 37 How. Pr. 
(N. Y.) 126, 6 Abb. Pr. N. S. fN. 
Y.) 144. This case is distinguished 
in Pendleton v. Knickerbocker Life 
Ins. Co. 7 Fed. 169, 173, which is 
rev'd in Knickerbocker Life Ins. Co. 
v. Pendleton, 112 U. S. 696, 28' L. ed. 
866, 5 Sup. Ct. 314. See Wall v. 
Home Ins. Co. 36 N. Y. 157. 

3 Iowa Life Ins. Co. v. Lewis, 187 
29 



§ 1207 JOYCE ON INSURANCE 

case the policy provided that "in case any note or obligation given 
tor the premium on this risk shall not be paid at maturity, such 
failure of payment shall terminate this insurance, and said note 
or obligation shall be considered the premium for the risk thus 
terminated," and it was held that default in payment of the note 
at maturity avoided the policy. 4 In a Massachusetts case 5 the note 
was given for a part of the premium. It was unpaid when the as- 
sured died. The condition in the policy was that it should be void 
for nonpayment of the premium when due, or if there should be a 
failure "to pay when due any notes or other obligations given for 
the premium/' and the note was similarly conditioned, the in- 
surers were held discharged. 6 In Kentucky notice is not necessary 
where both policy and note stipulate for forfeiture for nonpay- 
ment, 7 nor is notice required where the policy provides that it 
shall become void if any note for the premium is not paid when 
due. 8 In a Georgia case, however, which has been cited upon this 
point, the note was given to the agent payable to his order, and was 
accepted by him under an agreement that the note should be re- 
turned if the application was accepted. A policy was issued and 
sent to the agent, who never delivered it. The second premium 
became due and was not paid, and the court declared it unnecessary 
to determine the question as to the rights of the parties under the 
note, but held that no recovery could be had because of nonpayment 
of the second premium. 9 And under another decision in that 
state the policy is forfeited without notice in case of nonpayment 
on or before its maturity of a note where the policy stipulates that 
the contract shall be null and void and all moneys paid therein 
shall be forfeited if all stipulated payments or notes are not paid 
on or before due. 10 In New Jersey nonpayment of a note taken to 

U. S. 335, 23 Sup. Ct. 126, 47 L. Co. 7 Fed. 169, 173, which is rev'd 

ed. 204, 32 Ins. L. J. 1. See also in Knickerbocker Life Ins. Co. v. 

Thompson v. Knickerbocker Life Ins. Pendleton, 112 U. S. 696, 28 L. ed. 

Co. 104 U. S. 252, 26 L. ed. 765. 866, 5 Sup. Ct. 314. 

4 Muhlman v. National Ins. Co. 6 7 Manhattan Life Ins. Co. v. Sav- 
W. Va. 508. See Mason v. Citizens' age's Admr. 23 Ky. L. Rep. 483, 63 
Fire, Marine & Life Ins. Co. 10 W. S. W. 278. Compare Orient Ins. Co. 
Va. 572. See Southern Life Ins. Co. v. Clark, 22 Ky. L. Rep. 1066, 59 
v. Taylor, 33 Gratt. (Va.) 743, 10 S. W. 863. 

Ins. L. J. 208; Continental Ins. Co. 8 Park v. Hilton, 21 Ky. L. Rep. 
v. Daly, 33 Kan. 601, 7 Pac. 158. 1319, 54 S. W. 949, 30 Ins. L. J. 

5 Pitt v. Berkshire Life Ins. Co. 70. 

100 Mass. 500. See Shaw v. Bene- 9 Security Life Ins. & Annuity Co. 

diet Life Ins. Co. 103 Mass. 254 ; v. Gober, 50 Ga. 404. 

Bigelow v. State Mutual Life Ins. 10 National Life Ins. Co. of II fd. 

Co. 123 Mass. 113. v. Brown, 103 Ga. 382, 29 S. K. 927. 

6 This case is distinguished in Pen- See Sullivan v. Connecticut Cndem- 
dleton v. Knickerbocker Life Ins. nity Co. 101 Ga. 809, 29 S. E. 43. 

2330 



PREMIUM NOTES 



1207 



extend the time of payment of the cash premium must be paid at 
maturity if so expressly stipulated, or the policy becomes void at 
once. 11 In a case in Iowa the policy provided that nonpayment of 
the note within sixty days after maturity and suit commenced for 
its collection should operate as a cancellation, and that collection 
of the note should not be a waiver, and it was held that in case 
of default in payment and collection of the note the company was 
not liable for a loss. 12 So under a decision in Connecticut it ap- 
peared that a note was given at three months for a half year's 
premium then due, and a receipt was given by the agent "for re- 
newal of the policy," and it was held that the policy was not re- 
newed beyond the time of the maturity of the note, and became 
void if the note was not then paid. 13 And in another case both the 
policy and notes given for the annual premium provided for such 
forfeiture, and also w T ere conditioned that notice need not be given 
to any party or parties interested therein. It was held that pay- 
ment at maturity was a condition precedent to the continuance 
of the risk; that the company was not compelled to elect whether 
or not the policy was forfeited in case of nonpayment of the notes 
at maturity, or to give notice, but that the policy became void by 
force of the default. 14 If the policy and premium note both stipu- 

Both cited and distinguished in Mc- Illinois. — Chicago Life Ins. Co. v. 

Gehee v. Rinker, 9 Ga. App. 147, 70 Anderson, 80 111. 410. 

S. E. 962, 40 Ins. L. J. 1202. Indiana.— New England Mutual 

11 Hudson v. Knickerbocker Life Life Ins. Co. v. Hasbrouck, 32 Ind. 
Ins. Co. 28 N. J. Eq. 167. 447; Majestic Life Assur. Co. v. Tut- 

12 Shultz v. Hawkeye Ins. Co. 42 tie, 58 Ind. App. 98, 107 N. E. 22, 
Iowa, 239; Nedrow v. Farmers' Ins. 45 Ins. L. J. 137 (case of waiver, 
Co. 43 Iowa, 24; Williams v. Wash- however). 

ington Life Ins. Co. 31 Iowa, 541. Kentucky. — Manhattan Life Ins. 

13 Wilmot v. Charter Oak Life Ins. Co. v. Pentacost, 105 Ky. 642, 20 Ky. 
Co. 46 Conn. 483. See Lewis v. L. Rep. 1442, 49 S. W. 425. 
Phoenix Ins. Co. 44 Conn. 72; Bou- Missouri. — Ashbrook v. Phoenix 
ton v. American Mutual Life Ins. Mutual Life Ins. Co. 94 Mo. 72; 
Co. 25 Conn. 542. American Ins. Co. v. Klink, 65 Mo. 

14 Thompson v. Knickerbocker Life 78. 

Ins. Co. 2 Wood (U. S. C. C.) 547, Nebraska.— Antes v. State Ins. Co. 

Fed. Cas. No. 13,964, 104 U. S. 61 Neb. 55, 84 N. W. 412. 

252, 26 L. ed. 765. This case is New Jersey. — Catoir v. American 

distinguished in Pendleton v. Knick- Life Ins. & Trust Co. 33 N. J. L. 487. 

erbocker Life Ins. Co. 7 Fed. 169, Texas. — Union Central Life Ins. 

173 (case rev'd Knickerbocker Life Co. v. Hughes, — Tex. Civ. App. — , 

Ins. Co. v. Pendleton, 112 U. S. 696, 70 S. W. 1010. 

28 L. ed. 866, 5 Sup. Ct. 314) ; and Vermont.— Patch v. Phcenix Ins. 

New York Life Ins. Co. v. Eggleston, Co. 44 Vt. 481. 

96 U. S. 572, 24 L. ed. 841. England,— London & Lancashire 

Examine further, as to forfeiture Life Assur. Co. v. Fleming, A^p. 

without notice, the following cases: Cas. [1897] L. Rep. 499; Hutchings 

2331 



§ L208 JOYCE OX INSURANCE 

late for forfeiture, the first for failure to pay moneys required to 
be paid, and the latter for failure to pay on maturity thereof, non- 
payment, on time operates as an absolute forfeiture. 15 So whore 
the policy and a note given for the premium both provide for for- 
feiture in case of nonpayment of the note at maturity, nonpayment 
avoids the policy. 16 In Washington, upon nonpayment of a note 
at its maturity the policy becomes null and void where it provide^ 
for forfeiture for nonpayment of any premium installment when 
due and the premium receipt stipulates that the policy shall be- 
come ipso facto null and void if a note given in payment of any 
part of the premium is not paid at its maturity. 17 And where the 
policy becomes void by such nonpayment, accepting the money 
after the loss does not make the insurers liable. 18 

§ 1208. Same subject: the rule. — Incases of (his character the 
condition is undoubtedly inserted for the benefit of the insurer, 
and it might be claimed in behalf of the policyholder that such 
condition should, in conformity with the general rule, be construed 
most strongly against the insurer, and that courts do not favor for- 
feiture, and that the condition is a condition subsequent and not a 
condition precedent, and therefore a demand and declaration of for- 
feiture is necessary. But the parties are presumed to have de- 
liberately determined the conditions under which they will be 
bound; and another general rule is, that contracts must be per- 
formed as they are made, when the conditions are valid and not 
against public policy. It is competent for the parties to stipulate 
in the contract that upon nonpayment of a promissory note or 
paper of like character at maturity the same shall be void; such a 
condition is valid and enforceable, and not against public policy nor 
unreasonable, and will control. Upon breach thereof the liability 
of the company will cease, according to the terms agreed upon. A 
like condition in the note will, coupled with the condition in the 
policy, evidence the intent of the parties at the time the note was 
given to be in conformity with the intent evidenced by the policy, 
and make the stipulations of the parties more definite, fixed, and 
certain. 19 Again, it is not necessary, as against the maker of a 

v. National Life Ins. Co. 26 Cana- 18 Williams v. Albany City Ins. Co. 

diaD L. T. 187. 19 Mich. 451, 2 Am. Rep. 95; Wil- 

15 Laughlin v. Fidelity Mutual Life liams v. Republic Ins. Co. 19 Mich. 

Ins. Co. 8 Tex. Civ. App. 448, 28 469. See American Ins. Co. v. Con- 

S. W. 411. gle, 39 Mich. 536; American Ins. Co. 

1G Prank v. Sun Life Ins. Co. v. Stoy, II Mich. 385, 1 N. W. 877; 

(Can. S. C. 1894) 14 Can. L. T. 359. Yost v. American Ins. Co. 39 Mich. 

17 lies v. Mutual Reserve Life Ins. 531. 

Co. 50 Wash. 49, 18 L.R.A.(N.S.) 19 "The rule of law that all the 

902, 96 Pac. 522. writings executed by the parties at 

2332 



PREMIUM NOTES 



§ 1208 



promissory note or acceptor of the bill of exchange, to either allege 
or prove a demand or notice, and a sufficient demand is made in 
case of payment at a particular place if the note is then and there 
ready to be paid. But the payee of a bill of exchange or check must 
properly make presentment and demand for acceptance upon the 
drawee within a reasonable time, unless the same be payable at a 
specified time, although delay in presenting a check is immaterial 
unless it injures the drawer. 20 

Unless, therefore, there is something in the particular circum- 
stance of a case to warrant a departure therefrom, or unless a stat- 
ute provide otherwise, 1 the rule evidenced by the undoubted weight 
of authority is, that the contract ceases in such case upon defaull 
according to and in the manner provided by the stipulations, and 
that no demand or notice or declaration of forfeiture is necessary ; 
that the company may lawfully avail itself of such stipulations as 
to forfeiture, and their act in so doing is not against public policy. 
But the provision for avoidance must in such case be clear and 
distinct. The company may, however, waive such forfeiture, or 



the time form a part of the con- 
tract is recognized. The policy and 
the notes must be taken as one con- 
tract, and construed accordingly:" 
New England Mutual Life Ins. Co. 
v. Hasbrouck, 32 Ind. 447, per the 
court. 

20 See as to the above general prin- 
ciples governing commercial paper: 

Alabama. — Knott v. Venable, 42 
Ala. 186. 

Maine. — Dockray v. Dunn, 37 Me. 
442. 

Massachusetts. — Pitt v. Berkshire 
Ins. Co. 100 Mass. 500; Batchellor 
v. Priest, 12 Pick. (2 Mass.) 399. 

Michigan. — Phoenix Ins. Co. v. Al- 
len, 11 Mich. 501, 83 Am. Dec. 756; 
Reeve v. Peck, 6 Mich. 240. 

New York. — Syracuse Bingham- 
ton & New York R. R. Co. v. Collins, 
57 N. Y. 641, 3 Lans. (N. Y.) 29; 
Hills v. Place, 48 N. Y. 520, 525, 8 
Am. Rep. 568; Smith v. Miller, 43 
N. Y. 171, 3 Am. Rep. 690; Mer- 
chants' Bank v. Elderkin, 25 N. Y. 
(11 Smith) 178; Wolcott v. Van- 
voord, 17 Johns. (N. Y.) 248, 8 Am. 
Dec. 396; Anderson v. Drake, 14 
Johns. (N. Y.) 114, 7 Am. Dec. 442; 
Foden v. Sharp, 4 Johns. (N. Y.) 



2333 



183; Kelley v. Second National Bank, 
52 Barb. (N. Y.) 328; Wolff v. Mur- 
ray, 2 Sand. (N. Y.) 166. 

O h io — Walker v. Stetson, 19 Ohio 
St. 400, 2 Am. Rep. 405. 

Pennsylvania. — Peirce v. Smithers, 
27 Pa. St. 249. 

Vermont. — Bank of Remington v. 
Raymond, 12 Vt. 401. 

West Virginia. — Compton v. Gill- 
man, 19 W. Va. 312, 42 Am. Rep. 
776. 

Wisconsin. — Kinvon v. Stanton, 44 
Wis. 479, 28 Am. "Rep. 601 ; Walsh 
v. Dart, 23 Wis. 334, 99 Am. Dec. 
117. 

See notes on place of presentment, 
what is sufficient, 15 Am. Dec. 643, 
644, 24 Am. Rep. 160, 161. As to 
removal of maker out of state, see 
note 13 Am. Dec. 346, 347. If a 
draft is accepted without specifying 
any place of payment, it is held suffi- 
cient to present it for payment at 
the place of its date. Wittkowski 
v. Smith, 84 N. C. 671, 37 Am. Rep. 
632. 

1 See §§ 1206b, 1320 et seq., as to 
nonforfeiture statutes and statutes re- 
quiring notice that premium is due 
and unpaid. 



§§ 1208a, 1209 JOYCE ON INSURANCE 

may revive the policy, or an estoppel be raised against it by the 
circumstances. To avoid, however, a policy of insurance condi- 
tioned on the payment of a premium note, the burden of proving 
nonpayment is on the insurer. 2 

§ 1208a. When insurer not bound to notify assignee of maturity 
of note of assignor. — Again, insurer is not bound to notify the as- 
signee of the policy of the maturity of the assignor's note given 
prior to the assignment for an overdue premium even though in- 
surer has agreed to notify said assignee as to all premiums upon the 
policy as they become due. 3 

§ 1209. When stipulation is that policy void or risk suspended for 
nonpayment of note. — Insurance contracts of a similar character 
are governed by a like rule so far as applicable. Thus, it is fre- 
quently stipulated that if a note given for the premium is not 
paid at its maturity, the policy shall cease and remain void while 
the note is unpaid, or that the risk shall be suspended, and the 
company shall not be liable for a loss occurring during such period. 
The policy may also provide that if payment be thereafter made, it 
shall be revived and continued in force from the time of payment. 
In such case, if the note is overdue, payment must be made before 
loss to warrant a recovery. A tender after loss of amount due is 
not sufficient. 4 And the operation of the policy is merely suspended 
while notes remain overdue and unpaid where the policy so stipu- 
lates and provides that in such case the entire premium shall be con- 
sidered earned. 6 So in Nebraska, if a fire policy stipulates that a 
failure to pay the premium note when due will suspend the risk 
until payment, but that it may be revived for the full balance of 
the term by making full payment at any time before loss the in- 
surer is not liable for a loss occurring after maturity of the note, 
and after it has been partly but not fully paid, 6 but under a like 
stipulation if the note is not due at the time of the loss its non- 
payment does not preclude a recovery. 7 Under another decision in 
that state default in payment of a premium note, unless there is a 
waiver, suspends the insurance where the policy so stipulates. 8 In 

2 Hodsdon v. Guardian Life Ins. 4 Continental Ins. Co. v. Dorman, 
Co. 97 Mass. 144, 93 Am. Dec. 73; 125 Ind. 189, 25 N. E. 213. 
Behling v. Northwestern National 6 American Ins. Co. v. Harnbar- 
Life Ins. Co. 117 Wis. 24, 93 N. W. ger, 85 Ark. 337, 108 S. W. 213. 
800, 32 Ins. L. J. 433, 438. 6 Phoenix Ins. Co. v. Bachelder, 32 

3 Bank of Commerce v. New York Neb. 490, 29 Am. St. Rep. 443, 49 
Life Ins. Co. 125 Ga. 552, 54 S. E. N. W. 217. 

643. See Goddard v. Northwestern 'Farmers' & Merchants' Ins. Co. 
Mutual Fire Assoc. 85 Wash. 585, 148 v. Wiard, 59 Neb. 451, 81 N. W. 312, 
Pac. 893, as to no stipulation in cer- 29 Ins. L. J. 465. 
tificate of assignment. 8 Hooker v. Continental Ins. Co. 

2334 



PREMIUM NOTES § 1209 

;in Iowa case the policy contained a like condition, and one of the 
notes was not paid when due and was unpaid when the loss oc- 
curred. The note in question matured February 1st. The com- 
pany sent a notice February 11th that the note was due, and that 
unless paid within a specified time thereafter the policy would be 
canceled. Such notice was held sufficient to warrant a suspen- 
sion of the policy. 9 And in Illinois a stipulation in both the policy 
and note will be enforced requiring the payment at maturity of a 
note given for a premium on a life risk, or that otherwise the policy 
will be forfeited. 10 Under a Georgia decision if a life policy is 
delivered to the insured upon his executing notes for the initial 
premium, and it, together with the notes, provides that, if any obli- 
gation given for premiums shall not be paid when due, the policy 
shall be void until duly reinstated during the lifetime and good 
health of the insured, it becomes void upon the failure of the in- 
sured to pay one of the notes, and if he is not reinstated before his 
death, no right of recovery upon it exists. 11 In Michigan if a note 
is overdue and unpaid at the time of the loss, and the condition 
is that the company shall not be liable while any note for the 
premium is past due and unpaid, no recovery can be had. 12 But 
on subsequent payment of the note the policy revives, and continues 
in force from the date of such payment; 13 although an agreement 
by the company's agent that the note may lie over for a few- 
days in an agreement not to press payment and does not revive or 
continue the policy. 14 But nonpayment of a note for part of the 

•69 Neb. 754, 96 N. W. 663. See bany City Ins. Co. 19 Mich. 451, 2 

Home Fire Ins. Co. v. Garbacz, 48 Am. Rep. 95; Kirk v. Dodge County 

Neb. 827, 67 N. E. 864. Compare Mutual Ins. Co. 39 Wis. 138, 20 Am. 

Farmers' & Merchants' Ins. Co. v. Rep. 39; Wall v. Home Ins. Co. 36 

Wiard, 59 Neb. 451, 81 N. W. 312, N. Y. 157. 

29 Ins. L. J. 465. 13 Williams v. Albany City Ins. Co. 

9 Morrow v. Des Moines Ins. Co. 19 Mich. 451, 2 Am. Rep. 95. 

84 Iowa, 256, 51 N. W. 3, under 14 Wall v. Home Ins. Co. 36 N. Y. 

Laws Mich. 1880, c. 210, requiring 157, 8 Bosw. (N. Y.) 597. See Har- 

that notice be given. ley v. Council Bluffs Ins. Co. 71 

10 Pulling v. Travelers' Ins. Co. 55 Iowa, 401, 32 N. W. 396 ; Garlick v. 
111. App. 452, 26 Chi. .Leg. News, Mississippi Valley Ins. Co. 44 Iowa, 
222. See Lenz v. German Fire Ins. 553. Under a Texas civil appeals 
Co. 74 111. App. 341. decision the risk is not terminated 

11 Hipp v. Fidelity Mutual Life by a default in the payment of a 
Ins. Co. 128 Ga. 491, 12 L.R.A. premium note, but only suspended. 
(N.S.) 319, 57 S. E. 892. there being no waiver or estoppel 

12 In this case the money for the against the company, where it is stip- 
premium was paid immediately after ulated that the policy shall cease 
the loss, but was returned by the upon such nonpayment and that the 
company: Robinson v. Continental company shall not be liable during 
Ins. Co. 76 Mich. 641, 6 L.R.A. 96, such default, and this is so even 
43 N. W. 647. See Williams v. Al- though there is a condition that after 

2335 



S§ 1210, 1211 JOYCE ON INSURANCE 

first premium, made payable to the order of the agent, who re- 
ported the premium paid, and the policy delivered, does not entitle 
the company to deny liability on the policy which provided for its 
suspension during default on any notes given for premiums, where 
the agent's contract entitled him to the whole of the first premium 
as his commission, and he was charged with the amount thereof 
and sold the note, and the insured died after its maturity without 
having paid it, after which the insurer bought it -from the agent's 
indorsee. 15 

If the note for the premium is given by a third person and with- 
out conditions its nonpayment when due does not forfeit the policy 
even though the latter stipulates that it shall be void on failure 
to pay any notes for premiums when due. 16 

§ 1210. Note for entire premium: suspension risk. — In Nebraska, 
a note payable in one year from its date was given for an entire 
premium on a five-year fire risk. The contract therefor, both note 
and policy, stipulated for suspension of the risk during default in 
payment, and for revival thereof by a subsequent payment. The 
note was not paid, and in an action upon the note a recovery for 
the full amount was adjudged, on the ground that the plaintiff 
had a right to waive the forfeiture, and the contention of the de- 
fendant that the recovery should be limited to such an amount as 
equaled the customary short rate for one year's risk was not sus- 
tained. 17 

§ 1211. When condition for forfeiture is in note only. — When the 
condition as to forfeiture for nonpayment on maturity of a 
note given for the premium is contained only in the note, the 
mere fact that the note is not paid at maturity does not of it- 
self avoid the policy. Such a provision is a condition subse- 
quent, of which the company must avail itself by clear and un- 
equivocal acts. It must demand payment at the proper time, and, 
if no payment is made, it must declare the policy forfeited or 
void. 18 Thus, a note given for the balance due on a premium, 

the default the company is not liable 17 Phenix Ins. Co. v. Rollins, 44 

until there is a revival of the risk Neb. 745, 63 N. W. 46. 
under a written consent. East Texas 18 Columbian National Life Ins. Co. 

Fire Ins. Co. v. Perky, 5 Tex. Civ. v. Mulkey, 13 Ga. App. 508, 79 S. E. 

App. 698, 24 S. W. 1080. 482; Arnold v. Empire Mutual An- 

15 Union Life Ins. Co. v. Parker, nuitv & Life Ins. Co. 3 Ga. App. 685, 
6G Neb. 395, 62 L.R.A. 390, 92 N. W. 60 S. E. 470; Murphy v. Lafayette 
604. .Mutual Life Ins. Co. 167 N. Car. 

16 Galvin v. Union Central Life Ins. 334, 83 S. E. 461. See also Driver 
Co. 115 Ky. 547, 24 Ky. L. Rep. v. Planters' Mutual Ins. Assoc. 78 
2452, 103 Am. St. Rep. 336, 74 S. W. Ark. 127, 93 S. W. 752; White v. 
275. New York Life Ins. Co. 200 Mass. 

2336 



PREMIUM NOTES § 1211 

part of which had been paid in cash, provided that "if the amount 
of this note shall not be paid when due, the said policy shall be null 
and void," which note was overdue and unpaid when the insured 
died. The company neither demanded payment when due nor 
gave notice of its intention to insist upon a forfeiture, and it was 
held that the policy continued in force until the maturity of the 
note, and was not forfeited by failure to then pay the same. 19 In 
another case a policy of life insurance contained the usual clause 
of forfeiture for nonpayment of premiums. Departing from the 
strict rules of the company, a duly authorized agent had allowed 
the cash part of the premium to be paid one-half cash, the other 
half by a short note. Upon the day the premium was due, the 
agent received the check of the assured for the half cash due and 
six months' note, giving the renewal receipt for a year. The note 
contained the clause, "If not paid at maturity said policy is to be 
null and void." Neither check nor note was paid, and it was held 
that the mere fact that the note was not paid at maturity did not of 
itself avoid the policy, but only gave the insurance company the 
option of declaring a forfeiture. That this option must be as- 
serted by clear and unequivocal acts, it was also declared that the 
clause of forfeiture being inserted in the note for the benefit of the 
company could be waived by failure to act, or by other circum- 
stances evincing an intention not to claim the benefit of the stipu- 
lation, and whether the company had exercised such option or 
waived their rights was a question of fact for the jury under all 
the circumstances of the case. It was further decided that the 
insured was entitled to a renewal upon tendering at the proper 
time the proper amount of premium due ; that this amount did not 
include interest on premium notes previously given where the 
policy did not provide for its forfeiture by reason of nonpayment 
of such interest. 20 Again, it is held that such a condition in the 
note is nugatory, and the continuance of liability on the policy is 
not dependent on the payment of the note at maturity where the 
policy does not stipulate for forfeiture for such nonpayment. 1 In 
a New York case the note provided that the policy should lapse 
for nonpayment at maturity. Payment was not then made, and a 

510, 86 N. E. 928; Ressler v. Fidelity Lewis, 187 U. S. 335, 23 Sup. Ct. 

Mutual Life Ins. Co. 110 Tenn. 411, 126, 47 L. ed. 204, 32 Ins. L. J. 

75 S. W. 735. 1, where the court refused to review 

19 Montgomery v. Phoenix Mutual other state decisions on the ground 
Life Ins. Co. 14 Bush (77 Ky.) 51. that it was unnecessary and that: 

20 Mutual Life Ins. Co. v. French, "We prefer to follow our own deci- 
30 Ohio St. 240, 27 Am. Rep. 443, 2 sions."— Mr. Justice McKenna. 

Cin. Sup. Ct. 321, considered and 1 Dwelling-House Ins. Co. v. Har- 
explained in Iowa Life Ins. Co. v. die, 37 Kan. 674, 16 Pac. 92. 
Joyce Ins. Vol. III. — 147. 2337 



§ L2H JOYCE ON" INSURANCE 

notice by Letter from the company's secretary was given thai the 
policy was forfeited and canceled on the books: that if it was desired 
to revive the same, notice should be given the company thereof at 
once. This was not done, nor was the note ever paid, and whether 
i he Idler was properly mailed or whether there was a waiver was 
held a question for the jury. 2 

But under a clause in a note given for an insurance premium, 
that "for any loss occurring by death after this note is due and 
remains unpaid then said company shall not be liable," the policy 
is not forfeited by failure to make prompt payment, but the lia- 
bility of the insurer is merely suspended during the default, per- 
mitting the insured by payment to restore the liability. 3 And if 
notes, given for an unpaid portion of a premium payable in ad- 
vance, are conditioned that if not paid at maturity the policy 
shall be void, and assured upon being told by the agent that one 
of the notes is due and must be paid or the policy will be void 
abandons the contract, no demand need be made or notice given 
as to the other note, and if the premium is not paid the policy 
will be forfeited. 4 Again, it is decided that the payment of a 
note given for a period of a certain number of calendar months 
is a condition precedent to the continuance of the policy in force 
for that period where the policy is not a contract for the entire 
year, but one for each period of calendar months into which the 
year is divided and it is stipulated in said note that the insurance 
shall be void if payment is not made when the same is due. 5 The 
mere insertion by an agent of a life insurance company, of a pen- 
cil memorandum of a number of the policy, in a blank left for 
that purpose in notes in lieu of the prepayment of the cash pre- 

2 It did not sufficiently appear from company, such nonpayment avoids 

the evidence, however, that the letter the insurance contract without formal 

was mailed as a matter of law, and notice of cancelation.- Union Central 

a refusal to submit the question to Life Ins. Co. v. Chowning, 8 Tex. 

the jury was declared error. An- Civ. App. 455, 456, 28 S. W. 117. 

other question, however, arose in this 3 Kavanaugh v. Security Trust & 

case, and that was the power of the Life Ins. Co. 117 Tenn. 33, 7 L.R.A. 

secretary to waive prompt payment (N.S.) 253, 96 S. W. 499. Compare 

of premiums, and the fact whether Ressler v. Fidelity Mutual Life Ins. 

there was a waiver was held to be a Co. 110 Tenn. 411, 75 S. W. 735. 

matter for the jury. Hastings v. 4 Manhattan Life Ins. Co. v. My- 

Brooklvn Life Ins. Co. 138 N. Y. ers, 109 Kv. 372, 22 Ky. L. Rep. 

473, 34 N. E. 289, 53 N. Y. St. 875, 59 S. W. 30, 30 Ins. L. J. 134. 

Rep. 631, 63 Hun, 624, 44 N. Y. St. 5 Roberts v. Aetna Life Ins. Co. 

Rep. 37, 17 N. Y. Supp. 333. 101 111. App. 313, affd 212 111. 382, 

If a premium note is conditioned 72 N. E. 363. See also North Ameri- 

(o be void for nonpayment when due, can Accident Ins. Co. v. Bowen, — 

without notice being given the par- Tex. Civ. App. — , 102 S. W. 163. 
ties, or other act required of the 

2338 



PREMIUM NOTES 



§ 1212 



mium, after they were signed, will not, in the absence of anj 
question as to the identity of the notes, or of any fraudulent pur- 
pose, prevent the forfeiture of the policy for nonpayment in accord- 
ance with a stipulation contained in the notes. 6 

Although the contract would have become a paid-up term policy 
upon default in payment still the insurance is forfeiteB upon non- 
payment at maturity of a note, given in consideration of an ex- 
tension of time for payment of the premium, which stipulates that 
the policy, including all additions therein as for surrender or con- 
tinuance as a paid-up term policy, shall without notice become 
null and void if said note is not paid at maturity. 7 

§ 1212. When there is no condition as to forfeiture for nonpay- 
ment of note. — In the absence of a stipulation in the contract for 
forfeiture or suspension of the risk, or similar condition in case 
of nonpayment of a note given for the cash premium when due, 
payment is not a condition precedent to the validity of the policy. 
and it continues in force notwithstanding the note is not paid at 
maturity, 8 even though the policy provides that if the premium 
be not paid when due, the insurance policy shall become forfeited 
and void. 9 So a fire policy is not invalidated by nonpayment of 



6 Hipp v. Fidelity Mutual Life Ins. 
Co. 128 Ga. 491, 12 L.R,A.(N.S.) 
319, 57 S. E. 892. 

7 Seelev v. Union Central Life Ins. 
Co. 10 Pa. Super. Ct. 270. 



42 L.R.A. 261, 30 S. E. 918, 27 Ins. 
L. J. 1003; McGehee v. Rinker, 9 
Ga. App. 123, 70 S. E. 962, 40 Ins. 
L. J. 1202. 

Oklahoma. — Arkansas Ins. Co. v. 



8 Franklin Life Ins. Co. v. Wal- Cox, 21 Okla. 873, 20 L.R.A.(N.S.) 
lace, 93 Ind. 7; McAllister v. New 421n, 129 Am. St. Rep. 808, 93 Pac. 
England Mutual Life Ins. Co. 101 552, 38 Ins. L. J. 205, 214. 
Mass. 558, 3 Am. Rep. 404; Trade Washington. — Goddard v. North- 
Ins. Co. v. Barracliff, 45 N. J. 543, western Mutual Fire Assoc. 85 Wash. 
36 Am. Rep. 792; Michigan Mutual 585, 148 Pac. 893. 
Life Ins. Co. v. Bowes, 42 Mich. 19, 9 New England Mutual Life Ins. 
51 N. W. 962; Shaw v. Republic Life Co. v. Hasbrouck, 32 Ind. 447; Mc- 
Ins. Co. 69 N. Y. 286 ; Southern Life Allister v. New England Mutual Life 
Ins. Co. v. Booker, 9 Heisk. (Tenn.) Ins. Co. 101 Mass. 558, 3 Am. Rep. 
606, 24 Am. Rep. 344. And this 404. In this last case it was stipu- 
eonforms to the rule stated by Emeri- lated that "the policy and any sums 
gon (Emerigon on Ins. [Meredith's that shall become due thereon from 
ed. 1850] c. iii. sec. 7, p. 70) who said company are pledged and hy- 
says that if credit is given for the pothecated to said company, and they 
premium, there being no stipulation have a lien thereon to secure pay- 
for forfeiture, default in payment ment of any premium on which credit 
at the time agreed does not operate^ may be given, and of any note or 
as a rescission of the contract, unless security therefor." And a recovery 
there be a custom at the place of was permitted in a case where notes 
contract to the contrary. See also were given for a part of the pre- 
the following cases: mium, and the contract did not pro- 

Georgia. — Massachusetts Benefit vide for forfeiture, although when 

Life Assoc, v. Robinson, 104 Ga. 256, the first instalment note became due 

2339 



§ 1213 JOYCE ON INSURANCE 

premium notes at maturity, where no reference is made to them in 
the policy, and its validity is in no way contingent upon their pay- 
ment. 10 So- the nonpayment of a note given in payment of the 
first premium to an agent does not avoid the policy where the 
agent is liable to the company for the cash premium, and the note 
does not in any way refer to said premium or policy. 11 In Louisi- 
ana the waiver of the requirement of actual prepayment of the 
premium by acceptance of notes therefor precludes the insurer, 
under the rule that forfeitures are not favored from forfeiting the 
policy without any notice whatever to assured, or special demand, 
there being no stipulation in either the policy or note that for- 
feiture is to be immediate in case of nonpayment of the note at 
maturity. 12 And in the absence of such a stipulation as we are 
considering, if the note is extended and before maturity death 
occurs, the policy is not avoided. 13 But in a Kentucky case it is 
held that where, as a favor to the insured, credit is extended to 
him for some portion of a cash premium, the failure to pay the 
note representing such portion is regarded as a failure to pay the 
premium, and the policy is thereby forfeited. 14 

§ 1213. Subsequent parol agreement: nonpayment of note: for- 
feiture. — A policy is not rendered void by the mere fact that the 
note taken for the cash premium is not paid at maturity, under a 
parol agreement that in such case the policy should be surrendered, 
where such agreement is not referred to in either the policy or 
note, and is made after the delivery of the policy to the bene- 
ficiaries, and without their consent, the insurance being taken out 
on the life of a father in favor of his children. If the notes are re- 

the insured, upon demand for pay- 12 Lawrence v. Penn Mutual Life 

ment thereof by the insurer's agent, Ins. Co. 113 La. 87, 36 So. 898, 33 

had refused payment and declared Ins. L. J. 788. "Unless it be stipu- 

that he had abandoned the insurance, lated in the policy, or in some way 

and would have nothing more to do in the contract of insurance, that for- 

with the company; it also appearing feiture is to be immediate in event 

that the company had not assented the note is not paid, no such result 

thereto and held the notes, and that can follow its nonpayment. The 

the policy was not surrendered. See power to forfeit or cancel must be 

also Lawrence v. Penn Mutual Life 'nominated in the bond.' Here no 

Ins. Co. 113 La. 87, 36 So. 898, 33 such consequence was stipulated." — 

Ins. L. J. 788. Breaux, C. J. 

10 Arkansas Ins. Co. v. Cox, 21 13 Kansas Protective Union v. 
Okla. 873, 20 L.R.A.(N.S.) 775, 129 Whitt, 36 Kan. 760, 59 Am. Rep. 
Am. St. Rep. 808, 98 Pac. 552. 607, 14 Pac. 275. 

11 Griffith v. New York L. Ins. Co. 14 St. Louis Mutual Life Ins. Co. 
101 Cal. 627, 40 Am. St. Rep. 96, v. Grigsby, 10 Bush (73 Ky.) 310, 
36 Pac. 113, 26 Ins. L. J. 212. 314. 

2340 



PREMIUM NOTES 



§§ 1213a, 1214 



tainod by the insurers, and the policy is not surrendered to them, 
and no action is taken to dissolve the contract, it continues valid. 15 

§ 1213a. Right to loan after nonpayment of note. — An insured 
is not entitled to a loan on his policy, under a provision therein for 
a loan upon it, after he is in default in the payment of a premium 
or premium note, where such default works a forfeiture of the policy 
by its terms and conditions, unless such default is waived by the 
company. 16 

§ 1214. Power of mutual company to take note. — A mutual com- 
pany has power to take notes for a portion of the premium ; 17 but 
in general their powers, as to premium, deposit, capital, advance, 
or security notes, must depend largely upon the charter provi- 
sions, as well as such statutes as affect the right. Thus, under a 
statute which provides that in no case shall the premium note be 
more than twice the amount of the cash premium, it is held that a 
by-law may validly provide for a cash premium the first year, and 
the giving of four notes payable annually thereafter for the pre- 
mium on a five-year policy. 18 So the Indiana statute of 1881 con- 



15 Trager v. Louisiana Equitable 
Life Ins. Co. 31 La. Ann. 235. 

16 Union Central Life Ins. Co. v. 
Buxer, 62 Ohio St. 385, 49 L.R.A. 
737, 57 N. E. 66, 29 Ins. L. J. 519. 
The policy provided that after pay- 
ment of three annual premiums in- 
sured might obtain loans from in- 
surer graded as to amount by the 
number of premiums paid, pledging 
his policy as collateral security and 
he alleged in his petition that he 
relied upon this loan as a means of 
paying his premium, that he applied 
for the loan, was refused and that 
the refusal caused his failure to pay 
the premium note and it was held 
that such effort to obtain a loan Avas 
not the equivalent of payment, espe- 
cially when payment was never made 
or tendered. 

17 See citations generally under § 
341 and §§ 350 et seq. herein. What 
constitutes premium note; mutual 
company, see Sands v. Campbell, 31 
N. Y. 345, and exam'nie Wood v. Wel- 
lington, 30 N. Y. 218. As to want 
of power of mutual company to dis- 
pense with statutory provisions as 
to deposit or premium notes, see 



Gibbs v. Richmond Mutual Ins. Co. 
9 Daly (N. Y.) 203. 

As to deposit notes and cash pay- 
ments by members of mutual tire 
companies; relinquishment of liabil- 
ity; loans, etc., see N. Y. Ins. L. 
1909, c. 33, sec. 115, as revised from 
L. N. Y. 1848, c. 205. As to capital 
stock notes and deposit notes in mu- 
tual lire corporations, see N. Y. Ins, 
L. 1909, c. 33, see. 113, as revised 
from L. 1853, sec. 13, am'd by L. 
1854, c. 369. See also N. Y. Ins. 
L. 1909, c. 33, sec. Ill, as revised 
from L. 1853, c. 466, sec. 6, am'd 
by L. 1862, c. 367, am'd L. 1S9S, 
e. 147. 

18 Davis v. Oshkosh Upholstery Co. 
82 Wis. 488, 52 N. W. 771, under 
Wis. Rev. Stats, sec. 1907. As to 
premium notes in mutual fire com- 
panies, see 1 Homers Annot. Stat. 
Ind. 1896, sec. 3752, citing as to re- 
covery of assessments on premium 
notes : Downs v. Hammond, 47 Ind. 
131; Manlove v. Burger, 38 Ind. 211; 
Manlove v. Navlor, 38 Ind. 424; Km 
bree v. Shideler, 36 Ind. 423; Whit- 
man v. Meissner, 34 Ind. 487; Bo- 
land v. Whitman, 33 Ind. 64; Keller 



2341 



§ 1214 



joyck on lxsikaxce 



cerning mutual fire insurance companies provides, as a condition 
precedenl to receiving a policy, for the deposit of a note subject 
to assessment as the directors may require, or for the payment of 
a definite consideration in lieu of such note. It also provides as 
to the manner of appropriation of the funds, and such notes are 
only assessable to provide indemnity against^ losses by fire, and the 
fund created thereby must be first exhausted for the purpose before 
resort can be had to the cash funds. 19 In case of a mutual company, 
if its charter provides for a specific rate of premium to be paid in 
cash in the same manner as in companies other than mutual ones, 
the object thereof being to enable the company to issue policies 
on tho mutual and noninutual plan, it may accept a note for the 
premium, such note being a mere extension of the time of pay- 
ment. 20 But a requirement by the statute of organization that 
members pay a percentage in "cash" and such other charges as 
the rules and laws of the company require means current money 



v. Equitable Ins. Co. 28 Ind. 170; payment of insurance: Gen. Laws 

Bersch v. Sinissippi Ins. Co. 28 Ind. R. I. 1896, p. 566, c. 181, tit. 19, see. 

64; Sinissippi Ins. Co. v. Taft, 26 16. Construction of statutes relating 

Ind. 240; German Mutual Fire Ins. to mutual companies and premium 

Co. v. Franck, 22 Ind. 364; Hubler notes: Corey v. Sherman, 96 Iowa, 

v. Taylor, 20 Ind. 346. See also 2 114, 32 L.R.A. 490, 60 N. W. 232, 

Burns' Ind. Rev. Stat. p. 704, sec. 64 N. W. 828; Code of Iowa, sees. 

4883, citing Clark v. Manufacturers' 1058, 1146, 1150, 1160. If assess- 

Co. 130 Ind. 332, and other cases, nient on deposit note not paid direc- 

noted above. As to premium notes tors may sue: Rev. Stats. Me. 1883, 

in mutual fire companies, mariied p. 447, sec. 29, citing York County 

woman's note valid, premium reserve, Mutual Fire Ins. Co. v. Knisrht, 48 

assessments on premium notes, see Me. 75, 78. Insured not liable be- 

Rev. Stats. Me. 1883, p. 447, c. 49, yond amount of deposit note: Rev. 

sees. 26, 27; as amended 1895, c. 95, Stats. Me. 1883, p. 447, c. 49, sec. 

p. 94. See Freeman's Supp. 1885- 27. 

95, p. 305, and as cited in Stats. 19 Clark v. Manufacturers' Mutual 

1883; Union Ins. Co. v. Greenleaf, Fire Ins. Co. 130 Ind. 332, 30 N. E. 

64 Me. 123, 128; York County Mu- 212, under Rev. Stats. Ind. 1881, sec. 

tual Fire Ins. Co. v. Turner, 53 Me. 3752. 

225, 226; Maine Mutual Marine Ins. 2° Currv v. Nagle, 2 Biss. (U. S. 

€o. v. Neal, 50 Me. 301, 305; Maine C. C.) 244, Fed. Cas. No. 2,403, 2 

Mutual Marine Ins. Co. v. Swanton, Abb. (U. S.) 156,' Fed. Cas. No. 

49 Me. 448; New England Mutual 2,403. As to acceptance of draft 

Fire Ins. Co. v. Butler, 34 Me. 451, and laches of company, see Pendle- 

453. As to deposit notes of mutual ton v. Knickerbocker Life Ins. Co. 5 

fire companies, see Supp. Pub. Stats. Fed. 238 (consent was, however, giv- 

Mass. 1882-88, p. 526, c. 214, sec. 46 en to such deduction in this case.) 

(Pub. Stat. 119, sees. 113-15). As s. c. 7 Fed. 169, which was rev'd in 

to assessments, see sees. 47 et seq., Knickerbocker Life Ins. Co. v. Pen- 

and Crocker's Notes 1891, on Pub. dleton, 112 U. S. 696, 28 L. ed. 866, 

>tats. When mutual fire companies 5 Sup. Ct. 314. 
<mav refuse premium notes in part 

2342 



PREMIUM NOTES § 1215 

and not notes or other obligations where the fees are payable in 
advance under the rules and by-laws. 1 

§ 1215. Validity of notes for premium and premium notes. — 
Premium notes given for insurance are not valid if the policy for 
which they are given is void; such notes are without consideration, 
and no action thereon can be sustained therefor. 2 And this applies 
where the policy is invalid for want of insurable interest as in such 
case there is no valid consideration for the note. 8 So if the notes 
are given for a policy which cannot be enforced in the state where 
made, they are not enforceable as between the original parties in 
another state. 4 So where payments on instalment notes fall due 
in advance, no recovery can be had on such notes by a foreign 
company whose authority to do business within the state has been 
revoked, 5 and the consideration of notes given for the last four 
annual premiums under a five years' insurance has failed, and they 
cannot be collected if the company has during the first year become 
insolvent and ceased to conduct its business. 6 But although the 
company is insolvent, if such fact is unknown by its officers or 
agents at the time it issues the policy there is nevertheless a valid 
consideration for a note given for the premium. 7 But notes are 
valid for their face in the hands of a receiver, even though the 
makers took out no policies, and they are given in advance for 
premiums on policies to be taken out, if they are given to encour- 
age others to transact business with the company and for the pro- 
tection of persons to be insured, 8 and if the insurance is an illegal 
one, the note given for the premium is void. 9 So a note given as 
a consideration for the premium on a policy issued over a month 

1 State Farmers' Mutual Ins. Co. Virginia. — Ingrams v. Mutual As- 
v. Moore, 4S Neb. 870, 67 N. W. 876. sur. Soc. 1 Rob. (Va.) 661. 

2 United States.— Gray v. Sims, 3 3 Little v. Arkansas National Bk. 
Wash. (U. S. C. C.) 276, Fed. Cas. 105 Ark. 281, 152 S. W. 281. 

No. 5 729. 4 Ford v. Buckeye State Ins. Co. 

Kentucky— Lynn v. Burgovne, 13 6 Bush (69 Ky.) 133, 99 Am. Dec. 

B. Mon. (52 Ky.) 400. 663. 

Maine.— York County Mutual Fire 5 So held in American Ins. Co. v. 

Ins. Co. v. Turner, 53 Me. 225. Stoy, 41 Mich. 383, 385, 1 N. W. 

New Hampshire. — Haverhill Ins. 877. 

Co. v. Prescott, 42 N. H. 547, 80 6 Home Ins. Co. v. Daubenspeck, 

Am. Dec. 123. 115 Ind. 306, 17 N. E. 601. 

New York. — Frost v. Saratoga Ins. 7 So held in Lester v. Webb, 5 

Co. 5 Denio (N. Y.) 154, 49 Am. Allen (87 Mass.) 569. 

Dec. 234; Miner v. Judson, 2 Lans. 8 Brown v. Crooke, 4 N. Y. 51. 

(N. Y.) 300. 9 Russell v. De Grand, 15 Mass. 35. 

Ohio.— Wadsworth v. Davis, 13 See Chesborough v. Wright, 41 Barb. 

Ohio St. 123. (N. Y.) 28. 

2343 



§ 1216 JOYCE ON INSURANCE 

before the company was authorized to commence business is void, 10 
and a note signed by one of the members with the firm name for an 
insurance on his individual property is void. 11 But a security note 
is valid for its face, though payable to the order of the maker, 
though not indorsed by him; 12 and if the policy lias attached and 
is valid, it is held that the note is valid, and a note given for pre- 
miums in advance as security for dealers with the company is 
valid. 13 But if the vessel was unseaworthy when the risk com- 
menced, the note for the premium cannot be enforced, 14 and it is 
held that an alienation of the property which avoids the policy also 
avoids the note. 15 So, also, is a note given under a policy which is 
void because the insured has no title to the real estate. 16 But the 
fact that the insurer was entitled to cancel the policy upon notice 
at any time does not make the consideration for the note void, 17 
and the fact that the directors insured property in one class, which 
should under the charter and by-laws have been insured in another 
class, does not invalidate the policy, and the note is good. 18 A pre- 
mium note is a sufficient consideration for a policy, 19 and the de- 
livery of a policy and receipts is a good and sufficient consideration 
for a note for the first premium. 20 But if the contract was not 
completed, or if the policy has never been accepted, the note is 
not valid. 1 And there is no consideration for a note where the 
policy issued does not conform to that represented and applied 
for. 2 But the fact that the note was given to an agent who had 
neither registered nor paid his license tax, does not invalidate the 
note. 3 

§ 1216. Premium note given unauthorized company. — In Mas- 
sachusetts, a premium note given to a foreign company for insur- 

10 Williams v. Babcock, 25 Barb. 17 Irwin v. National Ins. Co. 2 
(N. Y.) 109. Disn. (Ohio) 68, 1 Disn. (Ohio) 430. 

11 Lime Rock Fire & Marine Ins. 18 Union Mutual Fire Ins. Co. v. 
Co. v. Treat, 58 Me. 415. Keysor, 32 N. H. 313, 64 Am. Dec. 

12 Brouwer v. Hill, 1 Sand. (N. 375. 

Y.) 629; Atlantic Ins. Co. v. Good- 19 Farmers' & Merchants' Ins. Co. 

all, 35 N. H. 328, 369. v. Wiard, 59 Neb. 451, 81 N. W. 312. 

13 Cruikshank v. Brouwer, 11 Baib. 20 Wadsworth v. Walsh, 12S Minn. 
(N. Y.) 228. 241, 150 N. W. 870; Parker v. Simp- 

14 Commonwealth Ins. Co. v. Whit- son, 56 Misc. 537, 107 N. Y. Supp. 
ney, 1 Met. (42 Mass.) 21. 199. 

15 Miner v. Judson, 5 N. Y. Sup. 1 Real Estate Ins. Co. v. Roessle, 
Ct. 46, 2 Hun (N. Y.) 441, 2 Lans. 1 Gray (67 Mass.) 336. 

(N. Y.) 300. See Hazard v. Frank- 2 Pearlman v. Sutcliffe, 30 Cana- 

lin Fire Ins. Co. 7 R, I. 429. dian L. T. 453, 15 O. W. R. 140. 

16 Busch v. Sinissippi Ins. Co. 28 3 Lovd v. Pollitt, 144 Ga.~ 91, 86 
Ind. 64. S. E. 233. 

2344 



PREMIUM NOTES § 1217 

ance effected in the state is void if such company has not complied 
with the statutory requirements whereby alone it may do business. 4 
§ 1217. Premium, etc., notes: generally. — We have in a prior 
chapter 5 stated what constitutes the capital stock of a mutual com- 
pany. The premium in such companies is usually paid partly in 
• ash and partly in premium notes. If a note is given payable at 
such times as the directors may require according to the charter 
and by-laws, it will be presumed to be a premium or deposit note, 
and no recovery can be had thereon, unless it is duly assessed. 6 
Sometimes, in addition to cash premiums, note- are'given annually 
subject to be canceled by dividends with interest payable thereon 
annually until so canceled, and the balance due, if any, to be 
deducted out of the amount payable, unless the note is sooner 
taken up, as is sometimes provided; 7 and a note may be given in 
advance for premiums to be earned and only collectible to that 
extent, in which case it is only a premium note, and not a capital 
stock note ; 8 or the company may be empowered to receive notes 
for advanced premiums to be written against at a compensation 
not to exceed a certain per cent to be allowed. 9 So a note may be 
given as a deposit to constitute the absolute funds of the company 
and not liable to assessment, but payable on demand by the com- 
pany ; 10 or a deposit note may be received, in pursuance of the 
act of incorporation and of the by-laws, in payment of assessments 
therefor to be made, and also in payment of a certain amount 
fixed by a per cent upon the property insured and required to be 
paid into the treasury before the policy is issued ; n or a note 
may be made conditional only upon the necessities of the company 
and demand of its officers. 12 Again, a note may in form be a pre- 
mium note, but it may be alleged and proved that it was given, 
accepted, and used as a capital note on the organization of the com- 
pany, in which case it may be recovered in full without an assess- 

4 Reliance Mutual Ins. Co. v. Saw- Life Ins. Co. 40 Iowa, 357; North- 

yer, 160 Mass. 413, 36 N. E. 59, western Mutual Life Ins. Co. v. Bon- 

under Stats. Mass. 1887, c. 214, sec. ner, 36 Ohio St. 51. 

77. But see Connecticut River Mu- 8 Elwell v. Crocker, 4 Bosw. (N. 

tual Fire Ins. Co. v. Way, 62 N. H. Y.) 22. 

622. See §§ 1267, 1275 herein. 9 Chesborough v. Wright, 41 Barb. 

5 §§ 341, 341a herein. (N. Y.) 28. 

6 Hope Ins. Co. v. Weed, 2S Conn. 10 Shawmut Mutual Fire Ins. Co. 
51; Sands v. St. Johns, 36 Barb. v. Stevens, 9 Allen (91 Mass.) 332. 
(N. Y.) 628; Savage v. Medbury, 19 » Rix v. Mutual Ins. Co. 20 N. II. 
N. Y. (5 Smith) 32. 198. 

7 Van Norman v. Northwestern Mu- 12 Howland v. Cuykendall, 40 
tual Life Ins. Co. 51 Minn. 57, 52 Barb. (N. Y.) 320. 

N. W. 988; Ohde v. Northwestern 

2345 



§ L218 JOYCE ON INSURANCE 

incut. 13 Tn case premium miles in advance are received as addi- 
tional security to the dealers, and are to be Liable for losses after 
the cash capita] and other resources are exhausted, the word "ex- 
hausted" goes to the sufficiency of the other assets, and docs hot 
require t lie actual collection or sale and application of said other 
assets before resorting to such notes. The obligation of the makers 
is to the creditors in such case, and not as sureties to the company, 
and although a change in doing business by the company may 
decrease the cash assets, the makers of the notes are not thereby 
discharged by such wrongful acts. 14 It may be a question for the 
jury whether a note is a security note or one given in advance for 
premiums. 15 If notes are given and accepted under the com- 
pany's charter in advance as security to its dealers, with interest to 
he paid thereon, they are the absolute property of the company, 
whether taken prior or subsequently to its organization. 16 But a 
note absolute upon its face may be shown to be a security for losses 
upon assessments to be made for that purpose, 17 and a person who 
has notice of its real character cannot treat such a note as an 
absolute one. 18 Under Iowa statutes notes given for mutual obli- 
gations by persons organized for mutual insurance under provisions 
for organizing corporations in general are not within a statute pro- 
viding that premium notes must on their face state that they were 
given for insurance. 19 

§ 1218. Negotiability of notes for the premium and premium, 
etc., notes. — A note given for premium on an open marine policy 
is negotiable, and may be transferred like other notes. There is 
no implied agreement that it shall be retained by the insurers until 
due, so as then to be subject to the adjustment of losses. 20 So 
notes given for cash premiums generally may be negotiated if so 
made as to be transferred, and parties may become bona fide holders 

13 Sands v. St. Johns, 36 Barb. 18 Ball v. Shibley, 33 Barb. (N. Y.) 
(N. Y.) 628. 610. 

14 Osgood v. Toole, 60 N. Y. 475. 19 Corey v. Sherman, 96 Iowa, 114, 

15 Merchants' Mutual Ins. Co. v. 32 L.R.A. 490, 60 N. W. 232, 64 N. 
Rey, 1 Sand. (N. Y.) 184. A note W. 828; Iowa Code, sees. 1058, 1146, 
given for the premium is not a de- 1160. 

posit note under the Maine statute: 20 Furniss v. Gilchrist, 1 Sand. (N. 
Union Ins. Co. v. Greenleaf, 64 Me. Y.) 53. And premium notes or 
123, under Me. Rev. Stats, e. 49, notes in advance for premiums: ma- 
sec 26. rine insurance corporations, see N. 

16 Brown v. Crooke, 4 Comst. (N. Y. Ins. L. 1909, c. 33, sec. 152. 
V.) 51. 

17 Mutual Benefit Life Ins. Co. v. 
Jarvis, 22 Conn. 133, 148. 

2346 



PREMIUM NOTES 



§ 1218 



thereof, 1 and such holder for value who received the note before 
it became due may recover upon the same, although given for an 
advanced premium to be written against, although it is illegal as 
between the parties, where he has no notice of the facts constituting 
such illegality, and the statute docs not make the note void. 2 If 
it is evident from the provisions of the charter or act of incorpora- 
tion of a mutual company, or from the terms of the contract with 
its members, or from the note itself, the company having authority 
to so contract, or to receive such note, that stock or advance notes 
given to aid in forming a mutual company, and constituting a 
part of the capital stock, are to be payable absolutely without being- 
dependent upon losses and expenses, and that they may be in- 
dorsed and transferred by the corporation, they will be held abso- 
lutely payable and negotiable, and they are also subject to the 
statute of limitations. In all such cases the purposes and objects 
which it is intended to effect will be considered, having in view the 
statute of incorporation or charter, and the powers which the legis- 
lature has given to the corporation. 3 And parties receiving such 



1 Farmers' Bank of Saratoga v. 
Maxwell, 32 N. Y. 579. The note in 
this case was payable absolutely at 
a fixed time and place. 

2 Chesborough v. Wright, 41 Barb. 
(N. Y.) 28. It is held in Michigan, 
although not in an insurance case, 
that a note may be valid in the hands 
of a holder for value, although it 
may be void at the common law, be- 
cause of illegality in its consideration 
where it is not in contravention of 
any statute, and is reserved without 
knowledge of the agreement on which 
it is based in the ordinary course of 
business before maturity : Davis v. 
Seeley, 71 Mich. 209, 38 N. W. 901 
(one judge dissenting) ; annotated 
case, Ball v. Shibley, 33 Barb. (N. 
Y.) 610. The sale of a note given 
the company's agent for the premium 
to a bona fide purchaser for value 
renders the insurer liable therefor to 
the insured, where the latter has been 
compelled through a suit to satisfy 
the claim of such holder, said note 
having been given under an agree- 
ment to return the same, should a 
policv not be issued : New York Life 
Ins. Co. v. Baese, (1895) — Tex. C. 
C. A. — , 31 S. W. 824. 



3 White v. Haight, 16 N. Y. 310. 
The note in this case was payable as 
follows : "I promise to pay the said 
company or their treasurer, for the 
time being, the sum of five hundred 
dollars in such portions, and at such 
time or times, as the directors of 
said company may agreeably to their 
act of incorporation require." De- 
nio, C. J., says in this case : "I am 
of opinion that the note was absolute 
and payable at all events. . . . 
They are to be given for premiums in 
advance upon risks contracted to be 
taken. They are to be considered as 
capital. . . . They are to be ne- 
gotiable and may therefore be in- 
dorsed and transferred by the corpo- 
ration at its pleasure:" Id. 321; 
Brookman v. Metcalf, 32 N. Y. 591. 
The note in this case was given for 
premiums in advance, and thw char- 
ter provided that such notes might 
be negotiated : Sands v. Campbell, 31 
N. Y. 345. In this case an injunction 
was had restraining the receiver of 
the company from collecting and re- 
ceiving any moneys on the premium 
notes of said company, and il was 
declared that the statute of limita- 
tions on such notes began to run from 



234^ 



1219 



JOYCE ON INSURANCE 



notes as bona fide holders, or as collateral security, are entitled 
to be protected. 4 Consideration should be given in all cases by the 
transferee or indorsee to such notice as the terms of the note impart, 
as to the condition- upon which it is payable, aa well as to the 
character of the note, and this statement applies equally to notes 
given for cash premiums as to others. 5 Notes which are based upon 
a contingency for their payment, such as the ordinary premium or 
deposit notes, are not, however, negotiable, nor subject to the statute 
of limitations. 6 

§ 1219. When note is payable. — A note payable in such portions 
and at such times as the directors may require is in effect payable 
on demand, or when the directors have properly required the 
payment thereof, 7 although the statute under which the company 
is incorporated requires capital notes to be payable at "the end of or 
within/' twelve months from their date. 8 But it must appear that 



the time it was given, citing How- 
land v. Edmonds, 24 N. Y. 307; but 
that the time duriner which the in- 
junction was operative should be de- 
ducted; Lawrence v. McCready, 6 
Bosw. (N. Y.) 329. The syllabus 
in this case reads: "1. In the ab- 
sence of any statute or provision in 
the charter authorizing an insurance 
company to receive notes in advance 
of premiums to be earned by the 
company, by insuring the maker, or 
defining the rights and liabilities of 
the parties when such note is given, 
the mere fact that the makers united 
with several others in giving such 
notes to an insurance company upon 
an understanding that the notes 
should be renewed from time to time 
for such amounts as should not be 
earned, and that the makers should 
be allowed five per cent on the amount 
of premiums earned as a compensa- 
tion for the advance, do not make the 
makers liable to the company, so that 
upon its insolvency and discontinu- 
ance of its business the receiver can 
collect thereon any greater sum than 
the company has earned; 2. It seems 
that such a note would be good and 
collectible in the hands of an in- 
dorsee for value:" Howland v. Meyer, 
3 Const. (3 N. Y.) 290. The note 
here read: ''Twelve months after 



date, I promise to pay the Alliance 
Mutual Insurance Company or or- 
der," etc. The act under which the 
company w r as incorporated provided 
that the company might receive notes 
for premiums in advance for the bet- 
ter security of its dealers, and might 
"negotiate the same for the purpose 
of paying claims or otherwise in the 
course of its business," and it was 
held that such a note might be trans- 
ferred to a party who had insured in 
the company on account of a claim 
for loss. See also as to negotiability, 
Holbrook v. Bassett, 5 Bosw. (N. Y.) 
147; Raejrener v. Willard, 60 N. Y. 
Supp. 478, 44 App. Div. 41. 

4 Brookman v. Metcalf, 32 N. Y. 
591. 

5 As to conditions in the latter, see 
§ 1211 herein. 

6 Savage v. Medbury, 19 N. Y. (5 
Smith) 32; Howland v. Cuykendall, 
40 Barb. (N. Y.) 320; Howland v. 
Edmonds, 24 N. Y. 307; Hope Ins. 
Co. v. Weed, 28 Conn. 51. 

7 Hill v. Reed, 16 Barb. (N. Y.) 
280; Gavtes v. Hibbard, 5 Biss. (U. 
S. C. C.) 99, Fed. Cas. No. "5,287; 
Nashua Fire Ins. Co. v. Moore, 55 
N. II. 48. 

8 Hill v. Reed, 16 Barb. (N. Y.) 
280. 



2348 



PREMIUM .NOTES § 1219a 

payment was required by the directors, and that losses and. expenses 
had been incurred to warrant a recovery. 9 So a deposit note con- 
stituting the absolute funds of the company and payable on demand 
may be enforced after such demand, nor is any assessment or 
attempt to collect similar notes necessary; 10 and a premium note 
may become due and payable not only at maturity, but also at the 
time of a loss in case it occurs prior thereto. 11 So the contract may 
provide that the neglect to pay an assessment when due shall ren- 
der the whole of the note due and payable. 12 or the contract may 
be such that the company has the right, should its necessities so 
require, to demand the payment in whole or in part of a note 
executed for the unpaid portion of annual premiums. 13 The failure 
to pay one of certain renewal notes does not mature the others 
even though it is agreed that upon nonpayment at maturity the 
right to take action on notes or collateral is as fully preserved as 
if the original notes had not been surrendered, and also that if, 
upon the payee's demand, new collaterals should not be substituted 
at a certain date said notes should all become due at that time. 14 
If an instalment note is stipulated to be payable on the "first days 
each" of a stated month for several consecutive years these words 
mean only one day and that is the first day in each year. 16 If a per- 
son has given his note in settlement of a life insurance premium, 
which note, is not on its face payable, or to be negotiated at a 
bank, but is in fact sent through a bank for collection, he is 
entitled to the entire day of maturity in which to make payment, 
without a forfeiture resulting from default in payment, and his 
right to pay is not terminated at the close of banking hours. 16 

§ 1219a. Same subject: conflicting dates: erroneous date. — If by 
the terms of the application policy and note construed together 
the premium is due on a certain day but the contract is to con- 
tinue in force until a later date that day will determine the time 
when the lapse, if any, may take effect. 17 So a policy is in force 
and a recovery can be had where a loss occurs after an erroneous 
date inserted by mutual mistake in an instalment note, but before 

9 American Ins. Co. v. Schmidt, 19 14 Ladd v. Union Mutual Life Ins. 

Iowa, 502; Warner v. Beem, 36 Iowa, Co. (U. S. C. C.) 116 Fed. S78. 

385. 15 Kimbro v. Continental Ins. Co. 

10 Shawmut Mutual Fire Ins. Co. 101 Tenn. 245, 47 S. W. 213. 

v. Stevens, 9 Allen (91 Mass.) 332. 16 Hipp v. Fidelitv Mutual Life 

11 Schimp v. Cedar Rapids Ins. Co. Ins. Co. 128 Ga. 491, 12 L.R.A. 
124 111. 354, 16 N. E. 229. (N.S.) 319, 57 S. E. 892. 

12 Jones v. Sisson, 6 Grav (72 n Kimbro v. Continental Ins. Co. 
Mass.) 288. 101 Tenn. 245, 47 S. W. 213. 

13 St. Louis Mutual Life Ins. Co. As to conflicting dates: premiums: 
t. Grigsby, 10 Bush (73 Kv.) 310. forfeiture, see § 1115a herein. 

234!) 



§ 1219b JOYCE ON [NSURANCE 

the actual date of the execution of said note and prior to the date 
of the expiration of the policy. 18 

§ 1219b. Same subject: extension of time. — The insurer may 
extend the time for the paymenl of a note given for the premium, 
the obligation to pay future premiums being a sufficient considera- 
tion for an agreemenl made before default. 19 And an agreement 
for extension of lime for payment of premiums in arrears may 
become operative in conformity with usage or a uniform course of 
dealing or by way of estoppel. 80 It is also held that if time is 
extended by insurer's agent who is the owner of the note and so 
informs assured there is no forfeiture for nonpayment of the note 
when due, notwithstanding a policy stipulation for forfeiture, for in- 
asmuch as the insurer has been paid the condition is not broken, and 
even were il conceded that the agent might have taken advantage 
of the stipulation he had waived his rights. 1 And if the time is 
extended to a certain date the failure to pay them, forfeits the policy 
without further notice under a policy stipulation that it shall 
cease upon nonpayment of any note for the premium. 2 It is not 
necessary, however, that a. contract for extension of time for pay- 
ment should fix a precise date. It is sufficient if such date be fixed 
with sufficient certainty so that it is not too indefinite to fix it until 
corn on insured's farm is gathered and marketed. 3 Again, if the 
time for payment of the note is extended it operates only as an 
extension of time for payment of the premium and the note is left 
with a bank for collection with directions to deliver the voucher 
upon taking up the note and assured dies without paying it 
and there is no agreement to waive payment of the premium and 
accept the note in lieu thereof, or any evidence that the note should 
be deemed an actual payment there can be no recovery on the 
policy. 4 

But if the extension is granted upon a condition precedent which 
is never complied with and there is no waiver it does not preclude 
a forfeiture. 5 And if in request for a further extension, an exten- 

18 Home Ins. Co. v. Clements, 28 teeost, 105 Kv. 642, 20 Ky. L. Rep. 
Ky. L. Rep. 953, 90 S. W. 973. 1442, 49 S. W. 425. 

19 Michigan Mutual Life Ins. Co. 3 Majestic Life Assur. Co. v. Tut- 
v. Custer, H2S Ind. 25, 27 N. E. 124. tie, 58 Ind. App. 98, 107 N. E. 22, 

As to extension of time of pay- 45 Ins. L. J. 137. 

ment of premiums, see § 1109 herein. * McDonald v. Provident Savings 

20 Majestic Life Assur. Co. v. Tut- Life Assur. Soe. 108 Wis. 213, 81 
tie. 58 In.l. App. 98, 107 N. E. 22, Am. St. Rep. 885, 84 N. W. 154. 
45 Ins. L. J. 137. B Union Central Life Ins. Co. v. 

l Mooneyv. Home Ins. Co. 80 Mo. Berlin, 101 Fed. G73, 41 C. C. A. 
App. 192, 2 Mo. App. Repr. 522. 592, 29 Ins. L. J. 972, s. c. 90 Fed. 
2 Manhattan Life Ins. Co. v. Pen- 779, 33 C. C. A. 274. 

2350 



PREMIUM NOTES §§ 1219c, 1219d 

sion form of note is sent to insured for his signature but he fails 
to execute and deliver it no contract for extension is effected, 6 nor 
is there any extension of time where the insurer's agent, to whom 
the notes have been sent for collection, offers to extend the time but 
said offer is not accepted and insured does not pay the notes or 
any part thereof. 7 

But it is held that although an agent is authorized to extend 
time on premium notes he cannot delegate his authority without 
insurer's consent unless the necessities of the case or known usage 
justifies the same. 8 

§ 1219c. Same subject: days of grace. — A provision in a policy 
allowing grace where notes are given for the premium has no 
application to a policy where no note is given. 9 So an allowance 
by the policy of days of grace with interest does not extend to a 
note given for an overdue premium. 10 Where a note for premiums 
for two years has the effect of payment the policy will be subject 
to forfeiture at the expiration of two years and the days of grace 
allowed in the contract, computing the time from which the policy 
went into effect. 11 Again, while days of grace may under the pro- 
visions of the policy apply to all premiums in regular course, still 
by a special condition of the contract they may be excluded where 
the second premium is paid partly in cash and the balance by a 
note stipulating that it shall be paid "without grace" and that all 
benefits which a full cash premium would have secured shall be 
forfeited immediately upon nonpayment of the note at maturity, 
except as provided otherwise in the policy, which allows days of 
grace for payment of premiums. 12 

§ 1219d. Payment of note by mail. — If the office of insurer is 
designated as the place of payment of a premium note, and a check 
is mailed therefor it must be received before the loss insured against 

6 Aetna Life Ins. Co. v. Ragdale's .time, see §§ 1109a, 1109b, 1110 kere- 
Admr. 95 Va. 579, 29 S. E. 326, 328. in. 

7 Manhattan Life Ins. Co. v. Sav- On applicability to premium notes 
age's Admr. 23 Ky. L. Rep. 483, 63 of provisions in policy for days of 
S. W. 278. grace for payment of premium, see 

8 Home Fire Ins. Co. v. Garbacz, note in 5 B. R. C. 434. 

48 Neb. 827, 67 N. W. 864. Compare 10 Bank of Commerce v. New York 

as to power of agents to delegate au- Life Ins. Co. 125 Ga. 552, 54 S. E. 

thority, § 396 herein. 643. 

9 Ohio Farmers' Ins. Co. v. Stow- n McDougald v. New York Life 
man, 16 Ind. App. 205, 44 N. E. Ins. Co. 146 Fed. 674, 77 C. C. A. 
558, 940. 100. 

As to payment of premiums : davs 12 Lefler v. New York Life Ins. Co. 
of grace: "statutes: computation "of 143 Fed. 814, 74 C. C. A. 488. 

2351 



§§ L220-1221a JOYCE ON INSURANCE 

occurs, where the policy provides for nonliability while such note is 
in default. 18 

§ 1220. Validity of provisions as to liability on premium, etc., 
notes. — A mutual insurance company organized under the laws of 
Indiana may validly provide that upon default after notice in pay- 
ing instalments on a premium note ordered by the directors, the 
whole amount of the note shall be due and collectible. 14 So in 
Dakota it is held that the policy may provide for liability on notes 
given for quarterly premiums, although the liability of the insurer 
has determined, and that such provision is not prohibited by the 
statute nor against public policy, nor unreasonable. 15 

§ 1221. Lien on premium notes and funds. 16 — A mutual insurance 
company may by its charter have a lien not only on the premium 
note, but also upon funds due for a loss to the extent of the amount 
of said note, and to meet the liability of the insured on assess- 
ments which may be levied on said premium notes; and the com- 
pany does not lose its lien by paying the money into court to await 
an adjustment of liabilities after a judgment against it for the loss. 17 
And by the terms of the contract the premium notes may be se- 
cured by a lien on the policy under an authority to loan part of 
the premiums thereon to the holder. 18 

§ 1221a. When insured liable on note for premium. — The delivery 
and retention of the policy is such a valuable and sufficient con- 
sideration for a note for the first premium as to make it enforce- 
able against insured. 19 And the approval of an application, issu- 
ance of the policy and properly mailing the same, even though it 
is not received before loss, binds the maker of a note for the pre- 
mium and renders him liable to the payee brokers who had ad- 
vanced the cash for the premium. 20 So although the policy is 
void for nonpayment of a note given for the first premium the 
assured cannot for that reason avoid payment of the note where the 

13 Continental Ins. Co. of N. Y. v. western Mutual Life Ins. Co. v. Bon- 
Hargrove, 131 Ky. 837, 116 S. W. ner, 36 Ohio St. 51. 

256. 19 Tapia v. Daggett, 167 Ala. 381, 

Payment of promiuru bv mail, see 52 So. 834. See also Caldwell v. 

§§ 1163, 1164 herein. Campbell, 4 Ga. 326. (il S. E. 290; 

14 German Fire Ins. Co. v. French, Parker v. Simpson, 167 N. Y. Supp. 
22 Ind. 364. 199. 

15 St. Paul Fire & Marine Ins. Co. As to insufficient defenses In ac- 
v. Coleman, 6 Dak. 458, 6 L.R.A. 87, tions on notes, see § 3735 herein. 

43 N. W. 693. 20 Van Arsdale-Osborne Broker- 

16 As to lien for premiums, see §§ age Co. v. Robertson, 36 Okla. L23, 
1131, 1132 herein. 128 Pac. 107, 42 Ins. L. J. 268. 

17 Susquehanna Mutual Fire Ins. Insurance upon growing grain 
Co.'s Appeal, 105 Pa. St. 615. against loss by hail. 

18 Such was the contract in North- 

2352 



PREMIUM NOTES § 1221b 

policy has been delivered even though he refuses to pay the note 
and returns the policy. 1 So the obligation of the insurer to pay 
a policy less the amount of the note constitutes a sufficient con- 
sideration for the note even though both policy and note provide 
for forfeiture for nonpayment of the note when due. 2 So insured 
is liable on a note where acceptance thereof for the premium is 
so far a waiver of the form of payment that the policy is no1 
forfeited for nonpayment. 3 If the note for the premium is pay- 
able to the agent himself and he pays insurer in cash the amount 
of the premium such note is given to the individual and not to 
the agent or insurer and is based upon a consideration of the de- 
livery of a valid policy. 4 

§ 1221b. When insured not liable on note for premium. — A note 
cannot be enforced where the policy is never issued but there is 
merely a conditional contract to insure and this is so even though 
an action for damages might lie against the party repudiating such 
contract. 5 And a mere promise, in concluding a letter, "to pay 
you or your order the first annual premium amounting to" a 
specified amount is not a negotiable instrument where it is by the 
terms of the letter conditional upon the policy being put in force. 6 
And the original payee cannot recover on a note where the promise 
to issue and deliver a life policy is not absolute but is conditioned 
upon the maker being an insurable risk and no offer to deliver the 
policy is made, and this is so even though the maker refuses com- 
pliance with the conditions and in consequence thereof his policy 
is not accepted. 7 Nor can there be a recovery on renewal notes based 
upon a condition precedent, such as procuring a loan, which is not 
performed. 8 And as one applying for a particular kind of life in- 
surance has a right to rely upon the agent's agreement to furnish 
such kind of policy, his failure to do so will prevent enforcement 
of the notes. 9 So the maker of a note for the premium is not liable 
thereon where he countermands his application for a new policy in 

1 Manufacturers Life Ins. Co. v. Newman, 72 Misc. 52, 129 N. Y. 
Rowes, 5 W. L. R. 405, 16 Man. L. R. Supp. 259. 

540. 7 Alligood v. Daniel & King, 12 

2 Union Central Ins. Co. v. Zihl- Ga. App. 220, 76 S. E. 1083. See 
man, 68 W. Va. 272, 69 S. E. 855. also Struve v. Moore, — Tex. Civ. 

3 State Life Ins. Co. v. Chowning, App. — , 136 S. W. 1178. 

27 Okla. 722, 113 Pac. 715. 8 Smith v. Dotterwich, 200 N. Y. 

4 Rosenberg v. Johnson, 45 Colo. 299, 33 L.R.A.(N.S.) 892, 93 N. E. 

53, 99 Pac. 315. 985. 

5 Ten Broek v. Jansma, 161 Mich. As to contemporaneous agreements 
597, 126 N. W. 710. and their breach as a defense to a 

As to sufficient defenses to actions promissory note, see note in 43 
on notes see § 3734 herein. L.R.A. 44!). 

6 Equitable Trust Co. of N. Y. v. 9 Summers v. Alexander, 30 Okla, 

Joyce Ins. Vol. TIL— 14S. 2353 



§ L222 JOYCE ON INSURANCE 

plan' of the old one before acceptance thereof. 10 Ami a note for a 
premium on a policy to be written on the Life of the wife of the 
applicant for his benefit, cannot be enforced if the policy is written 
for her benefil and the company refuses to be responsible for the 
validity of an assignmenl to the husband which the agenl induces 
the wife to indorse on the back of the policy. 11 Again, notwith- 
standing the insurer mighl have recovered the full amount of a uote 
upon nonpayment thereof at its maturity and even though the 
policy might have been revived by insured, an insistence by insurer 
upon a forfeiture of the policy and insured's consent thereto pre- 
clude- recovery of any part of the note. 12 So although a policy is 
forfeited for nonpayment of a note at maturity the insurer cannot 
recover the full amount thereof where it has made its election to 
settle for a proportionate part of the note for the time the insurance 
was in force and insured has paid said proportion. 18 Nor can any 
recovery be had on notes given to insurers agent where insured. 
upon discovery of the agent's fraudulent acts in inducing insurer to 
issue the policy and before any benefits had been received or any 
part of the contract performed had repudiated the contract, for in 
such case there is no consideration for the notes. 14 Nor is an instru- 
ment evidencing a promise to pay based upon a valid consideration 
or enforceable where the maker receives a rebate. 15 

§ 1222. Liability on premium, etc., notes: generally. — Owing to 
the various forms of insurance contracts where premium and other 
notes are given, it is impossible to formulate other than the most 
general rules in relation thereto, although one or more of the fol- 
lowing factors are important in determining the question. They 
are: 1. The power of a mutual company to take such notes: 16 
2. The validity of the note; 17 3. Its character and form, which in- 
cludes its negotiability and terms of payment; 18 4. The validity of 
contract provisions relating thereto ; 19 5. The construction of the 
terms of the contract, including the charter and by-laws, and such 
statutes as may apply, and in this connection whether the powers 

198, 38 L.R.A.(N.S.) 787, 120 Pac. "Curry v. Stone, — Tex. Civ. 

601. App. — , 92 S. W. 263. Examine 

On retention of policy of insurance Weidenaar v. New York Life Ins. 

as a waiver of mistake or fraud as Co. 36 Mont. 592, 94 Pac. 1. 

to terms of policy, see notes in 67 15 Equitable Trust Co. v. Newman, 

L.R.A. 705, and38L.R.A.(N.S.) 787. 72 Misc. 52, 129 N. Y. Supp. 259. 

10 Planters Fire Ins. Co. v. Crock- See also Ellis v. Anderson (Pa.) 68 

ett, 115 Ark. 606, 170 S. W. 1012. Le<?. Int. 380. 

11 Snydor v. Boyd, 119 N. Car. 16 See § 1214 herein. 

481, 37 L.R.A. 734, 26 S. E. 92. 17 See § 1215 herein. 

12 Skillern v. Continental 7ns. Co. 18 See S§ 1217-1219 herein. 

— Term. Ch. — , 42 S. W. 180. 19 See § 1220 herein. 

"Parker v. Murphy, 56 Misc. 541, 
107 N. Y. Supp. 202. 

2354 



PREMIUM NOTES §§ 1223, 1224 

of the company have been lawfully exercised in relation to such 
notes from their inception until the final determination of liability 
thereon ; 20 6. If the note is negotiable, the rights of bona fide hold- 
ers thereof; 1 7. The effect upon the note of withdrawal of the mem- 
ber; of surrender of the policy; of the loss or insolvency of either 
party, and of breach of conditions generally by the parties. 

§ 1223. When liability absolute on premium, etc., notes: when 
not. — The distinction, however, between the liabilities of those who 
give notes to form the capital stock and those whose notes are not 
given until after the stock is made up and the company organized 
should be remembered, since the former class are liable on their 
notes, irrespective of losses, while the latter are liable only for their 
pro rata share of the losses and expenses in common with others 
who have given like premium notes, which are available. 2 When 
a firm gives the premium note in advance for the security of dealers 
under the charter of a mutual insurance company, and a new firm 
is formed, which succeeds to its business, and which gives a note in 
renewal of the one first given, the signers of such note are liable 
therefor. And where premiums have been earned against it by the 
company while the note is running, the firm is not liable for such 
premiums in addition to such note. 8 So a note which constitutes 
part of the capital stock of a company is, under the New York stat- 
ute of 1849, payable absolutely when payable in such proportions 
and at such times as the directors of the company, agreeably to their 
charter and by-laws, may require. 4 And a note may be collected in 
full without assessment where it is in fact a stock note given and 
used as such, although it be in form a premium note. 6 

§ 1224. Liability for losses prior to membership. — The terms of 
the contract must determine the liability of a member on his pre- 
mium note, and he is entitled to insist that such liability shall not 

20 See chapters herein on construe- v. Crooke, 4 Comst. (N. Y.) 51; 

tion; also cases throughout this chap- Howland v. Meyer, 3 Comst. (N. Y.) 

ter. 290; Deraismes v. Merchants' Mutual 

!See § 1215 herein. Ins. Co. 1 Comst. (N. Y.) 371; Em- 

2 Dana v. Munro, 38 Barb. (N. Y.) met v. Reed, 8 N. Y. (4 Seld.) 312. 
528, per Mullin, J. As to mutual fire, etc., companies, 

3 Maine Mutual Marine Ins. Co. capital stock notes, deposit notes, re- 
v. Blunt, 64 Me. 95. linquishment, loans, etc., see N. Y. 

4 Hart v. Achilles, 28 Barb. (N. Ins. L. 1909, c. 33, sees. Ill, 113, 
Y.) 570; White v. Haight, 16 N. Y. 115; as to marine insurance corpora- 
310; citing Furness v. Gilchrist, 1 tions: restrictions as to premium 
Sand. (N. Y.) 53; Brouwer v. Hill, notes, see N. Y. L. 1909, c. 33, sec. 
1 Sand. (N. Y) 629; Browner v. 154. 

Applebv, 1 Sand. 158; Hone v. Al- 5 Sands v. John, 36 Barb. (N. Y.) 
len, 1 Sand. (N. Y) 171; Hone v. 628. 
Folger, 1 Sand. (N. Y.) 177; Brown 

2355 



. L225 JOYCE ON [NSUBANCE 

be extended beyond his contract, and in case a premium note is 
given payable as the directors may require, he is nol liable in such 
case for losses occurring before he became a member; G and in case 
of deposit notes subjeel to a pro rata assessment on all the notes to 
be determined by the directory, the responsibility to contribute to a 
loss begins when the risk lias attached, and terminates when the 
policy expires. 7 But the terms of the contract may be such that a 
note may he collected to pay losses and expenses which accrued be- 
fore the maker became a member of the corporation. This was so 
held where a deposit note was given to be considered the absolute 
funds of the company, and assessed and collected as the directors 
should deem expedient, and, in case losses should occur so as to 
consume the" absolute funds of the company, then the members 
should pay an additional sum not exceeding a certain proportionate 
amount. 8 

§ 1225. When liability continues until policy surrendered and all 
assessments paid. — Where the contract so provides, the maker of a 
premium or deposit note may be liable to assessment thereon until 
the policy is actually surrendered and payments made of all assess- 
ments for losses sustained prior to such surrender, even though in- 
curred subsequently thereto, and notwithstanding the policy has 
become forfeited by alienation of the property. 9 So it is also held 

6 Koehler v. Beeber, 122 Pa. St. liable to be discharged until the pol- 
291, 16 Atl. 354, 23 Wkly. Notes Cas. icy is regularly discharged on the 
558. See Long Pond Mutual Fire books of the company. It remains 
Ins. Co. v. Houghton, 6 Gray (72 subject to assessments till the dis- 
Mass.) 77. charge of the policy, or till such 

7 Planters' Ins. Co. v. Comfort, 50 notice to the officers of the company 
Miss. 662. of a surrender, assignment of the 

8 Nashua Fire Ins. Co. v. Moore, property, or other cause of dis- 
55 N. H. 48. See Long Pond Mu- charge as would make it their duty 
tual Fire Ins. Co. v. Houghton, 6 to discharge it. In the language of 
Gray (72 Mass.) 77; Susquehanna Beardslev, J., in Neely v. Onondaga 
Mutual Fire Ins. Co. v. Stauffer, 125 County Mutual Ins. Co. 7 Hill (X. 
Pa. St. 416, 17 Atl. 471. Y.) 49, before cited, 'although the 

9 In Atlantic Ins. Co. v. Goodall, plaintiff's policy became void by the 
35 N. H. 328, in which the question alienation of the property, it does 
was considered, the court said: "It not follow that his deposit note was 
is assumed by the plaintiff that the also void. On the contrary, until 
note and policy were dependent on he surrendered his policy, and paid 
each other, and that the policy re- his proportion of all losses which 
mained in force so long as the note accrued prior to such surrender, the 
was not discharged; but such is not deposit note remained obligatory up- 
our view of the case. The note was on him:'" See Neely v. Onondaga 
in force until all assessments for loss- County Mutual Ins. Co. 7 Hill (N. 
es incurred during the continuance of Y.) I!); Indiana Mutual Fire Ins. Co. 
the policy are paid and it is regu- v. Coquillard, 2 Ind. 645; Indiana 
larly discharged, and the note is not Mut. Ins. Co. v. Connor, 5 Ind. 170. 

2356 



PREMIUM NOTES 



§ 122G 



that the policy once attached is a valid consideration for the pre- 
mium note, which remains in force, notwithstanding the release or 
discharge of the policy, till the discharge is communicated to the 
office and the assessment and dues are paid. 10 So where the com- 
pany was insolvent, it was held that the maker, by failing to return 
the policy as worthless, was obligated to pay the note. 11 So instal- 
ment notes may be binding, although the policy has been forfeited, 
where there is an express agreement therefor. 12 

§ 1226. Liability after termination of contract or surrender of 
policy. — If one insured for a short time has the right to terminate 
his contract, and he gives notice of his election so to do, to which 
the company makes no reply, no recovery can be had on his pre- 
mium notes after the policy has expired. 13 So where a rescission of 
the contract by the assured is not made until after the first instal- 
ment of the premium note becomes due, he is liable for dues until 
the rescission. 14 Although a petition has been filed, yet if, before 
the receiver is appointed, the maker of a premium note pays an 
assessment and surrenders his policy, under an agreement with an 
authorized agent of the company that such payment shall be in 
full, the note is extinguished. 15 But where a member withdraws 
from the company and surrenders the policy, it is held that he is 

Examine § 1215 herein, and the cases that the company before the fire 
of Miner v. Judson, 5 N. Y. S. C. waived any right which it had ac- 
46, 2 Hun (N. Y.) 441, 2 Lans. (N. quired by reason of the default in 
Y.) 300; Tuckerman v. Bigler, 46 the payment of the assessment," per 
Barb. (N. Y.) 395, noted therein, the court. Contra, Nelson v. Trum- 
See also Crawford Co. Mutual Ins. bull Ins. Co. 19 Pa. St. 372. Pre- 
Co. v. Cochran, 88 Pa. St. 230, where mium note in mutual fire company to 
it was held that the levying of a be surrendered when insurance ends : 
second assessment during a default Rev. Stats. Me. 1883, p. 447, c. 49, 

' sec. 27; citing Leary v. Blanchard, 
48 Me. 274; Brown v. Donnell, 49 
Me. 425; Union Ins. Co. v. Green- 
leaf, 64 Me. 128. 

10 Atlantic Ins. Co. v. Goodall, 35 
N. H. 328. 

11 Graff v. Simmons, 58 111. 440. 

12 Blackerby v. Continental Ins. Co. 

653. 



in the payment of a former one did 
not operate as a waiver of the com- 
pany's right to demand the latter, 
nor did it thereby remove the dis- 
abling consequences flowing from the 
neglect to pay such assessments. "As 
long as the assessment remained un- 
paid beyond thirty days after being 



duly demanded, so long the protec- 83 Ky. 574, 7 Ky. Law Rep. 

tion of the policy continued suspend- See further on this subject §§ 1370- 

ed An acceptance of its 1373, post, as to waiver of forfeiture 

payment at any time before the fire by subsequent assessment, 

would have restored its efficiency. If 13 Home Ins. Co. v. Burnett, 26 Mo. 

the holder thereof was in default App. 175. 

when the loss was sustained, the com- 14 American Ins. Co. v. Garrett, 71 

pany was not bound to afterward ac- Iowa, 243, 32 N. W. 356. 

cept payment of the assessment. 15 Sands v. Hill, 55 N. Y. 18, 42 

There was, therefore, no evidence Barb. (N. Y.) 651. 

2357 



§§ L227 1229 JOYCE ON INSURANCE 

not liable thereafter upon a note which is in effecl given as a mere 
security for losses, subject to assessments therefor, and which there 
was never an absolute promise to pay, although the note, represent- 
ing three-quarters of the entire premium for the period, was car- 
ried. 18 Bui notes for the security of those concerned given in lieu 
of capital stock cannot be surrendered when needed for the debts 
by the trustees at the request of the makers where there is no con- 
sideration, except an agreemenl by the latter to claim nothing from 
the company for their use. 17 

§ 1227. Liability after suspension on note for entire premium. — 
[f a note is given for the entire premium, the company may recover 
the full amount, although the term of the policy has not expired, 
and even though there is a stipulation in the policy that failure to 
pay said note on maturity will operate to suspend the company's 
liability. 18 

§ 1228. Extent of liability after part payment of note. — A mem- 
ber can only be assessed for future losses to the face of the premium 
note where he has partly paid the amount thereof. 19 

§ 1229. Liability after loss. — If the contract so provides, recovery 
may be had on a premium note after loss, even though the policy 
is suspended. 20 So it is also held that although there has been a 
total loss of the property insured by a mutual fire insurance com- 
pany, yet the assured is liable for the payment of assessments made 
upon his premium note for his just proportion of all losses sustained 
by the corporation during the entire period mentioned in his policy 
of insurance. 1 But in case the note is one given in advance for 
assessments for insurance, and a default occurs in payment thereof, 
it is held that recovery may be had for a loss. 2 So a liability may 
exist upon a deposit note, although the property is destroyed and 

16 In this case the charter pro- 18 McEvoy v. Nebraska & Iowa Ins. 
vided for an assessment ratably upon Co. 46 Neb. 782, 65 N. W. 888. 

the members to meet deficiencies 19 Davis v. Oslikosh Upholstery Co. 

where the losses exceeded the funds 82 Wis. 488, 52 N. W. 771; distin- 

on hand, and there was no evidence guishing Kennan v. Rundle, 81 Wis. 

of such assessments. It also ap- 212, 51 N. W. 426. 

peared, however, that the insured paid 20 Robinson v. German Ins. Co. 51 

the company in cash very nearly the Ark. 441, 4 L.R;A. 251, 11 S. W. 

full value of the risk carried before 686. 

the policy was surrendered : Mutual l Swamscot Machine Co. v. Part- 
Benefit Life Ins. Co. v. Jarvis, 22 ridge, 25 N. H. (5 Fost.) 369. 
Conn. 133, Ellsworth, J., dissenting. On liability of members of mutual 

17 Maine Mutual Marine Ins. Co. fire insurance company on premium 
v. Pickering, 66 Me. 130. See Mans- note, see note in 32 L.R.A. 483. 
field v. Cincinnati Ice Co. 11 Ohio 2 King v. Mutual Ins. Co. 20 N. 
Dec. 617, 28 Week. L. Bull. 113. H. 198. 

2358 



PREMIUM NOTES §§ 1230, 1231 

the loss paid. 3 So where a note is payable in such portions and at 
such times as may be required under the act of incorporation, and 
in case of default in paying an assessment the whole note might be 
collected and paid into the company's hands, and retained to meet 
losses and expenses during the term of the policy, which was six 
years, and the property was destroyed in two years, it was held that 
the maker was liable on said note for the entire period of six years, 
notwithstanding said loss, and that no liability for damages in ex- 
cess of the sum limited in the policy existed in the insured. 4 

§ 1230. Liability incurred by default in payment of assessment. — 
The contract may provide; that upon nonpayment of an assessment 
on a premium note, the whole amount of the note shall thereupon 
become due and payable, and such provision is enforceable in an 
action on the note, and it is held to be unnecessary to declare special- 
ly thereon. 5 So an agreement may be enforced which provides 
that nonpayment of an instalment shall operate to forfeit the poli- 
cy, and the company's liability cease until payment, and the whole 
note shall become due. 6 If the maker becomes, under the company's 
charter, liable to pay the whole amount of his premium note by 
failing to pay an assessment when due, the company is entitled to 
retain the note until all losses are paid, for which an assessment on 
said note may be made. 7 The company may also under the con- 
tract be not liable for a loss occurring during the default, and yet 
the note be recoverable even after such loss. 8 

§ 1231. Liability in case of insolvency of company. — A note for 
premiums in advance given as security for dealers with the com- 
pany passes to the receiver of the company on its being declared 
insolvent. 9 So a note given upon the formation of the company 
and constituting part of its capital stock, and payable absolutely, 
may upon the company's insolvency be collected by its receiver. 10 
But the fact that a mutual company has become insolvent and its 

3 Bangs v. Seidraore, 21 N. Y. 136, the full premium shall be deemed 

24 Barb. (N. Y.) 29. earned in case of nonpayment of a 

4 New Hampshire Mutual Fire Ins. premium note at maturity, the corn- 
Co. v. Rand, 24 N. H. 428. pany may after default demand pay- 

5 Jones v. Sisson, 6 Gray (72 ment of the overdue premium with- 
Mass.) 288; Bangs v. Bailey, 37 out such demand operating as a wai- 
Barb. (N. Y.) 630; Limerick v. Gor- ver of the forfeiture: Laughlin v. 
ham, 37 Kan. 739, 15 Pac, 909. Fidelity Mutual Life Assoc. (8 Tex. 

6 Continental Ins. Co. v. Boykin, C. C. A. 448) 28 S. W. 411. 

25 S. C. 323. 9 Cruikshank v. Brouwer, 11 Barb. 

7 St. Louis Mutual Fire & Marine (N. Y.) 228. 

Ins. Co. v. Boeekler, 19 Mo. 135. As to bankruptcy and insolvency, 

8 Palmer v. Continental Life Ins. see §§ 3590 et seq. herein. 

Co. 31 Mo. App. 467; Beadle v. Che- 10 White v. Haight, 16 N. Y. 310; 
nango County Mutual Ins. Co. 3 Hill Hart v. Achilles, 28 Barb. (N. Y.) 
(N. Y.) 16L* If it is stipulated that 576. 

2359 



§ 1231 JOYCE ON INSURANCE 

effects have gone into the hands of a receiver will not increase the 
liability of members upon their deposit notes, where the general 
act of incorporation tinder which the company was formed pro- 
vides that members of such organizations are only liable to pay 
upon their premium notes their proper shares of the losses and 
damages sustained by the members. 11 Again, the insured in a 
marine policy on a ship for a year is not entitled to have his pre- 
mium note given up, on canceling his policy and paying pro rata 
for the time expired, in the event of the insurer becoming bank- 
rupt while the policy is running; 12 and the maker of a premium 
note or note for the security of dealers is liable thereon, notwith- 
standing the insolvency of the company before the expiration of 
the policy. 13 Nor is it of any consequence that the note was a 
renewal note, and past due, 14 since a resolution of a mutual insur- 
ance company to wind up its affairs is in legal effect an assessment 
of one hundred per centum on the premium notes to enable it to 
meet its liabilities and divide its excess, if any. 15 But where a note 
w.i- given for balances unpaid on cash premiums for prior years on 
a life policy, and which note included the premiums for the ensuing 
year, and the company became insolvent, went into liquidation, and 
notified the insured that the contract was terminated, it was held 
that, an action on the note by the insurer's assignee brought after 
the i\v\A^ were all paid could not be sustained. 16 And where after 
the tiling of the petition, but before the publication of notice and 
appointment of a receiver, an assessment was paid by the maker 
of a note, who surrendered his policy, the same being done in full 
satisfaction and surrender of the note under an agreement therefor, 
it was held that no further liability existed on said note, and the 
receiver could sustain no action therefor, notwithstanding a statu- 
tory provision that all transfers of choses in action and assets of a 
corporation were void when made after the petition for dissolution 
in payment of or as security for a debt. 17 And after insolvency of 
the company, and before decree, the maker of a premium note can- 

11 Slmu^hnessy v. Rensselaer Ins. 14 Hone v. Allen, 1 Sand. 137, 
Co 21 Barb. (N. Y.) 605. 171n. See Hone v. Ballin, 1 Sand. 

12 ll.mc v. Boyd, 1 Sand. (N. Y.) (N. Y.) 181; Hone v. Folger, 1 Sand. 
481. (N. Y.) 177. 

13 Sterling v. Mercantile Mutual 15 Command v. North Carolina Mu- 
Ins. Co. 32 Pa. St. 75, 72 Am. Doc tual Ins. Co. 1 Phill. Eq. (62 N. C.) 
77::. See Hone v. Allen, 1 Sand. (N. 341, 98 Am. Dee. 89. 

Y.) 137; Alliance Mutual Ins. Co. 16 Bostick v. Maxey, 5 Sneed (37 

v. Swift, 10 Cush. (64 Mass.) 433; Tenn.) 173. 

Deraismes v. Merchants' Mutual Ins. "Sands v. Hill, 55 N. Y. 18. 

Co. 1 Comst. (N. Y.) 37. But see under 2 N. Y. Rev. Slats. 469, sec. 

Farmers' & Merchants' Ins. Co. v. 71, relating to the "voluntary disso- 

Smith, 63 111. 187. lutions of corporations." 

2300 



PREMIUM NOTES §§ 1232, 1233 

not escape liability by surrendering his policy and paying a small 
per cent on the notes by agreement with the officers of the com- 
pany. 18 The fact that the company had ceased to do business, and 
has made an assignment in insolvency for its creditors, does not en- 
title the makers of deposit notes to have them canceled without pay- 
ing assessments for losses during the time they had the benefit of 
insurance, such notes being given to cover future assessments, and 
this is so although they may have been misled as to the amount 
of the guaranty fund for partial protection against assessments; it 
appearing that they deferred asking relief until after such insolv- 
ency. 19 

§ 1232. Insolvency of maker of note. — If the maker of the note 
becomes insolvent or bankrupt, and is discharged of his debts, the 
contract between the parties is thereby terminated; it ceases to be 
mutual and the insurer is released; 20 and so although interest is 
paid on the premium note after the maker becomes bankrupt, where 
such fact is not known to the company, and they have no actual 
notice of the proceedings in insolvency and the assured's discharge 
until after such payment. 1 

§ 1233. Interest on premium notes: forfeiture. — In life insurance 
the nonpayment of interest on premium notes will not work a 
forfeiture unless the contract so provides. 2 So where the contract 
does not clearly so stipulate, and there would be no forfeiture for 
nonpayment of the principal, and the company has sufficient 
funds of the assured in its hands to pay the interest, the policy will 
not be forfeited for nonpayment of interest on premium notes. 3 
But if such policy provides for the payment of interest on the pre- 
mium note at a specified day, otherwise the policy shall be for- 
feited, time is of the very essence of the contract, and noncompli- 
ance with such condition forfeits the policy. 4 And equity will not 

18 Doane v. Milville Mutual Marine Interest on premium notes; when 
& Fire Ins. Co. 43 N. J. Eq. 522, failure to pay forfeits paid-up pol- 
11 Atl. 739, 10 Cent. L. J. 670, 17 icy, when not, see §§ 1188, 1189 here- 
Ins. L. J. 393. in. 

19 Corey v. Sherman, 96 Iowa, 114, 3 Northwestern Mutual Life Ins. 
32 L.R.A*. 490, 514, 64 N. W. 828. Co. v. Fort's Adm'r, 82 Ky. 269, 6 

20 Reynolds v. Mutual Fire Ins. Co. Ky. L. Rep. 271. 

34 Md.' 280, 6 Am. Rep. 357. See 4 Knickerbocker Life Ins. Co. v. 

Young v. Eagle Fire Ins. Co. 14 Dietz, 52 Md. 16; Holman v. Conti- 

Grav (80 Mass.) 150, 79 Am. Dec. nental Life Ins. Co. 54 Conn. 195, 1 

673. See § 3599 herein. Am. St. Rep. 97, 6 Atl. 405; Knick- 

1 Reynolds v. Mutual Fire Ins. Co. erboeker Life Ins. Co. v. Harlan, 56 
34 Md. 280, 6 Am. Rep. 357. Miss. 512; People v. Knickerbocker 

2 Gardner v. Union Central Life Life Ins. Co. 103 N. Y. 480, 9 N. E. 
Ins. Co. 5 Fed. 430. 35. 

2361 



§ 1234 JOYCE OX INSURANCE 

relieve against such forfeiture, 6 in the absence of a waiver or 
estoppel. But if, where an insurance company wrongfully and 
in violation of the policy demands payment of a greater per cent 
of interest on outstanding premium notes than is payable thereon, 
and gives notice that a less rate will not be received if tendered, 
and That no other premiums will be received on the policy unless 
the rate per cent demanded is paid, a subsequent nonperformance 
of the conditions by the insured is excused. 6 If the premium is to 
be paid partly in cash and partly by notes, the interest payable 
annually, such interest becomes practically a premium, which 
must be promptly paid where so stipulated to prevent a forfeiture. 7 
And nonpayment of interest on premium notes which are in effect 
loans will not operate to effect a forfeiture, notwithstanding the 
policy so stipulates. 8 And premiums do not comprehend loans 
indorsed as such on the policy so that nonpayment of interest there- 
on will constitute a forfeiture, 9 and the contract may provide for 
the payment of the annual premium, one-half in cash and the 
other half to remain as a loan, bearing interest the same, together 
with all other credits and indebtedness to be deducted from the 
sum insured, and the policy is to be forfeited if the premiums and 
interest on the note or credit given be not paid annually in advance. 
In such case the contract will be so construed as to mean that so 
much of the premium as was unpaid became a loan, bearing in- 
terest so long as it was retained as such from the time the premium 
became due up to the maturity of the note. 10 

§ 1234. Tender: premium notes. — A tender at the maturity of an 
instalment on a note given for the premium made before loss is 
valid where the policy does not provide for forfeiture for nonpay- 
ment when due, although it does stipulate that the company shall 
not be liable for a loss occurring while any note for the premium 
remains due and unpaid. 11 And the amount of premium due 
upon tender of which the assured is entitled to a renewal does not 
include interest on premium notes previously given, where there 

5 Knickerbocker Life Ins. Co. v. by, 10 Bush (73 Ky.) 310. Compare 
Dietz, 52 Md. 16. Anderson v. St. Louis' Mutual Life 

6 Phconix Mutual Life Ins. Co. v. Ins. Co. Big. L. & A. Cas. 527, 1 
Hinesley, 75 Ind. 1. Flip. (U. S. C. C.) 559, Fed. Cas. 

'Smith v. St. Louis Mutual Life No. 362. Contra, Patch v. Phoenix 
Ins. Co. 2 Tenn. Ch. 727. See also Mutual Life Ins. Co. 44 Vt. is I. 
Van Norman v. Northwestern Mutual 9 Gardner v. Union Central Life 
Life Ins. Co. 51 Minn. 57, 52 N. W. Ins. Co. 5 Fed. 438. 
988 10 Maclntyre v. Cotton States Life 

8 Bruce v. Continental Life Ins. Co. Ins. Co. 82 Ga. 478, 9 S. E. 1121. 
58 Vt. 253, 2 Atl. 710. See St. u Continental Ins. Co. v. Miller, 4 
Louis Mutual Life Ins. Co. v. Grigs- Ind. App. 553, 30 N. E. 718. 

2362 



PREMIUM NOTES 



§ 1235 



is no provision in the policy that the nonpayment of said interest 
shall work a forfeiture. 12 And insurer's refusal to accept pay- 
ment of a note on the ground that the policy had been forfeited 
precludes the necessity of a subsequent tender of payment of the 
premium. 13 "Where insured who lias <;ivon his note to a mutual 
bail insurance company, he cannot by a tender of the amount of 
his note two years after his policy has been forfeited for nonpay- 
ment of premiums recreate a liability on his contract. 14 

§ 1235. Payment of premium notes or interest thereon by divi- 
dends or profits. 15 — It is held that even though the policy provide 
for forfeiture for nonpayment of interest on premium notes, the 
fact that the contract also provides that the insured shall be en- 
titled to share in the profits necessitates the application of his share 
of the dividends to the payment first to the interest, in order to 
prevent a forfeiture, and then to the notes, 16 even though the policy 
also provides that such shares shall be applied on the principal of 
the notes. 17 So it is held that if an endowment policy provides 
for the payment of a certain proportionate sum of the amount of 
the policy on default in payment of premiums, conditioned that 
the premium notes are taken up or the interest paid thereon an- 



12 Mutual Life Ins. Co. v. French, that such dividends should have been 
30 Ohio St. 240, 27 Am. Rep. 443. declared and actually due to the pol- 

13 Guetzkow v. Michigan Mutual icy-holders." See note to Girard Life 
Life Ins. Co. 105 Wis. 448, 81 N. W. Ins. Annuity & Trust Co. v. Mutual 
652. Life Ins. Co. 97 Pa. St. 15, 10 Ins. 

As to frequency of tender of pre- L. J. 273-75, where the editor con- 

miums, see § 1123 herein. eludes as follows: "While the gen- 

14 Nimic v. Security Mutual Hail eral doctrine laid down in the case 

Ins. Co. Inc. 84 Neb. 403, 121 N. W. of the mutual life insurance company 

434. above is very broad in its language, 

15 See also § 1166 herein. it would seem, after all, as if it must 

16 Brooks v. Phcenix Mutual Ins. be viewed in connection with the spe- 
Co. 16 Blatchf. (C. C.) 182, Fed. cial facts of that case, rather than 
Cas. No. 1,960, 8 Ins. L. J. 741 ; the enunciation of a general principle 
Northwestern Mutual Life Ins. Co. applicable to cases where the com- 
v. Fort, 82 Ky. 269, 6 Ky. L. Rep. pany had no sufficient ground for 
271, Ins. L. J. Jan. 1885 ; St. Louis assuming that the assured would wish 
Mutual Life Ins. Co. v. Grigsby, 10 his dividends applied in a particular 
Bush (73 Ky.) 310; Smith v. St. way:" Id. 275. The Girard Life In- 
Louis Mutual Life Ins. Co. 2 Tenn. surance Company's case is, however, 
Ch. 727; Van Norman v. Northwest- approved as resting on solid prin- 
ern Mutual Life Ins. Co. 51 Minn, ciple by the court, per Elliott, J., 
57, 52 N. W. 988, as to the doctrine in Franklin Life Ins. Co. v. Wallace, 
"that a company having in its pos- 93 Ind. 7, 11. 

session dividends to the credit of a 17 Northwestern Mutual Life Ins. 

policy holder is bound to so apply Co. v. Fort, 82 Ky. 269, 6 Ky. L. 

them as to prevent a forfeiture if Rep. 271, Ins. L. J. Jan. 1885. 
it has the power; nor is it necessary 

2363 



§ L235 JOYCE <>\ [NSURANCE 

nually in cash until the notes are canceled by the return of the 
surplus, otherwise the policy will be forfeited, unless one or more 
annual premiums has been paid in full, in cash, or by dividends, 
such condition is binding upon the assured, and although there is 
a ,1,. fault iii payment of the interest, it is obligatory to apply the 
dividends in payment of the note if sufficient, and so save a forfeit- 
ure. 1 1 is also decided that the amount of the interest being only 
tour cents, it is too trilling to note a default in its payment. 18 A 
policy may be for life with the total amount of premiums payable 
in a specified time with a participation in the profits. It appeared 
in such a case that the annual premiums were payable in cash 
and a premium note given for part, and there was a condition that 
hi eh notes should be paid out of the dividends. New notes were 
given on maturity of each note, including the amount due on the 
old note, less the dividends, and it was held that the right to par- 
ticipate in dividends continued during the natural life of the as- 
sured. 19 But under the New York statute the right to participate 
in profits or in the distribution of surplus does not apply to tempo- 
rary or paid-up insurance, or pure endowment insurance issued or 
granted in exchange for lapsed or surrendered policies. 20 So the 
light to share in future dividends may be lost, although the pre- 
mium notes are in the nature of a permanent loan to the policy- 
holder, to be paid out of dividends to be declared, or by a deduction 
from the policy when payable, where the policy is forfeited by the 
nonpayment of annual premiums and the annual interest as stip- 
ulated! 1 But where the charter required the interest on the deposit 
notes to be paid annually on or before a certain day, or the policy 
would be suspended, and no liability for loss existed on the part of 
the company while it was due and unpaid, it was held that profits 
accrued on the policy should not be applied to the interest, so as to 
charge the company with liability for a loss in such case, the by- 
laws providing only that the profits be calculated annually and 

18 Van Norman v. Northwestern plus or profits, Berryrnan v. Banker's 
Mutual Life Ins. Co. 51 Minn. 57, Life Ins. Co. 102 N. Y. Supp. 695, 
52 N. W. 988. See Dutcher v. Brook- 117 App. Div. 730. 

lvn Ins. Co. 3 Dill. (U. S. C. C.) l Northwestern Mutual Life Ins. 

87, Fed. Cas. No. 4,202. Co. v. Bonner, 36 Ohio St. 51. 

19 Dutcher v. Brooklyn Ins. Co. 3 As to the rule requiring thai apph- 
Dill. (I 1 . S. C. C.) 87, 'Fed. Cas. No. cation of dividends to keep the pol- 
4,202, 2 Cent. L. J. 153, 4 Ins. L. J. icy in force being applicable to the 
812. payment of interest on loans made 

2°3 N. Y. Rev. Stats. (8th ed.) p. on a policy in a mutual company, 
1688; N. Y. Ins. L. 1909, c. 33, sec. see Union Central Life Ins. Co. v. 
83. See [d. Bee. 87. Caldwell, 68 Ark. 505, 58 S. W. 355, 

Dividends only payable out of sur- 30 Ins. L. J. 41, 40. 

2364 



PREMIUM NOTES §§ 1235a-1237 

credited to the members, but that dividends should be declared 
only every ten years. 2 

§ 1235a. Application to unpaid notes, of amounts due for claims 
for injuries: accident policy. — The insurer must apply amounts 
due for claims acquired by reason of injuries to the payment of 
unpaid notes so as to prevent a forfeiture where such is the stipu- 
lation under an accident policy which also stipulates for the pay- 
ment of four premiums in equal instalments which shall consti- 
tute four separate contracts, and then each note for the premium 
is to apply to the period for which given. 3 

§ 1236. Effect of nonpayment of note upon beneficiary. — It is 
held that the fact that a policy is forfeited as stipulated by the 
nonpayment of premium notes cannot be avoided by one who has 
a beneficial interest in the policy, by reason alone of that circum- 
stance. 4 It is also decided that recovery by the beneficiary is pre- 
cluded where, upon refusal of insured to pay a note for the first 
premium, insurer and insured agreed that the contract and note 
liability should terminate. 5 But a forfeiture clause in a premium 
note given by the insured, if more onerous than that in the policy 
as against the interests of his wife, who is the beneficiary in the 
policy in case of his death, will not avail the insurance company 
as against the wife, unless she assents thereto, where the note is 
given for a premium after the policy has been in force several 
years. 6 In another case where the annual premium note was con- 
sidered as evidence of a loan, it was held that the company was 
obligated to enforce the payment of the annual interest thereon, 
and that the beneficiary could not be affected by the default in 
payment of interest by him to whom the loan was made. 7 

§ 1237. Deduction of note from loss. 8 — In marine insurance the 
usual provision in policies is that the amount of the note given for 
the premium if unpaid shall be first deducted from the loss, and 
in such case the insurers will be allowed to deduct the premium 

2 Mutual Fire Ins. Co. v. Miller Buxer, 62 Ohio St. 385, 49 L.R.A. 
Lodge, 58 Md. 463. 737 (annotated on power of insured 

3 North American Ins. Co. v. Bow- to destroy rights of beneficiary), 57 
en, — Tex. Civ. App. — , 102 S. W. N. E. 66. 

163. 7 St. Louis Mutual Life Ins. Co. v. 

4 Continental Ins. Co. v. Daly, 33 Grigsby, 10 Bush (73 Ky.) 310. See 
Kan. 601, 7 Pac. 158. Patch v. Phoenix Mutual Life Ins. 

5 Our Home Life Ins. Co. v. Pea- Co. 44 Vt. 481, where the policy was 
cock, — Fla. — , 70 So. 775. held forfeited under nearly the same 

As to vested interest of beneficiary, facts, 

see §§ 730 et seq., 741 et seq. herein. 8 See §§ 1239, 1311 herein. 

As to right of assured to surrender As to set-off in actions on notes, 

policy, see §§ 853 et seq. herein. see §§ 3736, 3737 herein. 

6 Union Central Life Ins. Co. v. 

2365 



§ I2 3S JOYCE ON 1XSIK AM'K 

note whenever liable for a Loss, 8 and so whether the note be given 
by the principal or his agent. 10 So in other than marine policies 
the stipulation frequently is that the amount due on an unpaid 
premium note shall be deducted from the amounl payable, in 
which case ii may be deducted." But it is held that a claim for a 
partial loss is unliquidated in its nature, and cannot be the sub- 
ject of set-off under the statute, and in a suil upon a marine policy 
to receive a contributory share from the insurers payable to the 
insured on the adjustment of the general average alter a partial 
loss, it is held that promissory notes due from the insured cannot 
be set off, even though the amount due on the policy has been 
assented to, provided the set-on 3 were permitted. 12 Whenever the 
right under the terms of the policy to deduct an unpaid premium 
note exists, the fact that the note is long past due, or that the stat- 
ute of limitations has run against it, will not prevent the exercise of 
the right ; 13 and where the contract expressly provides that the com- 
pany shall have the right to deduct premiums or interest, or any 
notes given for the premiums, and shall not be liable only for the 
excess in case of loss, such stipulation does away with the necessity 
of paying annual interest-bearing premium notes given for a part 
of the annual premium. 14 So where annual interest-bearing pre- 
mium notes were given, it was held a loan, the amount of which, 
with interest due thereon, must be deducted from the amount pay- 
able under the policy, even though the assured had defaulted in 
payment of interest thereon. 15 But in another case where the facts 
were substantially the same, it was held that nonpayment of the 
interest forfeited the policy. 16 

§ 1238. Counterclaim on note of owner of vessel insured for ben- 
efit of mortgagee. — If shipowners insure the vessel for the benefit 
of the mortgagee, a valid counterclaim exists in favor of the in- 
surer to the extent of the amount of a premium note due it from 
the owners of the vessel at the time of action brought, although it 
is not on the policy sued on in said action. 17 

9 Livermore v. Newburyport Ins. 12 Diehl v. GenernJ Mutual Ins. Co. 
Co. 2 Mass. 232; Hurlburt v. Pacific 1 Sand. (N. Y.) 257. 

Ins. Co. 2 Sum. (U. S. C. C.) 471, 18 Alexander v. Continental Ins. 

Fed. Cas. No. 6,019 ; Wiggin v. Amer- Co. 67 Wis. 422, 58 Am. Rep. 869, 

ican Ins. Co. 18 Pick. (35 Mass.) 30 N. W. 727. 

145, 158, 29 Am. Dec. 576. 14 Ohde v. Northhwestern Life Ins. 

10 Hurlburt v. Pacific Ins. Co. 2 Co. 40 Iowa, 357. 

Sum. (U. S. C. C.) 471, Fed. Cas. 16 St. Louis Mutual Life Ins. Co. 

No. 6.919. v. Grimsby, 10 Bush (73 Ky.) 310. 

11 Currier v. Continental Life Ins. 16 Patch v. Phoenix Mutual Life 
Co. 31 Mo. App. 467; Van Norman Ins. Co. 44 Vt. 481. 

v. Northwestern Mutual Life Ins. Co. "Murray v. Great Western Ins. 
51 Minn. 57, 52 N. W. 988. Co. 72 Hun (N. Y.) 282, 55 N. Y. 

2366 



PRE MUM NOTES § 1239 

§ 1239. Amount of recovery on premium notes. — Where premi- 
ums have been paid for risks at lime of insurance, they cannot be 
deducted from the premium note; 18 nor is the insured entitled to 
any deduction from the premium note or assessments thereon be- 
cause (he charter of the company expires before the expiration of 
the policy, as this still continues in force. 19 Hut the premiums 
earned against the insured while a note for the security of dealers 
is running should be deducted on his paying the amount of such 
premiums, and he is not liable for such premiums in addition to 
the amount o,f his subscription note. 20 And in case of a deposit 
note, it may be reduced by the amount of all previous assessments 
without interest where the said note has become due by reason 
of default in nonpayment of assessments. 1 Such being the con- 
tract, the maker of a note for the security of dealers in a mutual 
company is entitled to have credited thereon not only premiums 
on his own insurances, but premiums on policies of others whom 
he has induced to insure, and such transaction cannot be questioned 
by the company or its creditors. 2 Another question is, however, 
involved in such cases, since as between the immediate parties to a 
note the consideration may be inquired into, and this may be only 
so much of the premium as is actually earned, and the latter is the 
amount actually due; therefore, whether there should be a return 
premium, and the right of the insured to have such returned pre- 
mium deducted from the amount of the note, are important, and it 
is held that the indorser in a suit on a premium note is entitled to 
have the return premium applied to its reduction. 3 So the maker 
of a premium note given to a mutual insurance company for the 
nominal premium upon an open policy executed to cover such 
risks as may be afterward indorsed thereon is liable to the company, 
or to a receiver of its effects, on such note only to the amount of the 
actual premiums upon risks assumed by the company and in- 
dorsed on the policy. 4 

St. Rep. 748, aff'd without opinion, Y.) 630; Bangs v. Mcintosh, 23 

147 N. Y. 711. Barb. (N. Y.) 591. 

"Howard v. Hinckley & Egery 2 Emmet v. Reed, 4 Sand. (N. Y.) 

Iron Co. 64 Me. 93. 229, aff'd 8 N. Y. 312. 

19 Huntley v. Beecher, 30 Barb. 3 Phoenix Ins. Co. v. Fignet, 7 
(N. Y.) 580. Johns. (N. Y.) 383, 384. 

20 Merchants' Mutual Ins. Co. v. 4 Lawrence v. McCready, 6 Bosw 
Leeds, 1 Sand. (N. Y.) 183. (19 N. Y.) 329; Elwell v. Crocker, 

1 Bangs v. Bailey, 37 Barb. (N. 4 Bosw. (17 N. Y.) 22. 

2367 




CHAPTER XLII. 



ASSESSMENTS AND DUES. 

§ 1245. Assessment defined: consideration. 
§ 1245a. "Assessments upon surviving members," construed. 
§ 1245b. When decree is assessment and not an order for an assessment. 
1245c. Whether or to what extent assessments are debts. 
Assessments : generally. 

Distinction between premiums and assessments. 
Membership fees and dues: generally. 
Validity of provisions as to assessments and dues. 
Assessment premium, etc., notes: generally. 
Who liable to assessments: what members. 
Who liable to assessment: mortgagee: assignee. 
Liability of member: generally. 

Nonpayment of assessment or dues after date of accident insured 
against. 
§ 1255. Liability to assessments: agreement or provisions contrary to 

statute. 
§ 1256. Liability: prior and subsequent losses: liability after loss, for- 
feiture or suspension. 
§ 1256a. Same subject. 
§ 1257. Members joining between loss and rendition of judgment against 

company. 
§ 1258. When dues payable : dues in arrears : forfeiture. 
§ 1259. Assessment falling due on Sunday. 
§ 1260. Assessments : suspension of member. 
§ 1261. When nonpayment of dues or assessments forfeits or suspends: 

self-executing provisions. 
§ 1261a. Same subject. 

§ 1262. Assessments paid in advance in excess of mortuary assessments. 
§ 1263. No forfeiture: assessments in advance of death losses. 
§ 1264. Forfeiture or suspension : when affirmative act of society necessary. 
§ 1265. When member is in good standing: when not. 
§ 1266. Nonpayment of assessments : when no forfeitures. 
§ 1267. Assessments by unauthorized company. 

§ 1268. Liability to assessments: cancelation: surrender: withdrawal. 

2368 



§ 


1278. 


§ 


1279, 


§ 


12S0. 


§ 


1281. 



ASSESSMENTS AND DUES 

§ 1269. Right of member to withdraw and avoid liability for assessments. 
§ 1270. Whether contract to pay assessments unilateral. 
§ 1271. Right to deny liability for losses on policies to nonmembers. 
§ 1272. Dues and assessments: effect of insolvency upon liability. 
>5 1273. Assessments : receiver. 

§ 127-1. What receiver may include in assessment: premium notes. 
§ 1275. Assessments by trustee of unauthorized company. 
§ 1 "276. Restoration to membership: reinstatement: revival. 
S 1276a. Same subject: good health. 
§ 1276b. Same subject : incontestable clause. 
S 1276c. Same subject: when reinstatement not effected. 
§ 1276d. Same subject : when new contract, when not. 

§ 1277. Reinstatement by way of waiver and not as new contract: cred- 
itor's rights. 

To whom dues and assessments are payable. 

Mode of remittance. 

Tender of assessments : frequency of tender. 

Assessments and dues : death before time specified for payment 
expires : loss after suspension. 
§ 1281a. Daj'S of grace : death within days of grace. 
§ 1282. Death of member during suspension of lodge. 

Death while "dues in arrears." 

Payment assessment after loss. 

Right to have assessment made. 

No authority to receive less than the amount of assessment due. 

Assessments and dues: safety fund: reserve fund. 

Refusal to pay assessments: right to have fund distributed. 

Application or appropriation of funds by society or lodge. 

Necessity for assessment must exist. 

Prescribed mode must be followed in levying assessment. 

Who empowered to levy assessments. 

Notice of intention to assess not necessary for directors' regular 
meeting. 

Power of directors to assess cannot be delegated. 

When power to assess may be delegated : exceptions to rule. 

Assessment by illegally elected board. 

Intentional omission of members. 
§ 1298. Assessments where risks are classified. 
§ 1299. Assessment invalid of certificate changed to life policy with regular 

premiums. 
§ 1300. When assessment may be made. 
§ 1301. Assessment to pay unearned premium. 

§ 1302. Slight errors do not invalidate: material errors or omissions do. 
§ 1303. Second assessment of note. 

Joyce his. Vol. til.— 149. 2369 



§ 


1283. 


§ 


1284. 


§ 


1285. 


§ 


1286. 


§ 


1287. 


§ 


1288. 


§ 


1289. 


§ 


1290. 


§ 


1291. 


§ 


1292. 


§ 


1293. 


§ 


1294. 


§ 


1295. 


§ 


1296. 


§ 


1297. 



§§ L245, L245a JOYCE ON [NSUEANCE 

§ L304. ALSsessment: new policy substituted for old one through fraud. 

§ L305. Levying assessments: amount: inequality. 

§ 1305a. Righl to increase assessments. 

§ L306. Examination and allowance of claims. 

§ 1307. What may be included. 

•; L308. What need aol and may uoi be included. 

§ 1309. Anticipated losses. 

§ L310. Regularity of assessment must be affirmatively shown: allegation 

and proof: evidence. 
§ L311. Defenses to actions: assessments: premium notes. 
§ 1312. Statute of limitations : assessments. 

§ 1245. Assessment defined: consideration. — An assessment is a 
sum specifically levied in mutual benefit insurances upon a fixed 

and definite plan within the limit of the company's or society's 
fundamental law of organization to pay losses, or losses and expenses 
incurred. They are to a certain degree, substantially the equivalent 
of premiums, and form the pecuniary consideration of the con- 
tract; 5 that is. a promise to pay duly authorized assessments on call 
is a consideration of a member's insurance benefits as a member. 6 
A periodica] payment of a certain sum stipulated for under a cer- 
tificate is not an assessment within a statute specifying what the 
uotice of an assessment shall contain. 7 

§ 1245a. "Assessments upon surviving members," construed. — 
The words "assessments upon surviving members" means assess- 
ments made after a member's death upon those members who sur- 
vive him, to meet the loss caused by such death. "The word- 'surviv- 
ing members,' are not . . . the antithesis of dead members. The 
word 'surviving' in the insurance business is the antithesis of 
'lapsed.' A surviving policy is one in which the assessments have 
continued to be paid; a lapsed policy is one where the assured has 
failed to pay the assessments. A surviving member is one who has 
always paid up his assessments, and is still a member of the com- 

5 "The ascertainment and declara- interchangeable words. They are the 

tion of death losses is left to the consideration for the contract.'' Hill 

members of the association, and their v. Farmers' Mutual Fire Ins. Co. 129 

action in thai behalf is known as an Mich. 141, 144, 88 N. W. 392, 394.— 

assessment:" Ellerbe v. Barney, 119 Grant, -I. See § 11247 herein. 

Mo. 632, 041, 23 L.R.A. 42."),' 25 S. 6 Ellerbe v. Barney, 119 Mo. 632, 

AV. 384, 23 Ins. L. .1. 356, per Martin, 23 L.R.A. 425, 25 S. W. 384, 23 Ins. 

J. See Commonwealth v. YYctherbee, L. J. 356. 

105 Mass. 149, per Grav, J.; State 7 Smith v. Bown, 75 Hun (N. Y.) 

.•x rel. x. Monitor Fire Assoc. 42 231, 27 N. Y. Supp. 11, 58 N. Y. 

Ohio St. 555, 565. St. Rep. 005, under Laws N. Y. 1883, 

" 'Assessments' and 'premiums' are c. 175. 

2370 



ASSESSMENTS AND DIES §3 12451), L245c 

pany; a lapsed member is one who has failed to keep up his policj 
by paying the assessments. . . . The requirement of the statute 
that 'all indemnities to beneficiaries shall in the main be provided 
for by assessments upon all surviving members' simply means that 
they shall be paid in the main by assessments upon those members 
who have continued to be members of the company by keeping up 
their policies and paying their assessments. These assessments the 
company can lay either at stated intervals or when a member has 
died." 8 

But assessments paid by a member of a mutual assessment com- 
pany to meet death Losses are not assets of the company. 9 

§ 1245b. When decree is assessment and not an order for an as- 
sessment. — A decree that an "assessment shall be made" against all 
policy holders, which determines the unpaid liabilities according to 
their accrual by quarterly periods, and fixes the percentage of assess- 
ment against every policy in force during the respective periods is 
an assessment and not an order for an assessment. 10 

§ 1245c. Whether or to what extent assessments are debts. — The 
question whether or to what extent, assessments are debts depend? 
entirely upon the nature of the organization and the entire con- 
tract between the parties. It cannot be asserted as an arbitrary rule 
that they are debts, for they are not collectible as such in all eases, 
and necessarily cannot be, owing to the various kinds of associa- 
tions and forms of contracts. Numerous questions involving the 
construction of such contracts most be considered and it would 
seem that the most important of these are; whether payment is 
optional under the terms of the contract; or whether an absolute 
promise to pay arises from the benefit derived from part or entire 
performance; or whether the consideration has so far failed as to 
preclude a recovery. 11 

A mutual company may be empowered by statute to sue for un- 
paid as.-essments. 12 And the liability to pay, may under the con- 
tract he optional with the member, in which case no action will lie 
against him for the amount of the assessment, for it is not then a 
debt; in such case he may of his own volition or negligence ter- 
minate the contract. But a. member may so stipulate to pay assess- 
ments as that upon failure to fulfill such obligation an action will 

8 Mutual Benefit Life Ins. Co. v. 80 Md. 99, 44 L.R.A. 149, 73 Am. 
Marye, 85 Va. 643, 645, 8 S. E. 481, St. Rep. 169, 42 Atl. !)44. 

per Lacy, -I. A., case el' application 10 Swing v. Cloquet Lumber Co. 

for mandamus to compel auditor to 121 Minn. 221, 141 X. W. 117. 
license assessment life insurance com- n See citations under second nrv 

pany, without depositing bonds; de- following note and also citations 

nied". throughout this chapter. 

9 Condon v. Mutual Reserve Assoc. 12 Morgan v. Hog Kaisers' Mutual 

2371 



§ L245e JOYCE <>\ [NSURANCE 

lie againsl him to recover the same. 18 So assessments by a mutual 
benefit association are qoI debts recoverable by action a1 law, where 
1 he right to the benefit is clcj >ci i< Umi t on <joo<1 standing in the society, 

Ins. Co. 62 Neb. I Hi, 87 N. W. L45; though no express promise to pay, 

('mil]). Stat. L899, e. 43, sec. 140. where certificate is made considera- 

18 United States. -Russell v. tion for of paymenl although forfeit- 
O'Donoghue (U. S. C. C.) L78 Fed. ed for nonpayment). 
ion. 39 Ins. L. J. 1107 (not liable New Hampshire. — Provident Mu- 
to receiver where no implied promise tual Relief Assoc, v. Pelissier, 69 X. 
to pay, and nol liable where contract II. (506, 45 Ail. 652, 29 Ins. L. J. 
expressly excludes personal liability 350 (society entitled to recover as- 
even though there is an implied sessments made during membership) ; 
promise to pay. Case considered Farmers' Mutual Fire Ins. Co. v. 
fully under § 1272 herein, as to in- Chase, 56 N. H. 341. 
solvency); Korn v. Mutual Assur- New Turk. McDonald v. Boss 
ance Sue. li Cranch (10 U. S.) 192, Lewin, 2!) llun (N. Y.) 87 (per the 
3 L. ed. 195 (liable for assessment court); Globe Mutual Benefit Assoc., 
when forfeiture is consequence of Tn re, 17 N. Y. Supp. 852, 63 Hun, 
insured's own neglect to conform to 263. 

rule as to revaluation) ; Protection Ohio. — State v. Monitor Fire 

Life Ins. Co. In re, 9 Biss. (U. S. Assoc. 42 Ohio St. 555. 
C. C.) 188, Fed. Cas. No. 1,444. South Carolina— Palmetto Lodge 

Illinois.— Lehman v. Clark, 174 111. v. Fleming, 2 Strob. (S. Car.) 457, 

279, 43 L.R.A. 648, 51 N. E. 222 49 Am. Dec. 604 (action lies for 

(action for assessments does not lie recovery of dues accruing after sus- 

-where contract provides only for for- pension). 

feiture of interest in case of non- Vermont. — Baker v. Spaulding, 71 

payment). Vt. 169, 42 Atl. 982 (assessment en- 

Indiana. — Gibson v. Megrew, 154 forceable, principal point lex loci). 
Ind. 273, 48 L.R.A. 362, 56 N. E. West Virginia.— Swing v. Bentley 

674 (member cannot be compelled to & Gerwig Furniture Co. 45 W. Va. 

pay where contract does not provide 283, 31 S. E. 925 (conditions prece- 

therefor or for nonpayment, except dent to recovery on a quasi ex parte 

for forfeiture) ; Clark v. Schrmey- assessment on a premium note must 

er, 23 Ind. App. 565, 55 N. E. 785, be fully satisfied). 
29 Ins. L. J. 47/ (receiver cannot Wisconsin. — Fulton (assignee Wis- 

enforce payments). consin Odd Fellows Mutual Life Ins. 

Kentucky. — Ancient Order United Co.) v. Stevens, 99 Wis. 307, 74 N. 

Workmen v. Moore, 1 Ky. L. Bep. W. 803 (assignee of company can re- 

93, Ins. L. J. 539. cover for all assessments before mem- 

Michiaan. — Tolford v. Church, 66 bership ceased by failure to pay, but 

Mich. 431, 33 N. W. 913. not for those levied thereafter). 

Minnesota. — Langworthy v. C. C. England. — Supreme Legion Select 

Washburn Flouring Mills Co. 77 Knights of Canada, In re, 19 Cana- 

Minn. 256. 79 N. W. 974 (assessment dian L. T. 316 (no implied contract 

or notes collectible when member has to pay dues or assessments and no 

had benefit of insurance). action lies therefor). 

Mississi />/>/. Planters' Ins. Co. v. As to actions for assessments, pre- 

Comfort, 50 Miss. 662. miunis, etc., notes, see § 3487 here- 

Missouri. — Ellerbe v. Barney, 119 in. 
Mo. 632, 23 L.B.A. 135, 25 S. W. Whether premium a debt, see § 

484 (member personally liable, even 1098 herein. 

2372 



ASSESSMENTS AND DUES § 1246 



H 



and good standing depends on the payment of assessments which 
are always made in advance, and not to meet accrued obligations. 14 
And assessments to become due a foreign mutual insurance com- 
pany from policy holders residing within the state, and which by 
the terms of the contract arc merely voluntary and when collected 
are impressed with a trust in favor of other policy holders, arc not, 
when due, debts or choses in action enforceable by suit, at least not 
sufficiently so as to justify the appointment of a receiver at the in- 
stance of a domestic creditor. 15 So under an Illinois decision the 
assessment is not a debt and the only right of the association or 
company is to declare a forfeiture for nonpayment; it has no right 
to recover the assessment in a suit otherwise the member would be 
indefinitely liable. 16 

§ 1246. Assessments: generally. — The plan of organization of 
mutual insurance companies or societies may, and does necessarily, 
affect the character of the assessment as well as its amount. Such 
plan may provide that the members shall receive no money as pro- 
fits or dividends, or that the money collected shall be applied only 
to the payment of death benefits; or it may provide a guaranty fund 
or reserve fund for the payment of losses. The society may agree 
to levy an assessment of a certain sum upon each member to pay a 
death claim, or to pay a certain sum upon death, or as many dollars 
as there are members or as are collected, or the charter may only 
authorize an assessment to pay losses, or the company may be vested 
with a discretion to hold the reserve fund and levy an assessment for 
losses, or to use part or all of such fund therefor. 17 And there may 

14 I/Union St. Jean Baptiste v. Indiana.— Bersoh v. Sinissippi Ins. 
Ostiguy, 25 R. I. 478, 64 L.R.A. 158, Co. 82 Ind. 64. 

105 Am. St. Rep. 899, 56 Atl. 681. Kansas.— State v. Bankers' & Mer- 

15 Blackwell v. Mutual Reserve chants' Mutual Benefit Assn. 23 Kan. 
Fund Life Assoc. 141 N. Car. 117, 499. 

5 L.R.A. (N.S.) 771 (annotated on Massachusetts.— Crossman v. Mas- 
right to have receiver appointed to saohuettts Benevolent Assoc. 143 
take charge of claims not legally or Mass. 435, 9 N. E. 753. 
equitably enforceable), 115 Am. St. Missouri.— Craig v. Western Life 
Rep. 67*7, 53 S. E. 833. Compare Ins. Co. 136 Mo. App. 5, 116 S. W. 
Calkins v. Angell, 123 Mich. 77, 81 1013. 
N. W. 977. Ohio. — State v. Monitor Fire 

^ Lehman v. Clark, 174 111. 279, Assoc. 42 Ohio St. 555. 

43 L.R.A. 648, 51 N. E. 222, 27 Ins. New York.— Wadsworth v. Jewel - 

L .7 745, rev'g 71 111. App. 366. ers' & Tradesmen's Co. 132 N. Y. 

17 See: United States.— Union Ins. 540, 29 N. E. 1104; Mygatt v. New 

Co. v. Hoge, 21 How. (62 U. S.) York Protection Ins. Co. 21 N. Y. 

35, 16 L. ed. 61. 52, 19 How. Prac. 61; Thomas v. 

/California.— Solidarite Mutual Whallon, 3; Barb. (N. Y.) 172. 

Beneficial Assoc, In re, 68 Cal. 392. Pennsylvania.— Rosenberger v. 

2373 



L247 JOYCE ON [NSURANCE 

be no express promise in the contracl to pay iassessments. 18 Again, 
there are other plan- which have been noted heretofore, 19 so that it 
is clearly apparenl thai the amounts and times of payments of as- 
sessments musl vary, in that they must depend largely upon the 
particular plan or scheme contemplated by the fundamental law of 
the company or society, and they arc in fact a mutual contribution 
for the purpose specified in the fundamental law. 

§ 1247. Distinction between premiums and assessments. — A dis- 
tinction has been made between a premium and assessment. Thus, 
,in annual deposil of a definite sum in lien of an assessment, based 
upon the mortality tattles, the certificate being subjeel to forfeiture 
Unless said amount he paid in advance each year, and which sum is 
ascertained without reference to assessments for actual losses and ex- 
penses during the year, is declared to he a, premium or price for 
assuming the risk, and not an assessment to pay losses and expense-; 
as they may arise. And a by-law of a society which provides for 
such annual deposit instead of an assessment for which the charter 
only provides, and which is to he made specifically in accordance 
therewith, is held ultra vires and void. 20 Again, where the certifi- 
cate of a co-operative assessment insurance company, in conformity 
with the by-laws, provides for the payment of a specified sum, and 
a further bimonthly payment of a certain sum, such periodical 
sum is not an assessment, even though so denominated, but is to 
all intents and purposes a bimonthly premium, subject to no change 
of amount or date of payment during the continuance of the mem- 
bership, and is unaffected by death losses, or other vicissitudes of 
business, but is a certain sum which the defendant has contracted 
to pay on the issuance of the certificate, and is not within the pur- 
view of a statute requiring what the notice of an assessment shall 
state. 1 A distinction also exists in case assessment life companies 
carry old line policies and also assessment policies which constitute 
different and independent classes of risks, for in the former, losses 
are paid by premiums collected, while in the latter the losses are 
met by assessments. 2 And an "advance premium 7 ' is in the nature 
of a membership fee and not an advance payment of bimonthly 

Washington Fire Ins. Co. 87 Pa. St. 56 Minn. 414, 418, 57 N. W. 1063, 

J07, 'JOS. 1064. 

"Russell v. O'Donoghue (U. S. 1 Smith v. Bown, 75 Hun (N. Y.) 

('. C.) 178 Fed. L06. 231, 27 N. Y. Supp. 11, under New 

19 8S 343, 346b— 346d herein. York statute concerning requirements 

20 State ex rel. v. Monitor Fire of assessment notices: Laws 1883, c. 
Assoc. 42 Ohio St. 555. See also 175. 

Bradford v. Mutual Fire Ins. Co. 112 2 Craig v. Western Life Ins. Co. 
Iowa, 495, 84 N. W. 693; Ball v. 136 Mo. App. 5, 116 S. W. 1113. 
Northwestern Mutual Accideut Assoc. 

2374 



ASSESSMENTS AND DUES §§ 1248, 1240 

calls thereafter made under a provision that the consideration for 
the insurance is the receipt of the advance premiums and the pay- 
>>_---nient of all bimonthly premiums. 8 

§ 1248. Membership fees and dues: generally.— In mutual benefit 
associations, if the payment of a specified sum known as a member- 
ship lee is conditioned to lie paid in advance, and the certificate is 
not to be in force until the same is paid, such stipulation is a con- 
dition precedent, which must he observed, 4 and it is held thai such 
provision cannot be waived by an agent of the company. 5 And 
the contract sometimes provides not only for the payment of such 
membership fee and for voluntary assessments, but also lor the pay- 
ment of a certain stated sum at specified times for expenses, such as 
quarterly, semi-annual, or annual dues. In cases where the society 
is of the kind having supreme and subordinate lodges, and the 
member is obligated to contribute to the support of the lower lodge 
in certain sums payable at specified times, such amounts so to be 
paid are designated as dues. These differ from the mortuary as- 
sessments levied by the higher lodge, and from dues for insurance 
purposes, which may be payable to the supreme lodge. 6 And in 
some cases, instead of what are known as membership fees, each 
person becoming a member may be required to pay what is desig- 
nated as a "first assessment," 7 so that membership fees, dues, and 
assessments may all be important factors' in determining the right 
to membership and its continuance. If credit is given for the mem- 
bership fee, as where a note is taken therefor, the question of for- 
feiture may depend upon whether or not the policy or certificate 
provides for forfeiture or suspension for nonpayment of the note at 
its maturity; if it so provides, there is a forfeiture or suspension 
according to the terms of the stipulation, otherwise not, 

§ 1249. Validity of provisions as to assessments and dues. — The 
parties to a contract of insurance in a mutual company may validly 
stipulate that the policy shall be forfeited or ipso facto void for non- 
payment at or within a specified time of assessments on a premium 

3 Smith v. Covenant Mutual Bene- appears that the deceased was one 
fit Assoc. 16 Tex. Civ. App. 593, 43 of the charter members, and paid 
S. W. 819. w itb his associates what was termed a 

4 Orniond v. Fidelity Life Assoc, 'first assessment,' in addition to the 
96 N. C. 158 1 S. E. 796. fived dues for admission. If they 

5 Ormond v. Fidelity Life Assoc, thus voluntarily created a small death 
96 N. C. 158 1 S. E. 796. fund in advance, it is prohahle that 

6 See further on this subject, § 407 they did so in view of the contin- 
herein. gency that a death claim might arise 

7 Wadsworth v. Jewelers' & Trades- while the company was too weak to- 
men's Co. 132 N. Y. 540, 42 N. Y. meet it in the usual course of its 
St. Rep. 765, 29 N. E. 1104, aff'g business:" Id. 543, 544. 

31 N. Y. St. Rep. 185. "It also 

2375 



§ 1250 JOYCE ON INSURANCE 

note, or for tin- noiij ki\ tu.-u i <>!' glugs : "" 1 assessments and such pjmir- 
sions arc binding and enlorceafela? and the same rule applies to a 
by-law of a co-operative fire insurance corporation in New York 9 
and also to by-laws in a fraternal association providing for forfeit- 
ure for nonpayment of monthly assessments on or before a certain 
day 10 and the same is true in regard to conditions whereby the 
policy is made void or the risk suspended for nonpayment of dues 
or assessments, as in like eases of provisions for forfeiture for non- 
payment of premiums, and as to such provisions, in so far as they 
are lawful and not against public policy, the courts cannot inter- 
fere, 11 and such provisions are as effectual, when included in an 
application which is made part of the policy, as if contained in the 
policy itself; 12 and the rule would obtain as to similar provisions 
contained in any part of the contract, as in case of the charter and 
by-laws. 

§ 1250. Assessment premium, etc., notes: generally.— Unless the 
charter, by-laws, or note otherwise provide, premium notes given 
to a mutual lire insurance company are liable to assessments for 
losses during the whole period for winch the member was insured; 13 
but the power to make assessments must be limited by the amount 
of losses sustained and unpaid at the time of levying the assess- 
ment. 14 and the assessment must be legally made. 15 But an assess- 
ment which will be binding on nonresident policy holders may be 

8 Colorado.— Drum v. Benton, 13 Union, 193 Mo. App. 443, 182 S. W. 

App. D. C. 245, 26 Wash. L. Rep. 1043. 

642, 31 Chic. Leg. N. 72. u See Madeira v. Merchants' Ex- 

Iowa. — Munger v. Brotherhood of change Mutual Benefit Soc. 16 Fed. 

American Yeomen, — Iowa, — , 154 749; Ewald v. Northwestern Mutual 

N. W. 879 (ipso facto void). Life Ins. Co. 60 Wis. 431, 19 N. W. 

Missouri.— Burchard v. Western 513. See also §§ 1100, 1205, 1220 

Commercial Travelers' Assoc. 139 herein. 

Mo. App. 606, 123 S. W. 973; Old- 12 Mandego v. Centennial Mutual 

ham v. Supreme Lodge Modern Life Assoc. 64 Iowa, 134, 19 Ins. L. 

Brotherhood of America, 110 Mo. J. 660, 17 N. W. 656, 19 N. W. 877. 

App. 564, 157 S. W. 92. In this case the provision was that 

New York. — Beadle v. Chenango a failure to pay dues or assessments 

County Mutual Ins. Co. 3 Hill (N. should avoid the policy. 

Y.) 161 (in this case the provision 13 New Hampshire Mutual Fire 

was "in case the insured shall neg- Ins. Co. v. Band. 24 N. H. (4 Fost.) 

lect to pay any assessment, the in- 428. See § 1256 herein, 

surani-e shall be void"). On liability of members of mutual 

Virginia. — Knights of Columbus v. insurance company, see note in 32 

Burroughs' Beneficiary, 107 Va. 671, L.R.A. 482. 

60 S. E. 40, 17 L.R.A.(N.S.) 2!8. 14 Sinissippi Ins. Co. v. Taft, 26 

9 Seely v. Tioga Countv Patrons Ind. 240; Sinissippi Ins. Co. v. Far- 
Fire Relief Assoc. L5] X.' V. Supp. ris, 26 Ind. 342; Mutual Benefit Lite 
126, 165 App. Div. 685. See N. Y. Ins. Co. v. Jarvis, 22 Conn. 133. 
Ins. L. 1909, c. 33, sees. 261 et seq. 15 Mutual Benefit Life Ins. Co. v. 

10 Crawford v. North American Jarvis, 22 Conn. 133. 

2376 



ASSESSMENTS AND DUES § 1251 

made under the Minnesota statutes upon the premium notes of the 
holders of mutual policies in an insurance company organized in 
that state to repay unearned premiums on cash policies issued by 
the company. 16 Although interest-bearing notes may not be assess- 
able in the first instance, yet they may be assessable under the by- 
laws after other collectible assessments have been paid in, equal to 
the interest payable and to be paid for a specified period. 17 If the 
charter provides that a member shall be liable for losses in propor- 
tion to the amount of his premium note, he may be compelled to 
pay such part of all losses as his premium note bears to the whole 
amount of premium notes which are collectible and legally assess- 
able, and not the whole amount of the notes irrespective of the fact 
whether they are collectible or not. 18 A member of a mutual com- 
pany can only be assessed to the remaining face value of a premium 
note where he has partly paid the principal. 19 Deposit notes must 
be assessed in the usual way when under the by-laws they are not 
considered as absolute funds, but as assessable notes. 20 So, if the by- 
laws provide that those giving advance notes shall become mem- 
bers, and the directors may, if they deem best for the company's 
interest, surrender any and all advance notes, and a note is given 
subject to assessments at a certain per cent with all other advance 
notes, it is held that all uncanceled advance notes are subject to 
assessment, even to the full amount if necessary. 1 In all cases, 
however, involving the right to assess premium notes the terms of 
the particular contract and the character of the note must govern. 2 
§ 1251. Who liable to assessments: what members. — Only mem- 
bers or those who have assumed a contract obligation to pay assess- 
ments are liable therefor 3 for the contract whereby the member- 
ship exists must be completed before a liability to pay assessments 
can exist ; the fact that an application only is made and the policy 
never accepted cannot render one liable, as a member, to assess- 

16 Warner v. Delbridge & C. Co. x Maine Mutual Marine Ins. Co. 
110 Mich. 590, 34 L.R.A. 701, 68 v. Swanton, 49 Me. 448. 

N. W. 283. 2 See §§ 1202 et seq. herein, and 

17 Crawford v. Susquehanna Mu- sections under this chapter. 

tual Fire Ins. Co. 9 Sadler (Pa.) 502, 3 See Philbrook v. New England 

11 Cent. Rep. 653, 12 Atl. 844. Ins. Co. 37 Me. 137; McDonald v. 

18 Bangs v. Gray, 12 N. Y. (2 Ross-Lewin, 29 Hun (N. Y.) 87, per 
Kern.) 477. Hardin, J.: Stanley v. Northwestern 

19 Davis v. Oshkosh Upholstery Co. Life Assoc. (U. S. C. C.) 36 Fed. 
82 Wis. 4S8, 52 N. W. 771, distin- 75; Commonwealth v. Massachusetts 
guishing Kennan v. Kundle, 81 Wis. Mutual Ins. Co. 112 Mass. 116; Tol- 
212, 51 N. W. 426. ford v. Church, 66 Mich. 431, 33 X. 

20 ' Citizens' Mutual Fire Ins. Co. W. 913. See also subsequent eases 
v. Sortwell, 10 Allen (92 Mass.) under this and the following section. 
110. 

2377 



L251 JOYCK ON IXSCRAXCK 

nifiiis. 4 Nor is a person Liable for losses and expenses where his 
membership antedates the approval of the acl Lncojporating a 
mutu al compa ny. 6 Bui all persons who arc members are equally 
liable] and the directors have oo right to consider the length of 
time the membership has existed; 6 although only those who be- 
long to a certain class can be assessed in that class to wh ich they 
belong where there are separate classes. 7 So members of a corpo- 
ration existing in one state may nol be made Liable under a by-law 
to pay assessments levied by a supreme lodge incorporated in 
another state, since it is not competent for a dome-tit' corporation 
to subject its members in this way to a foreign authority. 8 If the 
act of incorporation of mutual lire companies is to take effect when 
accepted by the members of all the corporations to which it relate.-, 
no member is bound thereby who does not expressly assent there- 
to. 9 Again, if the charter provides that no benefits shall be paid 
to one who has ceased to be a member, and that deaths shall be 
reported by trustees, their report is not conclusive as to the fad of 
memberships. 10 No distinction as to the age of the policies should 
be made where the assessment is to be levied in proportion to de- 
posits and premiums. 11 

Unless so provided in the contract, a mutual assessment company 
has no power to charge a member with an assessment made before 
he became a member, or to assess members for prior losses, and no 
forfeiture can be based upon such invalid assessment; 12 and the 
same rule applies where one has ceased to be a member, 13 and if 
all the members are assessed for losses and expenses accrued before 

4 Real Estate Mutual Fire Ins. Co. Lodge Ancient Order United Work- 
er. Roessle, 1 Gray (07 Mass.) 336. men, 47 Mich. 429, 11 N. W. 268. 

5 Farmers' Mutual Fire Ins. Assoc. On necessity for compliance with 
v. Burch, 46 S. Car. 550, 24 S. E. by-laws as to payment of assess- 
503. incuts, gee note in 38 L.R.A.(N.S.) 

6 Herkimer County Mutual Ins. Co. 571. 

v. Fuller, 14 Barb. (N. Y.) 373, 7 9 Hamilton Mutual Ins. Co. v. Ho- 
llow. Pr. (N. Y.) 210; Planters' Ins. hart, 2 Gray (68 Mass.) 543. 
Co. v. Comfort, 50 Miss. 662. See 10 Dillingham v. New York Cotton 
Marblehead Mutual Fire Ins. Co. v. Exchange, 49 Fed. 719. 
Eayward, 3 Gray (69 Mass.) 208; "Commonwealth v. Massachusetts 
People's Equitable Mutual Fire Ins. Mutual Fire Ins. Co. 112 Mass. 116. 
Co. v. Arthur, 7 Gray (73 Mass.) 12 Evarts v. United States Mutual 
267. Accident Assoc. 61 Hun (N. Y.) 024, 

7 Allen v. Winne, 15 Wis. 113; Mil- 40 N. Y. St. Rep. 848, 16 N. Y. Supp. 
ler v. Georgia Masonic Mutual Life 27; Roswell v. Equitable Aid Union, 
Ins. Co. 57 Ga. 221; Kelly v. Troy 13 Fed. 840; Commonwealth v. Me- 
Ins. Co. 3 Wis. 254. But see § chanics' Mutual Ins. Co. 112 Mass. 
L298 herein. 192. See § 1250 herein. 

8 State ex rol. Miller, 00 Iowa, 20, 13 Mutual Benefit Life Ins. Co. v. 
23 N. W. 241 ; Lamphere v. Grand Jarvis, 22 Conn. 133. 

■j:;7s 



ASSESSMENTS AND DUES §§ 1252, L253 

some of them became members, the assessmenl is void as to the 
latter, but valid as to the others. 14 

§ 1252." Who liable to assessment: mortgagee: assignee. — Tf a 
mortgagee is, under the by-laws, to be liable for assessments pro- 
vided the original insured, the mortgagor, shall not pay the same 
,,n demand, a failure of the mortgagor to pay the assessmenl rim- 
not affect the mortgagee's right to recover. 18 An assignee is no1 
liable to assessments where he has nol agreed to become a member, 
and is under no contract to assume the liabilities of the assignor 
to the company or to pay assessments. 16 And although the policy 
stipulates that in case of assignment the assignee shall be respons- 
ible for the unpaid premium, no recovery can be had against the 
assignee therefor. 17 But where the assignee promises to pay all 
future assessments, this is a new contract. 18 

§ 1253. Liability of member: generally. — The liability of mem- 
bers to assessmen t must depend upon the contract provision.^. 19 
and also upon such statutes as are applicable. 20 And the rule of 
strict construction also applies to preclude assessment life com- 
panies from making binding assessments otherwise than upon the 
conditions prescribed in the contract. 1 So a member of a mutual 
benefit society cannot be compelled to pay an assessment, where 
his contract does not so provide or make any provision as to non- 
payment, except that his certificate shall be forfeited therefor. 2 
Nor does any equitable principle exist which compels a member of 
a mutual benefit association to pay assessments on the ground that 
he has had the benefit of the insurance, where the plan of the asso- 
ciation is that all payments are in advance and entitle the member 

14 Rowswell v. Equitable Aid Un- and by-laws are part of contract, see 
ion, 13 Fed. 840 ; Long Pond Mutual § 188 herein. 

Fire Ins. Co. v. Houghton, Gray On liability of members of mutual 

(72 Mass.) 77. insurance company, see note in 32 

15 Francis v. Butler Mutual Fire L.R.A. 481; on necessity for com- 
Ins. Co. 7 R. I. 159. See §§ 1153, pliance with by-laws as to payment 
1158 herein. of assessments, see note in 38 L.R.A. 

16 Cummings v. Hildreth, 117 Mass. (N.S.) 571. 

309; Commonwealth v. Massachusetts 20 Commonwealth v. Massachusetts 

Mutual Ins. Co. 112 Mass. 116; Bran- Fire Ins. Co. 112 Mass. 116, per 

nim v. Mercer County Mutual Fire Wells, J. See also § 194 herein; 

Ins. Co. 28 N. J. L. 92; New Hamp- Faurot v. Swan. L55 Mich. 284, 118 

shire Mutual Fire Ins. Co. v. Hunt, X. \Y. 955. 

30 N. H. 219. J Craig v. Western Life Ins. Co. 

17 Washington Ins. Co. v. Grant, 13G Mo. App. 5, 116 S. W. 1113. 
2 Clark, 308, 4 Pa. Law J. 88. As to the rule of strict construc- 

18 Foster v. Equitable Mutual Ins. tion, see §§ i'-! 1 * ei seq. herein. 

Co. 2 Gray (68 Mass.) 216. 2 <;i!.son v. Megrew, 154 Ind. 273, 

19 See 8*848 herein. That charter 48 L.R.A. 362, 56 N. E. 674. 

2379 



§ 1253 JOYCE ON INSURANCE 

to protection until the nexl assessment is due. 8 Nor can members 
be assessed to pay demands no1 within the terms of their contracts, 
especially where the policies are in different classes of risks,/"5s 

when' the company's liabilities arc n<»l only on ;t~< — ment policies 
but on old line policies resting on independent bases. 4 Bui a mem- 
ber of a mutual -benefit society is. however, personally liable for 
assessments regularly made during his membership, although there 
i- qo express promise on his part to pay them, where his certificate 
recites thai it is in consideration, among other things, of his pay- 
ment of such assessments, although it is made on the express con- 
dition of forfeiture of all his rights and that the contract shall be 
null and void if he fails to pay any assessment when due. 5 Again, 
the liability of a member of a mutual insurance company for 
losses occurring during his membership continues until an assess- 
ment has been made covering them. 6 But a member of a mutual 
lire insurance company cannot be held liable for losses other than 
those occurring during his membership unless there is some stipu- 
lation to the contrary 7 and it is held that a party who accepts the 
policy cannot escape liability to an assessment on the ground that 
lie is ignorant of its provisions^/ But an assessment must be legally 
"made, or it-Is not collectible. 9 So losses on old line policies in 
assessment life companies cannot be paid from assessments on 
holders of assessment policies, but must be met by premiums col- 
lected. 10 But in case of losses on cash policies unlawfully issued 
by a mutual company, members who took lawful policies on the 
assessment plan cannot be compelled to contribute by assessment 
on their premium notes merely because they knew of the issue of 
the cash policies, but did nothing to estop themselves from denying 
liability on account of them. 11 Again, an assessment made upon 
the premium notes of the holder of mutual policies in a Minnesota 
insurance corporation, made under the statutes of that state and 
decided to be valid by the courts of that state, to repay unearned 

3 Lehman v. Clark, 174 111. 279, 43 v. Boggs, 5 Pa. Super. Ct. 394, 41 
L.R.A. (it8, 51 N. E. 222. Wkly. N. C. 13, 28 Pitts. L. J. N. S. 

4 Craig v. Western Life Ins. Co. 106. 

L36 Mo. App. 5, 116 S. W. 1113. 8 Morrisson v. Insurance Co. of 

6 Ellerbe v. Barney, 119 Mo. 632, North America, 69 Tex. 353, 5 Am. 

23 L.R.A. 435, 25 S. W. 384. St. Rep. 63, 6 S. W. 605. See § 

On liability of member of benefit 1311 ;is to defenses. 

society to action lor assessment, see 9 See S§ 1290-1297 herein. 

note in 2:5 LR.A. 435. "Craig v. Western Life Ins. Co. 

6 Ionia Eaton & Barry's Farmers' 136 Mo. App. 5, 116 S. W. 1113. 
Mutual fire Ids. Co. v. Ionia Cir- n Corey v. Sherman, 96 Iowa, 111. 
nut Judge, 100 Mich. 606, 32 L.R.A. 32 L.R.A. 490, 60 N. W. 232, 64 
481, 59 N. W. 250. N. W. 828. 

7 Capital City Mutual Fire Ins. Co. 

2380 



ASSESSMENTS AND DUES §§ 1254, 1255 

premiums on cash policies issued by such corporation, may 1"' 
enforced in the courts of Michigan againsl a member of 3uch cor- 
poration residing therein, although such assessment would be in- 
valid if the contract of the policy holder were made in the latter 
state. 18 If the liability to levy assessments is absolute, an investi- 
gation by trustees as to whether the deceased had ceased to be a 
member is not conclusive, and an assessment may be levied upon 
the death of a member to provide for death benefits. In a case on 
this point the right to such benefits depended upon the continu- 
ation of membership in a cotton exchange, and it was hold that 
the fact that the share was hypothecated was not necessarily such 
a silo thereof as would terminate the membership. 13 

§ 1254. Nonpayment of assessment or dues after date of accident 
insured against. — Where a member is insured in a benefit society 
against personal bodily injuries and against death resulting from 
such injuries within ninety days from the date of the accident, the 
liability of the company is fixed from the date of the accident, and 
the company will not be relieved from liability by reason of the 
fact that assured ceased to be a member on account of a failure to 
pay a certain assessment falling due after the date of the accident. 14 

§ 1255. Liability to assessments: agreement or provisions con- 
trary to statute. — It is held that where one insured in a mutual in- 
surance company is liable under the statute of its incorporation to 
pay his proportion of such assessments as shall be sufficient to meet 
all of the company's losses and liabilities, he cannot limit such lia- 
bility by any arrangements entered into with the company, nor 
can his liability be lessened by any provisions in the articles of 
association. 15 And where the statute obligates members to pay all 
assessments for losses and expenses while they continue as members 
the insurer cannot limit the number or amount of assessments by 
contract provisions. 16 But in another case it is held that a general 
understanding among all the members should govern as to the 
extent of liability for assessments. 17 

12 Warner v. Delbridge & Cameron 816, 26 L.R.A. 112 (annotated on 
Co. lilt Mi,!,. 590, 34 L.R.A. 701, (i4 effect of failure to pay assessment 
Am. St. Rep. 367, 68 N. W. 283. between day of accident and time of 

On effect of assessment on stock- death). ' 

holders, made under order of court in 15 Russell v. Berry, 51 Mich. 287, 

another state, as res judicata, see 16 N. W. 651. 

note in 34 L.R.A. 694. As to stipulation contrary to stat- 

13 Dillingham v. New York Cotton ute, see §§ 176, 194 et seq. herein. 
Exchange (U. S. C. C. 1892) 19 Fed. 16 Morgan v. Hog Raisers' Mutual 
719. Ins. Co. 62 Neb. 446, 87 N. W. 145. 

14 Burkheiser v. Mutual Accident 17 Macklem v. Bacon, 57 Mich. 334, 
Assoc. 10 U. S. C. C. A. 94, 61 Fed. 24 N. W. 91 (one judge dissenting). 

2381 



§ 1256 JOYCE ON INSURANCE 

§ 1256. Liability: prior and subsequent losses: liability after 
loss, forfeiture or suspension. — As a general rule, a member is not, 
in the absence of a contract stipulation or by-laws to the contrary, 
liable for losses incurred prior to issuing his policy. 18 So a by-law 
of a mutual insurance company authorizing the directors to order 
an assessment to raise funds for the purpose of carrying out the 
aims and objects of the association does not justify the assessment 
of a member for losses occurring before bis membership. 19 So an 
assessment levied upon a premium note of a member of a mutual 
lire insurance company is voidable by him where such assessment 
is for Losses incurred at a time when he was not a member of the 
company; 20 again, new members of an accident assessment as- 
sociation are not liable for a loss which occurred prior to their 
becoming members, and assessments can he made only on the mem- 
bers liable to pay when the loss occurs. 1 Nor in the absence of 
some provision therefor in the contract, can a mutual accident 
company assess a member for losses arising prior to his member- 
ship. 2 Nor can money deposited by a member in advance to meet 
certain assessments be used by the company to pay such prior 
losses, 3 and a requirement of payment of one advance mortuary 
assessment on becoming a member does not necessitate that one 
such assessment be continuously paid up nor does such advance 
assessment apply to mortuary assessments levied prior to member- 
ship. 4 

The contract may, however, be such that a member will be liable 
to assessments for losses accruing prior to his membership, or after 
suspension or forfeiture of the policy, or after loss; 5 so, in such 
case, the member may under the by-laws be liable for assessments 

18 Capital City Mutual Fire Ins. x Collins v. Bankers' Accident Ins. 
Co. v. Boggs, 172 Pa. St. 91, 33 Atl. Co. 90 Iowa, 216, 59 Am. St. Rep. 
349; Fire Ins. Co. v. Hartshorne, 90 367, 04 N. W. 778. 

Pa. St. 405; Detroit Manufacturers 2 Roswell v. Equitable Aid Union, 

Mutual Fire Ins. Co. v. Merrill, 13 Fed. 840; Evarts v. United States 

101 Mich. 393, 59 N. W. 661. Mutual Accident Assoc. 61 Hun 

See also Clark v. Iowa State Trav- (N. Y.) 624, 40 N. Y. St. Rep. 848, 

eling Men's Assoc. 156 Iowa, 201, 10 N. Y. Supp. 27; Long Pond Mu- 

42 L.K.A.(KS.) 031, 135 N. W. tual Fire Ins. Co. v. Houghton, 6 

111!; Mutual Fire Ins. Co. v. Gray '(72 Mass.) 77. 

Jean, 96 Md. 252, 94 Am. St. Rep. 3 Evarts v. United States Mutual 

570, 53 Atl. 950; Faurot v. Swan, Accident Assn. 61 Hun (N. Y.) 624, 

155 Mich. 284, 118 N. W. 955. See 40 N. Y. St. Rep. 848, 16 N. Y. Supp. 

§§ 1224, 1251 herein. 27. 

19 Clark v. Iowa State Traveling 4 Hetzel v. Knights & Ladies of 
Men's Assoc. 150 Iowa, 201, 42 Golden Precept, 106 Iowa, 655, 106 
L.RA.(N.S.) 631, 135 N. W. 1114. N. W. 157. 

20 Swing v. Akely Lumber Co. 62 5 Susquehanna Mutual Fire Ins. 
Minn. 169, 64 N. W. 97. Co. v. Leavy, 136 Pa. St. 499, 20 Atl. 

23S2 



ASSESSMENTS AND DUES § 1256a 

for losses occurring prior to the issue of the policy. 6 And a mem- 
ber may be liable for losses during the suspension of the risk for 
nonpayment of assessments. 7 A member may also be liable for all 
lawful assessments upon his premium note for the full lime of the 
policy, as well before as after loss. 8 So a party who is under the 
charter a member during the term specified in the policy may be 
liable to assessment durin g such term, even after a loss, 9 until the 
policy or certificate is surrendered^ 10 and the provisions of the 
application and by-laws may be such thai the company may elect 
to continue the membership even after default in payment of 
assessments or dues, and hold the member liable for assessments 
subsequently thereto and until notice of withdrawal of the mem- 
ber. 11 

§ 1256a. Same subject. — The assured may be liable for assess; 
ments even after forfeiture for breach of conditions for losses ac- 
cruing while the policy was in force, for he is liable to contribute 
to all losses while the policy is in force where the conditions so 
stipulate, 12 and liability for assessments exists as long as member- 
ship continues where the statute so provides and no limitation con- 
trary thereto can be placed thereon by the insurer. 13 And even 
though assessments in a fraternal insurance association, do not be- 
come payable until after there has been a forfeiture the member is, 
nevertheless, absolutely liable therefor. 14 So where the contract 

502, 505; Susquehanna Mutual Fire v. Mutual Assur. Soc. 6 Cranch (10 

Ins. Co. v. Stauffer, 125 Pa. St. 416, U. S.) 192, 3 L. ed. 195; Seheufler 

17 Atl. 471, and cases following. v. Grand Lodge, 45 Minn. 250, 47 

6 Susquehanna Mutual Fire Ins. N. W. 799; Thropp v. Susquehanna 
Co. v. Stauffer, 125 Pa. St. 416, 17 Mutual Fire Ins. Co. 125 Pa. 427, 
Atl. 471. 11 Am. St. Rep. 909, 17 Atl. 473. 

7 Webb v. Mutual Fire Ins. Co. 63 See Patrons of Industry Fire Ins. 
Md. 213. - Co. v. Harwood, 72 N. Y. Supp. 8, 

8 Swamscot Machine Co. v. Part- 64 App. Div. 248; Bennett v. Beav- 
ridge, 25 N. H. 369. ers Reserve Fund Fraternity, 159 

9 Boot & Shoe Ins. Co. v. Melrose Wis. 145, 150 N. W. 181. See §§ 
Soc. 117 Mass. 199; Philbrook v. 1225 et seq. herein. 

New England Mutual Tns. Co. 37 Me. 13 Morgan v. Hog Raisers' Mutual 

137; New Hampshire Ins. Co. v. Ins. Co. 62 Neb. 446, 87 N. W. 145. 

Rand, 24 N. H. 428. Comp. Stat. 1899, c. 43, sees. 130, 

10 Thropp v. Susquehanna Mutual 137, 140. 

Fire Ins. Co. 125 Pa. 427, 11 Am. As to stipulations contrary to stat- 

St. Rep. 909, 17 Atl. 473. See also ute, see §§ 176, 194g, 194h herein. 
§ 12(50 herein. 14 Bennett v. Beavers Reserve 

11 Baker v. New York State Mutual Fund Fraternity, 159 Wis. 145, 150 
Benefit Assoc. 27 N. Y. Week. Dig. N. W. 181. Examine Pioneer Furni- 
91, 9 N. Y. St. Rep. 653, 45 Hun ture Co. v. Langworthy, St 111. App. 
(N. Y.) 588. 594 (liable for assessment for share 

12 Smith v. Saratoga Mutual Fire of losses and expenses prior to can- 
Ins. Co. 3 Hill (N. Y.) 508; Kom relation). 

23S3 



§ 1256a JOYCE ON INSURANCE 

stipulates for the payment of assessments by the insured for all loss- 
es during the term of the policy, the liability to assessments con- 
tinues during the term, and is not terminated by the destruction of 
the insured buildings by lire and the subsequent sale of the land. 15 
So the obligation to pay assessments where it is so stipulated in the 
by-laws, continues while the member remains in the association, 
and, while there is no speeial provision therefor in the contract, the 
termination of membership by withdrawal does not operate as a re- 
lease from future assessments for liabilities existing prior to such 
termination, 16 and where the loss has occurred during membership, 
it has been held that the assessment may be levied even nine years 
after the policy has expired. 17 So a suspended member of an Odd 
Fellows' lodge is liable for all dues accruing after his suspension if 
the by-laws so provide, and the by-laws be reasonable, and for the 
recovery of such dues an action lies. 18 

But it is held that a member is not relieved from liability for loss 
incurred while a member although not charged against him before 
his withdrawal, 19 and also that liability for future expenses is ended 
by cancelation of the certificates. 20 And a liability exists for all as- 
sessments levied prior to notice that membership has ceased, but not 
for assessments subsequently levied. 1 So, although a member of a 
fraternal beneficial association may be liable for assessments made 
prior to forfeiture of the contract he is not liable for those made 
thereafter, where the statute of incorporation imposes no obligation 
to pay as there is no implied promise to pay in such case. 2 So again, 
payments of assessments in a benefit association after forfeiture of 
membership, but in ignorance of that fact, do not estop the member 
from denying his liability to pay subsequent assessments. 3 

It is decided that alienation avoids the contract, determines the 

16 Thropp v. Susquehanna Mutual x Fulton (Assignees Wisconsin 

Fire Ins. Co. 125 Pa. St. 427, 11 Odd Fellows Mutual Life Ins. Co.) 

Am. St. Rep. 909, 17 Atl. 473. v. Stevens, 99 Wis. 307, 74 N. W. 

16 Provident Mutual Relief Assoc. 803. 

v. Pellisier, 69 N. H. 600, 45 Atl. 2 Faurot v. Swan, 155 Mich. 284, 

562, 29 Ins. L. J. 350. 118 N. W. 955. Examine Stockley 

17 Smith v. Bell, 107 Pa. St. 352. v. Benedict, 92 Md. 325, 48 Atl. 59. 

18 Palmetto Lodge v. Fleming, 2 3 Ellerbe v. Faust, 119 Mo. 653, 25 
Strob. (S. C.) 457, 49 Am. Dec. 604. L.R.A. 149, 25 S. W. 390. Examine 
But see Vivar v. Supreme Lodge Covenant Mutual Life Assoc, v. Tut- 
Knights of Pythias, 52 N. J. L. 455, tie, 87 111. App. 309; Duggans v. 
20 Atl. 36. Covenant Mutual Life Assoc. 87 111. 

19 Sparks v. Flaccus Glass Co. 16 App. 415. 
Pa. Super. Ct. 119. 

20 Knipe v. Scholl (Pa.) 16 Montg. 
Co. L. R, 209. 

23S4 



ASSESSMENTS AND DUES §§ 1257, L258 

mutuality, and ends the liability of the assured to assessments there- 
after; as where the insured 3old the insured property. 4 

§ 1257. Members joining between loss and rendition of judgment 
against company. — An assessmenl to satisfy a claim for loss under 
a judgment cannot lie levied on members who have joined between 
the time of loss and the rendition of judgment where the by-laws 
only provide for assessments on members. 5 

§ 1258. When dues payable: dues in arrears: forfeiture. — The 
time when dues become payable musl depend necessarily upon the 
contract provisions, or, in cases where they are payable to a subordi- 
nate lodge, it may he left to such lodge to determine under its by- 
laws and regulations the times of payment. A paymenl in advance 
is, however, not ncces-ary. unless the contract or hy-laws so provide. 
Tims, the computation of time in determining whether a member 
is "six months" in arrears musl be referred 'as to its commencement 
to the time the dues are payable, which, if they are payable quar- 
terly, is at the end of each quarter, and a member is in arrears "six 
months" from that time, and not as soon as the "six months' dues" 
are owed, 6 and the last day of the term is excluded, the time within 
which the six months are to run commencing the following day. 7 
So when dues payable quarterly are paid within two weeks after the 
end of that quarter on which they became due, the member is not 
in arrears "over the amount of thirteen weeks." 8 And where week- 
ly payments of dues are required under the by-laws weekly pay- 
ments must be made. 9 And where a member is in arrears for week- 
ly dues for funeral benefits, for a longer period than that specified 
there can be no recovery upon his policy. 10 But the provisions made 
by a local lodge cannot supersede the constitution of the association 
and make the dues payable in advance, where the constitution pro- 
vides that a certificate cannot be forfeited until the member is more 
than six months in arrears for the local lodge dues; u for in such 

4 Wilson v. Trumbull Mutual Fire N. Y. Supp. 167. Compare Stack v. 
Ins. Co. 19 Pa. St. 372; Wadsworth Williams, 151 N. Y. Supp. 185, 16C 
v. Davis, 13 Ohio St. 123; Boland App. Div. 190; Wilkie v. National 
v. Whitman, 33 Ind. 64. Council, Junior Order United Ameri- 

5 Collins v. Bankers' Accident Ins. can Mechanics, 151 N. Car. 527, 66 
Co. 96 Iowa, 216, 59 Am. St. Rep. S. E. 579. 

367, 64 X. W. 77S. 9 Stack v. Williams, 151 N. Y. 

6 Bukofzer v. Grand Lodge, 40 X. Supp. 185, 166 App. Div. L90. 

Y. St. Rep. 653, 15 N. Y. Supp. 922, 10 Long v. West Philadelphia Coun- 

61 Hun, 625. cil, •~ ),) Leg- Intel. 258, - l';i. Dist. 

7 Wiggin v. Knights of Pythias, 31 Rep. 375 (thirteen weeks arrears al- 
Fed. 122. lowed). 

8 Strasser v. Staats, 59 Hun (N. " Wiggin v. Knights of Pythias, 
Y.) 143. 35 X. Y. St. Rep. 789, 13 31 Fed. 122. 

Joyce Ins. Vol. III.— 150. 2385 



§§ 1259, 1260 JOYCE ON INSURANCE 

case the dues are not demandable in advance at the beginning, but 
at the end, of the term for which they are liable, and the fact that 
members may. and most of them do, pay their dues in advance of 
the day fixed cannot affect the question. 12 Again, dues in arrears 
may be paid after a member is unconscious from a fatal injury when 
payment was authorized by said member when in health, and by 
custom of the association payments were allowed without a health 
certificate where dues were in arrears. 13 So payment of an assess- 
ment may be made by the beneficiaries after the death of the in- 
sured within the thirty days after an assessment becomes due, where 
the by-laws allow that time for payment, if there is no provision to 
the contrary in the by-laws. 14 

§ 1259. Assessment falling due on Sunday. — If the last day of 
the month, that being the day on which the assessment becoi in- 
due, falls on Sunday, payment may be made on the following Mon- 
day in California, even though the assured dies on Monday. 15 

§ 1260. Assessments: suspension of member. — A contract may be 
so expressly or impliedly conditioned that nonpayment of an assess- 
ment merely operates to suspend the protection afforded by the pol- 
icy or certificate for such period as the assessment shall remain un- 
paid, 16 and if there be a loss during the suspension, the insurance 
cannot be recovered. 17 So under a provision that a policy shall be 
"null and void until the assessment be paid," nonpayment within 
the specified period for payment does not absolutely extinguish the 
contract, but merely suspends the obligation. 18 So a member en- 
titled to sick benefits may be suspended for nonpayment of assess- 
ments notwithstanding the rules relating to such benefits provide 
for the payment of dues and fines, and that a member shall not be 
in arrears so as to preclude his right to benefits; it also appearing 
that the rules relating to the widows', etc., fund provided for such 

12 Wiggin v. Knights of Pythias, 16 Blanchard v. Atlantic Mutual 
31 Fed. 122. Fire Ins. Co. 33 N. H. 9; Joliffe v. 

13 Wat kins v. Brotherhood Ameri- Madison Ins. Co. 39 Wis. Ill, 20 
can Yeomen, 188 Mo. App. 626, 176 Am. Rep. 35 ; Lycoming Fire Ins. Co. 
S. W. 516. v. Rought, 97 Pa. St. 415; Wash- 

14 Wright v. Supreme Commanderv ington Mutual Fire Ins. Co. v. Rosen- 
Knights of Golden Rule, 87 Ga. 426, herger, 84 Pa. St. 373. See §§ 1261, 
14 L.R.A. 283 (annotated on pay- 1264, 1266 herein. 

ment of premium after death to keep 17 Blanchard v. Atlantic Mutual 

insurance in force), 13 S. E. 564. Fire, 33 N. H. 9; Washington Mutual 

15 Northey v. Bankers' Life Assoc. Fire Ins. Co. v. Rosenberger, 84 Pa. 
110 Cal. 547, 42 Pac. 1079. St. 373. 

As to premium maturing Sunday, 18 Hummel's Appeal, 78 Pa. St. 
see § 1129 herein. 320. 

2386 



ASSESSMENTS AND DUES § 1261 

suspension for default in paying assessments." But if there be qo 
authority conferred so to do, a vote to suspend for nonpaymenl of 
assessments is invalid, 20 and unless their is some provision for sus- 
pension nonpaymenl of assessments will not so operate in mutual 
benefit societies. 1 Again, provisions in by-laws of a mutual benefit 
association, thai any member three months in arrears, shall be de 
clared Don-financial, and thai any member failing to visil the lodge 
shall stand suspended until a prescribed fine is paid, unless he has a 
lawful excuse, do no1 make a member non-financial for failure to 
pay dues, until he is three months in arrears and he has been de- 
clared non-financial. 8 Nor can there be any suspension of the mem- 
ber of a fraternal benefit society, where he is not in default for non- 
payment although the constitution provides for suspension after the 
expiration of a time certain. 3 

It is a condition precedent to a valid suspension that the assess- 
ment must be regularly made and the member must be subject 
thereto. 4 

§ 1261. When nonpayment of dues or assessments, forfeits, or 
suspends: self-executing provisions. — Astipulation or provision in 
the contract for forfeiture for nonpayment of dues at a specified 
day will operate of itself to work a. forfeiture or suspension, as the 
case may be, if said dues are not paid as agreed. 5 And if a certifi- 

19 Hansen v. Supreme Lodge Hunger v. Brotherhood of American 
Knights of Honor, 140 111. 301, 29 Yeomen, - Iowa, — , 154 N. W. 
N. E. 1121. 879. But compare Brooks v. Con- 

20 New England Mutual Fire Ins. servative Life Ins. Go. 132 Iowa, 377, 
Co. v. Butler, 34 Me. 451. 106 N. W. 913, 119 Am. St. Rep. 

1 Mutual Benefit Life Ins. Co. v. 560; Jelly v. Muscatine City & Coun- 

French, 30 Ohio St. 240, 27 Am. Rep. ty Mutual Aid Soc. 120 Iowa, 689, 

443; Borgraefe v. Supreme Lodge 98 Am. St. Rep. 378, 95 N. W. L9*3 

Knights of Honor, 22 Mo. App. 127; New York.— Giniso v. Calabrian 

District Grand Lodge v. Cohn, 20 American Citizens' Mutual Benefit 

111. 335. Assoc. 66 Misc. 162, 121 N. Y. Supp. 

8 Murphy v. Independent Order of 209; Paster v. Nagelsmith, 30 Misc. 

the Sons & Daughters of Jacob of 791, 63 N. Y. Supp. 154. 

America, 77 Miss. 830, 50 L.R.A. Ill Oklahoma. — Modern Brotherhood 

(annotated on forfeiture of benefit of America v. Beshara, 42 Okla. 6S4, 

certificate by default of subordinate 142 Pac. 1014. 

lodge), 27 So. 624. Pennsylvania. — Rhule v. Diamond 

3 Polish Roman Catholic Union of Colliery Accidental Fund, 5 Lack. 
America v. Warazak, 182 111. 27, 53 Leg. X. (Pa.) 101. 

S. W. 2S2. Wisconsin. — Haycock v. Sovereign 

4 Stewart v. Grand Lodge Ancient Camp Woodmen of the World, 162 
Order United Workmen, 100 Tenn. Wis. 116, 155 N. W T . 923. 

267, 46 S. W. 579. As to forfeiture for nonpayment 

B Iowa. — Mamlego v. Centennial assessments : "wife's interest, see Harl 

Mutual Life Assoc. 64 Iowa, 134, L9 lord Life Ins. Co. v. lbs, 237 U. S. 

N. W. 877, 17 N. W. 656. See 662, 59 L. ed. 1165, L.R.A.1916A, 

23S7 



§ 1261 JOYCE ON INSURANCE 

ate of membership in an assessmenl insurance company provides 
thai the insured shall make certain payments when due; thai the 
certificate shall be null and void if the payments are not so made; 
and thai all moneys paid thereon shall he forfeited to the company 
in case of neglect to make any required payment, the time of pay- 
ment h of the very essence of the contract, and nonpayment when 
(he money is due involves absolute forfeiture, and releases the com 
pany from liability without any affirmative action on its part. 6 So 
failure to pay dues ipso facto forfeits a, mutual benelii certificate, 
where the constitution and by-laws of the society provide that upon 
such failure the benefit certificate shall become absolutely void, and 
all liability of the society thereon shall thereupon end. 7 So in a 
Louisiana case there were two classes of assessments regular and ex- 
tra, the lust lixed and levied by the supreme council to be paid 
without notice on the last day of the month; and the latter levied 
and called by the executive committee, in case of necessity therefor, 
which required, as a condition precedent to suspension or a forfei- 
ture of benefit rights, that notice should be given of all assessments 
to every council. It was held that although both were provided for 
in the same by-law that they were separate and distinct so that non- 
payment of the regular monthly assessment of itself operated as an 
immediate suspension from the order, and a deprivation of all ben- 
efits from the policy upon death of the member while under sus- 
pension, as the by-laws were self-enforcing and binding and that 
the provision relative to notice for calls for assessments had no ref- 
erence to notice to individual members of calls for regular monthly 
assessments. 8 And neglect or refusal to pay an assessment "where 
ordered as provided in the by-laws" forfeits membership and all 
benefits under the policy unless there is a waiver. 9 And the rule as 

765, 35 Sup. Ct. 692, rev'g lbs v. L.R.A.(N.S.) 747, and L.R.A.1917B, 
Hartford Life Ins. Co. 121 Minn. 310, 214. 

141 N. W. 289. Rights as to same ^ Kennedy v. Grand Fraternity, 36 
fund decided in Dresser v. Hartford Mont. 325,^25 L.R.A.(N.S.) 78, 92 
Life Ins. Co. 80 Conn. 681, 70 Atl. p ac 971 

«_. , r P , T . P „ , • 8 Feiber v. Supreme Council Amer- 

Pitts v Hartford Life & Annuity ican L ion of H n2 La 960 , 

>' 1S - o« of P^nk ' ' b ' 36 80. 818, 33 Ins. L. J. 708. The 

Rep. 96, 34 Atl. 95. -, ■ ■ • '-»*- • XT ,-■. , 

' ., „ ~ ,. ,. decision in Maginnis v. Mew Orleans 

On necessity 01 allirmative action -, ,, -^ , . , T , , .... A 

, , , • • 1, n Cotton Exclusive Mutual Aid Assoc. 

in order to terminate rights 01 mem- .„ T . ,,0,. -, n o -1™ 

ber in mutual benefit society for non- 43 ,. I f- An f- H36, 10 So. 180, was 

payment of dues, see note in 17 relied on, although in that case notice 

L.R.A.(N.S.) 246; on effect of fail- was a condition precedent to sus- 

ure to pay periodical premium on pension,' but it had been given. 

policy of life insurance to terminate 9 Locomotive Engineers' Mutual 

the same in the absence of a pro- Life & Accident Assoc, v. Bobo, 8 

vision for forfeiture, see notes in 26 Ga. App. 149, 68 S. E. 842. 

2388 



ASSESSMENTS AND Dl BS § 126] 

to forfeiture for nonpayment of assessments within a specified time 
provided for in the charter of a mutual benefit society is self-opera- 
ting. 10 So the failure to pay an assessment when due operates oi 
itself to suspend a member, where it is provided in the by-laws that 
such act shall operate to forfeil all claim- against the association, 
and that his name shall be erased from the roll. 11 And where the 
by-laws provide that neglect or refusal to pay an assessment for a 
specif ic(l period shall determine the membership, and the secretary 
shall strike the member's name from the roll, such laws are self-ex- 
ecuting, and a defaulting member is nol aided by the fact thai the 
secretary does not strike his name from the roll. 12 So it is held that 
where an assessment may be made by a receiver, its nonpayment 
may operate as a forfeiture under a charter provision for forfeiture 
for nonpayment of assessments when due. 13 Again, a failure or re- 
fusal to pay dues under an endowment certificate in a society doing 
an insurance business under the Lodge system will operate to forfeit 
a member's certificate where it is so provided, although so long as a 
member pays his dues and remains in good standing his certificate 
cannot be forfeited by a forfeiture of the charter of his lodge de- 
clared by the general order, but if a minority of the members secede 
from a lodge and refuse to pay dues, their certificates are forfeited. 14 
So a by-law is self-executing which provides that a member shall 
stand suspended without notice where he fails to pay his dues on or 
before a specified day. 15 

Mutual benefit societies may also provide that nonpayment of 
assessments within a specified time after notice shall operate of it- 
self, without notice or declaration of forfeiture, or other act of the 
society, to work a forfeiture or suspension, and a provision of this 
character will be effective to accomplish the purpose intended as it 
is self-executing and ipso facto forfeits or suspends according to its 

On waiver by officers of subordi- Assoc. 31 Fed. 62. See Madeira v. 

nate lodge of forfeiture for rionpay- Merchants' Exchange Mutual Benefil 

men! of assessments, see notes in 4 Soc. 16 Fed. 749. 

L.R.A.(N.S.) 421, and 38 L.R.A. "In re Equitable Reserve Fund 

(N.S.) 571. Life Assoc. 131 N. Y. 354, 30 N. E. 

10 Maginnis' Estate v. New Orleans 111. 40 N. Y. St. Rep. 800, 16 N. 

Cotton Exchange & Mutual Aid Y. Supp. (N. Y. S. C. 1892) 80. 43 

Assoc. 43 La. Ann. 1136, 10 So. 180, N. Y. St. Rep. 204. 

21 las. L. J. 171. See Munger v. l4 Goodman v. Jedidjah Lodge, 6< 

Brotherhood of American Yeomen, Md. 117. 9 Atl. 13. 13 Atl. 627. 

— Iowa, — . 151 X. \V. 879. l5 Neenan \. National Council ol 

11 Yoe v. Howard Masonic Mutual Knights and Ladies <>f Security, L88 
Benefil Assoc. 63 Md. 86. til. App. 490. Sec Glasky v. United 

12 Rood v. Railway Passenger & Brotherhood, — 111. App. — , 43 Nat'l 
Freight Conductors' Mutual Benefit Corp. Hep. 285. 

2389 



§ L261a JOYCE ON INSl U ANCK 

terms: said construction will be given the contract where such ap- 
pears clearly from its terms to have been the intent of the parties. 16 
§ 1261a. Same subject.— And no declaration of forfeiture is nec- 
essary to terminate the rights of a member of a mutual benefit socie- 
ty for nonpayment of dues where the by-laws provide that any 
member shall ipso facto forfeit his membership who fails to pay his 
assessmenl for thirty days after notice. 17 And a by-law is self exe- 
cuting which provides for forfeiture of claims for losses where the 
member, within a, specified lime after notice, neglects or refuses to 
pay assessments. 18 And if the member 'is to stand suspended for 
failure to pay assessments on or before a specified time, and the 
certificate is to be void during such suspension, the members rights 
are ipso facto forfeited for nonpayment after notice without rein- 
statement. 19 So nonpayment of an assessment duly levied within 
the time required will invalidate the certificate if due notice is 
given. 20 The general rule is, however, subject to such exceptions 
as may arise from statutory provisions, waiver, and estoppel. But 
if the note be a payment in advance of the premium, nonpayment 
of an assessment does not suspend the policy, notwithstanding a 
vote that if assessments on the premium notes are not paid punctu- 
ally the policy will be suspended ; such a vote, not being warranted 
by the charter, will be of no validity. 1 And under a provision in a 
fire insurance policy that all assessments must be paid within thirty 
days after notice or the policy will be null, the expiration of thirty 

16 Alabama.— United Order of The New York.— McDonald v. Ross- 
Golden Cross v. Hoosier, 160 Ala. Lewin, 29 Hun (N. Y.) 87. 
334 49 So. 354. Texas. — Fletcher v. Supreme Lodge 

IWnois.— Lehman v. Clark, 174 Knights & Ladies of Honor, — Tex. 
111. 279, 43 L.R.A. 648, 51 N. E. Civ. App. — , 135 S. W. 201. 
222, 27 Ins. L. J. 745; Hansen v. "Knights of Columbus v. Bur- 
Supreme Lodge Knights of Honor, roughs, 107 Va. 671, 17 L.R.A.(NS.) 
140 111 301 29 N E 1121- Illinois 24o> (annotated on necessity ot afflr- 
Masons Benevolent Soc. v. Baldwin, motive action in order to terminate 
86 ill. 479; National Union v. Hunter, right* of member in mutual benefit 
99 111. App. 146. S C F 40 n ° npayment ° f dUGS) ' G ° 

Kentucky -Johnson v Southern ' ' ^^l v . Oxford County Pat- 
Mutual Life Ins. Co '9 Ivy. 403, ^ of Husband Mutual Fire Ins . 
404, 3 Ky. L. Rep. 26; American Cq 1Q7 Me 362 " 78 Atl 459 
Mutual Aid Soc. v. Quire, 8 Ky. L. 19 Day V- Supreme Forest Wood- 
Rep. 101. men Circle, 174 Mo. App. 260, 156 

Minnesota. — Benedict v. Grand g y\r 72. 

Lodge Ancient Order United Work- 20 Burdon v . Massachusetts Safety 

men, 48 Minn. 471, 51 N. W. 371, Fund Assoc. 147 Mass. 360, 1 L.R.A. 

21 Ins. L. J. 438. 146, 17 N. E. 874. 

Nebraska. — Grand Lodge Ancient l New England Mutual Ins. Co. v. 

Order United Workers v. Scott, 3 Butler, 34 Me. 451; Rix v. Mutual 

Neb. (Unof.) 845, 93 N. W. 190. Ins. Co. 20 N. II. 198. 

2390 



ASSESSMENTS AND DUES § 1261a 

daya without paymenl annuls the policy without action on the pari 
of the insurer. 8 

If both the statute and certificate preclude recovery of a death 
benefit for defaull in paymenl of assessments they will so operate. 8 
\iiil if dues in a fraternal order are payable in advance but may be 
paid at monthly meetings without being in arrears, a failure to 
make such periodical payments for several consecutive times de- 
termines the membership.* So where it is stipulated that there 
shall be a forfeiture for failure to pay assessments due during cer- 
tain months in each year, such provision applies in case of nonpay- 
ment in one of said months. 6 And where the amount of an overdue 
assessment is sent insurer, but it refuses the same except upon con- 
ditions Which are not fully complied with, the insurance benefit is 
forfeited. 6 And the agreement of a cashier of a bank, where assured 
had an account and where he had paid his assessments, to pay an 
assessment and charge the amount thereof to insured's account in 
case the latter should forget to pay the same does not constitute pay- 
ment so as to prevent a lapse of the policy, even though said bank- 
was the depositary of the society and its collecting agent and not- 
withstanding assured's balance was larger than the amount of said 
assessment. 7 

Again, the contract is forfeited by failure to pay valid and legally 
levied assessments even though the certificate also requires payment 
of all assessments due the benefit fund. 8 And where the policy stip- 
ulates for an annual expense premium and also a mortuary pre- 
mium and provides for renewal upon payments of the mortuary 
premiums upon notice and that the insurance shall lapse upon fail- 
ure to make payment as required and assured had paid the former 
but not the latter at the time of his death, the policy was held for- 
feited. 9 So failure for more than two years to make an attempt to 
secure relief from what is alleged to be an irregular forfeiture of a 
mutual benefit certificate, or to tender dues and assessments there- 
on, will be regarded as an acquiescence in the forfeiture. 10 

2 Mutual Fire Ins. Co. v. Maple, of Des Moines, 134 Mo. App. 35, 114 

60 Oreg. 359, 38 L.R,A.(N.S.) 726, S. W. 551. 

119 Pac. 484. 7 Grillith v. Merchants' Life Assoc. 

8 Grayson v. Grand Temple & of Burlington, 141 Iowa, 414, 119 

Tabernacle in S. of T. of Knights & N. W. 694. 

Daughters of Labor of the I. 0. T. 8 Supreme Council American Le- 

— Tex. Civ. App. — , 171 S. W. 489; gion of Honor v. Landers, 31 Tex. 

Kev. Stat. 1911, art. 4834. Civ. App. 338, 72 S. W. 880. 

*Sevignyv. Societi St. .lean Bap- 'Baldwin v. Provident Savings 

tiste, 36 R*. I. 374, 90 Atl. 741. Life Assurance Soc. of X. Y. 48 X. 

6 Smoot v. Bankers' Life Assoc. Y. Supp. 463, 23 App. Div. 5. al'l'd 

138 Mo. App. 438. 120 S. \Y. 719. 102 N. Y. 636, 57 N. E. 1103. 

6 McCoy v. Bankers' Life Assoc. 10 Sheridan v. Modern Woodmen, 

2391 



§§ 1262-1264 JOYCE ON INSIKAXCE 

It is held that if no hour is specified as that of the termination 
of time of payment of ;ni assessment, the policy will lie in force un- 
til midnight of the last day specified in the notice as that <>n or be- 
fore which the assessment must l>e paid to save a forfeiture. Tims, 
if an assessmenl is payable on or before the first day of May, mid- 
night of May 1st will he held to have been intended. 11 It is decided. 
however, that although the certificate expressly stipulates that it 
shall be void for nonpayment of assessments within thirty days 
after notice, the forfeiture is optional with the society, and the cer- 
tificate only voidable, 12 The question whether an assessment has 
been paid in time to prevent a suspension of the member, may be 
one for the jury. 13 

§ 1262. Assessments paid in advance in excess of mortuary as- 
sessments. — A member of a mutual benefit association who has paid 
assessments in advance in excess of the amounts required to meet 
death claims is not- obligated to pay assessments till the excess is 
equaled by unpaid assessments. 14 But although there are sufficient 
funds of the member in the society's hands or in some of its branch- 
es to meet an assessment, yet if his default is prejudicial to his re- 
lations wiih the association, it may be enforced against him. 15 And 
an advance assessment should be applied to payment of the first 
assessment for which insured is liable. 16 

§ 1263. No forfeiture: assessments in advance of death losses. — 
A company is authorized to levy assessments upon policyholders 
only for death losses that have actually occurred, it cannot claim 
a forfeiture of a policy for nonpayment of an assessment made in 
advance of a death loss. 17 

§ 1264. Forfeiture or suspension: when affirmative act of society- 
necessary. — There is, as will be noticed by a comparison of the cases, 
a well-defined distinction between provisions of the character of 
those considered under preceding sections and other cases where 
the fundamental law of the order or society provides that for non- 
44 Wash. 230, 7 L.R.A.(N.S.) 973, 14 Covenant Mutual Benefit Assoc. 
87 Pac. 127. v. Baldwin, 49 111. App. 203. 

11 Oh v. Homestead Ins. Co. 4 15 MeGowan v. Supreme Council 
Pitts. Leg. Jour. 98. Catholic Mutual Benefit Assoc. 76 

Onfirst and last days in computing Hun (N. Y.) 534, 28 N. Y. Supp. 

time in case of nonpayment, see note 177, 58 N. Y. St. Rep. 268. 

in 4!) L.R.A. 208. 16 Sleight v. Supreme Council of 

12 Bosworth v. Western Mutual Aid Mystic Toilers, 133 Iowa, 379, 107 
Soc. 75 town, 582, 39 N. W. 903. See N. W. 183; Kirk v. Sovereign Camp 
Supple v. Iowa State Ins. Co. 58 Woodmen of the World, ll»9 Me. 
Iowa, 29, 11 N. W. 716. App. 449, 155 S. W. 39. 

13 Roval Neighhors of America v. 17 Schultz v. Citizens' Mutual Life 
Laufman, 158 Ky. 358, 164 S. W. Ins. Co. 59 Minn. 308, 61 N. W. 
966. 331. 

2392 



ASSESSMENTS AND DUES § 1264 

paymenl of dues ;ui<l other delinquencies the member may be sus- 
pended by the lodge or other judicatory ; in the latter class of cases 
the designated authority must exercise the power to suspend, other- 
wise there can be no suspension, for the rules of the order must be 
looked to as the source of authority, and whatever rights are con- 
ferred thereby must be exercised only in conformity therewith, in 
so far as those rules are lawful. It is these rules on which the mem- 
ber has a right to rely, and by which he is hound, but in cases of 
the former class it is not necessary for the lodge or society or any 
other judicatory of the order to adjudge a forfeiture against a de- 
linquent member for nonpayment of an assessment for a death ben- 
efit. The provisions for forfeiture or suspension for nonpayment 
of assessments within a specified time, whether contained in the 
charter or articles of association, are valid and binding, and the for- 
feiture or suspension attaches by operation of the law, and this rule 
applies equally to the valid and reasonable by-laws of the society, 
or to the by-laws and regulations of a subordinate lodge when such 
lodge is empowered to enact them, and they are reasonable. 18 The 
second class of decisions includes those cases where the constitution 
and by-laws of a mutual benefit society provide that a member shall 
be excluded from the benefits of the lodge during default in the pay- 
ment of dues, and after the default has continued for a specified 
time, the member may be suspended. In such cases there must be 
an actual expulsion or suspension, for the fact of nonpayment does 
not of itself terminate the member's rights. 19 So although the con- 
stitution provides that members of lodges in default for nonpay- 
ment of benefit assessments within a given time shall forfeit all 
claim to the funds, yet if a special mode of procedure as to such de- 
faulting lodges is also provided, such default does not ipso facto 
operate as a forfeiture of the member's rights. 20 So in ease the by- 
laws provide that any member of the lodge failing to pay his as- 
sessment within a specified time "shall be suspended," there must 
be some affirmative act of the lodge. 1 Again, nonpayment of dues 
does not ipso facto work a forfeiture of membership benefits where 
a formal method of suspension is provided under the by-laws. 

18 See Borgraefe v. Supreme Lodee Minn. 256, 47 N. W. 799, 20 Ins. 
Knights of Honor, 22 Mo. App. 127, L. J. 241. 

opinion of Thompson, -I. 80 Young v. Grand Lodge S,ms of 

On necessity of affirmative action Progress, 173 Pa. St. 302, 33 Atl. 

in order to terminate rights of mem- 1038. 

ber in mutual benefit society for non- l Seheu v. Grand Lodge Ohio 

paymenl of dues, see note in 17 Division Independent Foresters, 1- 

L.R.A.(N.S.) 246. Fed. 214. See Commonwealth v. 

19 Seheuffer v. Grand Lodge An- Pennsylvania Beneficial Inst. 2 Serg. 
cient Order United Workmen, 45 & R. (Pa.) 141; Districl Grand 

2393 



§ L264 JOYCE ON INSURANCE 

even though (lie member, being secretary of the society, has failed 
to report his own delinquencies, and therefore no formal pro- 
ceedings for suspension are had; 2 and where the charter provides 
that if a member is suspended by the secretary, appeal may be 
made to the board of directors, when in session, it is held thai 
such forfeiture cannot properly be imposed as an ex parte result 
of mere default in payment, and without giving the assured an 
opportunity for hearing. 3 

There is another class of cases where the contract provides that 
notice of assessments shall be given to the member. Here the 
notice must be given as provided for, or there can be no forfei- 
ture or suspension for default. 4 A provision in the constitution is 
not self-executory which provides for a prompt remittance of the 
amount of the assessment upon notice, and that upon failure to re- 
mit within a specified time the member shall forfeit his claim 
to membership; some action must be taken by the directors as to 
forfeiture. 5 

It is decided that a provision in the constitution of a mutual 
benefit association that a member failing to pay his assessment 
within a certain time after notice of delinquency shall be sus- 
pended, is not self-executing, but merely declaratory of the right 
to suspend for nonpayment of an assessment, and membership 
or good standing is not lost or forfeited so long as the associa- 
tion does not act. 6 It is also held that affirmative action is neces- 
sary to a forfeiture of benefits even though no payment may oper- 

Lodge v. Cohn, 20 Bradw. (111.) 335; New York.— Waehtel v. Widows & 

Lazinsky v. Supreme Lodge Knights Orphans' Soc. 84 N. Y. 28, 38 Am. 

of Honor, 31 Fed. 592; Columbia Rep. 478; Payne v. Mutual Relief 

Ins. Co. v. Buckley, 83 Pa. St. 293, Soc. 17 Abb. N. C. (N. Y.) 53, 6 

24 Am. Rep. 172. N. Y. St. Rep. 366. 

2 Osterman v. District Grand Lodge See also §§ 1320 et seq. herein. 
No. 4 Independent Order Bnai Brith See Lazinsky v. Supreme Lodge 
(111 Cal. XVI.) 43 Pac. 412. Knights of Honor, 31 Fed. Rep. 592, 

3 Olmstead v. Farmers' Mutual Fire as to record of suspension in socie- 
Ins. Co. 50 Mich. 200, 15 N. W. 82. ty's books not being evidence of sus- 

4 United States. — Hall v. Supreme pension. 

Lodge Knights of Honor, 24 Fed. On conflict of laws as to notice of 

450. premium, see notes in 63 L.R.A. 862, 

Illinois. — Supreme Lodge Knights and 52 L.R.A. (N.S.) 283. 

of Honor v. Dalberg, 138 111. 508, 28 5 Northwestern Traveling Men's 

N. E. 785. Assoc, v. Schauss, 148 111. 304, 51 

Michigan.— Pulford v. Fire De- 111. App. 78, 35 N. E. 747. 

partment of Detroit Co. 31 Mich. 6 Jelly v. Muscatine Citv & Cent v 

458. Mutual* Aid Soc. 120 Iowa, 689, 98 

Missouri. — Bange v. Supreme Coun- Am. St. Rep. 378, 95 N. W. 19 < . 
cil, Legion of Honor, 128 Mo. App. 
461, 105 S. W. 1092. 

2394 



ASSESSMENTS AND DUES § 12G5 

ate as a suspension of a member. 7 So a benefit certificate which 
provides that for a nonpayment of dues the member shall be 
suspended and his rights forfeited, but winch also provides for his 
reinstatement on specified conditions, does not contemplate that 
a failure to pay dues will ipso facto work forfeiture, without 
affirmative action by the association. 8 And under other decisions 
some affirmative act on the part of the society, association or com- 
pany is necessary as provisions for suspension or forfeiture, for 
nonpayment of dues or assessments, are not self-executing. 9 

§ 1265. When member is in good standing: when not. — The term 
"good standing" is one frequently used in the certificates issued by 
mutual benefit societies. The term, while a general one of wide 
application, may also have reference to the nonpayment of dues and 
assessments, and a member is not in good standing at the time of 
his death, so as to warrant a recovery on his certificate, where he 
has not complied with the society's laws in relation to dues and 
assessments, and is then in default, and the time has fully ex- 
pired within which they might be paid; 10 and where it appears 
upon trial of an action to recover upon a benefit certificate that 
the assessment was regularly and properly levied, and was valid, 
and the member fails to pay the same, no recovery can be had 
on the ground that the member was not in good standing at his 
decease. 11 And a member does not, in the absence of waiver, con- 
tinue in good standing by an attempt to pay an assessment when 
not made in conformity with the rules of the order. 12 But if the 

7 Warwick v. Supreme Conclave Mississippi.— Murphy v. Independ- 
Knights of Damon, 107 Ga. 115, 32 ent Order Sons and Daughters of 
S. E. 951. Jacob, 77 Miss. 830, 50 L.R.A. 111, 

8 Brooks v. Conservative Life Ins. 27 So. 624. 

Co. 132 Iowa, 377, 119 Am. St. Rep. Missouri.— Purr v. Grand Lodge 

560, 106 N. W. 913. Compare Mun- German Order of Harugari, — Mo. 

ger v. Brotherhood of American Yeo- App. — , 2 Mo. App. Rep. 68. 

meil) — Iowa, — , 154 N. W. 879. New Jersey. — American Council 

9 California.— Osterman v. District No. 107, O. U. A. M. v. National 
Grand Lodge, No. 4, I. O. B. B. Ill Council, 63 N. J. L. 52, 43 Atl. 2. 
Cal. xvi. 43 Pac. 412. Pennsylvania. — Wheeler v. Lacka- 

////hcJ.s.— Traders Mutual Life Ins. wanna Coal Co. Accidental Fund 

Co. v. Johnson, 200 111. 359, 65 N. (Pa.) 5 Lack. Leg. N. 97. 

E 634. Wl Ins. L. J. 222 {distinauish- England.— Wooley v. Victoria Mu- 

ing Lehman v. Clark, 174 111. 279, 43 tual Fire Ins. Co. (Ont.) 19 Canadian 

L.R.A. 648, 51 N. E. 222, 27 Ins. L. L. T. 212. 

J. 745, rev'g 71 111. App. 366) ; Co- 10 MeMurry v. Supreme Lodge 

lumbus Mutual Life Assoc, v. Ban- Knights of Honor, 20 Fed. 107. 

rahan, 98 111. App. 22; High Court n Passenger Conductor's Life Ins. 

Independent Order of Foresters v. Co. v. Birnhaum, 116 Pa. St. 565, 11 

Schweitzer, 70 111. App. 139, ail'M Atl. 378. 

171 111 325, 49 N. E. 506. 12 Scholler v. Grand Lodge Ancient 

2395 



§ L265 JOYCE ON INSURANCE 

company has waived the forfeiture by subsequently levying assess- 
ments and recovering prior assessments, the question of good 
standing becomes immaterial in the action upon the certificate of a 
deceased member; 13 although if the officers to whom the assess- 
ments so made were paid alter suspension of the member, and he 
is not restored, the company may nevertheless deny the member's 
good standing. 14 If a member neglects to renew a deposit of the 
amount necessary to meet his assessments upon notification there- 
of as required by the contract, he forfeits his good standing, and 
no recovery can be had upon his certificate. 15 But the suspension 
most he regularly made; thus, if the quarterly dues are payable 
"on or before the first meeting in each quarter," it must appear 
that a meeting has been held since the commencement of the 
quarter; the fact that the association holds a weekly meeting is 
not enough where it is attempted to deny a member's good stand- 
ing for nonpayment of dues for a certain quarter. 16 A mem- 
ber also continues in good standing where his dues are advanced by 
the local lodge and no steps are taken by it to suspend. 17 And 
a mere delinquency of a member of a mutual benefit association in 
the payment of dues or assessments, does not defeat his good 
standing so long as he has a right to pay and the association 
forbears to take action. 18 So the payment of dues in arrears 
entitles the beneficiary to death benefits, where the member dies 
after the expiration of the time when he would have been in 
good standing under the by-laws, even though he was taken ill 
before said period. 19 It must be shown, to support a defense that 
the member was not in good standing, that such an assessment 
as the assured was obligated to pay had been levied. 20 And the 
burden of proof that a member was not in good standing rests 
upon the association when it relies upon that defense. 1 

In the construction of contracts providing for "good standing," 

Order United Workmen, 96 N. Y. Travelers of America v. McAdam, 

Supp. 1088, 110 App. Div. 456. 125 Fed. 358, 61 C. C. A. 22. 

13 Millard v. Supreme Council 18 Jelly v. Muscatine City & Coun- 
Ameriean Legion of Honor, 81 Cal. tv Mutual Aid Society, 120 Iowa, 
340, 22 Pac. 804. See c. XLIV. 689, 98 Am. St. Rep. 3*78, 95 N. W. 
herein. 197. 

14 Lyon v. Supreme Assembly 19 Tucker v. George Shiftier Coun- 
Etoyal Society of Good Fellows, 153 cil, No. 177, Jr. O. U. A. M. (Pa.) 
Mass. 83, 26 N. E. 236. 27 Lane. Law Rev. 121. 

15 Ziegler v. Mutual Aid & Benevo- 20 Kinney v. Brotherhood of Amer- 
lent Life Ins. Co. 1 McGloin (La.) ican Yeomen, 15 N. Dak. 21, 106 N. 
284. W. 44. 

16 Mills v. Rebstock, 29 Minn. 380, x Sleight v. Supreme Council Mys- 
13 N. W. 162. tie Toilers, 133 Iowa, 379, 107 N. W. 

17 Order of United Commercial 183. 

2396 



ASSESSMENTS AND DUES . L266 

consideration should be had in all cases to the decisions under simi- 
lar contracts in other cases where the provisions for forfeiture 
or suspension for nonpayment of dues or assessments exist, and in 
view of such decisions the ruling in some of the cases under this 
section will be found questionable, or a1 Leasl inconsistent therewith. 
§ 1266. Nonpayment of assessments: when no forfeitures. — No 
forfeitures or suspensions occurs in mutual benefil societies or com- 
panies for uonpaymenl of an assessmenl when due unless so pro- 
vided. 8 Where money deposited to meel .-ill future assessments is 
wrongfully applied on assessments made prior to membership, 
the member will not be in default for nonpayment of assessments 
to which the said money should have been applied. 8 But an as- 
sessment must have been legally made by a lawfully constituted 
body to authorize suspension of a member, for nonpayment there- 
of. 4 An assessment must also be legally made; that is, in the 
manner and for the purposes specified by the nllicers designated, 
otherwise there can be no forfeiture. 5 If an assessment falls due 
after the loss of the property insured, its nonpayment will not 
operate as a forfeiture with reference to that loss, even though the 
policy provides that neglect for thirty days to pay an assessment 
after notice thereof shall avoid the contract. 6 Nor can a forfeiture 
for nonpayment of assessments be declared after death to destroy 
rights under a certificate in force at the time of death. 7 In an 
Illinois case a new society became successor of another, and issued 
new certificates upon surrender of the old ones under a resolution 
therefor, which also provided that assessments made by the old 
society not due at the time of transfer of membership should be- 
come due and payable to the new society the same as it would have 
been to the old one had there been no transfer. The new certifi- 
cate of a member thus transferred provided for the payment of a 
specified sum and forfeiture for nonpayment of assessments "made 

2 Mutual Life Ins. Co. v. French, 973; Smoot v. Bankers' Life Assoc. 
30 Ohio St. 240. 27 Am. Rep. 443; 138 Mo. A pp. 438, 120 S. W. 719. 
Keeton v. National Union, — Mo. 5 Row-swell v. Equitable Aid Unions, 
App. — , 182 S. W. 798. See Brother- 13 Fed. S til ; Agnew v. Ancient Order 
hood of Railway Trainmen v. Dee, United Workmen, 17 Mo. App. 254. 

- Tex. Civ. App. — , 108 S. W. 492. See §§ L290-1302 herein; Supreme 

3 Kvarts v. United States .Mutual Council Catholic Knights of America 
Occident Assoc. 40 N. Y. St. Rep. v. txigsdon, 183 Ind. 183, 108 N. E. 
878, 16 N. Y. Supp. 27, 61 Hun 587. 

(N. Y.) 624. 6 Seyk v. Millers' National Ins. Co. 

4 King v. Physicians' Casualty As- 74 Wis. 67, 3 L.R.A. 523, 41 N. \Y. 
sociation of America, 97 Neb. 637, 443. 

150 N. W. 1010. See also Burchard 7 Baker v. Citizens' Mutual Fire 
v. Western Commercial Travelers' Ins. Co. 51 Midi. 243, 16 N. W. 391. 
Assoc. 139 Mo. App. 606, 123 S. W. 

2397 



§ 1266 JOYCE OX INSURANCE 

by the society," and it was held that this covered only assessments 
made by the new society, and the member's certificate was not for- 
feited for nonpayment of an assessment made by the old society. 8 
Again, if the obligation to pay an assessment arises from an inde- 
pendent contract, its violation does not affect the member's rights 
under his certificate. The forfeiture or suspension must be pro- 
vided for as a part of the contract to be of force. 9 

A member of a mutual bene! it society cannot be adjudged in de- 
fault for nonpayment of dues, where the amount of accrued sick 
benefits to which he is entitled exceeds the unpaid dues. 10 And 
a member is not in default for nonpayment of an assessment 
for •'mortuary and disability purposes" where it is not within the 
terms of a certificate providing for an annual payment of a cer- 
tain sum and also for a certain additional sum as an assessment 
on the "death" of a member. 11 Nor can there be a legal suspen- 
sion for nonpayment of an assessment which was met by that 
preceding and so on down to the first one which w r as covered by 
the advance payment made on admission into the society. 12 And 
where a member is not in default in his payments, a recovery on 
his certificate is not precluded merely by his declaration that he 
must drop his insurance because he cannot pay his assessments. 13 
And if assured dies on the day the assessment is due there is no 
forfeiture. 14 Failure of a subordinate lodge of a mutual benefit so- 
ciety to remit an assessment to the grand lodge, will not forfeit the 
rights of a member, although the by-laws provide that the grand 
lodge shall not be held for neglect of duty of subordinate lodges. 15 
And the failure of the secretary of a local, subordinate branch 
or section of the Knights of Pythias, to transmit to the general 

8 Mutual Life & Aid Soc. v. Mil- fit Life Assoc. 166 Mass. 916, 44 

ler, 23 111. App. 34. N. E. 226. 

9 Sanford v. California Farmers' 12 Demings v. Supreme Lodge 

Mutual Fire Ins. Assoc. 63 Cal. 547. Knights of Pythias, 48 N. Y. Supp. 

10 Rogers v. Union Benevolent Soc. CA9 > 20 A PP- Div - 622 - See aIso 
No. 2, 111 Ky. 598, 55 L.R.A. 695, ^ v Clark 174 111. 279, 43 
64 S. W. 444; National Council l j 745 ?4 v t 7 f Ilf A ' 366 "' 
Junior Order American Mechanics "ispetherie^v Order^of Amar- 

fJ h S w Jo rh 2T ' y 'r i ' inth, 114 Mich. 420, 4 Det. Leg. N. 

173 S. W. 813. But compare Inde- g 2 6 72 N W °62 

pendent Order of Sons & Daughters ~u Supreme" Tribe Ben Hur v. Paul, 

of Jacob of America v. Enoch, 108 2 4 Ind. App. 316, 56 N. E. 780. 

Miss. 302, 66 So. 744. 15 Murphy v. Independent Order 

On application of accrued benefits f the Sons & Daughters of Jacob 

upon dues or assessments accruing on f America, 77 Miss. 830, 50 L.R.A. 

a benefit certificate, see note in 55 111 (annotated on forfeiture of ben- 

L.R.A. 605. efit certificate by default of subor- 

11 Langdon v. Massachusetts Bene- dinate lodge), 27 So. 624. 

2398 



ASSESSMENTS AND DUES § 12G6 

board of control, within the time specified by the general laws 
of said order, moneys paid to him in due lime by a member, will 
not be ground for a forfeiture of the policy of such member,' since 
the secretary's negligence is no1 chargeable to the member, bu1 is 
that of an agent of the order, notwithstanding a provision in llio 
general laws of the order to the effect that he is to be regarded 
as tlu: agent of the member, and not of the order, where the gen- 
eral laws also require the member to pay dues to such secretary 
only, and provide that the secretary shall transmit, immediately 
after the tenth of each month, all moneys collected by him, and 
that the local branch shall be responsible to the board of control 
for all such moneys collected by the secretary. 16 A member of 
a mutual benefit society cannot be declared in default for non- 
payment of assessments, if he has paid in enough money to meet 
the assessments, but it has been wrongfully diverted to other 
purposes in excess of the authority of the society. 17 Failure to 
pay dues will not of itself deprive a member of a mutual benefit 
society of the right to sick benefits, under rules which provide 
that he may be suspended for failure to pay for a specified time, and 
expelled for continued failure where they further provide that no 

16 Supreme Lodge Knights of Order Sons & Daughters of America, 

Pvtliias v. Withers, 177 U. S. 260, 77 Misc. 830, 836, 50 L.R.A. 115, 27 

44 L. ed. 762, 20 Sup. Ct. 611. So. 624. 

Cited in : United Slates. — McMast- Missouri. — Winter v. Supreme 

er v. New York Life Ins. Co. 183 U. Lodge Knights of Pvthias, 96 Mo. 

S. 25, 39, 46 L. ed. 64, 73, 22 Sup. App. 1, 14, 69 S. W. 662. 

Ct. 10; Jumper v. Sovereign Camp, New York. — Schoeller v. Grand 

127 Fed. 635, 642, 62 C. C. A. 361, Lodge Ancient Order United Work- 
368; Modern Woodmen v. Tevis, 117 men, 96 N. Y. Supp. 1088, 110 App. 
Fed. 369, 370, 54 C. C. A. 294; Div. 460; Brown v. Independent 
Modern Woodmen v. Tevis, 111 Fed. Order Friends, 72 N. Y. Supp. 806, 
113, 119, 49 C. C. A. 262. 66 App. Div. 264; Brown v. Inde- 

District of Columbia. — Prudent pendent Order Friends, 70 N. Y. 

Patricians v. Marr, 20 App. D. C. Supp. 397, 34 Misc. 560. 

371. North Carolina. — Bragaw v. Su- 

Maryland. — Monahan v. Mutual preme Lodge Knights & Ladies of 

Life Ins. Co. 103 Md. 145, 157, 5 Honor, 128 N. Car. 354. 358, 54 

L.R.A.(N.S.) 762, 63 Atl. 211; L.R.A. 602, 604, 38 S. E. 905. 

Schlosser v. Grand Lodge Brother- Oregon. — Whigham v. Independent 

hood of Railroad Trainmen, 94 Md. Foresters, 44 Oreg. 543, 553, 75 Pac. 

362, 368, 50 Atl. 1048. 1067. 

Michigan. — Wagner v. Supreme South Carolina. — Mitchell v. Leech, 

Lodge Knights & Ladies of Honor, 69 S. Car. 413, 421, 66 L.R.A. 726, 

128 Mich. 660, 667, 87 N. VY. 903. 104 Am. St. Rep. 811, 48 S. E. 290. 
Mississippi* — National Mutual 17 Clark v. Iowa State Traveling 

Building & Loan Assoc, v. Brahan, Men's Assoc. 156 Iowa, 201. 42 
SO Miss. 107. 429, 57 L.R.A. 798, L.R.A.(N.S.) 631, 135 N. W. 1111. 
31 So. 840; Murphy v. Independent 

2399 



■•> L267, L268 JOYCE ON INSURANCE 

member shall l>e suspended or expelled without a fair and im- 
partial trial. 18 If the member of a fraternal association dies 
with ol it paying endowment dues and the period limited for pay- 
ment in order to prevent a forfeiture has no1 expired, he is not in 
arrears. 19 Ami where dues are in arrears the payment of those 
last in date upon requesl operates to make invalid a suspension 
for nonpayment- of dues. 20 

§ 1267. Assessments by unauthorized company. — Where the 
statute of a state provides that no foreign company shall, "directly 
or indirectly, take risks or transact any business of insurance" in 
such slate, a contract of insurance by a foreign company upon 
property in such state is held to necessarily involve the doing of 
business within that state, and therefore it is also held that a policy- 
holder in such a case is not liable for assessments, though the con- 
tract was executed outside the state. 1 

§ 1268. Liability to assessments: cancelation: surrender: with- 
drawal. — An insurance by a mutual company may be canceled 
by agreement of the parties, and the insured is not liable to as- 
sessment on his premium notes for subsequently contracted indebt- 
edness, nor for unpaid assessments made prior thereto ; 2 but the 
agreement to cancel must be executed to have such effect. 3 And 
it is held that upon withdrawal by a member he cannot be held 
liable to pay assessments thereafter, although he cannot thereby 
avoid obligations already incurred. 4 Where the amount of all the 
assured's liabilities were more than fully paid at the time of the 
cancelation of his policy, it was held that his insurance having 

18 Rogers v. Union Benevolent Soc. W. 409. See §§ 1216, 1275 herein. 
No. 2, 111 Ky. 598, 55 L.R.A. 605, Examine Russell v. O'Donoghue (U. 
64 S. W. 444. S. C. C.) 178 Fed. 106, 39 Ins. L. J. 

19 Grand Court of Texas Inde- 1107. 

pendent Order of Calanthe v. Johns, 2 York County Mutual Fire Ins. 

— Tex. Civ. App. — , 181 S. W. Co. v. Turner, 53 Me. 225; Akers 

869. v. Hite, 94 Pa. St. 394, 39 Am. 

On validity of payment of pre- Rep. 792; Columbia Ins. Co. v. Buck- 

mium or assessment during period of ley, 83 Pa. 293, 24 Am. Rep. 172 ; 

extension agreed upon, hut after in- Campbell v. Adams, 38 Barb. 132; 

sured's death, see note in 2 B. R. C. Tolford v. Church, 66 Mich. 431, 33 

191. N. W. 913, noted below. 

20 Walton v. Fraternal Aid As- 3 Columbia Ins. Co. v. Stone, 3 
soeiation, 149 Mo. App. 493, 130 Allen (85 Mass.) 385. 

S. K. 1124. 4 Union Mutual Fire Ins. Co. v. 

x So held in Rose v. Kimberly & Spaulding, 61 Mich. 77, 27 N. W. 
Clark Co. S!) Wis. 545, 46 Am.' St. 860; Borgraefe v. Knights of Honor, 
Rep. 855, 27 L.R.A. 556, 62 N. W. 26 Mo. App. 218. See Baker v. New 
526, 10 Cent. L. J. 355; Seamens v. York State Mutual Benefit Assn. 27 
T.niple Co. 105 Mich. 400, 55 Am. N. Y. Week. Dig. 91, 45 Hun, 588, 
St. Rep. 457, 28 L.R.A. 430, 63 N. 9 N. Y. St. Rep. 653. 

2400 



ASSESSMENTS AM) DUES L269 

been terminated by the cancelation he was not liable for losses 
iquently accruing. 5 There are, however, decisions which are 
seemingly in conflict with the doctrine of the above cases, and 
which hold that a liability to assessment may still exist, notwith- 
standing cancelation and surrender or insolvency. 6 But if there 
has been an executed agreement to cancel, and an adjustment or 
ettlement, and there is no fraud or other ground of relief from 
such agreement, and the agreement is one which the company or 
society might lawfully make, it is difficult to see how member- 
ship or liability will continue. 7 

It is decided that makers of deposit notes given to a mutual 
insurance company to cover future assessments, although they 
may have been deceived by misrepresentations as to a guaranty 
fund for partial protection against assessments, are not entitled 
to have their notes canceled without paying assessments for losses 
which occurred during the time for which they had the benefit 
of I heir insurance, — at least when they have asked no relief until 
after the company has ceased to do business and assigned its prop- 
erty for the benefit of creditors. 8 So failure to adjust a loss until 
a memher of a mutual insurance company cancels his member- 
ship will not relieve him from his share of the liability thereon. 9 
Again, a change in a company's charter may be of such a radical 
character as to discharge previous subscribers who do not assent 
to the change from liability to pay future assessments on their 
stock. 10 

§ 1269. Right of member to withdraw and avoid liability for 
assessments. — A policy holder in a mutual fire company cannot 
be permitted to withdraw therefrom and be released from all lia- 
bility for losses, 11 even though there is a limitation in the contract. 12 
And although a memher of a mutual company is at liberty to 
surrender his policy and withdraw, subject to a liability for his 

5 Tolford v. Church, 66 Mich. 431, 9 Ionia, Eaton & Barry's Farmers' 
33 N. W. 913. Mutual Fire Ins. Co. v. Ionia Cir- 

6 Commonwealth v. Massachusetts cuit Judge, 100 Mich. 606, 32 L.R.A. 
Mutual Ins. Co. 112 Mass. 116. In 481, 59 N. W. 250. 

tin- case neither insolvency nor can- On liability of members of mutual 

olation were held to relieve from insurance company, see note in 32 

liability for losses accrued while L.R.A. 481. 

members. Commonwealth v. Me- 10 Ashton v. Burbank, 2 Dill. (U. 

chanics' Mutual Ins. Co. 112 Mass. S. C. C.) 435, Fed. Cas. No. 582. 

192. See also §§ 1231, 1232 herein. "Detroit Manufacturers Mutual 

7 See cases under first note in this Fire Ins. Co. v. Merrill, 101 Mich, 
section. 393, 59 N. W. 661 ; Nichol v. Murphy. 

8 Corey v. Sherman, 96 Iowa, 114, 145 Mich. 424, 108 N. W. 704. 

32 L.R.A. 190, 60 X. W. 232, 64 N. "Nichol v. Murphy, 145 Mich. 1-1. 
W 828. 108 N. W. 704. 

Jovce Ins. Vol. TIT.— 151. 2401 



§ 1270 



JOYCE ON INSURANCE 



proportion of all assessments "to which the company is liable at 
the time of his withdrawal/' this privilege does not enable him 
by withdrawal to avoid liability for assessments to cover his pro- 
portion of losses for previous years, for losses in litigation, for 
which the company was liable at the time of his withdrawal, but 
which have not been assessed. 13 So when members of a mutual fire 
insurance association have enjoyed the protection which member- 
ship affords, they cannot, after a loss has been sustained, withdraw 
and refuse to pay their portion thereof. 14 

§ 1270. Whether contract to pay assessments unilateral. — If 
under the contract the member is to be liable during his member- 
ship for assessments duly made by the society's officers upon the 
deaths of other members, subject to forfeiture for nonpayment of 
said assessments within a limited time, he is liable during his 
membership for assessments regularly made upon the death of other 
members; the stipulation for forfeiture cuts off the possibility of 
future obligation, but does not discharge the members from past 
society debts or dues, and the contract is not unilateral. 15 It is un- 



13 Ionia E. & B. Farmers' Mutual .... On the part of the appel- 
Fire Ins. Co. v. Otto, 96 Mich. 558, lant it is contended that he never 

22 Ins. L. J. 857, 56 N. W. 88; Id. became indebted for the assessment 
97 Mich. 522, 56 N. W. 755. levied against him, but that he had 

14 Perry v. Farmers' Mutual Fire the option of forfeiting his rights 
Ins. Assoc. 139 N. Car. 374, 2 L.R.A. under the certificate by declining to 
(N.S.) 165 (annotated on liability of pay them. ... In his contention 
officers of mutual company to mem- the appellant argues that the certifi- 
bers, for permitting diversion of cate held by him constituted a con- 
funds), 111 Am. St. Rep. 791, 51 S. tract of life insurance 

E. 1025. That being a contract of life insur- 

15 Ellerbe v. Barney, 119 Mo. 632, ance it must necessarily possess the 

23 L.R.A. 425, 23 Ins. L. J. 356, 25 distinguishing features imputed to 
S. W. 384. In this case the court, such a contract by the courts in being 
per Martin, special judge, says: a unilateral or one-sided undertaking 
"The defendant paid assessments of the assured as to all future pay- 
until those now in dispute were called, ments required of him. If he chooses 
The latter were regularly made by to pay them, the company is bound 
the proper officers of the society to to continue the insurance. If he 
pay the amounts due upon the deaths declines to make further payments, 
of members in good standing holding the insurance ends without imposing 
valid certificates. Defendant was duly on him any liability on account of 

notified of these assessments. After- them The certificate in 

ward the insurance commissioner, controversy differs materially from 

now plaintiff, took possession of the the premium paying policies of the 

assets of the concern under the laws old capital stock companies. It is 

of Missouri, because of the insolvency the undertaking of a corporation 

of the company, and now seeks to organized on an entirely different 

compel payment of these assessments basis. The Masonic mutual ben< . I 

as assets for the benefit of those society of Missouri belongs to that 

properly entitled to share therein, class of life insurance companies 

2402 



ASSESSMENTS AND DUES 



§ L270 



equivocally decided, however, in an Illinois case, thai the con- 
tract of a member of a mutual benefit association is purely uni 
lateral, and lie may refuse to continue his payments at any time, 
in which event the association can only declare his Lnteresl for- 
feited, and cannot sue for unpaid assessments. 16 This decision is 

known among insurance men by the deavored to show that precisely the 

name of 'fraternal beneficiary as- cqntrary is implied in the very nature 

social ions.' .... It is mani- and purpose of the contract in ques- 

fest that these assessments in their turn I do not regard this 

nature bear a near resemblance to the contract unilateral in the sense of 

dues incident to membership in a relieving the assured from liability 

friendly society, and constitute a con- for insurance carried and considera- 

sideration for the promised insur- tion earned. No unilateral contract 

ance of the association materially has ever been permitted to accom- 

differing from the annual premium plish such an unjust result." Black, 

stock companies. When considered C. J., and Brace and Burgess, JJ., 

in the light of society dues, it will dissenting. 

be admitted that a person cannot, Whether premium or assessment a 

by discontinuing his membership, debt, see S§ 1098, 1245c herein, 

escape the obligation of paying those 16 Lehman v. Clark, 174 111. 279, 43 

dues which accrued before the ter- L.R.A. 648, 51 N. E. 222, 27 Ins. 

initiation of his membership." The L. J. 745, rev'g 71 111. App. 366. 

court then considers certain portions The court, per Phillips, J., said: 

of the certificate and by-laws, and "A contract for insurance in any 

adds: "There is nothing whatever benevolent association is a unilateral 

in this language, providing as it does contract, and by the association pro- 

for the forfeiture of membership and vision is made that for a failure to 

discontinuance of the rights incident pay the assessments made on a mem- 

to it, which suggests or intimates a ber who holds a certificate, all bene- 

discharge from past society debts fits he may have under and by virtue 

and dues. In the first section of the of such certificate are forfeited, and 

article the assessment is expressly all payments theretofore made are 

declared to be binding as a demand forfeited. Such is the rule with refer- 

which the members must pay. In ence to insurance under almost all 

the second section he forfeits his circumstances. If any other rule 

membership and rights by failure to should exist than that a contract 

pay after a notice of twenty days, is purely unilateral, then in effect 

A condition of forfeiture of rights a partnership would be formed by 

is a well-known feature added to which every person insured would 

many contracts which does not in become liable to all others insured, 

itself discharge the obligations which and the benefits derived from life 

have already accrued under it insurance would be rendered so 

The natural eifect of the forfeiture doubtful and uncertain, and so 
is to cut off the possibility of future prejudicial to those seeking insur- 
obligations, but not to 'disturb the ance, that their individual inter- 
validity of past indebtedness. Some- ests would require them to abstain 
thing very positive would have to from taking out a policy or a cer- 
appear either in the express declara- titicate of membership. If by taking 
tion of the contract, or as a neces- out a certificate of membership or a 
sary implication from its nature to policy they create a continuous lia- 
give it a different effect. No such bilily against themselves which might 
declaration appears, and I have en- be enforced by the company, associa- 

2403 



§<} 1271, 1272 JOYCE ON INSURANCE 

quoted from and followed in Indiana where the question was 
declared to be a new one in that state, the case being that of an 
assessment association where the contract provided for forfeiture 
for nonpayment of assessments. 1 * 7 

§ 1271'. Right to deny liability for losses on policies to nonraem- 
bers. — The fact that regular members of a mutual insurance com- 
pany have received the benefits of their insurance does not estop 
them to deny their liability to assessments for losses on policies 
issued to nonmembers. 18 

§ 1272. Dues and assessments: effect of insolvency upon liabil- 
ity. 19 — The neglect to pay the monthly dues after a safety fund 
association stops business and pending its dissolution, does not for- 
feit the policy, but it is otherwise as to the nonpayment of assess- 
ments duly made prior to the filing of the bill for dissolution, at 
least so as to preclude the right to share in the safety fund. 20 In 
determining this question, consideration must always be given to 
the fact whether the member is liable at all events under his con- 
tract, or whether it is optional with the member to pay or not as 
he chooses, subject only to forfeiture if he does not. 1 If the 
charter provides that the member shall be liable to the amount of 
the note given in case the losses exceed the funds on hand, in- 
solvency does not destroy the obligation to contribute to the speci- 
fied amounts. 2 So when losses have absorbed the entire funds of 
the company, a member may be liable to assessment to the full 

tion, or by the court through its re- 18 Corey v. Sherman, 96 Iowa, 

ceiver, then few men would avail 114, 32 L.R.A. 490, 60 N. W. 232, 

themselves of the benefits of a policy 64 N. W. 828. 

or certificate of membership which 19 See also §§ 1231, 1232, 1245c 

would create a liability they could herein. 

not throw off at pleasure, but would 20 Burdon v. Massachusetts Safety 

make them indefinitely liable for as- Fund Assoc. 147 Mass. 360, 1 L.R.A. 

sessments or premiums. The whole 146, 17 N. E. 874, 6 New Eng. Rep. 

scheme of insurance is based on a 840. 

contract purely unilateral, and wheth- 1 See Protection Life Ins. Co. In 

er the payment for insurance be re, 9 Biss. (U. S. C. C.) 188, Fed. 

termed a premium or an assessment, Cas. No. 1,444; Macklem v. Bacon, 

the right of the association or com- 57 Mich. 334, 24 N. W. 91. 

pany is to declare a forfeiture for 2 Vanatta v. New Jersey Mutual 

non-payment of premium or assess- Life Ins. Co. 31 N. J. Eq. 15. As to 

ment, and not a right to recover the power of the court in a proceed- 

assessment or premium in a suit." ing for the winding up of a safety 

17 Clark v. Scliromeyer, 23 Ind. fund association to order the levying 

App. 565, 55 N. E. 785, 29 Ins. L. of a death assessment, see Burdon v. 

J. 477, holding also that assessments Massachusetts Safety Fund Assn. 147 

could not be collected by a receiver Mass. 360, 6 New Eng. Rep. 840, 1 

from one who had ceased to pay L.R.A. 146, 17 N. E. 874. 
them. 

2404 



ASSESSMENTS AND DUES § 1272 

amounl authorized by the unexpired contract of insurance. 8 So 
premium notes of members of a mutual company may be liable 
to assessments after insolvency to pay unearned premiums due to 
one to whom it had issued a policy for an all cash premium foi 
simple insurance, under a statute authorizing it so to do. 4 Nor 
after insolvency, but before declaration thereof, can a member 
make ;i binding agreement with the company whereby his lia- 
bility to assessments is determined by cancelation of his policy. 5 
So the insolvency of the insurers before the expiration of the 
policy is no defense to an assessment. 6 And the obligations to con- 
tribute to the payment of prior losses, on assessments, is not ter- 
minated by the insolvency of a mutual insurance company and 
its assignment for the benefit of creditors. 7 But a member is not 
liable when the company is insolvent, where there is no expn ss 
provision to pay assessments as the consideration of the contract 
is actual bona fide continuing insurance. And this consider- 
ation fails if the company is insolvent when an assessment is levied 
and to require a member to pay for something he is not getting 
would be unfair. And even though a promise to pay may be 
implied, insolvency excuses payment where personal liability is 
expressly excluded by contract, nor in such case will a contention 
be sustained that the member is liable because a statute requires 
every life and casualty insurance company doing business on the 
assessment plan to specify in the certificate the amount to be 
paid and that said statute authorizes an application to show cause 
why such an association should not be restrained from doing 
business if the matured claims exceed its assets or assessments made 
or in process of collection, for said statute does not affect the con- 
tract between insured and the association, but provides merely a 
method of determining when proceedings may be instituted for 
winding up such institutions and where in addition the statute 
is a subsequently enacted one. 8 And if a fire policy issued by a 

3 Commonwealth v. Massachusetts citing as holding that contract must 
Mutual Fire Ins. Co. 112 Mass. 116. be implied, Gray v. Daly, 57 N. Y. 

4 In re Minneapolis Mutual Fire Supp. 527, 40 App. Div. 41, although 
Ins. Co. (Powell v. Wyman) 49 N. Y. court of appeals has not de- 
Minn. 291, 51 N. W. 921. cided the question, and as to point 

5 Doane v. Millville Mutual Ins. that consideration, failed upon in- 
Co. 43 N. J. Eq. 522, 11 Atl. 739. solvency the court per Ward, C. J., 

6 Sterling v. Merchants' Ins. Co. said : "This view is forcibly expressed 
32 Pa. St. 75, 72 Am. Dec. 773. by Judge Blodgett in Protection Life 

7 Corev v. Sherman, 96 Iowa, 114, Ins. Co., In re, 9 Biss. (U. S. C. C.) 
32 L.R.A. 490, 60 N. W. 232, 64 188, 196, Fed. Cas. No. 1,444, and 
N. W. 82S. his remarks are cited with approval 

8 Russell v. 0'Donoc:liue (U. S. C. in the Matter of Equitable Reserve 
C ) 178 Fed. 106, 39 Ins. L. J. 1107, Fund Life Assoc. 131 N. Y. 354, 377, 

2405 



§ 1273 JOYCE ON INSURANCE 

mutual company purports to be a standard one upon which in- 
sured had paid the regular premium as and for ordinary insur- 
ance it does not make insured liable to assessments, even though it 
provides that the articles and by-laws of the association form part 
of the contract. 9 

§ 1273. Assessments: receiver. — The same consideration is in- 
volved in the determination of this question as is noted at the 
beginning of the last section, viz., whether payment by the mem- 
ber is optional nr not. If a statute confers upon a receiver a right 
to sue for assessments due from members, he may maintain such 
suit and recover costs if successful. 10 An assessment levied by a 
receiver by order of a court of competent jurisdiction is valid. 11 
And if the order appointing a receiver has not been appealed from, 
his right to make an assessment cannot be questioned. 12 

Although it is held that if the authority to make assessments is 
conferred solely upon the directors, courts cannot order an assess- 
ment. 13 Nevertheless it is decided that the court may upon 
insolvency enforce collection of the insolvent company's assets 
and as incidental thereto may direct the receiver to levy necessary 
assessments even though a certain mode is prescribed by the com- 
pany's by-laws, and directors only are empowered to levy assess- 
ments. 14 And, an assessment by the original receiver may, in the 
court's discretion, be set aside for irregularity and because exces- 
sive where a successor is appointed. 15 The authority, however, of a 
receiver to make an assessment where he is so entitled depends 
upon the existence of the necessary facts, and not upon the order 
of the court; 16 and if he fails to comply with the requirements 
of the by-laws respecting publication and notice of such assess- 
ments, they are invalid. 17 So in an action for assessments he must 
allege and prove the necessary facts to entitle him to recover, 18 

30 N. E. 114." Under N. Y. Laws 18 Hill v. Merchants' & Manufac- 
1892, e. 690, sec. 210. See N. Y. L. turers' Ins. Co. 28 Grant Ch. (U. C.) 
1909, c. 33, sec. 210, Parker's N. Y. 560. 
Ins. L. (ed. 1915) pp. 323-334. 14 Whitaker v. Meley, 61 N. J. L. 

9 Osius v. O'Dwyer, 127 Mich. 249, 1, 38 Atl. 840, aff'd 61 N. J. L. 602, 
86 N. W. 831. 40 Atl. 893. 

10 1 '.aeon v. Clyne, 70 Mich. 183, 15 Nichol v. Murphy, 145 Mich. 424, 
38 N. W. 207, under Howell's Mich. 108 N. W. 704. 

Stats, sec. 4263. 16 Thomas v. Whallon, 31 Barb. 

11 Schofield v. Lafferty, 17 Pa. (N. Y.) 172. 

Super. Ct. 8, under Pa. act 1885, 17 Sands v. Sanders, 26 N. Y. 239. 

authorizing court of common pleas 18 Thomas v. Whallon, 31 Barb, 

-of county in which seat of govern- (N. Y.) 172; Manlove v. Burger, 38 

ment is located to appoint receiver. Tnd. 211; Downs v. Hammond, 47 

12 Seamans v. Millers' Mutual Ins. Ind. 131. 
Co. 90 Wis. 490, 63 N. W. 1059. 

2406 



ASSESSMENTS AND DUES § 1273 

and if the complain! showa upon its face that neither the receiver 
nor the court had examined nor passed upon the validity of the 
claims against the company, there can be no recovery. 19 h i 
necessary, in an action by the receiver, to show all the facts upon 
which the claims for losses were allowed, and for which the as 
incuts on the premium notes were made It is only requisite that 
sufficient claims for losses have been allowed to make up the sum 
assessed. The fact thai claims have been allowed prima facie 
hinds the members. 20 So the statute may provide that the ass 
ment shall be prima facie evidence of its regularity and of the 
receiver's right to recover. 1 If the statute only authorizes receivers 
to assess the members and persons insured, they cannot assess 
those whoso policies have been surrendered and canceled for 
amounts claimed subsequently thereto. 2 But even though policies 
have expired before a receiver is appointed he may recover an 
assessment premium note made to cover losses and expenses in- 
curred during the life of the policy. 3 And an assessment by a re-* 
ceiver which does not include notes illegally surrendered to tho 
makers does not invalidate it where he has assessed all the pre- 
mium notes in his hands. 4 It is held in New York that a receiver 
may, under authority of the court, order an assessment where 
there are proceedings for the voluntary dissolution of a benefit asso- 
ciation. 5 But it is also held in the same state that the circum- 
stances may be such that no absolute duty rests upon the members 
to pay an assessment ordered by the court to meet death losses, and 
that the nonpayment of such assessment does not deprive the 
members of a right to share in the reserve fund which under the de- 
cision was not liable for death claims, but only a fund for the 
assistance of living members; although it was held that the ex- 
penses of winding up should be borne pro rata by both the "death 
fund" and "reserve fund." 6 If a contract of insurance expressly 

19 In this case it was held that the 2 Tolford v. Church, 66 Mich. 431, 
amount of indebtedness previously 33 N. W. 913. 

allowed by the directors, and also of 3 Whitaker v. Meley, 61 N. J. L. 

the valid claims against the company, 1, 38 Atl. 840, afiPd 61 N. J. L. 602, 

must be ascertained prior to making 40 Atl. 893. 

an assessment, and that the averments 4 Davis v. Oshkosh Upholstery Co. 

must show the time covered by the 82 Wis. 488, 52 N. W. 771. See 

policy, and that the losses occurred §§ 1290-1302 herein, as to validity 

during that period. Embree v. of assessment s. 

Shiedeler, 36 Ind. 423. 5 In re Equitable Reserve Fund 

20 Sands v. Hill, 42 Barb. (N. Y.) Life Assoc. 40 N. Y. St. Rep. 800, 
651. 16 N. Y. Supp. 80, 61 Hun, 299. 

1 Bacon v. Clvne, 70 Mich. 183, 38 6 In re Equitable Reserve Blind 
X. W. 207, under How. Mich. Stat. Life Assn. 131 X. Y. 354, 43 X. V. 
sec. 42G3. St. Rep. 20 1. 21 Ins. L. J. 385, 30 

2407 



§ 1273 JOYCE ON INSURANCE 

provides that a certain percentage of the assessments thereon shall 
be set apart for the purpose therein set forth, the court cannot, 
through a receiver, compel the payment of an assessment to be ap- 
propriated to the payment of plaintiff's claim in violation of the 
terms of the contract and the rights of policyholders. 7 And in- 
sured is not liable for an assessment on a premium note by a re- 
ceiver under a decree to which he was not a party where his 
policy has also been canceled and his premium note returned. 8 Nor 
can any assessment be recovered by a receiver from a member of a 
mutual lire association who has paid an additional premium upon 
condition that he would be guaranteed against liability for assess- 
ment. 9 When a premium note in advance for the security of 
dealers is given for a mutual insurance company, in accordance 
with the provisions of its charter at its commencement in busi- 
ness, and is renewed, the makers are equally liable, in case of 
insolvency, to the receivers, as if the occasion for its use had arisen 
during the existence of the first note ; 10 and trustees for winding 
up the company's affairs may recover assessments on a policy con- 
taining a contingent liability clause, although the policies were 
canceled and the unearned premiums returned. 11 An assessment 
on premium notes, made by a receiver of a mutual insurance com- 
pany under a decree of the court, is not an adjudication binding 
on the courts of another state as against the maker of one of such 
notes who was not a party to the proceedings resulting in the as- 
sessment and who before the bankruptcy of the company has sur- 

N. E. 114, modifying the last case, enstoe v. Morgan, 60 Leg. Intel. 228, 
See also In re Protection Life Ins. 12 Pa. Dist. Rep. 268. 
Co. 9 Diss. (U. S. C. C.) 188, Fed. 10 Howard v. Hinckley & Egery 
Cas. No. 1,444. See as to right of Iron Co - 64 Me - 93 - 
receiver to assess as opposed to . n Mansheld etal Trustees v Cm- 
understanding among members to the J™"* 1 , lee T Co - ^ ? 9 hl0 Q Dec \, 6 V ) 
j. ivr n r> r-Tw- i 28 Week. L. Bull. 113. See Maine 
contrary, Macklem v. Bacon, 5/ Mich. u , , ,, T ~ -p.. , 
nn* o/ -vr itt n-i / -i v Mutual Marine Ins. Co. v. Pickering, 
.>34 24 N. W. 91 (one judge dis- 66 Me m The New Yor k statute 

senting). provides for the cancelation and dis- 
7 Blackwell v. Mutual Reserve Fund charge of an insurance contract by 
Life Assoc. 141 N. Car. 117, 5 L.R.A. the receiver, with the consent of the 
(N.S.) 771 (annotated on right to other parties holding such engage- 
have receiver appointed to take ment (2 N. Y. Rev. Stats, sec. 75; 
charge of claims not legally or equi- Jones on Business Corporation Laws, 
tably enforceable), 115 Am. St. Rep. P- 267 J . and . also for the cancelation 
677 53 S E 833 policies in fire companies by the 
oV' \ ,,.,, „ n receiver, and for the issue of cer- 
»Langworthy v. Saxony Mills, 72 tificatcs ' of mdcbtedness . G en. Laws 

Mo. App. 363. N Y. 1892, c. 38, art. 3, sec. 123; 

9 Wetmore v. McElroy, 96 S. Car. Parker's N. Y. Ins. L. (1915) § 123, 
182, 80 S. E. 266. Compare Black- p. 225. 

2408 



ASSESSMENTS AND DUES § 1274 

rendered his policy and received back his note. 12 The receiver of 
a foreign mutual insurance company, appointed by a foreign 
court of competent jurisdiction, may maintain an action, in the 
courts of Wisconsin against a member of the company resident 
there, to recover an assessment levied by a decree of a foreign court, 
upon a premium note which was a part of the assets of the com- 
pany in the hands of the receiver when the assessment was made 13 
And a receiver of a foreign company which does not transact 
business in New York within the intent of the statute, may en- 
force in its courts a liability for assessment. 14 A foreign judgment 
does not conclude policyholders of a sister state as to the amount 
and necessity for an assessment so as to preclude their denying 
liability therefor. 15 The levy of an assessment by the assignee of 
a corporation not in bankruptcy is invalid, 16 it is not error for 
the court to refuse to order a receiver of stock corporation issuing 
assessment plan policies, to levy assessments, as policyholders would 
be under no legal obligation to pay them, and where the only pur- 
pose in paying such assessments would be to continue the insurance 
in force. In addition there would be no consideration for such 
payment and no legal obligation to make it. Such a case differs 
from that where policyholders in mutual companies are obligated 
for death claims. 17 And holders of cash premium policies as mem- 
bers of a mutual company are liable for assessments levied by a 
receiver. 18 

§ 1274. What receiver may include in assessment: premium 
notes. — Where premium notes are given to a mutual insurance 
company, it is held that the receiver may, where the company has 
become insolvent, include in an assessment upon such notes claims, 
shrinkage, interest on loss, and the expenses of the receivership. 19 
In case of the insolvency of a mutual fire insurance company, if an 
order is made by the court appointing a receiver, all existing poli- 
cies are canceled from the date of the order, and no assessments 
can be made for premiums unearned at the time of the insolvency. 80 

12 Parker v. C. Lamb & Sons, 99 n Ensworth v. National Life &ssoe. 
Iowa, 265, 34 L.R.A. 704, US X. YV. 81 Conn. 592, 71 All. 791, 38 Ins. 
686. L J. 401. 

13 Parker v. Stoughton Mill Co. 91 l8 Ely v. Oakland Circuit Judge, 
Wis. 174, 51 Am. St. Rep. 881, 64 62 Mich. 40(3, 17 Dot. L. N. 62, 125 
N. W. 751. N. W. 375. 127 N. W. 769. 

14 Stone v. Penn Yan, Keuka Park 19 Davis v. Shearer, 90 Wis. 250, 
& Branchport Rv. 109 N. Y. Supp. 62 N. W. 1050; Seamans v. Millets' 
374, 125 App. Div. 94. Mutual Ins. Co. 90 Wis. 490. 63 N. 

15 Swing v. Arkdelphia Lumber Co. W. 1059. See § 1307 herein. 

90 Ark. 394, 119 S. W. 265. 20 Davis v. Shearer, 90 Wis. 250, 

16 Hurlburt v. Carter, 21 Barb. (N. 62 N. W. 1050. 
Y.) 221. 

2409 



§§ 1275, 1276 JOYCE ON INSURANCE 

§ 1275. Assessments by trustee of unauthorized company. — 
Where a mutual fire insurance company not qualified to do busi- 
ness in a state because of noncompliance with the statutory re- 
quirement of such state becomes insolvent, and a trustee is appoint- 
ed, an assessment by such trustee upon the makers of the premium 
notes within that state of the full amount due on their notes is 
void, where such assessment was never affirmed by the court, and 
the insured had surrendered their policies before the appointment 
of a trustee. 1 

§ 1276. Restoration to membership: reinstatement: revival. — 
Where b\ r the terms of the contract the nonpayment of dues 
or assessments operates as a suspension, or deprives the mem- 
ber of his good standing, he may be restored to his rights 
under the policy or certificate, or may be reinstated upon compli- 
ance with the terms of his policy or certificate, and the provisions 
of the society or order, and such laws will be liberally construed. 
In mutual benefit societies, where the result of a default is a for- 
feiture of the policy, and the laws of the society do not specify 
the conditions upon which reinstatement may be had, there would 
seem to be no doubt but that the society may, so far as empowered 
by its laws, impose such conditions for revival of the policy or 
reinstatement as are reasonable. The exercise of such a power is 
consistent with the purposes and conduct of the organization and 
the rights of other members. To hold otherwise would, in effect, 
deprive other members of that protection to which their contract 
with the society or company entitles them. Such a rule is based 
upon the reason and justice of the law, and is not inconsistent with 
the adjudicated cases, and must, therefore, when not so expressly 
provided by the terms of the contract, be considered as an implied 
condition of which every member will be deemed to have notice 
when he enters into contract relations with such society. But 
where the rules of the order provide that the member may be rein- 
stated for valid reasons upon paying assessment arrearages, the so- 
ciety is not the sole arbiter as to the validity of the reasons, but the 
question is one for the jury. 2 But a provision in a mutual benefit 

1 So held in Swing v. Akely Lura- many previous assessments, which 
her Co. 62 Minn. 169, 64 N.W. 97. fact the court declared manifested 

2 Dermis v. Massachusetts Mutual his intent to pay. After the memher 
Benefit Assoc. 47 Hun (N. Y.) 338 became unconscious, the company 
(one judge dissenting). In this case sent him a notification of the fer- 
tile member was rendered powerless feiture, and that the certificate might 
by a sudden calamity before the ex- be renewed if he was in good health, 
piration of the thirty days within but the court said that the company 
which payment might under the con- had no right to add this condition 
tract be made. The member had paid to the rule, as it was not included 

2410 



ASSESSMENTS AND DUES § 1276 

certificate that a member who has forfeited his certificate may be 
reinstated by presenting an application which shall be appn 
by the secretary, refers to the secretary of the grand lodge. 8 It is 
held that a literal performance of the exacl conditions is requisite 
to warrant a reinstatement. Thus, if the laws of the society re- 
quire an appearance in person or an application in writing, and 
the payment of back due- and assessments, this must be done. 4 Ami 
where the member after his suspension pays an assessment, and 
the same is accepted. Ins rights under the policy revive, and the 
company will be liable for a subsequently occurring loss. 5 If 
payment of all dues within a specified time after forfeiture is all 
that is required by the by-laws, usage of the society does not im- 
pose other obligations as prerequisites, for the positive terms of the 
contract will exclude the custom. 6 Again, if a by-law provides for 
reinstatement upon presenting sufficient excuse for failure to pay 
an assessment, and it appears that a director to whom the assess- 
ment had been paid had neglected to pay it over to the company, 
and the board refuses to reinstate upon said excuse on the ground 
of the member's ill-health, the case is a proper one for a court 
of equity. 7 

A form of policy providing for reinstatement "upon payment 
of all arrears, with interest thereon not to exceed six per cent 
per annum," is permissible under a statute giving the privilege 
"upon the payment of all overdue premiums and every other 
indebtedness to the company upon such policy, with interest at a 
rate not exceeding six per cent per annum." 8 If a benefit certifi- 
cate is forfeited prior to the enactment of a statute, the member's 
reinstatement after the act goes into effect does not bring the cer- 
tificate within the provisions of the act, so as to affect the right of a 
beneficiary, by reason of the fact that he is not included within 
those beneficiaries whom the statute designates as the only persons 

therein, for if the reason was valid, son, 48 Kan. 718, 30 Pac. 460; re- 
it was not dependent upon the mem- viewing 29 Pac. 473; Odd Fellows' 
ber's good health. See § 1472 herein. Mutual Aid Assoc, v. Sweetser, 117 

On judicial control of discretion as Ind. 97, 19 N. E. 722. 

to reinstatement of insured, see note 6 Manson v. Grand Lodge, 30 Minn, 

in 40 L.R.A.(N.S.) 148. 509, 16 N. W. 395. 

3 Kennedy v. Grand Fraternity, 36 7 Van Houten v. Pine, 38 N. J. 
Mont. 325, 25 L.R.A.(N.S.) 78, 92 Eq. 72. That equity has jurisdiction, 
Pac. 971. sec Graveson v. Cincinnati Life Assoc. 

4 Lehman v. Independent Order 8 Ohio (C. C.) 171. 26 Week. L. 
B'nai B'rith, 23 N. Y. Week. Dig. Bull. 183, 66 C. D. 327. 

409. 8 New Yoik Life Ins. Co. v. Hardi- 

6 Washington Mutual Fire Ins. Co. son, 199 Mass. 190, 127 Am. St. Rep. 
v. Rosenberger, 84 Pa. St. 373; Mod- 478, 85 N. E. 468. 
era Woodmen of America v. Jarae- 

2411 



§ 1276a JOYCE <>N INSURANCE 

in whose favor certificates in such societies can be issued. 9 And 
reinstatement of a person insured, to which he had a right upon 
certain conditions complied with, constitutes no consideration for 
a stipulation exacted from him, reducing the amount for which 
the society should be liable. 10 The fact that the member neglects 
to be reinstated during his lifetime does not prevent his insurance 
being revived after his death by payment of the sum due at his 
death, provided that the period has not elapsed within which he 
might, if living, be reinstated. 11 And a reversal by the proper 
officers of a masonic lodge as illegal, although after the death of 
the member, of a vote by which such member was suspended, 
and his restoration to the roles as of the date of his apparent 
suspension, render him a member as though no such vote had 
ever been passed, so as to create a liability on a certificate of mem- 
bership in a mutual benefit society providing that membership shall 
be forfeited by suspension or nonmembership in any masonic 
lodge. 12 

A question sometimes arises as to the effect upon a member, who 
has been restored or readmitted to membership, of the failure of a 
local branch of a society to strictly conform to its constitution and 
by-laws as to the routine prescribed in cases of members, and it 
would seem that to require too strict a compliance in matters not 
material, and which are merely formal and incidental to the ex- 
ercise of the power, might, in many cases, be productive of great 
injustice, and it has been held that although the proceedings 
do not in all respects conform strictly to the rules of the order, the 
company is estopped to deny the member's good standing. 13 

§ 1276a. Same subject: good health. — A provision in a policy of 
life insurance that delinquent members may be reinstated if ap- 
proved by the medical director and president, by giving reasonable 
assurance that they are in continued good health, is valid and 
reasonable, and the required approval is not merely a ministerial 
act, but involves the exercise of judgment and discretion. 14 

9 Lindsey v. Western Mutual Aid defaulted policy by payment of pre- 

Soc. 84 Iowa, 734, 50 N. W. 29, mium after death), 13 S. E. 564. 

under Laws 21st Gen. Assem. Iowa, 12 Connelly v. Masonic Mutual 

c. 65, sec. 21. Benefit Assoc. 58 Conn. 552, 9 L.R.A. 

' 10 Davidson v. Old People's Mutual 428, 20 Atl. 671. 

Benefit Soc. 39 Minn. 303, 1 L.R.A. 13 Gaige v. Grand Lodge, 48 Hun 

482, 30 N. W. 803. (N. Y.) 137, 15 N. Y. St. Rep. 455; 

11 Modern Woodmen of America v. Hoffman v. Supreme Council of 

Jameson, 49 Kan. 677, 31 Pac. 733, American Legion of Honor, 35 Fed. 

rev'g 30 Pac. 460, and 29 Pac. 473. 252. 

See Wright v. Supreme Commandery 14 Lane v. Fidelity Mutual Life 

of Golden Rule, 87 Ga. 426, 14 L.R.A. Ins. Co. 142 N. Car. 115, 115 Am. 

283 (annotated on reinstatement of St. Rep. 729, 54 S. E. 854. 

2412 



ASSESSMENTS AND DUES § 1276a 

Payment of arrears alone is not sufficient to reinstate a member 
of a mutual benefit society who 1ms forfeited his certificate by 
nonpayment of dues, under a provision of the constitution thai one 
who has forfeited his certificate by nonpayment of dues may, it' in 
good health, be reinstated by presenting an application accom- 
panied by the arrears, and, in every such application, applicant 
shall furnish satisfactory proof that lie is in good health, but 
approval by the proper officer of the evidence of health is also neces- 
sary. 16 

Representations that a person is in good health, made in an ap- 
plication for reinstatement of a lapsed policy of life insurance, do 
not mean that his health is absolutely perfect, hut only that it is 
practically the same as it was when the policy was issued. 16 So 
the health of body required at the time of making application for 
insurance to make the policy attach, is not perfect and absolute 
health, nor must it exclude all disorders or infirmities which may 
possibly shorten life, only an ordinary and reasonable degree of 
health is required, and this question is generally to be determined 
by the jury. 17 And if insured is reinstated on the payment of back 
dues, conditioned that he is of "temperate habits, in good health 
then, and for twelve months past, and free from all disease, in- 
firmity, or weakness," a slight and temporally illness within the 
year previous to his reinstatement which does not render him un- 
insurable, and from which he has entirely recovered at the time 
of his reinstatement, does not violate such condition nor vitiate 
his insurance. 18 But if satisfactory evidence of good health is re- 
quired, and it cannot be furnished, the society need not reinstate. 19 
So the refusal to approve a certificate of health by an applicant 
for reinstatement to a mutual benefit society cannot be said to be 
erroneous where the applicant shows that he has recently had pneu- 
monia, although he further states that he feels better "at the 
present time" than he has for years, where serious after effects are 
shown to sometimes follow pneumonia. 20 And a member of a 
mutual benefit association cannot affect his reinstatement by paying 

15 Kennedy v. Grand Fraternity, 36 St. Rep. 803, 16 S. E. 427. See 
Mont. 325, 25 L.R.A.(N.S.) 78, 92 note to 3 Am. St. Rep. 634. 

Pae. 971. 19 Ronald v. Mutual Reserve Fund 

16 Massachusetts Benefit Life Assoc. Life Assoc. 44 N. Y. St. Rep. 407, 
v. Robinson, 104 Ga. 256, 42 L.R.A. 21 Ins. L. J. 634. 

261. 30 S. E. 918. 20 Kennedy v. Grand Fraternity, 36 

17 Maine Benefit Assoc, v. Parks, Mont. 325, 27 L.R.A.(X.S.) 78 (an- 
81 Me. 79, 10 Am. St. Rep. 240, 16 notated on whether breach of insur- 
Atl. 339. ance policy which ipso facto termi- 

18 F rencn V- Mutual Reserve Fund nated it can be waived), 92 Pac. 971. 
Life Assoc. Ill N. C. 391, 32 Am. 

24i:} 



§ 1276a JOYCE ON INSURANCE 

dues when lie is ill. although the local lodge makes no objection, 
where the rules of the order allow reinstatement only if the ap- 
plicant is in good health, and make the payment of arrears the 
warranty of good health. 1 And payment by a member of a mutual 
benefit society of arrears of dues, for nonpayment of which he has 
heen sw.-pcnded. to the clerk of the local camp at a time when he 
is not in good health, will not, although it is received and for- 
warded by the clerk, effect a reinstatement, where, by the laws of 
the order, the clerk had no authority to receive such payment un- 
it iss the suspended member was in good health, as such member was 
bound to take notice of the rule, and therefore knew that his pay- 
ment was ineffectual. 2 

In case of a requirement that the assured be alive and in good 
health to warrant a reinstatement, and the holder of the policy, 
after (he assured's neglect to pay, applies within a reasonable time 
for reinstatement and offers to show that the assured is alive and in 
good health, the refusal to reinstate is a breach of contract by the 
company, and an action lies to recover the amount paid with in- 
terest. 3 But it is also held that if an insured person has forfeited 
his policy of life insurance by the nonpayment of dues, and has 
then complied with a provision in the policy that "delinquent mem- 
bers may be reinstated if approved by the medical director and 
president by giving reasonable assurance that they are in good 
health," but the officers of the insurance company decline to ap- 
prove his application, he is not entitled to recover damages for the 
cancelation of his policy and refusal to reinstate him, in the 
absence of any showing that the action of such officers was fraudu- 
lent or arbitrary. 4 

The receipt of dues for reinstatement by the secretary of a sub- 
ordinate lodge of a benevolent society while the suspended mem- 
ber for whom the dues were paid was in a dying condition, does 
not waive a requirement of one of the rules of the society that, after 
suspension for nonpayment of dues, a member can only be rein- 
stated while in good health. 5 And the secretary of a mutual 

1 Hartman v. National Council of 3 Lovick v. Provident Life Assoc, 
the Knights and Ladies of Security, HO N. C. 93, 14 S. E. 506, 21 Ins. 
76 Oreg. 153, L.R.A.1915E, 152, 147 L. J. 332. 
Pae. 931. *Lane v. Fidelity Mutual Life Ins. 

2 Bixler v. Modern Woodmen of Co. 142 N. Car. 115, 115 Am. St. 
America, 112 Va. 678, 38 L.R.A. Rep. 720, 54 S. E. 854. 
(N.S.) 571n, 72 S. E. 704. 5 Roval Highlanders v. Scovill, 66 

On waiver by officer of subordi- Neb. 213, 4 L.R.A. (N.S.) 421, 92 
nate lodge of forfeiture for nonpay- N. W. 206. 

ment of .-issessments, see notes in 4 On waiver by officer of subordinate 
L.R.A.(N.S.) 421; 38 L.R.A.(N.S.) lodge of forfeiture for nonpayment 
571; and L.R.A.1915E, 152. of assessments, see notes in 4 L.R.A. 

2414 



ASSESSMENTS AND DUES §§ 1276b, 1276c 

benefit society, to whom evidence of good health is submitted with 
an application for reinstatement by a member who has forfeited 
his rights, does not, by a failure to call for additional evidence, 
tacitly admit that the evidence submitted is sufficient, so as to 
require him to approve the application where he has a discretion 
whether to approve or not. 6 

§ 1276b. Same subject: incontestible clause. — A provision in a 
life policy that it shall be incontestible after one year, applies to 
proceedings taken to secure reinstatement after default in pay- 
incut of premiums, so that after the lapse of a year from reinstate- 
ment the policy cannot be avoided for fraud in securing it, al- 
though insured agrees in his application for reinstatement that the 
policy shall be void if any statement is untrue. 7 If, however, a life 
policy which provides that it shall be incontestible after two years 
from the date of its issue is forfeited by reason of a default in the 
payment of premiums, but subsequently the insured obtains a rein- 
statement upon false warranties, the insurer may take advantage 
of such misrepresentations at any time within two years after 
the reinstatement. 8 

§ 1276c. Same subject: when reinstatement not effected. — A 
partial payment of back dues on a lapsed policy will not work 
a reinstatement of the insured, under a stipulation for reinstatement 
on the payment of "all back dues." 9 So reinstatement of a lapsed 
policy, obtained by fraudulent misrepresentation of material facts, 
is ineffectual. 10 And bringing suit for the assessment after the 
policy has become void by its terms does not reinstate an insurance 
policy which provides that failure to pay an assessment within a 
certain time shall render the policy void. 11 So a voluntary inquiry 
by the brother of one insured, made at the bank several days 
after the maturity of a premium note given by the insured, and 
after it has been dishonored and returned to the company, and an 
offer to then pay the local agent, are not sufficient to reinstate 

(N.S.) 421; 38 L.R.A.(N.S.) 571; "Pacific Mutual Life Ins. Co. v. 
and L.B.A.1915E, 152. Galbraith, 115 Tenn. 171, 112 Am. 

6 Kennedy v. Grand Fraternity, St. Rep. 862, 21 S. W. 204. 

36 Mont. 325, 25 L.R.A.(N.S.) 78 9 Melvin v. Piedmont Mutual Life 

(annotated on whether breach of in- Ins. Co. 150 N. Car. 398, 134 Am. 

surance policy which ipso facto ter- St. Rep. 943, 64 S. E. 180. 

minates it may be waived), 92 Pac. 10 Massachusetts Benefit Life Assoc. 

97] v. Robinson, 104 Ga. 256, 42 L.W.A 

7 Great Western Life Ins. Co. v. 261, 30 S. E. 918. 

Snavelv, 206 Fed. 20, 124 C. C. A. " Mutual Fire Ins. Co. v. Maple. 
154,46L.R.A.(N.S.) L056 (annotated 60 Greg. 359, 38 L.R.A.(N.S.) 726, 
on applicability of incontestable 119 Pac. 484. 
clause to false statements made in ap- 
plication for reinstatement). 

2415 



L276d JOYCE OX INSURANCE 

the policy or to prevent a forfeiture. 12 Nor has the beneficiary in 
,i mutual benefit certificate a right to reinstate the member against 
his will by paying assessments which he has passed. 13 Again, where 
an insured, in arrears six weeks, pays four week's back due-, and 
dies two days later, no recovery can be had on his policy, which 
provides that "on a failure to j)ay the weekly premiums for five 
weeks, all claims on the company are by such arrears forfeited," 
and that a reinstatement shall occur on the payment of "all hack 
dues," hut only after sixty days from paying the hack due- and on 
condition that the insured shall he in good health when they are 
paid and for five weeks thereafter. 14 The right to reinstatement 
within a certain period upon payment of accrued assessments after 
the forfeiture of membership in a mutual benefit society, which 
tikes place eo instanti by operation of law and without notice under 
the terms of the contract upon nonpayment of assessments, is ter- 
minated by the death of the member without such payment dur- 
ing the time allowed for reinstatement; and a tender of the assess- 
ments made within that period by the beneficiary is unavailing. 15 
§ 1276d. Same subject: when new contract, when not. — Where 
by the failure of insured to pay premiums when due the policy is 
ipso facto forfeited, if the policy is subsequently reinstated with the 
consent of the insurer, it becomes a new contract as if then for the 
first time issued. 16 It is a new contract in the sense that the insurer 
in consideration of payment agrees to continue in force a policy 
which had expired and which before it is revived is the same to 
insured as if it had never been written. 17 But it is also decided that 
a reinstatement of the insured after a forfeiture is not the making 
of a new contract where no different terms are agreed upon. It 
simply restores the old contracts, and the fact that the reinstate- 
ment occurred in a state different from that in which the policy 
was issued does not make it a contract of the state wherein the re- 
instatement took place. 18 It is pertinent in this connection to 
state that in all probability the same form of contract would have 

12 Hipp v. Fidelity Mutual Life Galbraith, 115 Tenn. 171, 112 Am. 
Ins. Co. 128 Ga. 491, 12 L.R.A.(N.S.) St. Rep. 862, 21 S. W. 204, 35 las. 
319, 57 S. E. 892. L. J. 180. Examine O'Brien v. 

13 Proctor v. United Order of Gol- Brotherhood of the Union, 70 Conn, 
den Star, 203 Mass. 587, 25 L.R.A. 52, 55 Atl. 577. 

(N.S.) 370, 89 N. E. 1042. " Lanz v. Vermont Life Ins. Co. 

"Melvin v. Piedmont Mutual Life 139 Pa. 546, 10 L.K.A. 577, 21 Atl. 

Ins. Co. 150 N. Car. 398, 134 Am. 80. 

St. Rep. 943, 64 S. E. 180. 18 Goodwin v. Provident Savings' 

15 Carlson v. Supreme Council Loan Assoc. 97 Iowa, 226, 32 L.K.A. 
American Legion of Honor, 115 Cal. 473, 59 Am. St. Rep. 411, 66 X. W. 

Hid. 35 L.R.A. 643, 47 Pac. 375. 157. 

16 Pacific Mutual Life Ins. Co. v. 

2416 



ASSESSMENTS AND DUES §§ 1277, 1278 

been issued had insured become a new member or policyholder 
in the same association or company instead of a reinstated mem- 
ber. 

§ 1277. Reinstatement by way of waiver and not as new con- 
tract: creditor's rights. — A creditor who is a beneficiary is not en- 
titled to recover upon a certificate, where the member is reinstated 
upon the payment of overdue assessments, if the evidence tend- to 
show that the reinstatement is by way of waiver of the forfeiture 
and not by way of a new contract. 19 

§ 1278. To whom dues and assessments are payable. — In deter- 
mining to whom dins may be paid, the question may depend upon 
the nature of the organization and its powers; or the character of 
the benefit to be derived, whether mortuary or sick benefits; or the 
contract, with all that is included as a part thereof ; or the powers 
vested in local or subordinate lodges, if the society transacts its 
business under that system; or the effect of customs of the society 
or local order, if there be such order; or upon agency and waiver 
or estoppel. 20 Sometimes the rules of the organization may require 
the subordinate secretaries to collect an assessment, 1 or the assess- 
ment may be collected by the subordinate lodges and forwarded to 
the supreme lodge, 2 and the subordinate lodge and its financier are 
agents of the supreme lodge for such purpose, 3 or it may be payable 
to the secretary or an officer of the society under the contract or 
rules of the organization, 4 or it may be paid to the secretary even 
though he fails to remit the same where he is empowered to re- 
ceive dues and sign receipts, 5 and payment to the secretary is pay- 
ment to an assistant secretary who is authorized to receive dues. 6 
The secretary of a local branch of a fraternal society, charged with 
the duty of collecting the assessments on benefit certificates issued 
by the grand lodge, is the agent of such lodge with respect to the 

19 So held in Clarke v. Sehwarzen- 45, 86 Pac. 494. See Supreme Lodge 
berg, 164 Mass. 347, 41 N. E. 655, Knights of Pythias v. Withers, 177 
before Stat. 1885, c. 183. U. S. 260, 44 L. ed. 762, 20 Sup. Ct. 

20 Examine §§ 35, 36, 398, 407 611. 

herein. 4 So in McDonald v. Ross-Lewin, 

1 So in Demings v. Supreme Lodge 29 Hun (N. Y.) 87; Manson v. 
Knights of Pythias, 131 N. Y. 522, Grand Lodge, 30 Minn. 509, 16 N. 
30 N. E. 572. W. 395. 

2 So in Hall v. Supreme Lodge, 5 Grand Camp Colored Woodmen, 
24 Fed. 450; Supreme Lodge v. Ab- Forest of Arkansas v. Ware, 107 
bot, 82 Ind. 1 ; Scheu v. Grand Lodge Ark. 102, 153 S. W. 1114, 42 Ins. 
Ohio Division Independent For- L. J. 66G. 

resters, 17 Fed. 214. 6 LaMarsh v. L'Union St. Jean 

8 Johnson v. Grand Lodge Ancient Baptiste De Nashua, 68 N. H. 229, 
Order United Workmen, :!1 Utah, 38 Atl. 1045. 
Joyce Ins. Vol. III.— 152. 2417 



§ 1278 JOYCE OX [NSURANCE 

business of such collections. 7 So the dues may be payable to the 
local collector, 8 or assessments may be paid to the local agent, 9 or to 
an agent with apparent authority, 10 or the requirement may be that 
the member shall pay the assessment into the beneficiary fund in 
his subordinate lodge, 11 and it may be a question for the jury 
whether the promise of payment to a director, and his promise to 
pay i li«' society and neglect so to do, constitutes a sufficient excuse 
t«> warrant a reinstatement. 18 So payment may be made to any 
oilicer who is empowered to recover the same. 13 The paymenl to 
a local lodge of assessments on a benefit certificate payable after 
death is payment to the supreme lodge where the member is ad- 
mitted by the local lodge, which has collected the admission fee, 
and all assessments due from him. and the member's rights are 
not affected by the fact that the local lodge has failed to remit the 
same to the supreme lodge. 14 If an assessment is made by the sub- 
ordinate lodge empowered to levy such an assessment, payment 
need not be made of an assessment levied by the grand lodge. 16 
But whether the act of an oilicer of a subordinate lodge of a given 
order is, in a particular instance, binding upon the "Supreme 
Conclave" of the same order depends upon the relation of the 
former to the latter, as defined by its constitution and by-laws, and 
upon what is therein provided. So that, in the absence of necessary 
information on these points, it cannot be intelligibly determined 
whether or not the payment of an assessment to an officer of the 
subordinate lodge would, in legal contemplation, be a payment to 
the "Supreme Conclave." 16 The stipulations of the contract as to 
the person to whom payments of an assessment shall be made can- 
not be set aside by a custom sanctioned by the officers of the lodge, 
and which has arisen from a construction of the contract by such 

7 Trotter v. Grand Lodge Iowa 13 Manson v. Grand Lodge, 30 
Legion of Honor, 132 Iowa, 513, 7 Minn. 509, 16 N. W. 3fl5. 
L.R.A.(N.S.) 569, 109 N. W. 1099. As to payment to clerk of local 

8 So in Brown v. Grand Council, circle, see Patton v. Women of Wood- 
Northwestern Legion of Honor, 81 craft, 65 Oreg. 33, 131 Pac. 521. 
Iowa, 400, 46 N. W. 1086. " Barbaro v. Occidental Grove, No. 

9 O'Donnell v. Ridgeley Protective 16, 4 Mo. App. 429; Schunk v. 
Assoc. 98 Neb. 497, 153 N. W. 547. Gegenseitiger Wittwen und Waisen 

_ 10 McLaughlin v. National Protec- Found, 44 Wis. 369. 
tive Legion, 184 111. App. 597. 15 Agnew v. Ancient Order United 

11 So provided in the constitution Workmen, 17 Mo. App. 254. 

of the A. O. U. W. Ancient Order 16 O'Connell v. Supreme Conclave, 
United Workmen v. Moore, 1 Ky. 102 Ga. 143, 66 Am. St. Rep. 159, 
L. Rep. 93. 28 S. E. 282. 

12 Van Houten v. Pine, 38 N. J. 
Eq. 72. 

2418 



ASSESSMENTS AND DUES § 1279 

officials. The members arc bound only by the contract, 17 and from 
the terms of the contracl the member may !»•' obligated to see that 
the money for assessments and dues is actually received by the 
society, 18 or the secretary. 19 So it may be necessary to pay ass 
ments to a receiver of the company. 80 But payment to a local 
examining physician nol authorized to receive assessments is in- 
sufficient. 1 And where an assessment association makes a bank 
its depositary, authorizing it to receive assessments from member? 
but directing it not to accept those past due unless specially au- 
thorized, and a member, who is a depositor al the bank and there 
pays his assessments, has an agreement with the cashier to pay his 
assessment, if he should at any time forget it, and charge the same 
to his account, such agreement does not constitute payment, so as 
to prevent a lapse of the policy, of an assessment of which neither 
the cashier nor the bank had notice. 2 

A contract by a member of a mutual benefit society, formed by 
its assent to its by-laws, that the local lodge to which he is attached 
and its officers shall be his agents in collecting and transmitting 
assessments and reinstating suspended members, and that the na- 
tional council shall not be bound by any irregularity on the part 
of such lodge or officers, is valid and binding. 3 

§ 1279. Mode of remittance. — If there is no provision as to the 
mode of transmission of assessments or dues, or if the notice for 
the payment thereof is silent as to the mode of remitting the same, 
the assured will be bound to see that the money is actually received 
by the company within the time specified as that within which pay- 
ment must be made, or he will forfeit his policy, for a party will be 
held strictly to his contract with regard to payment of dues. But 
if the notice gives instructions as to the mode of remittance, the 
right to forfeit the policy for nonpayment is waived, provided the 
insured complies with such directions ; 4 and there are other excep- 

17 Wiggin v. Knights of Pythias, 3 llartman v. National Council of 
31 Fed. 122; Manson v. Grand Lodge, the Knights and Ladies of Security, 
30 Minn. 509, 16 N. W. 305. 76 Oreg. 153, L.R.A.1915E, L52 

18 Protection Life Ins. Co. v. Foote, (annotated on waiver by officer of 
79 111.361. See §§ 1346 et seq. here- subordinate lodge of forfeiture for 
in, as to waiver and estoppel. nonpayment of assessment), 147 Pac. 

19 Fee v. National Masonic Assoc. 931. 

110 Iowa, 271, 81 N. W. 483, 29 4 Protection Life Ins. Co. v. Foote, 
Ins. L. J. 635. 79 111. 361. See Jenkins v. Ancienl 

20 See § 1273 herein. Order United Workmen, 93 Kan. 324, 

1 Teeter v. United Life Assoc. 159 144 Pac. 223; Grand Lodge Ancient 
N. Y. 411, 54 N. E. 72. Order United Workmen v. Crandall, 

2 Griffith v. Merchants' Life Assoc. 80 Kan. 332, 102 Pac. 843; National 
141 Iowa, 414, 133 Am. St. Rep. Masonic Accident Assoc, v. Burr, 57 
177, 119 N. W. 934. Neb. 437, 77 N. W. 1098. 

2419 



280 JOYCE ON INSURANCE 

lions to the rule. 5 Tf ;i member fails to pay his assessment on the 
day it becomes due, and the by-laws provide that the certificate 
shall be of no force in such case, and can only be revived by pa} - 
me nt thereof, bu1 thai no indemnity benefits shall be paid for in- 
juries received between the time when the delinquent payment 
became due and the time when the same is received by the secretary 
at his office, such member cannot recover benefits unless such money 
is received by the association before the member is injured, even 
though the check for the amount due is mailed in time to have 
ordinarily reached the association before the time of the injury, 
there being other evidence tending to show that it was not received 
till after the day of the injury. 6 And if a member dies after for- 
feiture of his rights as member of his section, the society is not 
liable where the section secretary fails to forward dues, but such 
dues though mailed are not received by the board of control before 
the member's death as required by the laws of the society which 
also make section officers of sections, agents of members and not 
the agents of the endowment rank or supreme lodge. 7 

§ 1280. Tender of assessments: frequency of tender. — If an ex- 
pelled member regularly tenders his assessments until death, and 
the judgment is reversed or the reinstatement ordered by the court, 
recovery may be had by the beneficiary. 8 And the wrongful 
declaration of forfeiture of a mutual benefit certificate and refusal 
to accept further premiums, do not prevent a recovery of the 
amount due upon the death of the holder if the proper dues were 
tendered when they fell due. 9 Where the statute so permits, an 
assessment may be tendered, and, if refused, the party may keep 
the money in his possession, and the tender is good where he sub- 
sequently pays it into court. 10 And a good tender is as effectual 
to preserve rights as payment. 11 In mutual assessment companies, 
where the contract is such that the amount of the assessment is 
necessarily unknown, it cannot be within the intent of the contract 
that a member must tender an assessment every time it becomes 
•due, and even if the amount is actually known, the case would then 

5 See §§ 1163, 1164 herein, as to Grand Fraternity, 132 Tenn. 235, 
the rule concerning premiums, and L.R.A.1915F 1056, 177 S. W. 941. 
§§ 1345 ct seq. herein, as to waiver 9 Lane v. Grand Fraternity, 132 
and estoppel. Tenn. 235, L.R.A.1915F, 1056, 177 

6 So held in National Masonic Ac- S. W. 941. 

cident Assoc, v. Burr, 44 Neb. 256, 10 Loughbridge v. Iowa Life & 

24 Ins. L. J. 423, 62 N. W. 466. Endowment Assoc. 84 Iowa, 141, 50 

7 Campbell v. Supreme Lodge N. W. 568, under Code Iowa, sec. 
Knights of Pythias, 168 Mass. 297, 2104. 

47 N. E. 109. » Beatty v. Mutual Reserve Fund 

8 Marke v. Supreme Lodge Knights Life Assoc. 75 Fed. 65, 21 C. C. A. 
■•>!■ Honor, 29 Fed. 896. See Lane v. 227, 44 U. S. App. 527. 

2420 



ASSESSMENTS AND DUES 



§ L280 



bo brought within that of Meyer v. Knickerbocker Life [nsurance 
Company, 12 where it is held that a formal annual tender of pre- 
miums is not necessary after refusal. 18 So tender of further dues 
and assessments by a member of a mutual benefil society, is not 
necessary to preserve his rights, after receiving notice of his 
pulsion from the society and that no more money will be received 
from him, 14 and this applies where the association has canceled 
the policy. 15 So it is ordinarily required that notice of an assess- 
ment must be given, in which case it is a condition precedent to 
payment. 16 And in such case insured is not required to pay or 
tender an assessment until notified. 17 Nor need a tender of arrear- 
ages, which are necessary to be paid to reinstate the member be 
made at a lodge meeting; a tender is sufficient, in such case, when 
made to an officer authorized to receive such moneys. 18 As be- 
tween a subordinate and supreme lodge, or a member and the lodge, 
tender is payment so far as the protection of the relative rights of 

12 73 N. Y. 516, 29 Am. Rep. 200. ity, 131 Minn. 82, 154 N. W. 665; 

13 See §§ 1122, 1123 herein, as to Marcus v. National Council, Knights 
tender and frequency of tender of & Ladies of Security, 127 Minn. 196, 
premiums; National Life Ins. Co. v. 149 N. W. 197. 

Tullidge, 39 Ohio St. 240, where the New York. — Bochdam v. Supreme 

company refused to accept a premi- Lodge Knights of Pythias, 67 Misc. 

urn, and it was held that an action 407, 123 N. Y. Supp. 59. Compare 

might be maintained to continue the Supreme Tent, Knights of Maccabees 

policy in force; Day v. Connecticut of the World v. Fisher, 45 Ind. App 

Life "Ins. Co. 45 Conn. 480, 29 Am. 419, 90 N. E. 1044. 

Rep. 693, where it was held that the 14 Langnecker v. Trustees of Grand 

holder might tender the premium, Lodge Ancient Order United Work- 

and wait till the policy became due men, 111 Wis. 279, 55 L.R.A. 185, 

and then sue ; McKee v. Phoenix Ins. 87 N. W. 293. 

Co. 28 Mo. 383, 75 Am. Dec. 129, "Raymond v. Supreme Lodge 

where it was held that if the com- Knights of Pythias of the World, 

pany wrongfully refuses to receive 148 N. Y. Supp. 76, 85 Misc. 141, 

a premium due, the insured may treat aff'd 165 App. Div. 944, 149 N. Y. 

the contract as at an end. Supp. 1108. 

See also the following cases: 16 Jones v. Sisson, 6 Gray (72 

United States. — Robinson v. Mu- Mass.) 288; Williams v. Babcock. 25 

tual Unserve Life Ins. Co. 182 Fed. Barb. (N. Y.) 109; Coyle v. Ken- 

850, s. c. 189 Fed. 348, 111 C. C. tucky Grangers' Mutual Benefit 

A. 79. Co. 8 Ky. L. Rep. 604, 2 S. W. 

Georgia.— Southern Life Ins. Co. 676 ; Hall v. Supreme Lodge, Knights 

v. Logan, 9 Ga.' App. 503, 71 S. E. of Honor, 24 Fed. 450. 

742. 17 McMahan v. Sewickley Mutual 

Illinois.— Stubbs v. Modern Broth- Fire Ins. Co. 179 Pa. 52, 27 Pitts. 

erhood of America, 187 111. App. 186. L. J. N. S. 449, 36 Atl. 174, 26 

Michigan. — Wagner v. Supreme Ins. L. J. 721. 

Lodge, Knights & Ladies of Honor, 18 Manson v. Grand Lodge Ancient 

128 Mich. 660, 87 N. W. 903. Order United Workmen, 30 Minn. 

Minnesota.— Reiter v. National 509, 16 N. W. 395. 
Council, Knights & Ladies of Secur- 

2421 



§ L2S1 JOYCE u.\ INSURANCE 

tin- |>;irlii'< ;iiv concerned. Tt is suflicient if made once where tlie 
party stands ready thereafter to pay on demand. 19 So a tender to 
the secretary of a mutual company of an assessment may 1 e a good 
tender. 20 If after a policy has been forfeited for nonpayment of 
a premium when due, and such payment is afterward tendered and 
received by the insurer, fair dealing requires that it be informed of 
the condition of the assured, and a payment made without such 
information while he is probably in extremis is fraudulent. 1 

§ 1281. Assessments and dues: death before time specified for 
payment expires: loss after suspension. — If a note is given for a 
membership fee and the policy eontains no condition for forfeiture 
for its nonpayment when due, and the time of payment thereof is 
extended, and death occurs before said period expires, oo forfeiture 
arises by nonpayment of the note when first due; 2 and the directors 
may be empowered to exclude the insured from all benefits under 
his certificates, and still collect assessments on his premium note 
during his default where the whole note is absolutely collectable. 8 
And where payment is required to be made within a specified time, 
or within a certain number of days after notice, otherwise the pol- 
icy is to be forfeited, the fact that the assessment is unpaid when 
death occurs does not prevent a recovery if the period specified has 
not expired at the time of death. 4 But no recovery can be had for 
a loss occurring during suspension of the risk. Thus, where the 
assessment is required to be paid within ten days after demand, 
otherwise the policy is to be suspended until payment, and a loss 
occurs after the ten days and before the payment, no recovery can 

19 People v. Mutual Life Ins. Co. Indiana. — Painter v. Industrial Life 
92 N. Y. 105; Hall v. Supreme Lodge Assoc. 131 Ind. 68, 30 N. E. 876. 
Knights of Honor, 24 Fed. 450. But New York.— Elmer v. Mutual Ben- 
see |§ 1122-1125 herein, as to tender efit Life Assoc, of America, 19 N. Y. 
of premiums. Supp. 289, 64 Hun (N. Y.) 639, 47 

20 Loughbridge v. Iowa Life & En- N. Y. St. Rep. 35 ; Baker v. New 
dowment Assoc. 84 Iowa, 141, 50 York State Mutual Benefit Assoc. 
N. W. 568. 91 N. Y. St. Rep. 653, 27 N. Y. Week. 

1 Collins v. Metropolitan Life Ins. Dig. 91. 

Co. 32 Mont. 329, 108 Am. St. Rep. Pennsylvania. — Rogers v. Capitol 
578, 80 Pac. 609. 1092. Life Ins. Co. 1 Week. Not. Cas. 

2 Kansas Protective Union v. Whitt, (Pa.) 589. See § 1256 herein. 

36 Kan. 760, 59 Am. Rep. 607, 14 On payment of •premium after 

Pac. 275. death to keep insurance in force, see 

3 Coles v. Iowa State Mutual Ins. note in 14 L.R.A. 283; on validity of 
Co. 18 Iowa, 425. payment of premium or assessment 

4 Georgia. — Wright v. Supreme during period of extension, but after 
Commandery, 87 Ga. 426, 14 L.R.A. insured's death, see note in 2 B. R. C. 
283, 13 S. E. 564. 191. 

Illinois. — Protection Life Ins. Co. 
v. Palmer, 81 111. 88. 

2422 



ASSESSMENTS AND DUES § 1281a 

be had. 8 So where a member fails to pay certain dues and is sus- 
pended, .'Hid after his death the same are paid to the collector of 
the local society, the company will Dot be liable, even though a re- 
ceipl is given therefor by the collector, the latter not having au- 
thority so to do. 6 Where the assured, in a mutual benefit 
association, died on the twenty-seventh day of July, and he had 
until the tenth day of the following August in which to pay the 
last assessment made by the association, he was not in default and 
the policy was still in force at the time of his death, and the lia- 
bility of the association was accordingly fixed, and was unaffected 
by the fact that no part of such assessment was paid on the date 
last mentioned. 7 

§ 1281a. Days of grace: death within days of grace. — If days of 
grace are allowed in that assessments are not payable until on or 
before the last day of the month, there can be no default before the 
termination of said period. 8 

In a Kentucky case the time was specified for the payment of 
mortuary calls or they might be paid within thirty days after date 
of notice thereof or if payment was not made within thirty days 
after it was due the policy should terminate and be void. And it 
was also provided that the sum to which the beneficiaries were en- 
titled should be paid less any balance due the company. It was 
held that the policy w^as not forfeited where insured dies twelve 
days after date of the notice of a mortuary call even though said 
mortuary call had not been paid, as the thirty days' period had not 
elapsed, for the instant assured died the contract was terminated 
and the company's liability fixed and the company would have had 
the right to deduct the unpaid premium had there been no policy 
provision therefor. The court, per Paynter, J., notes the case of 
Want v. Blunt 9 and says: "The provisions of the policy in that 
case were unlike those of the policy which is the basis of this action, 
and as the facts of that case are distinguishable from those of this 
case, it is unnecessary for the court to express an opinion as to 
whether it would approve the doctrine of that case were a similar 
case presented to it for adjudication." 10 

5 Blanchard v. Atlantic Mutual Fire Wash. 666, 76 Pac. 292. Days of 
Ins. Co. 33 N. H. 9. grace : premiums, see §§ 1109a-1110 

6 Brown v. Grand Council North- herein. 

western Legion of Honor, 81 Iowa, 9 12 East, 182, considered under § 

400, 46 N. W. 1086. 1119 herein. 

7 Kerr v. Minnesota Mutual Bene- "Kentucky Life & Accident Ins. 
fit Assoc. 39 Minn. 174, 12 Am. St. Co. v. Kaufman, 102 Ky. 6, 42 S. W. 
Rep. 631, 39 N. W. 312. 1104, 27 Ins. L. J. 335. The court 

8 Logsdon v. Supreme Lodge of also said: "It was evidently con- 
Fraternal Union of America, 34 templated that the deceased might 

2423 



§§1282, 1283 



JOYCE ON INSURANCE 



§ 1282. Death of member during suspension of lodge. — Tf a by- 
law of the supreme lodge provides for suspension of a subordinate 
Lodge which refuses or neglects to forward assessments within a 
specified time, and also provides that "if a death occur in said lodge 
during such suspension no death benefit shall be paid," said clause 
shall be construed to read as if the words "during such suspension" 
had been added to said clause, for it would be an injustice to hold 
that a member who had promptly paid his dues to the local lodge 
should forfeit all his rights by reason of the fault or neglect of the 
lodge to perform its duty, especially where the lodge might there- 
after be restored by paying up. The restoration of the lodge would 
restore the member's rights to benefits. 11 

§ 1283. Death while "dues in arrears." — If the constitution of a 
mutual benefit society provides that a member shall be entitled to 
funeral benefits when at the time of his death he is "not more than 
three months in arrears," such provision will be so construed as not 



die while the policy was in force, 
owing the company a part or the 
whole of the bi-monthly premium. 
The ease of Baxter v. Brooklyn Life 
lus. Co. L19 N. Y. 450, 7 L.R.A. 
293, 23 X. E. 1048, fully sustains 
the views we have expressed. Coun- 
sel for appellee cites Klein v. New 
Fork Lite Ins. Co. 104 U. S. 88, 26 
L. ed. 662; Yoe v. Howard Masonic 
.Mutual Benefit Assoc, of Bait. 63 
M<1. 86, and Dennis v. Massachusetts 
Beneficial Assoc. 120 N. Y. 496, 9 
L.R.A. 189, 17 Am. St. Rep. 660, 
24 N. E. 843. In the case of Klein 
v. Insurance Co. the premium was 
<Ine on the 1st of March, but was not 
paid until after the death of the 
insured which occurred March 18th. 
The object of that action was to 
obtain relief against the forfeiture 
and it was held that time was of the 
ace of the contract, and refused 
the relief sought. In the ease of Yoe 
v. Association it was the duty of 
the secretary to notify the insured 
of the death of a member of the 
association, and thereupon the mem- 
ber thus notified was required within 
thirty days from the date of the no- 
tice to pay the sum of $1.10, and in 
the case of neglect or refusal to pay 
it, his name was to be erased from 



the roll of members and he forfeited 
all claims upon the association. On 
the 29th of August the notice re- 
quired was sent to Yoe. On the 30th 
of September, Yoe died which was 
two davs after the expiration of the 
thirty days. The court denied the 
right to recover, because the assess- 
ment was not paid within thirty 
days after the date of the notice. 
The thirty days expired before the 
death of the insured, and he failed 
to pay the assessment. In Dennis v. 
Association the insured had thirty 
days, in which to pay the premiums, 
from the mailing of the notice of 
assessment. The notice was mailed 
February 15th; payment was due 
March 15th. The insured died March 
filth, and the court denied the right 
of the beneficiary to recover. It will 
be observed that the facts of those 
cases are entirely different from the 
case at bar. Had Kaufman failed 
to pay the assessment within thirty 
days, and died after the expiration 
thereof, then we would have had be- 
fore us a question similar to thosi 
considered in the cases to which we 
have referred." 

11 Supreme Lodge Knights of Hon- 
or v. Abbott, 82 Ind. 1. 



2424 



ASSESSMENTS AND DUES §§ 1284, 1285 

to exclude a member from funeral benefits wbere, although he is 
three months in arrears, he dies the day before the dues of the fol- 
lowing month are payable. 12 

§ 1284. Payment assessment after loss. — If the policy or certifi- 
cate provides that nonpayment of an assessment on a premium note 
when due shall forfeit the policy, and the assured is notified, but 
neglects to pay the same, the policy will be void, and the company 
may refuse to accept a payment after loss. 13 And payment of an 
assessment after death by a friend of the assured — the latter in his 
lifetime having refused payment — is of no effect, even though the 
company accepts the same, where it is accepted in ignorance of 
the death. 14 So the collection of an assessment after loss does not 
render the insurer liable where by the conditions of the contract 
the termination of the same does not affect the validity of the pol- 
icy or the note with respect to past dues. 15 But the payment to 
the company and its retention of assessments after the death of 
the assured may render it liable unless accepted without knowl- 
edge. 16 Thus, if the assured during his lifetime requests payment 
of an assessment, and this is done after his death, and the company 
retains the money, such payment is good. 17 

§ 1285. Right to have assessment made. — The company is bound 
by its contract, and is obligated to make the necessary assessments 
to meet losses in accordance therewith. Thus, where the assured, 
as a member of a mutual benefit society, promises to pay assess- 
ments in consideration that the company will pay a specified sum 
not exceeding a certain amount, and the contract specifies the time 
within which the loss shall be payable, giving the form of notice 
and process for collecting death assessments, said contract imports 
a promise on the part of the company that it will make or cause to 
be made the necessary assessment ; 18 and where the right exists to 
have an assessment made on all the other policyholders, the mem- 
ber's right cannot be limited by the enactment of a by-law to which 
he does not assent, which provides that assessments shall only be 

12 So held in Sherry v. Operative 376; Pritehard v. Mechanics' Assoc. 
Plasterers' Union, 139 Pa. 470, 20 3 Com. B. N. S. 622; Swett v. Pro- 
Atl. 1062. tection Relief Soc. 78 Me. 541, 7 Atl. 

13 Southern Mutual Ins. Co. v. Tay- 394. 

lor, 33 Gratt. (Va.) 743. See §§ 17 Erdman v. Mutual Ins. Co. of 

1261 et seq. herein. the Order of Herman's Sons, 44 AVis. 

14 Miller v. Union Central Life Ins. 376. See § 1374 herein, as to waiver 
Co. 110 111. 102. by acceptance of assessments after 

15 Nash v. Union Mutual Ins. Co. loss or death. 

43 Me. 343, 69 Am. Dec. 65. 18 Lawler v. Murphy, 5S Conn. 294, 

16 Erdman v. Mutual Ins. Co. of 8 L.R.A. 113, 20 Atl. 457. 
the Order of Herman's Sons, 44 Wis. 

2425 



§ 1285 JOYCE ON INSURANCE 

made on a certain class, and the directors may become liable per- 
sonally to such member where they pay out money to which he is 
.-hi it led. even though the same is done in good faith. 19 Bui a mem- 
ber of a i .utual tire insurance company, whose losses are payable 
from assessments upon the other members cannot hold the officers 
of the company personally liable for his loss, because they have 
diverted funds upon which he had no claim for his loss. His 
remedy is to have an assessment made to pay his loss. 20 And if 
the liability to levy an assessment for a death benefit is absolute. 
this is not conclusively changed by an investigation of trustees 
whether the deceased was a member or not, even though the charter 
and by-laws provide that benefits shall not extend to those whose 
membership has ceased, and that deaths are to be reported by the 
trustees. 1 So although it is provided in the constitution that a pro 
rata sum shall be paid in full satisfaction of a claim where a single 
assessment is insufficient, yet if the certificate provides that a claim 
-hall be payable only from the death fund at the time of death, or 
from moneys realized from the next assessment, and every member 
is required to pay, when he becomes such, a first death assessment, 
a first death claim is not dependent for payment upon the death 
fund on hand, but a right exists to have it satisfied out of funds 
arising from an assessment to meet such claims. 2 But where certain 
necessary costs for an appraisal of damages are required to be de- 
posited by the insured upon demand before an assessment is made, 
there can be no recovery if such security is demanded and refused. 3 
An agreement to pay a sum received from a death assessment, not 
exceeding a certain specified amount with a further provision that 
the death claim shall be payable within sixty days after proof, 
giving the form of notice and process for collecting death assess- 
ments, and containing a promise by insured to pay assessments, — 
imports a promise by the insurance association to make, or cause to 
be made, the necessary assessment. 4 And assured is entitled to have 

19 Stewart v. Lee Mutual Fire Ins. 2 Wadsworth v. Jewelers & Trades- 
Assoc. 64 Miss. 499, 1 So. 743. men's Co. 132 N. Y. 540, 29 N. E. 

Refusal to levy assessment: action 1104, 26 Jones & S. (N. Y.) 88, 31 

at law: mandamus: specific perform- N. Y. St. Rep. 185, 9 N. Y. Supp. 

ance, see §§ 3473, 3474, 3516 herein. 711. In this case the pro rata clause 

20 Perry v. Farmers' Mutual Fire was held vague and indefinite ;it the 
Ins. Co. 139 N. Car. 274, 2 L.R.A. least, and not applicable to the Inns. 
(N.S.) 165 (annotated on liability of 3 In this case the policy was on 
officers of mutual company to mem- growing crops and the loss was by 
bers for permitting diversion of hail: Mutual Hail Ins. Co. v. Wilde, 
funds), 111 Am. St. Rep. 791, 51 8 Nob. 427, 1 N. W. 384. 

S. E. 1025. 4 Lawler v. Murphy, 58 Conn. 294, 

' l Dillingham v. New York Cotton 8 L.R.A. 113, 20 Atl. 457. 
Exch. (U. S. C. C. 1892) 49 Fed. 719. 

2426 



. ASSESSMENTS AND DUES §§ 1286, 128? 

a disability assessment levied upon receipt of proof of his injury 
where the certificate so provides. 5 

§ 1286. No authority to receive less than the amount of assess- 
ment due. — In view of the peculiar nature of the relations existing 
between members and the association, and the mutual obligations 
resulting therefrom, and the objects of the organization, it would 
seem to be undoubted that mutual benefit societies have no power 
to receive from a member an amount less than the actual sum due 
on the assessment, and it would also seem that the company has no 
power to accept other than cash or its equivalent in payment, as in 
case of promissory notes. 6 

§ 1287. Assessment and dues: safety fund: reserve fund. — Where 
the contract provides for a safety fund for the benefit of living 
members by the use of the income of such fund toward the payment 
of dues and assessments, or by a division of the same among those 
whose certificates are in force on the failure of the association to 
pay indemnities, and an assessment is levied prior to filing a bill 
for dissolution, the nonpayment of the same within the time limited 
for its payment, in order to keep the policy in force, will avoid the 
contract so as to preclude the holder from sharing in the safety 
fund. But this case differs from that where a certain sum is re- 
quired to be paid to the safety fund within one year from the date 
of the certificate ; for here, if the payment is made within the year, 
it is sufficient to entitle the certificate holder to share in the fund, 
even though the amount is not paid until after the bill is filed for 
dissolution ; so also where certain monthly dues are not paid until 
after the association stops business and proceedings are pending to 
wind up its affairs. 7 Again, where the reserve fund is of like char- 
acter, entirely excluding representatives of members deceased, and 
no absolute legal obligation rests upon the members to pay an as- 
sessment levied by the receiver, the nonpayment of such assessment 
does not forfeit the right to participate in the reserve fund. 8 A 
mutual insurance company whose constitution and by-laws do not 
provide for an emergency fund cannot justify assessments for the 
creation of such fund, without amending the constitution and by- 
laws in the manner pointed out in those instruments. 9 If there is 

5 Garcelon v. Commercial Travel- 8 Equitable Reserve Fund Life 

ers' Eastern Accident Assoc. 184 Assoc. In re, 131 N. Y. 354, 30 N. E. 

Mass. 8, 67 N. E. 868. 114, 43 N. Y. St. Rep. 204, 21 Ins. 

6 Buffum v. Favette Mutual Ins. L. J. 385. See s. c. 61 Hun, 299, 

Co. 3 Allen (85 Mass.) 360. But 16 N. Y. Supp. 80, 40 N. Y. St. 

see §§ 35, 36 herein. Rep. 800. 

7 Burdon v. Massachusetts Safety 9 Clark v. Iowa State Traveling 

Fund Assoc. 147 Mass. 360, 1 L.R.A. Men's Assoc. 156 Iowa, 201, 42 

146 17 N E 874. L.R.A. (N.S.) 631, 135 N. W. 1114. 

2427 



§ L 288 JOYCE ON [NSURANCE 

a provision in the constitution of ;m assessmenl c pany that, in ■ 

case of deficiency in the assessment to meet a death loss, il may be 
paid from the emergency fund, it leave- it optional with the com- 
pany to make the paj men! or not. 10 Payment by a member of a 
mutual benefit society of assessments which are being diverted to 
th e formation of an emergency fund, doe- not show acquiescence on 
his part, in the creation of such fund, if he had no knowledge of 
the fact, and, under the constitution and by-laws there was no 
authority to create such fund. 11 

§ 1288. Refusal to pay assessments: right to have fund distribut- 
ed. — If the contract provides for a reserve fund for the benefit of 
living members, and the company goes into a receiver's hands, those 
entitled to such fund and whose contracts are in force will share 
pro rata according to the amount contributed thereto by each, and 
the fact that a member has refused to pay an assessment which he 
was under no legal obligation to pay does not preclude his right to 
such share. 12 In the case establishing this proposition the right to 
the fund was limited to the living certificate holders, but the con- 
tract provided that the reserve fund should not be applied to the 
payment of death claims until it should reach a specified sum, 
which it never did. There were also other conditions relating 
thereto. But in a Massachusetts case 13 the safety fund was to be 
divided among certificate holders, and it was held that it should 
be divided among all members and representatives of members 
whose policies were in force at the date of filing the bill for dissolu- 
tion. It is also held in New York that the rights of claimants to 
the reserve fund should be referred to the date of the commence- 
ment of the proceedings for dissolution of the company. 14 If the 
company is incorporated as a fraternal beneficiary organization 
under a statute providing therefor, and issues benefit certificates 
payable out of a fund created by assessments levied for such pur- 
pose, and the society employs paid agents to solicit business con- 
trary to the statute, a member to whom a certificate has been issued 

10 Crawford v. Northwestern Trav- L. J. 385. See s. c. 61 Hun, 290. 16 
eling Men's Assoc. 226 111. 57, 10 N. Y. Supp. SO, 40 X. Y. St. Rep. 
L.K.A.tN.S.) 264 (annotated on ef- 800. See also Burdon v. Massachu- 
feet of provision that deficiency in setts Safety Fund Assoc. 11/ Mass. 
assessment nisiv be paid from emer- 360, 1 L.R.A. 1 16, 6 New Eng. Rep. 
gency fund), 80 X. E. 736. 840, 17 N. E. 874. 

11 Clark v. Iowa State Traveling 1S Burdon v. Massachusetts Safety 
Men's Assoc. 156 Iowa, 201, 12 Fund Assoc. 147 Mass. 360, 1 L.R. A. 
L.R.A.(N.S.) 631, 135 N. W. 1114. 14G, 17 N. E. 874. 

12 In re Equitable Reserve Fund 14 Equitable Reserve Fund Life 
Life Assoc. L31 N. Y. 354, 30 N. E. Assoc. In re, 131 N. Y. 354, 30 N. E. 
114, 43 X. Y. St. Rep. 204, 21 ins. 114. 

2428 



ASSESSMENTS AND DUES § 1289 

may refuse to pay assessments thereafter levied without forfeiting 
payments already made, and the certificate holders will, in such 
case, be entitled to have the fund distributed among them. 15 In 
case of a distribution of the surplus of a mutual insurance com- 
pany or of its other assets, there being no charter provision to the 
contrary, existing policyholders and such only are the legitimate 
distributees. In the aggregate, they are entitled to the whole. 16 

§ 1289. Application or appropriation of funds by society or lodge. 
— Dues and assessments are collected for a specific purpose, and, 
with relation to the member who is called upon to pay them, the 
contract obligation governs. When said moneys are collected they 
should ordinarily be applied to the specific purpose for which they 
are collected. When assessments have been levied and paid to the 
company, the fund created thereby becomes, to a certain extent, a 
trust fund, and if the claim for which the assessment has been 
made is a lawful one, the company will be obligated to pay said 
benefit. Thus where a death claim has accrued and an assessment 
has been levied to satisfy the same, and the payment of the same 
having been delayed and the amount having subsequently passed 
into the hands of a receiver, the amount is subject exclusively to 
the payment of the claim which it was levied to meet, and is not an 
asset subject to other claims. 17 But while such funds are not assets 
subject to general debts, and while the beneficiaries may be entitled 
thereto, yet the company has the control of the same, in so far that 
it is not, by reason of the mere fact that the assessment has been 
levied and collected for a benefit, obligated to appropriate it to the 
settlement of the same, for if the claim is illegal and invalid, the 
company may refuse to pay it. This is an obligation which rests 
upon the proper officers of the company by reason of the fact that 
they act for and represent the members in the disposition of the 
funds to which they have contributed, and it may be reasonably 
presumed that the members did not contract to pay assessments to 
meet invalid and illegal claims. No waiver can arise from the fact 
that the payment has been made and received of an assessment to 
meet a mortuary call, for it may have been apparently valid, and 
not have proved to be invalid until afterward. 18 Again, the ment- 
is F gg v . Supreme Lodge of Unit- 115 Am. St. Rep. 1023, 105 N. W. 
ed Order of Golden Lion, 159 Mass. 1031, 1135. 

9, 33 N. E. 692, 156 Mass. 431, 31 17 In re Equitable Reserve Fund 
N. E. 289. Life Assoc. 131 N. Y. 354, 40 N. Y. 

16 Huber v. Martin, 127 Wis. 412, St. Rep. 800, 61 Hun, 299, 16 N. Y. 
3 L.R.A.(N.S.) 653 (annotated on Supp. 80, 43 N. Y. St. Rep. 204, 30 
distribution of surplus upon dissolu- N. E. 114, 21 Ins. L. J. 3S5. 
tion of mutual insurance company), 18 Mayer v. Equitable Life Assoc. 

2429 



§ L289 JOYCE ON LNSURANCE 

bors may be obligated to pay an assessment, although the directors 
might have resisted the paymenl of some of the losses included 
therein, for this does uot invalidate it. 19 Bui although the society 
controls the funds, it holds them in trust, and cannot misapply the 

same for purposes not within its charter powers. 20 The fact that 

42 Iluu (N. Y.) 237. The court, per held that an invalid contract is not 

Landon, J., said in this ease: "The made valid by the incorporation of 

right to paymenl under the contract the members of the voluntary asso 

depended upon its validity, or at ciation, and the assumption l>y that 

least upon the inability of the defend- corporation of the contracts of the 

ant to show its invalidity. That in- voluntary association, and that the 

validity it offered evidence tending company's treasurer could not ratify 

to show. The defendant was in a and make valid invalid contracts of 

certain sense the agent of the mem- insurance by acceptance, after the 

bers of the company, but was an member's death, of unpaid assess- 

agent with special and defined powers ments, and that the assessments paid 

and limitations, and the true and by the members became the compa- 

obvious construction of those powers ny's money under its by-laws, and 

and limitations forbade payment up- that members could not control the 

on a claim which it was able to show disposition of assessments, but that 

was procured through misrepresenta- the company could retain the money 

tion or fraudulent suppression of and control it: Id. 545, per Libber, 

facts, concerning which it required J.; In re Protection Life Ins. Co. 9 

answers from Stephan when he ap- Biss. (C. C.) 188, Fed. Cas. No. 

plied for membership. That it had 1,444. Under the policies in this case 

realized the money with which to the amount to be assessed was held 

make payment was no waiver of its not a general asset of the company, 

duty to see to it that payment was "It is so much money which each 

due; that duty it still owed to its policyholder agrees to contribute to 

members who had paid their assess- pay a death loss, and when collected 

ments, trusting to the fidelity of the does not belong to the company nor 

company to protect them and the to its general creditors, but to this 

fund from invalid claims:'' Id. 238. special class of creditors, most of 

This case is cited in Stuart v. Mu- whom could only maintain a suit on 

tual Reserve Fund Life Assoc. 78 its guarantees, or for damages bv 

Hun (N. Y.) 191. 193, 60 N. Y. St. reason of its neglect to make the 

Rep. 255, per Brown, P. J., who says : assessment," per Blodgett, J., 198. 

"Neither is the fact that the money See Wilber v. Torgerson, 24 111. App. 

to pay the claim was collected by 119. 

assessments upon the members of the 19 Sands v. Hill, 42 Barb. (N. Y.) 

association available to the plaintiff, 651. But see 2 Alb. L. J. 70, 55 N. Y. 

nor does it affect the right of the 18. 

defendant to reject the claim upon 20 State ex rel. Monitor Fire Assoc, 

evidence subsequently obtained. 42 Ohio St. 555. Money collected for 

Such, I think, would be the duty the such benefits by a subordinate lodge 

officers owed to the association, if cannot be appropriated by it to the 

they were satisfied from their exam- payment of assessments and for death 

ination that there was a breach of benefits ordered by the grand lodge, 

the contract;" citing also Fisher v. The funds out of which sick benefits 

Andrews, 37 Hun (N. Y.) 176. In are payable are not the funds oul of 

Swett v. Citizen's Mutual Relief So- which death benefits are payable, and 

ciety, 78 Me. 541, 7 Atl. 394, it is each fund being for a specific pur- 

2430 



ASSESSMENTS AND DUES § 1290 

the statute under which the company is incorporated provides for 
a death fund "belonging to the beneficiaries of anticipated deceased 
members," in "an amount not exceeding one assessment," doe- not 
necessitate the payment of losses therefrom as they occur, but the 
officers may exercise their discretion concerning the application of 
the same to particular losses, and they may use all or only a portion, 
or none at all, of said fund, and may levy an assessment to meet 
losses if it deems proper without using such fund. 1 After the as- 
sessment has been paid the member cannot thereafter personally 
control its disposition, and cannot assign the same. 2 If the act of 
incorporation so provides, the holders of cash policies have a right 
to insist that the premium notes be first exhausted for losses before 
the cash fund be drawn on. 3 An insurance company does not hold 
surplus or profits as trust fund for the benefit of the holders of 
policies on the tontine savings fund assurance plan, under the New 
York law, where, by its policies, it agrees that the surplus or profits 
derived from such policies as shall cease to be in force before the 
completion of their respective tontine dividend periods, shall be 
apportioned equitably among such policies as shall complete such 
periods. 4 

§ 1290. Necessity for assessment must exist. — An assessment 
cannot be validly made unless the necessity therefor properly and 
Legally arises. Every prerequisite to its validity must be complied 
with, and it must be made for a proper purpose, otherwise payment 
l>y a member is not enforceable. 5 In other words, the facts must 
be such as to occasion a legal necessity therefor; 6 for the contract 
under which a premium note is given makes the note a conditional 
promise to pay. It is dependent upon certain contingencies, and 
these conditions are precedent, and must exist, otherwise a vote to 

pose, the money paid by the member 6 Pacific Mutual Ins. Co. v. Guse. 

cannot in such case be applied other- 49 Mo. 329, 8 Am. Rep. 132; Ameri- 

wise than for the purpose contem- can Mut. Aid Soc. v. Helburn, 85 

plated without his direction: Ancient Ky. 1, 2 S. W. 495, 28 N. Y. Supp. 

Order United Workmen v. Moore, 1 177. "When assessment is legitimate, 

Ky. Law Rep. 93, 9 Ins. L. J. 539. under Laws N. Y. 1879, e. 496; Mc- 

1 Crossman v. Massachusetts Be- Cowan v. Supreme Council Catholic 
nevolent Assoc. 143 Mass. 435, 9 N. Mutual Benevolent Assoc. 7(5 Hun 
E. 753. under Mass. Stats. 1880, e. (N. Y.) 534, 8 Ky. Law Rep. 627, 7 
196, sec. 3. Am. Law Rep. 571, 58 N. Y. St. Rep. 

2 Swett v. Citizens' Mutual Relief 268. 

Soc. 78 Me. 541, 7 Atl. 39 \. 6 Thomas v. Whallon, 31 Barb. (N. 

3 Clark v. Manufacturers' Mutual Y.) 172, 178; American Ins. Co. v. 
Fire Ins. Co. 130 Ind. 332, 30 N. E. Schmidt, 19 Iowa, 502; Pulford v. 
212. See § 890 herein. Fire Department of Detroit, 31 Mich. 

4 Pierce v. Equitable Life Assur. 458. 
Soc. 145 Mass. 56, 1 Am. St. Rep. 
433, 12 N. E. 858. 

2431 



§ 1291 JOYCE ON INSURANCE 

assess will have no validity, and the assessment will be unenforce- 
able. 7 The mere passage of a resolution levying an assessment does 
not of itself create any liability; 8 but in certain cases acts done by 
a corporation presuppose the existence of other facts which are 
.,rv fco make them operative, and in such case there is pre- 
sumptive proof of the former. 9 

A courl decree of dissolution is conclusive on the question of 
necessity of making assessments and the amount thereof. 10 But 
a contested claim for the recovery of insurance is not a liability on 
which an assessment can be based until allowed or settled by ad- 
judication of a court of competent jurisdiction. 11 

§ 1291. Prescribed mode must be followed in levying assessment. 
—Sometimes no form or mode of making an assessment is pre- 
scribed, and no formal record thereof required to be kept, but the 
duty to assess is nevertheless imperative. 12 But if a mode is speci- 
fied, it must be followed, and the assessment made on the losses 
and in the manner prescribed, otherwise no obligation rests upon 
the member to pay it, and no forfeiture can arise in case of its 
nonpayment, for the contract does not require that a member 
should pay an assessment which is illegally made. 13 Thus, if an 

7 See cases cited in last two notes. Life Ins. Co. v. Jarvis, 22 Conn. 133, 

8 Pacific Mutual Ins. Co. v. Guse, 148. 

49 Mo. 329, 8 Am. Rep. 132. Illinois.— Farmers' Mutual Fire 

9 Thus the necessity of an assess- Ins. Co. v. Knight, 162 111. 470, 44 
ment may be presumed from notice N. E. 834; Chicago Guaranty Fund 
to the subordinate secretary, where Life Ins. Soc. v. Wilson, 91 111. App. 
the rules of a benefit society require 667. 

the supreme secretary to notify the Iowa. — Underwood v. Iowa Legion 

subordinate secretary to collect a of Honor, 66 Iowa, 134, 23 N. W. 

fixed assessment when the benefit 300. 

fund is insufficient: Dealings v. Su- Maryland. — Mutual Fire Ins. Co. 

preme Lodge Knights of Pythias of v. Jean, 96 Md. 252, 94 Am. St. Rep. 

the World, 131 N. Y. 522, 60 Hun 570, 53 Atl. 950. 

(N. Y.) 350, 14 N. Y. Supp. 834, 30 Michigan.— Baker v. Citizens' Mu- 

N. E. 572. tual Fire Ins. Co. 51 Mich. 243, 16 

i° Swing v. Wanamaker, 124 N. Y. N. W. 391. 

Supp. 231,139 App. Div. 627; Stock- Minnesota.— lbs v. Hartford Life 

ley v. Riebenback, 12 Pa. Super. Ct. Ins. Co. 121 Minn. 310, 141 N. W. 

109. 289. 

11 Decker v. Righter, 9 Kan. App. Missouri. — Wayland v. Western 
431, 58 Pac. 1009. Life Indemnity Co. 166 Mo. App. 

12 Backdahl v. Grand Lodge An- 221, 148 S. W. 626. 

cient Order United Workmen, 46 New Hampshire. — Atlantic Fire 

Minn. 61, 48 N. W. 454, 20 Ins. L. Ins. Co. v. Sanders, 36 N. H. 252. 
J. 459. See Bay State Mutual Fire Pennsylvania. — Passenger Conduc- 

Ins. Co. v. Sawyer, 12 Cush. (66 tors' Life Ins. Co. v. Birnbaum, 116 

Mass.) 64. Pa. St. 565, 10 Cent. Rep. 63, 11 

13 Connecticut. — Mutual Benefit Atl. 378. 

24:52 



ASSESSMENTS AND DUES § 1291 

isse sment is not made according to the terms prescribed by the 
by-laws, it is invalid, and need not be paid, 14 and it is incumbent 
upon the corporation, if it seeks to recover an assessment on a 
deposit note, to prove that it was made in conformity with the re- 
quirements of the act of incorporation and by-laws. 16 The contract 
is between the member and the society, and the former has a right 
to rely upon the observance by the company and its officers of its 
terms. It is this obligation which determines the rights and lia- 
bilities of the respective parties as between them, and the member 
may insist that the requirements of the fundamental law of the 
society shall be observed by the organization, and that the mode 
of assessment agreed upon shall be strictly followed; 16 and the 
directors, in levying an assessment, must no1 overlook the plain 
provisions of their charter in a search for some rule of action more 
purely equitable. 17 But the rule above given presupposes that the 
by-law under which the assessment is made is valid, for if it be 
invalid the fact that it is followed cannot of itself make the assess- 
ment legal, since a member is not estopped to deny the exercise of 
an authority not conferred by the charter, nor does the member's 
consent to such an authority confer it. 18 

Again, assessments to meet liabilities on a policy of accident as- 
sessment insurance must be made on the basis of membership at 
the date of the death or accident. 19 And in making an assessment 
the officers must not disregard the reasonable limits necessary to 
meet losses and an excess of their authority in this respect makes 
the assessment illegal and void. 20 So assessment for losses must be 

H Appleton Mutual Fire Ins. Co. Pennsylvania. — Susquehanna Mu- 

v. Jesser, 5 Allen (87 Mass.) 446. tual Fire Ins. Co. v. Gackenbach, 115 

See Settle v. Farmers' & Laborers' Pa. St. 492, 9 Atl. 90. 

Co-operative Ins. Assoc. 150 Mo. See §§ 325 et seq., 340 et seq. here- 

App. 520, 131 S. W. 136. in, as to relative duties and obliga- 

15 Atlantic Mutual Ins. Co. v. Fitz- tions of the parties ; Naill v. Kan- 
patrick, 2 Gray (68 Mass.) 279; sas Farmers' Fire Ins. Co. 47 Kan. 
Chicago Guaranty Fund Life Soc. 223, 27 Pac. 854, on rehearing, 45 
v. Wilson, 91 111. App. 667; Settle Kan. 738, 26 Pac. 944, 45 Kan. 74, 
v. Farmers' & Laborers' Co-operative 25 Pac. 211. 

Ins. Assoc. 150 Mo. App. 520, 131 "Slater Mutual Fire Ins. Co. v. 

S. W. 136. Barstow, 8 R. I. 343. 

16 Illinois. — Covenant Mutual Ben- 18 Grand Lodge v. Stepp, 31 Pitts, 
efit Assoc, v. Spies, 114 111. 463, 2 L. J. 164, where the latter proposi- 
N. E. 482. tion is sustained. 

Iowa. — American Ins. Co. v. 19 Collins v. Bankers' Accident Ins. 

Schmidt, 19 Iowa, 502. Co. 96 Iowa, 216, 59 Am. St. Rep. 

Missouri.— Pacific Mutual Ins. Co. 367, 64 N. W. 778. 

v. Guse, 49 Mo. 329, 8 Am. Rep. 132. 20 Pencille v. State Farmers'^Mu- 

New Hampshire. — Nashua Fire tual Hail Ins. Co. 74 Minn. 67, 76 

Ins. Co. v. Moore, 55 N. H. 48. N. W. 1026. 
Joyce Ins. Vol. III.— 153. 2433 



§ 1291 JOYCE ON INSl'HAXCE 

made as soon as possible after they occur, and be against those only 
win. were members when the losses were suffered. The assessment 
cannot be postponed by borrowing money to pay losses and after- 
ward levying an assessment against all who are members when it 
is made, when some of them were not such when the loss was 
suffered, and others who were members at such time have ceased to 
be such, and are therefore omitted from the assessment. 1 If the 
record shows on its face that the resolution was unanimously 
adopted by the directors, as a board, and by the executive committee, 
and it contains the necessary date for computing the amount, and 
there is no evidence to impeach or rebut the levy and it is not 
claimed that the amount is erroneous, it is prima facie evidence 
against the members of the association of the validity of the assess- 
ment, 2 

If the by-laws of a mutual insurance company simply add to the 
general rule of law that losses shall be paid by the policies in force 
at the time of their occurrence, another provision, that if the as- 
sessment against such policies prove insufficient, than all existing 
policies, even though issued subsequently to the losses, shall be 
liable lo make up the deficiency, is not unlawful, and assessments 
declared and levied on the basis thereof are regular and lawful. 3 
Mem Iters of a mutual insurance company who did not pay their 
-hares of a void assessment to cover a valid claim, will not be per- 
mitted to object to the crediting of the amounts paid thereon by 
other members, upon the sums assessed against them under a new 
levy to meet the liabilities for which the void assessment was levied. 4 
An unsigned, uncertified, and otherwise incomplete paper cannot be 
treated as an official assessment which under the charter and by- 
laws should have been signed, and the forfeiture of a policy cannot 
be predicated upon a failure to pay such an assessment. 5 If an 
assessment is not made in accordance with the society's constitu- 
tional provisions, it is no excuse that it was made in conformity 
with a custom of the society, unless the member against whom the 
forfeiture is claimed had knowledge of such fact. 6 Where the stat- 
ute provides for petition to ratify assessments or calls made by mu- 

1 Mutual Fire Ins. Co. v. Jean, 96 Mutual Fire Ins. Co. v. Ionia Cir- 

Md. 252, 94 Am. St. Rep. 570, 53 cuit Judge, 100 Mich. 606, 3,2 L.R.A. 

Atl. 950. 481 (annotated on liability of mem- 

8 Anderson v. Mutual Reserve bers of mutual insurance company), 

Fund Life Assoc. 171 111. 40, 44 N. E. 59 N. W. 250. 

205, 27 Ins. L. J. 249. 5 Baker v. Citizens' Mutual Fire 

3 Thropp v. Susquehanna Mutual Ins. Co. 51 Mich. 243, 16 N. W. 391. 
Fire Ins. Co. 125 Pa. St. 427, 11 Am. 6 Underwood v. Iowa Legion of 
St. Rep. 909, 17 Atl. 473. Honor, 66 Iowa, 134, 23 N. W. 300. 

4 Ionia Eaton & Barry's Farmers' 

2434 



ASSESSMENTS AND DUES § 1292 

tual companies it applies to calls made under the statute, and not 
under the contracts contained in the deposit notes. 7 

A mutual benefit society in making assessments upon its mem- 
bers does not act in a judicial, but in a ministerial capacity, and no 
presumption can arise in favor of the regularity or legality of its 
assessments. 8 

§ 1292. Who empowered to levy assessments. — The board of di- 
rectors must levy the assessment when it is so provided in the by- 
laws, 9 and generally the assessment must be made by the officers, or 
authority designated, 10 although not only the corporation may 
levy an assessment, but the receiver may be empowered so to do. 11 
If the assessments are required by the articles of incorporation and 
by-laws to be made by the secretary, they must be so made to be 
valid and warrant a forfeiture. 12 And a forfeiture of insurance in 
a mutual company for nonpayment of an assessment cannot be sus- 
tained when such assessment is not made by the officers designated 
by law. 13 And the assessment may be valid when levied at a meet- 
ing of the board called by the president only, 14 and the fact that 
one director was absent when an assessment was made does not 
invalidate it. 15 And the authority of an executive committee elected 
by the directors under the constitution and by-laws may be of such 
a nature as empower them to make assessments at such times as 
the directors may determine and for such an amount as said com- 
mittee may consider sufficient. 16 The directors, when empowered 
to make an assessment, can act only in conformity with and to the 
extent of the powers conferred, for they can have no arbitrary dis- 
cretion. 17 The rules of the association may require the supreme 
secretary, when the benefit fund is insufficient, to notify the sub- 
ordinate secretaries to collect a fixed assessment. 18 If an assessment 
is required to be made by the secretary, and is made by others, it 
is invalid, and neglect to pay the same does not warrant a for- 

7 Commonwealth v. Dorchester Mu- 13 Johnson v. Farmers' Mutual 
tual Fire Ins. Co. 112 Mass. 142. Fire Ins. Co. 110 Mich. 488, 64 Am. 

8 American Mutual Aid Soc. v. St. Rep. 360, 68 N. W. 299. 
Helbum, 85 Ky. 1, 7 Am. St. Rep. 14 Fayette Mutual Fire Ins. Co. v. 
571, 2 S. W. 495. Fuller, 8 Allen (90 Mass.) 27. 

9 Farmers' Mutual Fire Ins. Co. v. 15 Williams v. German Mutual Firj 
Chase, 56 N. H. 341. Ins. Co. 68 111. 387. 

10 Susquehanna Mutual Ins. Co. v. 16 Beatty v. Mutual Reserve Fund 
Trinckhannock Toy Co. 97 Pa. St. Life Assoc. 75 Fed. 65, 21 C. C. A. 
424, 39 Am. Rep. 816. 227, 44 U. S. App. 527. 

11 See Hurlburt v. Carter, 21 Barb. 17 Thomas v. Whallon, 31 Barb. 
(N. Y.) 221. See §§ 1273, 1274 here- (N. Y.) 178. See St. Lawrence Mu- 
in, as to receiver. tual Ins. Co. v. Paige, 1 Hilt. (N. Y.) 

12 Bates v. Detroit Mutual Benefit 430. 

Assoc. 51 Mich. 587, 17 N. W. 67. 18 Demings v. Supreme Lodge 

2435 



§§ 1293, L294 JOYCE ON LXSl UAXCK 

feiture; 19 bui the fad that a director had a personal interest as a 
member does not of itself invalidate an assessment. 80 An assess- 
ment is invalid if made by the grand lodge when the charter re- 
quires it to be levied by the subordinate lodge. 1 If mortuary 
assessments can be made under the constitution only by the board 
of directors upon submission by the secretary of proofs of deaths to 
the board, and, upon indorsement and approval of the president 
an assessment may then bo made, the directors are not invested 
with a power to make an assessment in their discretion upon pre- 
sentment merely of proper proofs of death. 2 

§ 1293. Notice of intention to assess not necessary for directors' 
regular meeting. — An assessment on a premium note may be valid- 
ly levied at a regular monthly meeting of the president and di- 
rectors, held pursuant to the by-laws of the company and the 
statutes of the commonwealth, and in such case affirmative proof 
is unnecessary that notice was given to the directors that an assess- 
ment would be laid at such meeting, although the directors have 
power to order an assessment if needed at any meeting called for 
that purpose. 8 Such a rule is based upon the fact that the duties 
of the directors are marked out by the charter and by-laws, which 
duties they are presumed to know, and they should come to a reg- 
ular meeting, prepared to act, without special notice that the subject 
of levying an assessment would be considered at that meeting, and 
a notice of intention to assess is unnecessary in the absence of some 
requirement therefor, and the powers of the directors will not be 
enlarged by giving such notice. This rule also accords with the 
general rule relating to regular business meetings of corporations. 4 

§ 1294. Power of directors to assess cannot be delegated. — 
Although the fact of levying an assessment by the board of directors 

Knight of Pythias of the World, 131 arise. These duties being marked out 

N. Y. 522, 30 N. E. 572, GO Hun by the charter, no special notice to 

(N. Y.) 350, 14 N. Y. Supp. 834. them is necessary. 

19 Bates v. Detroit Mutual Benefit 4 Morawetz on Private Corpora- 

Assoc. 51 Midi. 587, 17 N. W. 67. tions (2d ed.) sec. 482, citing Samp- 

80 Williams v. German Mutual Fire son v. Bowdoinham Steam Mill Co. 

Ins. Co. 68 111. 387. 36 Me. 78; Warner v. Mower, 11 Vt. 

1 Agnew v. Ancient Order United 385, and other cases; Fayette Mu- 
Workmen, 17 Mo. App. 254. tual Fire Ins. Co. v. Fuller, 8 Allen 

2 Railway Passenger & Freight (90 Mass.) 27, in which the court 
Conductors' Mutual Aid & Benefit said: "In the absence of any express 
Assoc, v. Robinson, 147 111. 138, 23 provision in the by-laws as to call- 
ins. L. J. 79, 35 N. E. 168. ing of such meetings, the notice given 

3 Bay State Mutual Fire Ins. Co. by the secretary was sufficient, and 
v. Sawyer, 12 Cush. (66 Mass.) 64. they might proceed to act upon an 
The just conclusion is that they are assessment. The rule, 'notify all 
to meet to perform duties as thev may meetings of directors,' was complied 

2436 



ASSESSMENTS AND DUES § 1295 

is a ministerial, and not a judicial, act, 5 and a distinction is made 
in regard to agents in this respect, it being declared that where the 
discretion is to be exercised in respect to an act which is ministerial 
and not judicial, it may be delegated; 6 yet, inasmuch as the funda- 
mental law of the society is the source of authority, if the power 
conferred upon the directors to levy assessments invests them with 
a discretion which is personal, such power must be exercised per- 
sonally, and cannot be delegated. 7 This is in conformity with the 
rule that directors of corporations cannot delegate powers which it 
is intended that they should exercise personally. 8 So a board of 
directors authorized under the by-laws to levy assessments cannot 
delegate their power to the president. 9 

§ 1295. When power to assess may be delegated: exceptions to 
rule.— The board of directors may be expressly authorized by the 
charter to appoint a committee to make assessments, in which case 
it is necessary that the assessment be levied either by the board or 
by the executive committee, 10 and the board of directors acting upon 
notice of a death may direct the secretary to issue notices of assess- 
ments, in case its chairman shall, upon examination of the proofs 
of death when they arrive, find them correct. Such assessment con- 
forms with a requirement that the board shall make all assessments 

with by the secretary, and this meet- gated :" Per the court in Farmers' 
ing was competent to make an assess- Mutual Fire Ins. Co. v. Chase, 56 N. 
men t." H. 341; People's Mutual Ins. Co. v. 

5 Herkimer County Mutual Ins. Co. Westcott, 14 Gray (80 Mass.) 440. 
v. Fuller, 14 Barb. (N. Y.) 373, 7 8 2 Morawetz on Private Corpora- 
How. Pr. (N. Y.) 210; Sands v. tions (2d ed.) sec. 536; citing Silver 
Sweet, 44 Barb. (N. Y.) 108; Ameri- Hood Road v. Greene, 12 R. I. 164, 
can Mutual Aid Soc. v. Helburn, 85 and other cases. Thus where, the 
Ky. 1, 2 S. W. 495, 8 Ky. L. Rep. charter provided that the directors 
627, 7 Am. St. Rep. 571. should "settle and determine losses 

6 Burial Board of St. Margaret's, and damages to be paid by the sev- 
Rochester v. Thompson, 6 L. R. C. era! members and their respective 
P. 445, 454, 458, 19 W. R. 892, 24 proportions" thereof, and the diree- 
L. T. N. S. 673, 40 L. J. C. P. 213, tors voted to assess to a certain 
per Willes, J. ; Walsh v. Southworth, amount, and a minority committee 
6 Ex. 156, per Parke, B.; Baker v. was appointed to make the assess- 
Cave, 1 H. & N. 674, 678, per Pol- ment and fr ed it for a less sum, it 
lock, C.B.; Winchester v. Ayres, 4 was held illegal: Monmouth Mutual 
G. Greene (Iowa) 104; 2 Thompson Fire Ins. Co. v. Lowell, 59 Me. 504. 
on Corp. (2d ed.) sees. 1202 et seq. 9 Garretson v. Equitable Mutual 
Compare Garretson v. Equitable Mu- Life & Endowment Assoc. 93 Iowa, 
tual Life & Endowment Assoc 93 402, 61 N. W. 952. 

Iowa, 402, 61 N. W. 952. 10 American Mutual Aid Soc. v. 

7 "The general rule is that when Helburn, 85 Ky. 1, 2 S. W. 495, 8 
the power to be executed involves Ky. L. Rep. 627, 7 Am. Law Rep. 
necessarily the exercise of judgment 571. 

and discretion, it cannot be dele- 

2437 



§ 1296 JOYCE ON INSURANCE 

and the chairman approve of the proofs of death. 11 So a hoard of 
directors may pass a resolution directing the secretary to levy an 
issessment, the articles of association specifying the amount. 12 

§ 1296. Assessment by illegally elected board. — Tt is hold that 
an assessement made by a board of directors illegally elected is in- 
valid. 13 This decision is cited by a learned writer on corporations, 
under a section upon the liability of shareholders to pay unau- 
thorized calls, and he says: "The shareholders have agreed to con- 
tribute the amount of their shares only after an authorized call has 
been made by properly elected agents, and Until such a call has 
been made a condition precedent to their liability remains unper- 
formed." 14 This case is, however, upon the point cited by Mr. 
Morawetz, opposed to the doctrine of the supreme court of Indiana, 
also noted and criticized by that authority, wherein it is held that 
;mv irregularity or illegality in the election of the directors by 
whom calls were made is no ground on which the payment of the 
subscription for stock can he resisted." 15 A question might arise 
as to the right of a member to collaterally attach an assessment up- 
on the ground stated in the above case, 16 and it is held that a 
member is estopped to say in defense to an action on a note that he 
and his associates have not complied with the charter provisions, 
nor may he deny the organization of the company. 17 It is also 
decided that the irregularity of election of the president does not 
invalidate the assessment. 18 But a member is not obligated to pay 
a,u assessment which is invalid because levied under a by-law in- 
consistent with the charter ; 19 and there would seem to be every 
valid reason in favor of the proposition that the member has a 

11 Passenger Conductors Life Ins. ing the functions of an office already 
Co. v. Birnbaum, 116 Pa. St. 565, 11 filled:" Per Hoar, J. 

Atl. 378. As to powers of directors 14 2 Morawetz on Private Corpora- 

of corporations generally to appoint tions ( 2d ed.) sec. 150, p. 151. 

a, committee to execute resolutions 15 2 Morawetz on Private Corpora- 

of the board, see 2 Morawetz on Pri- tions (2d ed.) sec. 150, citing Stein - 

vate Corporations (2d ed.) sec. 535. metz v. Versailles & Osgood Turnpike 

12 Van Frank v. United States Ma- Co. 57 Ind. 457, and other Indiana 
sonic Benefit Assoc. 158 111. 560, 41 cases. 

N E. 1005. 16 People's Mutual Ins. Co. v. 

'"People's Mutual Ins. Co. v. Weatcott, 14 Gray (80 Mass.) 440. 

Westcott, 14 Gray (80 Mass.) 440. 17 Turnbull County Mutual Fire 

•"By the terms of their contract their Ins. Co. v. Horner, 17 Ohio, 407. 

liability can only be created by an 18 Currie v. Mutual Assurance Soc. 

assessment or call made by the direc- 4 Hen. & M. (Va.) 315, 318, 4 Am. 

tors and officers in whose selection Dec. 517. 

they were entitled to a voice. ... 19 National Mutual Fire Ins. Co. 

They were not bound to recognize as v. Yeomans, 8 R. I. 25, 86 Am. Dec. 

directors persons who were never 610. 
lawfully chosen, and who were usurp- 

2438 



ASSESSMENTS AND DUES §§ 1297, 1298 

right to insist that the assessment shall be made by those, and those 
only, who are authorized to levy the same, and the doctrine of the 
case first noted herein seems based on sound principles. 20 

1297. Intentional omission of members. — If a mutual company 
in levying an assessment intentionally omits some of the members 
who are liable thereto and should have been included, this invali- 
dates the assessment as to all. 1 Although it is held in Minnesota 
that if other members are knowingly omitted in making an assess- 
ment on a premium note, it is merely voidable by the member 
assessed. 2 An assessment levied against a part only of the members 
in proportion to their premium-' and deposits is invalid, 3 and the 
rule obtains although the assessment is accompanied by the com- 
putation of the liability of the omitted members, and by the in- 
tention to assess them accordingly on the expiration of their 
policies. 4 But the assessment will be valid and binding where a 
certain percentage is levied on the premium notes of all the mem- 
bers, although all their names are not specified nor the exact sum 
required to be paid by each, 5 and the fact that a few only of the 
members are omitted does not invalidate the assessments. 6 

§ 1298. Assessments where risks are classified. — Although a \ r 
mutual company may be empowered to divide its risks into classes, 7 j 
so that a premium note in one class shall only be liable in the first jj\ 
instance to assessments to meet losses occurring in that particular ; 
class to wh ich it b elongs YyitTiT the necessity arises all the assets j 
and the notes of both classes must he applied to moot losses arising 
in either class; so also if the assets in one class are insufficient, 
resort must be had to the "other class for the deficiency. 8 And a 
premium note is assessable for losses where the fund produced by 
the cash premiums has been exhausted. 9 But in case of cash pre- 

20 People's Mutual Ins. Co. v. 7 White v. Ross, 4 Abb. App. Dec. 

Westcott, 14 Grav (80 Mass.) 440. (N. Y.) 589, 15 Abb. Pr. (N. Y.) 

iMarblehead Mutual Ins. Co. v. 66; Union Mutual Fire Ins. Co. v. 

Hay ward, 3 Gray (69 Mass.) 208. Keyser, 32 N. H. 313, 64 Am. Dee. 

2 Swing- v. Akely Lumber Co. 62 375. 

Minn. 169, 64 N. W. 97. 8 White v. Roes, 4 Abb. App. Dee. 

3 People's Equitable Fire Ins. Co. (N. Y.) 589, 15 Abb. Pr. (N. Y.) 
v. Arthur, 7 Gray (73 Mass.) 267; 66; Sands v. Sanders, 28 N. Y. 416, 
Herkimer County Mutual Ins. Co. 25 How. Prac. 82; Commonwealth v. 
v Fuller, 14 Barb. (N. Y.) 373, 7 Mechanics' Mutual Ins. Co. 112 Mass. 
How. Pr. (N. Y.) 210. 192. 

*Marblehead Mutual Ins. Co. v. 9 White v. Havens, 4 Abb. App. 
Hayward, 3 Gray (69 Mass.) 208. Dec. (N. Y.) 582; Sands v. Hill, 42 

5 Lycoming Fire Ins. Co. v. Rought, Barb. (N. Y.) 651. 
97 Pa. St. 415. 

6 Fayette Mutual Fire Ins. Co. v. 
Fuller, 8 Allen (90 Mass.) 27. 

2439 



§ 1298 JOYCE ON INSURANCE 

mium policyholders in a mutual company organized under the 
Indiana statute, it is held that the premium notes must first be ex- 
hausted to pay losses lie fore the cash fund can be drawn upon. 10 
If the charter or by-laws require the separation of property into 
classes, and provide for liability only within each class, such divi- 
sion cannot be ignored in levying an assessment, and in such case, 
if the assessment is made generally, it is invalid; u and the funds 
of one class must, if so required, be exhausted before resorting to 
those of another class, 12 but only those who are members of a par- 
ticular class at the time of the adoption of a by-law authorizing the 
directors to assess according to such division can be assessed, 13 un- 
til such other notes have paid assessments equal to the interest paid 
on notes of its class. But although the articles of association allow 
a division of risks into classes, and provide that premium notes 
shall only be assessed for losses in the class to which they belong. 
yet an assessment for notes for losses based upon such a division 
is void if such classification is opposed to the policy and provisions 
of the sta tutes. *^ J If the business of a mutual fire insurance com- 
pany is divided into classes, and the statute requires the same to be 
conducted separately and independently each class from the other, 
and also specifically provides that in no case shall an assessment be 
made by the company or association upon the premium notes of 
one class for the losses or expenses of the other class, 15 neither the 
premium notes of one class nor the proceeds of the same can be 
diverted for losses or expenses, neither directly by assessments on 
account of the prohibition of the statute, nor may the law be evaded 
by suffering a judgment by default, for such judgment is unen- 
forceable against property in the class other than that in which the 
policy is issued. 16 

10 Clark v. Manufacturers' Mutual Ins. Co. 47 Kan. 223, 27 Pac. 854 
Fire Ins. Co. 130 Ind. 332, 30 N. E. (this case was in court from 1887 
212, under Rev. Stats. Ind. 1881, sees, to 1891). See Kansas Farmers' Mu- 
3752, 3753. tual Fire Ins. Co. v. Amick, 37 Kan. 

11 Atlantic Mutual Fire Ins. Co. 73, 14 Pac. 454, 45 Kan. 74, 25 Pac. 
v. Moody, 74 Me. 385; Allen v. 211, 49 Kan. 726, 31 Pac. G91. The 
Winne, 15 Wis. 113. See Kelly v. last two decisions were in favor of 
Troy Ins. Co. 3 Wis. 254. the insurance company, upon the 

12 Longpond Ins. Co. v. Hough- ground that a general judgmeni 
ton, 6 Gray (72 Mass.) 77. could not be enforced against prop 

13 .Miller v. Geoi'gia Masonic Mu- erty in another class than that to 
tual Life Ins. Co. 52 Ga. 221. which the insurance belonged, and it 

14 Thomas v. Achilles, 1G Barb. (N. was declared in the opinion of the 
Y.) 491. last case "that the premium notes of 

15 Sess. Laws Kan. 1875, c. Ill; the first class could not be assessed 
Comp. Laws, 1879, c. 50a. or used to pay a loss in the second 

16 Naill v. Kansas Farmers' Fire class." 

2440 



ASSESSMENTS AND DUES §§ 1299, 1300 

The conclusion from these decisions is, that the company's right 
to divide its risks into classes and to base its assessments upon such 
division must be governed by the law under and by virtue of which 
it is created and exists, and that it may be empowered to regulate 
these matters by its charter or by-laws not inconsistent with express 
statutory provisions, mandatory or prohibitory in their nature, and 
where the statute is mandatory, it must be followed, and where it 
prohibits the use of funds in other than a particular manner, it 
must likewise be observed. 

§ 1299. Assessment invalid; of certificate changed to life policy 
with regular premiums. — If a company organized as an assessment 
and endowment company changes its plan after issuing a cer- 
tificate, and issues in effect a supplemental ordinary life policy. 
with regular premiums at stated intervals, it cannot assess the as- 
sured under the first certificate, and a demand therefor, coupled 
with a demand for premiums under the supplementary policy, ex- 
cuses nonpayment of the premiums on the latter. 17 

§ 1300. When assessment may be made. — The plans or schemes 
of mutual insurance are so many and different, and the contracts 
so various, 18 that no more definite rule can be formulated for deter- 
mining when an assessment may be levied than the general one 
that the terms of the contract must govern in all cases. The con- 
tract may be such that upon death of a member and notification by 
the secretary each surviving member will be obligated to pay, with- 
in a specified time after such notification, the amount required by 
the rules of the association, otherwise to forfeit his certificate. 19 An 
assessment may be made although there is a reserve fund, it being 
a matter of discretion with the directors or officers whether all such 
fund shall be used or only a portion, or none at all. 20 So an as- 
sessment may be valid, although the benefit has been paid, where 
payment is made out of the reserve fund which the assessment is_ 
levied to reimburse. 1 As we have already seen, an assessment may 
be made after the policy has been suspended or forfeited, or even^ 
after loss or death. 2 It may also be made after insolvency, 3 but an 

17 So held in Colby v. Life Indem- efit Assur. Assoc. 143 Mass. 435, 9 N. 
nity & Investment Co. 57 Minn. 510, E. 753. 

59 N. W. 539. x McGowan v. Supreme Council of 

On right of assessment company to Catholic Mutual Benefit Assoc. 76 

change plan or class of policies, see Hun (N. Y.) 534, 28 N. Y. Supp. 

note in 1 L.R.A.(N.S.) 623. 177. 

18 See § 343 herein. 2 Atlantic Ins. Co. v. Goodall, 35 

19 McDonald v. Ross-Lewin, 29 Hun N. H. 328. 

(N. Y.) 87. 8 See §§ 1256, 1281, 1284 herein. 

20 Crossman v. Massachusetts Ben- 

2441 



§ 1301 JOYCE ON INSURANCE 

assessment by directors after an assignment in insolvency is void. 4 
Delay in Levying an assessment may be excused, although the con- 
tracl provides for a Levy without delay, and. in view of all the 
circumstances, is not unreasonable, as in ease of intervening Li 
tion or a settlement of controverted rights. 5 And a mutual insur- 
ance company is not obligated after each Loss to compute an assi ss- 
menl at once on its deposit notes liable thereto; it is sufficient to 
adopt a rule of procedure that will practicably and reasonably ap- 
proximate thereto; 6 and although the act of incorporation requires 
the directors to Levy an assessment "forthwith" to meet claims under 
policies exceeding the amount of the company's existing fund.-, 
exclusive of the members' deposit notes, yet if the company delays 
for a time which is not unreasonable to make an assessment, it is 
not thereby invalidated. 7 

§ 1301. Assessment to pay unearned premium. — It is held that 
premium notes of members may be assessed to repay unearned pre- 
miums. This was so held where the company was organized under 
the Minnesota laws, 8 and was also empowered to enter into contracts 
for all cash premiums ; 9 the holders of policies in the latter class 
not being members of the company, and the contract not being- 
mutual, but a simple insurance contract. The unearned premiums 
for which it was held the premium notes might be assessed were 
those to which the holder of the cash premium policy was entitled 
upon the termination of the policy by insolvency proceedings. 10 
So in Michigan assessments cannot be made to pay unearned or re- 
turned premiums where the member contracts to pay only assess- 
ments for losses. 11 In Massachusetts, however, it is held tliat the 
liability under the statute of a member as a corporator in a mutual 
fire insurance company does not authorize an assessment to repay 
unearned premiums, but that the deposit notes must be first ex- 
hausted for the losses. 12 So in an Indiana case, where the party 
paying a definite sum in cash in lieu of a premium note was not a 
member, nor entitled to share in the surplus, and the statute pro- 

4 Schimpf v. Lehigh Valley Mutual 9 Under Laws Minn. 1885, c. 180. 
Ins. Co. 86 Pa. St. 373. 10 In re Minneapolis Mutual Fire 

5 People's Mutual Ins. Co. v. Allen, Ins. Co. (Powell v. Wyman) 49 
10 Gray (76 Mass.) 297. Minn. 291, 51 N. W. 921. 

6 New England Mutual Ins. Co. v. n Detroit Manufacturers' Mutual 
Belknap, 9 Cush. (63 Mass.) 140. Fire Ins. Co. v. Merrill, 101 Mich. 

7 Marblehead Mutual Ins. Co. v. 393, 59 N. W. 661. 
[Jnderwood, 3 Gray (69 Mass.) 210, 12 Commonwealth v. Monitor Mu- 

under Mass. Rev. Stats, c. xxxvii, sec. tual Fire Ins. Co. 112 Mass. 150; 

31; Shaughnessy v. Rensselaer Ins. Commonwealth v. Mechanics' Mutual 

Co. 21 Barb. (N. Y.) 605. Fire Ins. Co. 112 Mass. 192. 

8 Gen. Laws, 1881, c. 91. 

2442 



ASSESSMENTS AND DUES § 1302 

vided for the appropriation of funds to the payment first of expenses 
and then to whatever damages the member was entitled to claim 
under his policy, it was held that the cash premium policyholders 
were entitled to claim repayment of unearned premiums upon the 
appointment of a receiver, but that the premium notes could only 
be assessed for payment of fire losses. 13 

§ 1302. Slight errors do not invalidate material errors or omis- 
sions do. 14 — If an assessment made in good faith, under circum- 
stances which legally warrant such an exercise of power, is sub- 
stantially in conformity with the necessary requirements, and based 
upon correct principles, it is valid, and will not be declared illegal 
for errors which are slight and immaterial. 15 Nor need the state- 
ment enter into the minute details; it is only necessary that it 
clearly appears from the facts that a necessity existed for the levy. 16 
and a slight error in the amount stated in the notice which arises 
from a miscalculation will not of itself prevent the company from 
recovering the amount actually assessed and due. 17 But if assessable 
notes to any amount which should have been included are omitted 
intentionally, the assessment will be void, 18 and where the by-laws 
provide for the assessment pro rata of all expired policies for losses 
occurring at the time they expire, a failure to include such policies 
in an assessment avoids it. 19 But if the receiver has assessed all 
premium notes in his hands, his omission to include certain notes 
that have been illegally surrendered will not enable the makers of 
such notes, no other member objecting, to resist such assessment. 20 
But the assessment may be valid, notwithstanding the omission of 
such assessable notes, where the omission does not arise from a 
fraudulent intent and the amount is so small as to be immaterial. 1 
If a deficiency does not appear to have arisen by reason of a failure 
to collect an assessment, a member is not liable, although the de- 
ficiency be the result of "error, mistake, or miscalculation." 2 

13 Clark v. Manufacturers Mutual 18 Herkimer Ins. Co. v. Fuller, 14 
Fire Ins. Co. 130 Ind. 332, 30 N. E. Barb. (N. Y.) 373; Marblehead v. 
212. Hayward, 3 Gray (69 Mass.) 208. 

14 See also preceding and following 19 Susquehanna Mutual Fire Ins. 
sections. Co. v. Gackenbach, 115 Pa. 492, 9 

15 Marblehead Ins. Co. v. Under- Atl. 90. 

wood, 3 Gray (69 Mass.) 210; New 20 Davis v. Oshkosh Upholstery Co. 

England Mutual Ins. Co. v. Belknap, 82 Wis. 488, 52 N. W. 7-1. 

9 Cush. (63 Mass.) 140. x Fayette Mutual Fire Ins. Co. v. 

16 Lycoming Fire Ins. Co. v. Bix- Fuller, 8 Allen (90 Mass.) 27. 

by, 15 Phila. 647, 38 L. I. 452, 15 2 Ionia Eaton & Barry Farmers' 
Week. Not. Cas. 109. Mutual Fire Ins. Co. v. Otto, 96 

"Thropp v. Susquehanna Mutual Mich. 558, 22 Ins. L. J. 857, 56 N. 
Fire Ins. Co. 125 Pa. 427, 11 Am. W, 88, 97 Mich. 522, 56 N. W. 755. 
St. Rep. 909, 17 Atl. 473. 

2443 



§§ 1303-1305 JOYCE ON INSURANCE 

§ 1303. Second assessment of note. — Tf an assessment has hem 
levied upon a pren i in i ii note and the same remains outstanding and 
uncollected, a second assessmenl for the whole amount of the oote 
is not void where it is made upon the same members for the same 
purposes, and embraces the same object, or is made by reason of 
difficulties and errors existing in a former assessment, or where it is 
made in place of a previous illegal assessment not enforced. 8 Where 
a deficiency arises by reason of the failure to collect an assessment 
in full, and a new assessment becomes necessary, it should be levied 
upon the same members. 4 

§ 1304. Assessment: new policy substituted for old one through 
fraud. — If the insured has given notes as a premium for a five year 
policy, which policy he is induced to surrender by fraudulent rep- 
resentations of the company, and upon the assurance that it will 
issue a "duplicate," but more liberal and less onerous, policy, but 
in fact his liability is doubled under the "duplicate" policy, he is 
not liable to an assessment made by the company's receiver on such 
notes under the provisions of the new policy. 5 

§ 1305. Levying assessments: amount: inequality. — The direct- 
ors cannot ignore the cardinal rule which requires them to observe 
the fundamental law of their corporate existence in making assess- 
ments, and an assessment of a certain per cent on all premium 
notes without a consideration of the just proportion of the losses 
incurred and the amounts paid on said notes is invalid for its in- 
equality. 6 But where the company transacts business on both the 
stock and mutual plan, and moneys received from premiums under 
the stock plan are appropriated to paying losses, whereby the early 
members of the mutual class are relieved from assessments on their 
notes and others are left to be assessed for subsequent losses, there 
is no remedy for such inequality, and those whose notes are in force 
when such losses occur are liable. 7 An assessment cannot be levied 
for a larger amount than that provided for by the charter, even 
though authorized by a by-law. 8 Directors, as a rule, may not 
exercise an arbitrary discretion in levying assessments, but must 

3 Sands v. Sweet, 44 Barb. (N. Y.) 6 Davis v. Parcher Upholstering Co. 
108, following Jackson v. Slyke, 44 82 Wis. 488, 52 N. W. 771; Rev. 
Barb. (N. Y.) 116, note; citing Peo- Stats. Wis. sec. 1907. See also Com- 
ple's Mutual Ins. Co. v. Allen, 10 monwoalth v. Union Mutual Ins. Co. 
Gray (70 Mass.) 297; and question- 112 Mass. 116. 

ing Campbell v. Adams, 38 Barb. (N. 7 Shaughnessv v. Rensselaer Ins. 

Y.) 132. Co. 21 Barb. (N. Y.) 605. 

4 Farmers' Ins. Co. v. Chase, 56 N. 8 National Mutual Fire Ins. Co. v. 
H. 341. Yeomans, 8 R. I. 25, 86 Am. Dee. 

5 Wyman v. Gillett, 54 Minn. 536, 610. 
56 N. W. 167. 

2444 



ASSESSMENTS AND DUES § 1305 

be controlled by the authority conferred upon them, and must act 
in good faith and within a reasonable discretion. 9 So if fire policies 
be for different terms with different rates of premium, an assess- 
ment for each month's losses is not void for inequality if based upon 
a division of the premium for each policy of the member represent- 
ing the years of its duration. 10 Although if it appears that the 
discretion conferred in levying assessments concludes the members, 
as where they under their contract have obligated themselves to 
pay such sums as should be assessed, it is held that such act of the 
directors is final, especially when the amount of the call does not 
appear to be so inconsistent with the established course of business 
of the company as to show that it was not made in good faith, 
and in the proper and judicious course of administration of the 
company's affairs. 11 An assessment in a mutual fire company may 
be validly levied by percentages upon what is known as an "assess- 
ment basis" calculated for each policy, by multiplying the premium 
rate by twenty, such "assessment basis" being ascertained by mul- 
tiplying the amount of insurance by the premium note, and all 
assessments being levied alike upon all members in the same man- 
ner. 12 The assessment must be levied with reference to the losses 
for which the company is then responsible, and to which the mem- 
ber may be called upon to contribute. 13 Under the Michigan act 
providing for mutual insurance companies and for receivers there- 
of in certain cases, such receivers have power to assess the members, 
not only in such sum as shall be barely sufficient to pay all losses 
and liabilities, but in such sums as shall be sufficient to cover all 
the probable deficiencies by reason of the failure of some of the 

9 See Rosenberger v. Washington company of a greater amount' than 
Fire Ins. Co. 87 Pa. St. 207 ; Thomas is necessary to enable it to meet ex- 
v. Whallon, 31 Barb. (N. Y.) 178; isting claims against it, together with 
Sands v. Graves, 58 N. Y. 94. a reasonable allowance for expenses 

10 Citizens' Mutual Fire Ins. Co. and failures to make collections, is in- 
v. Sortwell, 10 Allen (92 Mass.) 110. valid; and an allowance for these 

11 Commonwealth v. Dorchester purposes of a sum more than the 
Mutual Fire Ins. Co. 112 Mass. 142, whole amount of the deficiency in its 
145, et seq. The court, per Wells, funds is unreasonable if no special 
J., says in this case: "But the basis circumstances are shown to justify 
of recovery of the amount of the the excess : People's Equitable Mutual 
note or any portion of it, and the Fire Ins. Co. v. Babbitt, 7 Allen (89 
test of the validity of an assessment, Mass.) 235; Rosenberger v. Washing- 
must be found in the contract, except ton Ins. Co. 87 Pa. St. 207. 

so far as it is referred to the statute 12 Susquehanna Mutual Fire Ins. 

by the terms of the note or the by- Co. v. Leavy, 136 Pa. St. 499, 20 Atl. 

laws of the company :" Id. 147. This 502. 

decision, however, overrules that of a 13 Commonwealth v. Union Mutual 

former case in the same state, where Ins. Co. 112 Mass. 116. 

it was held that an assessment by the 

2445 



§§ 1305a, L306 JOYCE <>\ [NSURANCE 

members to pay. 14 The word "remaining" used in ilio article? of 
association of a masonic relief society, which is merely ;i mutual life 
insurance company, proceeding on the assessment plan and which 
articles limit the sum provided for the paymenl of a death benefit 
in the total sum of dues "remaining" in the treasury of said society, 
must be construed as meaning "received" or "realized." 15 The 
reasonable limits of an assessment in a mutual insurance company 
upon policyholders to meet Losses musl not be disregarded, or the 
officers of the company making such assessment^ will be condemned 
as having transcended their authority, and the assessment held 
illegal and invalid. Such oflicers must act judiciously, as well as 
honestly, when levying assessments, and, if they fail to do so, the 
courts may interfere in behalf of the injured parties. 18 Thirty per 
cenl is not an unreasonable amount to levy for contingencies, in 
levying an assessment upon the members of a mutual insurance 
company to meet liabilities, where a new assessment for deficiencies 
arising from failure to collect cannot be made under the law of the 
state, and litigation in connection with the collection of the assess- 
ment, is probable. 17 

§ 1305a. Right to increase assessments. — The amount of each as- 
sessment stipulated in a mutual benefit insurance contract cannot 
be raised by the association without the consent of the member, 
although he has agreed to comply with all the laws, rules, and re- 
quirements of the order. 18 So consent by a member of a mutual 
henelil society, to be bound by all present and future rules of the 
order, does not empower the society to make an increase in the rate 
of his assessment date from the inception of his policy, and deduct 
the amount owing by him under such arrangement from the face 
on his policy. 19 This question, has, however, been fully considered 
elsewhere herein. 20 

§ 1306. Examination and allowance of claims. — As we have 
stated, a necessity must exist within the terms contemplated by the 

14 Wardle v. Townsend, 75 Mich. 18 Dowdall v. Supreme Council 
385, 4 L.R.A. 511, 42 N. W. 950. Catholic Mutual Benefit Assoc. 196 
An assessment of $50,000 to pay N. Y. 405, 31 L.R.A. (N.S.) 417, 89 
$25,000 not excessive. N. E. 1075. 

15 Lake v. Minnesota Masonic Re- On right to increase rates, see ciotes 
lief Assoc. 61 Minn. 96, 52 Am. St. in 31 L.R.A. (N.S.) 417, and L.R.A. 
Rep. 538, 63 N. W. 263. 1916A, 762. 

1G Pencille v. Suite Farmers Mutual 19 Jaeger v. Grand Lodge of Order 
Bail Ins. Co. 74 Minn. 67, 73 Am. of Hermann's Sons, 149 Wis. 354, 39 
St. Rep. 326, 76 N. W. 1026. L.R.A.(N.S.) 494, 135 N. W. 869. 

17 Ionia Eaton & Barry's Farmers' 20 See §§ 380 et seq. herein. 
Mutual Fire Ins. Co. v. Ionia Circuit 
Judge, 100 Mich. 606, 32 L.R.A. 481, 
59 N. W. 250. 

2446 



ASSESSMENTS AND DUES § 1307 

contract for making an assessment, for it is upon these conditions 
that the member has promised to contribute. 1 And where the con- 
tract provides that the premium notes shall be liable for losses and 
expenses, an assessment must be based upon an examination and 
determination of the amount of losses and expenses, and of the 
notes liable to be assessed therefor. While this does not exclude the 
exercise of a reasonable discretion in ascertaining the facts, never- 
theless the facts must be inquired into, and where the entire amount 
of the note is assessed without the necessary inquiry, the assessment 
is void, 2 and proof is inadmissible to supply such omission, 3 and the 
claims allowed may be shown in defense to have been void or fraud- 
ulently allowed. 4 But an assessment may be ordered, subject to the 
examination of proofs of death by the secretary and his approval, 5 
and the fact that some of the losses might have been successfully 
resisted on technical grounds does not invalidate the assessment. 6 
If a death claim accrues after involuntary dissolution of a benefit 
association, it is not entitled to participate in the death fund with 
claims maturing before the dissolution, although it may be entitled 
to participate in the reserve fund. 7 

§ 1307. What may be included. — An allowance may be made in 
making an assessment upon premium notes for losses paid out of 
the funds derived from cash premium policies. 8 So an assessment 
may be made to repay money borrowed to pay a loss if levied upon 
those liable for such loss. 9 Payments of prior illegal assessments 
may be credited the members, and a new assessment may include 
the amount paid ; 10 and if such assessment is partly paid, the sum 
may be included, 11 and an assessment may be made to pay back 
sums voluntarily paid the company under a previous assessment 
which has been adjudged invalid, together with interest thereon. 12 
And an assessment by a receiver may be allowed under a statute 
for uncollectable claims, and it is not invalid, although for a larger 
amount than the company's actual indebtedness and the estimated 
expense of collection. It is sufficient, in such cases, that the assess- 

1 See § 1290 herein. Life Assoc. 131 N. Y. 354, 40 N. Y. 

2 Sands v. Graves, 58 N. Y. 94; St. Rep. 810, 61 Hun, 299, 16 N. Y. 
Embree v. Sehiekelor, 36 Ind. 423. Supp. 80, 43 N. Y. St. Rep. 204, 30 

3 Sands v. Graves, 58 N. Y. 94. N. E. 114. 

4 People's Mutual Fire Ins. Co. v. 8 Sands v. Graves, 58 N. Y. 94. 
Allen, 10 Gray (92 Mass.) 297. 9 Tobey v. Russell, 9 R. I. 58. 

5 Passenger Conductors Life Ins. 10 People's Equitable Ins. Co. v. 
Co. v. Birnbaum, 116 Pa. St. 565, Petitioners, 9 Allen (91 Mass.) 319. 
11 Atl. 378. . u People's Mutual Fire Ins. Co. v. 

6 Sands v. Hill, 42 Barb. (N. Y.) Allen, 10 Gray (76 Mass.) 297. 
651. 12 People's Equitable Ins. Co. v. 

7 In re Equitable Reserve Fund Petitioners, 9 Allen (91 Mass.) 319. 

2447 



§ 1308 JOYCE ON INSURANCE 

ment is substantially correcl and is made in good f;iitli. 13 An 
allowance may be made for return premiums on canceled policies, 14 
also for claims uncollectable because of noncompliance with state 
insurance Law; 16 and an assessment may include losses chargeable 
upon each policy for the month in which the assessment expired, 
and exclude those in the month in which it began, the assessment 

being based upon a computation of losses from month 1 onth. 16 

So a reasonable amount may be included for expenses and the 
insolvency of members, 17 and for other expenses and debts. 18 While , 
the constitution and by-laws provide for bimonthly assessments 
for a sum in gross to be fixed by the executive committee sufficient 
in amount to meet pending death claims, and while a resolution 
properly passed empowers the board of directors to fix a gross sum 
of assessment at an amount less than sufficient to meet pending 
death claims and to make good the amount necessary therefor by 
appropriations from the reserve fund, nevertheless such resolution 
does not imperatively require such acts to be done by the board but 
only vests it with discretion to limit the assessment and appropriate 
the reserve fund as suggested in the resolution. 19 Again, assess- 
ments upon the members to pay a loss, may include interest and 
expenses incident thereto resulting from not paying it when due, 
and also the costs of litigation incurred in defending actions. 20 
But a mutual fire insurance company cannot levy assessments to 
create a surplus fund for future losses where its power is limited to 
assessments for the payment of losses only. 1 

§ 1308. What need not and may not be included. — An assess- 
ment upon a premium note in which a former unpaid assessment is 
included is irregular. 2 Claims which are uncollectable and worth- 
less need not be considered, 3 and the fact that illegally surrendered 

13 Tobey v. Russell, 9 R. I. 58; Ins. Co. v. Petitioners, 9 Allen (91 
Wardle v. Townsend, 75 Mich. 385, Mass.) 319. As to losses and expen- 
4 L.R.A. 511, 42 N. W. 950. But see ses prior to membership, see § 1256 
York County Mutual Fire Ins. Co. v. herein. 

Bowden, 57 'Me. 280, 286. 19 Barbot v. Mutual Reserve Fund 

14 Fayette Ins. Co. v. Fuller, 8 Life Assoc. 100 Ga. 681, 28 S. E. 498, 
Allen (*90 Mass.) 27. 27 Ins. L. J. 338. 

15 Insurance Commr. v. Commer- 80 Ionia Eaton & Barry's Farmers' 
cial Mutual Ins. Co. 20 R, I. 7, 36 Mutual Fire Ins. Co. v. Ionia Circuit 
Atl. 930. Judge, 100 Mich. 606, 32 L.R.A. is], 

16 People's Mutual Ins. Co. v. Al- 59 N. W. 250. 

len, 10 Grav (76 .Mass.) 297. 1 Farmers' Mutual Fire Ins. Co. v. 

V Susquehanna Mutual Fire Ins. Knight, 162 111. 470, 44 N. E. 834. 
Co. v. Gackenbach, 115 Pa. St. 492, 8 Campbell v. Adams, 3S Barb. (N. 
9 Atl. 90 ; Crossman v. Massachusetts Y.) 132; Planters' Ins. Co. v. Corn- 
Mutual Benefit Assoc. 143 Mass. 435, fort, 50 Miss. 662. 
9 N. E. 953. 3 Maine Mutual Marine Ins. Co. v. 

18 People's Mutual Equitable Fire Ncal, 50 Me. 301. 

2448 



ASSESSMENTS AND DUES §§ 1309, 1310 

notes are not included does not invalidate the assessment by a re- 
ceiver when lie assesses all notes in his hands. 4 A deficiency from 
uncollectable notes may no1 be included. 5 An assessment for losses 
and expenses, or which includes losses and bad debts, is invalid and 
uncollectable where the power to assess is limited to the amount of 
losses unpaid at the time of making the assessment. 6 

§ 1309. Anticipated losses. — If no provision is made for an as- 
gessment to meet anticipated losses, no such assessment can be 
levied, and if the directors are required to examine into a claim 
for loss, and to levy an assessment if it be valid, they have no 
authority, in such case, to assess for future losses which are in an- 
ticipation only. 7 So a premium note is not assessable for losses 
anticipated upon an assumed failure of others to contribute their 
proportion of losses. 8 If all the deposit notes and one per cent is 
not more than sufficient to pay a loss on property destroyed by fire, 
and before the deposit notes are collected other property is de- 
stroyed, the losers under the last fire cannot recover any part of the 
assessment made under the original loss. 9 It is declared, however, 
in Wisconsin that an assessment may be levied for anticipated loss- 
es. 10 

§ 1310. Regularity of assessment must be affirmatively shown: 
allegation and proof: evidence. — As has been stated in a prior sec- 
tion, the act of making an assessment is a ministerial, and not a ju- 
dicial, one ; n therefore, no presumption can arise in favor of the 
regularity or legality of assessments, 12 and it is an affirmative matter, 

4 Davis v. Oshkosh Upholstery Co. 26 Ind. 336. The court said: "It 

82 Wis. 488, 52 N. W. 771. was not in the power of the board of 

6 Bangs v. Grey, 2 Kern (N. Y.) directors to make assessments on pre- 

569. See Farmers' Mutual Ins. Co. mium notes beyond the sum necessary 

v. Chase, 56 N. H. 341. The defend- to pay the amount due and unpaid 

ant was assessed to supply a deficien- on losses : " Bersch v. Sinissippi Ins. 

cy from uncollected assessments made Co. 82 Ind. 64. 

before the existence of his policy. 7 Pacific Mutual Ins. Co. v. Guse, 

Such an assessment would be invalid 49 Mo. 329, 8 Am. Rep. 132 ; Thomas 

against the defendant: Long Pond v. Whallon, 31 Barb. (N. Y.) 172; 

Co. v. Houghton, 6 Gray (72 Mass.) Rosenberger v. Washington Fire Ins. 

77. Co. 87 Pa. St. 207. 

6 Sinissippi Ins. Co. v. Taft, 26 8 York County Mutual Fire Ins. 

Ind. 240; York County Mutual Fire Co. v. Turner, 53 Me. 225. See also 

Ins. Co. v. Bowden, 57 Me. 286. In Thomas v. Whallon, 31 Barb. (N. Y.) 

this case the court said : "The provi- 172. 

sions of the law contemplate the as- 9 Caston v. Alleghany Mutual Ins. 

sessment of notes to meet actual lia- Co. 1 Pa. St. 322. 

bilities in just proportions. One class 10 Kelly v. Troy Fire Ins. Co. 3 

cannot be called upon to pay losses Wis. 254, 329, per the court, 

and expenses of another class: " Sin- n § 1204 herein. 

issippi Ins. Co. v. Farris, 26 Ind. 12 American Mutual Aid Society v. 

342; Sinissippi Ins. Co. v. Wheeler, Helhurn, 85 Ky. 1, 2 S. W. 495, S Ky. 
Joyce Ins. Vol. III.— 154. 2449 



§ 1310 JOYCE ON [NSURANCE 

both of pleading and evidence, necessary to establish a forfeiture 
for nonpayment of an assessment, thai the assessmenl should appear 
to have been made in the manner, mode, and in conformity with 
the authority given, and for a proper purpose. 18 A general allega- 
tion thai ii was "duly made"' is insufficient. 14 It musl appear that 
the loss occurred before making the assessmenl and during the 
terms of the policies assessed; also that the levy was made upon all 
the members liable to contribution, and, if necessary, the amount. 
due from delinquents on assessments should be collected in a proper 
suit therefor. 15 The person assessed must also be shown to have 
been a member when the assessment was levied, and that the loss for 
which it. was made accrued during the continuance of the member's 
liability therefor. 16 There must also be proof of the losses and ex- 
penses for which the assessment was levied; 17 and if a receiver sues 
to recover assessments, the complaint must aver all the necessary 
facts showing a liability on the premium notes. 18 If an action is 
brought to recover an assessment, and the proof shows an excess 
therein, but it is not so large in amount as in itself to import fraud 
or gross mistake, the jury may give a verdict for the plaintiff. The 
burden of proof of fraud or misconduct rests, in such case, upon the 
party relying thereon as a defense. 19 Where the defense of nonpay- 
ment of an assessment resulting in forfeiture was set up in an 
action on a benefit certificate, it was held error to reject evidence of 
the receipt from the supreme secretary by the section secretary, of 
the notice to pay a fixed assessment required under the by-laws to be 
given where there was not enough of the fund in a certain class to 
pay the benefit; such evidence was rejected on the ground that it 
was not shown that the assessment was regularly made, but it was 
declared that the fact of the sending of said notice was presumptive 
proof of the necessity for an assessment, and that the fund was in- 

Law Rep. 627, 7 Am. Law Rep. 571; Co. v. Guse, 44 Mo. 329, 8 Am. Rep. 

Sounds v. Sweet, 44 Barb. (N. Y.) 132. 

108. "American Mutual Aid See v. 

13 Mutual Benefit Life Ins. Co. v. Helburn, 85 Ivy. 1, 2 S. YY. 495, 8 

Jarvis, 22 Conn. 133, US; American Ky. L. Rep. G27, 7 Am. Law Rep. 

Mutual Ai.l Soc. v. Helburn, 85 Ky. 571. 

1, 2 S. W. 496, 8 Ky. L. Rep. (i27, 7 15 Planters' Ins. Co. v. Comfort, 50 

Am. Law Rep. 571; Shea v. Massa- Miss. 662. 

cliuselts Mutual Benefit Assoc 160 16 Columbia Fire-Ins. Co. v. Kin- 
Mass. 289, 23 Ins. L. J. 214, 35 N. E. yon, 37 N. J. L. 33. 
855, 39 Am. St. Rep. 475; Mutual "Pacific Mutual Ins. Co. v. Guse, 
Life Ins. Co. v. Houghton, 6 Gray 49 Mo. 329, 8 Am. Rep. 132. 
(72 Mass.) 77; Atlantic Mutual Fire 18 Manlove v. Burger, 38 Ind. 211. 
Ins. Co. v. Fitzpatrick, 2 Gray (68 19 Susquehanna Mutual Fire Ins. 
Mass.) 279; Wayland v. Western Co. v. Gackenback, 115 Pa. St. 492, 
Life Indemnity Co. L66 Mo. App. 9 Atl. 90. 
221, 231, 148 S. W. 626; Pacific Ins. 

2450 



ASSESSMENTS AND DUES § 1311 

sufficient to meet the loss. 20 The record of losses kept by the asso- 
ciation may, under the contract, be prima facie evidence that losses 
have occurred, 1 and the charter of the company may provide thai 
the certificate of the secretary shall be prima facie evidence of the 
assessment. 2 And the provision applies to an action on the note 
to the extent that it is prima facie evidence of the validity of the 
assessment and its amount. 3 The company's books or records, or 
an examined and proven copy thereof, showing the proper authori- 
ties had acted, etc., and also showing the forfeiture, if relied on, 
should first be produced ; if not obtainable, then the absence thereof 
accounted for before parol evidence is admissible. An attempt to 
prove by the testimony of officers what the records should show is 
an attempt to introduce secondary evidence. 4 

§ 1311. Defenses to actions: assessments: premium notes. — The 
noncompliance with the provisions of the charter is no defense to 
an action for an assessment on a deposit note. 5 The rule is the 
same in mutual as in stock companies, that a member is estopped 
to deny the organization of the company ; 6 nor may the maker be 
heard to say that the notes were given in advance without any in- 
surance therefor, 7 and insolvency before the expiration of the policy 
will constitute no defense to an action on a premium note. 8 If the 
policy is void ab initio, the premium notes cannot be collected. 9 In 
an action brought by the subordinate lodges of the Independent 
Order of Odd Fellows in Kansas against the grand lodge of such 
order in that state, it appeared that an assessment had been made 
by the grand lodge of Kansas upon these subordinate lodges, for 

20 Demings v. Supreme Lodge v. Hill, 42 Barb. (N. Y.) 651 ; Brown- 

Knights of Pythias, 131 N. Y. 522, er v. Appleby, 1 Sand. (N. Y.) 158:, 

30 N. E. 572, 43 N. Y. St. Rep. 872, Browner v. Hill, 1 Sand. (N. Y.) 

reversing 60 Hun, 350, 38 N. Y. St. 629; Dettra v. Kestner, 147 Pa. St. 

Rep. 979, 14 N. Y. Supp. 834. 566, 572, 23 Atl. 889. As to estoppel 

1 People's Ins. Co. v. Allen, 10 generally to deny illegality of act of 
Grav (76 Mass.) 297. corporation in excess of the charter 

2 Williams v. German Mutual Fire or the legality of its corporate exist- 
Ins. Co. 68 111. 387 ; Susquehanna ence, see 2 Morawetz on Private Cor- 
Mutual Fire Ins. Co. v. Gackenbach, porations (2d ed.) sees. 692, 750, 774, 
115 Pa. St. 492, 9 Atl. 90. 778 note. 

3 Williams v. German Mutual Fire 7 Browner v. Appleby, 1 Sand. (N. 
Ins. Co. 68 111. 387. Y.) 158; Brown v. Crooke, 4 N. Y. 

4 Phoenix Mutual Fire Ins. Co. of 51. 

Cincinnati v. Bowersox, 6 Ohio (C. 8 Sterling v. Mercantile Mutual 

C.) 1; Dial v. Vallev Mutual Life Ins. Co. 32 Pa. St. 75, 72 Am. Dec. 

Assoc. 29 S. C. 560, 8 S. E. 27. 773. 

5 Trumbull Countv Mutual Fire 9 Frost v. Saratoga Mutual Ins. ( !o. 
Ins. Co. v. Horner, 17 Ohio, 407. 5 Denio (N. Y.) 154; Bersch v. Sin- 

6 Citizens' Mutual Ins. Co. v. Sort- issippi Ins. Co. 28 Ind. 64. 
well, 8 Allen (90 Mass.) 217; Sands 

2451 



311 JOYCE ON |\S[ K.WfK 

the purpose < f founding a home fur the orphans of deceased Odd 
Fellows. Both parties recognized the sovereign grand Lodge of the 
United States as having full legislative and judicial power in all 
mallei-- relating to the order, and that an appeal lay to this lodge 
from a decision of the grand lodge. The plaintiffs asked for an 
injunction of this assessment, but the court refused it. no appeal to 
the sovereign Lodge having been taken, and this action of the court 
was held no error. 10 It is held that the maker of a premium note 
may defend an action on the same, on the ground of fraud or false 
representations in inducing him to enter into the contract. 11 But 
such hats constitute no defense to an action by the receiver to re- 
cover assessments where members have joined thereafter, and so 
even though the fraud is not discovered until after the appointmenl 
of the receiver; it being held that the rights of innocent members 
having intervened, it was necessary to their protection that the 
action be sustained: 12 and the same decision was uiven in another 
case under substantially the same facts, with the addition, however, 
that the member knowing of said facts had held his policies and 
slept on his rights until the appointment of trustees to wind up the 
company's affairs. 13 But if the representations were made when 
the note was uiven in order to obtain it, they constitute a defense, 1 * 
and the insured may not show that he had no insurable interest 
in the property in an action on the deposit note for an assessment 
levied, where said note acknowdedges the receipt of a policy. 15 
Where a decree was given against a mutual benefit society ordering 
the officers of such society to levy an assessment adjudged due from 
defendant to plaintiff, the fact that such officers were not parties to 
the action is not a ground for complaint on the part of the defend- 
ant, since it adds nothing to the effect of the decree. 16 In Pennsyl- 
vania, if the by-laws are not attached to the policy, it does not ap- 
pear what are legal assessments, and a failure to pay assessments 
due operates as a forfeiture so that the assured may in such case 
recover, although it is alleged that an assessment was due from 
assured at the time of the loss. 17 

10 Reno Lodge No. 99 of Hutchin- 409, 71 Am. Dec. 602. See § 1256 
son v. Grand Lodge of Kansas, 54 herein. 

Kan. 7::, 37 Pae. 1003, 26 L.R.A. 98. 15 New England Mutual Fire Ins. 

11 Whitman v. Messner, 34 Ind. 487. Co. v. Belknap, 9 Cush. (63 Mass,) 
18 Dettra v. Kestner, 117 Pa. St. 140. 

506, 572, 23 Atl. 889; Fogg v. Pew, 16 Prader v. National Masonic Ac- 

10 Gray (76 Mass.) 409, 71 Am. Dec. cident Assoc. 95 Iowa, 149, 63 N. W. 

662. 601. 

13 M;insfield v. Cincinnati Ice Co. w Haverstick v. Pennsylvania Twp. 
28 Week. L. Ball. 113, 11 Ohio Dec. Mutual Fire Ins. Assoc. 156 Pa. St. 
617. 333, 27 Atl. 245. 

14 Fogg v. Pew, 10 Gray (76 Mass. ) 

2152 



ASSESSMENTS AND DUES 



§ L312 



§ 1312. Statute of Limitations: assessments. — In cases of assess- 
ments on premium or deposit notes, the agreement being to pay 
the amount required and when required, the Statute of Limitation 
does not commence to run until the date of levying an assessment. 18 
And although an assessment to the full amount of the note has 
been made, the statute runs from the time the same becomes due 
and payable. 19 



18 Bigelow v. Libby, 117 Mass. 35!) ; insurance company, see note in 1 

Hope Mutual Ins. Co. v. Weed, 28 L.R.A.(N.S.) 914. 
Conn. 51. 19 Sands v. Lillienthal, 46 N. Y. 

On when statute of limitations be- 541. See also Smith v. Bell, 107 Pa. 

gins to run against unpaid balance on St. 352. 
premium or "stock" notes of mutual 

2453 



CHAPTKli XLIII. 



NOTICE: PREMIUMS, ASSESSMENTS, AND DUES. 

§ 1320. When notice must be given: generally. 

§ 1321. When notice need not be given: generally. 

§ 1321a. Notice necessary when insured entitled to profits or reduction of 

premiums. 
§ 1322. Failure to give written notice: tender unnecessary. 
§ 1323. Statutory notice. 

§ 1324. Stipulation contrary to statute requiring notice: waiver. 
§ 1324a. Waiver of notice in other cases. 
§ 1325. Constitutionality of statute requiring notice. 
§ 132f>a. Statutory notice: place of contract. 
§ 1325b. Statutory notice : effect of repeal of statute. 
§ 132G. To what class of policies New York and other statutes apply. 
§ 1326a. Same subject : paid-up policy. 
§ 1327. Stipulation in guaranty fund note as to notice. 

Sufficiency of notice. 

Sufficiency of statutory notice. 

Authorities holding notice sufficient. 

Right to notice: effect of subsequently enacted by-law. 

To whom notice should be given. 

Notice to assignee who had contracted to pay assessments: liabil- 
ity of assignee for failure to pay same. 

Cases holding that usage to send notice necessitates giving notice. 

Authorities holding the contrary doctrine. 

Same subject: conclusion. 

Personal notice: whether notice must be actually received. 

Service by mail. 

Same subject: validity of provisions as to. 
§ 1336b. Same subject: last known address: change of address. 
§ 1337. Notice wrongly addressed. 
§ 1338. Notice by publication. 

§ 1338a. Same subject : validity of provisions as to. 
§ 1339. Computation of time. 

§ 1320. When notice must be given: generally. — Tn life insur- 
ance the continuance of the contract is generally made dependent 

2454 



§ 1328. 


§ 1329. 


§ 1330. 


§ 1330a. 


§ 1331. 


% 1331a. 


§ 1332. 


§ 1333. 


§ 1334. 


§ 1335. 


§ 1336. 


§ 1336a 



NOTICE 



§ 1320 



upon the payment at stipulated times of a premium which is fixed 
and certain, and the amount of which is known by the insured, 
so that unless the contract so provides, or notice be required by 
law or usage, or a course of dealing,* no notice is necessary. But it 
is usually conditioned that notice of assessments shall be given, or 
the plan of insurance may be such that the assured cannot know 
the amount he will be called upon to pay unless notified thereof. 
If, however, the contract provides for notice of the time of pay- 
ment of the premium or of the assessment or of dues, such notice 
is a condition precedent to the exercise of the company's right to 
claim a forfeiture or to suspend a member for nonpayment. 20 

20 United States. — Thompson v. v. Supreme Tent Knights of Macca- 
Knickerbocker Life Ins. Co. 104 U. bees of the World, 140 Mo. App. 76, 
S. 252, 26 L. ed. 765 (failure to give 119 S. W. 514 (notice of suspension 
notice no excuse for nonpayment necessary) ; Siebert v. Supreme 
notwithstanding custom to give no- Council Order of Chosen Friends, 23 
tice) ; Union Mutual Life Ins. Co. v. Mo. App. 268. 

Mowry, 96 U. S. 544, 24 L. ed. 674 New Jersey.— Supreme Assembly 
(policy stipulation for forfeiture for Royal Society of Good Fellows v. Mc- 
nonpayment of premium on day spec- Donald, 59 N. J. L. 248, 35 Atl. 1061 
ified ; promise that if person will take (notice in mode prescribed must be 
out insurance he will be notified wheji given member of benevolent society). 
to pav annual premiums does not New York. — Wachtel v. Benevolent 
estop "insurer from forfeiture for Soc. 84 N. Y. 28, 38 Am. Rep. 478; 
nonpayment when due for policy ex- Meeder v. Provident Savings Life 
presses final agreement) ; Hall v. Su- Assur. Soc. 68 N. Y. Supp. 518, 58 
preme Lodge Knights of Honor, 24 App. Div. 80 ; Ellis v. National Prov- 
Fed. 250. ident Union, 63 N. Y. Supp. 1012, 50 

Arkansas. — Haynes v. Masonic App. Div. 255. 
Benefit Assoc. 98 Ark. 421, 136 S. W. Ohio.— Union Central Life Ins. Co. 
187. v. Pottker, 33 -Ohio St. 459, 31 Am. 

Connecticut. — Lewis v. Phoenix Rep. 555; Robert v. New England 
Mutual Life Ins. Co. 44 Conn. 72. Mutual Life Ins. Co. 1 Disn. (Ohio) 

Georgia. — Locomotive Engineers' 355, 12 Ohio Dec. 668, aff'd 2 Disn. 
Mutual Life & Accident Ins. Assoc, v. 106, 13 Ohio Dec. 66. 
Bobo, 8 Ga. App. 149, 68 S. E. 842. Pennsylvania.— Smith v. National 

Illinois.— Supreme Lodge Knights Life Ins. Co. 103 Pa. St. 117; Grand 
of Honor v. Dalberg, 138 111. 508, 28 Mutual Life Ins. Co. v. New York 
N. E. 785. Mutual Life Ins. Co. 97 Pa. St. 15; 

Indiana.— Supreme Lodge Knights Columbia Ins. Co. v. Buckley, 83 Pa. 
of Honor v. Johnson, 78 Ind. 110. St. 293, 298, 24 Am. Rep. 172. 

Iowa. — Mandego v. Continental Tennessee. — Hartford Life Ins. Co. 
Mutual Assoc. 64 Iowa, 134, 17 N. v. Hyde, 101 Tenn. 396, 48 S. W. 968 
W. 656, 19 N. W. 877. (notice necessary to enable insured 

Michigan. — Miner v. Farmers' Mu- to know amount payable), 
tual Fire Ins. Co. 153 Mich. 594, 117 England. — See Bell v. Hudson's 
N. W. 211. Bay, 30 Canadian L. T. 100, 11 W. 

Missouri. — Bange v. Supreme L. R. 633. 
Council Legion of Honor, 153 Mo. See also cases cited throughout 
App. 154, 132 S. W. 276; Meisenbach this section and §§ 1103 et seq. (pre- 

2455 



§ 1320 JOYCE ON [NSURANCE 

Thus, the notice prescribed by the charter or by-Laws must be 
ui\<ii. 1 .iii.l [f the !'\ laws provide that notice of annual dues 
shall be given the member a certain number of days before they 
become due, such notice is necessary to establish a forfeiture, even 
though the certificate provides for forfeiture. 2 And the notice must 
be reasonably in accord with the provisions of the contract, and 
the company must notify the member with reasonable certainty 
what he must do within the time specified for payment, for the 
party is entitled to such notice as his contract calls for. and a for- 
feiture cannot be based upon a notice of claims for dues in advance 
contrary to the terms of the agreement. 3 

Notice of assessment should lie given when made, and not before 4 
unless so expressly provided for by the articles of incorporation and 
by-laws. 5 It is held, however, in New York that notice may be 
given in advance of the time when the premium becomes due. 6 

The fact that the assessment has been legally and properly made 
cannot aid the company to claim a forfeiture if it has neglected 
to give notice if required. 7 Again, instructions by an insurer that 
premiums musl he paid at the office, and that due notice will be 
given of the day when due. will prevent forfeiture for nonpayment 
unless notice has been given. 8 And insured does not cease to be a 
member of the association by reason of his failure to pay an as- 
sessment, which will become due thirty days after notice, and such 
notice is not given, as the assessment does not become due. 9 The 
stipulation in the contract may be such as to require notice by the 
secretary, 10 or by the financial secretary of each subordinate coun- 
cil ; n and actual notice of an assessment may be required under 

miums) ; §§ 1206 et seq. (notes for 5 Corev v. Sherman, 96 Iowa, 114, 

premiums, etc.) ; §§ 1261 et seq. (as- 32 L.R.A. 490, 64 X. W. 828. 

sessments). 8 Phelan v. Northwestern Mutual 

On conflict of laws as to notice of Life Ins. Co*. 42 Hun (N. Y.) 419. 

premiums, see notes in 63 L.R.A. 862, But see s. c. 113 N. Y. 147, 10 Am. 

and 52 L.R.A. (N.S.) 283. St. Rep. 441, 20 N. E. 827. 

l Pulford v. Fire Dept. of Detroit, 7 Frey v. Mutual Fire Ins. Co. of 

31 Mich. 458; Supreme Lodge the County of Wellington, 43 U. C. 

Knights of Honor v. Dalberg, 138 Q- •?■ 102 - 

III 508 ''8 N E 785 "Hemlem v. Imperial Life Ins. Co. 

"GarretsonV Equitable Mutual ^ 1 ^ du 2 $°> 25 LRA - G27 ' 59 K 
Life & Endowment Assoc. 93 Iowa, a at 1 i t> -n i t -j> a 

ac\o a-i v w (.-•) q t\t *. i r Mutual Reserve Fund Life Assoc. 

"- 61 N. W. 952. See Mutual En- v Hamli m v s _ , () - ... L d 

•loument Assessment Assoc, v. Es- 167, 11 Sup. Ct. 614. 

Se a ( ™\ , , f 63 ' 10 1>>:l1 ^ v - Detroit Mutual Life Co. 

3 Mutual Endowment Assessment 5] Midi. 587 17 N \V 67 

Assoc, v. Essender, 59 Md. 463. "Bridges'v. National Union, 73 

4 Bangs v. Mcintosh, 23 Barb. (N. Minn. 186. 76 N. \V. 270, 28 Ins L 
Y.) 591. .1. 388. 

2456 



NOTICE § 1320 

the articles of association, even though a by-law provides for notice 
by publication. 12 And if the constitution makes nonpayment 
within a specified time to operate of itself as a forfeiture, notice of 
death assessments must be given. 13 So where notice is* required to 
be given the local subordinate lodge, it must be given as provided, 
and the members must be notified by the lodge, for mere notice to 
such local agents is not constructive notice to the members. 14 A 
member may be entitled to a notice from both the local and general 
secretary before a forfeiture can be declared if the by-law so pro- 
vides, expressly or by construction. 15 And notice of intended sus- 
pension for nonpayment of dues or assessments is necessary. 16 So 
failure to pay assessments will not subject a member of a mutual* 
benefit society to a suspension without notice of the arrearage, where 
the by-laws require each member to be notified as to arrears. 17 And 
notice of assessment must be given where contract so provides not- 
withstanding the member has knowledge of the assessment. 18 

If the amount of the premium is uncertain on account of divi- 
dends, and the insured is dependent upon notice for knowledge of 
the sum due, which notice the company has been accustomed to 
give, or if the times and amounts of assessments depend upon the 
mortality of members, or the amount assessable for a loss is un- 
certain, an obligation rests upon the company to give notice as a 
condition precedent to forfeiture or suspension, or the depriving a 
member of good standing, and the failure to pay through the fault 
or otherwise of those obligated to send notice, does not affect the 
holder's or member's rights. 19 

12 Schmidt v. German Mutual Ins. Catholic Knights of America, 95 Mo. 
Co. of Indiana, 4 Ind. App. 340, 30 App. 233, 68 S. W. 949. See also 
N. E. 939 ; Supreme Lodge Knights Bradford v. Mutual Fire Ins. Co. 112 
of Honor v. Dalberg, 138 111. 508, 28 Iowa, 495, 84 N. W. 693. 

N. E. 785. n Murphy v. Independent Order 

13 Scheufler v. Grand Lodge An- of the Sons & Daughters of Jacob of 
cient Order United Workmen, 45 America, 77 Miss. 830, 50 L.R.A. Ill, 
Minn. 256, 20 Ins. L. J. 241, 47 N. 27 So. 624; Lamarsh v. L'Union St. 
"W. 799. Jean Baptiste De Nashua, 68 N. H. 

14 Hall v. Supreme Lodge Knights 229, 38 Atl. 1045. See also Schafer 
of Honor, 24 Fed. 450; Covle v. Ken- v. United Brotherhood of Carpenters, 
tuckv Grangers' Mutual Benefit As- 22 Misc. 363, 49 N. Y. Supp. 151; 
soc. 8 Ky. Law Rep. 604, 2 S. W. Horgan v. Metropolitan Mutual Aid 
676. Assoc. 202 Mass. 524, 88 N. E. 890. 

15 Payn v. Mutual Relief Soc. 17 18 Hannum v. Waddell, 135 Mo. 

Abb. N. C. (N. Y.) 53, 6 N. Y. St. 153, 36 S. W. 616. 

Rep. 366. 19 United States. — Phoenix Life Ins. 

16 Meisenbach v. Supreme Tent, Co. v. Foster, 106 U. S. 30, 27 L. ed. 

Knio-hts of the Maccabees of the 65, 1 Sup. Ct. 18; New York Life 

World, 140 Mo. App. 76, 119 S. W. Ins. Co. v. Eggleston, 96 U. S. 572, 

514; Seehorn v. Supreme Council, 24 L. ed. 841. 

2457 



§ 1320 JOYCE ON [NSURAN< E 

Where an agent of an accident insurance company solicit.- an 
ignoranl negro employed as extra porter by a railroad company to 
take insurance; and. after explaining the object and benefit of 
such course, is informed regarding the nature of the porter's em- 
ployment and that he has not money enough to take a policy. 
whereupon he oilers to take an order on the railroad company 
for the amount of the premium, to he paid out of the porter's 
wages, winch oiler is accepted and the policy delivered without 
being read by the porter, who can scarcely read anything him- 
self — before the company can forfeit the policy for nonpayment 
of premium, in case it cannot realize on the order, it must give 
the insured notice of its nonpayment. 20 

Notice of an assessment is a condition precedent to an action, 1 
and the burden is upon insurer to show that notice of an assess- 
ment was given assured, 2 and it must be shown that the required 
notice was given in the prescribed form. 3 So when notice is a 
condition precedent to payment of an assessment on time, its va- 
lidity must be affirmatively alleged and proven; an allegation that 
legal notice was duly given is insufficient. 4 

Illinois.— Covenant Mutual Benefit dent Ins. Co. 89 Tenn. 427, 10 L.R.A. 
Soc. v. Spies, 114 111. 463, 2 N. E. 534, 14 S. W. 929. See § 1143 here- 
482. in. 

Iowa.— Mayer v. Mutual Life Ins. 1 Williams v. Babcock, 25 Barb. 
Co. 38 Iowa, 304, 18 Am. Rep. 34. (N. Y.) 109; Columbia Ins. Co. v. 

Michigan. — Castner v. Farmers' Buckley, 83 Pa. St. 293, 24 Am. Rep. 
Ins. Co. 50 Mich. 273, 15 N. W. 452. 172. 

Minnesota. — Gellatly v. Mutual 2 Mutual Life Industrial Assoc, v. 
Benefit Soc. 27 Minn. 215, G N. W. Scott, 170 Ala. 420, 54 So. 182. 
527. 3 Doggett v. United Order of Gold- 

Missouri.—Agnew v. Ancient Or- en Cross, 126 N. Car. 477, 36 S. E. 
der United Workmen, 17 Mo. App. 26 ; Mutual Reserve Fund Life Assoc. 
254. v. Hamlin, 139 U. S. 297, 35 L. ed. 

New York. — Meyer v. Knicker- 167, 11 Sup. Ct. 614. Cited in Equi- 
bocker Life Ins. Co. 73 N. Y. 516, 29 table Life Assurance Soc. v. Nixon, 
Am. Rep. 200; Attorney General v. 81 Fed. 796, 800, 26 C. C. A. 624, 48 
Continental Life Ins. Co. 33 Hun (N. U. S. App. 482. See also Locomotive 
Y.) 138; Farrie v. Supreme Council Engineers Mutual Life & Accident 
Catholic Benevolent Legion, 47 Hun, Ins. Assoc, v. Bobo, 8 Ga. App. 1 19, 
639, 15 N. Y. St. Rep. 155, aff'd 120 68 S. E. 842. 
N. Y. 662, 24 N. E. 1104. 4 Coyle v. Kentucky Grangers' Mu 

Ohio. — Manhattan Life Ins. Co. v. tual Benefit Assoc. 8 Ky. Law Rep. 
Smith, 44 Ohio St. 156, 58 Am. Rep. 604, 2 S. W. 676. In this case the 
806, 5 N. E. 417; Union Central Life appellee alleged that the appellant 
Ins. Co. v. Pottker, 33 Ohio St. 459, refused and tailed to pay the sum 
31 Am. Rep. 555. required within ten days after legal 

See also cases throughout this sec- notice of the death of one of the 
tion. members of the society, and there 

20 Eury v. Standard Life & Acci- were similar allegations in reference 

2458 



NOTICE § 1321 

§ 1321. When notice need not be given: generally. — As stated 
in the Last section, in life insurance contracts no notice is. as a 
rule, required, in the absence of some statute or usage or some 
contract stipulation, 5 even though the assured had no actual knowl- 
edge, owing to his neglecl to take the policy up from the corn- 
pan \'s agent, of a condition for forfeiture for nonpayment at a 
specified time of the premium. 6 Nor is notice required under a 
provision of the by-laws that nonpayment of dues within a speci- 
fied time ipso facto forfeits the insurance; 7 and such a condition 
is valid; 8 and unless notice is required of the times of payment, 
and amount of dues, no notice thereof need be given ; 9 nor is no- 
tice required as a condition precedent to suspension where it is so 
provided in the by-laws of a fraternal benefit association; 10 nor 
where it is stipulated in the policy that it shall be void without no- 
tice upon nonpayment at maturity of any note given for the 
premium; 11 nor where it is provided that nonpayment of any 
premium note or interest when due shall forfeit the insurance. 12 
And if the charter or by-laws require interest on the deposit notes 
of members to be paid annually on or before a certain time, and 
that no loss will be paid by the company while such interest re- 
mains due and unpaid, and there is nothing in the charter requir- 
ing notice of the amount due and the time when due, no notice 

to failure and refusal to pay other 6 Security Life Ins. Co. v. Gober, 

assessments, and the court said: 50 Ga. 404. 

"These allegations are not an aver- 'Knights of Columbus v._Bur- 

ment of facts. The answer should roughs' Beneficiary, 107 Va. 671, 17 

have averred affirmatively the facts L.R.A.(N.S.) 246 (annotated on ne- 

showing that the precedent condi- cessity of affirmative action in order 

tions above indicated to the liability to terminate rights of member in mut- 

of Coyle for the payment of his dues ual benefit society for nonpayment 

or assessments had been complied of dues), 60 S. E. 40; Burchard 

with by the society ; failing in this it v. Western Commercial Travelers' 

is clearly defective." See also Su- Assoc. 139 Mo. App. 606, 123 S. W. 

preme Lodge Knights of Honor v. 973. 

Dalberg, 138 111. 508, 28 N. E. 785; 8 Britt v. Sovereign Camp Wood- 

Siebert v. Chosen Friends, 28 Mo. men of the World, 153 Mo. App. 698, 

App. 272; Baxter v. Brooklyn Life 134 S. W. 1073. 

Ins. Co. 44 Hun (X. Y.) 184; Su- 9 Mutual Endowment Assessment 

preme Lodge Knights of Honor v. Assoc, v. Essenden, 59 Md. 463, per 

Johnson, 78 Ind. 110. the court. See cases under first note 

5 Security Life Ins. Co. v. Gober, to the last section. 

50 Ga. 404. See cases cited under 10 National Council of Knights & 

first note of the last section. Ladies of Security v. Burch, 126 111. 

On effect of custom to give insured App. 15. 

Dotic of maturity of premium where " Park v. Hilton, 21 Ky. L. Rep. 

insured is not otherwise entitled to 1319. 54 S. W. 949. 30 Ins. L. J. 70. 

notice, see note in 20 L.R.A.(X.S.) 12 Bohling v. Northwestern Life 

1037 Ins. Co. 117 Wis. 24. 93 X. W. 800. 

24.")!) 



>;>; L321a, L322 JOYCE <>\ [NSURANCE 

is required : 13 and if one by-law of a beneficiary association provides 
for forfeiture for nonpayment «>(' assessments and another by-law 
requires thai notice of assessments be given members, nevertheless 
notice i- held nol a condition precedenl : H nor need notice of pre- 
miums be given on a surrendered policy exchanged for anothei 
one; 18 nor is each member entitled to notice where assessments 
are a fixed, unvarying and permanent charge and the constitution 
provides thai masters of every lodge be notified of assessments by 
the secretary of the grand lodge. 16 

§ 1321a. Notice necessary when insured entitled to profits or re- 
duction of premiums. — Forfeiture of a life insurance policy for non- 
payment of premium when it becomes due, cannot be insisted upon 
when the assured is entitled to share in the profits, and therefore 
cannot know what amount he is required to pay, and no notice 
has been given him of what sum the insurer claims to be due from 
him, 17 So where insured is entitled to reductions on premiums 
and cannot know how much is due notice is a condition precedent 
to forfeiture. 18 And this applies where, under the contract insured 
is entitled to a deduction on dividends on the premium, 19 and such 
dividends are insufficient to meet a maturing obligation. 20 So no- 
tice is likewise required in case of a participating policy where the 
custom of the parties had been to apply the dividends on premiums, 
and, the amount thereof being uncertain, to furnish insured with 
an annual statement of the amount required to renew the policy. 1 

§ 1322. Failure to give written notice: tender unnecessary. — If 
a written notice by the insurer's president states that notice will be 
given of the time when premiums will be due, and no notice is 
given, a tender of premiums due after the surrender of a policy 
fraudulently obtained is not necessary under an action to revive the 
policy. 2 

18 Mutual Fire Ins. Co. v. Miller 19 Phoenix Insurance Co. (Phoenix 

Lodge, . r )S Md. 463. * Mutual Life Ins. Co.) v. Doster, 106 

"Chappie v. Sovereign Camp, U. S. 30, 1 Sup. Ct. 18, 27 L. ed. 65; 

Woodmen of the World, 64 Neb. 55, Home Life Ins. Co. v. Pierce, 75 111. 

89 N. W. 423. 426. 

15 Leonhard v. Provident Savings 20 Union Central Life Ins. Co. v. 

Life Assur. Soc. 130 Fed. 287, 64 C. Caldwell, 68 Ark. 505, 58 S. \Y. 355, 

C. A. 533. 30 Ins. L. J. 41. 

16 llavnes v. Masonic Benefit As- l Meyer v. Knickerbocker Life Ins. 

soe. 98 Ark. 421, L36 S. W. 187. Co. 78 N. Y. 516, 29 Am. Rep. 200. 

17 Eddy v. Phoenix Mutual Life 2 Heinlein v. Imperial Lite Ins. Co. 
Ins. Co. 65 N. H. 27, 23 Am. St. Rep. 101 Midi. 250, 25 L.I.'. A. 027, 45 Am. 
17. is Atl. 89. St. Rep. 409, 59 NT. W. 615. That 

18 Nail v. Providenl Savings Life tender is necessary when notice not 
Assur. Soc. — Tenn. Ch. — , 54 S. given. See Osborne v. Home Life 
W. 100. Ins. Co. 123 Cal. 610, 56 Pac. 616; 

2460 



NOTICE § 1323 

§ 1323. Statutory notice. — If the statute requires that the com 
pany give notice of the time of payment of premiums or assess- 
ments to the holders of policies or certificates, such notice must be 
given, and conformity with the provisions of the statute as to the 
kind of notice and the mode of service of the same is a condition 
precedent to the enforcement of a forfeiture for nonpayment. 3 
And if the company assures the holder of a policy issued before 
the passage of such an act that the notices required will lie given. 
compliance therewith is necessary, 4 and if the statute provides 

Baxter v. Brooklyn Life Ins. Co. 119 ments) Rev. Stat. Ont. c. 203, sec. 

N. Y. 450, 7 LR.A. 293, 23 N. E. 165. 

1048, 44 Hun, 184 ; Meyer v. Knieker- See the following nonforfeiture 

boeker Life Ins. Co. 73 N. Y. 516, 29 and notice statutes: Arizona, Rev. 

Am. Rep. 200. But compare Lone v. Stat. 1901, sec. 809, as am'd by act 

Mutual Life Ins. Co. 33 Wash. 577, March 21, 1907. 

74 Pac. 689. California. — Deering's Civ. Code, 

3 Salmon v. Farm Property Mutual 1903, sec. 450; Id. Appendix, p. 729, 

Ins. Assoc, of Iowa, 168 Iowa, 521, sec. 11. 

150 N. W. 680; Code Supp. 1913, Colorado.— Sess. Laws, 1907, c. 

1759m ; Marden v. Hotel Owners' Ins. 193, sec. 43. 

Co. 85 Iowa, 584, 39 Am. St. Rep. Illinois.— Rev. Stat. 1908, sec. 208u 

316, 52 N. W. 509; acts 18th Gen. (6). 

Assem. Iowa, c. 210 (case of assess- Iowa.— Code, sec. 1788, acts 18th 

ments) ; Baxter v. Brooklyn Life Ins. Gen. Assemb. c. 210, sees 1 2 

Co. 119 N. Y. 450, 44 Hun (N. Y.) Kansas.— See Gen. Stat. 1905, sec. 

184, 29 N. Y. St. Rep. 592, 23 N. E. 36 ^- c , . 1Qft0 an A oa 

1048; N. Y. Laws, 1877, c. 321 (re- f m ^^^^J^S^t^L 

i j . s ion i. • \ t>i i Louisiana. — Acts 19Uo, acts nos. 

pealed -see § 1324 herein) ; Phelan h L 1906 86 

v. Northwestern Mutual Life Ins. Co. g7 ' ^ 

113 N. Y. 147, 10 Am. St. Rep. 441, Maine.— Rev. Stat. 1903, c. 49, sec. 

42 Hun (N. Y.) 419, 20 N. E. 827; 101 

Laws N. Y. 1877, c. 321 (repealed, Massachusetts.— Acts & Res. 1907, 

see § 1324 herein) and see note 35 c 575^ see> 80, Rev. L. c. 118, sees, 

under § 1326 herein; Carter v. Brook- 47^ 48 (assessments by mutual fire in- 

lyn Life Ins. Co. 110 N. Y. 15, 17 N. surance companies). 

E. 396, 12 Cent. Rep. 756, N. Y. Michigan.— Pub. acts 1907, p. 253. 

Laws, 1876, c. 341 (repealed, see § Missouri. — Laws, 1903, p. 208. 

1324 herein) ; Auspitz v. Equitable Montana. — Rev. Codes, 1907, sec. 

Life Assur. Soc. of the U. S. 115 N. 4139. 

Y. Supp. 109 ; McDougal v. Provident Nevada. — Comp. Laws 1900, sec. 

Savings Life Assur. Soc. of New 953. 

York, 64 Hun (N. Y.) 515, 19 N. Y. New Jersey— -Laws 1907, p. 135. 

Supp. 481; Milwaukee Trust Co. v. Neiv York. — See § 1326 herein. 

Farmers' Mutual Fire Ins. Co. 115 Tennessee. — Acts 1907, p. 1531. 

Wis. 371, 91 N. W. 967 (assessment) Wisconsin. — Rev. Stat. 1898, sec. 

Wis. Rev. Stat. 1898, sec. 1935; Su- 1934 (assessments), 

preme Legion Select Knights of Can- 4 Carter v. Brooklyn Life Ins. Co. 

ada, In re: Cunningham's Case (Ont. 110 N. Y. 15, 17 N. E. 396, 12 Cent. 

C. A.) 18 Canadian L. T. 380 (assess- Rep. 756. 

2461 



§ 1323 JOYCE ON [NSURANCE 

that there shall be no forfeiture until thirty days after service of 
such notice the thirty days must be allowed. 6 

But statutory notice of maturity of ;i premium note is held 
not a prerequisite to forfeiting the policy when the note provides 
thai such policy shall be void for nonpayment of the note when 
due. 6 And when the prescribed statutory notice of a premium 
due is given it is not necessary to give notice also of the maturity 
of a note executed for the premium, 7 and this applies to a re- 
newal note taken in part payment of the premium. 8 If the policy 
provides for the payment of annual premiums, and also of mor- 
tality assessments, it is held that the statutory notice as a condition 
precedent to forfeiture applies only to premiums or interest payable 
at stated intervals, and not to mortality assessments. 9 Again, even 
though notice is not given under the New York statute, if the 
insured was in default in payment for over one year at the time 
of his death, recovery is precluded notwithstanding action is brought 
within the period limited for suing. 10 And the giving of the statu- 
tory notice does not aid the insurer where it has not attached a 
copy of the premium note to the policy as also required by statute. 11 
But where the statutory notice is not given of a premium owing 
at the time of the death of the insured, neither payment nor ten- 
der is required to warrant a recovery. 12 

It is held that the statute of New York of 1876, amended in 
1877, requiring notice of the times of payment of dues and pre- 
miums, does not apply to mutual benefit associations, 13 nor to poli- 
cies issued upon monthly or weekly instalments of premiums. 14 

50 it is decided that notice is a prerequisite to suspension of a 
member for nonpayment at maturity of a premium note given 
such a mutual fire association, even though the contract stipulates 

5 Phelan v. Northwestern Mutual Y.) 635; under Stats. N. Y. 1877, c. 

Life Ins. Co. 113 N. Y. 147, 10 Am. 321 (repealed, Hamilton's Stats. Rev. 

St. Rep. 441, 20 N. E. 827. See s. c. 1894, e. 600, sec. 1324, and note 35 

12 Hun (N. Y.) 419. under § 1326 herein). 

6 Bartholomew v. Security Mutual 10 Liesney v. Metropolitan Life Ins. 
Life Ins. Co. 124 N. Y. Supp. 917, Co. 151 N. Y. Supp. 1084, 166 App. 
140 App. Div. 88. Div. 625, rev'g 148 N. Y. Supp. 1057, 

7 O'Brien v. Union Central Life 86 Misc. Rep. 650. 

Ins. Co. 125 N. Y. Supp. 470, 140 " Robey v. State Ins. Co. 146 Iowa, 
App. Div. 362. 23, 124 N. W. 775, 39 Ins. L. J. 191. 

8 Banholzer v. New York Lite Ins. Code sees. 1727, 1741. 

Co. 74 Minn. 287, 77 N. W. 295, 78 12 Baxter v. Brooklyn Life Ins. Co. 

N. W. 244, 28 Ins. L. J. 193. Citing 119 N. Y. 450, 7 L.R.A. 293, 44 Hun 

Conway v. Phoenix Mutual Life Ins. (N. Y.) 184, 23 N. E. 1048. 

Co. 140 N. Y. 79, 35 N. E. 120. 13 Ronald v. Mutual Reserve Fund 

9 So held in Merriman v. Keystone Life Assoc. 132 N. Y. 378, 44 N. Y. 
Mutual Benefit Assoc. 138 N. Y. 116, St. Rep. 407, 30 N. E. 739. 

51 N. Y. St. Rep. 665, 63 Hun (N. "Merryman v. Keystone Mutual 

2462 



NOTICE § 1324 

for forfeiture for nonpaymenl .it maturity. 16 But it is also de- 
termined that a mutual insurance company, organized under a 
statute which expressly prohibits such companies from receiving 
premiums or making dividends, is no! required to give the notice 
called for by a, statute which provides that, in every instance, where 
a lire insurance company takes a note for the "premium" of any 
policy, such company shall not declare the policy forfeited or sus- 
pended for nonpayment of the note, without first giving a pre- 
scribed notice; and the failure of a mutual company to give such 
a notice is not material in any action on its policy. 16 

§ 1324. Stipulation contrary to statute requiring notice: waiver. 
— If the statute requires that notice of the accruing of premiums 
be given assured by the company, such statutory conditions rest 
on public or general policy, and cannot be waived by assured, even 
though for his benefit. 17 So in California it is held that if a stat- 
ute declares that no life insurance company shall have the power 
to declare forfeited or lapsed any policy by reason of nonpayment 
of premiums unless notice be given as required by statute, it is 
held that any contract stipulating to the contrary is void, since 
the statute indicates the legislative will that as a matter of public 
policy life insurance corporations shall be deprived of the power 
to declare forfeited policies of insurance for the nonpayment of 
premiums, except in the prescribed statutory mode, and a waiver 
on the part of assured cannot be held to confer a power which the 
statute has taken away. 18 So under another California decision a 
waiver of the statutory notice required by the law of a foreign 
state and a part of the contract, cannot be shown in aid of a for- 

Benefit Assoc. 63 Hun (N. Y.) 635, nothing in the statute to prevent the 

18 N. Y. Supp. 305, 44 N. Y. St. Rep. parties from abandoning the contract 

797. if thej' so desire. 

15 Bradford v. Mutual Fire Ins. As to stipulations contrary to stat- 
Co. 112 Iowa, 495, 84 N. W. 693; utes, see §§ 176, 194 (g)/l94 (h) 
Acts 18th Gen. Assenib. c. 210, sees, herein, and as to assessments and 
1 2. agreements or provisions contrary to 

16 Beeman v. Farmers' Pioneer Mu- statute, see § 1255 herein. 

tual Insurance Assoc. 104 Iowa, 83, 18 Griffith v. New York Life Ins. 

65 Am. St. Rep. 424, 73 N. W. 597. Co. 101 Cal. 627, 40 Am. St. Rep. 96, 

17 So held in Phinney v. Mutual 36 Pac. 113. But see Laws N. Y. 
Life Ins. Co. (U. S. C. C. 1895) 67 1885, c. 328, sec. 1, which provides 
Fed. 493. See Mutual Life Ins. Co. for waiver in certain classes of pol- 
v. Phinney, 178 U. S. 327, 44 L. ed. icies. See § 1326 and notes herein. 

.1088, 20 Sup. Ct. 906, where the con- As to limitation upon power of fra- 
tract was for the purposes of the ternal benefit societies to waive pro- 
case held made under and governed visions of the society's laws, see N. Y. 
by the laws of New York. Although Ins. L. c. 33, sec. 239 added by L. 
issued t"> a resident of another state, 1911, c. 198. 
it was also decided that there was 

2463 



§ 1324 JOYCE ON INSURANCE 

feiture. 19 And if the eontracl and all matters relating to its per- 
formance are governed by the laws of the state of New York, then 
the fad that the application was made and signed and delivered 
in another state <\<>i'* not relea.-e the insurer from the obligation 
to give -.iid statutory notice before declaring a forfeiture for non- 
payment of premiums, even though the policy contains a waiver 
of any other notice than that under the terms of the policy. 20 
So oral statements by an insured, recognizing the forfeiture of his 
policies, and refusing to continue them, when made without any 
consideration, will not he sufficient to annul the express provisions 
of a statute prohibiting a forfeiture for nonpayment of premiums 
without the giving of specified notice. 1 And where assured waived 
notice but shortly thereafter the statute came into force requiring 
notice to assured and the transferee such waiver cannot be invoked 
to the prejudice of such assignee to the extent of relieving the in- 
surer from continuing to send notices as it had been accustomed to 
do. 2 Where, .however, the contract is governed by the laws of a 
foreign state disallowing forfeiture without a premium notice, the 
assured, by i*3glect to pay premiums, long continued after the 
statutory period before the expiration of which the policy cannot 
be forfeited without such premium notice, may effect an abandon- 
ment of his contract and so preclude any right to the protection 
to which he might otherwise have been entitled under said statute. 3 
But as we have stated under a prior section, it is decided in the 
Federal Supreme Court that although it is stipulated that the 
contract shall be held and construed to have been made in a for- 
eign state, nevertheless if the policy does not expressly refer to the 
premium notice law of that state forbidding a waiver of the statu- 
tory notice, and does contain a provision which is in effect a waiver 
of notice, such policy stipulation as to waiver controls. 4 Under 

19 Osborne y. Home Life Ins. Co. 131 Mo. App. 417, 111 S. W. 604; 

123 Cal. 610, 56 Pac. 616; Harrigan See Lone v. Mutual Life Ins. Co. 33 

v. Home Life Ins. Co. 128 Cal. 531, Wash. 577, 74 Pac. 689. 
58 Pae. 180, 61 Pac. 99. 4 Mutual Life Ins. Co. of N. Y. v. 

20 Phinncv v. Mutual Life Ins. Co. Hill, 193 U. S. 551, 48 L. ed. 788, 24 

(U. S. C. C. 1895) 67 Fed. 493. Sup. Ct. 538, 33 Ins. L. J. 550 (con- 

1 Mutual Life Ins. Co. v. Dinglev, sidered also under § 132.1a herein). 
100 Fed. 408, 40 C. C. A. 459, 49 The court per Mr. Justice Brewer, 
I j. I. '.A. 132, rev'd on other grounds, said: "The ordinary rule in respect 
184 U. S. 695, 46 L. ed. 763, 22 Sup. to the construction of contracts is 
Ct. 937. this: that where there are two clauses' 

2 Klgutter v. Mutual Reserve Fund in any respect conflicting, that which 
Life Assoc. 52 La. Ann. 733, 28 So. is specially directed to a particular 
289, 29 Ins. L. J. 926; N. Y. L. 1892, matter controls in respect thereto 
c. (»!<(), sec. 92. over one which is general in its terms, 

3 McGeehan v. Mutual Life Ins. Co. although within its general terms the 

2464 



NOTICE 



§ 1324a 



another decision in the same court, however, it was expressly 
stipulated that the contract should be governed by the laws of New 
York relating to life insurance and also that nonpayment of the 
premiums when due should render the policy null and void and 
that notice should be given assured but only as a favor and not of 
right and the notice having been given the case turned upon wheth- 
er the notice sufficiently complied with the statute and it was 
held that a forfeiture was not prevented by reason of such claimed 
insufficiency under the circumstances of the case. 5 Again, it is 
held that a provision of a policy issued by a corporation of one 
state to a resident of another state, that notice as to payment of 
premiums, as stated in the policy, is given and accepted by its 
delivery, and "any further notice required by any statute is waived," 
expressly makes inapplicable a statute of the state where the in- 
surer is domiciled, requiring certain notices to be given before 
policies can be forfeited for nonpayment of premium. 6 

§ 1324a. Waiver of notice in other cases. — The delivery to and 
acceptance by assured of a policy constitute a waiver of notice 
where it is so stipulated therein. 7 So formal defects in the no- 
tice of assessment are waived by failure to object thereto when it 

particular may be included. Because, as well as statutes : Bock v. Perkins, 

when the parties express themselves 139 U. S. 628, 35 L. ed. 314, 11 Sup. 

in reference to a particular matter, Ct. 677; and cases cited; Rodgers v. 

the attention is directed to that, and United States, 185 U. S. 83, 46 L. ed. 

it must be assumed that it expresses 816, 22 Sup. Ct. 582, and eases cited; 

their intent; whereas a reference to Winebrenner v. Forney, 189 U. S. 

some general matter, within which the 148, 47 L. ed. 754, 23 Sup. Ct. 590 ; 

particular may be included, does not Sedgw. Stat. & Const. Law (2d ed.) 

necessarily indicate that the parties 360 and note; 2 Parsons Contr. (6th 

had the particular matter in thought, ed.) p. 501 and note." 
Here, when the parties stipulate that An earlier decision in the Federal 

no other notice shall be required, at- court holds that the statute is a part 

tention is directed to the particular of the contract and that there can be 

matter of notice. When the stipula- no waiver contrary to its provisions, 

tion is that the contract shall be con- Equitable Life Assurance Soc. v. 

strued to have been made in New Trimble, 83 Fed. 85, 27 C. C. A. 404. 
York, no particular statute is referred 5 Nederland Life Ins. Co. v. Mein- 

to, and the attention may not be ert, 199 U. S. 171, 50 L. ed. 139, 26 

directed to the matter of notice or Sup. Ct. 115, rev'g 127 Fed. 651, 62 

any other special feature of New C. C. A. 377, 36 Chic. Leg. N. 207, 

York law. The special controlled the 33 Ins. L. J. 673. 
general ; that which must have been 6 Metropolitan Life Ins. Co. v. 

in the minds of the contracting par- Bradley, 98 Tex. 230, 68 L.R.A. 509, 

ties controls that which may not have 82 S. W. 1031. 

been, although included within the 7 Allison's Exctr's v. Fidelity Mu- 

language of the latter stipulation, tual Life Ins. Co. 32 Ky. L. 1025, 107 

This is the general rule in the con- S. W. 730. 
struction of all documents, — contracts 

Joyce Ins. Vol. III.— 155. 2465 



§§ 1325, 1325a JOYCE OX INSURANCE 

is received. 8 If. however, the duty imposed upon a member of an 
association to inform the company of his failure to receive notice 
of an assessment has not been expressly or impliedly made a con- 
dition of the contract, his failure to give such information cannot 
excuse the failure of the association to give the required notice. 9 
Again, where the duty to give notice rests only upon custom the 
assured waive- his right to notice by mail by a notice of the order 
of his refusal to pa> assessments and of his intent to give up his 
membership. 10 But a waiver of insured's right to be served at his 
residence with notice of assessment must be shown to sustain a de- 
fense of nonpayment. 11 

The invalidity of a notice of assessment is not waived by assured 
by an offer, under protest, to pay the same. 12 Nor does a member 
by failing to pay an assessment, of which notice was not given 
him though he was entitled to it, waive any rights as such mem- 
ber by seeking reinstatement as such upon a claim by the asso- 
ciation that he had forfeited such rights by the failure to pay. 13 
Nor is there any presumption that a member of a benefit associa- 
tion has acquiesced in his suspension without notice, and aban- 
doned his rights under his contract. 14 

§ 1325. Constitutionality of statute requiring notice. — The statu- 
tory requirement imposed upon insurance companies that they give 
notice of the time of the accruing of premiums does not violate the 
constitution of the United States, as not affording equal protection 
of the laws to companies of the state of enactment of said statute, 
or to companies of other states doing business in said state. 15 

§ 1325a. Statutory notice: Place of contract. — While we have 
considered elsewhere the rules of construction and the governing 
law as to the place of contract 16 the following is pertinent here. 
It is decided in a Federal court that the insurance is forfeited for 

8 Cronin v. Supreme Council of Mich. 471, 4 Det. L. News, 1212, 74 
Royal League, 101 111. App. 479. See N. W. 725. 

§ 1384 herein. 13 Mutual Reserve Fund Life As- 

9 Mutual Reserve Fund Life Assoc, soe. v. Hamlin, 139 U. S. 297, 35 L. 
v. Hamlin, 139 U. S. 297, 35 L. ed. ed. 167, 11 Sup. Ct, Rep. 614. ( ited 
L67, 1 1 Sup. Ct, 614. Cited in Hart- in Supreme Council American Legion 
ford Life Ins. Co. v. Hyde, 101 Tenn. of Honor v. Orcutt, 119 Fed. 682, 
396, 102, s S. W. 968*. 687, 56 C. C. A. 294, 299; Columbus 

10 Supreme Council Catholic Mutual Life Assoc, v. Hanrahan, 98 
Knights of America v. Winter's 111. App. 22, 24. 

Admr. 108 Ky. 141, 55 S. W. 908, 29 14 Meisenhnch v. Supremo Tent. 

Ins. L. J. 403. Knights of Maccabees of the World. 

11 Wallace v. Fraternal Mystic Cir- 140 Mo. App. 76, 119 S. W. 514. 
cle, 127 Mich. 387, 86 N". W. 853. "Phinney v. Mutual Life Ins. Co. 

"Dowling v. Knighl Templars & (U. S. C. C.) 67 Fed. 193. 
Masons' Life Indemnity Co. 116 16 See §§ 225 et seq. herein. 

2466 



NOTICE § 1325a 

nonpayment of premiums due for over a year where the policy 
so stipulates and that the New York statute requiring notice does 
not apply where an application is made in another state and the 
policy delivered there although issued in New York and by its 
terms made payable in that state and although the application 
also provides that it is subject to the charter of the insurer and to 
the laws of New York. 17 This decision was declared to be based 
upon the principle governing a Federal Supreme Court case which 
is substantially to the same effect and also decides that the New 
York statute is applicable only to business transactions within that 
state. 18 A still later decision of the same court holds to this rule 
and determines that said statute has no extra-territorial effect ex- 
cept that parties contracting outside of said state may stipulate 
that its laws shall control unless in conflict with the laws of the 
state where the contract is made, or against its public policy, but 
that an express stipulation in the policy waiving notice is para- 
mount to an agreement that the contract shall be construed as a 
New York contract and to that extent limits the provisions of the 
New York law in reference to notice although it does not specially 
refer to said notice law and can, therefore, only be invoked because 
it is one of the statutes of that state applicable to insurance con- 
tracts. 19 So it is decided in Texas that a statute forbidding the 

17 Mutual Life Ins. Co. of New and 1890 had not been paid, the in- 
York v. Hathaway, 106 Fed. 815, 45 surance company was nevertheless in- 
C. C. A. 655, rev'g Hathaway v. Mu- debted to them for the full amount of 
tual Life Ins. Co. of New York (U. the policy and interest, bv reason of 
S. C. C.) 99 Fed. 531, 29 Ins. L. J. the fact that it had failed to give the 
325, N. Y. Laws 1877, as repealed bv notice of forfeiture prescribed by 
L. 1892, c. 690, am'd by act 1897. chapter 341, Laws 1876, as amended 
Contra: Equitable Life Assur. Soc. by chapter 321, Laws 1877, of the 
v. Trimble, 83 Fed. 85, 27 C. C. A. state of New York. The complaint 
404. set but a copy of the policy, alleged 

18 Mutual Life Ins. Co. of New the payment of the first annual pre- 
York v. Cohen, 179 U. S. 262, 45 L. mium, the death of the insured, arid 
ed. 181, 21 Sup. Ct. 106. On the au- the relationship of the plaintiffs to 
thority of this case Mutual Life Ins. the beneficiary. The defendant re- 
Cb. v. Dingley, 49 L.R.A. 132, 100 lied upon the nonpayment of the 
Fed. 408, 10 C. C. A. 459, is rev'd premiums other than the first, and an 
(mem.) 184 U. S. 695, 46 L. ed. 763, abandonment of the contract. A de- 
22 Sup. Ct. 937. murrer to these defenses was sus- 

19 Mutual Life Ins. Co. v. Hill, 193 tained and a judgment entered for 
U. S. 551, 48 L. ed. 788, 24 Sup. Ct. the plaintiffs, which was affirmed by 
538, 33 Ins. L. J. 550. "This action the court of appeals for the ninth 
was commenced in the circuit court circuit: 97 Fed. 263, 38 C. C. A. 150, 
of the United States for the district 49 L.R.A. 127. A writ of certiorari 
of Washington. The contention of was issued bv this court (176 U. S. 
the plaintiffs is that, although the an- 683, 44 L. ed. 638. 20 Sup. Ct. 1032) 
nual premiums for 1887, 1888, 1889 the judgment reversed, and the ease 

2467 



§ 1325a JOYCE ON INSURANCE 

forfeiture by local corporations of insurance policies for nonpay- 
ment of premiums, until a certain time after notice of the amount 
and date of payment has been mailed to the insured at his last 
known postoffice address, "in this state," does not apply to policies 
issued in other states, unless expressly made applicable by the 
terms of the policy, 20 but if the policy provides that it shall be 
governed by such foreign law the statutory notice must be given. 1 
So in Nebraska a contract of insurance entered into therein which 
contains no provision that the statute law of a foreign state as to 
premium notice shall govern does not necessitate such notice, as the 
statute has no extraterritorial force, 2 especially so where the policy 
is by its terms automatically forfeited by nonpayment of pre- 
miums. 8 So in Louisiana a statute of one state providing that no 
life insurance company doing business in that state, shall declare 
any policy lapsed or forfeited for nonpayment of premiums, ex- 
cept after special notice as provided therein, applies only to busi- 
ness transacted in that state and does not apply to a policy issued 
in that state to a citizen of another state where the policy is de- 
livered and the premium paid. 4 So in Washington the require- 
ments of the New York statute as to notice to assured before for- 
feiture can be declared for nonpayment of premiums under a life 
risk, only applies to New York companies doing business in that 
state, and not to said companies issuing policies in other states, 5 

remanded for further proceedings: v. Sears, 178 U. S. 348, 44 L. ed. 
178 U. S. 347, 44 L. ed. 1097, 20 Sup. 1096, 20 Sup. Ct. 912; Rosenplanter 
Ct. 914. An amended answer and a v. Provident Savings Life Assurance 
replication were then filed by leave Soc. 91 Fed. 728, aff'd 96 Fed. 721, 
of the circuit court. A trial was 37 C. C. A. 566, 46 L.R.A. 473. 
had before the court and a jury, 20 Metropolitan Life Ins. Co. v. 
which resulted in a verdict and judg- Bradley, 98 Tex. 230, 68 L.R.A. 509, 
ment for the plaintiffs. This judg- 82 S. W. 1031. 

meat was affirmed by the Court of 1 New York Life Ins. Co. v. Orlopp, 
Appeals (118 Fed. 708, 55 C. C. A. 25 Tex. Civ. App. 284, 61 S. W. 336. 
536) and the case w;is again brought 2 McElroy v. Metropolitan Life 
here on certiorari: 188 U. S. 742, 47 Ins. Co. 84 Neb. 866, 23 L.R.A. 
L. ed. 678, 23 Sup. Ct. 856." State- (N.S.) 968n, 122 N. W. 27. 
ment by Mr. Justice Brewer. See 3 Rye v. New York Life Ins. Co. 88 
Northwestern Mutual Life Ins. Co. v. Neb. 707, 130 N. W. 434, 40 Ins. L. 
McCue, 223 U. S. 234, 56 L. ed. 419, J. 910. 

32 Sup. Ct. 220, 38 L.R.A.(N.S.) 57; 4 Grevenig v. Washington Life Ins. 
Mutual Life Ins. Co. of N. Y. v. Co. 112 La. 879, 104 Am. St. Rep. 
Allen, 178 U. S. 351, 44 L. ed. 1098, 474, 36 So. 790. Compare Elgutter 
20 Sup. Ct. 913, rev'g 97 Fed. 985, 38 v. Mutual Reserve Fund Life Assoc. 
C. C. A. 696; Mutual Lite Ins. Co. 52 La. Ann. 1733, 28 So. 289, 29 Ins. 
of N. Y. v. Phinney, 178 U. S. 327, L. J. 926. 

44 L. ed. 1088, 20 Sup. Ct. 906, 29 5 Griesemer v. Mutual Life Ins. Co. 
Ins. L. J. 910; Mutual Life Ins. Co. 10 Wash. 202, 210, 38 Pac. 1031, 

2468 



NOTICE §§ 1325b, 132G 

nor under an Illinois decision does the New York statute apply to 
a policy issued on an application made in another state. 6 Under 
a Tennessee decision, however, the New York statute governs and 
becomes part of the contract, where the policy is issued in that state 
on the life of a resident of another state. 7 So in Minnesota a 
policy which stipulated that Hie contract should be deemed a New 
York contract and be construed according to the laws thereof, was so 
construed and the decisions of the highest courts of that state were 
held binding upon the parties. 8 It is also held in Missouri that the 
policy is a New York contract under an allegation that it was 
made there and that the laws of that state were a part of the con- 
tract which was governed thereby. 9 So in a California case the 
New York statute is construed and applied as a part of the con- 
tract. 10 

§ 1325b. Statutory notice: effect of repeal of statute. — A stat- 
utory requirement of a certain premium notice as a condition 
of forfeiting the policy for nonpayment, notwithstanding any 
stipulation to the contrary in the contract, does not become a part 
of the contract made by a policy issued while the statute is in 
force, so as to be operative after the statute is repealed, but the re- 
peal simply permits the enforcement of the contract according to 
its own terms and conditions. 11 

§ 1326. To what class of policies New York and other statutes 
apply. — The former New York statute providing for notice of ma- 

1034; Laws N. Y. 1877, c. 321 (re- tbat at all affects the question now 

pealed, see §§ 1323b, 1324, 1326 here- under consideration" that was wheth- 

i n ). er the "premium notice" applied tc« 

6 Rose v. Mutual Life Ins. Co. of certain notes. 

N. Y. 240 111. 45, 88 N. E. 204. Com- 9 McGeehan v. Mutual Life Ins. Co. 

pare Ihrig v. Mutual Life Ins. Co. of of New York, 131 Mo. App. 417, 111 

N. Y. — 111. — 35 Chic. Leg. N. 366, S. W. 604. 
26 Nat. Corp. Rep. 746. 10 Osborne v. Home Life Ins. Co„ 

7 Nail v. Provident Savings' Life 123 Cal. 610, 56 Pac. 616, N. Y. Law- 
Assurance Soc. — Tenn. Ch. — , 54 1877. See also Harrington v. Home 
S. YV. 109; N. Y. Laws 1877, p. 342. Life Ins. Co. 128 Cal. 531, 58 Pac. 
See Rosenplanter v. Provident Sav- 180. 

ings Life Assur. Soc. 91 Fed. 728, n Rosenplanter v. Provident Sav- 

aff'd 46 L.R.A. 473, 96 Fed. 721, 37 ings' Life Assur. Soc. 96 Fed. 721, 

CCA. 556. 37 C. C. A. 566, 46 L.R.A. 473, aff'e: 

8 Banholzer v. New York Life Ins. 91 Fed. 728 (N. Y. Stat, 1877, 1892). 

Co 74 Minn. 387, 77 N. W. 295, 78 Distinguished in Hathaway v. Mutual 

N. W. 244, 28 Ins. L. J. 193, under Life Ins. Co. of N. Y. 99 Fed. 534. 

N. Y. Ins. L. 1892, c. 690, sec. 92, 29 Ins. L. J. 325, which was reversed 

although the court says: "We have in Mutual Life Ins. Co. of N. . Y. v. 

compared the language of the two Hathaway, 106 Fed. 815, 45 C. C. 

acts" 1877, 1892, "and are unable to A. 655. 
discover any difference between them 

2469 



§ L326 



JOYCE ON INSURANCE 



turity of premiums as a condition precedent to forfeiture for non- 
payment thereof applied to policies issued by a company providing 
for the payment of a specified sum solely from the funds accumu- 
lated from payments of its insured, and thai if such accumula- 
tion is insufficient, then an assessment si la 11 he made on contracts 
in force, and that if the assessment fund and accumulations 
are insufficient to satisfy all claims, then a distribution pro rata 
shall be made. 12 The later statute of that state, winch provides 
against forfeiture within one year after default in the payment 
of any premium, instalment or interest, except upon written or 
planted notice, of any life policy not issued upon the payment of 
monthly or weekly premiums, or unless the same is a term insur- 
ance contract for one year or less, 13 applies where an annual ex- 



12 Jacklin v. National Life Assoc. Div. 488 (notice required by sec. 92 
(N. Y. S. C. 1803) 24 N. Y. Supp. need not be given members of socie- 
74G; Laws N. Y. 1876, e. 341, sec. 1 tics exempt under sec. 233). 
(repealed, see § 1324 berein). The New York statute governing 
Amended Laws 1877, e. 321 (re- life or casualty insurance corpora- 
pealed, see § 1324 herein). See tions upon the co-operative or assess- 
Laws N. Y. 1885, e. 328, sec. 1, which ment plan provides: "Each notice <>f 
provides for waiver in certain classes assessment, premium or periodical 
of policies. call made by any such corporation, 

The Insurance Law of New York association, or society, upon its mem- 

1892 provided: "All notices of as- bers or any of them, shall truly state 

sessment made upon its lodges, coun- the cause and the purpose of the 

oils, branches, or members or any of same, and if the amount paid on the 

them, by any such society, order, or last death claim paid has not been 

association, shall truly state the cause paid in full at its maximum face 

and purpose of the assessment, and value, the name of the deceased mem- 

what portion or amount thereof, if ber, and the maximum face value of 

any, is to be used for the payment of the certificate or policy, and the rea- 

other than beneficiary claims. An son why not paid in full. An affida- 

affidavit made by any officer of such vit made by the officer, bookkeeper, or 

society, order, or association that such clerk of any such corporation, asso- 

notice was mailed, stating the date of ciation, or society, having charge of 

mailing, shall be presumptive evi- the mailing of such notice, that such 

dence thereof." N. Y. Ins. L. 1892, c. notice was mailed, stating the date 

690, art. 7, sec. 238, source; L. 1889, of mailing, shall be presumptive evi- 

<•. 520, sees. 11, 12, as am'd by L. dence thereof." N. Y. Ins. Law 1909, 

L897, c 503; L. L900, c (ill ; L. 1901, c. 33, sec 210, as revised from L. 

c. 307. Sections 233 and 239 of the 1883, c. 175, sec. 17, as am'd by L. 

same statute specified what benefici- 1887, c. 285; L. 1906, c. 320; L. 1911, 

ary societies, orders, and associations c. 536. 

were subject to the provisions of arti- As to New York statute governing 

cle 7. Article XI. of the same chap- assessments in mutual fire insurance 

ter, and schedule annexed, specified corporations. (N. Y. Ins. L. 1909, 

what laws and portions thereof were c. 33, sec. 116). See § 1338 herein. 

repealed (all repealed). See Bop- u The Laws of New York govern- 

ple v. Supreme Tent Knights of Mac- ing life, health and casualty insurance 

cabees, 45 N. Y. Supp. 1096, 18 App. corporations, provide: "No life in- 

2470 



NOTICE 



§ 132G 



penso and mortuary premium are required under a policy pro- 
viding for renewals from month to month. 14 But it does not apply 



surance corporation doing business ments of the policy in respect to the 
in this state shall within one year aft- time of such payment; and qo such 
er the default in paymenl of any pre- policy shall in any case be forfeited, 

mium, instalment, or interest declare or declared forfeited, or lapsed, un- 
forfeited, or lapsed, any policy here- til the expiration of thirty days after 
after issued or renewed, and not is- the mailing of such notice. The affi 
sued upon the payment of monthly davit of any officer, clerk, or agent 
or weekly premiums, or unless the of the corporation, or of anyone au- 
same is a term insurance contract for thorized to mail such notice, that the 
one year or less, nor shall any such notice required by this section has 
policy be forfeited, or lapsed, by rea- been duly addressed and mailed by 
son of nonpayment when due of any the corporation issuing such policy, 
premium, interest or instalment or shall be presumptive evidence that 
any portion thereof required by the such notice has been duly given. No 
terms of the policy to be paid, with- action shall be maintained to recover 
in one year from the failure to pay under a forfeited policy, unless the 
such premium, interest or instalment, same is instituted within two years 
unless a written or printed notice from the day upon which default was 
stating the amount of such premium, made in paying the premium, instal- 
interest, instalment, or portion there- ment, interest or portion thereof for 
of, due on such policy, the place which it is claimed that forfeiture 
where it shall be paid, and the person ensued." N. Y. Ins. L. 1909, c. 33, 
to whom the same is payable, shall sec. 92 (Consol. _L. c. 28) as re- 
have been duly addressed and mailed vised from L. 18/_6, c. 341, sec. 1, 
to the person whose life is insured, or as am'd by L. 18/7, c. 321, sec. 2; 
the assignee of the policy, if notice L. 1897, c. 218; L. 1906, c. 326 (Ins. 
of the assignment has been given to L. 1892, c. 690, sec. 92) (Parker's N 



the corporation, at his last known 
postofiice address in this state, post- 
age paid by the corporation, or by 
any officer thereof, or person ap- 



Y. Ins. L. [ed. 1915] pp. 148-154). 
Assessments by assessment com- 
panies or associations are within sec. 
210 (above given under this section), 



pointed bv it to collect such premium, see Greenwald v. United Life Ins. 
at least fifteen and not more than Assoc. 42 N. Y. Supp. 973, 18 Misc. 
fort v-five days prior to the day when 91. See Merriman v. Keystone Mu- 
the some is pavable. The notice tual Benefit Assoc. 138 N. Y. 116, 33 
shall also state that unless such pre- N. E. 738, aff'g 18 N. Y. Supp. 305, 
mium, interest, instalment, or por- 63 Hun, 635. Comi?are Elmer v. Mu- 
tion thereof, then due, shall be paid tual Benefit Life Assoc. 19 N. Y. 
to the corporation, or to the duly ap- Supp. 289, 64 Hun, 639. 
pointed agent or person authorized to As to application to policies issued 
collect such premium by or before prior to act of 1877, see Carter v. 
the day it falls due, the policy and Brooklyn Life Ins! Co. 110 N. Y. 
all payments thereon will become for- 15, 17 N. E. 396; see § 1325b herein. 
feited and void except as to the right For list of nonfuture and notice 
to a surrender value or paid-up pol- statutes in other states, see § 1323 
icy as in this chapter provided. If herein. 

the payment demanded by such no- 14 Baldwin v. Provident Savings 
tice shall he made within its time lim- Life Assurance Soe. of N. Y. 48 N. 
ited therefor, it shall he taken to be Y. Supp. 463, 23 App. Div. 5, aff'd 
in full compliance with the require- 162 N. Y. 636, 57 N- E. 1103. 

2471 



§ 1326a JOYCE ON INSURANCE 

to policies on the stipulated premium plan under thai section of 
the statutes relating thereto which was added by the laws of L898. 15 
Under a Massachusetts decision payments of fixed quarterly sums 
for a certain number of year- which arc necessary to prevent for- 
feiture, are nol assessments within the statute of that stale "rela- 
tive to assessment insurance corporations." Providing that at the 
expiration of the time for payment stated in each call or notice 
of an assessment for mortuary, disability or expenses purposes, 
persons who have failed to pay are to be notified and allowed fif- 
teen days after receipt of notice to make payment and keep the 
policy in force; and this is so even though after expiration of the 
above-mentioned premium period there was" a liability to calls for 
the mortuary funds in addition to said quarterly premiums. 16 In 
Iowa the statute requiring notice as a condition precedent to for- 
feiture or suspension for nonpayment of a note taken by a fire in- 
surance company for the "premium," does not apply to and re- 
quire notice by a mutual company organized under a statute which 
expressly prohibits such companies from receiving premium- or 
making dividends. 17 

§ 1326a. Same subject: paid-up policy. — The conversion of a 
life policy into a nonforfeitable paid-up policy for a fixed term, 
on a default in the payment of a premium, by virtue of the pro- 
visions in the contract, where the insured fails to demand, after 
the default, a reinstatement of the policy, or a paid-up policy for 
a smaller sum, as he has an option to do, makes it unnecessary, in 
case of his death, after the expiration of the stipulated term, 
for the insurer to give the notice required by New York Laws as a 
basis for declaring a forfeiture or lapse of the policy for nonpay- 
ment of premium, since there is neither a forfeiture nor a lapse 
where the term expires for which the risk is taken, although sub- 
stantially the same extension of the policy would have been given 
him without any provision therefor in the contract, by the New 
York net reserve statute the operation of which would not have dis- 
pensed with the notice required for forfeiture. 18 

15 Napier v. Bankers Life Ins. Co. tnal Tns. Assoc. 104 Iowa, 83, 65 Am. 
100 N. Y. Supp. 1093, 51 Misc. 293; St. Rep. 424, 73 N. W. 597, acts Gen. 
N. Y. Ins. L. (1892, c. 690) sec. 312, Assemb. Iowa, c. 210 (notice of as- 
added by-laws 1898, c. 85 (repealed) sessments) ; acts 16th Gen. Assemb. 
Cumming & Gilbert's Gen'l, etc., c. c. 103, and acts amending same. 
Laws N. Y. p. 1965. Compare Bradford v. Mutual Fire 

16 French v. Hartford Life & An- Ins. Co. 112 Iowa, 495, 84 N. W. 693. 
nuitv Ins. Co. 169 Mass. 510, 48 N. 18 Johnson v. New York Life Ins. 
E. 268, 27 Ins. L. J. 331; Mass. Stat. Co., 109 Iowa, 708, 50 L.R.A. 99, 
1896. c. 515, sec. 2. writ of error dismissed 187 U. S. 491, 

17 Beeman v. Farmers' Pioneer Mu- 47 L. ed. 273, 23 Sup. Ct. 194, 78 N. 

2472 



NOTICE §§ 1327, 1328 

§ 1327. Stipulation in guaranty fund note as to notice. — Tt is 
obligatory upon a contributor to pay assessments within a speci- 
fied time alter notice of its levy, or he must forfeit prior payments 
when a guaranty fund note so stipulates. 19 

§ 1328. Sufficiency of notice. — In determining the sufficiency of 
a notice, reference must always be had to the contract with what it 
includes. The requirements of the charter and by-laws must be 
followed, in so far as they contain provisions relating to the char- 
acter or contents of the notice, the time and mode and service, the 
amount payable, or any other material matter relating to its suffici- 
ency. The rule should also be constantly considered that forfeitures 
are not favored, and rights, the deprivation of which depend upon 
notice, will be guarded by the courts to the extent of enforcing com- 
pliance with the requirements of the contract, the charter, and by- 
law's as to the notice of all material matters relating thereto. 20 

It is, therefore, a general rule that notice must conform to that 
prescribed by the by-laws. 1 And a suspension is invalid when based 
upon an insufficient notice. 2 There must also be an actual notice, 
for if a party stipulates in a contract with the association for the 
manner and mode of notice, a mere rumor or information from a 
third party of the fact which the notice concerns does not constitute 
notice of such fact, nor is it such knowledge thereof as obligates 
him to act thereupon at his peril, or to reasonably put him upon 
inquiry. 8 

The notice should not require the payment of more than the 
agreement calls for. 4 for the amount claimed to be due for pre- 
miums must be certain, and if the notice specifies a sum greater 
than that to which insurer is entitled to, the failure to pay does not 
work a forfeiture. 5 So where the amount of a premium to be paid 

W. 905 ; N. Y. Laws 1877, c. 321, 2 Supreme Assembly Royal Society 

see. 1 (notice) ; N. Y. Laws 1892, c. of Good Fellows v. McDonald, 59 N. 

690, sec. 88 (net reserve: surrender J. Law 248, 35 Atl. 1061. 

value of lapsed or forfeiture poli- 2 Walton v. Fraternal Aid Assoc. 

cies. N. Y. L. 1909, c. 33, sec. 88, 149 Mo. App. 493, 130 S. W. 1124; 

Consol. L. c. 28). See Baldwin v. District Grand Lodge No. 4, O. K. 

Provident Savings Life Assur. Soc. S. B. v. Menken, 67 111. App. 576. 

of N. Y. 48 N. Y. Supp. 463, 23 App. 2 Chic. L. J. Wkly. 64. 

Div. 5, aff d 162 N. Y. 636, 57 N. E. 3 Siebert v. Supreme Council Or- 

1103. Examine Rye v. New York der of Chosen Friends, 23 Mo. App. 

Life Ins. Co. 88 Neb. 707, 130 N. W. 268, per the court. 

434, 40 Ins. L. J. 910. 4 Mutual Endowment Assessment 

19 Berry v. Anchor Mutual Fire Assoc, v. Essender, 59 Md. 463. 

Ins. Co. 94 Iowa, 135, 62 N. W. 681. 5 So held in Eddv v. Phoenix Mu • 

20 That forfeitures are favored and tual Life Ins. Co. 65 N. H. 27, 23 
that construction liberal in favor of Am. St. Rep. 17, 18 Atl. 89. 
insured, see §§ 220 et seq. herein. 

2473 



§ 1328 JOYCE ON INSURANCE 

ia variable and a knowledge thereof rests peculiarly with insurer, 
he niu-i show that the sum whirl) he demanded was correct. 6 Nor 
should the notice fail to state a credit for an advance deposit. 7 And 
if the assured has deposited in advance for assessments, and there 
[•i an excess in his favor, the company musl give notice of the cor- 
amount which insured is required to pay, and notice of the full 
amount is not sufficient notice on which to base a forfeiture. 8 And 
if the by-laws require that the notice shall include a list of deaths 
since the last notice, this must be done; so also where it requires the 
amounl due to the benefit fund to be stated, it must appear there 
iu. 9 If the stipulation is for the payment of quarterly dues, a no- 
tice is insufficient which calls for the payment of annual dues in 
advance. 10 And a notice by a receiver which is published before 
the assessment is ascertained, and which does not give information 
to each member of the amount he is to pay, is irregular and decep- 
tive. 11 

Again, notice must specify the date from which the time allowed 
for payment can be computed or it is of no validity. 12 And if the 
member is required under the notice to pay an assessment before 
the stipulated contract time for payment, such notice is invalid. 13 
So a notice is insufficient which erroneously limits the time within 
which payment must be made. 14 And the policy cannot be forfeit- 
ed where no allowance is made in the notice for days of grace in 
fixing the due date of payment necessary to avoid a forfeiture. 15 A 
notice is also insufficient to sustain a forfeiture which is published 
for a less number of days than is required. 16 A notice which is 
admitted to inform insured that an assessment will be due on a cer- 
tain date, there being no evidence of any other notice, does not 

6 Goodwin v. Provident Savings' 12 Williams v. Reserve Fund Live 
Life Assurance Assoc. 97 Iowa, 226, Stock Ins. Co. 43 N. Y. Supp. 1083, 
32 L.R.A. 473, 59 Am. St. Rep. 411, 19 Misc. 515. 

(>6 N. W. 157. 13 Frey v. Wellington Mutual Ins. 

7 Dowling v. Knights Templars and Co. 4 Ont. 293. 

Masons' Life Indemnity Co. 116 14 Bridges v. National Union, 73 

Mich. 471, 74 N. W. 725, 4 Det. L. Minn. 486, 76 N. W. 270, 77 N. W. 

News, 1 212. 411. 

8 United States Mutual Accident 15 New York Life Ins. Co. v. Ding- 
A, 30C. v. Mueller, 151 111. 254, 37 ley, 93 Fed. 153, 35 C. C. A. 177. 
N. E. 882. certiorari denied 176 U. S. 682, 44 

9 Miner v. Michigan Mutual Benefit L. ed. 637, 20 Sup. Ct. 1024. See 
Assoc. 63 Mich. 338, 29 N. W. 852. Trimble v. New York Life Ins. Co. 

10 Mutual Endowment Assessment 20 Wash. 386, ?5 Pac. 429. 

Assoc v. Essender, 59 Md. 463. 16 Sands v. Groves, 58 N. Y. 94; 

11 Bangs v. Mcintosh, 23 Barb. (N. Fitzpatrick v. Mutual Benevolent 
V.) 591. Life Ins. Assoc. 25 La. Ann. 443. 

2474 



NOTICE § 1329 

show an election on the part of the company to cancel the contract, 
nor will such notice forfeit or terminate the policy. 17 

A notice must be signed by the person by whom it is required to 
be given; thus, a notice is insufficient, which is filled up and ad- 
dressed by the local secretary, and upon which the name of the 
general secretary is printed, only where the by-laws pro\i<l< for 
notice of an assessment by the former, and a forfeiture upon failure 
to pay after notice from the latter. 18 And a notice may be inoper- 
ative for uncertainty; as where, in the alienee of evidence of any 
rule in the charter or by-laws on the subject, a notice of an assess- 
ment by a receiver on deposit notes specified different rates for small 
notes and large notes, but did not show the class to which any note 
belonged, it was held void. 19 So the company is bound by the act 
-of its secretary in sending notice. 20 And the fact that the assess- 
ment was properly levied will not validate a notice, defective in it- 
self. 1 

It is held, however, that courts will be liberal in determining 
what amounts to notice, 2 and that the question of due and sufficient 
service of notice is for the jury. 3 

§ 1329. Sufficiency of statutory notice. — If the form, time, and 
manner of notice be prescribed by statute, it must be complied with, 
especially if a forfeiture is to result from the neglect, of the party 
entitled to notice, to do some act to which the notice relates. Thus, 
a notice, the phraseology of which is not as clear as the language 
of the statute, is insufficient. 4 And it may be generally stated that 

17 See Finster v. Merchants' & for the protection of all classes, and 
Bankers Ins. Co. 97 Iowa, 9, 65 N. W. the language it prescribes for notice 
1004. is intelligible to all. To say that in 

18 Payne v. Mutual Relief Soc. 17 a declared event 'a policy will become 
Abb. N. C. (N. Y.) 53. See s. c. 6 forfeited and void' conveys a mean- 
N. Y. St. Rep. 366. ing easily to be comprehended. To 

19 Bangs v. Duckinfield, 18 N. Y. refer to a policy and conditions, and 
592. say that 'members neglecting so to 

20 Olmstead v. Farmers' Mutual pay are carrying their own risk,' is 
Fire Ins. Co. 50 Mich. 200, 15 N. quite another thing, and while it may 
"vV. 82. be comprehensible to those versed in 

1 Frey v. Mutual Fire Ins. Co. of the language of insurers and accus- 
the County of Wellington, 43 TJ. C. tomed to their phraseology, it is not 
Q. B. 102.' the language of the statute, and does 

2 Hollister v. Quincy Mutual Ins. not embody the notice which the stat- 
Co. 118 Mass. 478. ute requires:" Per Danforth, J., in 

'Buckley v. Columbia Ins. Co. 83 Phelan v. Northwestern Mutual Life 

Pa. St. 298. Ins. Co. 113 N. Y. 147, 10 Am. St. 

4 "Many ignorant and unlearned Rep. 441, 20 N. E. 827. In this case. 

people seek to avail themselves of it was held that notice is insufficient 

the advantages proposed by these where it states that a certain pre- 

companies. The statute is designed mium, giving the amount, will tall 

247f) 



§ 1329 



JOYCE ON INSURANCE 



if a notice required by statute to be sent insured under a life risk 
before the policy can be forfeited for nonpayment of premiums ia 
insufficient, because of nonconformity to the statutory require- 
ments, it will not enable the company to claim a forfeiture. 6 Nor 
is the statute complied with where the statement in the notice is 
that the policy lapses and it omits that part of the statutory clause 
as to insured's right to a surrender value or paid-up policy. 6 

While it is held that the form prescribed by statute must he fol- 
lowed, and that a notice the phraseology of which is not as clear as 
the language of the statute is insufficient; 7 and even though the 
notice need not literally follow the statute it being sufficient if there 
is a substantial compliance therewith, nevertheless if it departs 
therefrom in an essential particular it will he fatally defective as in 
case of a failure to state that if the premium or instalment is not 
paid by or before the day it falls due the policy will be forfeited. 8 
So where the statute provides specifically that the notice shall state, 
among other things, that "such policy and all payments thereon 
will become forfeited and void" for nonpayment of the premium, 
a notice is insufficient which fails to so state. 9 So under the laws 



due at a designated time and place; Benefit Assoc. 63 Hun (N. Y.) 635, 
that the conditions of his policy re- 44 N. Y. St. Rep. 707, 18 N. Y. Supp. 
quire payment to be made on or be- 305. In this case the court said, per 
fore the date the premium is due; Macomber, J.: "The notice which is 
that members neglecting to pay are now relied upon to work a most un- 
carrying their own risks; that agents conscionable forfeiture does not con- 
have a right to waive forfeitures; form to this statutory requirement, 
and that prompt payment is neces- ... It failed: 1. To notify the 
sary to keep his policy in force. Phe- insured that all payments made there- 
Ian v. Northwestern Life Ins. Co. on would become forfeited; and 2. 
113 N. Y. 147, 10 Am. St. Rep. It failed to notify the assured that 
441, 20 N. E. 827. the policy would be void. Having 

As to authorities holding statutory regard for the intelligence and tech- 
notice sufficient, see § 1330 herein. nical knowledge of the class of per- 

6 Griesemer v. Mutual Life Ins. Co. sons to whom such insurance is most 



10 Wash. 202, 38 Pae. 1031; Laws 
N. Y. 1877, c. 321. 

6 Security Trust & Life Ins. Co. v. 
Hallum, 32 Tex. Civ. App. 134, 73 
S. W. 554, under the N. Y. Statute. 



attractive, we are unable to say that 
the notice, as actually served, con- 
veyed any such idea to the assured. 
We content ourselves by holding that 
it did not necessarily convey such 



7 Phelan v. Northwestern Mutual idea, and that the assured might, and 



Life Ins. Co. 113 N. Y. 147, 20 N. E. 
827. But see Phelan v. Northwestern 
Mutual Life Ins. Co. 42 Hun (N. Y.) 
419. 

8 Flint v. Provident Life & Trust 
Co. of Phila. 215 N. Y. 254, 109 N. 
E. 248, 78 Misc. 673, 140 N. Y. Supp. 
167, 42 Ins. L. J. 593. 

9 Merryman v. Keystone Mutual 



probably did, understand from its 
language that before he could be ac- 
tually deprived of the benefit of the 
policy some step would be necessary 
to be taken by the company, and that 
such action might, and probably 
would, involve the repayment to him 
of the premiums and mortuary as- 
sessments already disbursed by him." 



2476 



NOTICE § 1330 

of Iowa a notice of the nonpayment of premium will not terminate 
the liability of the insurer, unless it states "that unless payment is 
made within thirty days the policy will be suspended." A aotice 
that the sum unpaid must reach the oil ice not later than the date 
thereof does not comply wilh the statute. 10 Again, there is not ;i 
compliance with the statute where "the notice erroneously specifies 
the time when an instalment will be due 11 

Noncompliance with the statute by an omission of the amount 
of the assessment is fatal. 12 So notice to the insured by the insurer. 
who has issued two policies to the former, stating the aggregate 
amount required to pay customary short rates and expenses in order 
to cancel both policies, and the amount of premium due under a 
note given for unpaid premiums on both policies, but not stating 
the amount required on each policy separately is insufficient notice 
under the statute to forfeit or suspend one of the policies alone for 
nonpayment. 13 

Again, in serving a notice care should be taken that it be done in 
conformity with the special law of the notice which prescribes the 
form and manner in which it is to be given. 14 

A statutory requirement that notice of assessment shall truly 
state the cause and purpose thereof has no application to assessments 
which are to be used for the sole purpose of increasing a fund to 
pay death claims. 15 

§ 1330. Authorities holding notice sufficient. — It is held that a 
notice may be sufficient although it shows the assessment to have 
been levied by the society, instead of the board of directors. 16 And 
where the provisions of the constitution relating to the time of send- 
ing notice are merely directory, notice need not be sent on the exact 
day; as in case the provision is that notice shall be sent not later 
than the eighth day of the month, and it is sent on the twelfth. 17 
And if the notice admits of no other reasonable construction than 

10 Marden v. Hotel Owners' Ins. der of Chosen Friends, 23 Mo. App. 
Co. 85 Iowa, 584, 39 Am. St. Rep. 272, per the court. 

316, 52 N. W. 509. 15 Bridges v. National Union, 73 

11 Dubuque Fire & Marine Ins. Co. Minn. 486, 76 N. W. 270, 77 N. W. 
v. Oster, 74 111. App. 139. 411. 

12 Milwaukee Trust Co. v. Farmers' 16 Williams v. German Mutual 
Mutual Fire Ins. Co. 115 Wis. 371, Fire Ins. Co. 68 111. 387. 

91 N. W. 967, Wis. Rev. Stat. 1SDS, 17 Benedict v. Grand Lodge An- 

see. 1935. eient Order United Workmen, 48 

13 Born v. Home Ins. Co. 110 Iowa, Minn. 471, 51 N. W. 371, 21 Ins. L. 
379, 80 Am. St. Rep. 300, 81 N. W. J. 438. The constitution in this case 
076, 29 Ins. L. J. 242; Smith v. provided that "written notices of as- 
Continental Ins. Co. 108 Iowa, 382, sessments shall be made and sent by 
79 X. \Y. 326, 28 Ins. L. J. 534. the financier not later than the eighth 

14 Sieberl v. Supreme Council Or- day of the month in which the no- 

2477 



L330 



JOYCE ox [NSURANCE 



thai of ;i call for paymenl it is sufficient. 18 So it is held that the 
fad thai the notice is merely technically defective in form is im- 
material, provided the member actually receives notice, as in case 
where it has only a facsimile of the seal of the lodge thereon. 19 So 

net ice of premium due may he written on a card. 80 If a member 
of a beneficial association had actual notice of assessments, and 
promised to pay, hut a reasonable lime, such as about one month, 
expired thereafter, before his death in which to pay, hut payment 
was not made, there can be no recovery on his certificate. 1 And if 
there is no provision as to the manner of giving notice, it. is suffi- 
cient that insured received notice that if assessments were not paid 
on a specified date lie could be suspended. 2 So where the form of 
notice is not prescribed, mere informalities, such as signing the no- 
tice and want of address to the member on the notice, do not make 
it insufficient where it is actually received by the member in an 



tice was issued by the grand record- 
er." The court said in reference to 
this provision: "It is contended on 
the part el' the plaintiff that the pro- 
visions of the constitution as to the 
times for making assessments and 
sending notices thereof must be con- 
st rued, and effect be given to them 
exactly according to their terms; in 
ether words, that a notice is ineffec- 
tual to impose upon a member the 
duty to pay an assessment, a neglect 
of which duty may result in a for- 
feiture of his rights, unless the no- 
tice be given on or before the eighth 
day of the month; and further, that 
the requirement of the constitution is 
not complied with if notice is given 
only by mail. As to the time within 
which notices are to be sent, the ex- 
press provision of the constitution 
must be deemed to be only directory, 
and not a limitation upon the right 
and duty to notify members of assess- 
ments made, or accordance with the 
plaintiff's contention would be plainly 
opposed to, and would often defeat, 
one of the principal purposes of the 
organization, and would be unsup- 
ported by any apparent reason, save 
the bare language of the constitution 
above recited." 

18 Sliuman v. Juniata Farmers' Mu- 
tual Fire Ins. Co. 206 Pa. 417, 55 At I. 
t069. 



19 Karcher v. Supreme Lodge, 137 
Mass. 308. "The plaintiff here ob- 
jects that this notice was invalid, be- 
cause it contained only a printed fac- 
simile of the seal of the lodge, and 
the constitution of the defendant re- 
quired that it be under the seal of the 
lodge. The provisions of the consti- 
tution are not fully set out, and we 
are, therefore, unable to determine 
whether by the constitution the pres- 
ence of the seal is made anything 
more than a matter of form, or wheth- 
er by the true construction of the 
constitution a printed fac simile of 
the seal is not. what was intended. 
There is no evidence that Karcher 
was misled by the notice, or that it 
was not in all respects as effectual 
in giving him information as if it had 
contained an actual impression of the 
seal of the lodge. So far as appears, 
this defect in the notice, if it was a 
defect, was immaterial," per Field, J. 

80 Metropolitan Life Ins. Co. v. 
Gibbs, 34 Tex. Civ. App. 131, 78 S. 
W. 398. 

1 Thibert v. Supreme Lodge 
Knights of Honor, 78 Minn. I IS, 17 
L.R.A. 136, 79 Am. St. Rep. 412, 
81 N. W. 220. 

2 Bettenhauser v. Templars of Lib- 
ert v, 68 N. Y. Supp. 505, 58 A]) p. 
Div. 61. 



2478 



NOTICE § 1330 

envelope properly addressed to him, and the notice is otherwise 
valid. 3 Again, a notice of a mortuary assessment, sent to a mem- 
ber of an assessment insurance company, is not rendered defective 
by (he fact that it includes an item for three months' expenses in 
advance, which the insured had for seven years elected to pay quar 
terly, rather than monthly. 4 So if it appears that the member en- 
titled to notice had actual knowledge that the assessment had been 
made, and had stated that he intended to pay it. there is a question 
for the jury whether he had notice ; 5 and it is decided that the notice 
is suflicient although it fails to specify the amount due on each 
note; 6 so also though it be mailed by another than the officer desig- 
nated to give notice. 7 And actual notice by a receiver has been 
held sufficient. 8 So if the notice specify only the rate per cent, it 
is declared sufficient. 9 

Where a notice is received from the home office, in insurer's of- 
ficial stamped envelope, in its form of notice, signed by the proper 
officers stating the amount due, the date when due, and requesting 
payment ; it is sufficient to bind insurer and prevent forfeiture where 
insured dies and tender of the amount due is made thereafter but 
before the expiration of the time so fixed. 10 

Where the notice conforms with the statute, an additional state- 
ment as to the forfeiture of the policy by reason of nonpayment 
contained therein, does not constitute a failure to comply with the 
statute where another notice is received by assured after he defaults 
in payment and he has an opportunity to be reinstated but fails to 
avail himself thereof. 11 And if the notice complies with the stat- 
ute and by-laws in stating that its object is to provide a fund for 
death losses it is not insufficient even though its purpose is to pro- 
vide in part for anticipated death losses. 12 It is also decided that a 
notice stating that the annual premium will be due on a certain date 

3 Hanson v. Supreme Lod^e 8 Cooper v. Shaver, 41 Barb. (N. 

Knights of Honor, 140 111. 301, 29 Y.) 151. 

X. E. 1121. See Dickert v. Farmers' 9 Bangs v. Duekinfield, 18 N. Y. 

Mutual Assur. Assoc. 52 S. Car. 412, 592. 

29 S. E. 786. 10 Murphy v. Lafayette Mutual 

4 Pitts v. Hartford Life & Annuity Life Ins. Co. 167 N. Car. 334, 83 S. 

Ins. Co. 66 Conn. 376, 50 Am. St. E. 461, 45 Ins. L. J. 11. 

Rep. 96, 34 Atl. 95. n Nederland Life Ins. Co. v. Mei 

5 Siebert v. Supreme Council Or- nert, 199 U. S. 171, 50 L. ed. 139, 

der of Chosen Friends, 23 Mo. App. 26 Sup. Ct. 15, 4 Am. & Eng. Ann. 

268. Cas. 4S0, rev'g 127 Fed. 651, 62 C. 

6 Atlantic Mutual Fire Ins. Co. v. C. A. 377, 36 Chic. Leg. News, 207, 33 

Sanders, 36 N. H. 252. Ins. L. J. 673. See § 1329 herein. 

7 Pavn v Mutual Relief Soc. 17 u Mulherin v. Bankers' Life Assoc. 

Abb. N. C. (N. Y.) 53, 6 N. Y. St. 163 Iowa, 740, 144 N. W. 1000. 

Rep. 365. 

2479 



*§ 1330a, 1331 JOYCE ON INSURANCE 

and if not then paid the policy will be forfeited is sufficient even 
though it omits the amount of the premium and fails to state where 
or to whom it is payable. 13 And a statement that the premium is 
due. and unless paid "by (a- before the said day" the policy will be 
forfeited, etc., is not insufficient. 14 Under a policy providing for 
payment on or before a specified date of a "mortuary premium" and 
a specified "expense charge" the word "premium" will not accurately 
express what is intended in a notice required by statute regulating 
forfeiture of life policies, and the policy not being an ordinary one 
the word "payments" used in said notice is sufficient. 15 

§ 1330a. Right to notice: effect of subsequently enacted by-law. 
— A member cannot be virtually deprived of all existing rights to 
notice of assessments and of his consequent right to the benefit fund 
by a subsequently enacted by-law of which he has had no notice. 
Such a by-law is unreasonable and of no effect. 16 We have, how- 
ever, fully considered elsewhere the effect of, and to what extent 
changes in by-laws are binding and also the power to alter or repeal 
the same, etc. 17 

§ 1331. To whom notice should be given. — Where notice as to pre- 
miums and assessments is required, it should be given to the as- 
sured or the member, but if another, as in case of an assignee for 
value who has, with the company's consent, assumed the obligation 
to pay, or has become a member, and is consequently liable, such 
party should be notified. 18 But notice need not be given to a volun- 
tary assignee, he being a stranger to the contract. 19 And if the stat- 
ute requires that notice be given to the insured it must be given to 

18 Trimble v. New York Life Ins. tied date as stipulated, and that "this 
Co. 20 Wash. 386, 55 Pae. 429, un- notice is given to meet the require- 
der N. Y. L. 1877, c. 221, see. 1. ment of the" statute. McDougall v. 

14 Schnell v. Mutual Life Ins. Co. Provident Savings Life Assur. Soe. 
of N. Y. 65 N. Y. Supp. 889, 53 of New York, 64 Hun (N. Y.) 515. 
A pp. Div. 172. 19 N. Y. Supp. 481. See Elmer v. 

15 McDougall v. Provident Savings Mutual Benefit Life Assoc, of 
Life Assurance Soc. 135 N. Y. 551, America, 64 Hun (N. Y.) 639, 1!) 
rev'g 19 N. Y. Supp. 481, 64 Hun, N. Y. Supp. 289. 
515, distinguishing Phelan v. North- 16 Thibert v. Supreme Lodge 
western Mutual Life Ins. Co. 113 Knights of Honor, 78 Minn. 441, 17 
N. Y. 147, 10 Am. St. Rep. 441, 20 L.R.A. 136, 79 Am. St. Rep. 112, 
N. E. 827. The reversed case held SI N. W. 220. 
that notice was insufficient where it 17 See §§ 377 et seq. herein, 
did not state, as required, that "if 18 Examine Brannin v. Mereer 
not paid the policy and all payments County Mutual Ins. Co. 28 X. J. I>. 
thereon will become forfeited and 92. See preceding chapter as to who 
void," although the notice given speci- are liable to assessments, etc. 
tied that it would be necessary to pay 19 Lycoming Fire Ins. Co. v. Storrs, 
the premiums on or before the speci- 97 Pa. St. 354. 

2480 



NOTICE ■§ 1331 

him and not to the assignee. 20 But where notice to the assignee of 
the policy is required by statute it must ho given, 1 especially when: 
the insurer has due notice of the assignment; 2 or where it has con- 
sented thereto and it has induced the assignee by sending notices 
to him to believe it would continue to do so. 3 It is held, however. 
that the notice of nonpayment of a note for the premium need not 
be given the assignee of the policy.* 

But notice of premium need not be given the beneficiary where 
he is not the assignee. 5 And the wife who is the beneficiary need 
not be sent a notice of premiums due, even though the insurer knew 
that she was not residing at her insured husband's address on its 
looks, where it had sent a notice to him at such address after knowl- 
edge that he had changed the same. It had not, however, been au- 
thorized to change his address in said books. 6 But the beneficiary 
in a certificate of insurance on the life of her father who is insane 
or incapable of attending to business is entitled to notice of his de 
fault in paying assessments before a forfeiture can be declared there- 
for after she has given a notice to the company of his condition and 
requested a notice of any default on his part so that she might make 
an effort to pay the assessment if he did not. 7 

Notice of premiums due may be given to the husband where he 
has taken out a policy on his life for his wife's benefit; 8 and though 
the by-laws require that the society shall notify its members through 
its local agents or subordinate lodges, it would be unreasonable and 
unjust to hold mere constructive notice to such local agents suffi- 
cient ; they must be notified, and in time notify the members. 9 And 
where the constitution of the society so provides a notice of an assess- 
ment to the master of each lodge is sufficient. 10 

20 Osborne v. New York Life Ins. 5 Linn v. New York Life Ins. Co. 
Co. 123 Cal. 610, 56 Pae. 616, N. 78 Mo. App. 192, 2 Mo. App. Rep. 
Y. Laws 1877, c. 321. See Rowe v. 201, N. Y. Laws 1892, c. 690, see. 92. 
Brooklyn Life Ins. Co. 42 N. Y. 6 Smith v. Mutual Reserve Life 
Supp. 616, 11 App. Div. 532. Assoc. 44 Wash. 315, 87 Pac. 347. 

1 Strauss v. Union Central Life 7 Buchannan v. Supreme Conclave 
?Ins Co 67 N Y. Supp. 509, 33 Independent Order of Heptasophs, 
misc. Rep. 333, aff'd 70 N. Y. Supp. 178 Pa. 465, 34 L.R.A. 436, 35 Atl. 
U149, 60 App. Div. 632, N. Y. Laws 873. 

1897, c 218 8 Whitehead v. New York Life Ins. 

2 Strauss v. Union Central Life Co. 102 N. Y. 143, 152, 55 Am. Rep. 
Ins. Co. 170 N. Y. 349, 63 N. E. 347, 787, 6 N. E. 267. 

N. Y. Laws 1890, c. 690, sec. 92. 9 Coyle v. Kentucky Grangers' Mu- 

3 Elgutter v. Mutual Reserve Fund tual Benefit Soc. 8 Ky. Law Rep. 604, 
Life Assoc. 52 La. Ann. 1733. 28 So. 2 S. W. 676. 

289, 29 Ins. L. J. 926, N. Y. Laws 10 Havnes v. Masonic Benefit 
1892, c. 690, sec. 92. Assoc. 98 Ark. 421, 136 S. W. :.87. 

4 Wood v. Confederation Life Ins. 
■Co. 2 N. B. Eq. Rep. 217. 

Joyce Ins. Vol. ITT.— 1.10. 2481 



§§ 1331a. L332 JOYCE ON INSURANCE 

§ 1331a. Notice to assignee who had contracted to pay assess- 
ments: liability of assignee for failure to pay same.— If a person 
contracts with assured and the beneficiaries in consideration of the 
paymenl to him of a certain sum per year to pay the assessments 
and dues and the policy is assigned to him, he is obligated to con- 
tinue the payments even though insured discontinues delivering to 
him the riotides of assessments as bad been his custom, and such 
assignee upon Letting the policy lapse, is liable to assured in dam- 
ages for the cash value of the policy at the time of default in such 
payments. 11 

§ 1332. Cases holding that usage to send notice necessitates giving 
notice. — If a Life insurance company has been in the practice of 
Qotifying the insured of the time when the premium will fall due, 
and of the amount, and the custom has been so uniform and so rea- 
sonably Long in continuance as to induce the insured to believe that 
a clause for forfeiture for nonpayment will not be insisted on, but 
thai the notice will precede the insistence upon the forfeiture, and 
the insured is in consequence put off his guard, such notice must be 
given, and if not given no advantage can be taken of any default in 
payment which it has thus encouraged, for the insured is entitled 
to expect the customary notification; and to mislead the insured 
by not giving such notice, and then insist upon a strict compliance 
with the conditions of forfeiture, constitutes, under such circum- 
stances, a fraud upon the assured which the courts have refused in 
numerous cases to countenance. 12 So the fact that by the charter of 

11 Vaughan v. Reddick, 32 Ky. L. Indiana.— Franklin Life Ins. Co. v. 
Rep. 531, 106 S. YV. 292. Sefton, 53 Ind. 380. 

12 United States.— New York Life Iowa.— Mayer v. Mutual Lite Ins. 
Ins. Co. v. Eggleston, 9G U. S. 572, Co. 38 Iowa, 304, 18 Am. Rep. 34. 
"1 L ed. 841; Southern Life Ins. Co. Louisiana.— Elgutter v. Mutual Re- 
v McCain 96 U. S. 84, 24 L. ed. serve Fund Life Assoc. 52 La. Ann. 
653; Globe Mutual Life Ins. Co. v. 1733, 28 So. 289, 29 Ins. L. J 926. 
Wolff, 95 U. S. 326, 24 L. ed. 387; Missouri, — Hanley v. Lit > Associa- 
Seamans v. Northwestern Mutual tion of America, 69 Mo. 380 ; Thomp- 
I ife Co 3 Fed 325 son v. St. Louis Mutual Life Ins. Co. 

Alabama.— Brooklyn Life Ins. Co. 52 Mo. 409; Britt v. Sovereign Camp 

v. Bledsoe, 25 Ala. 538. of Woodmen of the World, 153 Mo. 

Connecticut. — Lewis v. Phoenix App. 098, 134 S. W. 1073. 
Ins. Co. 44 Conn. 72. New York. — Sullivan v. Industrial 

Georgia.— Grant v. Alabama Gold Benefit Assoc. 7:! Hun (N. Y. ) 319, 

Life Ins. Co. 70 Ga. 575. 26 N. Y. Supp. 180; Attorney Gen- 

Ulinois.—'Rome Life Ins. Co. v. eral v. Continental Life Ins. Co. 33 

Pierce, 75 111. 426; Illinois Ins. Co. Hun (N. Y.) 138; Dilleber v. Knick- 

v Stanton, 57 111. 351, 354; Supreme erhocker Life Ins. Co. 7 Daly (N. Y.) 

Council Catholic Benevolent Assoc, v. 540, aff'd 76 N. Y. 567; Meyer v. 

drove 176 Ind. 356, 36 L.R.A.(N.S.) Knickerbocker Ins. Co. 51 How. Pr. 

913, 96 N. E. 159. (N. Y.) 263. 

2482 



NOTICE § L332 

a mutual benefit association a particular method of notice of assess 
ments falling due is declared to be sufficienl and binding on all 
members, does oo1 exempl the corporation from the operation of 
the principles of equitable estoppel, which apply to all other per- 
sons, natural or judicial. 18 So it is held thai it is a question for the 
jury whether there has been a forfeiture where it has been the cus- 
tom of the c pany to give three ootices, one at the time of the 

assessment, one thirty, and one sixty days thereafter, and bul one 
notice is given, the assured having promised shortly thereafter to 
fix the matter up, and having subsequently corresponded with the 
company and made another like promise after a small loss had ac 
crued. 14 Again, where the assured had been accustomed to receive 
notice of the lime when premiums fell due, and he changed his res 
idence and notified defendant's agent of the fact, hut notice of the 
next premium falling due was sent to his former residence, and con- 
sequently he failed to pay the premium on the day. it was held in 
an action on the policy that the defendants were bound by their 
custom to give notice, and could not set up such nonpayment where 
no notice had been given as a forfeiture of the policy. 15 So if the 
uniform custom of the insurance company lias been to give notice 
of the time when the premiums fall due. and to collect the same at 
the residence of the policyholder through a local agent residing in 
his neighborhood, this mode of collection cannot he discontinued 
and payment required at the company's office without notice to the 
insured; 16 and it is held in other cases that a continued custom to 
give notice cannot he discontinued without notice, 17 and that a pay- 
ment within a reasonable time after the premium becomes due is 
sufficient where the custom has been to send notice and none is 

North Carolina, — Braswell v. sured notice of maturity of premium 

American Life Ins. Co. 75 X. Car. S. where insured is not otherwise en- 

Ohio. — Union Centra! Lite Ins. Co. titled to notice, see note in 20 L.R.A. 

v. Pottker, 33 Ohio St. 451). 31 Am. (N.S.) 1037. 

Rep. 555. 13 (Jnnther v. New Orleans Cotton 

Pennsylvania. — Helme v. Philadel- Exchange Mutual Aid Assoc. 40 La. 

phia Life Ins. Co. Gl Pa. St. 107. 100 Ann. 775. 2 L.R.A. 118, 8 Am. St. 

Am. Dec. 621. Rep. 554. 5 So. 05. 

Tennessee. — Kavanaujrh v. Se- 14 Elmondorph v. Citizens' Mutual 

curitv Trust & Life Ins. Co. 117 Ins. Co. 91 Mich. 36, 51 N. W. 926. 

Tenn. 33, 7 L.R.A. (N.S.) 253, 96 S. "Mayer v. Mutual Life Ins. Co. 

W. 499, 36 Ins. L. J. 30, 34; Hart- 38 Iowa, 304, 18 Am. Rep. 34. 

ford Life Ins. Co. v. Hyde, KH Tenn. 16 Union Central Life Ins. Co. v. 

396, 4S S. \V. 968. Pottker, 33 Ohio St. 459, 31 Am. Rep. 

Wisconsin. — Knoebel v. North 555. 

American Accident Ins. Co. 135 Wis. 17 Mever v. Knickerbocker Ins. Co. 

424. 20 L.R.A.(N.S.) 1037n, L15 51 How. IV. (N. Y.i 263, 73 N. Y. 

\. W. L094, 37 Ins. L. J. 376, 380. 516, 29 Am, Rep. 200; Phoenix Ins. 

On effect of custom to -rive in- Co. v. Doster, 106 U. S. 30, 27 L. ed. 

24S.5 



§ 1333 JOYCE ON LVSIKAXCF/ 

q. 18 Ami i( is held that the society is bound by a long-continr 
aed custom as to the manner of giving notice, although the by-law 
provides for a special mode of giving notice. 19 So a mutual benefil 
society \\ hich for years has given members notice of the limes w hen 
tegular asse sments are payable, waives the righl to forfeit a certifi- 
cate for nonpayment of an assessment for failure to give such no- 
tice, 80 and a uniform custom of the company to give notices of as 
sessments and to collect, the same through a residenl agent cannol 
be discontinued without notice. 1 And where ii is the custom of an 
association to conform to by-laws, thai notice should be directed to 
the regular address of the member and mailed, it must be complied 
with. 2 And the assignee must be given the statutory notice of mor- 
tuary premiums and dues where insurer has led such assignee by 
3ending notices to him to believe that it would continue to do so. 3 
Again, although a contract for accident insurance, the premiums 
on which are to be paid monthly, expressly provides that they must 
be paid on the first day of each month, without notice, yet, if for 
ten months the insured is sent notice of the maturity of the pre- 
mium, with a request that it be sent in a self-addressed envelop, the 
insurer cannot suddenly, without warning, cease to send the notice, 
and forfeit the policy for nonpayment, which occurs because the 
assured has, in good faith, waited for the usual notice; especially 
where the payments were to be entered in a hook which must al- 
ways be presented with the payment, so that assured might well 
assume that the only safe way of preserving the book was in sending 
it as directed by the insurer, to a postoffice address designated by it. 4 
§ 1333. Authorities holding the contrary doctrine. — Opposed, 
however, to these decisions are those of several courts wherein the 
contrary doctrine is held; thus, it is decided that if the custom to 
send notice that dues are payable is merely voluntary on the part 
of the insurer, failure to give notice does not waive a condition as to 

65, 1 Sup. Ct. 18; Manhattan Life Mass. 330; Union Central Life Ins. 

Tns. Co. v. Smith, 44 Ohio St. 156, Co. v. Pottker, 33 Ohio St. 459, 31 

58 Am. Rep. 806, 5 N. E. 417. Am. Rep. 555. 

18 (Jnmt v. Alabama Gold Life Ins. 2 Bange v. Supreme Council Le- 

Co. 76 Ga. 575. gion of Honor of Missouri, 128 Mo. 

l9 Gunther v. New Orleans Cotton App. 461, 105 S. W. 1092. 

Exchange Mutual Aid Assoc. 40 La. 3 Elgutter v. Mutual Reserve Fund 

Ann. 776, 2 L.R.A. 118, 8 Am. St. Life Assoc. 52 La. Ann. 1733, 28 So. 

Rep. 554, 5 So. 65. 289, 29 Ins. L. J. 926, N. Y. Laws 

20 Supreme Council, Catholic Be- 1892, c. 690, sec. 92. 

nevolent Legion v. Grove, 176 Lid. *Knoebel v. North American Acci- 

356, 36 L.R.A.(N.S.) 913, 96 N. E. dent Ins. Co. 135 Wis. 424, 20 L.R.A. 

159. (N.S.) 1037n, 115 N. W. 1094, 37 

1 White v. Connecticut Ins. Co. 120 Ins. L. J. 376, 380. 

2484 



NOTICE 



§ 1333 



forfeiture for nonpayment thereof on the specified day, 5 also that 
such custom is a mere matter of indulgence, and the insured may 
nut legally insist upon its continuance. 8 And it is held that the 
fact that the exact times and amounts of payments is known to the 
assured will permit a discontinuance of a custom to send notice, 
without, notifying the insured of the change; 7 and thai evidence 
that the company has been in the habit of notifying the insured 
when his premiums are duo. hut has neglected to do so in the partic- 
ular instance in question, is inadmissible, unless it be shown thai 
the notice was purposely omitted with the design to work a forfei- 

6 "The claim that there was a waiv- ated by the charter or by-laws of the 
er of the conditions of the policy company, and we think it clear that 
is based on the following propo- there is nothing in the habit or nsage 
sitions: 1. That fifteen days before relied on thai could impose such dutj 
the annual dues were payable, ac- upon the company, with such conse- 
cording to the terms of the policy, the quence of failure to perform it as 
defendant caused a notice to be sent that contended for by the appellee:" 
1o the assured, reminding her of the Mutual Fire Ins. Co. v. Miller, 58 
dav when such dues became payable. Md. 463, per Alvey, J. "The reason 
Conceding that this had been the cus- why the insurance company gives no^ 
torn of the defendant, it was a volun- tice to its members of the time of 
tary act on its part, and was not re- payment of premiums is to aid their 
quired by the terms of the policy, memory and to stimulate them to 
The obligation to pay the annual dues prompt payment. The company is 
on a named day was as positive as under no obligation to give such no- 
if the assured had given her promis- tice, and assumes no responsibility by 
sory note to that effect. The fact giving it. The duty of the assured 
that the defendant voluntarily sent to pay at the day is the same, wheth- 
such notice to the persons insured, er notice be given or not:" Thomp- 
and that in this instance it was, as son v. Knickerbocker Life Ins. Co. 
is claimed, negligent in sending the 104 U. S. 252, 26 L. ed. 658, per 
notice to the proper place, cannot Bradley, J. "It is contended that the 
amount to a waiver of the condition failure of the defendant company to 
of the policy," per Seevers, J. ; Man- send the customary notice excused the 
dego v. Centennial Mutual Life Ins. plaintiff's default. By the terms of 
Assoc. 64 Iowa, 134, 17 N. W. 656, the contract it was certainly the duty 
19 N. W. 877, 19 Ins. L. J. 660; New of the assured to pay on the day stip- 
York Life Ins. Co. v. Statham, 93 ulated, whether he received notice or 
U. S. 24, 23 L. ed. 789. not; he knew, or was bound to know, 

6 "In order to make the contention the several dates at which the pre- 
good, it must be shown that there was miuras were due, and his neglect to 
an obligation on the part of the com- pay was at his own peril; the com- 
pany to give the notice, and that the pany was under no obligation to give 
giving of such notice was a con- the notice:" Smith v. National Life 
dition precedent to the right of the Ins. Co. 103 Pa. St. 177, 49 Am. 
company to receive the interest on St. Rep. 121, per Clark, J. 
the premium note, according to the 7 Thompson v. Knickerbocker Life 
contract of insurance. But, as we Ins. Co. 104 U. S. 252, 26 L. ed. 
have seen, this obligation is not ere- 765. 

2485 



§§ 1334, 1335 JOYCE ON INSURANCE 

lure 8 And the failure to give the customary notice as to the pay- 
ment of annual interest on premium notes does not excuse default 
in paymehl of the -nine when due, while the policy provides for 
forfeiture on such default. 9 

§ 1334. Same subject: conclusion. — The better opinion would 
seem to be thai evidenced by the cases which hold thai a usage which 
is uniform and reasonably long-continued, whereby the insured has 
been induced to believe thai the rule as to forfeiture will not be 
strictly insisted on, but that the company will continue its custom 
to give notice as to the times when the premium will become due. 
or notify the insured of the discontinuance of such custom. This 
rule is hut fair and just to all parties, and to hold that evidence i~ 
inadmissible of such a, custom between the parties is to rejecl evi 
deuce showing any suhscquent modification by the parties of the 
contract, as well as evidence of waiver: hut it is without doubt com- 
petent for the parlies to modify subsequently the terms of their 
contract, or for either party to waive a, provision in the contract 
which is for his benefit. 10 

§ 1335. Personal notice: whether notice must be actually re- 
ceived. — Unless there is some requirement to the contrary, a per- 
sonal notice is sufficient, and where notice is required and no mode 
is provided, a personal notice is necessary, unless the same purpose 
may be otherwise accomplished. 11 And personal notice is insulli- 
ci< id if the by-laws prescribe some other mode. 12 Bui it is also held 
that when the reporter of a subordinate lodge of defendant bene- 
ficial association notified decedent in person of three assessments 
due, and decedent promised to make payment before he went away 
to work, such personal notice was sufficient to put decedent in de- 
fault, although the by-laws provided for written or printed notice. 13 
So actual notice by the receiver before bringing action may be suf- 
ficient, although notice by publication is required. 14 Again, if no- 
tice is relied on, it must be shown to have been actually received, 

8 Girard Life Ins. Annuity & Trust Ind. App. 340, 30 N. E. 939; Jones 

Co. v. New York Mutual Life Ins. v. Sisson, (i Gray (72 Mass.) 288. 
Co. 97 Pa. St. 15. "Northampton Mutual Livestock 

9 Webb v. Baltimore County Mu- Ins. Co. v. Stewart, 39 N. J. L. 486; 
dial Fire Ins. Co. (53 Md. 213. Sands v. Shoemaker, 4 Abb. App. 

10 Sec §§ 1345 et seq. herein on Dec. (N. Y.) 119, 2 Keyes (N. Y.) 
waiver and estoppel. But as to waiv- 271. But see Cooper v. Shaver, 4 
er of statutory notice, see $$ 1324, Barb. (N. Y.) 151. 

1324a, herein. 13 Thibert v. Supreme Lodge 

"Wachtel v. Widows & Orphans' Knights of Honor, 78 Minn. 448, 47 

Soc. 84 N. Y. 28, 38 Am. Rep. 178; L.R.A. 136, 79 Am. St. Rep. 412, 81 

York County Mutual Ins. Co. v. N. \V. 220. 

Knight, 48 Me. 75; S Innidi v. Ger- 14 Cooper v. Shaver, 41 Barb. (N. 

man Mutual Ins. Co. of Indiana, 4 Y.) 151. 

2486 



NOTICE 



§ 1335 



unless the contract stipulates otherwise; and generally, in the ab- 
sence of some provision to the contrary j notice when required to be 
given nm-i be shown to have been actually received, 16 unless the 
statute provides that properly mailing is sufficient. 16 And it is aol 

is Illinois —Protective Life [ns. Mueller, 151 [11. 254, 37 X. E. 882; 



Co. v. Palmer, 81 111. 88. 

Indiana. — Schmidt v. Gorman Mu- 
tual Ins. Co. of Indiana, 4 End. App. 
340, 30 N. E. 939. 

Louisiana. — Gunther v. New Or- 



Protection Life Ins. Co. v. Palmer, 

si 111. 88. 

Kentucky. — Continental Fire Ins. 
Co. v. A. lams, S Ky. L. Rep. 269. 

Maryland. — American Fire In-. Co. 



leans Cotton Exchange Mutual Aid v. Brooks, 83 Md. '22, 34 Atl. 373. 



Assoc. 10 La. Ann. 77(i, 2 L.R.A. lis, 
s Am. St. Rep. 554, 5 So. 65. 

Xcir York. — Merriman v. Keystone 



Massachusetts. — Mullen v. Dorches- 
ter Ins. Co. 121 Mass. 171. 

Michigan. — Castner v. Farmers' 



Mutual Benefit Assoc. 138 N. Y. 116, Mutual Fire Ins. Co. 50 Mich. 273, 

33 N. E. 738, 44 N. Y. St. Rep. 797, 15 X. \V. 452; Burhans v. Corey, 17 

51 X. Y. St. Rep. 665, 18 X. Y. Supp. Mich. 282. 
305. 63 Hun, (135. New York.— Peabody v. Satterlee, 

North Carolina.- -Duffy v. Mutual 166 N. Y. 174, 52 L.R.A. 956, 59 \. 

Life Ins. Co. 142 N. Car. 103, 7 E. 818; Merriman v. Keystone Mu 

L.R.A.fN.S.) 238, 55 S. E. 79, 36 tual Benefit Assoc. 138 N. Y. 116, 33 

Ins. L. J. 25. N. E. 738, aff'g 18 N. Y. Supp. 305, 

Ohio.— Crockett v. Order of Red 63 Hun, 035; Crown Point Iron Co. 

Cross, 24 Ohio CiV. Ct. Rep. 421. v. iEtna Ins. Co. 127 N. Y. 608, 14 

Tennessee.— Kavanaugh v. Security L.R.A. 147, 28 N. E. 653; Wachtel 

Trust & Life Ins. Co. 117 Tenn. 33, v. Noah Widows' & Orphans' Bene- 

7 L.R.A. (N.S.) 253, 96 S. W. 499, 36 fit Soc. 84 N. Y. 28, 38 Am. Rep. 

Ins. L. J. 30. 478. 

Texas— McCorkle v. Texas Benev- Tennessee.— State v. Connecticut 

olent Assoc. 71 Tex. 149, 8 S. W-. Mutual Life Ins. Co. 106 Tenn. 282, 

516. 294, 295, 61 S. W. 75. 

™ See § 1324, c, note N. Y. St. Texas. — McCorkle v. Texas Mu- 

Rep. Stats., and note under § 1326 tual Benefit Assoc. 71 Tex. 149, 8 

herein. Kavanaugh v. Security Trust S. W. 516. 

& Life Ins. Co. 117 Tenn/ 33, 7 Vermont.— Brattleboro East Soc. 

L.R.A. (N.S.) 253, 96 S. W. 499, 36 v. Reed, 42 Vt. 76. The Court in the 

Ins. L. J. 30. In this case the court, principal case continuing said: "It 

per Neil, J., said: "In the absence is insisted that the contrary rule is 

of a statute, or of an express term in laid down in the following authori- 

a contract, making sufficient the mere ties:" Citing and Reviewing: 
mailing of a communication contain- United States. — Phoenix Mutual 

ing information of the approaching Life Ins. Co. v. Doster, 106 TJ. S. 30, 

maturity of the premium, it must ap- 27 L. ed. 65, 1 Sup. Ct. 18; Xew 

pear thai such communication was York Life Ins. Co. v. Eggleston, 06 

received before it can be operative as U. S. 572, 24 L. ed. 453; McConnell 

notice, and thereby effect a forfeiture V. Provident Savings' Life Ins. Co. 92 

of the policy upon failure to pay at Fed. 769, 31 ('. C. A. 663. 
the date." ' Citing and 'Reviewing: Iowa. — McKenna v. State Ins. Co. 

Illinois.— Cronin v. Supreme Council 73 Iowa, 453, 35 X. W. 519. 
Royal League, L99 111. 228, 93 Am. Louisiana. — Epstein v. Mutual Aid 

St. Rep. 127, 65 X. E. 323: United & Benevolent Assoc. 28 La. Ann. 938. 
States Mutual Accident Assoc, v. Massachusetts.— -Lothrop v. Green- 

2487 



§ 1335 



JOYCE ON INSURANCE 



essential thai the notice be received under a statutory requirement 
thai the notice be properly addressed and mailed." 

The question, therefore, whether the notice, when required to I" 1 
given, must be actually received by the party to whom it should 
be given, musl depend upon the provisions, statutory or otherwise, 
concerning giving notice. And if the charter, articles of associa- 
tions, or by-laws, or, in brief, the contract provides that the mode 
of transmission shall be by mail, actual receipt of the notice need 



field Stock & Mutual Fire Ins. Co. 2 
Allen (84 Mass.) 82. 

Tennessee. — Hartford Life Ins. 
Co. v. Byde, 101 Tenn. 396, 103, 48 
S. W. 968; Otis v. Payne, 86 Tenn. 
6G3, 666, 8 S. W. 848. 

Virginia. — Surviek v. Valley Mu- 
tual Life Ins. Co. — Va. — , 23 S. E. 
223; May on Insurance, vol. 2, sec. 
35(ia; Bacon on Insurance, sec. 381: 
and the court concluded as follows: 
"Here we have not a negotiation, hut 



properly posted, all of the requisites 
of i lie custom were complied with. 
This is not a sound view. All of 
the previous letters had reached their 
(list ination, and had conveyed the in- 
formation they were designed to eon 
vey. The custom was not merely to 
mail, hut to give notice by mail, to 
actually convey the information in- 
tended to be delivered by that means. 
"We see no hardship to the in- 
surer in this view of the matter. It 



a claim that a right already acquired is surely not admissible to suppose 
was forfeited by miscarriage of the that any insurance company is alerl 
mail : that the mere posting of a letter for occasions to declare forfeitures 
properly stamped and addressed and thereby to keep moneys for which 
should be treated as notice and a val- no equivalent has been rendered. The 
liable right thereby defeated, although company is entitled to prompt pay- 
such letter never reached its destina- ment of premiums. It is only by 
tion, no information was conveyed by such payments that its business can 
it, and it in no sense performed the be carried on. The power to de- 
purpose it was designed to perform, clare forfeitures for nonpayment is 
Before such a conclusion can be given to effectuate this purpose. But 
properly reached, it seems to us there it is a perversion of the purpose 
should be direct statutory provisions when forfeitures are in themselves 
requiring it, or the clear terms of a made an object or end to be attained. 
contract. Therefore the courts have always 
"The purpose of a letter is to give seized upon every reasonable circum- 
information. If it never reaches its stance presented in a case to prevent 
destination, it fails of its purpose. To the taking effect of a forfeiture. In 
say that nevertheless it must be held the case of a miscarriage of the mail, 
to have accomplished the purpose the insured performs his duty it, 
could only be justified, as we have upon subsequently receiving notice, 
said, by the terms of a statute or of he promptly complies by paying the 
an express contract authorizing premium due: Grant v. Alabama 



such result. In the absence of these, 
it would not be reasonable to infer 
that a. man would agree that his ig- 
norance of a fact should fix him with 
all of the consequences of knowledge. 



Gold Life Ins. Co. 76 Ga. 575, 583. 
The complainants in the present case 
did so comply and thereby saved the 
forfeiture." 

17 New York Life Ins. Co. v. Scott, 



"It is said in the present case that 23 Tex. Civ. App. 541, 57 S. AY. 677; 
the custom had been to give no- N. Y. Laws 1892, c. 690, sec. 92. 
tice by mail, and that, when a letter 

2488 



NOTICE § 1335 

not 1)0 proven; il is sufficient thai the same is properly addressed 
and mailed in such a manner thai it would ordinarily be received 
in due course of mail. 18 Tin.- presumption may, however, be re- 
united by proof that the notice was never received. 19 So notice of 
an assessment need not be received by assured before forfeiture can 
be declared, where the by-law provides for forfeiture within a spec 
ified time after mailing notice to the member's address, 20 and if it 
he expressly or impliedly stipulated that notice shall be given by a 
deposit of the same in the postoflice in a certain city, addressed to 
the address left in writing at the association's office, it is sufficient 
notice if such rule is complied with, even though it is never re- 
ceived. 1 But if the charter requires that members shall be notified 
of assessments by circular or verbally, and that if they do not pay 
within a fixed time they will forfeit protection through their policy, 
such personal liability cannot attach from merely mailing the no- 
tice, but it must be actually received. 2 So in Illinois mere proof of 
the mailing to the member's last address of notice of assessments, 
without proof that it was or could have been received by him within 
the specified time before actual payment, is insufficient to sustain 
a forfeiture. 3 And not only must the receipt of the notice be shown 
in such case but also that it was properly mailed and if it is not 
received the presumption is that it was not mailed. 4 So the mere 
mailing of a notice properly addressed and stamped is not, in the 
absence of a statute or contract provision, a compliance with a cus- 
tom to give notice of the maturing of a note given for an insurance 
premium, where the letter never reaches its destination, although 

18 McConnell v. Provident Savings On necessity that notice of matu- 

Life Assur. Soc. 92 Fed. 7(ii), 34 C. rity of premiums or assessments sent 

C. A. 663 (N. Y. Stat.) ; Weakly v. through the mails be received, see 

Northwestern Benevolent & Mutual note in 7 L.R.A.(N.S.) 253. 

Aid Assoc. 19 Bradw. (Bl.) 327; 19 Sherrod v. Farmers' Mutual Fire 

Union Mutual Accident Assoc, v. Mil- Ins. Assoc. 139 N. Car. 167, 51 S. E. 

ler, 26 III. App. 230; Greeley v. Iowa 910. 

State Ins. Co. 50 Iowa, 86 ; Epstein 20 See Survick v. Valley Mutual 

v. Mutual Aid Assoc. 28 La. Ann. Life Assoc. (1895) — Va. — , 23 S. 

938; Yoe v. Howard Masonic Mutual E. 223. 

Benefit Assoc, of Baltimore, 63 Md. 1 Epstein v. Mutual Aid Assoc. 28 

86; Lothrop v. Greenfield Stock & La. Ann. 938. 

Mutual Fire Ins. Co. 2 Allen (84 2 Castncr v. Farmers' Mutual Fire 

Mass.) 82; Borgraefe v. Supreme Ins. Co. 50 Mich. 273, 15 N. W. 452. 

Lodge Knights & Ladies of Honor, 3 Northwestern Traveling Men's 

22 Mo. App. 127; Sherrod v. Farm- Assoc, v. Schauss, 148 111. 301. 35 

ers' Mutual Fire Ins. Assoc. 139 N. N. E. 747, 51 111. App. 78. 

Car. 167, 51 S. E. 910. Examine * Duffy v. Mutual Life Ins. Co. 142 

Commonwealth Mutual Fire Ins. Uo. N. Car. 103, 7 L.R.A.(N.S.) 238 

v. Wood, 171 Mass. 484, 51 N. E. 19. (annotated on mode of proving mail- 

2489 



§ 1330 



JOYCE (>.\ INSURANCE 



the custom has been to give notice by mail. 8 And if the by-laws 
provide thai notice shall be given, notice by mail directed to the 
insured without proof of the actual receipl of the same is insuffi- 
cient, 6 and if the article- of association provide for payment within 
,i specified time "after receiving notice," actual lattice must be 
shown to have been received, even though the by-laws provide for 
notice by publication. 7 If assessments are required to be paid with- 
in a specified time from "date" of the notice, this means the date 
when it is or should be received. 8 And if notice is not mailed to 
insured's regular address it must be shown to have been received 
within the time limit prescribed by the by-laws, and an instruction 
which fails to so state is erroneous. 9 Again, if the notice is mailed 
to an unauthorized address, the company assumes the risk of de- 
liverv. even though prior notices sent to the same address had heen 
received. 10 

The question whether a notice has been received is for the jury, 11 
especially so in ease the evidence is uncertain as to how the notice 
was addressed, and whether it was mailed, and it does not appear 
that it was delivered or that the member was on the list from which 
the notices were made out. 12 

§ 1336. Service by mail. — Service of notice by mail may be suf- 
ficient under the terms of the contract, 13 a statute may also provide 
for service of notice by registered letter addressed to the assured at 
his postoffice address named in or on the policy, 14 in which case the 

ing of notice of maturity of premiums Miner v. Fanners' Mutual Fire Ins. 

or assessments), 55 S. E. 79, 36 Ins. Co. 153 Mich. 594, 117 N. W. 1211 ; 

L. J. 25. Bange v. Supreme Council Legion of 

5 Kavanaugh v. Security Trust & Honor, 153 Mo. App. 154, 132 S. W 



Life Ins. Co. 117 Tenn. 33, 7 L.R.A. 
(N.S.) 253n, 96 S. W. 49!). Examine 
§ 1163 herein. 

6 McCorkle v. Texas Benevolent 
Assoc. 71 Tex. 149, 8 S. W. 516. 

7 Schmidt v. German Mutual Ins. 
Co. of Indiana, 4 Ind. App. 340, 
30 N. E. 939. 



2/0. See Howell v. John Hancock 
Mutual Life Ins. Co. 95 N. Y. Supp. 
87, 107 App. Div. 200. 

12 Jackson v. Northwestern Mutual 
Relief Assoc. 78 Wis. 463, 47 N. \Y. 
733. 

13 Lothrop v. Greenfield Stock Mu- 
tual Ins. Co. 2 Allen (84 Mass.) 82; 



8 United States Mutual Accident Epstein v. Mutual Aid Assoc. 28 La. 
Assoc, v. Mueller, 151 111. 254, 37 N. Ann. 938; Ziegler v. Mutual Aid & 
E. 882. Benevolent Life Ins. Co. 1 McGl. 

9 Bange v. Supreme Council Legion (La.) 284, and cases under last sec- 
of Honor, 153 Mo. App. 154, 132 S. tion. See § 1335 herein. 

W. 276. "Laws Iowa, 1880, c, 210, sec. 2; 

10 Carter v. Brooklyn Life Ins. Co. McClain's Code, p. 299. See § 1324 
110 N T . Y. 15, 17 X. E. 396. herein as to N. Y. Stats.; and notes 

11 McCorkle v. Texas Benevolent under § 1326 herein. Smith v. Con- 
Assoc. 71 Tex. 11!), S S. W. 516; t mental Ins. Co. 108 Iowa, 382, 7!) 
Jackson v. Northwestern Mutual Re- N. YV. 120, 28 Ins. L. .1. 534, act 18th 
lief Assoc. 78 Wis. 463, 47 N. W. 733; (Jen. Assemh. c. 210. 

2490 



NOTICE § L33G 

service is complete when the letter is mailed ; 15 bul notice of assess- 
ment must be mailed in sufficient time, 18 and it may be mailed the 
day "before its date. 17 [f notice is senl by mail, it is obligatory upon 

the sender to comply with nil the prerequisites necessary to enable 
it to reach the other pnrtv in due course of mail : thai is, it musl be 
properly addressed and mailed, postage prepaid, and the company 
must show these facts affirmatively, both in pleading and evi- 
dence; 18 for the burden of proving notice of assessments is upon a 
beneficial association, 19 and upon such showing the presumption 
attaches that the letter was received in the regular course of mail, 20 
although as stated under a preceding section such presumption may 
be rebutted. 1 So it may be shown in defense to an net ion on a ben- 
efit certificate that, in conformity with the by-laws a paper was 
mailed in which the call for assessments was published. 2 If. how- 
ever, it does not appear that a by-law authorizing mailing the no- 
tice has been complied with forfeiture for nonpayment of the assess- 
ment is precluded. 3 But a notice is not mailed if it is merely left 
in a place, not provided by the government, from which a mail car- 
rier is accustomed to take letters for deposit in the mail. 4 But the 
fact of finding the notice among the policyholder's effects seven- 
teen days after the premium was due, and forty-seven days after its 
date, does not of itself, in the absence of other evidence, prove that 
it was properly addressed and mailed as required by the statute. 
especially where the address on the notice was not the policyhold- 

15 Ross v. Hawkeve Ins. Co. 83 19 Shea v. Massachusetts Benevo- 
Iowa, 586, 50 N. W. 47; McKcnna lent Assoc. 160 Mass. 289, 39 Am. 
v. State Ins. Co. 73 Iowa, 453, 35 St. Rep. 475, 35 N. E. 855. 

N W 519. 20 Hastings v. Brooklyn Life Ins. 

16 State Division Lone Star Ins. Co. 44 N. Y. St. Rep. 37, 17 N. Y. 
Union v. Blassengame, — Tex. Civ. Supp. 333, 63 Hun (N. Y.) 624; 
App. — , 162 S. W. 6. Benedict v. Grand Lodge Ancient Or- 

17 Van Frank v. United States Mu- der United Workmen, 48 Minn. 471, 
tual Benefit Assoc. 158 111. 560, 41 N. 51 N. W. 371, 21 Ins. L. J. 438. See 
E. 1005. § 1335 herein. 

18 Duffy v. Fidelity Mutual Life l Sherrod v. Farmers' Mutual Fire 
Ins. Co.' 142 N. C. 163, 7 L.R.A. Ins. Assoc. 139 X. Car. 1ti7, 51 S. E. 
(N.S.) 238, 55 S. E. 79. 143 N. Car. Oil). See § 1335 herein. 

697, 56 S. E. 1047. 8 Rambousek v. Supreme Council 

See Haskinsv. Kent nek v (!ran<xers' of the Mystic Toilers, L19 Cowa, 263, 

Mutual Benefit Soc. 7 Ky. L. Rep. 93 X. W. 277. 

371; Lothrop v. Greenfield Stock Mu- 3 Ellis v. National Provident 1 men. 

tual Ins. Co. 2 Allen (84 Mass.) 82. 50 App. Div. 255, 63 X. Y. Supp. 

See § 1163 herein. HI 12. 

On mode of proving mailing of *Molloy v. Supreme Council Cath- 

nntice of maturity of premiums or olic Benevolent Assoc. 93 Iowa, 501. 

assessments, see note in 7 L.R.A. 61 N. W. 928. 

(N.S.) 238. 

2491 



§ 1336a JOYCE o\ [NSURANCE 

er's last known address; 8 and where the mailing was only proved 
by the general course of business of the company, and three notices 
for three members of the same family, all of whom were certificate 

holders in the company, were inclosed in one envelope and received 
li\ one of them, it was found thai the notice was not mailed, and 
the court refused to disturb such finding. 6 If there is an indorse- 
ment on the policy that the first premium will be payable on a spec- 
ified date, assured has a right to rely thereon, and will not forfeit 
his rights under the policy for nonpayment of an assessment mailed 
to him before such specified time, even though it is stipulated in the 
policy that mailing notice of an assessment, postage prepaid, will be 
sufficient notice, and that payment must be made within one calen- 
dar month thereafter. 7 

§ 1336a. Same subject: validity of provisions as to. — A by-law 
authorizing a printed or written notice of assessments and dues to 
be sent properly addressed and mailed to insured is valid and bind- 
ing. 8 So a by-law is not void as being unreasonable which provides 
for service by mailing a copy of the association's official paper with 
notice therein of assessments. 9 But a by-law which attempts to 
make the certificate of an officer of the association conclusive evi- 
dence of mailing of the required notice is illegal as it practically 
restricts the right to sue in the courts and is an unreasonable and 
dangerous innovation upon a common right especially so where said 
by-law does not require the certificate of the officer to state a fact 
within his own knowledge nor require him to certify that he mailed 
the notice, or that he saw some other person do so, but permits him 
to rely upon the statement of others that it was done. 10 In this con- 
nection it may be stated that the New York statute only makes the 
affidavit of the persons therein specified presumptive evidence of 
mailing and that notice has been duly given. 11 

6 Phelan v. Northwestern Mutual As to reasonable and unreasonable 
Life Ins. Co. 113 N. Y. 147, 10 Am. by-laws, see §§ 368 et seq. herein. 
St. Rep. 441, 20 N. E. 827. As to reasonable and unreasonable 

6 Garretson v. Equitable Mutual amendments, see §§ 379k et seq. here- 
Life & Endowment Assoc. 74 Iowa, in. 

Mil, 38 N. W. 127. 10 Duffy v. Fidelity Mutual Life 

7 Ball v. Northwestern Mutual Ac- Ins. Co. *142 N. Car. 103, 7 L.R.A. 
cident Assoc. 50 Minn. 414, 57 N. W. (N.S.) 238, 55 S. E. 79, 36 Ins. L. 
1063. J. 25. 

8 Duffy v. Fidelity Mutual Life Ins. u See statute in note under § 1326 
Co. 142 N. Car. 103, 7 L.R.A. (N.S.) herein. 

238, 55 S. E. 79, 36 Ins. L. J. 25. What affidavit should contain. See 

9 Underwood v. Modern Woodmen Mr-Call v. Prudential Ins. Co. 90 N. 
of America, 141 Iowa, 240, 119 N. Y. Supp. 644, 98 App. Div. 225. 

\Y (jio. Effect of affidavit made in foreign 

2492 



NOTICE § 13 

§ 1336b. Same subject: last known address: change of address. — 
A notice may be addressed to the residence named in the policy mi 
til the company is notified of the change. 18 And the association 
must continue to send notice to the proper address unless it is noti- 
fied of a change of such address and if without authority therefor 
it sends notice to an address differenl from (hat stated in the con- 
tract it has no force as a notice in the absence of proof that it was 
received by assured. 13 And the notice is sufficient if mailed to the 
assured at his last known address where the contract provides for 
such mode of transmission. 'The fad that the party has changed 
his address does not affect the sufficiency of the notification when 
such change is unknown to the society. 14 And if the change of ad- 
dress is not authorized to be made in the insurer's books, a notice to 
the last address there appearing is sufficienl though insured's last 
assessment had been paid from another address. 16 If, however. 
insured has no postoflice address in the state, a statutory require- 
ment that notice must be mailed to the last known address does not 
apply. 16 If insured's address is changed without notice thereof to 
insurer and the notice of assessments is sent by second class mail 
which cannot be forwarded instead of on a postal as had formerly 
been done the policy will nevertheless be forfeited for nonpayment 
of premiums as required and so, even though the by-laws require 
notice by mail. 17 Again, the obligation to give notice before strik- 
ing a member's name from the rolls for nonpayment of arrears in 
dnes is not excused by such member's neglect to notify the society 
of a change in his address where the by-laws provide for such notice, 
and for a fine in case of the member's failure to notify the society 
of a change of address. 18 

state. See Carr v. Prudential Ins. 13 Mutual Life Industrial Assoc. 

Co. 101 N. Y. Supp. 158, 115 App. v. Scott, 170 Ala. 420, 51 So. 182. 
Div. 755. 14 Lothrop v. Greenfield Stock & 

12 Lothrop v. Greenfield Stock Mu- Mutual Fire Ins. Co. 2 Allen (84 

dial Ins. Co. 2 Allen (84 Mass.) 82. Mass.) 82. 

Statutory notice sent to joint address. "Smith, v. Mutual Reserve Fund 

If a policy is issued to husband and Life Ins. Co. 44 Wash. 315, 87 Pac. 

wife on their lives, and the statutory 347. 

notice is sent addressed to them joint- 16 Napier v. Bankers' Life Ins. Co. 

ly, he cannot avail himself of his neg- 100 N. Y. Supp. 1052, 51 Misc. 283. 
lect to deliver the notice to his wife, 17 Mutual Fire Ins. Co. v. Turner, 

and so claim a nonforfeiture for the 115 Va. 631, 79 S. E. 1067. 
nonpayment of the premium due. 18 \Vachtel v. Widows & Orphans' 

Mullen v. Mutual Life Ins. Co. Soc. 84 N. Y. 28, 38 Am. Rep. 478. 
( L895) — Tex. Civ. App. — , 32 S. 
W. 911, rev'd 89 Tex. 259, 31 S. W. 
605. 

2403 



§§ L337, 11338 JOYCE ON INSURANCE 

Notice to a bank collecting premiums for an insurance company, 
of a change in the postoffice address of an insured, is notice to the 
company. 19 So notice to a general agenl of insurer, in a conversa- 
tion on the street, of insured's change of address hinds insurer and 
requires thai notice be sent to the address given, under a statutory 
requirement thai notice be sent to the Last known postoffice address 
of insured. 20 

§ 1337. Notice wrongly addressed. — If the notice of assessment 
is wrongly addressed, owing to the collector's mistake, to a place 
where the member never resided, and it is never received by him, 
the nonpayment of such assessment when due does not operate as a 
forfeiture where the by-laws require notice to he mailed or left at 
the member's last known postoffice address or residence. 1 And 
there is no presum] tion that the assured received notice of the ma- 
turity of premiums where such notice is not mailed to his address, 
but is. on the other hand, sent to another city of which he was be- 
fore thai time a resident. 2 If notice of an assessment is required 
by the constitution to be mailed to the "last address as shown" by 
certain hooks, there is no forfeiture for nonpayment of assessments 
where the notice is mailed to another address. 3 So a notice of the 
maturity of a premium which is improperly addressed and does not 
reach assured, hut is returned to the insurer cannot establish a for- 
feiture. 4 

§ 1338. Notice by publication. — If notice by publication is re- 
quired, or if public notice by advertisement is provided for, such 
notice must be given in the mode and for the time prescribed, in 
oi-der to establish a forfeiture or suspension or to maintain a suit 
against a member where such action may be had. 5 And notice of 

19 Goodwin v. Provident Savings' L.R.A. 473, 59 Am. St. Rep. 411, 66 
Life Assurance Soc. !>7 Iowa, '226, 32 N. W. 157, 25 Ins. L. J. 401. 
L.R.A. 473, 66 N. W. 157, 25 Ins. L. ^Northampton Mutual Livestock 
.1. 401. Ins. Co. v. Stewart, 39 N. .1. L. 186; 

20 Goodwin v. Provident Savings' Pennsylvania Training School v. In- 
Life Assur. Soc. 97 Iowa, 226, 32 dependent Ins. Co. 127 Pa. St. 559, 
L.R.A. 473, 66 N. W. 157> 25 Ins. L. 18 Atl. 392; Fitzpatrick v. Mutual 
3. 401. Benefit Life Ins. Assoc. 25 La. Ann. 

1 Waterworth v. American Order of 443. 

Druids, Kit .Mass. 571, 42 N. E. 10(5. The New York statute governing 

2 Goodwin v. Provident Savings' assessments in mutual fire insurance 
Life Assur. Assoc. 97 Iowa. 226, 32 corporations provides: "The direc- 
L.R.A. 173,59 Am. St. Rep. 411, 66 tors shall, as often as they deem 
X. \V. L57, 25 Ins. L. J. 401. necessary, after receiving notice of 

3 Mollov v. Supreme Council Cath- any loss or damage by lire sustained 
olic Benevolent Assoc. 93 Iowa, 504, by any member, and ascertaining the 
til N. \\ . 928. same, or after the rendition of any 

4 Goodwin v. Provident Savings' judgment against the corporation for 
Life Assur. Soc. 97 Iowa, 226, 32 loss or damage, settle and determine 

2494 



NOTICE § 1338 

assessment must not only be published in the official paper 1ml mu-t 
also bo sent, where the constitution of the society provides thai it 
shall be made and sent in such manner as the grand Legion shall 
provide. 6 And if public notice by advertisement is specified, proof 
of personal notice is insufficient. 1 So in case the statute provides 
that the directors may publish notice of assessments in such manner 
as they shall see fit, or as the by-laws shall have prescribed, they 
must comply with the mode prescribed in the by-laws for publica- 
tion of notices, but in the absence of by-laws on the subject they 
may exercise their discretion, and defects in the notice arising from 
noncompliance with the by-laws will not be aided by a personal de- 
mand. 8 A requirement in the charter that public notice be given 
when advertising an assessment made, means notice by advertise- 
ment in a newspaper. 9 And if the by-laws provide that payment 
must be made in a specified number of days after publication, they 
must be so made. 10 So where the charter provides for notice of 
death by posting notice thereof in the exchange, and for payment 
within a specified time thereafter, a member who fails to pay an 
assessment of which notice was so posted forfeits his certificate. 11 If 
the notice is required to be published five days' payment of an as- 
sessment to be called for within thirty days thereafter, and the 
time of publication is extended by notice to eight days, payment to 
be made at the office of the company within thirty days thereafter, 
the notice must be published the full eight days, and no forfeiture 

the sums to be paid by the several of the losses for which the assess- 

members thereof as their respective merit is made." N. Y. Ins. Law 1909, 

portion of such loss, and publish the c. 33, sec. 116, as revised from L. 

same in such manner as they shall 1853, c. 466, sec. 13, as am'd by L. 

see fit or as the by-laws shall have 1854, c. 369 ; L. 1890, c. 302. 

prescribed. The sum to be paid by 6 Grand Legion of Illinois Select 

each member shall always be in pro- Knights of America v. Beatty, 224 

portion to the original amount of his 111. 346, 8 L. R. A.(N.S.) 1124, 7!) 

note or notes, and shall be paid to N. E. 565, affd 117 111. App. 647. 

the officers of the corporation with- 'Northampton Mutual Livestock 

in thirty days next after the pub- Ins. Co. v. Stewart, 39 N. J. L. 486. 

lication of such notice. If any mem- 8 Sands v. Sanders, 26 N. Y. 239. 

ber shall, for the space of thirty days 9 Pennsylvania Training School v. 

after such publication and after per- Independent Mutual Fire Ins. Co. 127 

sonal demand for payment shall have Pa. St. 559, 25 Week. Not. Cas. 53, 

been made, neglect or refuse to pay 18 Atl. 392. 

the sum so assessed upon him, the 10 Madeira v. Merchants' Exchange 

directors may sue for and recover the Mutual Benefit Soc. 16 Fed. 749. 

whole amount of his note or notes, u Maginnis' Estate v. New Orleans 

with costs of suit, but execution shall Cotton Exchange and Mutual Aid 

only issue for assessments and costs A -soc. 43 La. Ann. 1136, 10 So. 180, 

as they accrue, and every such execu- 21 Ins. L. J. 171. 
tion shall be accompanied by a list 

2495 



§§ 1338a, L339 JOYCE ON [NSURANCE 

can be declared for nonpayment prior to the expiration of the thirty 
thereafter; 12 and if the by-laws provide for publication of no- 
n premium uotes in three newspapers in the 
county where the company is organized and transacting business, 
compliance with such by-laws must be proven to warrant a recovery 
of an assessment, or it musl be shown that it was not possible to com- 
ply therewith because there were not the specified number of news- 
papers in the county. A proof of publication in two newspapers 
without such other proof is insufficient, nor is there any obligation 
on the part of the member to show that there were three newspap- 
ers. 18 But the fact that the by-laws provide for notice by publica- 
tion in one or more newspapers does not preclude the necessity for 
actual nolicr when articles of association provide for the latter. 14 

§ 1338a. Same subject: validity of provisions as to. — A statute 
which provides that notice of assessments may be given by "publi- 
cation or otherwise," is not unconstitutional as not requiring per- 
sonal notice. 15 

§ 1339. Computation- of time. 16 — In computing the time within 
which the days allowed for payment of an assessment begin to run. 
regard must be had to the requirements or agreement concerning 
notice. 17 Thus, if the statute provides that notice may be transmit- 
ted by registered letter, the time limited for payment begins to run 
from the day the letter is properly and duly mailed. 18 In the com- 
putation of time under the New York statute as to notice of matur- 
ity of premiums, the day of mailing is to be excluded, and a notice 
mailed November 2d, stating that the premium will be due Decem- 
ber 2d, does not cover the thirty days required. 19 If the by-laws 
provide for forfeiture in case of nonpayment within thirty days 
from the date of the assessment, the "date" means the time when it 
was made out by the secretary and mailed to the assured, and it is 
no excuse that the notice never reached the assured where it is prop- 
erly mailed and addressed. This case distinguishes those cases 

12 Fitzpatrick v. Mutual Benefit computation of time generally, see 
Life Ins. Assoc. 25 La. Ann. 443. notes 49 L.R.A. 193 (50 pages) ; 15 

13 Sands v. Graves, 58 N. Y. 94. L.R.A. (N.S.) 688. 

14 Schmidt v. German Mutual Ins. "Weakly v. Northwestern Benevo- 
Co. of Indiana, 4 Ind. App. 340, 30 lent Mutual Aid Soc. 19 Bradw. ( 111.) 
N. E. 939. 327. 

15 Hamilton Mutual Ins. Co. v. 18 Ross v. Hawkeye Ins. Co. 83 
Parker, 11 Allen (93 Mass.) 574; Iowa, 586, 50 N. W. 47, 21 Ins. L. 
Mass. Stats. 1862, c. 181, sec. 2; J. 121. 

Stats 1863, c. 24!). 19 Hicks v. National Life Ins. Co. 

i8S ee §§171, 1446 herein. As to 60 Fed. 690, 9 C. C. A. 215; Laws 

exclusion' and inclusion of days in N. Y. 1877, c. 321. See also Ro~en- 

2496 



NOTICE § 1339 

wherein time is to be computed from the "date of notice/' 20 Again, 
it is held that sending notice when required under the by-laws is an 
essentia] part of the notice or assessment, and it must, therefore, be 
sent within a reasonable time after its date, and otherwise the time 
allowed for payment should not be computed from such date. 1 On 
a line with this case are two other cases, one in Kentucky and one 
in Minnesota, where the constitution of the society provided that the 
assessment should be paid by the member not later than the twenty- 
eighth day of the month, and that notices of assessments should be 
sent not later than the eighth day of the month on which the ^as- 
sessment was issued. Although this provision of the constitution 
was construed as allowing twenty days for payment before forfeiture 
could be declared, it was held in the first-named state that it was suf- 
ficient if a reasonable time was given from the sending of the notice, 
even though the full time of payment was not allowed, and in the 
latter case a suspension of the member by the society on the twenty- 
ninth day of the month was sustained, and this although the notice 
in the first case was not sent until the ninth or tenth of the month, 
and in the latter case not until about the twelfth of the month. 2 
While it might be urged that there is a distinction between an 
agreement to pay on a specified day, where a reasonable time is given 
to meet the obligation, and an agreement that a specified number of 
days from the date of notice shall be given for payment, neverthe- 
less these decisions are subject to criticism in this, that if the con- 
stitution be construed to allow the full twenty days for payment of 
an assessment, it is doubtful if rulings which, contrary to contract 
stipulations, tend to shorten such specified time, will be favorably 
considered, especially where the forfeiture of contract .rights follows 
such construction. And the main objection to these decisions must 
be based on the point that the constitution was construed to allow 
twenty days for payment. There is another class of cases which are 
similar, in that the notice frequently provides for payment within 
a certain number of days from date, but in addition specifies in the 
notice the date on which the time for payment will expire, and in 
so far as such specification of a certain day as the time limit con- 
forms to the charter or constitution and by-laws, or, in brief, with 
the contract, it would seem to exclude the question of computation 

planter v. Provident Savings' Life 2 Ancient Order United Workmen 
Assur. Soc. 96 Fed. 721, 37 C. C. A. v. Moore (Ky.) 1 Ky. L. Rep. 93; 
566, 46 L.R.A. 473. Benedict v. Grand Lodge Ancient Or- 

20 ' Weakly v. Northwestern Benev- der United Workmen, 48 Minn. 471, 
olent Mutual Aid Soc. 19 Bradw. 51 N. W. 371, 21 Ins. L. J. 438. 
(111.) 327. 

1 Stanley v. Northwestern Life 
Assoc. 36 'Fed. 75. 

Joyce Ins. Vol. III.— 157. 2497 



§ 1339 JOYCE ON INSURANCE 

of time; but this ought certainly to be based only on the assumption 
that the notice must be sent in due and reasonable time after date, 
but even in such case if the contract allows a certain number of days 
after notice for payment, it is doubtful if the company may, by 
designating a certain day, impose an obligation on the insured not 
contained in the contract. Thus, it is the genera] rule in cases where 
the assessment is to be paid within a specified number of days after 
date or after service of notice, or after notice is sent to the assured, 
or in cases of like character where the policyholder or assured is 
entitled to actual receipt of notice, that the day when the notice is 
actually received should be excluded in the computation of time. 3 
And if the notice is agreed to be sent by mail, the computation of 
time must be from the day when a properly addressed and mailed 
letter would reach the party in regular course of mail ; that is, such 
day must be excluded, 4 even though notice is not actually received. 5 
It, is held, however, that the date of notice is that on which it is ac- 
tually received where assessments are to be paid within a specified 
number of days "after notice" and if not paid within a certain num- 
ber of days "from notice." 6 And time is to be computed from the 
date of notice of assessment and not from the date specified in said 
notice as that on which the treasurer of the insurer would be at a 
certain place to receive payment. 7 

Where the requirement is for notice by publication for a stated 
time and payment within a certain number of days after notice, or 
after date of the death of a member and notice thereof by publica- 
tion, the time should be computed from and after the expiration 
of the last day of publication. 8 In computing the time from which 
dues commence to be in arrears, as in case of dues in arrears for six 
months, the time commences to run from and after the last day of 
the period at the termination of which they are due and payable. 9 

8 Protection Life Ins. Co. v. Palm- e Darlington v. Phoenix Mutual 

er, 81 111. 88 (after "date of notice") ; Fire Ins. Co. 194 Pa. 650, 45 Atl. 482, 

American Mutual Aid Soe. v. Quire 29 Ins. L. J. 373. See Matthews 

8 Kv. L. Rep. 101 (the charter pro- Farmers' Mutual Live Stock Ins. Co. 

vided for payment within a specified v. Moore, 580 Ind. App. 240, 108 N. 

time after notice "served on" or E. 155. 

"scut to" the assured; the date of re- 7 Shuman v. Juniata Farmers' Mu- 

ceiving notice is the date from which tual Fire Ins. Co. 206 Pa. 417, 55 

time is computed); (ireat Western Atl. 1069. 

Mutual Aid Assoc, v. Colmar, 7 Colo. 8 Wet more v. Mutual Aid & Bene- 

App. 275, 43 Pac. 159. fit Life Assoc. 23 La. Ann. 770. 

4 Lothrop v. Greenfield Stock Mu- 9 Bukofzer v. United States (Jrand 

tual Ins. Co. 2 Allen (84 Mass.) 82; Lodge Independent Order Suns of 

National Mutual Benefil Assoc, v. Benjamin, 40 N. Y. St. Rep. 653, aff'd 

M.ller, 85 Kv. 88, 2 S. VY. 900, 8 139 N. Y. 612, 35 N. Iv 20 1, 15 N. 

Ky. Law Rep. 731. Y. Supp. 922, 61 Hun (N. V.) 625j 

8 Lothrop v. Greenfield Stock Mu- Wiggin v. Knights of Pythias, 31 

tual Ins. Co. 2 Allen (84 Mass.) 82. Fed. 122. 

2498 



CHAPTER XLIV. 



PREMIUMS, ETC. : EXCUSES, WAIVER AND ESTOPPEL. 



§ 1345. Whether war excuses nonpayment of premium. 

§ 1346. What excuses nonpayment of premiums and assessments: gen- 
erally. 

§ 1347. Excuses: omitting customary statement: amount unknown. 

§ 1348. Excuses : change of agency without notice. 

§ 1349. Excuses : insolvency : company ceasing to do business. 

§ 1349a. Acts ultra vires corporation's powers to excuse. 

§ 1350. Act of God : sickness : death : accident : insanity : no excuse : ex- 
ceptions. 

§ 1351. Death of agent: failure to find agent: agent's neglect or misrep- 
resentations no excuse. 

§ 1352. What is not an excuse : absence of assured : lapse of policy by 
accident: other instances. 

§ 1353. Waiver of punctual payment of premiums, assessments, and dues : 
estoppel : generally. 

§ 1354. Waiver and estoppel : prior parol agreements as to payment of 
premium, etc. 

§ 1355. Waiver and estoppel : subsequent parol agreements as to pay- 
ments and premiums, etc. 

§ 1356. Payment of premiums: waiver and estoppel, custom, acts, etc 

§ 1357. Waiver: holding overdue premium notes and demanding payment. 

§ 1357a. Holding overdue notes and requesting payment. 

§ 1358. Custom not to treat nonpayment of premium notes as forfeiture. 

§ 1359. Enforcing payment of note after forfeiture. 

§ 1360. Assured must have known of custom. 

§ 1361. Payment of assessments: waiver and estoppel, custom, acts, etc. 

§ 1362. Waiver of prepayment. 

§ 1363. Where receipt of premiums and assessments is an act of favor. 

§ 1364. Waiver of estoppel: acceptance and retention of overdue pre- 
miums and assessments: cases. 

§ 1365. Right or obligation to accept and retain overdue premium or 
assessment : no waiver. 

§ 1366. Unconditional offer to accept overdue premium : tender. 

§ 1367. Conditional acceptance of overdue premiums, etc. 

2499 



§ 1372. 


§ 


L373. 


§ 


L374. 


§ 


L375. 


§ 


L376. 


§ 


L377. 


§ 


1378. 


§ 


1371). 


§ 


1380. 


§ 


1381. 



§§ L345, L346 JOYCE ON INSURANCE 

§ L368. When custom to receive overdue payments may be availed of by 

insured: general custom: proof. 
§ L369, Waiver of forfeiture generally by receipt of overdue premiums, 

assessments and dues. 
§ L369a. Demand or requesl for payment. 
>? 1369b. Express waiver: knowledge of assured. 
§ l .".7(>. Waiver bj collecting assessments on notes or by collecting or suing 

On notes. 
§ 1371. Whether levy and receipt of subsequent assessments and dues 
waive forfeiture. 
Same subject : authorities holding a waiver. 
Same subject : authorities contra. 
Waiver: custom: acceptance of premium or assessment after loss 

or death. 
Waiver: payment of premium note: generally. 
Waiver by failure to declare a forfeiture. 
Failure to insist promptly on payment of premium note. 
Waiver: collecting loss: adjustment and allowance of loss. 
Waiver by recognition of the policy as in force. 
Waiver of giving credit for the premium. 
Defense that waiver induced by false representations. 
§ 1382. Waiver by agents: subordinate lodges. 
§ 1383. Waiver by assured of exemption from assessment : illegality of 

assessment. 
§ 1384. Waiver by assured of defective notice and service of same. 

§ 1345. Whether war excuses nonpayment of premium. — We have 
already considered somewhat at length the effect of war upon the 
contract of insurance, and we refer to the authorities there noted 
for the determination of this question. 10 

§ 1346. What excuses nonpayment of premiums and assessments: 
generally. — If the company refuses to perform its contract, nonpay- 
ment of the premium at the stipulated day excuses the assured. 11 
But the company must be in fault, and there must be a readiness 
and willingness to perform to excuse a failure to pay a premium as 
agreed. 12 That an assessment is invalid, or that a required notice 
of payment of premiums or assessments is invalid, constitutes a 
sufficient excuse for nonpayment of the premium or assessment. 13 
And if the assured lias been fraudulently induced to surrender his 
policy, this affords a sufficient excuse as to the beneficiary for the 

10 See §§ 281 et seq. herein. Life Ins. Co. (id How. Pr. (N. Y.) 

11 Shaw v. Republic Life Ins. Co. 519; People v. Globe Mutual Life 
69 X. V. '286. Ins. Co. 32 Hun (N. Y.) 147. 

18 Attorney General v. Continental 18 Cooper v. Shaver, 41 Barb. (N. 

2500 



EXCUSES, WAIVER AND ESTOPPEL §§ 1347, 1348 

nonpayment of premiums. 14 The question as to what excuses non- 
payment of premiums, assessments, or dues is also involved in 
numerous cases relating to the payment of premiums, assessments, 
and dues generally already considered, and also in many decisions 
concerning waiver and estoppel noted under this chapter. 

§ 1347. Excuses: omitting customary statement: amount un- 
known.— Where the premium is paid partly in cash and partly in 
interest-bearing premium notes, and the company has been ac- 
customed for years from the time of .issuing the policy to make out 
and deliver to the assured a statement showing the amount due, 
it cannot withdraw its agent and discontinue such practice without 
notice, and thereupon, without having sent the regular statement. 
declare the policy forfeited for nonpayment of the premium when 
due, and cancelthe contract. 15 Ho if a knowledge of the amount 
due is known only to the company, which keeps silent as to tire 
same when asked, and the amount is unknown at the time when 
payable, there is a sufficient excuse for a default. 16 And if the as- 
sured has neither knowledge as to the time when premiums will 
become due nor possession of the policy, and the company, upon 
request made at its office, promises to send the necessary informa- 
tion, but does not, it cannot take advantage of its own fault and base 
a defense thereon to an action for recovery on the policy. 17 

§ 1348. Excuses: change of agency without notice. — Nonpay- 
ment on the day is excused where the company neglects to inform 
the assured of a change of the agent authorized to receive payments, 
after it has adopted a rule to give notice in all such cases, and the 
premium is tendered when due to the agent accustomed to receive 
payments, and there has been a reasonable endeavor by the assured 
to find the new agent. And the circumstances may entitle the as- 
sured to a reasonable time within which to make payment after the 
premium became due, especially when punctual payment had been 
waived the previous year and sixty days is held to be a reasonable 
time. 18 

Y.) 151; Rosenberger v. Washington notice, see note in 20 L.R.A.(N.S.) 

Fire Ins. Co. 87 Pa. St. 207, 208. See 1037. 

§§ 1290-1311, and e. XXXI. herein. 16 Meyer v. Knickerbocker Life Ins. 

"Whitehead v. New York Life Co. 73 *N. Y. 510, 29 Am. Rep. 200, 

Ins. Co. 102 N. Y. 143, 55 Am. Rep. aff'g 51 How. Pr. (N. Y.) 263; Dean 

787, 6 N. E. 267. v. JEtna Life Ins. Co. 2 Hun (N. Y.) 

15 Meyer v. Knickerbocker Life 358, 4 N. Y. S. C. 497. 

Ins. Co. 51 How. Pr. (N. Y.) 263, n Leslie v. Knickerbocker Life Ins. 

aff'd 73 N. Y. 516, 29 Am. Rep. 200. Co. 63 N. Y. 27, 2 Hun (N. Y.) 616, 

On effect of custom to give insured 5 N. Y. S. C. 193. See also chapter 

notice of maturity of premium where preceding on notice, 

insured is not otherwise entitled to 18 Seamans v. Northwestern Mutual 

2501 



§ 1349 JOYCE ON INSURANCE 

§ 1349. Excuses: insolvency: company ceasing to do business. — 
In the matter of premiums, the insolvency of the company so far 
determines the contracl as to the insured that no obligation rests 
upon him to pay premiums thereafter falling due. 19 But in the 
matter of assessments and dues in mutual companies, the contract 
musl govern; thus, in the case of security or premium nun- the 
maker may be liable thereon, notwithstanding the company's in- 
solvency, for insolvency is not such a failure of consideration as to 
[■(■lease the maker. 20 although the contract may be such thai after 
insolvency the company cannot insist upon forfeiture of the policy 
for a refusal to Tenew the same or to pay assessment-, Levied there- 
on. 1 1 f the insured would avail himself of the excuse of insolvency, 
he must show Ids readiness and willingness to pay had the com- 
pany been solvent. 2 If the company has become insolvent, trans- 
ferred its assets, and stopped business, it cannot claim a forfeiture 
for nonpayment of premiums, although it is authorized by statute 
to discontinue and to reinsure its risks; 3 and no payment need bo 
made if an inquiry is pending as to the company's solvency, ii 
being meanwhile restrained by an injunction from transacting 
business. 4 So nonpayment of dues in a safety fund association after 
it stops business, and pending the dissolution, does not forfeit the 
certificate, 6 and it is held that if a foreign company ceases to do 
business at the place where the premium is stipulated to be paid, 
and maintains no known agency there, nonpayment is excused. 6 
So where the company becomes insolvent and a receiver is appoint- 

Life Tns. Co. 3 Fed. 325, 8 Fed. Cas. x Command v. North Carolina Mu- 

No. 278n, and see eases cited in this tual Life Ins. Co. 1 Phil. Eq. (62 N. 

case as to reluctance of courts to en- C.) 341, 98 Am. Dec. 89. Sec §§ 1231, 

force forfeitures in this class of cases. 1232, 1272, 1273 herein, where this 

See also as to forfeitures not being question is considered. 

favored, $S 220 et seq. herein. Brings 2 People v. Globe Mutual Life Ins. 

v. National Life Ins. Co. 11 Fed. 458. Co. 32 Hun (N. Y.) 147. 

See Meyer v. Knickerbocker Life Ins. 3 People v. Empire Mutual Life 

Co. 73 N. Y. 516, 51 How. Pr. (N. Ins. Co. 92 N. Y. 105, aff'g 28 Hun 

Y.) 26.'!, noted under preceding sec- (N. Y.) 358. 

tion, where, agent was withdrawn. 4 Coffee v. Universal Life Ins. Co. 

19 Jones v. Life Assur. Co. 83 Ky. 10 Biss. (C. C.) 354, 7 Fed. 301. Con- 
75, 7 Ky. Law Rep. 1; People v. Em- tra, Universal Life Ins. Co. v. White- 
pire Mutual Life Ins. Co. 92 N. Y. head, 58 Miss. 226, 10 Ins. L. J. 337, 
105; Attorney General v. Guardian 38 Am. Rep. 322. 

Mutual Life Ins. Co. 82 N. Y. 336, 28 5 Burden v. Safety Fund Assoc. 147 

Bun (N. Y.) 358; People v. Globe Mass. 360, 1 L.K.A. 146, 6 New Eng. 

Mutual Life Ins. Co. 32 Hun (N. Y.) Rep. 840, 17 N. E. 874. 

I 1 1 ; Albert Ins., In re, L. R. 9 Eq. 6 Dorion v. Positive Government 

703. Life Assur. Co. 23 Low. Can. Jur. 

20 Sterling v. Mercantile Mutual 261. But see § 1168 herein. 
Tns. Co. 32 Pa. St. 75, 72 Am. Dec. 

773. 

2502 



EXCUSES, WAIVER AND ESTOPPEL §§ 1349a, 1350 

ed, who gives notice that he will receive no more premiums, the 
insured is excused. 7 But it is not sufficient excuse for a refusal to 
pay premiums, that, owing to wrongful acts of the company's 
officers, it had become insolvent, and therefore it was unsafe to pay, 
if the company still continues to do its ordinary business in the 
ordinary way, and is ready to receive premiums, 8 nor is the insure* I 
excused from payment of a premium which falls due several months 
before the insolvency. 9 Although the insolvency of the company 
terminates the obligation to pay subsequently accruing premiums, 
it does not prevent the enforcement of a claim for damages from 
the day of the order in insolvency. 10 And where premiums have 
been paid for some time subsequent to the date of the appointment 
of a receiver, the referee may allow the claims of those dying after 
the times at which premiums have been paid, and the claimants 
are each entitled to be allowed the present value of the policy at 
the time of the dissolution of the company and the appointment of 
the receiver, deducting the amount of premiums unpaid at the 
time of death, 11 and where proceedings are instituted in insolvency 
against the company, and it admits the fact, and is so adjudged, a 
receiver appointed, and the outstanding policies canceled, the con- 
tract is so far terminated as to preclude the right to recover for 
losses subsequently accruing, and this is so notwithstanding the 
policy stipulates for a notice of a contemplated cancelation. 12 

§ 1349a. Acts ultra vires corporation's powers no excuse. — It 
is not a sufficient excuse for nonpayment of assessments to show 
that the insurer has engaged in a business ultra vires its powers, in 
the absence of a showing that insured is injured thereby in his con- 
tract obligations. 13 

§ 1350. Act of God: sickness: death: accident: insanity: no 
excuse : exceptions. — Although it is held that a stipulation for for- 
feiture for nonpayment of annual premiums does not apply to a 

7 Attorney General v. Guardian 12 Reliance Lumber Co. v. Brown, 
Mutual Life Ins. Co. 82 N. Y. 336, 4 Ind. App. 92, 30 N. E. 625. 

aff'g 28 Hun (N. Y.) 358. 13 Havdell v. Mutual Reserve Fund 

8 Tavlor v. Charter Oak Life Ins. Life Assoc. (U. S. C. C.) 98 Fed. 
Co. 9 Daly (N. Y.) 489. 200, affd 104 Fed. 718, 44 C. C. A. 

9 Attorney General v. Continental 169 ; Hale v. Michigan Farmers' Mu- 
Life Ins. Co. 64 How. Pr. (N. Y.) tual Fire Ins. Co. 148 Mich. 453, 14 
519. Det. Leg. N. 214, 111 N. W. 268. 

10 In re Albert Life Ins. Co. L. R. As to charter : corporate powers : 
9 Eq. 703; Attorney General v. Guar- ultra vires, see § 334 herein. 

dian Mutual Life Ins. Co. 82 N. Y. As to power of mutual companies 

336, aff'g 28 Hun (N. Y.) 358. affecting the contract: ultra vires, see 

11 Attorney General v. Guardian §§ 350 et seq. herein. 
Mutual Life Ins. Co. 82 X. Y. 336, 

aff'g 28 Hun (N. Y.) 358. 

2503 



§ 1350 JOYCE ON [NSURANCE 

contingency occasioned by the acl of God, or of the law rendering 
such paymenl impossible, 14 aevertheless the general rule is, thai no 
mere accident or act of < rod, however controlling, can keen the policy 
in force after the day without payment. 16 The fact thai one is so 
sick and delirious until he dies thai he can do nothing aboul paying 
the premium, does not presenl a case of impossibility caused by the 
ac i f < ;,„! such as to prevenl a forfeiture, 16 oor does sudden sickness, 
nor mental or physical incapacity, nor paralysis, nor inability to at- 
tend to business afford an excuse for nonpayment of premiums or 
assessments as stipulated," for where a person, by an express con- 
tract, engages absolutely to do an act not impossible or unlawful at 
!h ( . time, neither inevitable accident, nor other unforeseen contin- 
gency not within his control, will excuse him. So thai if a member 
of an assessment insurance company promises to pay certain mortu- 
ary assessments, and a stated sum annually for expenses, within 
thirty days after notice that the same is due. payment by the assured 
of the stipulated sums as they become due is a condition precedent to 
any subsequent liability on the pari of the company, though the 
mental faculties of the insured, at the time of receiving notice of a 
mortuary assessment, are so far impaired as to prevent him from 
doing business. 18 Ho the fact that one insured was sick and unable 
to attend to business at the time when a premium note fell due, and 

14 Hillvard v. Mutual Benefit Life ic Mutual Benefit Assoc, of Balti- 

Ins. Co. 35 N. ,J. L 415. more, 63 Md. 80. 

15 Howell v. Knickerbocker Ins. Co. Massachusetts. — Rocei v. Massa- 
44 N. Y. 27(i, 4 Am. Rep. 675. ehusetts Accident Co. 222 Mass. 336, 

16 Carpenter v. Centennial Mutual 110 N. E. 972. 

Life Assoc (IS Iowa. 453, 50 Am. New York. — Howell v. Knicker- 

Rep. 855, 27 N. W. 456. bocker Life Ins. Co. 44 N. Y. 276, 

On effect of incapacitating illness 277, 3 Rob. (N. Y.) 232,4 Am. Rep. 

or insanity on failure to pay pre- 075; Ingram v. Supreme Council 

tnium when due, see notes in 12 American Legion of Honor, 14 N. Y. 

L.R.A.(N.S.) 319, and 40 L.R.A. St. Rep. 400. 

(N.S.) 537. Pennsylvania. — Scully v. Kirkpat- 

w United Stairs. — Klein v. New rick, 79 Pa. St. 324, 21 Am. Rep. 62; 

York Life Ins. Co. 104 U. S. 88, 26 Smith v. Pennsylvania Mutual Life 

L. ed. 662; Thompson v. Knicker- Ins. Co. 11 Week. Not. Cas. (Pa.) 

bocker Life Ins. Co. 104 U. S. 252, 26 295. 

L. ed. 765; Hawkshaw v. Supreme South Carolina. — Donald v. Pied- 
Lodge Knights of Honor, 29 Fed. mont & Arlington Life Ins. Co. 4 S. 
770. Car. 321. 

Connecticut. — School District No. Tennessee. — Thompson v. Fidelity 

1 v. Dauchy, 25 Conn. 530, 68 Am. Mutual Life Ins. Co. 116 Tenn. 557, 

Dec. 371. (i L.R.A. (N.S.) 1039, 115 Am. St. 

Iowa: — Carpenter v. Centennial Rep. 823, 92 S. W. 1098. 

Mutual Life Assoc. 68 Iowa, 453, 56 18 Pitts v. Bartford Life & Annui- 

A.n. Rep. 855, 27 X. W. 45. ty Ins. Co. 66 Conn. 376, 50 Am. St. 

Maryland. — Yoe v. Howard Mason- Rep. 90, 34 Atl. 95. 

2504 



EXCUSES, VYAIVER AND ESTOPPEL § 1350 

so remained until he died, will not prevent a forfeiture of the policy 
for nonpayment, in accordance with the express terms contained 
in it and in the premium note. 19 So failure to pay an assessment 
by reason of a stroke of apoplexy causing unconsciousness which 
continues until death will not forfeit a benefit certificate which 
declares that it shall be void for failure to pay assessments, where it 
also provides that a member may be reinstated by paying assessment 
arrearages, "for valid reasons to the officers of the association," — 
such as a failure to receive notice of trie assessment, 20 And an 
option provided for in a life insurance policy stipulating that, upon 
satisfactory proof to the company of the incapacity or disability of 
the insured, the premiums payable for the remaining years shall 
cease or be remitted during die continuance of the incapacity, 
and that the insurance shall be paid as an endowment at the age 
of eighty, or at death if before that age, was not rendered operative 
by the fact that the insured was sick with typhoid fever when one 
of the premium notes fell due, and that he so remained until his 
death some weeks thereafter. 1 But this rule as to sickness does not 
exclude any agreement to the contrary which the parties may law- 
fully make, and it is held in Nebraska that a default in making 
payments during illness will not work a forfeiture of a certificate in 
the Ancient Order of United Workmen. 2 And the charter, con- 
stitution, or articles of association may expressly or impliedly pro- 
vide to the contrary, as in case where sudden sickness may con- 
stitute a "valid reason" for default. 3 So it may be stipulated that 
the party shall have a right to make payment within a reasonable 
time after it is due, and where in such case the assured left his 
house in apparent good health for his place of business, intending 
then to pay, but was stricken with paralysis and remained uncon- 
scious until his death the next day, it was held that payment was 
excused. 4 So the insanity of the insured is not an excuse for his 
failure to pay premiums, 5 and this last rule applies to the payment 

19 Hipp v. Fidelity Mutual Life 3 See § 1276 herein. 

Ins. Co. 128 Ga. 491, 12 L.R.A. 4 Howell v. Knickerbocker Life Ins. 

(N.S.) 319n, 57 S. E. 892. Co. 44 NT. Y. 2_76, 3 Rob. (N. Y.) 232, 

20 Dennis v. Massachusetts Benefit 4 Am. Rep. 675 (two judges dissent- 
Assoc. 120 N. Y. 496, 9 L.R.A. 189, ing). 

17 Am. St. Rep. 660, 24 N. E. 843. 5 Wheeler v. Connecticut Mutual 

1 Hipp v. Fidelity Mutual Life Ins. Life Ins. Co. 82 N. Y. 543, 37 Am. 
Co. 128 Ga. 491, 12L.R.A.(N.S.) 319, Rep. 594; Sheridan v. Modern Wood- 
57 S. E. 892. men of America, 44 Wash. 230, 7 

2 Grand Lodge Ancient Order Unit- L.R.A.(N.S.) 973, 87 Pac. 127. 
ed Workmen v. Brand, 29 Neb. 644, 

46 N. W. 95. 

2505 



§ 1351 JOYCE ON INSURANCE 

of assessments in benevolenl societies, 6 in the absence of any pro- 
vision to the contrary in the rule- of the society or order. 7 

§ 1351. Death of agent: failure to find agent: agent's neglect or 
misrepresentations no excuse. — The death of the local agent is no 
excuse for nonpaymenl of premiums, so as to prevenl forfeiture, 
where the premiums are agreed to be paid at the home office, 8 and 
the insured must use reasonable and sufficienl diligence in making 
paymenl to avoid a forfeiture; such diligence is not exercised where 
the insured goes with the soliciting agent to the general agent's 
office to make payment, and, being informed that the general agenl 
through whom the policy had been issued was succeeded by an- 
other, who was out at the time, went away in company with the 
soliciting agent, but left it to the latter to pay the premium, he hav- 
ing promised to do so out of his own pocket, and this even though 
the latter did call again two or three times during the day. 9 So it 
is held in Louisiana that there is no law of that state which requires 
foreign companies making insurance contracts there to keep resi- 
dent agents there to receive premiums. 10 But it is held that where 
no place of payment of a note given for the premium is specified, 
and no place of payment of the premium itself is fixed either in 
the policy or application, that no place of payment being found 
in the state where the insured resides constitutes a reasonable ex- 
cuse for its nonpayment at maturity, even though the policy pro- 
vides for forfeiture in case of nonpayment of such note when due, 
and that the maker is not obligated to pay the same at the home 
office. 11 But where the agent of the insured, who was his book- 
keeper, was intrusted to pay assessments, but absconded, having 
embezzled a large sum of money, it was held that this constituted no 
sufficient excuse, as the agent's fault was that of the principal, 12 
and it is no excuse that the assured relied upon the statements of 
the agent of the company that the dividends would pay the pre- 

8 Hawkshaw v. Supreme Lodge of 8 Bulger v. Washington Life Ins. 

Knights of Honor, 29 Fed. 770; Mc- Co. G3 Ga. 328. 

Cann v. Supreme Conclave Indepen- 9 Cronkhite v. Accident Ins. Co. of 

dent Order 1 Icptasophs, 119 Md. 655, North America, 35 Fed. 26. 

45 L.K.A.(N.S.) 537, 87 Atl. 383; 10 Quinn v. Manhattan Life Ins. Co. 

M< I 'raig v. Independent, 30 Canadi- 28 La. Ann. 135. See § 1168 herein. 

an L. T. 101. See Sheridan v. Mod- n Blackerby v. Continental Ins. Co. 

era Woodmen of America, 44 Wash. 83 Ky. 574, 7 Ky. Law Rep. 653, 15 

230, 7 L.R.A.(N.S.) 973, 87 Pac. 127, Ins. L. J. 756. 

consiflrrrd under § 1361 herein. 12 Graveson v. Cincinnati Life As- 

7 McCann v. Supreme Conclave In- soc. 11 Ohio Dec. 369, 26 Week L. 

dependent Order Heptasophs, 110 Bull. 183. 
Md. 655, 46 L.R.A.(N.S.) 537, 87 
Atl. 363. 

2506 



EXCUSES, WAIVER AND ESTOPPEL §§ 1352, 1353 

minm. 13 And a breach of representations made during negotia- 
tions, and not embodied in the completed contract, afford no excuse 
for nonpayment. 14 

§ 1352. What is not an excuse: absence of assured: lapse of 
policy by accident: other instances. — If the contract provides for 
notice of an assessment by mail, and also for forfeiture in case ol 
neglect for thirty days to pay the same, and such notice is properly 
mailed to the insured at his last known address, but by mistake of 
the postmaster is forwarded to the insured, who was then in Europe, 
and in consequence the assessment is not paid in time, it is held 
that the insured cannot recover for a loss of the property by fire, 
even though he had an agent in charge to whom the notice mighl 
have been given by the postmaster, 15 and that the company has the 
policy is held no excuse. 16 So a lapse of policy by accident is no 
excuse, 17 and where a by-law of the company provides for suspen- 
sion of the risk unless an assessment is paid within a certain time, 
neglect to pay the same is not excused by the fact that the company 
owes the member from whom the payment is due a less sum, if he 
does not offer to pay the balance, 18 nor can it avail the member that 
a sum was due from the lodge sufficient to pay the assessment where 
it was due from another and distinct fund. 19 And it is no excuse 
for a default in payment of premiums that the company neglected 
to keep separate all the premiums paid on policies of the same class 
to which the policy issued belonged, it being issued on the tontine 
or ten-year dividend system, 20 nor is it any excuse that the com- 
pany has not given the local agent a receipt for the premium. 1 

§ 1353. Waiver of punctual payment of premiums, assessments, 
and dues: estoppel: generally. 2 — It is undoubted that a provision 
for forfeiture for nonpayment of premiums when due is for the 
benefit of the insurer, and may be waived by it. 8 And this applies 

13 Hale v. Continental Life Ins. Co. 20 Bogardus v. New York Life Ins. 
20 Blatchf. (U. S. C. C.) 515, 12 Fed. Co. 101 N. Y. 328, 4 N. E. 522. 

359 J Morey v. New York Life Ins. Co. 

14 Bogardus v. New York Life Ins. 2 Wood (U. S. C. C.) G63, 664, Fed. 
Co. 101 N. Y. 328, 4 N. E. 522. But Cas. 9,795. 

see § 1235 herein, as to payment by 2 See § 1356 herein. 

application of dividends. 8 Indiana. — Michigan Mutual Life 

15 Greeley v. Iowa State Ins. Co. Ins. Co. v. Custer, 128 Ind. 125, 27 
50 Iowa, 86. N. E. 124; Phenix Ins. Co. v. Toui- 

16 Howard v. Mutual Benefit Life linson, 125 Ind. 84, 21 Am. St. Rep. 
Ins. Co. 6 Mo. App. 577. 203, 9 L.R.A. 317, 25 N. E. 126. 

17 Windus v. Tredegar, 15 L. T. N. Iowa. — Bricker v. Great Western 
S. 108. Accident Assoc. 161 Iowa, 61, 140 N. 

18 Hollister v. Quincy Mutual Fire W. 851. 

Ins. Co. 118 Mass. 478. Kentucky.— New York Life Ins. 

19 Ancient Order United Workmen Co. v. Evans, 136 Ky. 39, 124 S. W. 
v. Moore, 1 Ky. L. Rep. 93. 376, 39 Ins. L. J. 306 : Home Ins. Co. 

2507 



§ 1353 



JCT5 CE ON INsi i; ami: 



to mutual fire insurance companies. 4 It is accessary, however, to 
supporl a claim of waiver, thai there be an actual knowledge of 
ill,, material facts by the party against whom the waiver is claimed, 8 
or a waiver, to be operative, musl be supported by an agreement 
founded on a valuable consideration, 6 and it must have been in- 
tended, 7 or the acl relied on as a waiver musl be such as to estop a 
party from insisting on performance of the contract or forfeiture 
of the condition, 8 or there musl be such a course of conduct or acts 
as induces a belief in insured that he has a right to rely thereon and 
a just and reasonable ground to infer that no forfeiture will be 
asserted and this must be something more than a course of action 
within the express term- of the contract. 9 And it is declared thai 
a waiver cannot be inferred from mere silence as insurer is not 
obliged to do or say anything to make the forfeiture effectual. 10 
Bui it is held that a waiver will lie inferred from slight evidence, 
and the company, if it intends to insist upon a forfeiture for non- 
payment of premiums, must strictly conform to the stipulations of 
i he contract, and not attempt to secure profits which a departure 
therefrom would give it. 11 Again, notwithstanding notes are given 



v. Kan.. 1!) Kv. L. Rep. 276, 39 S. W. 
501, 26 Ins. L. .1. 515, 510. 

Nebraska. — Nebraska & Iowa Ins. 
Co. v. Christiensen, 29 Neb. 572, 26 
Am. St. Etep. 107, 15 N. W. 924. 

Texas. — Equitable Life Assur. Soc. 
of U. S. v. Ellis, — Tex. Civ. A pp. 
— 137 S. W. 181, 40 Ins. L. J. 1360. 

Utah. — Loftis v. Pacific Mutual 
Life Ins. Co. 38 Utah, 532, 114 Pae. 
L34, 40 Ins. L. -I. 1048. 

* Johnson v. Retail Merchants' Mu- 
tual Fire Ins. Co. 112 Minn. 418, 128 
X. W. 162. 

5 Robertson v. Metropolitan Life 
Ins. Co. 88 N. Y. 511; Reynolds v. 
Mutual Fire Ins. Co. :!1 Md. 280, 6 
Am. Rep. 337; Hondeck v. Mer- 
chants' & Bankers' Ins. Co. 102 Iowa, 
303, 71 N. W. 354; Berman v. Fra- 
ternities Health & Accident Assoc. 
1(17 Me. 368, 78 Atl. 462. See Cent- 
ral Market St. Co. v. North British 
,V Mercantile Ins. Co. 245 Pa. 272, 
!M Ail. 662, 11 Ins. L. J. 416 (accept- 
ance with knowledge estops). 

6 Fanners' & Merchants Fire Ins. 
Co. v. Chestnut, 50 111. Ill, 00 Am. 
Dec. ]!)_!; Fnderwood v. Farmers' 
Joint Stock Ins. Co. 57 N. Y. 500; 



Marvin v. Universal Life Ins. Co. 16 
Hun (N. Y.) 101; Ripley v. iEtna 
Ins. Co. 30 N. Y. 136, 86 Am. Dec. 
362; Evans v. United States Life Ins. 
Co. 3 Hun (N. Y.) 587. 

7 Diehl v. Adams Countv Mutual 
Ins. Co. 58 Pa. St. 443, 98 Am. Dec. 
302. 

8 Riplev v. Mtna Ins. Co. 30 N. Y. 
136, 86 Am. Dec 362; Diehl v. Adams 
County Mutual Ins. Co. 58 Pa. St. 
443, 98 Am. Dec. 302; Marvin v. Uni- 
versal Life Ins. Co. 16 Hun (N. Y.) 
I'M. 

9 Crosby v. Vermont Accident Ins. 
Co. 84 Vt". 510, 80 Atl. 817, 10 Ins. L. 
J. 2036. 

10 Titus v. Glens Falls Ins. 81 N. 
Y. 410, 410, quoted from and relied 
on in Equitable Life Assur. Soc. v. 
Ellis, — Tex. Civ. App. — , 137 S. W. 
184, 40 Ins. L. J. 1360, 1367. Com- 
pare SS 1264, 1376 herein. See also 
Kahler v. Iowa State Ins. Co. 106 
Iowa, 380, 76 N. W. 731; East Texas 
Fire Ins. Co. v. Perkev. 89 Tex. 604, 
35 S. W. 1050, 26 Ins. ... .J. 53. 

11 Johnson v. Southern Mutual Life 
Ins. Co. 79 Ky. 403, 3 Ky. Law Rep. 
26. 



2508 



EXCUSES, WAIVER AND ESTOPPEL § 1353 

in payment or part payment of a premium, and the policy provides 
that on default in the payment of the notes the policy shall be- 
come ipso facto null and void, the forfeiture can be waived by the 
insurer, and is waived, if, after such default, the insurer continues 
to assert liability on the part of the insured to pay such notes in 
full. 12 And acts of the insurer recognizing the policy as continu- 
ing in force after nonpayment of the premiums, constitutes a waiv- 
er even though it is stipulated that the policy .-hall he terminated 
ipso facto by nonpayment of premiums when due. 13 If the failure 
of the company to -end a notice of an assessment waives a forfei- 
ture, its employee's mistake' in the matter is immaterial. 14 The gen- 
eral doctrine of waiver applicable to other insurance companies is 
equally applicable to mutual benefit societies. 15 And a provision 
in the policy of a mutual fire insurance company that, if the mem- 
ber holding the policy "fails to pay any assessment ... at 
the time specified in the notice sent him by the secretary," it shall 
become void, is within the purview of the rules as to waiver of for- 
feitures, and will be waived by acts of the company inconsistent 
with an intention to rely thereon. 16 But the receipt by the supreme 
body of a mutual benefit society of money from a local lodge to pay 
the clues of a delinquent member, without knowledge that it is not 
his money, but an advancement by the lodge, does not estop it from 
contesting liability on his certificate because of his nonpayment of 
dues. 17 And a local branch of a mutual benefit insurance company, 
which has provided for sick benefits for which the general order 
has assumed no responsibility, has no authority to apply an amount 
due a member for such benefits in payment of an assessment against 
him, so as to prevent his certificate from lapsing for nonpayment 

12 Galliher v. State Mutual Life Examine Jennings v. Metropolitan 
Ins. Co. 150 Ala. 543, 124 Am. St. Life Ins. Co. 148 Mass. 61, 18 N. E. 
Eep. 83, 43 So. 833. 601; Pitney v. Glen's Falls Ins. Co. 

On waiver of forfeiture for non- 65 N. Y. 6, 21; Mulrey v. Shawmut 
payment of premium note, or estop- Mutual Fire Ins. Co. 4 Allen (86 
pei to assert it, see note in 5 B. R, C. Mass.) 116, 81 Am. Dec. 689. See 
410. §§ 34, 35, 393, 397, 398 herein. 

13 Equitable Life Assurance Soc. 16 Johnston v. Phelps County 
v Ellis, — Tex. Civ. App. — , 137 S. Farmers' Mutual Ins. Co. 63 Neb. 21, 
W. 184, 40 Ins. L. J. 1360. 56 L.R.A. 127, 88 N. W. 142. 

14 Mills v. Home Benefit Life Ins. 17 Knights of Columbus v. Bur- 
Assoc. 105 Cal. 232, 38 Pac. 723. roughs, 107 Va. 671, 17 L.R.A. (N.S.) 

15 Millard v. Supreme Council 246 (annotated on necessity of af- 
American Legion. of Honor, 81 Cal. firmative action in order to terminate 
340, 22 Pac. 864. Contra, Mitchell v. rights of member in mutual benefit 
Mutual Life Ins. Co. of New York, society for nonpayment of dues), 60 
not reported, but cited in Bliss on S. E. 40. 

Insurance (ed. 1872) sec. 472, p. 739. 

2509 



§ L353 JOYCE ON [NSURANCE 

of dues, where the rules of the order require his dues to be appor- 
tioned between the death benefil fund and the general fund of the 
order. 18 And forfeiture of the rights of a member of a mutual 
benefil society for the nonpayment of dues, is not prevented by the 
fact thai they were paid by the Local brapch of the order to which 
he belonged, where the local branch forwarded the money without 
complying with the provisions of a by-law that no money shall he 
paid from the treasury unless by a two-thirds vote of the members 
al a regular meeting held subsequently to a regular meeting at 
which notice of intention to pay and the purpose and amount are 
given and read. 19 Although the insured may insist upon the waiv- 
er, lie ts noi obligated to accept the same, and may insist upon the 
forfeiture, and interpose, on account thereof, whatever defense he 
may have against the assessment, provided he would otherwise be 
obligated to pay it. 20 The time of payment of premiums may be 
extended by the company or its agent empowered so to do, 1 but an 
agreement by the agent to carry the policy for a while does not 
operate as a renewal. 2 So an agent's authority to receive payment 
of a premium note unless he has the same in his possession, may 
ho restricted by stipulations on both the policy and the note, 5 
and the company is not obligated to insist upon the forfeiture 
when incurred, but it may, at its option, accept payments there- 
after made, 4 and such act does not operate as a waiver of its 
right to insist that prompt payment shall.be thereafter made. 5 
And there is no doubt but that the company may, by a due 
and reasonable notice, terminate a course of business as to re- 
ceiving overdue premiums relied on to astablish a waiver by 
the assured and insist that the contract stipulations as to pay- 
ment be thereafter strictly complied with. 6 If a certificate is 
issued after a default in paying an assessment, it operates as 

18 McCann v. Supreme Conclave State Ins. Co. 29 Oreg. 569, 46 Pac. 
[ndependent Order Ileptosophs, 119 366. 

Md. 655, 46L.R,A.(N.S.) 537, 87 Atl. 4 MeGcachie v. North American 

383 Life Assur. Co. (Out. H. C. of J. 

19 Knights of Columbus v. Bur- Q. B. Div. 1892) 12 Can. L. J. 220; 
roughs, 107 Va. 671, 17 L.R.A.(N.S-) Tripp v. Vermont Life Ins. Co. 55 
246, tin S. K. 40. Vt. 100; Morrow v. Des Moines Ins. 

*o Tuckerman v. Bigler, 46 Barb. Co. 84 Iowa, 256, 51 N. W. 3; Smith 
(N. Y. l -''.7."). v. St, Paul Fire & Marine Ins. Co. 

1 McCraw v. Old North State Ins. 3 Dak. 80. 

Co. 78 N. C. 149; Palmer v. Phoenix 5 Morrow v. Des Moines Ins. Co. 

Mutual late Ins. Co. 84 N. Y. 63. 84 Iowa, 256, 51 N. W. 3. 

2 Matthews v. Travelers' Ins. Co. 6 Phoenix Mutual Life Tns. Co. v. 
73 Ore-;. 27S, 144 Pac Sf>. Kinsley, 75 Ind. 1, per the court. 

3 Long Creek Building Assoc, v. 

2510 



EXCUSES, WAIVER AND ESTOPPEL § 1354 

a waiver of forfeiture. 7 So if the company continues by un- 
equivocal acts to recognize the policy as valid after a default, there 
is a waiver. 8 So also where insured is induced to believe that non- 
payment will not work a forfeiture 9 and although a notice of for- 
feiture is given by the company, yet there may be a waiver by the 
failure of the company to comply with the terms of the contract 
and return the premium note, which is unpaid. 10 So a return of 
the policy to the assured who has surrendered it for breach of con- 
dition or to use will not waive a condition that the company is not 
liable for any loss occurring while any part of the premium re- 
mains unpaid. 11 If the assured is not alive at the time of the acts 
relied upon as a waiver, there is no waiver of forfeiture for nonpay- 
ment of premium. 12 The waiver by an insurance company of its 
right to declare a policy void because the note given for the cash 
premium is not paid at maturity, does not preclude the company 
from insisting upon a condition in the policy declaring the same 
void, in case of loss or damage, if the premium note is unpaid and 
past due at the time of such loss. 13 

§ 1354. Waiver and estoppel: prior parol agreements as to pay- 
ment of premiums, etc. — The insured will not be permitted to show, 
in order to establish a waiver of punctual pavment of premiums, as- 
sessments, or dues, or to avoid a forfeiture for default in payment, 
the acts or declarations of the company or its agents made at or prior 
to the time the contract was completed, or to show an oral agreement 
with the company or its agents, where such agreement, acts, or decla- 
rations are contrary to the stipulations of the policy, and are not in- 
corporated therein or made part thereof, by reference or otherwise, 
and the same rule applies to parol evidence of the same character 
to prove an estoppel. 14 Thus, parol evidence is inadmissible of the 

7 Roswell v. Equitable Aid Union, tual Ins, Co. v. Lyman, 15 Wall. (82 

13 Fed. 840. U. S.) 664, 21 L. ed. 246. 

8 Olmstead v. Farmers' Mutual Fire Connecticut. — Lewis v. Phcemx 
Ins. Co. 50 Mich. 200, 15 N. W. 82. Mutual Life Ins. Co. 44 Conn. 72. 

9 Baumann v. Metropolitan Life Illinois. — Illinois Mutual Fire Ins. 
Ins. Co. 144 Wis. 206, 128 N. W. 864. Co. v. O'Neile, 13 111. 89. 

10 Johnson v. Southern Mutual Life Indiana. — Franklin Life Ins. Co. 
Ins. Co. 79 Kv. 403, 3 Ky. Law Rep. v. Sefton, 53 Ind. 380. 

26. Maine. — Coombs v. Charter Oak 

n Nedrow v. Farmers' Ins. Co. 43 Ins. Co. 65 Me. 382. 

Iowa, 24. Michigan. — iEtna Ins. Co. v. Olm- 

12 Simpson v. Accidental Death Ins. stead, 21 Mich. 246, 4 Am. Rep. 483, 

Co. 2 Com. B. N. S. 257. per Cooley, J. See § 40 herein. 

"Ferebee v. North Carolina Mu- New York.— Walton v. Acjricultu- 

tual Home Ins. Co. 68 N. C. 11. ral Ins. Co. 116 N. Y. 317, 5 L.R.A. 

14 United States.— Merchants Mu- 677, 22 N. E. 413; Howell v. Knick- 

2511 



L355 



-Mn CE ON ENSURANCE 



representations of the agent, made prior to issuing the policy, that 
notice of the times of payments of the premiums should be given 
the insured in season to pay them, and thai he need give himself no 
uneasiness on that subject; such a representation ban create no 
estoppel, for all previous verbal arrangements are merged in the 
written contract. The doctrine of estoppel does not apply when 
the statements or acts relate to rights dependent upon written con- 
tracts in futuro, and in which when making the same the parties 
may stipulate as they wish, and may include such matters and 
conditions as they intend to rely upon. 15 So representations made 
by the company's agent as to when assessments will he made can- 
not he introduced in evidence in defense of an action on a pre- 
mium note. 16 lint a parol agreemenl as to the time of payment of 
the premium may he shown where it does not conflict with the 
written contract, although the law. in the absence of such an agree- 
ment, would fix an earlier date. 17 Ihit if an assent, hy authority 
of the directors, by false representations of the company's solvency, 
induces the assured to execute a premium note, such statements con- 
stitute a defense to an action on said note. 18 

§ 1355. Waiver and estoppel: subsequent parol agreements as 
to payments and premiums, etc. — There is no doubt but that it is 
competent for the parties to alter or modify the terms of the con 
tract by a parol agreement entered into subsequently to the execu- 



erbocker Ins. Co. 44 N. Y. 276, 4 Am. 

Rep. (i7f>. 

I'i nnsylvania. — Susquehanna Mu- 
tual Fire Ins. Co. v. Swank. 102 Pa. 
St. 17. 



1802) 13 Ky. L. Rep. 589. In this 
case, however, in so far as the rule of 
law stated by the decision is incurred, 
there is no objection thereto, but I he 
case is subject to criticism upon the 



Parol evidence: how far contract tacts as reported, for the policy was 
merger in written agreement (§ 40 issued on the tenth of the month, ami 
herein): parol evidence; what is part the premiums were payable quarter 
of the policy (§§ 185, 185a herein): annually, and it was held that an 
parol evidence: agent's powers as to agreement could be proven that, the 
contract: misrepresentations: (§ 472 payments could he made any time be- 
herein) ; parol evidence to explain tween the tenth and twenty-fifth of 
contract (§§ 3808, 3809 herein). the month on which they respectively 

()n the parol evidence rule as to fell due. If, however, the agreement 

varying or contradicting written con- had been made subsequently to the 

tracts as affected hy the doctrine of completion of the contract, the case 

waiver or estoppel, as applied to would be rightly decided. 



18 Whitman v. Meissner, 34 lv<\. 
487. See also § 514 herein. For ex- 
ceptions to the general rule, see 
Browne on Parol Evidence (ed. 1803) 
w Boland v. Whitman, 33 Ind. 64. pp. 0, 10, 06-98, etc.; Pindar v. Res- 
17 Kentucky Grangers' .Mutual Ben- olute Ins. Cq. 47 N. Y. 1 1 I ; Planters' 
etit Soc. v. Adams (Ky. Super. Ct. Mutual Ins. Co. v. Deford, 3s Md. 

2512 



policies of insurance, see note in 16 
L.R.A.(N.S.) 1165. 
16 Union Mutual File Ins. Co. v. 

Mowry, 96 F. S. 511, 2 1 F. ed. 674. 



EXCUSES, WAIVER AND ESTOPPEL § 1356 

lion and completion of the contract, 19 and, therefore, evidence is 
admissible of an agreement by parol to waive the conditions as to 
payment of the premiums or one as to notice; and acts and declara- 
tions of the company and its authorized agent, done and made sub- 
sequently to the consummation of the contract, are admissible to 
establish a waiver of such conditions or to raise an estoppel. 20 Thus, 
parol evidence is admisible to show that the company agreed with 
the insured to receive quarterly payments after they became due, 
if paid within a reasonable time thereafter, and such fact wull estop 
the company to insist upon a technical forfeiture. 1 And evidence 
is competent and relevant to show that the company has authorized 
its agent to grant indulgence as to the time of paying the premium 
notes, or to prove that a valid extension has been granted, or that 
the forfeiture has been waived, even though the policy expre^lv 
provides that the company has no power to alter or abrogate con- 
tracts or waive forfeitures. 2 

§ 1356. Payment of premiums: waiver and estoppel, custom, 
acts, etc. — The doctrine of estoppel is applied to some act, declara- 
tion, or omission of a party to prevent the same from operating as 
a fraud upon one who has been induced to act in reliance thereon ; 
as where one has thereby induced another to change his conduct or 
alter his condition. The party seeking to avail himself of an 
estoppel must have been misled, to his injury or prejudice, by the 
words, conduct, or omissions of the other party. If he does not 
alter his condition, or if both parties are equally cognizant of the 
existing facts, so that he is not prejudiced by conforming to the 
course of action on which the claim to an estoppel is based, there is 
no estoppel. If an insurance company or its authorized agent, by 
its habits of business, or by its acts or declarations, or by a custom 
to receive overdue premiums without objection, or by a custom not 
to exact prompt payment of the same, or, in brief, by any course of 
conduct, has induced an honest belief in the mind of the policy 
holder, which is reasonably founded, that strict compliance with 
a stipulation for punctual payment of premiums will not be in- 
sisted upon, but that the payment may be delayed without a for- 

382; Van Sehoiek v. Niagara Fire Co. 19 N. Y. 305 ; Bodine v. Exchange 

Ins. Co. 08 N. Y. 434. See also c. Fire Ins. Co. 51 N. Y. 117, 10 Am. 

XIX. herein. Rep. 500. See also cases cited under 

19 §§ 270 et seq. herein. following- sections. 

20 Knickerbocker Life Ins. Co. v. 1 De Frece v. National Life Ins. Co. 
Norton, 90 U. S. 234, 24 L. ed. 089; 130 N. Y. 144, 32 N. E. 550; Howell 
Phoenix Mutual Life Ins. Co. v. Hine- v. Knickerbocker Ins. Co. 44 N. Y. 
sley, 75 Ind. 1; DUleber v. Knicker- 270, 4 Am. Rep. 075. 

bocker Life Ins. Co. 70 N. Y. 507; 2 Knickerbocker Life Ins. Co. v. 
First Baptist Church v. Brooklyn Ins. Norton, 90 U. S. 234, 24 L. ed. 689. 
Joyce Ins. Vol. III.— 158. 2513 



§ 1356 JOYCE ON [NSURANCE 

feiture resulting therefrom, it will be deemed to have waived the 
righl to claim the forfeiture, or it will be estopped from enforcing 
the same, although the policy expressly provides for forfeiture for 
Qonpaymenl of premiums as stipulated, and even though it is also 
conditioned that agents cannot waive forfeitures, 3 and even though 

^United States.— Hartford Life & Life Ins. Co. v. Warner, 80 [11. 410; 

Annuity [ns. Co. v. Qnsell, 144 CL S. Protection Life [ns. Co. v. Foote, 7!) 

139, 3 L. ed. 196, L2 Sup. Ct. 671, 21 III. 361 ; Home Life Ins. Co. v. Pierce, 

[ns. L. J. 48; Phoenix Ins. Co. v. Dis- 75 111. 426; Davidson v. Foung, 38 

ter, 106 I'. S. 30, 27 L. ed. 65, 1 Sup. 111. 152. 

Ct. 18; New York Life Ins. Co. v. Eg- Indiana. — Sweetzer v. Odd Fel- 

gleston, 96 U. S. 572, 24 L. ed. 841; lows' .Mutual Aid Assoc. 117 [nd. 97, 

Union Mutual Life Ins. Co. v. Mow- 19 N. E. 722; Phoenix Mutual Life 

ry, 96 I'. S. 544,24 L. ed. 674; South- Ins. Co. v. Hinesley, 75 [nd. 1 ; Ma 

era Mutual Life Ins. Co. v. McCain, jestie Life Ins. Co. v. Tuttle, 58 [nd. 

96 I'. S. 84, 24 L. ed. 653; Beatty v. App. 98, L07 N. E. 22, 15 Ins. L. J. 

Mutual Reserve Fund Life Assoc. 75 137. 

Fed. 65, 21 C. C. A. 227, 44 U. S. Kansas.— Mound City Mutual Life 

App. 527: Spoeri v. Massachusetts Ins. Co. v. Twining, 19 Kan. 349. 

Mutual Life Ins. Co. 39 Fed. 752; Louisiana. — Societe de Bienfai- 

Unsell v. Hartford Life & Annuity sance v. Morris, 24 La: Ann. 347. 

Co. 32 Fed. 44::, 144 U. S. 439, 36 L. Michigan.— Towle v. [onia Eaton 

ed. 496, 12 Sup. Ct. 671. & Barry Farmers' Mutual Fire Ins. 

Alabama.— Gallaher v. State Mutu- Co. 91 Mich. 219, 51 N. W. 987. 

al Life Ins. Co. 150 Ala. 543, 43 So. Missouri. — Jones v. Mutual Re- 

833; Home Protection Ins. Co. v. serve Fund Life Asoc. 148 Mo. 1. 19 

Avery, 85 Ala. 348, 7 Am. St. Rep. S. W. 978; Thompson v. Mutual Life 

54, 5 So. 143; Mobile Life Ins. Co. Ins. Co. 52 Mo. 469. 

v. Pruett, 74 Ala. 487; Mound City New Hampshire. — Appleton v. 

Mutual Life Ins. Co. v. Huth, 49 Ala. Phoenix Mutual Life Ins. Co. 59 N. 

520; Brooklyn Life Ins. Co. v. Bled- H. 541, 47 Am. Rep. 220; Horn v. 

soe, 52 Ala.* 538. Cole, 51 N. H. 287, 12 Am. Rep. 111. 

Arkansas. — Pacific Mutual Life New York. — De Frece v. Union 

Ins. Co. v. Carter, 92 Ark. 378, 123 Mutual Life Ins. Co. 136 N. Y. 144, 

S. \\\ 384. 32 N. E. 556, 43 N. Y. St. Rep. 805; 

Connecticut. — Bouton v. American Whitehead v. New York Life Ins. Co. 

Mutual Life Ins. Co. 25 Conn. 542; 102 N. Y. 143, 55 Am. St. Rep. 787, 

Sheldon v. Connecticut Ins. Co. 25 6 N. E. 267; Ruse v. Mutual Benefil 

Conn. 207, 65 Am. Dec. 565. Life Ins. Co. 26 Barb. (N. Y.) 556; 

District of Columbia. — National Buckbee v. United States Annuity cV 

Benefit Assoc, v. Elzie, — Dist. Col. Trust Co. 18 Barb. (N. Y.) 541; 

— , 38 Wash. L. Rep. 442. Markgraf v. Fellowship of Solidarity, 

Georgia. Bankers' Health & Life 65 Misc. 64, 119 N. Y. Supp. 665; 

Ins. Co. v. Givvins, 12 <!a. App. 378, Griffin v. Prudential Life Ins. Co. of 

77 S. E. 203, 42 Ins. L. J. 647; Ala- America, 60 N. Y. Supp. 79, 43 App. 

bama Gold Life Ins. Co. v. Garmany, Div. 499. 

74 Ga. 51; Southern Life Ins. Co. v. Oklahoma.— St. Paul Fire & Ma- 
Kern pton, 56 Ga. 339. - rine Ins. Co. v. Cooper, 25 Okla. 38, 

Illinois. — Northwestern Mutual 105 Pac. L98. 

Life Ins. Co. v. Amerman, 11!) III. Tennessee. — Equitable Ins. Co. v. 

329, 59 Am. Rep. 799, LO X. E. 225; McCrea, 8 Lea (76 Tenn.) 511. See 

overruling 16 111. App. 528; Chicago Thompson v. Fidelity Mutual Life 

25.14 



EXCUSES, WAIVER AND ESTOPPEL § 1350 

the policy provides that receiving overdue premiums is merely an 
act of courtesy. 4 

A custom to give short credits for premiums due may be con- 
strued as a waiver of the right to insist on the stipulations. 5 So 
whero for eight years the insurer has permitted an assignee of a 
policy to pay the annual premiums by notes falling due quarterly, 
and has always notified him when a note was falling due, the policy 
cannot be forfeited for nonpayment of a note, unless the customary 
notice reached him. 6 So where more than half of all the premiums 
that fell due during the existence of the policy have been paid by 
the assured and accepted by the company after they have matured, 
and the last premium was paid about the same time as the others, 
the company is estopped to claim a forfeiture. 7 And if there has 
been a promise to accommodate the insured by giving time, and, 
relying thereon, the insured has been accustomed to delay paying 
premiums until after they were due, the company must give notice 
of discontinuance of such custom before it can claim a forfeiture. 8 
So waiver of the payment of premiums may be established by evi- 
dence of a custom of the agents of both parties to collect premiums 
on the first of the month for insurances effected the month prior 
thereto. 9 So where the company was accustomed to receive over- 
due payments of premiums without objection, and sent out letters 
with the words "every policy is nonforfeiting" printed thereon in 
prominent letters, the company is estopped to thereafter insist on a 
forfeiture for failure to make punctual payment of the premium. 10 
And the rule applies where the notice of payment provides for 
forfeiture for default in prompt payment of the premium where 
the policy does not so provide, and a literal compliance with the 
requirement has not been exacted on any prior occasion. 11 So it, 
may be legally inferred that the insured is justified in believing; 

Tns. Co. 116 Tenn. 557, 115 Am. St. 6 Kavanaugh v. Security Trust & 

Rep. 923, 92 S. W. 1098, 6 L.R.A. Life Ins. Co. 117 Tenn. 33, 7 L.R.A. 

(N.S.) 1039. (N.S.) 253 (annotated on necessity 

Texas. — McCo'rkle v. Texas Benev- that notice of maturity of premiums 

olent Assoc. 71 Tex. 149, 8 S. W. 516. or assessments sent through the mail 

Utah.— Loftis v. Pacific Mutual be received), 96 S. W. 499. 

Life Ins. Co. 38 Utah, 532, 114 Pac. 7 Spoeri v. Massachusetts Mutual 

134, 40 Ins. L. J. 1048. Life Ins. Co. 39 Fed. 752. 

Vermont. — Tripp & Bailey v. Ver- 8 Dilleber v. Knickerbocker Life 

mont Life Ins. Co. 55 Vt. 100. Ins. Co. 76 N. Y. 567. 

See § 1368 herein. 9 Potter v. Phoenix Ins. Co. (U. S. 

4 Thompson v. St. Louis Ins. Co. C. C.) 63 Fed. 382. 

52 Mo. 469. 10 Home Life Ins. Co. v. Pierce, 75 

5 Lebanon Mutual Ins. Co. v. 111. 426. 

Hoover, 113 Pa. St. 591, 57 Am. Rep. " Alabama Gold Life Ins. Co. v. 
511, 8 Atl. 163. Garmany, 74 Ga. 51. 

2515 



§ 1357 JOYCE ON INSURANCE 

that prompt payment of premiums is unnecessary, where it appears 
that eighteen payments ou1 of twenty-one have been paid and re- 
ceived without objection when overdue. 12 

§ 1357. Waiver: holding overdue premium notes and demanding 
payment. 13 — Forfeiture for nonpayment of premium notes is incon* 
sistenl with a subsequent demand for the payment of such note and 
a notice that if not paid suit will be brought thereon. 14 And con- 
ceding that the consent of the assured is necessary to the waiver 
of a forfeiture and the keeping alive of the liability to pay premium 
notes, his assent may be inferred when demand after forfeiture 
is made for the payment of the premium note, and is met by its 
partial payment and the promise to pay the balance as soon as able. 15 
So the unconditional demand by insurer of payment of an overdue 
premium note is a waiver of the default so that insured may re- 
cover on the policy if be immediately complies with the demand by 
mailing a cheek for the amount, although the insured property is 
burning when the demand is received and the policy provides that 
the company will not be liable for any loss which might occur 
while any premium note remains due and unpaid. 16 Again, if 
insured gives notes for the payment of deferred premiums, under a 
policy upon his property providing that if any installment of pre- 
mium is not paid when due, insurer shall not be liable for loss 
during such default, and that the policy shall lapse until payment 
is made, and insurer upon delinquency of insured in the payment of 
an installment of the premiums, retains the notes, demands pay- 
ment, and continues to demand payment in full of such installment 
at different times and until long after it is due, it thereby waives 
the conditions in the policy providing for lapse thereof during de- 
fault and continues the policy in force. 17 So notification of a policy 
holder by insurer after his premium note is overdue that, unless 
the note be paid at once, it will be compelled to return the note, 
which will cancel the policy, is a waiver of the forfeiture for non- 
payment of the note when due; and the insurer cannot thereafter 

12 De Frece v. National Life Ins. 15 Galliher v. State Mutual Life 

Co. 136 N. Y. 144, 32 N. E. 556, 46 Ins. Co. 150 Ala. 543, 124 Am. St. 

N. Y. St. Rep. 479. Rep. 83, 43 So. 833. 
■vil^See § 1356 herein. 16 Limerick v. Home Ins. Co. 150 

"Mai-den v. Hotel Owners' Ins. Ky. 827, 44 L.R.A.(N.S.) 371n, 150 

Co. 85 Iowa, 584, 39 Am. St. Rep. S. W. 978. Examine Federal Life 

316, 52 N. W. 509. Tns. Co. v. Warren, 167 Ky. 740, 181 

On unsuccessful attempt to collect S. W. 331. 
premium as waiver of forfeiture, see w Walls v. Home Ins. Co. 114 Ky. 

notes in 18 LR.A.(N.S.) 902, and 44 611, 102 Am. St. Rep. 298, 71 S. W, 

L.K.A.(N.S.) 371. 650, 24 Ky. L. Rep. 1452. 

2516 



EXCUSES, WAIVER AND ESTOPPEL §§ 1357a-1359 

insist upon the forfeiture upon hearing that the insured was in a 
dying condition when the notification was mailed. 18 

But it is decided that holding overdue premium notes and de- 
manding payment thereof does not establish a waiver of forfeiture 
where the contract stipulates that if said notes are not paid at ma- 
turity, the full amount of annual premiums shall be considered as 
earned and payable, and that the policy shall not be thereby re- 
vived. 19 And a demand by insurer's cashier for payment, made 
after maturity of a note given in renewal, is not such a waiver as to 
validate a tender made during insured's fatal illness. 20 

§ 1357a. Holding overdue notes and requesting payment. — Tn a 
Kentucky case, the policy provided that if premiums are not paid 
when due and also for issuance of a paid up policy on demand and 
surrender of the policy, under the New York statute, and a note is 
given under a like agreement in part payment of the premium in 
lieu of cash, and said note is not paid at maturity but is retained 
and the insurer repeatedly requests insured to reinstate the policy 
which he was notified was canceled although it was not marked 
"lapsed" and was in possession of insurer to secure a loan. It was 
held that insurer by its acts merely treated the policy as in abey- 
ance, deferring final action until it had exhausted the chance of 
having insured continue the insurance by payment of the note. 
It was also declared that where insurer after the policy has elapsed 
retains the note merely as evidence of the fact that it has been 
canceled and acts consistently with its claim of forfeiture there is 
no waiver, but if insurer retains the note as evidence of indebted- 
ness to it or asserts it as a debt against insured the forfeiture is 
waived. 1 

§ 1358. Custom not to treat nonpayment of premium notes as 
forfeiture. 2 — The terms of the written contract cannot be varied by 
evidence of a general custom of the company not to treat nonpay- 
ment of premium notes when due as forfeiting the policy. 3 */ 

§ 1359. Enforcing payment of note after forfeiture. 4 — If the com-'X 
pany never formally cancels the policy, and having full notice of 
the facts, enforces payment of the premium note, it waives a stat- 

18 New England Mutual Life Ins. 1 New York Life Ins. Co. v. Evans, 
Co. v. Springgate, 129 Ky. 627, 19 136 Kv. 391, 124 S. W. 376, 39 Ins. 
L.R.A.(N.S.) 227, 112 S. W. 681, 13 L. J. 306. 

S. W. 824. 2 See § 1356 herein. — - 

19 Union Central Life Ins. Co. v. 3 Union Central Life Ins. Co. v. 
Chowning (8 Tex. Civ. App. 455, 456, Chowning (8 Tex. Civ. App. 455, 456, 
1891) 28 S. W. 117. 1894) 28 S. W. 117. 

20 Mercer v. South Atlantic Life "" r !See § 1356 herein. 
Ins. Co. Ill Va. 699, 69 S. E. 961, 40 

Ins. L. J. 426. 

2517 



§§ 1360, 13G1 JOYCE ON INSURANCE 

utory requirement thai the assured, in order to revive a policy after 
default, must pay his premium note before loss. 5 

§ 1360. Assured must have known of custom. 6 — The assured 
must have known of a custom to receive overdue premiums, and 
have been induced by such custom to rely thereon, in order to 
avail himself thereof to establish a waiver. 7 And the fad thai an 
insurer waives forfeitures of policies held by other persons is of no 
evidentiary value in an action brought to recover on a policy issued 
,„, the Life of a person not shown to have had any knowledge of 
such waivers and whose policy was by its terms forfeited for non- 
payment of premiums. 8 But for the purpose of showing deceased's 
knowledge of a custom to accept overdue assessments evidence is 
competent of his statements as to conversations with the insurer's 

secretary. 9 

§ 1361. Payment of assessments: waiver and estoppel, custom, 
acts, etc. 10 — The rule above stated as to the payment of premiums 
is also applicable to the payment of assessments. 11 Thus, a habit 
of the company to receive overdue assessments estops the company 
to claim a forfeiture. 12 And when it has been the society's custom 
to accept overdue payments when made within a certain number 
of days without a health certificate, they may be paid within that 
time by authority of a member given when well, although he had 
been fatally injured at the time of actual payment. 13 And although 
the certificate is stipulated to be avoided by nonpayment of as- 
sessments within ten days after receiving notice, the association is 
estopped to claim a forfeiture for nonpayment within that time 
where it is its habit to receive payments within sixty days from 
notice, 14 although it is a question for the jury whether the facts 

5 Bloom v. State Ins. Co. (94 Iowa, Mutual Life Ins. Co. v. Hinesley, 75 

359) 62 N. W. 810; McClain's Code, Ind. 1; Fowler v. Metropolitan Life 

sec. 1731. Ins. Co. 41 Hun (N. Y.) 357; Illinois 

8 See § 1356 herein. Mason's Benevolent Soe. v. Baldwin, 

7 McGowan v. Supreme Council 86 111. 479; and cases cited under § 

Catholic Mutual Benefit Assoc 76 1356 herein. See Rasicot v. Royal 

llun (N Y) 534. 28 N. Y. Supp. Neighbors of America, 18 Idaho, 85, 

177, 58 N. Y. St. Hep. 268. 29 L.R.A.(N.S.) 433, 108 Pac. 1048. 

8 Collins v. Metropolitan Life Ins. As to waiver by subordinate lodges, 
Co. 32 Mont. 320, 1 OS Am. St. Rep. see § 1384 herein. 

578, 80 Pac. 60!), 1092, 34 Ins. L. J. 12 Stylow v. Wisconsin Odd Fcl- 

592 lows' Mutual Life Ins. Co. 69 A\ is. 

9 Jones v. Preferred Bankers' Life 224, 2 Am. St. Rep. 738, 34 N. W. 
Assurance Co. 120 Mich. 211, 79 N. 151. 

W. 204. 13 Watkins v. Brotherhood of 

i° Sec § L356 herein. American Yeomen, 188 Mo. App. 626, 

"National Mutual Benefit Assoc. 176 S. W. 516. 

v Jones, SI Kv. 1 10, 7 Kv. Law Rep. 14 Sweetzer v. Odd Fellows' Mutual 

751 8 Ky. Law Rep. 623; Phoenix Aid Assoc. 117 Ind. 97, 19 N. E. 722. 

2518 



EXCUSES, WAIVER AND ESTOPPEL § 1362 

proven constitute a waiver. 15 And the fact that the manager has 
promised to draw upon a member for an assessment, and has twice 
done so, estops the company to claim a forfeiture. 16 Although by 
custom of the office, known to the company, an agent has power 
to and does waive delay in payment of premiums, in case of as- 
sured's death before actual payment no recovery can be had. 17 If 
the association has at various times received assessments after the 
time specified for payment, and informs assured that the policy will 
not be forfeited for nonpayment after the day they became duo. 
such acts constitute a waiver of a right to insist on forfeiture. 18 
But insurer is not estopped to claim a forfeiture by a custom of 
the local secretary to collect assessments from assured at his resi- 
dence where no such custom is sanctioned or prescribed by the 
rules of the order. 19 And where a director promised to pay an 
assessment for a member under a promise of repayment, but 
neglected to do so, it was held that there was no forfeiture. 20 But 
such promise by an agent known to have no authority to make the 
same does not so operate. 1 So a recognition of a policy holder as 
a member after he has refused to pay an assessment and failed to 
renew his policy waives the right, after the company becomes in- 
solvent, to insist that his policy is forfeited. 2 But even though 
there be a waiver, in such cases the payment must be made within 
a reasonable time after it becomes due. 3 

§ 1362. Waiver of prepayment. — A stipulation as to prepayment 
of the premium may be waived by insurer or its agent with the 
requisite authority. 4 Where the agent delivering the policy tells 

15 Elnondorph v. Citizens' Mutual tual Ins. Co. 1 Phil. Eq. (62 N. C.) 
Ins. Co. 91 Mich. 36, 51 N. W. 926; 341, 98 Am. Dec. 89. 

Sweetzer v. Odd Fellows' Mutual Aid 3 Girard Life Ins. Co. v. Mutual 
Assoc. 117 Ind. 97, 19 N. E. 722. Life Ins. Co. 86 Pa. St. 236, 97 Pa. 

16 McCorkle v. Texas Benevolent St. 15. 

Assoc. 71 Tex. 149, 8 S. W. 516. 4 United States.— Fidelity & Casu- 

17 Conway v. Phcenix Mutual Life alty Co. v. Getty, 80 Fed. 497, 25 C. 
Ins. Co. 140 N. Y. 79, 35 N. E. 420, C. A. 593, 39 U. S. App. 599, 26 Ins. 
23 Ins. L. J. 231, 55 N. Y. St. Rep. L. J. 897 (is waived). 

571. California. — Griffith v. New York 

18 Loughbridge v. Iowa Life & En- Life Ins. Co. 101 Cal. 627, 40 Am. 
dowment Assoc. 84 Iowa, 141, 50 N. St. Rep. 96, 36 Pac. 113 (prepay- 
W. 568. nient is waived when). 

19 Fletcher v. Supreme Lodge Illinois. — John Hancock Mutual 
Knights & Ladies of Honor, — Tex. Life Ins. Co. v. Schlink, 175 111. 284, 
Civ. App. — , 135 S. W. 201. 51 N. E. 795, 28 Ins. L. J. 132, aff'g 

20 Van Houten v. Pine, 38 N. J. 74 111. App. 181; Stoehlke v. Hahn, 
Eq. 72. 158 111. 79, 42 N. E. 150 (company 

1 Co-operative Life Assoc, v. Mc- may waive payment) ; German Ins. 
Connico, 53 Miss. 233. Co. v. Orr, 56 111. App. 637 ; Gosch 

2 Conigland v. North Carolina Mu- v. State Mutual Fire Ins. Co. 44 111. 

2519 



§ 1362 JOYCE ON INSURANCE 

assured thai payments may be made a1 the door, and several calls 
therefor being made withoul payment, and about six months there- 
after, a fire having started in the same block, payment is made to 
and accepted by the agent, who docs not at the time believe there 
is any danger to the insured premises, and forwards the premium 
al once to the insure]-, the latter, however, having no knowledge of 
the threatened danger by fire, it is held that a finding by the jury 
in favor of the plaintiff might reasonably have been made. 5 Pre- 
payment of premium is waived where the company's soliciting 
agent receives part of the money on delivery of the policy, and 
credit is given for the balance in a sum equivalent to the agent's 
commissions, notwithstanding provisions in the policy requiring 
payment of the money at the home office, and that a waiver must 
be in writing over the president's signature, and although the 
policy is canceled before loss for nonpayment of premium, the 
assured, however, not being notified thereof before loss. 6 If the 
contract stipulates that no risk is assumed by the insurer except for 
that portion of the year for which cash premiums in advance have 
been obtained., a forfeiture for nonpayment of premiums is* not 
waived by the giving a note for said premium to an agent unauthor- 
ized to postpone payment, especially when there was never any 
acceptance by the company or knowledge thereof on its part. 7 But 

App. 263 " (delivery of the policy 70 N. W. 59 (prepayment may be 

waives condition as to prepayment), waived). 

Iowa. — Union . Building Assoc, v. Prepayment of premium may be 

Rockford Ins. Co. 83 Iowa, 647, 14 waived by an agent of the company 

L.R.A. 248, 32 Am. St. Rep. 323, 49 where there is evidence that the com- 

N. W. 1032 (nonpayment of first pre- pany was aware of the practice of its 

mium, when no estoppel against com- agents so to do, and in its contract of 

pany). agency had stipulated that such acts 

New York. — Equitable Trust Co. of the agent in crediting premiums 

of New York v. Newman, 69 Misc. were at their own risk. Smith v. 

494, 127 N. Y. Supp. 243. Provident Sav. Life Assur. Co. 13 

North Carolina.— Hardy v. Aetna U. S. C. C. A. 284, 24 Ins. L. J. 502, 

Tate Ins. Co. 154 N. Car. 430, 70 S. 65 Fed. 765. 

E. 828, 40 Ins. L. J. 1148. This subject is further considered 

South Dakota. — Chasse v. Bankers' under §§ 76 et seq., 550 et seq. here- 
Reserve Fund Life Ins. Co. 27 S. in, and see also as to powers of agents 
Dak. 70, 129 N. W. 568. to waive conditions sections through- 
Texas. — Supreme Lodge United out the chapters on Agency (§§ 424 
Benevolent Assoc, v. Lawson, — Tex. et seq. herein). 
Civ. App. — , 133 S. W. 907. 5 Hargrave v. Home Fire Ins. Co. 

Virginia— Wytheville Insurance & 43 Neb. 271, 272-75, 61 N. W. 611. 

Banking Co. v.' Teiger, 90 Va. 277, 6 Terry v. Provident Fund Ins. Co. 

is S. E. L95. 13 Ind. App. 1, 55 Am. St. Rep. 217, 

Wisconsin. — John K. Davis Lum- 41 N. E. 18. 

ber Co. v. Home Ins. Co. 95 Wis. 542, 7 Smith v. New England Mutual 

2520 



EXCUSES, WAIVER AND ESTOPPEL § 1363 

although the taking of notes for the first premium constitutes a 
waiver of actual payment, still nonpayment of said notes at matur- 
ity will operate to forfeit the policy. 8 If the company has often 
extended time to the insured and to others for payment on other 
policies, and part of the premium due is accepted when tendered, 
there is a waiver of prepayment. 9 But a condition in a policy that 
the insurance will not be in force until, nor will the company be 
liable in respect of any loss or damage happening before, the pre- 
mium, or a deposit on account thereof, is actually paid, and that 
no such payment or deposit shall be good unless a duly executed 
receipt shall have been given to the insured, cannot be considered 
as waived by a delivery of the policy to the insured. 10 And a policy 
containing the following condition "This insurance will not be in 
force until, nor will the company be liable in respect of any loss 
or damage happening before, the premium or a deposit on account 
thereof is actually paid, and no such payment or deposit and no 
payment in respect of renewal of this policy shall be good unless a 
printed form of receipt for it, issued from the office of the company 
and signed by one of the company's authorized officers or agents, 
shall have been given to the insured" does not become effective 
upon delivery, notwithstanding a recital of the receipt of the pre- 
mium contained in the body of the policy. 11 

§ 1363. Where receipt of premiums and assessments is an act of 
favor. — If a custom to allow a few days extra is proved to be merely 
a favor or act of courtesy, the company is not, in such case, pre- 
cluded to insist upon the forfeiture, 12 although there would seem to 
be no valid reason why proof that the custom was only a courtesy 
or matter of favor should not appear by clear and satisfactory evi- 
dence to have been known to the assured to warrant such ruling, 
and we would suggest that the proof ought to exclude the conclu- 
sion that the assured was reasonably justified, by the acts of the 
assurer, in believing that he could safely delay payments, for if 
he was clearly misled by such custom to his injury, there ought to 

Life Ins. Co. 11 U. S. C. C. A. 411, 76 L. J. C. P. N. S. 31, 96 L. T. N. 

63 Fed. 760. S. 1, 23 Times L. R. 200. 

8 Satterfield v. Fidelitv Mutual u Equitable Fire & Accident Office 
Life Ins. Co. 121 Ala. 429, 55 So. Ltd. v. Cbing Wo Hong, 1 B. R. C. 
200. 34 (1907) A. C. 96. Also reported 

9 Nebraska & Iowa Ins. Co. v. in 76 L. J. C. P. N. S. 31, 96 L. T. 
Cbristiensen, 20 Nob. 572, 26 Am. St. N. S. 1, 23 Times L. R. 200. 

Rep. 407, 45 N. W. 924. 12 Jones v. National Mutual Ben- 

10 Equitable Fire & Accident Office efit Assoc. 8 Ky. Law Rep. 599, 2 S. 
Ltd. v. Cking Wo Hong, 1 B. R. C. W. 447; Servoss v. Western Mut. Aid 
(1907) A. C. 96. Also reported in Soc. 67 Iowa, 86. 

2521 



§ 1364 JOYCE ON INSURANCE 

be an estoppel, as much so as in cases where such estoppel controls 
the express provisions of the policy or contract; for if the company 
has habitually received overdue assessments when tendered, it can- 
qoI at the same time avoid the effect of such ads. and continue its 
right to insisl upon forfeiting a contract for nonpayment of assess 
tnents, either by printed notices or by verbal communications. 13 
stipulation in an obscure part of the policy in small type that 
receipts of overdue premiums should form no precedent as to the 
payment of future premiums, bul rather a qualification of the re- 
ceipi of premiums, and where it does not appear when the same had 
been inserted, and thai the company had failed to take advantage 
thereof in two former trials and one argument in error of the same 
ca se ii cannot be set up to establish a forfeiture, 14 and if the a- 
one of favor in that particular instance, there is no waiver. 15 And 
mere indulgence in the payment of premiums does not constitute 
waiver of a condition of forfeiture for the failure to pay premiums 
when due. 16 

§ 1364. Waiver and estoppel: acceptance and retention of over- 
due premiums and assessments: cases. 17 — If the company receives 
and retains past due premiums or assessments paid after the day 
specified in the policy, it renews the contract and waives forfeiture 
for nonpayment where such acceptance is unconditional and the 
facts known. 18 So acceptance of defaulted assessments without im- 

13 Sweetzer v. Odd Fellows' Mu- Georgia.— Neal v. Gray, 124 Ga. 

trial Aid Assoc. 117 Ind. 97, 19 N. E. 510, 52 S. E. 622, 35 Ins. L. J. 121. 

722. 124; Massachusetts Benefit late 

14 Girard Life Ins. Annuity & Assoc, v. Robinson, 104 Ga. 253, 42 

Trust Co. v. New York Mutual Life l.K.A. 261, 30 S. E. 918. 

Ins. Co. 97 Pa. St. 15. Idaho. — Price v. North American 

15 Illinois Masons' Benevolent Soe. Accident Ins. Co. 28 Idaho, 136, 152 
v. Baldwin, 86 111. 470. p. 1( , gQ5_ 

16 Thompson v. Fidelity Mutual Vowa.— Underwood v. Iowa Lop inn 

^o^^o « 6 k T A enn '«f 'p *<Z of Honor, 66 Iowa, 134, 23 N. W. 
(N.S.) 1039, 115 Am. St. Rep. 823, 3Q0 

92 i7 S c W s\°Q- 8 r i • ' Maine.— Williams v. Maine State 

IslS^^Srd v. Supreme Relief Assoc 89 Me. 158, 36 AiL 68. 

Council American Legion of Honor, ^ffT?^ Jfi M J& 

81 Cal. 340 22 Pac. 801. lilnc l Mutual Aid Soc. 146 Mass. _',s. 

(■ It ,i,'crlicul. McUurk v. Metro- to X. E. 624. 

politan Life Ins. Co. 56 Conn. 528, New York.— Wyman v. Phoenix 

1 L.E.A. 563, 16 All. 203. Mutual Life Ins. Co. 45 Hun (N. Y.) 

Dakota.— Smith v. St. Paul Fire 184. 

Ins. Co. 3 Dak. 80. North Carolina. — Clifton v. Mutual 

District of Columbia. — Jacobs v. Life Ins. Co. of N. Y. L68 N. Car. 

National Life Ins. Co. 1 MacAr. 499, 84 S. E. 817; Godfrey v. Atlan 

i I) ('.) 4S4. 032; National Benefit tic House. Ins. Co. 169 N. Car. 238, 

Assoc, v. Elzie, — D. C. — , 38 Wash. S4 S. E. 330. 

L. Rep 442 Pennsylvania. — United Brethren 

2522 



EXCUSES, WAIVER AND ESTOPPEL § 13G4 

posing conditions as to a physical examination operates as a 
waiver. 19 So unconditional acceptance of dues in arrears consti- 
tutes a waiver. 80 And assurer is estopped after the occurrence ef a 
loss to assert that the policy is avoided where with knowledge of 
the facts it accepts unearned premiums. 1 And an acceptance of 
overdue premiums on an industrial policy and an attempt to effect 
a settlement with the beneficiary constitute a waiver. 2 And where 
past due instalments are collected ou1 of insured's wages, nonpay- 
ment is waived. 3 If money is received and retained by the com- 
pany after the time for payment of an assessment has passed, and a 
conditional receipt is mailed therefor to assured, it must appear 
that it was received by assured in the absence of any stipulation 
for communication through the mails, otherwise there is a waiver 
of the default. 4 Again, if under a reasonable construction of the 
contract the insurer, without exercising his option to declare the 
policy void, permits, insured to make the weekly payments called 
for by the contract, under the impression that such payments are 
premiums on a valid contract of insurance, such acts of insurer in 
accepting said payments amount to a continuing representation to 
the holder that his impression as to the validity of the contract is 
correct. 5 But the premiums or assessment must be received with 
knowledge of the facts and this applies to an accident policy. 6 And 
if the fact that the member is not in good standing in his local 
lodge is unknown at the time of the receipt of assessments or dues, 
there is no waiver. 7 And although the insurer accepts and retains 
payment made of an overdue premium, this does not constitute a 
waiver of a later payment of premium long overdue and made after 

Mutual Aid Soe. v. Schwartz (Pa.) North British & Mercantile Ins. Co. 

12 Cent. Rep. 728, 81 Am. Dec. 689, of London & Edinburgh, 245 Pa. 272, 

13 Atl. 769. 91 Atl. 662. 

riah. — Loftis v. Pacific Mutual 2 Industrial Mutual Indemnity Co. 

Life Ins. Co. 38 Utah, 532, 114 Pac. v. Thompson, 83 Ark. 574, 104 S. W. 

134, 40 Ins. L. J. 1048 (accident pol- 200. 

icy) . 3 Loftis v. Pacific Mutual Life Ins. 

Vermont— Tripp v. Vermont Life Co. 38 Utah, 532, 114 Pac. 134. 

Ins. Co. 55 Vt. 100. 4 Shea v. Massachusetts Benefit As- 

Wisconsin. — Erdmann v. Mutual soc. 160 Mass. 289, 39 Am. St. Rep. 

Ins. Co. of Order of Herman's Sons, 475, 23 Ins. L. J. 214, 35 N. E. 855. 

44 Wis. 376. B Melick v. Metropolitan Life Ins. 

19 Runbeck v. Farmers' & Bankers' Co. 84 N. J. L. 437, 87 Atl. 75, 42 
Life Ins. Co. 96 Kan. 186, 150 Pac. Ins. L. J. 1259, aff'd 85 N. J. L. 727, 
586. 91 Atl. 1070. 

20 Brotherhood of Painters, Decor- 6 Matthews v. Travelers' Ins. Co. 
ators and Paperhangers of America 73 Oreg. 278, 144 Pac. 85. 

v. Barton, 45 Ind. App. 160, 92 N. E. 7 Springmeier v. Widows & Orph- 
64 ans Benevolent Assoc. 5 Cin. L. Bull, 

i Central Market Street Co. v. ~>16, 8 Ohio Dec. 89. 

2523 



§ 1364 JOYCE <>\ [NSURANCE 

the insured was ill, but which, after insurer learned of the facts, 
was tendered back and the act <>!' the agenl repudiated, 8 and the 

waiver arising from such act.- of acceptance ami waiver after de- 
mand of an assessmenl cannot, where tie- money has been retained 
until after death, he avoided by proof of mistake in demanding and 
receiving the assessment. 9 But if the assured, seven months after 
default in payment of premiums, sends the amount due with a 
letter from the company's medical examiner as to his health, and 
demands a receipt for said money, and the company does not re- 
turn the money but credits him therewith, and immediately writes 
both him and its local agent, insisting on a medical examination, 
there is a waiver, even though assured dies of consumption six days 
after writing the letter, he having no knowledge of the company's 
last letter. 10 If a local agent receives an overdue assessment with 
knowledge of the fact, and forwards it to the company, which 
receives it, and after loss adjusts the same, it is a waiver. 11 So the 
acceptance and retention by the society of assessments paid by a 
member, the company knowing that he is in default and taking no 
action to effect a legal suspension under the by-laws, waives the 
default and forfeiture. 12 And the forfeiture is waived by the tender 
and acceptance of part of the amount of an overdue premium. 13 
and the tender and acceptance as payment of the premium due on 
a certain day continues the policy in force, notwithstanding pre- 
vious premiums may be remaining unpaid. 14 lint there may be 
acceptance of overdue premiums under such circumstances as not 
to constitute a Avaiver. 15 So forfeiture is held not to be waived by 
the collection of previous assessments. 16 So there is no waiver 
where the company refuses to accept, but returns, such assessments 
to its local agent, who has received them subject to its rejection. 17 

8 Collins v. Metropolitan Life Ins. Order United Workmen, 10 Utah, 
Co. 32 Mont. 329, 108 Am. St. Rep. 110, 37 Pac. 245. See Lycoming 
578, 80 Pae. 609, 1092, 34 Ins. L. J. County Mutual Ins. Co. v. Schollen- 
592. border, 44 Pa. St. 259. 

9 Georgia Masonic Mutual Life Ins. 13 Hodsdon v. Guardian Life Tns. 
Co. v. Gibson, 52 Ga. 040; Bailev v. Co. 97 Mass. 144, 93 Am. Dee. 73; 
Mutual Benefit Assoc. 71 Iowa, 689, Joliffe v. Madison Mutual Ins. Co. 
27 N. AY. 770. See Modern Woodmen 39 Wis. Ill, 20 Am. Rep. 35. But 
of America v. Jameson, 49 Kan. 667, see § 1114 herein. 

677, 31 Pac. 733, aff'g 48 Kan. 718, 14 Butler v. American Popular Life 

::n |\„.. Kill, '21 Ins. L. .1. 711, revers his. Co. 12 X. Y. Sup. I It. 3 12. 

ing 29 Pae 173. 15 Clifton v. Mutual Life Ins. Co. 

w Rasmusen v. NYw York Life Ins. of New York, 168 N. Car. 499, 84 S. 

Co. «U Wis. 81, 64 N. W. 301. E. 817. 

11 Fanners' Mutual Fire Ins. Co. v. 16 Nash v. Union Ins. Co. 43 Me. 
Bowen, 40 Mich. 147. 343, 69 Am. Dec. 65. 

12 Daniher v. Grand Lodge Ancient 17 United Brethren Mutual Aid Soc. 

2524 



EXCUSES, WAIVER AND ESTOPPEL § 1364 

And although dues had in former years been received when in 
arrears, there is no waiver where the insured never paid nor ten- 
dered the dues until long after he was told that the insurer would 
insist on the forfeiture; 18 nor is the condition in an insurance 
policy as to prompt payment of the premiums waived as to other 
premiums by the acceptance of a note for the first and an extension 
of time thereon. 19 And retention by a farmers' mutual company 
of insured's share of an assessment does not preclude relying upon 
his fraud as a defense to his claim. 20 The receipt by a mutual ben- 
efit society of overdue assessments without notice that they were 
not made with the consent of the member, does not estop it from 
contesting its liability on the certificate on thai ground, if they 
were not so made. 1 Under a Wisconsin decision retention by an 
insurance company of an overdue assessment for a reasonable time 
for the purpose of ascertaining whether the facts warrant a rein- 
statement of the forfeited policy under the company's by-laws, and 
to enable the insured to comply with conditions precedent to such 
reinstatement, does not waive the forfeiture caused by the payment 
of the overdue assessment. But the retention by the insurer, for 
an unreasonable time, of money paid on an overdue assessment 
after a forfeiture of the policy has occurred to the knowledge of the 
insurer, without notifying the insured that any condition is affixed 
to such retention, notwithstanding a special request accompanying 
the money for an immediate return of evidence indicating that it 
has been received and applied for the purpose for which it is sent, 
constitutes a waiver of the forfeiture. It was also decided that a 
policy having been assigned, by permission of the insurance com- 
pany, to a creditor of the assured, under such circumstances as to 
invest in the assignee the whole beneficial interest in the policy, 
and render it necessary for him to make the payments required to 
preserve the policy, all notices, stipulated to be given to the holder 
of the same should be given to such assignee. And in such case if 
the assignee of a policy of insurance, holding the whole beneficial 
interest therein, allows it to lapse by failing to pay an instalment of 
money due thereon at the proper time, and thereafter makes pay- 
ment thereon, he will not be affected by any condition affixed by 
the company to the retention of the money, not brought home to 

v. Schwartz, 10 Sadler (Pa.) 242, 12 20 Lewis v. Farmers' Mutual Fire 

Cent. Rep. 728, 81 Am. Dec. 689, 13 Ins. Co. of Town of Clarno, 159 Wis. 

Atl. 769. 547, 150 N. W. 949. 

18 Mandego v. Centennial Mutual x Proctor v. United Order Golden 
Life Assoc. 64 Iowa, 134, 19 Ins. L. Star, 203 Mass. 587, 25 L.R.A.(N.S.) 
J. 660, 17 N. W. 656, 19 N. W. 877. 870, 89 N. E. 1042. 

19 Mobile Life Ins. Co. v. Pruett, 
74 Ala. 487. 

2525 



§§ 1365-1367 JOYCE ON INSURANCE 

him. 8 The question as to waiver of forfeiture by retaining assess- 
ments an unreasonable Length of time is one of fact for the jury. 3 

§ 1365. Right or obligation to accept and retain overdue premium 
or assessment: no waiver. 4 — If the company has by the terms of 
the contract, or of the charter or by-laws or articles of association, 
included therein a righl to demand and receive overdue assess- 
ments, such act does not operate as a waiver of forfeiture, nor estop 
the company from insisting therein. 6 Thus if the contract provides 
for suspension of the risk during the time the premium note re- 
mains overdue and unpaid, but is also conditioned that the policy 
may be revived on subsequent payment, the receipt of partial pay- 
ments on the note does not operate as a waiver of the forfeiture 
arising from default in payments, nor render the company liable 
for a loss occurring after such default, for the company is obligated 
under the contract to receive payment on the note when tendered, 
and the policy is not revived until full payment is made. 6 So 
where the policy provides that upon default in payment as stip- 
ulated of instalments due, the policy shall cease and the premium 
be considered as earned, the demand, payment, and acceptance of 
the premium constitutes no waiver. 7 

§ 1366. Unconditional offer to accept overdue premium: tender. — 
An unconditional offer by the company to accept at a future time 
an overdue premium, with a tender of payment in pursuance of 
such offer, operates to waive a forfeiture for the nonpayment. 8 

§ 1367. Conditional acceptance of overdue premiums, etc. 8a — 
Although the policy may be forfeited or suspended by default in 
payment of premiums or assessments, and overdue premiums or 
assessments may be received conditionally, as in case they are ac- 
cepted provided the assured be alive and in good health, the required 
conditions as to life or health must exist to warrant a continuance. of 
the policy, or its revival, or a waiver of the forfeiture, or rein- 
statement of the member, and the same rule applies to a custom to 
receive overdue payments conditionally, for in such case the con- 
ditions must exist to constitute a waiver. 9 Thus, although several 

2 McQuillan v. Mutual Reserve 7 Cohen v. Continental Life Ins. 
Fund Life Assoc. 112 Wis. 665, 56 Co. 67 Tex. 325, 60 Am. Rep. 24, 3 
L.R.A. 233, 88 Am. St. Rep. 986, 87 S. W. 296. See Joliffe v. Madison 
N. W. 1069, 88 N. W. 925. Mutual Ins. Co. 39 Wis. Ill, 20 Am. 

3 Matt v. Roman Catholic Protec- Rep. 35; Shultz v. Ilawkeve Ins. Co. 
tive Soe. 7 Iowa, 455, 30 N. W. 799 42 [owa, 239. 

Minding of no waiver in this case). 8 Murray v. Home Benefit Life As- 

4 Sec § L356 herein. soc. 90 Cal. 402, 25 Am. St. Rep. 133, 

5 See § 1258 herein, and §§ 1202 27 Pac. 309. 

et seq. herein, on premium, etc., notes. 8a See S 135(i herein. 

6 Carloek v. Phoenix Lis. Co. 138 9 United States.— Hartford Life & 
111. 210, 28 N. E. 53. Annuity Ins. Co. v. Unsell, 144 U. S. 

2526 



EXCUSES, WAIVER AND ESTOPPEL § 13(57 

overdue premiums have been received, or if they have been habit- 
ually received. ye1 if they have always been accepted on the express 
condition that the assured is in good health and that the acceptance 
of such overdue payments is wholly optional with the company, 
there is no waiver of forfeiture where the insured is not in good 
health; 10 and if the member is required to furnish a certificate of 
health, this constitutes a condition upon which payment can only 
be made. 11 If after nonpayment of an assessment when due a 
duplicate notice is sent, stating that the forfeited certificates may be 
renewed by immediate payment and the receipt thereof at the home 
office, if the association approves the risk and the assured pays said 
assessment and receives a receipt therefor, conditioned that assured 
is in good health, as he then was, there is a waiver of forfeiture. 12 
And if the facts are such that the satisfactory evidence of good 
health provided for by the by-laws could not have been furnished, 
and the receipt given for the assessment is conditioned that the 
assured should be living, of temperate habits, and in good health, 
as when made, a member, there is no waiver. 13 But in another case 
a life insurance company, being estopped by its contract to insist 
on a forfeiture of a policy for nonpayment of premiums, agreed 
with the assured to receive the overdue premiums and restore the 
policy, if a medical re-examination should be satisfactory, and if 
not, to refund the premiums so received. The assured paid th& 
overdue premiums, but the medical re-examination was unsatisfac- 
tory. The company declined to revive the policy or refund the 
premiums so paid, and it was held that the assured might be rein- 
stated in the position he occupied when the agreement was entered 
into. 14 And it has been rather broadly held that there was a waiver 

439, 36 L. ed. 496 (U.S. C. C. 1892) efit Assoc. 143 Mass. 435, 9 N. E. 
12 Super. Ct. 671, 21 Ins. L. J. 481; 753; Servoss v. Western Mutual Aid 
Unsell v. Hartford Life & Annuity Soc. 67 Iowa, 86, 24 N. W. 604. Ex- 
Ins. Co. 32 Fed. 443, aff'd 144 U. S. amine Runbeck v. Farmers' & Bank- 
439, 36 L. ed. 496, 12 Sup. Ct. 671. ers' Life Ins. Co. 96 Kan. 186, 150 

Connecticut. — Lewis v. Phoenix Pae. 586. 

Mutual Life Ins. Co. 44 Conn. 72, 73. 12 Sieberg v. Massachusetts Bene- 

Ioiva. — Servoss v. Western Mut. fit Life Assoc. 87 Hun (N. Y.) 199, 

Aid Soc. 67 Iowa, 86, 24 N. W. 604. 67 N. Y. St. Rep. 750. 

New York. — Harris v. Equitable 13 Ronald v. Mutual Reserve Fund 

Life Assur. Soc. 3 Hun (N. Y.) 724, Life Assn. 44 N. Y. St. Rep. 407, 132 

6 N. Y. St. Rep. 108. N. Y. 378, 30 N. E. 739, 21 Ins. L. 

England.— Want v. Blunt, 12 East, J. 634. 

183. 14 Meyer v. Knickerbocker Life 

10 Mutual Life Ins. Co. v. Girard Ins. Co. 73 N. Y. 516, 29 Am. Rep. 
Life Ins. Co. 100 Pa. St. 172; Cross- 200; Appleton v. Phoenix Mutual 
man v. Massachusetts Benefit Assoc. Life Ins. Co. 59 N. H. 541, 47 Am. 
143 Mass. 435, 9 N. E. 753. Rep. 220. 

11 Crossman v. Massachusetts Ben- 

2527 



§ 1368 JOYCE ON INSURANCE 

both of the condition of the certificate and also of prompt pay- 
ment, 15 where a provision in the by-laws stipulated that overdue 
payments of assessments would l>c accepted only on the presenta- 
tion of a certificate of good health, and the last three payments 
prior to the death of the insured had been accepted a day or two 
after maturity without such certificate, and the last payment was 
not made at the time the insured died, live days after time of pay- 
iiiciit had expired. And the same ruling was made where an oxer- 
due assessment was collected and the receipt provided that it was 
"received on condition that the member is in good health," 
and six assessments were subsequently levied and unconditionally 
received by the company thereafter, even though at the time of the 
conditional acceptance the member was in ill health. 16 So if the 
company being cognizant of the actual state of health of the in- 
sured, or if there is no fraud practiced in concealing the same from 
the company, the acceptance and retention of the payment con- 
stitutes a waiver, even though the receipt provides that it is only 
binding on condition that the assured is in good health, unless the 
money be paid within the time specified under the notice. 17 Al- 
though the premium is past due, yet if the company receives and 
retains it, there is a waiver of the forfeiture, even though the com- 
pany wrote to the assured after the money was in its hands that he 
must send a certificate or his ow r n statement of good health. And 
in such case a verdict for recovery on the certificate will be sus- 
tained. 18 Although assured pays an assessment, nevertheless he 
may question its validity, it having been conditionally received by 
the society. 19 

§ 1368. When custom to receive overdue payments may be availed 
of by insured : general custom : proof. 20 — Evidence of the acceptance 
of one single overdue premium or assignment, or of a few separate 
instances, is insufficient of itself to establish a waiver of forfeiture 
claimed for nonpayment of a subsequent premium or assessment. 21 

15 Painter v. Industrial Life Assoc. 27 Wis. 372, 20 Wis. 335. But in 
131 Tnd. 68, 30 N. E. 876. the same ease, 21 Wis. 548, it was 

16 Rice v. New England Mutual Aid held a question for the jury whether 
Soc. 146 Mass. 248, 15 N. E. 624. See the money was taken upon condition 
also Stylow v. Wisconsin Odd Eel- that the member was in good health. 
lows' Mutual Life Ins. Co. 69 Wis. 19 Shea v. Massachusetts Benefit 
224, 2 Am. St. Rep. 738, 34 N. W. Assoc. 160 Mass. 289, 39 Am. St. Rep. 
151. 475, 23 Ins. L. J. 214, 35 N. E. 855. 

17 Stylow v. Wisconsin Odd Fel- 20 See § 1356 herein. 

lows' Mutual Life Ins. Co. 69 Wis. 21 Marston v. Massachusetts Mu- 
224, 2 Am. St, Rep. 738, 34 N. W. tual Life Ins. Co. 59 N. II. 92; Bos- 
151. worth v. Western Mutual Aid Soc. 

18 Rockwell v. Mutual Life Ins. Co. 75 Iowa, 582, 39 N. W. 903; Willcutts 

2528 



EXCUSES, WAIVER AND ESTOPPEL § 13G8 

But three continuous payments of overdue assessments preceding 
the last made and accepted have been held sufficient to establish a 
waiver. 1 And the acceptance by the secretary, who is authorized to 
collect assessments of the amount due at various times after the 
expiration of the specified days of payment, constitutes a waiver of 
forfeiture. 2 If there is a custom to charge premiums on renewals 
or new policies, and have periodical settlements with insured under 
an arrangement with him to that effect, it may be implied thai 
credit is given for premiums so charged until the next settlement. 3 
The rule stated in a prior section presupposes such an habitual and 
uniform custom as to w r arrant the presumption that the insured 
was justified in believing that he could safely delay payment, not- 
withstanding the terms of his contract; such custom as is shown by 
an examination of the cases may have extended over a number of 
years, and the instances may not have occurred consecutively, or 
it may have covered only a comparatively short period of time, or 
there may have been several consecutive instances immediately pre- 
ceding the time of payment of the last premium or assessment, so 
those paid when overdue may have sustained such a proportion to 
the whole number of payments during a given period of time as to 
warrant the presumption of a waiver. 4 Evidence is held admissible 
on behalf of the insured to show a custom or usage among insur- 
ance companies to receive premiums within a reasonable time after 
they fall due, under policies similar to that in suit, if the insured be 
in good health, notwithstanding the policies contain a clause of 
forfeiture for nonpayment of premiums on the very day they are 
due. 5 But a custom to receive assessments after default cannot be 
availed of unless the member knew of such custom, or had been 
indulged in that manner a number of times. The mere fact that 
it had been granted to others is also held insufficient. 6 Again, 

v. Northwestern Mutual Life Ins. Co. Co. v. New York Mutual Life Ins. Co. 
81 Ind. 300, 301; Mobile Life Ins. Co. 97 Pa. St. 15. See also Helme v. 
v. Pruett, 74 Ala. 487. Philadelphia Ins. Co. 61 Pa. St. 107, 

1 Painter v. Industrial Life Assoc. 100 Am. Dec. 621 ; Mayer v. Mutual 
131 Ind. 68, 30 N. E. 876. Life Ins. Co. 38 Iowa, 304, 18 Am. 

2 Loughbridge v. Iowa. Life & En- Dec. 34; Thompson v. St. Louis Mut- 
dowment Assoc. 84 Iowa, 141, 50 N. ual Fire Ins. Co. 52 Mo. 469. In this 
"W. 568. case the instruction to the jury by 

3 Newark Machine Co. v. Kenton the lower court admitting evidence of 
Ins. Co. 50 Ohio St. 549, 22 L.R.A. usual delay in the payments was sus- 
768, 35 N. E. 1060. tained upon appeal. 

4 See cases cited under § 1361 here- 6 McGowan v. Supreme Council of 
in, and Crossman v. Massachusetts Catholic Mutual Benefit Assoc. 76 
Benefit Assoc. 143 Mass. 435, 9 N. E. Hun (N. Y.) 534, 28 N. Y. Supp. 
753. 177, citing Applet on v. Phoenix Mu- 

5 Girard Life Ins. Annuity & Trust tual Life Ins. Co. 59 N. H. 541, 47 

Joyce Ins. Vol. III.— 159. 2529 



§ 1308 JOYCE ON INSURANCE 

where no general custom of waiving such defaults is shown to exist, 
and it does no1 appear thai deceased had any knowledge of such 
custom, if any. and there is no evidence of waiver as to himself ex- 
cept iii a few instances, a finding in favor of the company will not 
be disturbed. 7 So the fact, of the acceptance of a quarterly premium, 
and of the payment of premium notes from one to four months 
after they are due during one year, does not establish such a cus- 
tom that the assured may rely thereon in delaying payment the suc- 
ceeding year. 8 And an acceptance of payment of twelve overdue 
assessments out of seventeen is held not 1<> establish a custom cal- 
culated to mislead assured. 9 And a course of dealing which will 
justify insured in believing that the insurer will accept a premium 
twenty days overdue, is not shown by the receipt of a few when they 
were only a few days overdue, and of two others upon presentation of 
health certificates and a promise to pay future premiums prompt- 
ly. 10 And the fact that insurer upon three prior occasions accepted 
the premium from the insured after maturity, he being in good 
health at the lime, did not continue the policy in force after a sub- 
sequent default in the payment of the premium, during which the 
insured died. 11 A single act of a clerk of a local camp of a mutual 
benefit society in attempting to contract notwithstanding a provision 
of the laws of the order that no act on his part shall have the effeel 
of creating a liability on the part of the society, or of waiving any 
right belonging to it; which act consists of promising the repre- 
sentatives of an insane member to notify them of assessments, — 
will not hind the society so as to prevent its claiming a forfeiture 
of the certificate for nonpayment of dues, notice of which is regu- 
larly mailed to the member, although no notice is given to the 
representatives according to the promise. 12 It is also held that the 
rule permitting a course of dealing to estop an insurer from in- 
sisting upon prompt payment of premiums, does not apply unless 
the tender is made during the life of the insured. 13 Evidence of 

Am. Rep. 220; Crossman v. Massa- 9 Koehler v. Modern Brotherhood 

ehusetts Benefit Assoc. 143 Mass. 435, of America, 160 Mich. 180, 125 N. W. 

!) X. E. 753; Taylor v. iEtna Life 49. 

Ins. Co. 13 Cray (79 .Mass.) 434; 10 Thompson v. Fidelity Mutual 

Schwartz v. Germania Life lus. Co. Life Ins. Co. 116 Tenn. 557, 6 L.R.A. 

IS Minn. 4-1S; Wood v. Poutfhkeep- (N.S.) 1039, 115 Am. St. Rep. 823, 

sie Ins. Co. 32 N. Y. 619; Redfield v. 92 S. W. 1098. 

Patterson Fire Ins. Co. 6 Abb. N. C. " Lantz v. Vermont Life Ins. Co. 

(N. Y.) 456. 139 Pa. 546, 10 L.R.A. 577, 21 At I. 

7 Bosworth v. Western Mutual Aid 80. 

Soc. 75 Iowa, 582, 39 N. W. 903. 12 Sheridan v. Modern Woodmen 

8 Smith v. New England Mutual of America, 44 Wash. 230, 7 L.R.A. 

Life Ins. Co. 11 U. S. C. C. A. 411, (N.S.) 973, 87 Pac. 127. 

63 Fed. 769. 13 Thompson v. Fidelity Mutual 

2530 



EXCUSES, WAIVER AND ESTOPPEL 



1369 



such general usage, is, however, held inadmissible in other case- ; 14 
although it is held that evidence of a custom to give credit for fire 
insurance premiums in other cases may be shown in connection 
with evidence that the company or its authorized agent had given 
credit to the insured on previous occasions. 15 A finding by the 
jury of waiver will not be disturbed when based upon the fact of a 
custom of the company to frequently accept overdue premiums 
sent to the broker. 16 

§ 1369. Waiver of forfeiture generally by receipt of overdue pre- 
miums, assessments and dues. 17 — Tf a forfeiture has occurred for 
breach of any condition in the policy or of the contract in a mutual 
benefit society, and the company thereafter, with knowledge of the 
facts, unconditionally accepts and retains a premium or assessment, 
it thereby waives the former forfeiture, and the company is estopped 
thereafter from setting up the grounds of forfeiture as a defense, 18 
and this is so even though a former assessment had been received 



Life Ins. Co. 116 Tenn. 557, 6 L.R.A. Barringer, 73 111. 230 ; Commercial 

(N.S.) 1039, 115 Am. St. Rep. 823, Ins. Co. v. Spankneble, 52 111. 53, 4 

92 S. W. 1098. Compare § 1123 Am. Rep. 582; iEtna Ins. Co. v. Ma- 

herein. guire, 51 111. 342; Northwestern Mu- 

14 Lewis v. Phoenix Mutual Life Co. tual Life Ins. Co. v. Amerman, 16 
44 Conn. 72; Franklin Life Ins. Co. HI. App. 528. 

v. Sefton, 53 Ind. 380; Howell v. Iowa. — Viele v. Germania Ins. Co. 

Knickerbocker Life Ins. Co. 44 N. Y. 26 Iowa, 9, 96 Am. Dec. 83. 

(5 Hand.) 276, 4 Am. Rep. 675; Louisiana.— Story v. Hope Ins. Co. 

Wood v. Pou<?hkeepsie Ins. Co. 32 N. 37 La. Ann. 254. 

Y. 619; Sheldon v. Atlantic Fire Ins. Maine.— North Berwick County v. 

Co. 26 N. Y. 460, 84 Am. Dec. 231; New England Fire & Marine Ins. Co. 

Redfield v. Paterson Fire Ins. Co. 6 52 Me. 336. 

Abb. N. C. (N. Y.) 456. Massachusetts. — Rice v. New Eng- 

15 Wood v. Poughkeepsie Ins. Co. land Mutual Aid Soc. 146 Mass. 248, 
32 N. Y. 619, 627, per Davis, J. And 15 N. E. 264; Rindge v. New Eng- 
see cases under last note. land Mutual Aid Soc. 146 Mass. 286, 

16 Estes v. Home Manufacturers & 15 N. E. 628. 

Merchants Mutual Ins. Co. 67 N. H. Michigan,— Farmers Mutual Fire 

462, 33 Atl. 515. Ins. Co. v. Bowen, 40 Mich. 147. 

17 See § 1356 herein. New Hampshire. — Tuttle v. Robin- 

18 United States. — Phomix Life son, 33 N. H. 104. 

Ins. Co. v. Raddin, 120 U. S. 183, 30 Neic York.— Weed v. London & 

L. ed. 644, 7 Sup. Ct. 500. Lancashire Fire Ins. Co. 116 N. Y. 

Connecticut. — MeGurk v. Metro- 106, 22 N. E. 229. 

politan Life Ins. Co. 56 Conn. 528, North Dakota, — Thompson v. 

1 L.R.A. 563, 16 Atl. 263; Fitzpat- Travelers' Ins. Co. 13 N. Dak. 444, 

rick v. Hartford Life & Annuity Ins. 101 N. W. 900, 34 Ins. L. 124, 128. 

Co. 56 Conn. 116, 7 Am. St. Rep. Pennsylvania.— Lycoming County 



2S8, 13 Atl. 673, 17 Atl. 411; Rath- 
bone v. City Fire Ins. Co. 31 Conn. 
193, 194. 

Illinois. — Lvcomins: Ins. Co. v. 



Mutual Fire Ins. Co. v. Sehollenberg- 
er, 44 Pa. St. 259; Lycoming Fire 
Ins. Co. v. Stockbower, 26 Pa. St. 
199. 



2531 



§ L369 



JOYCE o.\ [NSUKANCE 



conditionally; 19 and so although the policy provides that nothing 
Less than a distinct specific agreemenl indorsed on the policy shall 
constitute a waiver of any condition therein. 20 And if insurer with 
knowledge thai there has been such a default in the payment of 
premiums as would terminate the contract enters into such nego- 
tiations with insured as indicate an intention to continue the policy 
in force the righl to claim a forfeiture is waived. 1 Nor is an in- 
surer permitted to collect premiums with full knowledge of facts 
which might avoid the policy, and of the purpose of the insured 
bo continue to conducl I lie business in disregard to a, provision work- 
ing a forfeiture, and then to deny the validity of the policy should 
a Loss occur. 2 So the retention of a premium on a fire insurance 
policy after knowledge of the breach of a condition involving a 
right to forfeiture, is an election to waive such breach and con- 
tinue the policy in force, and the policy should then be construed 
as though such condition had never existed. 3 

A receipt of the premium i- a waiver of concealment. 4 of mis- 
representations generally, 5 of misrepresentations as to age in a life 
policy, 6 of conditions respecting residence, 7 of removal of residence, 8 
of engaging in prohibited occupation, 9 of alleged fraud in procuring 
the policy, 10 of a defense that the policy never attached where the 



West Virginia. — Schwartzbaoh v. 
Ohio Valley Protective Union, 25 W. 
Va. 622, 52 Am. Rep. 227. 

Wisconsin. — Gans v. St. Paul Fire 
& Marine Ins. Co. 43 Wis. 108, 28 
Am. Rep. 535. 

England- -Winy' v. Hawey, 5 De 
Gex, M. & G. 265. 

19 Rice v. New England Mutual 
Aid Soe. 146 Mass. 248, 15 N. E. 624, 
and cases cited. 

20 Story v. Hope Ins. Co. 37 La. 
Ann. 254. 

1 Majestic Life Ins. Co. v. Tuttle, 
58 Ind. App. 98, 107 N. E. 22, 45 
Ins. L .1. 1:57. 

2 Mitchell v. 
Co. 72 Miss. 
535. 

3 Ohio Fanners' Ins. Co. v. Vogel, 
Kili Ind. 239, 3 L.R.A.(N.S.) 966n, 
117 Am. St. Rep. 382, 70 X. K. 977. 

* Armstrong v. Turquand, !) Ir. C. 
L 32, :; Irish Jur. X. S. 150. 

B Fitzpatrick v. Hartford Life cV. 
Annuity Ins. Co. 50 Conn. L16, 7 



\1 ississippi Home Ins. 

:.:;. 48 Am. St. Rep. 



Am. St. Rep. 288, 13 Atl. 673, 17 
Atl. 411; Hoffman v. Supreme Coun- 
cil, 35 Fed. 252; Wetherell v. Ma- 
rine Ins. Co. 49 Me. 200; Schwartz- 
bach v. Protection Union Soe. 25 \V. 
Va. 022, 52 Am. Rep. 227. 

6 Gray v. National Benefit Assoc. 
Ill Ind. 531, 11 N. E. 477; Morris- 
son v. Odd Fellows' Mutual Life Ins. 
Co. 59 Wis. 102, 18 N. W. 13 ; Low- 
enstein v. Old Colony Life Ins. Co. 
179 Mo. App. 364, 166 S. W. 889. 

7 Germania Life Ins. Co. v. Koeh- 
ler, 168 111. 293, 61 Am. St. Rep. 108, 
48 N. E. 297. 

8 Germania Ins. Co. v. Rudwig, 80 
Ky. 22::. 

9 Hume Life Ins. Co. v. Pierce, 75 
111. 421 i. 

On waiver of provision as to 
change of occupation by continued re- 
ceipt of dues, see notes in 27 L.R.A. 
(N.S.) 440, and LR.A.191GF, 755. 

10 Armstrong v. Turquand, 9 Ir. 
Law, N.S. 32,"~3 Irish Jur. N. S. 450. 



2532 



EXCUSES, WAIVER AND ESTOPPEL § 1369 

claim is first made after loss, 11 of change in habits of assured after 
notice thereof 18 of prohibited use of a building, 13 of other insur- 
ance, and encumbrances, 14 of a fireproof safe clause, 15 and of ill- 
health of assured. 16 So the acceptance of an additional premium for 
an increase of risk may waive a forfeiture. 17 So in a case where 
membership in a mutual benefit society was dependent upon the 
continuance of membership in another order, the receipt of dues 
by the society from a member after his withdrawal from such order 
does not constitute a waiver of forfeiture of good standing, where 
such fact of withdrawal is not known to the society nor its officers. 18 
But the society, by accepting and retaining dues and fees under a 
beneficiary certificate with knowledge waives all irregularity in 
admission of the applicant to membership therein, as well as in the 
organization of the subordinate lodge. 19 And a benefit assurance 
association which, after notice, of after such a length of time that 
knowledge would be presumed, of a change of employment, con- 
tinues to accept dues from an insured without the filing of a written 
waiver, as required by a by-law prohibiting the acceptance of mem- 
bers engaged in certain hazardous employments, and providing 
that, if a certificate holder enter any such employment after becom- 
ing a member he may, by filing a written waiver of liability because 
of such increased hazard, continue his certificate, except as to death 
or injury directly traceable to the prohibited occupation, waives 
such provision, and recovery may be had for a death directly re- 
sulting from the engaging by the insured in the prohibited employ- 
ment. 20 An insurer which, after receiving knowledge of the falsity 

11 Powell v. Factors' & Traders' and vouchers in a safe or safe place, 
Ins. Co. 28 La. Ann. 19. see notes in 51 L.R.A. 702, and L.R.A. 

12 Phoenix Mutual Life Ins. Co. v. 1915F, 759. 

Raddin, 120 U. S. 183, 30 L. ed. 644, 16 Rice v. New England Mutual Aid 

7 Sup. Ct. 500. Soc. 146 Mass. 248, 15 N. E. 624. 

13 Keenan v. Dubuque Mutual Fire On waiver of stipulation of policy 
Ins. Co. 13 Iowa, 375. that it shall not become binding un- 

14 Scottish Union & Mutual Ins. Co. less delivered to assured while in 
v. Wylie, 110 Miss. 681, 70 So. 835; good health, see notes in 17 L.R.A. 
E. C. Winsor & Son v. Mutual Fire & (N.S.) 1149; 43 L.R.A.(N.S.) 727; 
Tornado Ins. Co. 170 Iowa, 521, 153 and L.R.A.1910F, 171. 

N. W. 97. 17 North Berwick County v. New 

On waiver of forfeiture because of England Fire & Marine Ins. Co. 52 

false representations as to previous Me. 336, per the court, 

applications, see note in 55 L.R.A. 18 Burbank v. Boston Police Re- 

134. lief Assoc. 144 Mass. 434, 11 N. E. 

15 Gish v. Insurance Co. of North 691. 

America, 16 Okla. 59, 13 L.R.A. 19 Perine v. Grand Lodge Ancient 
(N.S.) 826, 87 Pac. 869. Order United Workmen, 48 Minn. 82. 

On waiver of provision in fire pol- 50 N. W. 1022, 21 Ins. L. J. 213. 
icy requiring the keeping of books 20 Johnson v. Modern Brotherhood 

2533 



§ 1369 JOYCE ON INSURANCE 

of answers in the application upon which the policy was issued 
continues to collect premiums on the policy, is estopped to deny 
liability thereon because of such falsity. 1 So a fraternal benefit 
society which issues a certificate to an applicant, and thereafter 
continuously collects dues from her for nearly five years, cannot, 
after her death, repudiate the contract on the ground that the cer- 
tificate never went into effect, because the applicant had warranted 
that she was not pregnant at the time of her application, when in 
fact she was, although such fact was not known to her, and in no 
w ise contributed to the cause of death, nor increased the risk, \\ here 
such condition would not have avoided the policy or been a breach 
of the contract, had it occurred after the contract became ell'ective. 2 
\\ here an open river policy includes all merchandise to be shipped 
to and from plaintiff to and from all ports, and there is attached ; i 
cotton and produce contract, returns to be made of all produce 
shipped, and the contract is to be avoided for failure to do so, and 
this is not done, and the company afterward receives the premiums 
without raising any question of forfeiture of the produce contract. 
nevertheless the plaintiff cannot recover. 3 Acceptance by a benefit 
society of an overdue assessment and the expense of providing proof 
of death, with knowledge that the holder of the certificate was 
killed while switching cars, does not waive a, provision in the policy 
that it shall not be liable for injuries to switchmen in railroad 
yards, where there is nothing to show that if knew it was so em- 
ployed at the time of his death. 4 An insurance company which 
permits payments of overdue premiums without insisting on proofs 
of good health on the part of insured, as provided by the contract, 
does not w r aive its right to require such proof before permitting re- 
instatement after a subsequent forfeiture; at least, where the first 
default was condoned by a subordinate officer who had no authority 
to bind the company without bringing it to the attention of the 
officers in whom was vested the power to enforce or waive the for- 
feiture. 6 A notice at the time of procuring the insurance of inten- 
tion to procure additional insurance in the future is not a notice of 
existing conditions, so as to make the reception of the premium 

of America, 109 Minn. 288, 27 L.R.A. America, IS [daho, 85, 29 L.R.A. 

(N.S.) 446 (annotated on waiver of (N.S.) 433, Ids Pac. 1048. 

provision as to change of occupation s Palmer v. Factors' & Traders' 

hv continued receipt of dues), 123 Ins. Co. 33 La. Ann. 1336. 

\. W. 819. See also note in L.R.A. 4 Norton v. Catholic Order of For- 

L916F, 755. esters, 138 Iowa, 464, 24 L.R.A. 

1 Masonic Life Assoc, v. Robinson, (N.S.) 1030, 114 N. W. 893. 

149 Ky. 80, 41 L.R.A. (N.S.) 505, 147 5 Conway v. Minnesota Mutual 

S. W. SS2. Life Ins. Co. 62 Wash. 49, 40 L.R.A. 

2 Rasieot v. Royal Neighbors of (N.S.) 148, 112 Pac. 1106. 

2534 



EXCUSES, WAIVER AND ESTOPPEL §§ 1369a, 1369b 

with such notice work an estoppel against the insurer. 6 Nor docs 
the acceptance of a premium waive engaging in a prohibited occu- 
pation where the insured is told at the time by the company's agent 
who received the money that it would not protect him in case of 
death before change of the employment. 7 

§ 1369a. Demand or request for payment. — Demand for payment 
of a premium after default and an attempt to collect the same evi- 
dences an election to waive forfeiture. 8 So forfeiture of insurance 
in a mutual benefit association on account of nonpayment of dues 
may bo waived by demanding and receiving such dues after the 
death of the insured with knowledge of his death. 9 And the insurer 
cannot demand payment and at the same time insist upon a forfei- 
ture under a policy provision that it should be void for nonpayment 
of any premium note when due, such demand by its agent estops the 
insurer from insisting upon a forfeiture. 10 But there is no waiver 
where the findings of fact show none, even though a demand for 
payment of an overdue premium is made and at the time a permit 
to keep a certain hazardous article is indorsed upon the policy. 11 
So a demand for an overdue premium without its payment is not 
sufficient to reinstate a policy which by its terms is forfeited by a 
failure to pay promptly, although demand and payment does re- 
instate. 12 And sending to assured a printed postal card notice of 
an overdue assessment requesting payment does not constitute a 
waiver. 13 But mere knowledge, by an insurance company, of facts 
constituting a forfeiture of a policy, does not amount to a waiver 
thereof, although a demand for overdue premiums is made on the 
insured, if he does not comply with the demand. 14 

§ 1369b. Express waiver: knowledge of assured. — That a letter 
from an insurer waiving a forfeiture for nonpayment of a pre- 

6 Black v. Atlanta Ins. Co. 148 N. Mutual Fire Ins. Co. 112 Minn. 418, 

Car. 169, 21 L.R.A.(N.S.) 578, 61 128 N. W. 462. 

g e 672 12 Cohen v. Continental Fire Ins. 

''Northwestern Mutual Life Ins. Co. 67 Tex. 325, 60 Am. Rep. 24, 3 

Co. v. Amerman, 119 111. 329, 59 Am. S. W. 296; Edge v. Duke, 18 L. J. 

Rep. 799, 10 N. E. 225. Ch. 183. 

8 Lof tis v. Pacific Mutual Life Ins. 13 Koehler v. Modern Brotherhood 
Co. 38 Utah, 532, 114 Pac. 134. of America, 160 Mich. 180, 125 N. 

9 Supreme Tribe of Ben Hur v. W. 49. 

Hall 24 Ind App. 316, 79 Am. St. 14 Formena v. German Alliance Ins. 

Rep' 262, 56 N. E; 780. Co. 104 Va. 694, 3 L.R.A.(N.S.) 

io New England Mutual Life Ins. 444, 52 S. E. 337. 

Co. v. Springgate, 129 Ky. 627, 19 On unsuccessful attempt to collect 

LR A (N S.) 227, 113 S. W. 824, premium as waiver of forfeiture, see 

overruling petition for rehearing, 112 notes in 18 L.R,A.(N.S.) 902, and 

S. W. 689. 44 L.R,A.(N.S.) 371. 

11 Johnson v. Retail Merchants' 

2535 



§ 1370 JOYCE ON INSURANCE 

iiiimn iioic. is no! received or read by the insured before his death 
does qo1 destroy its effecl as i waiver. 15 

§ 1370. Waiver by collecting assessments on notes or by collect- 
ing or suing on notes. 16 — Making and collecting assessments upon 
the premium note for Losses which accrued prior to the forfeiture 
are ool a waiver of it. 17 And Liability on a premium note to secure 
ssments on a mutual fire insurance policy, is no1 terminated by 
refusal to pay a Loss upon the property insured; and. therefore, the 
mere enforcement of an assessment made after denial of liability 
for the Loss dor- not waive a forfeiture for breach of condition of 
the policy. 18 So placing a premium note in the hands of an 
attorney for collection after the policy has become void according 
to its terms for failure to pay the note will not revive the policy if 
the collection is not effected, — especially where the policy provides 
that no waiver -hall he valid unless in writing. 19 Bui the assured 
cannot set up his own default to work a forfeiture. 80 Where the 
premium notes are payable absolutely, whether the policies have 
been forfeited or not, an acceptance of a payment after a Loss of 
which the company has notice is not a waiver of any forfeiture, 1 
especially where the company has refused to pay the loss because 
of forfeiture of the policy for breach of condition. Thus accept- 
ance of money due on a note six weeks after the loss and after 
commencement of suit does not. waive a forfeiture for a previous 
breach of condition of the policy. 2 So if the contract stipulate- 
that the note for the premium shall he collectable even in case of 
loss, and that legal proceedings shall not revive the policy, the for- 
feiture arising from nonpayment of the note when due is not waived 
by collecting the amount thereof. 3 But if with knowledge of an 
act of forfeiture an insurance company makes and collects assess- 
ments on premium notes, the forfeiture of the policy is thereby 

15 Now England Mutual Life Tns. x Joliffe v. Madison Mutual Ins. Co. 
Co. v. Springgate, 129 Kv. 627, 19 39 Wis. Ill, 20 Am. Rep. 35; Nee- 
L.R.A.(N.S.) 227, 112 S. \Y. (iSl. lev v. Onondago County .Mutual Ins. 

16 See § 1356 herein. Co. 7 11.11 (N. Y.) 49. 

17 Smith v. Saratoga Mutual Ins. 2 Schimp v. Cedar Rapids Ins. Co. 
Co. 3 Hill (N. Y.) 508. 124 111. 3.14, 13 West. Rep. 857, 16 

18 Knowlton v. Patrons' Andres- N. E. 229. 

eoggin Mutual Fire Ins. Co. 100 Me. 8 Shakey v. Hawkeye Ins. Co. I ] 

481, 2 L.R.A.(N.S.) 517, 62 Atl. Iowa, 540; Knickerbocker Life Ins. 

289. Co. v. Pendleton, 112 U. S. 696, 28 

19 lies v. Mutual Reserve Life Ins. L. ed. 866, 5 Sup. Ct. 314; Wheeler 
Co. 50 Wash. 49, 18 L.R.A.(N.S-) v. Connecticut Mutual Life Ins. Co. 
902n, 96 Pae. 522. 82 N. Y. 543, 37 Am. Rep. 594; Cur- 

80 Susquehanna Mutual Fire Ins. tin v. Phosnix Ins. Co. 78 Cal. 619, 
Co. v. Leavy, 136 Pa. St. 499, 20 21 Pae. 370. 
Atl. 502, 505. 

2536 



EXCUSES, WAIVER AND ESTOPPEL § 1371 

waived. 4 So retaining and attempting to collect an overdue pre- 
mium note on an insurance policy will waive a provision in the 
policy that nonpayment of the note at maturity will terminate the 
contract. 5 An insurance company by retaining premium notes 
containing a provision that if they are not paid at maturity the 
policy shall be null and void, and endeavoring to collect the notes 
in full, waives a provision that the policy should be void if tho 
notes are not paid at maturity. 6 So an attempt to enforce payment 
in full of notes and also treating them as in force and effect con- 
stitutes a waiver. 7 And where an unpaid note for the premium is 
renewed, accepted by the insurer and transferred, and a suit brought 
therein by its indorsee, it constitutes a waiver of forfeiture and said 
renewal after nonpayment when due is no defense to an action on 
the note. 8 

§ 1371. Whether levy and receipt of subsequent assessments and 
dues waive forfeiture. 9 — The cases are not in harmony on this 
question. Many of the decisions which seem directly in point will 
be found, upon examination, to have relied upon authorities which 
do not support the doctrine of that case, for the reason that the 
cited cases have not rested upon the sole question whether a levy 
of subsequent assessments constitutes a waiver of forfeiture; but 
there have been other circumstances in proof which, together with 
the fact of such subsequent levy, have been held to warrant a for- 
feiture or not, as the case may be. Again, it has been declared that 
after a breach of condition and consequent forfeiture the rights of 
the parties have become fixed as in case of a lease which has become 
ipso facto void by the condition, where no acceptance of rent after- 
ward can give it countenance. 10 In other cases, by the very stipu- 
lations of the contract the assurer has the right to levy and collect- 
assessments after forfeiture or suspension without subjecting itself 
to the claim of waiver of its exemption from liability from the for- 
feiture; as in case of premium and like notes, or where the pre- 
mium is stipulated to be considered as earned; or the assessment 
may be levied under such conditions that a waiver, which might 
otherwise exist, cannot be based thereon; as where a resolution of 

4 Mackenzie v. Planters' Ins. Co. 9 6 Shawnee Mutual Fire Ins. Co. v. 
Heisk. (56 Tenn.) 2G1 ; Susque- Cannedv, 36 Okla. 733, 44 L.R.A. 
hanna Mutual Fire Ins. Co. v. Leavy, (N.S.) 376, 129 Pae. 805. 

136 Pa. St. 499, 20 Atl. 502, 505 ; 7 Galliher v. State Mutual Life Ins. 

Viall v. Genesee Mutual Ins. Co. 19 Co. 150 Ala. 543, 43 So. 833. 

Barb. (N. Y.) 440. See next section 8 Neal v. Gray. 124 Ga. 510. 52 

herein. S. E. 622, 35 Ins. L. J. 121. 

5 Union Central Life Ins. Co. v. 9 See § 1356 herein. 

Spinks, 26 Ky. L. Rep. 1205, 69 10 See Gardiner v. Piscataquis Mu- 
L R A. 261, 83 S. W. 615. tual Fire Ins. Co. 38 Me. 439. 

2537 



§ 1372 JOYCE ON INSURANCE 

the board of directors provides that notice be given to enable de- 
linquent members to reinstate themselves, and the testimony shows 
such factj and thai the notice was sent for that purpose only, and 
the same is uncontradicted. Here there is no waiver of forfeiture 
by sending notices of assessments subsequently levied after others 
are overdue and unpaid. 11 There arc, however, numerous cases 
which hold that if the assui d has been delinquent in the payment 
of assessments, or there has been a breach of some other condition 
in the policy, the levy of subsequent assessments by the company 
for a subsequently occurring loss constitutes a waiver of forfeiture, 
provided the insurer has knowledge of all the facts involved. 12 
We believe this to be the correct rule, provided, however, that the 
contract does not otherwise stipulate, that there has been no mis- 
take, and that the acts of levying and receipting such subsequent 
assessments are not done under such circumstances that it is ap- 
parent that no waiver was intended, and that no agreement or 
estoppel could be based thereon. 

§ 1372. Same subject: authorities holding a waiver. — If a mu- 
tual insurance company, with full knowledge of the falsity of a 
warranty, assesses the premium note, it is estopped from setting up 
the false warranty as a defense. 13 Thus in Iowa the sending of 
notices of other assessments after default in prior payments, said 
notices requesting payment within a specified time to avoid suspen- 
sion, extends the time of payment of overdue assessments, notwith- 
standing a provision in the certificate to the contrary. 14 So in 
Michigan, a mutual company having full knowdedge of the facts 
may waive a forfeiture, as may also those authorized to act for it, 
and where an assessment was set down opposite the policy in suit 
in the company's assessment hook, and the notice of assessment 
was the same number, and it was claimed that the assessment was 

"Mutual Protection Life Ins. Co. Mutual Protective Co. v. Mitchell, 48 

v. Laury, 84 Pa. St. 43. Pa. St. 374. 

12 United Stairs. — Riswell v. Equi- Wisconsin. — Erdmann v. Mutual 

table Aid Union, 13 Fed. R. 840. Ins. Co. of the Order of Hermans' 

Indiana. — Sweetzer v. Odd Pel- Sons, 44 Wis. 376. 
lows' Mut. Aid Assn. 117 Ind. 97, 19 13 Frost v. Saratoga Mutual Ins. 
N. E. 722; Masonic Mut. Benevolent Co. 5 Denio (N. Y.) 154, 49 Am. Dec. 
Soc. v. Beck, 77 Ind. 203, 40 Am. 234; Williams v. Marine State Re- 
Rep. 295; Farmers' Mutual Relief lief Assoc. 89 Me. 158, 36 Atl. 63; 
Assoc, v. Kooiitz, 1 Ind. A|»j>. :>38, 30 Beatty v. Mutual Reserve Fund Life 
\'. E. 1 15. Assoc. 75 Fed. 65, 21 C. C. A. 227, 

New Hampshire. — Tuttle v. Robin- 44 U. S. App. 527. 

son, 33 X. II. 104. 14 McGowan v. Northwestern Le- 

New York. Sands v. Hill, 42 gion of Honor, 98 Iowa, 118, 67 N. 

Barb. (N. Y.) 651. W. 89. 

Pennsylvania. — Cumberland Vallev 

2538 



EXCUSES, WAIVER AND ESTOPPEL § 1372 

actually made on another policy of the plaintiff, it was held a ques- 
tion for the jury whether such assessment waived a forfeiture aris- 
ing from claimed misrepresentations. 16 So subsequent assessments 
after delinquencies in paying, coupled with the acceptance by the 
company of assessments from another member sent in the same 
letter with that of the member after his death, waives the right to 
declare a forfeiture after death. 16 And where sixty-four consecutive 
assessments have with one exception been paid when overdue and 
unconditionally received, and two subsequent assessments are made, 
which remain unpaid and overdue when still another one is levied 
by the company it thereby waives the right to insist upon a for- 
feiture, although the last three assessments are unpaid at the mem- 
ber's death. 17 So the acceptance of past due assessments and levy- 
ing other assessments constitutes a waiver. 18 So forfeiture of policy 
for failure to pay an assessment is waived by the receipt of the 
amount of subsequent assessments, levied after a loss, in addition to 
the assessment levied prior to and delinquent at the time of the 
loss, with knowledge of the facts, notwithstanding a provision that 
in case of forfeiture, if the policy holder afterwards pays the amount 
due, the policy "shall be holding from the date of the receipt of 
said amount," where all the property was destroyed, so that nothing 
remains to which renewal of the insurance might attach. 19 Again 
it is held that if no notice is given that the premium is due from 
the beneficiary, the contract of insurance being repudiated by the 
company, it is estopped to claim a forfeiture where it sends notice, 
according to its custom, to others, and the agent refuses to receive 
the premium. 20 So a levy and acceptance unconditionally of six 
subsequent assessments will waive a forfeiture. 1 A forfeiture for 
the nonpayment of a premium note is inconsistent with a subse- 
quent demand for its payment and a notice that if not paid suit 
will be instituted therefor. 2 And levying and collecting a sub- 

15 Towle v. Ionia Eaton & Barry Farmers' Mutual Ins. Co. 63 Neb. 21, 
Farmers' Mutual Fire Ins. Co. 91 56 L.R.A. 127, 88 N. W. 142, 
Mich. 219, 51 N. W. 987. 20 Sullivan v. Industrial Benevolent 

16 Railway Passenger & Freight Assoc. 73 Hun (N. Y. 1894) 319. 26 
Conductors' Mutual Aid Assoc, v. N. Y. Supp. 186, 56 N. Y. St. Rep. 4. 
Swartz, 54 111. App. 445. J Rice v. New England Mutual Aid 

17 Stylow v. Wisconsin Odd Fel- Soc. .146 Mass. 248, 15 N. E. 624. 
low's' Mutual Life Ins. Co. 69 Wis. On promissory note as payment of 
224, 34 N. W. 151. insurance premium, see note in 5 

18 Millard v. Supreme Council Am- B. R. C. 365. 

erican Legion of Honor, 81 Cal. 340, 2 Marden v. Hotel Owners' Ins. Co. 
22 Pac. 864. 85 Iowa, 584, 39 Am. St. Rep. 316, 

19 Johnston v. Phelps County 52 N. W. 509. 

2539 



§ L373 JOYCE ON [NSURANCE 

sequent assessment waives aonpayment on time of prior ones. 3 
or of a forfeiture. 4 So if the society continues to receive assessments 
after the member lias been suspended, it is estopped to deny hia 
good standing, 8 and if the company Levies and receives such sub- 
sequent assessments, and retains the same until after the member's 
decease, it waives a forfeiture arising from aonpayment of prior 
assessments, even though the company did not discover the failure 
to pay said prior assessments. 6 

§ 1373. Same subject: authorities contra. — ( Mlier cases hold that 
the subsequent levy of an assessment does not waive the forfeiture, 7 
and it is so held where the policy has been suspended. 8 So a bene- 
fit society does not waive a forfeiture for nonpayment of assess- 
ments by making further assessments and giving notice thereof 
within the period during which the insured has a right to rein- 
statement upon making payment of all accrued assessments. 9 So 
a forfeiture of a policy of insurance for breach of warranty is not 
waived by a subsequent assessment of the forfeited policy and the 
payment by the insured of the assessment, where the assessment 
has been made by mistake. 10 So where a resolution of the board 
of directors provides that notice be given to enable delinquent mem- 
bers to reinstate themselves, and the testimony shows such fact and 
is uncontradicted, there is no waiver of forfeiture by sending notices 
of assessments subsequently levied after others are overdue and 
unpaid. 11 So if the assessment is for a loss occurring prior to the 

3 Rowsell v. Equitable Aid Union, ments, or by the levy of assessments. 

13 Fed. 840. see McKinney v. German Mutual 

4 Watson v. Centennial Mutual Five Ins. Soe. 89 Wis. 653, 46 Am. 

Life Ass.,.-. 21 Fed. (i!)8; Phoenix Ins. Si. Rep. 861, 62 N. W. 413, and cases 

Co. v. Slaughter, 12 Wall. (79 U. S.) noted on p. 863. 

KM, 20 L. ed. Ill; Masonic Mutual 7 Crawford County Mutual Ins. Co. 

Benefit Aid Benefit Soc. v. Beck, 77 v. Cochran, 88 Pa. St. 230; Philbrook 

Ind. 203, 40 Am. Rep. 295. v. New England Ins. Co. 37 Me. 137. 

5 Hoffman v. Supreme Council Le- 8 Nash v. Union Mutual Ins. Co. 

gion of Honor, 35 Fed. 252. 43 Me. 343, 69 Am. Dec. 65; Craw 

6 Tobin v. Western Mutual Aid ford County Mutual Ins. Co. v. Coch- 

Soe. 72 lown, 261, 33 N. W. 663. See ran, 88 Pa. St. 230. 

Modern W linen of America v. 9 Carlson v. Supreme Council 

Jameson, 48 Kan. 718, 30 Pac. 460; American Legion of Honor, 115 Cal. 

21 Ins. L. J. 711, reversing 29 Pac. 466, 35 L.R.A. 643, 47 Pac. 375. 
473. Retention of overdue payments 10 Diehl v. Adams County Mutual 

and levying subsequent assessments Ins. Co. 58 Pa. St. 44:?, 98 Am. Dec. 

waives 'forfeit ure: Great Western 302; Elliott v. Lycoming County Mu- 

Mutual Aid Assoc, v. Colmar, 7 Colo, tual Ins. Co. 66 Pa. St. 22, 5 Am. 

A pp. 275, 43 Pac. 159. That a for- Rep. 323. 

feiture is waived by the subsequent n Mutual Protection Life Ins. Co. 

collection of premiums or assess- v. Laury, 84 Pa. St. 43. 

2540 



EXCUSES, WAIVES AND ESTOPPEL § 1374 

forfeiture, there is no waiver, 12 or if the assessment is made after 
an assignment, it does not waive the forfeiture arising therefrom 
when made for losses occurring prior thereto; 18 and where the 
policy is avoided by an increase of risk, the subsequent levy and 
collection of an assessment constitutes no waiver. 14 Nor is there 
any answer in such cases where the company has no knowledge of 
the facts on which the claimed breach of condition is based. 15 
And where by the contract the policy was to be invalid while as- 
sessments were overdue and unpaid, the mere sending of a notice 
of assessment by an agent was held not to constitute a waiver of 
default. 16 

§ 1374. Waiver: custom: acceptance of premium or assessment 
after loss or death. 17 — If there has been habitual custom to receive 
premiums at other times than the stipulated day, a payment with- 
in a reasonable time after it is due, according to custom, is good, 
and the policy is not forfeited, even though the insured is fatally 
sick at the time of the last payment and the company does not know 
of the sickness, 18 and so even though death has occurred after ma- 
turity and before actual payment, 19 and so notwithstanding the 
home agent inserted a statement in the last receipt, which was not 
in former receipts, that the policy holder was in good health : 20 
and in such case a recovery is not barred by the fact that no tender 
of the premium was made after the death, 1 and the receipts of 
arrears from the beneficiary after a default in payment of the pre- 
mium prevents a lapse of the policy. 2 And the frequent accept- 
ance of past due assessments some of which were a long time over- 

12 Viall v. Genesee Mutual Ins. Co. authorized sending the notice, al- 
19 Barb. (N. Y.) 440; Finley v. Ly- though the assessment was in fact 
coming Ins. Co. 30 Pa. St. 311, 72 levied upon policies then in force: 
Am. Dec. 705. Leonard v. Lebanon Mutual Ins. Co. 

13 Smith v. Saratoga Countv Mu- 3 Week. Not. Cas. 527. 

tual Fire Ins. Co. 3 Hill (N. Y.) 508. 17 See §§ 1117, 1356 herein. 

14 In this case, however, the assess- 18 Cotton States Life Ins. Co. v. 
ment was made after the loss of the Lester, 62 Ga..247, 35 Am. Rep. 122. 
property by fire and for losses oc- 19 Mayer v. Mutual Life Ins. Co. 
curring before the fire: Gardiner v. of Chicago, 38 Iowa, 304, 18 Am. 
Piscataquis Mutual Fire Ins. Co. 38 Rep. 34; Spoeri v. Massachusetts 
Me. 439. Mutual Life Ins. Co. 39 Fed. 752. 

15 Gilbert v. North American Fire 20 Cotton States Life Ins. Co. v. 
Ins. Co. 23 Wend. (N. Y.) 42, 43, 35 Lester, 62 Ga. 247, 35 Am. Rep. 122. 
Am. Dec. 543. l Hanley v. Life Assoc, of Ameri- 

16 This case seems to have turned ea, 4 Mo. App. 253. 

upon the fact, held material by the 2 Arnott v. Prudential Ins. Co. of 
court, that it did not appear that the America, 63 Hun, 628, 44 N. Y. St. 
assessment was levied by the com- Rep. 480, 17 N. Y. Supp. 710, 63 
pany intending to recognize the pol- Hun (N. Y.) 628. 
icy as being then in force, nor that it 

2541 



§ 1374 JOYCE (>N [NSUKANCE 

due, waives suspension and validates a payment made within a 
short time after the member's death. 3 And. if, under a policy of 
insurance providing that the company shall not he liable for any 
loss occurring while any pari of the premium is overdue and un- 
paid, the company, with knowledge of a loss, accepts a, premium 
overdue, it thereby waives the forfeiture and restores the policy to 
in full force, noi only as to the future, hut also from the begin- 
ning. 4 And an acceptance of additional premiums, based on the 
pay roll of an employer, after knowledge of the death of insured 
constitutes a, waiver where insurer also refused to take part in suits 
by the insured's administrator against a railroad company for 
causing insured's death or in the hitter's suit against the employ- 
er. 6 So a receipt of assessments voluntarily paid for the assured 
after his death to his lodge, and forwarded to the society, and ac- 
cepted and retained by it, with knowledge of the death, until suit 
brought to recover on the policy, waives a forfeiture. 6 But there 
is no waiver if neither the officers receiving the assessments nor the 
company had knowledge of the facts constituting the ground of 
forfeiture. 7 If a person has insured his property for five years in 
a mutual insurance company, and a part of it is destroyed by tire, 
hui he does not pay two assessments, one of which is delinquent, 
and the other overdue, until after the loss has occurred, the accept- 
ance of such payments is not a waiver of forfeiture of the policy. 
because of the delinquent assessment, where the insured has the 
right, under the laws of the association, to make such payments, 
when it is necessary to make them to restore the insurance pro- 
vided for in the policy for the remainder of the period of five 
years, and where the association is hound to accept such payments 
in order to revive the policy for the remaining time it has to run. 8 
So the demand and receipt of assessments by a life insurance com- 
pany after the death of the insured, with knowledge of his death, 
and that the contract is voidable on account of misrepresentations 
♦by the insured, waives the forfeiture. 9 So a mutual lire company 
is estopped to deny its liability when after the death of the assured 

8 Reisz v. Supreme Council Amer- the Order of Hermans' Sons, 44 Wis. 

Lean Legion of Honor, 103 Wis. 427, 376. 

7:> X. W. 430. 7 Swett v. Citizens' Mutual Relief 

* Continental Ins. Co. v. Chew, 11 Soc. 78 Me. nth 7 Atl. 394. 

Ind. App. 330, 54 Am. St. Rep. 506, 8 Beeman v. Fanners' Pioneer Mu- 

38 NT. !'.. 117. tual Ins. Assoc 104 Iowa. 83, 65 Am. 

s Fidelity & Casualty Co. of N. Y. St. Rep. 424, 73 N. W. 597. 

v. Railway News Co. 31 Kv. L. Rep. 9 Masonic Mutual Benefit Assoc, v. 

55, 725. 101 S. W. 900, 103 S. W. Beck, 77 Ind. 203, 10 Am. Rep. 295; 

297. Bailey v. Mutual Benefit Assoc. 71 

6 Erdmann v. Mutual Ins. Co. of Iowa, 689, 27 N. W. 770. 

2542 



EXCUSES, WAIVER AND ESTOPPEL § 1374 

k assesses his administrator upon the policy and receives payment 
from him. 10 Waiver of a forfeiture of an insurance policy for fail- 
ure to pay an assessment, by the receipt of the delinquent assess- 
ment after a loss, will he prevented if at the time of the receipt of 
such assessment any of the insured property remains in existence 
to which the revived insurance may attach, by a provision that, in 
case of forfeiture where the policy holder afterward pays the amount 
due from him, the policy "shall be holding from the date of the 
receipt of said amount." 11 So where a premium is accepted after 
loss of the property with knowledge of the loss, there is a waiver of 
default for nonpayment. 12 But a retention of the premium till 
after death, there being no knowledge of the facts, constitutes no 
waiver. 13 So also of a payment received in ignorance of the death. 14 
And where an overdue premium is to be accepted only on condition 
that it be paid at once, and the same is not sent until a fortnight 
later, the insured then being sick and having died the next day, 
the company is not bound by its acceptance and receipt. 15 The 
beneficiary of a mutual benefit certificate cannot insist upon an 
estoppel against the order because of refusal to accept the dues of 
a member who is ill, if, upon the representative of the lodge stat- 
ing that he had information that the member is not fit to be such 
and should be expelled, and that unless he is permitted to lapse 
out by nonpayment of dues he will take the matter before the order 
and secure the expulsion, he acquiesces in the suggestion without 
further attempt to pay dues. 10 When the premium is earned and 
forfeiture occurs before the loss, taking and retaining the premium 
does not constitute a waiver of the forfeiture nor evidence tending 
to show it. 17 If the insurer, in a policy of marine insurance, accepts 
the balance of the premium due after disaster to the insured vessel, 
he does not thereby waive the defense that no such loss has occurred 
as that sued for. 18 

10 Hart v. Pottawattamie County 13 Bursteed v. West of England 
Mutual Fire Ins. Co. 74 Iowa, 39, 36 Ins. Co. 5 Irish Ch. 553. 

N. W. 880. 14 Pritchard v. Merchants' Assur. 

11 Johnston v. Phelps County Soc. 3 Com. B. N. S. 622. 
Farmers' Mutual Ins. Co. 63 Neb. 21, 15 Servoss v. Western Mutual Aid 
56 L.R.A. 127, 8S N. W. 142. Soc. 67 Iowa, 86, 24 N. W. 604. 

12 Joliffe v. Madison Mutual Ins. 16 McCann v. Supreme Conclave 
Co. 39 Wis. Ill, 20 Am. Rep. 35; Independent Order of Heptasophs, 
Schoneman v. Western Horse & Cat- 119 Md. 655, 46 L.R.A. (N.S.) 537 
tie Ins. Co. 16 Neb. 404, 20 N. W. (annotated on effect of incapaeitat- 
284; Farmers' Mutual Fire Ins. Co. irig illness or insanity on failure to 
v. Bowen, 40 Mich. 147. See Central pay premium when due), 87 Atl. 383. 
Market St. Co. v. North British & 17 Smith v. Continental Ins. Co. 6 
Mercantile Ins. Co. 245 Pa. 272, 91 Dak. 433, 43 N. W. 810. 

Atl. 662, 44 Ins. L. J. 416. 18 Searles v. Western Assur. Co. 88 

2543 



§ 1375 JOYCE ON INSURANCE 

§ 1375. Waiver: payment of premium note: generally. 19 — The 
determination of the question whether the acceptance of payment, 
after death or loss, of a promissory note given an insurance com- 
pany operates as a waiver of a prior forfeiture or exemption from 
liability of the insurer, depends upon the character of the note and 
the oature and term- of the contract. Thus, as we have stated in 
preceding sections, there may be a liability on a premium note 
after loss; or .1 liability to pay the whole note may be incurred by 
default in paymenl of an assessment; or the contract may provide 
for the deduction of the am >unt due on the note from the loss; or 
the note may be given for the premium on an open marine policy 
to become valid as fast-as premiums are earned ; or the contract may 
stipulate that, in case of default, the entire premium shall be con- 
sidered as earned; or the note may be given in advance for pre- 
miums; or the liability may, by the character of the note itself, be 
absolute at all events; 20 and there are other cases in which the com- 
pany will have a right to accept payments on the note without 
waiving forfeitures. 1 Thus, if the company, with full knowledge 
of the facts that a premium note is overdue and unpaid at the time 
of the loss of part of the insured property, accents unconditionally 
the amount due on said note representing the entire premium, and 
there is no stipulation that the premium shall be considered as 
earned in case of default in payment at maturity of the note, it 
thereby waives its right to insist upon its exemption from liability, 
and the company is likewise estopped in such case to assert that it- 
liability only revived as to that portion of the property which was 
not destroyed, and this even though the contract provides that the 
company shall not be liable for loss occurring during the time the 
policy is suspended by reason of nonpayment of the note at ma- 
turity. 2 In Smith v. Continental Insurance Company 3 the policy 

Miss. 260, 117 Am. St. Rep. 741, 40 J., said: "The only question which 

So. 866. is here open to controversy is wheth- 

19 See § L356 herein. er the company did waive the right 

20 See §§ 1202 et seq. herein. to forfeit the policy by an acceptance 
1 See § 1365 and other sections un- of the premium after the loss bad 

der this chapter. occurred. It is proper to say ;.l the 

8 Phoenix Ins. Co. v. Tomlinson, outset that this case is to be discrim- 
125 Ind. 84, 21 Am. St. Rep. 203, 9 inated from such cases as American 
L.R.A. 317, 31 Cent. L. J. 43!), 19 Ins. Co. v. Henley, 60 Ind. 515, and 
Ins. L. J. 1004, 25 N. E. 126. See American Ins. Co. v. Leonard, 80 
Phoenix Ins. Co. v. Lansing, 15 Neb. Ind. 272, for the reason that in those 
494, 20 N. W. 22. The opinion of cases the premium notes were shown 
the court in the case in which this to be unpaid at the time of the loss, 
ruling was made is of sufficient im- and it did not appear that the insur- 
portance to warrant the insertion of ance company had subsequently ac- 
a part thereof; the court, per Elliott, cepted payment, while here there was 

2544 



EXCUSES, WAIVER AND ESTOPPEL § 1375 

had become void by reason of misrepresentation and effecting addi- 
tional insurance. The note had been paid in full, but after loss, 

an acceptance of the premium after paid. It is not jusl that the company 
the loss occurred. We cannot per- should retain the premium and give 
eeive any valid ground upon which no value in return. The fact thai all 
it can be held that an insurance com- of the property insured was not de- 
pany may accept payment of the en- stroyed does not affect the que lion, 
tire premium after a loss has oc- for the policy is indivisible and con- 
curred, and yet escape payment of tinuous. ... It was not in the 
the loss. By accepting payment it power of the assured to pay part 
affirmed the validity of the policy, only of the premium. lie was hound 
and tacitly asserted that the policy to pay it all or lose the benefit of his 
was in force from the time it was contract. The rights of the parties 
executed. In such a case there is no are reciprocal. The company was 
interregnum in which there was a not bound to accept part of the pre- 
lifeless policy, for the policy is con- mium, nor had it a right to treat the 
tinuous in its nature and effect, and premium as paid upon part only of 
the premium covers the risk as an the property insured. It was the 
entirety. It would do violence to the right of the company to refuse to ac- 
intention of the parties and the Ian- cept part of the premium, but it had 
guage of their contract to declare, as no right to accept the whole premi- 
the appellants seek to have us do, urn, and treat it as payment for an 
that the payment simply revived the insurance upon part only of the 
policy. ... In our judgment, ac- property covered by the policy. Hav- 
eeptanee of the premium after the ing accepted the entire premium and 
loss has occurred is a waiver of the full notice of the loss, it confirmed 
right to declare a forfeiture of the the contract as to the whole of the 
policy, and not a mere act of revivor, property insured. ... It cannot 
... To treat the acceptance of the accept the entire premium and yet 
premium as merely reviving the con- assert that it is liable only from the 
tract is, in effect, to adjudge a for- time of the acceptance, although the 
feiture. . . . This is clear when loss occurred prior to that time. . . . 
it is brought to mind that, if the pol- The policy . . . does not provide 
icy is held to be lifeless from the time that the default in payment shall en- 
of default in payment until after the title the company to treat the pre- 
loss, it must also be held that the in- mium as earned. If it did, we should 
sured cannot recover anything upon have a more difficult question. In 
his contract. A construction of the this instance, the premium was not 
conduct of the parties which will earned, for the period covered by the 
practically produce the same result as policy was five years, and the loss 
a declaration of forfeiture, is one occurred within seventeen months 
which it is the duty of the courts to after the policy was written. There 
avoid, if it can reasonably be done. It was, in fact, at the time of the loss 
is clear that this construction may be and at the time of the acceptance of 
reasonably avoided. . . . It is a the amount of the judgment no 
familiar general rule that a party earned premium beyond that paid in 
who accepts and retains benefit from cash; nor is there any recital that de- 
a contract confirms the contract as it fault shall entitle the company to 
was executed. . . . It is but just treat the premium as earned. There 
that the company having accepted the is, therefore, no tenable ground upon 
entire premium alter the occurrence which the company can justify its 
of the loss should yield the consider- act in taking the insurer's money, 
ation for which the premium was and yet repudiate liability for the 
Joyce Ins. Vol. III.— 160 2545 



§ 1375 



JOYCE o.\ ENSURANCE 



and pending suit, the company accepted accrued interest on the note 
and ii was held thai there was qo waiver of the forfeiture on the 
ground that the premium was earned. 4 In another case the policy 
contained a like condition with thai in Phoenix Insurance Company 
v. Tomlinson. 6 A loss occurred while a aote given for a portion 
of the cash premium remained unpaid and overdue, and ii was 



loss. The moment the risk attached 
the premium paid was beyond recov- 
er} by the insured: Standley v. 
Northwestern .Mutual Life Ins. Co. 
95 I nil. •_'."> I ; Continental Life Ins. 
Co. v. Bouser, 111 End. 266, L2 X. E. 



Gilman, J 12 End. 7, L3 X. I-:. 1 IS; 
Williams v. Albany City Ins. Co. 19 
Midi. 451, 2 Am. Rep. 95, 469; Jolift'e 
v. Madison Mutual Ins. ('<,. 39 Wis. 
Ill, 20 Am. Rep. 35; Lyon v. Trav- 
elers' Ins. Co. 55 Mich. Ill, ."> 1 Am. 



479. This right is correspondent with Rep. 354, 20 X. W. 829; Bane v. 



his burden. He cannot get his 
money hack, but he can enforce Ins 
contract, and his contract is contin- 
uous tor the period named and in- 
divisible as to the property described. 
When the company accepted pay- 
ment, of the entire premium, it waived 



Travelers' Ins. Co. 85 Kv. (377, 4 S. 
W. 787, Kv. Law Rep. 211; Titus 
v. (dens Falls Ins. Co. 81 N. Y. 410, 
8 Abb. N. C. 315, and concludes: 
"The acceptance of the money was 
after the loss and after the company 
knew that the assured was affirming 



all right to forfeit the policy, for as the validity of the policy and his 
the insured can gel back no part of right to recover the loss. It knew 
l lie premium paid, neither can the that he did not regard the policy as 
company escape the performance of suspended, and by accepting the 
its part of the contract. It cannot money it confirmed the contract as of 
have the benefit and escape the bur- the date of its execution." 
den. ... It was in the power of 3 6 Dak. 433, 43 N. W. 810. 
the company to accept or refuse pay- 4 This case and others to snbst ail- 
ment. It made its election, and it tially the same effect, viz.: Schimp 
must abide the legal consequences of v. Cedar Rapids Ins. Co. 124 111. 354, 



that act. It was a voluntary per- 
formance with full knowledge of all 
the material facts, and the election 

was e plete. We have studied with 

care the cases referred to by the ap- 



17 Ins. L. J. 703, 16 N. E. 22!), and 
Cohen v. Continental Ins. Co. 07 
Tex. 325, 60 Am. Rep. 24, .'! S. W. 
296, are considered in a note to 31 
Cent. L. J. 442, appended to the case 



pedant's counsel, and we cannot re- from which we have quoted the opin- 

gard them as sustaining the position ion in last preceding note 2 above, 

counsel assume; for we do not be- The writer, Mr. John A. Finch, con- 

lieve that in any of them is the doc- eludes that: "It may be safely said 

trine asserted that under such a pol- thai the weight of authority on a 

icy as that before us the insurance policy worded like this one is with 

company may, with knowledge of (he the opinion," citing Schreiber v. 

loss and notice that the assured is af- German-American Hail Co. 43 Minn. 

firming the validity of the policy, ac- 307, 45 N. W. 708; McMartin v. 

cept and retain the entire premium, Continental Ins. Co. 41 Minn. l!)8, 

and yet refuse to pay the loss." The 42 N. W. 934; Phoenix Ins. Co. v. 

com) then considers and reviews Lansing, 15 Neb. 494, 20 N. W. 22. 

Klein v. Xew York Life Ins. Co. 101 5 L25 End. 84, 21 Am. St. Rep. 203, 



U. S. 88, 26 L. ed. 662; Wall v. Home 
Ins. Co. 36 X. Y. 157; Sweetser v. 
odd Fellows Mutual Assoc. 117 End. 
!)7, 1!) X. E. 722; Home Ins. Co. v 

2543 



9 L.R.A. 317, 25 N. E. 120. See 
prior note of this case under this sec- 
tion. 



EXCUSES, WAIVER AND ESTOPPEL § 1375 

held that the exemption of the company from liability was waived 
by its accepting after notice of loss the amount due on the note. 6 So 
where the insured died on the day the last of three notes given for 
the balance of a cash annual premium matured, and the note was 
taken up four days thereafter, the company was held liable for the 
loss. 7 In a Missouri case the forfeiture was also held to have been 
waived under the following circumstances: The policy provided 
that when a premium note was taken for a cash premium, and 
default in its payment should operate to suspend the company's 
liability until it should be paid. The assured gave such a note, 
and immediately after it was due. having another policy which he 
desired canceled and the unearned premium thereon applied to 
this note, and not knowing how much would be due the company. 
he proposed by letter to pay, asking for a statement of the amount, 
whereupon the company at once applied upon the note the amount 
in their hands, and directed him by letter to remit the balance, 
which he did by first mail, but a loss occurred before the remittance 
was mailed. 8 So there may be a waiver by the receipt by an agent 
of the amount of an overdue premium note, and the receipt by the 
company of the same from the agent without inquiry. 9 But in an- 
other case where a note was given for the premium and the insured 
property was lost by fire, after the maturity of the note and after 
the policy w T as forfeited by its terms for nonpayment of the note, 
it was held that the mere voluntary payment of the note with legal 
interest after loss to a clerk of the insurer at its office, but against 
its express objection, did not operate as a waiver. 10 So it is decided 
in a case under substantially the same facts, with the exception 
that the payment was received without objection by the company, 
that such acceptance of the amount due on the note did not con- 

6 Joliffe v. Madison Mutual Ins. livers the policy, there would seem ftf 
Co. 39 Wis. Ill, 20 Am. Rep. 35, be no good reason why the company 
distinguished from the case of Wil- should not be bound by it. The con- 
limns v. Albany City Ins. Co. 19 sideration for the insurance is the 
Mich. 251, 2 Am. Rep. 95; Farmers' premium, and if this is paid and ap- 
Mutual Fire Ins. Co. v. Bowen, 40 propriated by the company, the time 
Mich. 147. of its payment would not seem to be 

7 Froehlich v. Atlas Life Ins. Co. material." But see North western 
47 Mo. 406. See Schonoman v. West- Lis. Co. v. Amerman, 119 111. 329, 
ern Ins. Co. 16 Neb. 404, 20 N. W. 59 Am. Rep. 799, 10 N. E. 225. 
284, where it was said by the court 8 Sims v. State Ins. Co. 47 Mo. 54, 
that "if there has been a failure to 4 Am. Rep. 311. 
pay the premium promptly at the 9 Hodsdon v. Guardian Life Ins. 
day, the company certainly may Co. 97 Mass. 144, 93 Am. Dec. 73. 
waive this condition, and if it after- 10 Muhlman v. National Ins. Co. 6. 
ward receives and retains it, and do- W. Va. 508. 

2547 



§ 137G JOYCE OX [NSURANCB 

stitute a waiver, 11 nor La there any waiver of forfeiture where tlio 
amount of an overdue premium note is accepted after Loss in 
ignorance thereof. 18 The insured lias a righl to accepl the pre- 
mium ear 1 until the policy ceases to be in force, bu1 if he accepts 

the full premium or compensation for the risk when the Loss occurs, 
such act is declared not consistent with a claim thai the policy is 
forfeited, or that the company is exempt from Liability. 18 li is 
held in Iowa that an acceptance of a part of the amount of the oote 
after maturity does not waive the forfeiture. 14 So occasional pay- 
ments, after they become due, of notes given for premiums, and 
consequent renewals of the policy, are no waiver, as to premiums 
afterward due, of the stipulation for forfeiture on failure to pay a 
note when due. 15 And there is no waiver where the policy provides 
thai the collection of the note, by suit or otherwise, shall not be con- 
strued to revive the policy. 16 So a waiver of a forfeiture cannot 
arise from the aet of an attorney employed by the company to 
collect a premium note, where he expressly disclaims any author- 
ity except to collect the note. 17 

§ 1376. Waiver by failure to declare a forfeiture. 18 — Tf the char- 
acter and terms of the contract be such as to necessitate some form- 
al declaration of forfeiture by the company, its omission to avail 
itself of the right to cancel a policy or declare a forfeiture for a 
failure to pay a premium note at maturity will be deemed a waiver 
of the right to insist on a forfeiture. 19 And a failure cannot be 
declared after a member's death so as to deprive the parties con- 
cerned of rights then existing. In such cases the liability of the 
insurer accrues on the death of the assured, and it is too late after- 

11 Williams v. Albany City Ins. Co. 16 Curtin v. Phcenix Ins. Co. 78 
19 Mich. 451, 2 Am.' Rep*. 95, dis- Cal. 619, 21 Pac. 370. 

tinguished in Joliffe v. Madison Mut- 17 Continental Fire Ins. Co. v. 

ual Ins. Co. 39 Wis. Ill, 20 Am. Rep. Coons, 14 Ky. Law Rep. 110. 

35, and in Phcenix Ins. Co. v. Tom- 18 See § 1356 herein. 

1 in son, 125 Ind. 84, 9 L.R.A. 317, 21 19 Western Horse & Cattle Ins. Co. 

Am. St. Rep. 203, 31 Cent. L. J. 439, v. Scheible, 18 Neb. 495, 25 N. W. 

19 Ins. L. J. 1004, 25 N. E. 126, both 620; Montgomery v. Phcenix Mutual 

noted above within this section. Life Ins. Co. 14 Bush (Ky.) 51. See 

12 Harle v. Council Bluffs Ins. Co. Farmers' Mutual Relief Assoc, v. 
71 low;., 401, 32 N. W. 396. Koontz, 4 Ind. App. 538, 30 N. E. 

18 Joliffe v. Madison Mutual Ens. 145, noted in text in section 1378; 

Co. 39 Wis. Ill, 20 Am. Rep. 35, per Phcenix Ins. Co. v. Coomes, 13 Ky. 

the court. L. Rep. 238. 

14 Garlick v. Mississippi Valley As to forfeiture for failure to pay 

Tns. Co. 44 Iowa, 553; Carlock v. premiums or assessments when due: 

Phoenix Ins. Co. 138 111. 210, 28 N. when provisions self -executing : when 

E. 53. affirmative act necessary, see $§ 1103 

16 Marston v. Massachusetts Life et seq., L261 el seq. herein. 
Ins. Co. 59 N. It. 92. On whether failure of insurer to 

2548 



EXCUSES, WAIVER AND ESTOPPEL §§ 1377, 1378 

ward to claim for the first time the benefit of a forfeiture. 20 It is 
also held that a condition in the policy that the note shall be void 
if not paid within a specified number of days after maturity, will 
be construed as meaning voidable only at the election of the com- 
pany. 1 Under an open policy reciting payment of premium at a 
specified rate, but providing that the- premium on each risk is to be 
fixed at the time of indorsement according to the rates of the com- 
pany, when the character of the vessel and time of sailing are 
known, if the insured, on giving timely notice of a shipment, states 
all the facts, the circumstance that the vessel is out of time does 
not exonerate the insurers, but it is for them to object on that ac- 
count and require the proportionate premium. 2 If by the terms of 
the policy or certificate the nonpayment of a premium or assess- 
ment at the day specified operates ipso facto to determine the con- 
tract, the delay of the company in declaring a forfeiture of a policy 
on its books for nonpayment of the premium is no waiver of the 
condition requiring prompt payment. 3 

§ 1377. Failure to insist promptly on payment of premium 
notes. — Failure on the part of the insurer to insist on payment 
promptly at maturity of a premium note, does not operate as a 
waiver of the forfeiture arising under a stipulation in the policy 
and note that the latter shall lapse on default in payment, where 
it appears that one day before the note's maturity the insured 
notified the company that he would pay as soon as he could sell son to 
property, and ten days thereafter the company wrote requesting 
assured to pay and revive the policy, and on the day of so writing 
the property was burned. 4 

§ 1378. Waiver: collecting loss: adjustment and allowance of 
loss. — Although a mutual insurance company levies and collects an 
assessment to pay the loss under a policy, it does not thereby waive 
its right to avail itself of a forfeiture of the policy and its conse- 
quent exemption from liability for the loss. 5 But the adjustment 

speak or act after notice of breach of 3 Aslibrook v. Phoenix Mutual Ins. 

policy constitutes a waiver thereof, Co. 94 Mo. 72, 6 S. W. 462, 463. 

see notes in 25 L.R.A.(N.S.) 1, and 4 Dale v. Continental Ins. Co. 95 

51 L.R.A.(N.S.) 261. Tenn. 38, 31 S. W. 266. 

20 Olmstead v. Farmers' Mutual As to conditions for forfeiture for 

Fire Ins. Co. 50 Mich. 200, 15 N. W. nonpayment of notes at maturity, 

82; Young v. Mutual Life Ins. Co. see S§ 1204 et seq. herein, 

of New York, 2 Saw. (U. S. C. C.) 5 Nash v. Union Mutual Ins. Co. 

325, Fed. Cas. No. 18,168. 43 Me. 343, 69 Am. Dec. 65; Mayer 

1 Louisville Underwriters v. Pence, v. Equitable Life Assoc. 42 Hun (N. 

93 Kv. 96, 19 S. W. 10, 21 Ins. L. J. Y.) 237. See also § 1289 herein, on 

493, 14 Ky. L. Rep. 21, 40 Am. St. appropriation of fund, etc. 
Rep. 176. 

2 Rolker v. Great Western Ins. Co. 
4 Abb. App. Dec. (N. Y.) 76. 

2549 



§§ 1379 L38] JOYCE ON [NSURANCE 

and allowance of a loss may operate as a waiver of forfeiture for 
failure to pa\ assessments when due where the constitution of the 
society provides thai insurance shall be perpetual, and thai oonpay- 
menl should only suspend the protection till all dues shall be paid, 
and the company fails to declare the forfeiture. 6 

§ 1379. Waiver by recognition of the policy as in force. 7 — As a 
general rule if the company lias treated the policy as valid, and 
has soughl to enforce paymenl of the premium, or lias otherwise 
with knowledge recognized, by its own acts or declarations, or those 
of its agents, the policy as still subsisting, it waives thereby prior 
forfeiture-. 8 

§ 1380. Waiver by giving credit for the premium. — The com- 
pany may undoubtedly waive the condition as to payment on a 
specified day by accepting a note for the premium, or by otherwise 
giving credit therefor. 9 And where credit is intended to be uiven, 
and is unconditionally given, and the policy attache-, the waiver of 
a cash payment is irrevocable, and the company cannot thereafter 
insist upon a forfeiture, even though death ensues before actual 
payment, and in ease of a finding of the court that there has been a 
waiver, the correctness or incorrectness of a series of requests which 
are founded on an assumption that payment had not been made is 
held not subject to review. 10 

1381. Defense that waiver induced by false representations. — 
If the company is induced by false representations or fraud of the 
assured to revive a forfeited policy, or to reinstate a suspended mem- 
ber, or to otherwise waive a forfeiture, the waiver so procured is 
void, and the facts constitute a defense to an action on the policy. 
Thus, false representations as to health inducing a waiver of for- 
feiture from failure to pay premiums when due may he shown, 
and being proven, will void the waiver and prevent a recovery. 11 

6 Fanners' Mutual Relief Assoc, v. 1356, 1361, on waiver and estoppel 
Koontz, 4 lnd. A pp. 538, 30 N. E. by acts, etc.; and also cases through- 
1 i;, out this entire chapter; LoftiS v. 

7 Sec § L356 herein. Pacific Mutual late Ins. Co. 38 Utah, 
»Young v. Mutual Life Ins. Co. 532, 114 Pac. 134, 40 Ins. L. J. 1048, 

of New York, •_' Saw. (U. S. C. C.) 1055. 

325, Fed. ('as. No. 18,1(58; Robinson 9 Thompson v. Knickerbocker Life 

v. Pacific Fire Ins. Co. 18 Hun (N. Ins. Co. 104 U. S. 252,26 L. ed. 765. 

V.) 395; Olmstead v. Farmers' Mut- See §§ 70 et seq., 1141 herein. 

aal Fire Ins. Co. 50 Mich. 200, 15 X. 10 Miller v. Life Ins. Co. 12 Wall. 

W. 82; Behler v. German Mutual (79 U. S.) 285, 20 L. ed. 398. 

Fire Ins. Co. OS [nd. 347; Appleton " Harris v. Equitable Lite Ins. Co. 

v. Phoenix Mutual late Ins. Co. 59 04 N. Y. 196, 13 All). L. J. 248, 3 

N. II. 511, 47 Am. Rep. 220. See SS Hun (N. Y.) 724, 6 N. Y. S. C. 108. 

2550 



EXCUSES, WAIVER AND ESTOPPEL § 1382 

§ 1382. Waiver by agents: subordinate lodges. — It is undoubted 
that an authorized agent or one acting within the apparent scope 
of his authority may, as well as the company, waive the condition 
requiring payment of premiums on specified days, even though the 
policy provides that no agent may waive forfeitures. 18 And even 
though insurer had no actual knowledge that payment had heen 
made. 13 But insurer is not bound by an agreement of its agent, 
who effected the insurance, to extend time for payment of pre- 
miums where it has no knowledge thereof, and even though said 
agent has accepted an overdue payment after the illness of insured, 
there is no waiver where upon learning the facts insurer tenders 
back the amount so paid and repudiates its agents acts, especially 
where the policy prohibits waivers by agents except by agreement 
in writing signed, etc. 14 An agent authorized to collect the pre- 
miums may waive the payment in cash of the premium by a])] liv- 
ing the amount thereof in payment of a debt due from him to the 
assured, and if funds which the insured has a right to apply to the 
payment of premiums have thus come into the agent's hands, his 
retention of the same until after death of the assured will not pre- 
vent a recovery on the policy. 15 So an officer of the company, such 
as the president or secretary, may waive such condition as to punc- 
tual payment. 16 And where insurers acts amount to a ratification 
of those of the agent it will be estopped to deny the latter's author- 

12 Sheldon v. Connecticut Mutual pany replies furnishing the informa- 

Life Ins. Co. 25 Conn. 207, 65 Am. tion asked, but does not state that 

Dec. 565; Price v. North American the policy had lapsed, it will be 

Accident Ins. Co. 28 Idaho, 136, 152 deemed to have remained in force: 

Pac. 805; Carson v. German Ins. Co. Rowe v. Brooklvn Life Ins. Co. 

62 Iowa, 433, 17 N. W. 650, 55 Am. (1896) 38 N. Y. Supp. 621. 
Rep.*787, 6 N. E. 267; Whitehead v. On waiver by officer of subordinate 
New York Life Ins. Co. 102 N. Y. lodge of forfeiture for nonpayment 
143, reversing 38 Hun (N. Y.) 425, of assessments, see notes in 4 L.R.A. 

63 How. Pr. 394; Marcus v. St. Louis (N.S.) 421; 38 L.R.A.(N.S.) 571; 
Mutual Life Ins. Co. 68 N. Y. 625; and L.R.A.1915E, 152. 

Church v. Lafayette Fire Ins. Co. 66 13 Price v. North America Accident 

N. Y. 222 ; Godfrey v. Atlantic Ins. Co. 28 Idaho, 136, 152 Pac. 805. 

House Ins. Co. 169 N. Car. 238, 84 14 Collins v. Metropolitan Life Ins. 

S. E. 339. See chapters on agency, Co. 32 Mont. 329, 108 Am. St. Rep. 

§§ 424 et seq., 441 et seq., 550 ef seq. 578, 80 Pac. 609, 1092, 34 Ins. L. J. 

herein. 592. 

If the premium has become due, 15 Chickering v. Globe Ins. Co. 116 

and the assured, the day after having Mass. 321. That agent may waive 

failed to pay the same, writes the cash payment by allowing credit, see 

company for a detailed statement of Ball Sage Wagon Co. v. Aurora 

the condition of the policy, and also Fire & Marine Ins. Co. 20 Fed. 232. 

for figures for a paid-up policy, to 16 Dillebar v. Knickerbocker Life 

which letter the president of the com- Ins. Co. 76 N. Y. 56/. 

2551 



§ L382 JOYCE ON INSURANCE 

ity, as in case of granting an extension on premium notes. 17 But 
the receipt of overdue a.-sessmenes l>y an otlieer with qualified power 
does doI waive the forfeiture and operate to reinstate a member, 
where It is stipulated thai money received from a suspended mem- 
ber must be "tendered in open branch meeting," 18 and no waiver 
arises from the act of the secretary, in acknowledging payment of 
the premium, where he has no knowledge of the facts, and such 
acknowledgmenl is made under a mistake of facts. 19 But there is 
a waiver where the assured relies upon information from the agent 
as to the date of payment, and such information is incorrect. 80 
And if the company declare- a policy forfeited for nonpayment of 
premiums, and I hereafter a tender is made by the insured to the 
vice-president and manager of the insurer, who refers him to the 
agent who issued the policy to arrange the matter, and the latter 
agrees to "fix ii up" in accordance with a prior agreemenl to offsel 
rents due against the premiums, the company is held by such acts 
not to have waived the claimed forfeiture, where the policy pre- 
cludes agents from waiving forfeitures; 1 and if the assured has 
notice! of the agent's want of authority to receive overdue premiums, 
no waiver arises from the agent's unauthorized act in so doing, 
unless such act is ratified by the company. 8 Nor can an agent 
receive overdue premiums and give an antedated receipt therefor, 
so as to waive a forfeiture or revive the policy, nor is evidence ad- 
missible to show a usage so to receive and antedate premiums, or to 
authorize, by parol license, agents to do so. 3 So if premiums are 
required to be paid weekly, and the policy is to be void for arrears 
in payments of over four weeks, but a mode of revival is provided, 
a delay of fifteen weeks without any steps for revival is not excused 
by the fact that a branch superintendent of the company assures 
the insured that an arrearage does not matter, agents not having 
power, under the terms of the policy, to waive conditions or receive 
arrearages. 4 It is held in Illinois that the assured may be justified 
in believing that time for the payment of premiums is extended 

17 Majestic Life Ins. Co. v. Tuttle, tual Life Ins. Co. 12 Fed. 003, 11 Ins. 

58 Ind. A pp. 98, 107 N. E. 22, 45 L. J. 653. 

Ins. L. .1. L37. * Sullivan v. Germania Ins. Co. 15 

l8 McGowan v. Supreme Council Mont. 522, 39 Pac. 742. 

Catholic Mutual Benefit Assoc. 56 2 McGowan v. Charier Oak Life 

Bun (N. V.) 534, 58 N. Y. St. Rep. Ins. Co. 16 Fed. 125, 4 Am. L. Rec. 

268. 559. 

19 Robertson v. Metropolitan Life 3 Busby v. Nortb American Life 
Ins. Co. 88 N. Y. 541; reversing 47 Ins. Co. 40 Md. 572, 17 Am. Rep. 
N. Y. Super. Ct. 377 (two judges 634. 

dissenting under the facts of the 4 Mallory v. Metropolitan Life Ins. 
case). Co. 97 Mich. 416, 23 Ins. L. J. 03, 5G 

20 Selvage v. John Hancock Mu- N. \Y. 773. 

2552 



EXCUSES, WAIVER AND ESTOPPEL § 1382 

where he receives through the company's agent a circular issued 
by it setting forth its liberality in extending the time for said pay- 
ment. 6 Unless officers of dependent or subordinate lodges are so 
authorized, they have no power to waive compliance with the laws 
of the higher order relating to payment of such assessments, either 
to give credit therefor or by receiving them when overdue, 6 although 
the extent of the authority of such agents is an unsettled question. 7 
But certificate holders in a benefit society have the right to rely 
upon a construction given to the rules and regulations of the order 
by the highest tribunals of the order, and to presume that the 
supreme lodge will not enforce a forfeiture under circumstances 
which the board of control has held did not create one so that the 
continued receipt of monthly assessments up to the date of such 
member's death, constitutes a waiver of a technical forfeiture for 
nonpayment of lodge dues. 8 And where the treasurer of a sub- 
ordinate council forwarded to the supreme treasurer the sum total 
of assessments due from his council, and this included the amount 
due from him, it was held a sufficient payment, although not made 
through the collector, and that his widow was entitled to the bene- 
fit. 9 If the constitution of the endowment rank of the Knights of 
Pythias vests the entire charge and full control in a board of con- 
trol, and said board treats the continued receipt up to a member's 
death, of assessments upon the policy or endowment as a waiver 
of the right to insist upon a forfeiture, there is a waiver of non- 
payment of lodge dues, for which separate accounts are kept, and 
which forms no part of the consideration of the contract, it appear- 
ing that the member had not been suspended, but had been re- 
quested to pay before the' next meeting, before which time he died. 10 
So the continued receipt of assessments upon a certificate of mem- 
bership in an endowment rank of the Knights of Pythias, up to 
the date of the death of the member, is a waiver of any technical 
forfeiture of the certificate by reason of the nonpayment of his 

5 United States Life Ins. Co. v. 8 Supreme Lodoe Knights of Pvth- 

Ross, 159 111. 476, 42 N. E. 859. ias v. Kalinski, 163 U. S. 289, 41 L. 

6 BorgTaefe v. Supreme Loda-e ed. 1(33, 16 Sup. Ct. 1047. 

Knights of Honor, 26 Mo. App. 218, 9 Farrie v. Supreme Council Cath- 

22 Mo. App. 127; Bouten v. Ameri- olic Benevolent Lesion, 47 Hun (N. 

can Mutual Life Ins. Co. 25 Conn. Y.) 639, 15 N. Y. St. Rep. 155, affd 

542; Miller v. Hillsborough Fire As- 120 N. Y. 662, 24 K E. 1104. 

soc. 42 N. J. Eq. 459, 7 Atl. 895; 10 Supreme Lodge Knights of Pyth- 

Illinois Masonic Benefit Soc. v. Bald- ias of the World v. Kalinski, 163 U. 

win, 86 111. 479. S. 289, 16 Sup. Ct. 1047, 41 L. ed. 

7 See Manning v. Ancient Order 163, aff'g 57 Fed. 348, 6 C. C. A. 373, 

United Workmen, 86 Kv. 136, 5 S. 16 Sup. Ct. 1047. 
W. 385, 9 Ky. L. Rep. 428, 9 Am. St. 
Rep. 270. 

2553 



§ 1382 JOYCE ON INSURANCE 

Lodge dueSj for which separate accounts were kept and which 
formed oo pari of the consideration for the certificate, where the 
member had not been suspended bu1 had been told to pay them 
before the aexl meeting of the Lodge and died before thai time." 
!f the supreme Lodge receives assessments collected by the subordi- 
nate Lodge, and retains them with a knowledge of a forfeiture, it 
waives the same. 12 And where the secretary of the local lodge of 
a mutual benefil society is frequently away from home on the last 
day prescribed for payment of assessments on certificates, and for a 
long time has been in the habil of accepting payments any time 
prior to the date of transmitting the assessments to the supreme 
body, a rule of the order that failure to pay assessments on or be- 
fore the Last specified day shall of its own force suspend the cer- 
tificate will he regarded as waived. 13 So the subordinate order or 
local subdivision may advance for him the amount of a member's 
assessment.. 14 And where in pursuance of a custom the society 
notifies insured's wife that the lodge would pay his dues during his 
illness there is a waiver of nonpayment, 15 If the president assumes 
that the Lodge has acted upon an assessment, which is not the fact, 
and directs its payment, there can be no forfeiture for its nonpay- 
ment by a member. 16 

Where the secretary of a local lodge is not so authorized by the 
the grand lodge, he does not by his habit of receiving past due 
assessments waive suspension for nonpayment of assessments. 17 
And if a local scribe is constituted by custom the agent of the 
national organization to collect dues and after they are past due he 
receives but fails to remit the same to the national scribe until after 
the member's death, there is no forfeiture even though the national 
scribe had no knowledge at the time he received said due that in- 
sured was dead. 18 And acceptance of payment by an agent when 
the member is not in good health, as required by the contract, does 

11 Supremo Lodge Knights of Pyth- 15 Britt v. Sovereign Camp of 

ias v. Wellenvoss, 11!> Fed. 671, Woodmen of the World, 17)3 Mo. 

117."., 56 C. C. A. 287, 291; Supreme App. 698, L34 S. W. 1073. 

Tent Knights of Maccabees v. Vol- 16 Bagley v. Grand Lodge Ancient 

kert, 25 Ind. App. 627, 643, 57 N. E. Order of "United Workmen, 46 ill. 

203; Baltimore Life Ins. Co. v. How- App. 411. 

ard, 95 Md. 244, 258, 52 All. 397. "Chadwick v. Order of Triple Al- 

12 Illinois Masonic Benefit Soc. v. lianee, fib' Mo. App. 463. 

Baldwin, 86 111. 479. 18 Mosaic Templars of America v. 

"Trotter v. (hand Lodge Iowa Jones, 99 Ark. 204, 137 S. W. 812, 40 

Legion of Honoi*, 132 [owa, 513, 7 Ins. L. J. 1535. Also see Saucerman 

L.R.A.(N.S.) 569, 109 X. W. L099. v. Court of Honor, 150 111. App. 340. 

14 Seheu v. Grand Lodge Ohio Di- Examine Falkenberg v. North Amer- 

vision, Independent Forresters, 17 ican Fraternal Order, 149 III. App, 

Fed. 214. H22. 

2554 



EXCUSES, WAIVER AND ESTOPPEL § 1383 

not constitute a waiver even though such agent had knowledge of 
insured's physical condition, where the policy precludes waiver by 
any officer or representative of the society. 19 Where a member of 
a mutual benefit society has, by the terms of the contract, forfeited 
his rights, and ceased to be a member by nonpayment of dues, 
neither waiver of the forfeiture nor an estoppel to rely upon it is 
effected by a receipt by the collector of the local lodge of current 
dues, pending an application for reinstatement, which must be up- 
proved by the secretary of the grand lodge, and the statement of 
the collector that the member is in good standing until the next 
payment becomes due, where neither the applicant nor the bene- 
ficiary was in any way misled thereby, especially where the collector 
had been given no express or implied authority to bind the order 
in that respect and his act was not ratified. 20 Where the constitu- 
tion of a society provided that in case a member was suspended for 
nonpayment of assessments he could be reinstated upon payment 
of the assessments within four months, but that if an assessment 
remained due for more than four months he could only be rein- 
stated by a vote of his lodge, the payment of all assessments, and 
the furnishing of a health certificate, and it appeared that the mem- 
ber had on several occasions let his assessments become overdue, but 
had paid them all within four months, except the last one, which 
he did not remit until more than four months from the date there- 
of, and then the officer to whom he sent it forwarded to the insured 
a copy of the constitution and by-laws, marking the provision as 
to reinstatement, but retaining the money, it was held to be a ques- 
tion for the jury whether the requirement as to the health certificate 
and vote of the lodge had been waived. 1 

§ 1383. Waiver by assured of exemption from assessment: ille- 
gality of assessment. — If the assured pays to the company after 
his policy is surrendered the amount claimed by it prior thereto, 
and which he at the time believes himself liable to pay, such act 
does not constitute a waiver on his part, nor can an estoppel be based 
thereon as to exemption from his liability for subsequent losses. 2 

19 Few v. Supreme Lodge Knights this payment, together with what the 
of Pythias, 136 Ga. 181, 71 S. E. 130. defendant paid on the assessment of 

20 Kennedy v. Grand Fraternity, January 5th, more than paid all his 
36 Mont. 325, 25 L.R.A.(N.S.) 78 liabilities to the company up to the 
(annotated on whether breach of an time of the cancelation of his policy, 
insurance policy which ipso facto We think this should have discharged 
terminates it may be waived), 92 Pac. the defendant from any further lia- 
971_ bility. Neither the officers of the 

1 Rice v. Grand Lodge, 92 Iowa, company nor the receiver ever re- 
417, 60 N. W. 726. turned to the defendant his policy, or 

2 Vol ford v. Church, 66 Mich. 431. intimated to him that they did not 
33 N W 913. "The court finds that regard the policy canceled, while the 

2555 



;S4 JOYCE <>N [NSURANCE 

And objection to the legality of an assessment is not waived by an 
offer, thereafter withdrawn, to pay an exec-.- assessment. 8 

§ 1384. Waiver by assured of defective notice and service of 
same. — There is no question but that the assured may waive any 
objection which he is entitled to raise to a mere defect in the notice 
of an assessim at. Thus, an application for reinstatement operates, 
as against the beneficiary, as a waiver, of defects in the uotice. 4 h 
is a reasonable assumption that the form and manner of service of 
a notice may be waived by the party entitled to the same, since 
whatever strictness is necessary in following specified or stipulated 
requirements, it is for the benefit and protection of the party en- 
titled to notice, and all the circumstances should be considered in 
determining whether there has been such a waiver and whether the 
service is sufficient. If a party actually receives notice of an assess- 
m< nt through the mail, and does not object thereto, or to the man- 
ner of receiving the same, and is in no way injured by the depart- 
ure from the stipulated mode, which requires either that he be 
personally called on or that notice in writing to pay the assessment 
be left at his last and usual place of abode or business, he will be 
deemed to have waived the mode of service. 6 

defendant relied upon the fact that it Knights of Honor, 140 111. 301, 29 N. 
was no longer of any validity; and E. 1121. "In the application for a 
had the defendant's property named reinstatement no objection was made 
in the policy burned at any time aft- to the notice or any of the proceed- 
ed the 19th of March, 1884, I hardly ings which led to the suspension, and 
think counsel for plaintiff would in the absence of objection to the no- 
have been willing to admit liability tiee when Hansen had an opportuni- 
to the payee named in the policy by ty to make an objection, if any exist- 
the company," per the court. ed, it will be presumed that all ob- 

3 Langdon v. Massachusetts Bene- jection was waived," per the court. 
lit Life Assoc. 166 Mass. 316, 44 N. See §§ 1324, 1324a herein. 

E. 226. 5 Hollister v. Quincy Ins. Co. 118 

4 Hansen v. Supreme Lodge Mass. 478. 

2556 



CHAPTER XLV. 



RETURN OF PREMIUMS AND ASSESSMENTS. 



§ 1390. Principles governing right to return of premiums where risk has 
not attached. 

§ 1391. Stipulation for return of premium: generally. 

§ 1392. Stipulations: statutes governing the right to a return of the pre- 
mium. 

§ 1393. Return of proportionate premiums: surrender, rescission, cancela- 
tion, etc. 

§ 1394. Stipulation may entitle to a proportionate return of premium, al- 
though there be a partial or total loss of goods, etc.: sailing 
with convoy. 

§ 1395. Where underwriter discharged before performance of condition on 
which return of proportionate premium based. 

§ 1396. Where condition satisfied but underwriters discharged from loss: 
premiums returnable although loss by excepted risk. 

§ 1397. No return if risk has attached. 

§ 1397a. Election to refund premium or pay insurance: waiver. 

§ 1398. Premium returnable where policy ab initio void: generally. 

§ 1399. Insurance contract with infant: return of premium. 

§ 1400. Premium returnable where contract voidable or void for mis- 
representations or fraud of assurer. 

§ 1400a. Premium returnable where contract voidable or void for misrep- 
resentation or fraud of assurer's agent. 

§ 1401. Premium returnable when paid by mistake of facts: policy based 
upon mistake : mistake of law. 

§ 1401a. Return of premium where policy does not conform with agreement. 

§ 1401b. Premium not returnable : voluntary payments under claim of right. 

§ 1402. Whether premium returnable where foreign company has not com- 
plied with state laws. 

§ 1403. Return of premium: breach of warranty. 

§ 1404. Premium returnable for misrepresentation or concealment of as- 
sured without fraud. 

§ 1404a. Same subject: knowledge of insurer's agent where both parties 
act in good faith. 

§ 1405. Premium not returnable: policy illegal: parties in pari delicto. 

2557 



JOYCE ON INSURANCE 

§ l 105a. Return of premium: ultra vires contracts. 

§ lint:. Premium uoi returnable: policy void for fraud or material mis- 
representations of assured or his agent. 
§ ll()7. Premium qo! returnable: material alteration of policy. 
§ L407a. Return of premiums: demand for additional medical examination. 
§ 1408. Return of premium: breach of contract by assurer. 
§ 1 K)S;i. Same subject : transfer of assets to another company: winding- up: 

reorganization: change of insurance plan. 
§ l msb. Same subject : insolvency. 

§ 1408c. Same subject: insolvency of foreign mutual (ire insurance com- 
panies. 
§ 1 Ids. I. Same subject : insolvency of title insurance company: credit insur- 
ance company. 
>; 1 408e. Same subject: discrimination as to rates: rebates. 
§ 1408f. Same subject: reduction of amount of insurance. 
§ 1408g. Same subject: increase of assessments. 
§ 1408h. Same subject: reinsurance. 
§ 1409. Return where note is given. 
§ 1409a. When no return where note is given. 
§ 1 11(1. Return for want of interest. 
§ 1410a. Same subject: when no return. 

§ 1410b. Return where insurance without consent of insured. 
§ 1410c. Same subject: statutes. 

S 1410d. Payment by check of municipal corporation: misappropriated 
funds: recovery back. 

Proportionate return: overvaluation: short interest. 

Whether premium returnable for overinsurance by several in- 
surers: pro rata contribution. 

Same subject: opinions of the text-writers. 

Same subject: the case of Fisk v. Masterman. 

Same subject : code provisions. 

Same subject: the rule as to double insurances. 

Same subject: summary and conclusion. 

Stipulations for return of premium: prior and subsequent in- 

- surances: the American clause. 

When no return in case of several policies. 

Premium not returnable when risk entire. 

Premium returnable when risk divisible. 

Return of premium: effect of usage: review of authorities. 

Same subject: conclusion. 

Stipulation for return of premium: "sold or laid up." 
§ 1425. Return of premium: retention of a certain per centum by the 

insurer. 
§ 1426. Return of premium: insurance by voluntary agent. 

2558 



§ 


1411. 


§ 


1412. 


§ 


1413. 


§ 


1414. 


§ 


1415. 


§ 


1416. 


§ 1417. 


§ 


1 lis. 


§ 


1419. 


§ 


1420. 


§ 


1421. 


§ 


1422. 


§ 


1423. 


§ 1424. 



/ 



RETURN OF PREMIUMS AND ASSESSMENTS § 1390 

§ 1427. Recovery back of premium from agent. 
§ 1428. Who may recover back. premium. 

§ 1 128a. Name subject: beneficiaries. 

§ 1421). Return of premium: assignment: right of assignee. 
§ 1429a. Tender or return of premium as prerequisite to defense or for- 
feiture. 
§ 1429b. Return or tender of premiums as affecting waiver. 
§ 141)0. Return of premium: miscellaneous authorities. 

§ 1390. Principles governing right to return of premiums where 
risk has not attached. — Insurance in a contract. Its very definition 
imports the payment of a consideration or price on the part of the 
assured, and the assumption of a risk or peril by the assurer. The 
premium or cost of insurance is fixed or adjusted with reference to 
the risk or peril assumed. Premium and risk are both of the very 
essence of the contract, and each is dependent upon and insepar- 
able from the other. The very life of the contract involves the pre- 
sumption of a risk, and the assurer is paid the premium or price of 
insurance to take upon himself the peril or event insured against. 
It therefore necessarily follows that if the risk has not attached, or 
if no part of the interest insured is exposed to any of the perils in- 
sured against, the insurer has no claim to the premium ; if paid, it 
must be returned 6 in the absence of fraud by insured. 7 

6 Illinois. — iEtna Life Ins. Co. v. England. — Mason v. Sansbury, 3 
Paul, 10 Bradw. (111.) 431. Doug. 61; Wells v. Abraham, L. R. 

Indiana. — Supreme Tribe of Ben 7 Q. B. 554; Davidson v. Case, 8 
Hur v. Lennen, — Ind. App. — , 93 Price, 542, 1 Eng. Rul. Cas. 141; 
N. E. 869. Dawkes v. Coveneigh, Styles, 346, 1 

Kentucky. — Dixie Fire Ins. Co. v. Hale's P. C. 546; Flint v. Fleming', 
Wallace, 153 Ky. 677, 156 S. W. 140. 1 Barn. & Adol. 45, 13 Eng. Rul. Cas. 

Massachusetts. — Foster v. United 693. 
States Ins. Co. 11 Pick. (28 Mass.) See also 2 Arnould on Marine Ins. 
85; Penniman v. Tucker, 11 Mass. 66. ( e d. 1850) 1225, *1210; Id. (8th ed. 

Minnesota.— National Council Hart & Simey) sees. 1247-1251, pp. 
Knights i& ; Ladies of Security y, Gar- i 5 02-1510; 1 Duer on Marine Ins. 
ber, 131 Minn. 16 154 N W. 512; (ed . m5) 2fj0 201 and CMes under 

Parsons Rich & Co v Lane (Re notes following in this section. See § 

Millers' & Mfrs. Ins. Co.) 9/ Minn. i™ i ■ & , -,-, ,. , ° 

98, 4 L.R.A.(N.S.) 231, 106 N. W. ^JS^S*" 1 . f 8 . to English statute. 

4g- ' It the risk has never attached un- 

New York.— Elbers v. United Ins. d f a fire , P olic -y> there must > in the 

Co. 16 Johns. (N. Y.) 128 129. absence or fraud by the insured, be a 

Ohio. -- Connecticut Mutual Life return of premium: Jones v. Insur- 
ing Co. v. Pyle, 44 Ohio St. 19, 58 ance Co. 90 Tenn. 604, 25 Am. St. 
Am. Rep. 781, 4 N. E. 465. Rep. 706, 18 S. W. 260. See also 

Wisconsin. — Blaeser v. Milwaukee Millers' & Manufacturers' Ins. Co., 

Mutual Ins. Co. 37 Wis. 31, 19 Am. In re, 97 Minn. 98, 4 L.R.A.(N.S.) 

Rep. 747. 231, 106 N. W. 485; Metropolitan 

2559 



§ L390 



JOVCI-: (>.\ INSl'l.'AN'CK 



In this connection the rule as stated by Lord Mansfield, in a case 
decided in the court of King's Bench in 1777, has been 8 extensively 
quoted and relied on by the courts and English and American law- 
writers. Thai eminenl jurist says thai if the risk has not been run, 
whether owing "to the fault, will, or pleasure of the assured, or to 
any other cause, the premium shall be returned," and his reasons 
are substantially those above given. So, also, in another case he 
uses substantially the same words, and says: "If the risk lie not 
run. though it be by the neglect, or even the fault, of the insured, 
yel the insurer shall nol retain the premium." 9 So Emerigon, 
quoting from Pothier, says: "As the premium is the price of the 
risks thai the insurers are to run, and as there can be no price of 
risks when the insurers have not run any, this obligation to pay the 
premium naturally includes the tacit condition, if the insurers run 
the risk : " and thai if the assurers have not run any risk, "although 
by the act of the insured, the premium shall not be due to the in- 
surers, . . . and if it had already been paid them, they will 
be bound to return it; . . . so if merchants have effected in- 
surance on goods, which they propose to load on board a certain 
ship, but, having changed their minds, the shipment is not made. 
the premium of insurance on these goods shall not be due to the 
insurers, who have not in this case run any risk." 10 If the voyage 
insured never commences, or it be entirely broken up before the 
departure of the vessel, so that the ship never sails on such voyage, 
even by the act or fault of the insured, or if the voyage becomes 
void by a failure of the warranty, there being no actual fraud, the 
insured is entitled to a return of the premium, for the risk must 
attach to warrant the retention of the price paid. This rule is un- 
disputed. 11 So where a vessel sails on a voyage different from the 



/ 



Life Ins. Co. v. Bowser, 20 Ind. App. 
557, 50 N. E. 86. See § 140G herein. 

8 Tvrie v. Fletcher, Cowp. 666, 14 
Eng. Rul. Cas. 502. 

9 Stevenson v. Snow, 3 Burr. 1237. 

10 Emerigon on Ins. (Meredith's 
ed. L850) c. wi. sec. 1, p. 656. See 
also this reference for review of law 
as stated by the early foreign auth- 
ors. See also 2 Marshall on Ins. (ed. 
1810) c. xv. sec. '-', pp. 652 et seq. ; 
Bermon v. Woodbridge, 2 Doug. 781, 
14 Eng. Rul. Cas. 507, per Lord 
Mansfield; Tvrie v. Fletcher, Cowp. 
666, 1 1 Eng. Rul. Cas. 502, per Lord 

field. 

11 Marine [ns. Co. of Alexandria 
v. Tucker, 3 Cranch (7 U. S.) 357, 2 



L. ed. 466; Russell v. De Grand, 15 
Mass. 35; Penniman v. Tucker, 11 
Mass. 66; Merchants' Ins. Co. v. 
Clapp, 11 Pick. (28 Mass.) 56; Com- 
monwealth Ins. Co. v. Whitney, 1 
Met. (42 Mass.) 21,23; Waddington 
v. United States Ins. Co. 17 Johns. 
(N. Y.) 23; Lawrence v. Ocean Lis. 
Co. 11 Johns. (N. Y.) 241; Murray v. 
Columbian Ins. Co. 4 Johns. (N. Y.) 
443; Richards v. Marine Ins. Co. 3 
Johns. (N. Y.) 307; Murray v. Unit- 
ed Ins. Co. 2 Johns. (N. Y.) 168; 
Robertson v. United Ins. Co. 2 Johns. 
Cas. (N. Y.) 250, 1 Am. Dec 166; 
Jackson v. New York Ins. Co. 2 
Johns. Cas. (N. Y.) 191 ; Delairgue 
v. United Ins. Co. 1 Johns. I 'us. (X. 



2560 



RETURN OF PREMIUMS AND ASSESSMENTS § 1391 

one insured, the insured is entitled to a return of the premium; 12 
and the premium is to be returned which is paid for insurance 
against a blockade erroneously supposed to exist. 13 So also if the 
goods are not shipped, 14 or if the risk never attached on the goods, 
the insurance being on ship and cargo, tlie cargo not being loaded. 15 
So also if the policy be void ab initio through fault of the insured, 
without fraud, or if there be a want of insurable interest. 16 

And in general this principle of an attachment of the risk governs 
the right to a return of the premium in all cases subject to such 
exceptions as are noticed under the subsequent sections of this chap- 
ter. 

Again, where a note is left in escrow to be delivered upon issu- 
ance of a policy after the applicant had passed a satisfactory medi- 
cal examination, and said note was wrongfully obtained from escrow 
and transferred to the state agents of insurer and insured paid a 
judgment thereon obtained by said agents, and no policy was ever 
issued it was held that it was immaterial whether payment was vol- 
untary or compulsory and that a demurrer to a complaint setting 
out substantially the above facts was properly overruled where a 
statute provided in substance for a return of the premium paid 
where insurer has incurred no risk or liability under the policy for 
which the premium was paid. 17 

§ 1391. Stipulation for return of premium: generally. — It is 
competent for the parties to stipulate that under certain conditions 
or the happening of some event, or the not happening v of a specified 
contingency, a part of the premium shall be returned. Such 
stipulations may lawfully be, and should be, inserted in the policy, 
or otherwise made a part of the contract, and when so made are 
enforceable. Such agreements may be required by statute, as 
where a standard form of fire policy is provided, or the stipulation 
may exist by virtue of some code provision, with reference to which 

Y.) 310; Dus:uet v. Rhinelander, 1 1, pp. 51, 52; c. xvi. see. 1, pp. 650, 

Johns. Cas. (N. Y.) 360, rev'd 1 652-54. 

Caines Cas. xxv. ; 2 Johns. Cas. 476; 12 Forbes v. Church, 3 Johns. Cas. 

Graves v. Marine Ins. Co. 2 Caines (N. Y.) 159. 

(N. Y.) 339; Audley v. Duff, 2 Bos. 13 Taylor v. Sumner, 4 Mass. 56. 

& P. Ill ; Siffkin v. Alnutt, 1 M. & 14 Martin v. Sitwell, 1 Show, 156 ; 

S. 39; Penson v. Lea, 2 Bos. & P. Toppan v. Atkinson, 2 Mass. 365. 

330; Martin v. Sitwell, 1 Show, 156; 15 Hornever v. Lushington, 15 

Bermon v. Woodbrids?e, 2 Doug. 781, East, 46, 48, *50, *51, 13 Eng. Rul. 

14 Eng. Rul. Cas. 507; Boehm v. Cas. 637. 

Bell, 8 Term Rep. 154; Horneyer v. 16 See §§ 1398, 1400, 1405, 1410 

Lushington, 15 East, 46; 3 Camp. 85, herein. 

13 Eng\ Rul. Cas. 637; Emerigon on n Grabinski v. United States An- 

Ins. (Meredith's ed. 1850) c. Hi. see. nuity & Life Ins. Co. 33 S. Dak. 300, 
Joyce Ins. Vol. III.— 161. 2561 



-"7 



§1392 JOYCE ON INSURANCE 

the contract is assumed to h ive been made, and wnich may thereby 
become a part thereof. 18 

So in accidenl policies it may be stipulated thai qo claim shall 
be valid in excess of a specified sum in case of death, or in excess 
f a certain sum payable periodically in case of injury, nor for in- 
demnity in excess of the money value of the insured's time., and 
iliat all premiums paid for such excess shall be returned on demand 
to the insured or his le.ual representative. 19 So a limitation may 
be imposed by insurer upon its liability for premiums paid in 
insured, at the date of the policy, was not in sound health. 20 
And a receipt for the premium given by solicitors, to whom the 
manager had authority to delegate his powers, may stipulate for a 
return thereof if the risk is rejected. 1 So effect will be given a 
clause in the receipt for the premium advanced that it will be re- 
turned if no notice is given applicant within a certain time of action 
on the application, and this applies even though the policy has 
been issued and forwarded but has not been received by the ap- 
plicant. Such a case differs from that where the insurance is to 
run from the date of the application. 2 And insurer is obligated k> 
return a note given for the premium where it so agrees to do in 
case the application is rejected. 8 So insured is entitled to a return 
of part of the premium paid under a stipulation that it should be 
returned should the vessel be employed in a specified trade during 
the '•whole currency of this policy" and it is so employed. 4 

§ 1392. Stipulations: statutes governing the right to a return of 
the premium. — In some of the states statutes have been passed pro- 
viding for a return of unearned premiums, in cases of lire risks, for 
the excess of insurance over the loss. 6 But several states have adopt- 

145 N. W. 553; Civ. Code, sees. 1862. 03 Tex. 144, 53 S. W. 1014, 20 Ins. 

L863. L. J. 131. 

18 1 Marshall on Ins. (ed. 1810) "Mutual Life Ins. Co. v. Gorman, 

660a, *670; 2 Arnould on Marine 19 Ky. L. Rep. 295, 40 S. W. 571, 26 

[ns. (ed. 1850) 1246, sec. 426; 2 Id. Ins. L. J. 101 I. 

(8th ed. Hart & Simey) see. 1263, p. 4 (Josshodd Steamship Co. v. 

1520. Sec sections following herein. Forbes, 5 Coml. Cases, 43. 

Express stipulation as to return, B Hawaii — Rev. Laws 1905, sec. 

see 17 Earl of Ealsbury's Laws of 2622. 

England, see. 981, p. 498. See § Idaho.— Civ. Code 1901, see. 2235 ', 

1 mil!, herein. Rev. 1881-87, sec. 2759. 

19 Taken from form of accident Louisiana. — Const. & Rev. Laws 
policy. L904, p. 861 ; Ins. Laws 1906, pp. 23, 

20 (ire-eric v. Prudential Ins. Co. 31, sec. 15; acts 1888, no. 1 19. 

165 HI. App. 570. Massachusetts.- Acts & Ives. 1!)0/. 

1 Mutual Life Ins. Co. v. Herron, e. 576, sec. 57, p. 882. 

79 Miss. 381, 30 So. 691. Nevada.— Comp. Laws 1900, sec. 

2 Mutual Life Ins. Co. v. Elliott, 921; Gen. Stats. 1885, sec. 993. 

2562 



RETURN OF PREMIUMS AND ASSESSMENTS . L392 

ed laws providing that in fire policies the amount fixed in the 
policy shall be taken conclusively to be the true value of the prop- 
erty when insured and the true amount of loss; 5a while in Califor- 
nia the code provides at length as to when premiums are returnable 
and when not. 6 So in that state and in other states there are stat- 
utory provisions for return of premiums for fraud etc. of insurer, 
or w r here by default of insured other than actual fraud no liability 
is incurred by assurer. 7 And a code which provides in substance 
for a return of the premium paid where the insurer has incurred, 
no risk or liability under the contract for which the premium was 
paid, is in accord with the common law rule and necessitates a pay- 
ment of a premium as a condition precedent to an action for its 
return. 8 There are also provisions relating to the return of the 
unearned premium where the assured rescinds or the assurer cancels 
the policy, 9 or in case of over-insurance by several insurers. 10 
Again, the marine insurance act of 1906, of England, expressly 
provides for return of premiums or a proportionate part thereof; 
the enforcement thereof; for return by agreement, and for failure 
of consideration ; also where the policy is void, or avoided by insur- 
er; where the risk has not attached; where there is no insurable 
interest; where the interest is defeasible; and where there is over- 
insurance. 11 



North Carolina^. 
4756. 

Oregon. — Bellinger & Cotton's 
Ann. Code & Stats. 1902, sec. 3737; 
2 Hill's Annot. Stats. 1887, sec. 3585. 

Virginia. — Acts 1906, c. 112, sec. 
30, p. 140. 

Washington. 
sec. 2740. 



Rev. 1905, see. 145 N. W. 553; Civ. Code, sees. 1862, 
1863. 

9 See §§ 1634, 1635 herein. 

10 See § 1415 herein. 

11 Marine Ins. act 1906 (6 Edw. 
VII. c. 41) sees. 82-84; Butter- 
worth's 20th Cent. Stat. (1900-1909) 

Hill's Stats. 1891, "Insurance" p. 421 ; 17 Earl of Hals- 
bury's Laws of England, sec. 780, p. 



5a As to valued policy laws, see §§ 496; 2 Arnould on Marine Ins. (8th 



163 et seq. herein 



ed. Hart & Simey) sec. 1247a, pp. 



6 Cal. Civ. Code sees. 2617-22. See 1503-1505. Said statute provides : 



Dak. Civ. Code sees. 1542-1544, and 
decision thereunder, § 1409 herein. 

7 California^— €iv. Code 1903, sees. 
2617-2619. 

1/ o)i tana. — Rev. Code 1907, sees. 
5617-5619. 



"(a) If already paid, it may be 
recovered by the assured from the in- 
surer; and 

"(b) If unpaid, it may be re- 
tained by the assured or his agent. 
Where the policy contains a stipula- 



tor^ Dakota. — Rev. Code 1899, tion for the return of the premium, 

sees. 4514-4518. or a proportionate part thereof, on 

South Dakota. — Civ. Code 1903, the happening of a certain event, and 

sees. 1862-1867. See §§ 1400, 1406 that event happens, the premium^ or, 

herein. as the ease may be, the proportion- 

8 (!rahinski v. United States An- ate part thereof, is thereupon ret urn- 

nuity & Life Ins. Co. 33 S. Dak. 300. able to the assured. 

2563 



[93 J01 I E <»N iXM RAN< E 

§ 1393. Return of proportionate premium: surrender, rescission, 
cancelation, etc. — It is a general rule thai if the risk has once at- 
tached, the insurer cannol thereafter entitle himself to a return of 
the premium, by giving notice of his intention to terminate the 
contract, uor can he do so by rejecting the policy where the risk 
has commenced; for he cannol by his own act release himself from 
his obligations, and compel the underwriter to relinquish his con- 
tracl and return the premium which has hern earned. 12 

But if the code, in relation to which a contract is assumed to 
have been made, provide- that if insurance is made for a definite 
period of time the insured shall be entitled, upon a surrender of 

"Where the consideration for the "(d) Whore the assured has a de- 
paymenl of the premium totally fails, feasible interesl which is terminated 
and there has been ao fraud or i lit*- during the currency of the risk, the 
gality on the part of the assured or premium is not returnable; 
lus agents, the premium is thereupon "(e) Where the assured has over- 
returnable to the assured. Where insured under an unvalued policy, a 
the consideration for the payment of proportionate part of the premium is 
the premium is apportionable and returnable. 

there is a total failure of any appor- "(f) Subject to the foregoing pro- 
tionable part of the consideration, a visions, where the assured has over- 
proportionate part of the premium insured by double insurance, a pro- 
is, under the like conditions, there- portionate part of the several pre- 
iipou returnable to the assured. miums is returnable; provided that, 

"(3) In particular: (a) where the if the policies are effected at different 
policy is void, or is avoided by the times, and any earlier policy has at 
insurer as from the commencement any time borne the entire risk, or if 
of the risk, the premium is returnable a claim has been paid on the policy, 
provided that there has been no fraud in respect of the full sum insured 
or illegality on the part of the as- thereby, no premium is returnable in 
sured; hut if the risk is not appor- respect of that policy, and when the 
tionable, and has once attached, the double insurance is effected knowing- 
premium is not returnable. ly by the assured no premium is re- 

"(b) Where the subject-matter in- turnable." 
sured, or part thereof , has never been 12 New York Fire & Marine Ins. 
imperilled, the premium, or, as the Co. v. Roberts, 4 Duer (11 N. Y. 
case may be, a proportionate part Super. Ct.) 141; Leonard v. Wash- 
thereof, is returnable: Provided that burn, 100 Mass. 251; Langhorn v. 
where the subject-matter has been. in- Cologan, 4 Taunt. 330, per Lord 
sured 'lost or not lost' and has ar- Mansfield. "When the contract, is 
lived in safety at the time when the yet imperfect and inchoate, the as- 
contraet is concluded, the premium sured by preventing the inception of 
is i i < > t returnable unless, at such time, the risk . . . may prevent it 
the insurer knew of the safe arrival: from becoming operative, and in ef- 

"(c) Where the insured has no in- feet dissolve it, but in no other case 

surable interest throughout the cur- can he release himself by his own aet 

I'ency of the risk', the premium is re- from his own obligations" so as to 

turnable, provided that this rule does entitle him to a return premium: 1 

not apply to a policy effected by way Duer on Marine Ins. (ed. 1845) 82, 

of gaming or wagering; 143. 

2564 



RETURN OF PREMIUMS AND ASSESSMENTS § 1393 

his policy, to such proportion of the premium as corresponds with 
the unexpired term, after deducting from the whole premium ;m\ 
claim for Loss or damage which has previously accrued under the 
policy, 13 and the grounds of cancelation are set forth in other sec- 
tions of the code, the assured is not entitled to cancel the policy 
without cause, and to insist upon such proportionate return of the 
premium, unless there is a right of cancelation reserved in the pol- 
icy itself. 14 

In the standard fire policy in New York it is stipulated that if 
the policy is canceled as provided therein, or shall become void or 
cease, and the premium has been actually paid, the unearned pre- 
mium shall be returned on surrender of the policy or last renewal, 
the company retaining the customary short rate, except that where 
the policy is canceled by the company by giving notice, it shall 
retain only the pro rata premium. It is also provided that the 
policy may be canceled at any time at the request of the insured 
or by the company, by giving notice as provided therein. 15 Tf the 
policy provides for cancelation by either party and a return of the 
unearned premium pro rata, the payment of the earned premium 
cannot be avoided by the assured on the ground that the policy is 
void, but he must offer to surrender the policy or demand a return 
of the premium ; 16 and a party seeking a rescission is liable for any 
part of the premium which may have matured previous to such 
rescission. 17 An agreement for a return of a fair proportion of the 
premium, in case the policyholder wishes to cancel the contract, is 
not void for uncertainty, 18 and although we have elsewhere con- 
sidered this subject 19 it may be stated here, that where the right to 
cancel by giving notice and refunding a rateable proportion of the 
premium is reserved the return premium must be paid or tendered 
by the company, otherwise there is no cancelation, and the policy 

13 Cal. Civ. Code sec. 2617. New Jersey, North Carolina, North 

14 Joshua Hendy Machine Works Dakota, Rhode Island, and West Vir- 
v. American Steam Boiler Ins. Co. 86 ginia following the New York form. 
Cal. '248, 21 Am. St. Rep. 33, 24 Pac. The standard forms, however, of such 
1018. other states as have adopted one by 

15 3 N. Y. Rev. Stats. (8th ed.) p. force of the statute differ from that 
1663; Laws 18S6, c. 488, am'd by L. of New York, see §§ 176 et seq. liere- 
1887, c. 429; L. 1901, c. 513; L. 1903, in. 

c 106 ; N. Y. Ins. L. 1909, c. 33, sec. 16 St. Paul Fire & Marine Ins. Co. 

121, Consol. L. c. 28, am'd L. 1910, v. Neidecken, 6 Dak. 494, 43 N. AY. 

c. 168, 638, 668; L. 1913, c. 181. (See 696. 

§§1648, 1671 herein.) As we have n American Ins. Co. v. Garrett, 71 

.stated elsewhere herein there are a Iowa, 243, 32 N. W. 356. 
number of states which have adopted 18 Hayward v. Knickerbocker Life 

a standard form of fire insurance pol- Ins. Co. 12 Daly (N. Y.) 42. 
icy, those of Connecticut, Louisiana, 19 See §§ 1671-1673 herein. 

2565 



393 JOYCE ON INSURANCE 

continues in force until such tender or payment is made, and this 
although the company has notified the insured or has announced 
its readiness to pay, 20 even though the company notifies the as- 
sured^ agenl thai it is ready to pay it, but does not do so in fact 
until nt'tcr the loss; 1 And if the unearned premium is paid and 
accepted by tli«' assured after the loss, both parties being ignoranl 
thereof, the company is nut thereby released from its liability. 2 
It' the assured accept in full satisfaction less than a ratable return 
of his premium upon cancelation, it is sullicient. 3 

It is held in Illinois that notice alone is sufficient, although stip- 
ulation is to return to the assured the unearned premium, where 
it is also stipulated that the cancelation may be made "at any time 
by cither party." 4 And actual tender of the unearned premium 
is held unnecessary in Wisconsin, provided the minds of the parlies 
have met on the point that the policy is to be canceled. 5 Nor is 
payment or tender required under a New Jersey decision. 6 

The insured is estopped or waives his rights if he voluntarily, at 
the agent's request, surrenders the policy without exacting pay- 

20 Georgia.— Hollingsworth v. Ger- 138 Am. St. Rep. 906, 105 Pac. 354, 
mania Ins. Co. 45 Ga. 294, 12 Am. 39 Tns. L. J. 170. 
Rep. 579. Pennsylvania. — Philadelphia Linen 

Illinois. — Peoria Marine & Fire Co. v. Manhattan Fire Ins. Co. 8 Pa. 
Ins. C«>. v. Botto, 47 111. 516; Kinney Dist. Rep. 261, 56 Leg. Int. 212. 
v. Caledonian Ins. Co. 148 111. App. But compare El Paso Reduction 
260. Co. v. Hartford Fire Ins. Co. (U. S. 

Kansas. — Manlove v. Commercial C. C.) 121 Fed. 937; Backno v. Ex- 
Mutual Fire Ins. Co. 47 Kan. 309, 27 change Fire Ins. Co. 49 N. Y. Supp. 
Pac. 979, 21 Ins. L. J. 174. 677, 26 App. Div. 91. See notes 13 

Maryland, — German Union Fire L.R.A.(N.S.) 884, 889. 
Tns. Co. v. Fred G. Clarke Co. 116 l Hollingsworth v. Germania Ins. 
Md. 622, 39 L.R.A.(N.S.) 829, 82 Co. 45 Ga. 294, 12 Am. Rep. 579. 
Atl. 974. 2 Hollingsworth v. Germania Ins. 

Michigan. — Metropolitan Life Ins. Co. 45 Ga. 294, 12 Am. Rep. 579. 
Co. v. Freedman, 159 Mich. 114, 32 8 iEtna Ins. Co. v. Weissinger, 91 
L.R.A.(N.S.) 298n, 123 N. W. 547; Ind. 297. 

Heme Ins. Co. v. Curtis, 32 Mich. * Newark Fire Ins. Co. v. Sam- 
402. mons, 11 111. App. 230. See § 1073 

Montana. — Savage v. Phoenix Ins. heroin. 
Co. 12 Mont. 458, 33 Am. St. Rep. 6 Bin»ham v. North American Ens. 
591, 31 Pac. 66. Co. 74 Wis. 498, 43 N. W. 494. See 

New York. — Tisdell v. New Hamp- § 1673 herein. 
-mire Fire Ins. Co. 155 N. Y. 163, 40 6 Davidson v. German Ins. Co. 74 
L.R.A. 71;:.. Id X. E. 664; Van Valk- N. J. L. 487, 13 LR.A.(N.S.) 884n, 
enburgh \. Lenox Fire Tns. Co. 51 N. 65 Atl. 696. 

Y. 465; Hathorn v. Germania Ins. On return of premium as condi 
Co. 5.") Barb. (N. Y.) 28. tion of cancelation, see notes in 13 

Oklahoma, -- Taylor v. Insurance L.R.A.(N.S.) 884, and L.R.A.1915F, 
€o. oi' North Amciira. 25 Okla. 92. 444. 

2566 



RETURN OF PREMIUMS AND ASSESSMENTS § 1394 

ment as a condition precedent. 7 If the policy provides that if i1 
shall become void or cease, the premium being actually paid, the 
unearned premium shall be returned on surrender of the policy, 
and there is a breach of condition as to vacancy, the policy musl 
be surrendered or the insurer is not bound to return any unearned 
premium. 8 The right to recover unearned premiums on the termi- 
nation of insurance in a mutual company, does not exist until the 
dues or liabilities which the insured may be liable to pay under the 
charter and by-laws of the organization can be ascertained and de- 
ducted, where the charter provides for withdrawal by notice and 
"paying all dues and liabilities." 9 

§* 1394. Stipulation may entitle to proportionate return of pre- 
mium, although there be a partial or total loss of goods, etc.: sailing 
with convoy. — If there be a stipulation for the return of a propor- 
tionate part of the premium if the ship "sails with convoy and 
arrives," the condition is so far performed that there shall be a re- 
turn of the premium agreed upon: 1. If the ship sails with con- 
voy, and actually arrives at the ultimate port of destination although 
she does not arrive with convoy ; 2. If having departed with convoy 
the ship herself arrives, although the policies be upon other inter- 
ests, such as goods or freight, and there be a partial loss of the goods, 
as the subject of indemnity, and the safe arrival of the goods con- 
stitutes in such case no part of the question as to return of pre- 
mium; 3. If the ship arrives, and before she has completed un- 
loading her cargo is captured, and the residue of the goods are 
thereby totally lost; 4. If the ship departs with convoy, intending 
to join convoy for the whole trade at a port at which she is at 
liberty to touch and stay, and the convoy with which she sails be- 
coming lost the ship runs for and arrives at the port of destination ; 
5. If the ship arrives, having sailed with convoy, though being 
captured and recaptured, the underwriters are obliged to pay the 
salvage. But it will not avail the assured that the arrival was pre- 
vented by an act under which the underwriters would be discharged, 
and if the ship is to sail with convoy from one port to another, and 

7 Bingham v. North American Ins. premium as condition of cancelation, 

Co. 74 Wis. 498, 43 N.W. 494; Buck- see notes in 13 L.R.A.(N.S.) 889, 

ley v. Citizens' Ins. Co. 188 N. Y. L.R.A.1915F, 444. 

309, 13 L.R.A.(N.S.) 889n, 81 N. E. 8 Schmidt v. Williamsburgh City 

165; George Hotel Co. v. Liverpool Fire Ins. Co. 95 Neb. 43, 51 L.R.A. 

& London & Globe Ins. Co. 106 N. Y. (N.S.) 261, 144 N. W. 1044. 

Supp. 732, 122 App. Div. 152. See 9 State Mutual Fire Ins. Co. v. 

§ 1673a herein. See Hopkins v. Brinkley State & Heading Co. 61 

Phoenix Ins. Co. 78 Iowa, 344, 43 N. Ark. 1, 29 L.R.A. 712, 54 Am. St. 

W. 197. Rep. 191, 31 S. W. 157. 

On waiver of return of unearned 

2567 



g L395 



JOYCE <>\ [NS1 RANCE 



from convoy to thai port to the port of destination, il being stipu- 
lated to return different portions of the premium for cadi stage of 
tin- voyage, the word "arrives" must refer to the ultimate pori of 
destination, and the ship must actually arrive. 10 And where the 
ship was warranted to deparl with convoy from England, on a voy- 
age from Hull to Bilboa, and she sailed from Hull to Portsmouth, 
and from there with convoy, which was not the direct course, and 
was captured, the premium was apportioned, return being made 
excepl as to that part of the voyage from Hull to Portsmouth, for 
which the premium was retained! 11 

§ 1395. Where underwriter discharged before performance of 
condition on which return of proportionate premium based. — If the 
underwriter be discharged before the condition can be complied 
with, on performance of which the additional premium paid is 
stipulated to be returned, as in case the underwriter is discharged 



10 Simonds v. Boydell, 1 Doug. 255, 
per Lord Mansfield (policy on 
goods); Horncastle v. Haworth, Sir 
J. Mansfield, C. J., in 180(5, report- 
ed in 1 Marshall on Ins. (ed. 
1810) *G74; Audley v. Duff, 2 Bos. 
& P. Ill, per Lord Eldon; Everard 
v. Hollingsworth, 2 Bos. & P. Ill, 
note; Aguilar v. Rodgers, 7 Terra 
Rep. 421, per Lord Kenyon and 
Grose and Lawrence, Justices (pol- 
icy on freight) ; Kellner v. Le Mesur- 
ier, 4 East, 396, per Lord Ellen- 
borough; L! Arnould on Marine Ins. 
(ed. 1850) 1246, *1232 et seq. ; 2 
Marshal] on Ins. (ed. 1810) 669a, 
" ' i 7 < ) et seq. See 1 Parsons on Ma- 
rine [ns. (ed. 1868) 514; 2 Phillips 
on Ins. (3d ed.) 522, sec. 1840. But 
see on lasl point, Levin v. Cormac, 4 
Taunt. 482, note; Ogden v. Firemen's 
Ins. Co. 12 Johns. (N. Y.) 114. Of 
the above cited cases in that of Si- 
monds v. Boydell the full value stip- 
ulated was allowed on the whole 
amount of insurance, in addition to 
an average loss paid by the under- 
writers. In Horncastle v. Haworth 
the stipulated return of premium was 
recovered, in addition to a total loss. 
And Lord Mansfield declared in 
the Simonds v. Boydell ease that if 
it had been meant that no re- 
turn should be made unless all the 
goods arrive safe, it would have been 



stipulated that the ship "arrive with 
all the goods" or "safety with the 
goods." And in the Kellner v. Le 
Mesurier case it was declared that the 
words ''and arrives" annex a condi 
tion which overrides and governs all 
the several stipulations for a return 
of the premium, and meant a sailing 
with convoy for the different parts 
of the voyage as stipulated, and that 
the aggregate of the different por- 
tions of the premium should then be 
returnable if the ship arrived at the 
ultimate port of destination, for 
whatever benefit would be derived 
from sailing with convoy would not 
be derived to the underwriters in 
case of partial convoy only. The 
rule above stated, however, does not 
apply where the stipulation is mere- 
ly to sail with convoy; the fact that 
she has so sailed does not warrant a 
recovery of the stipulated propor- 
tionate premium in addition to a to- 
tal loss, though in this case the whole 
amount of the premium was added 
to the invoice and included in the to- 
tal loss: Langhorn v. Alnutt, 4 Taunt. 
510, before Sir J. Mansliehl ; 2 Arn- 
ould on Marine Ins. (ed. 1850) 1250. 

As to marine ins. act 1906 of Eng- 
land, see § ]'.Y.)'2 herein. 

"Rothwell v. Cooke, 1 Bos. & P. 
172. 

5G8 



RETURN OF PREMIUMS AND ASSESSMENTS §§ 1396, 1397 

by a breach of warranty as to the time of sailing before the ship can 
sail with convoy, il being stipulated for a proportionate return of 
premium if the ship sails with convoy and arrives, there shall be a 
return of the premium stipulated as to convoy. 12 

§ 1396. Where condition satisfied but underwriters discharged 
from loss: premium returnable although loss by excepted risk. — If 
the condition is satisfied on the performance of which a propor- 
tionate return of the premium is stipulated to be made, as in case of 
a condition for such return "for return," and both ship and goods 
arrive safely, the insured is entitled to the agreed upon proportion- 
ate return of premium, although after the arrival the goods are 
seized in the ship's port of discharge before they can be unloaded, 
and although the loss is by an excepted risk, or one not insured 
against. In this case the risk on the goods was to continue until 
they wero discharged and safely landed, with a warranty to free 
from capture or seizure in the ship's port of discharge, and the 
underwriters were discharged from the loss. 13 Mr. Phillips, rely- 
ing upon this and other cases, says they "favor the equitable con- 
struction that the condition of arrival or other event on which the 
return is to depend is satisfied by the underwriters being exoner- 
ated." 14 

§ 1397. No return if risk has attached. — If a legal risk has once 
attached or commenced, there shall be no apportionment or return 
afterward of the premium, so far as that particular risk is con- 
cerned. Diminution in its duration has no effect to decrease the 
amount stipulated as the premium or price for renewing the risk, 
for it is sufficient to preclude a return that the insurer has been 
liable for any period, however short. This rule is based upon just 
and equitable principles, for the assurer has, by talcing upon him- 
self the peril, become entitled to the premium, and although the 
rule may result in profit to the insurer, it is but a just compensa- 

12 Meyer v. Gregson, 3 Doug. 402, 14 2 Phillips on Ins. (3d ed.) 523, 
reported in 1 Marshall on Ins. (ed. see. 1811, citing Kellner v. Le Mcsur- 
1880) 658, 676, per Lord Mansfield, ier, 4 East, 396; Dalgleish v. Brooke, 
and Justices Ashurst and Buller, as 15 East, 295; Ogden v. Firemen's 
to marine ins. act 1906 of England, Ins. Co. 12 Johns. (N. Y.) 114. In 
see § 1392 herein. this last ease the condition was not 

13 Dalgleish v. Brooke, 15 East, literally fulfilled, hut the court by 
295. Mr. Arnould says: "It is no construction held that the risk was 
objection to the claim for a return divisible, and that the event contem- 
of premium that the loss was not one plated was that the underwriters 
insured against provided the ship should run no risk between certain 
have arrived :" 2 Arnould on Marine ports, which having happened, the 
Ins. (ed. 1850) 1250, *1236, relying premium should be returned. 

on this case. As to marine ins. act 
1906 of England, see § 1392 herein. 

2569 



-i L397 



JOYCE ON [NSUEANCE 



tioD for the dangers or perils assumed; besides the danger incurred 
may be greater in one moment than during an entire voyage, and 
it would be extremely difficult, a1 the least, to fairly apportion the 
premium. 16 

So it is held in Maine thai the liability of an insurance company 
for a return of premiums is not absolute, but depends upon wheth- 
er ilif policy lias become a binding contract between the parties. 
If it has, and the risk has commenced, there can be no apportion- 
ment, and no action lias for the recovery of premiums paid. 16 If 
one insures the profits of a ship and the ship returns in ballast, the 
insured is qo1 entitled to a return of the premium. 17 And the 
-line rule applies where a return of premium is sought on the 
ground of a want of interest, the risk having been run and the ship 
arrived. 18 Where the policy on goods was of date December 21st, 



15 United States. — Clark v. Manu- 
facturers' Ins. Co. 2 Wood. & M. (U. 
S.) 472, Fed. Cas. No. 2829. 

California.- Joshua Hendy Mach- 
ine Works v. American Steam Boiler 
Ins. Co. 86 Cal. 248, 21 Am. St. Rep. 
33, 24 Pac. 1018. 

Dakota. — St. Paul Fire & Marine 
Ins. Co. v. Coleman, 6 Dak. 458, 6 
L.R.A. 87, 43 N. W. 693 (see § 1409 
herein ) . 

Indiana. — Continental Life Ins. 
Co. v. Houser, 111 Ind. 266, 12 N. 
E. 479; Gray v. National Benefit As- 
soc. Ill Ind. 531, 11 N. E. 477; 
Standley v. Northwestern Mutual 
Lite Ins. Co. 95 Ind. 254, 258; Su- 
preme Tribe Ben Hur v. Lennert, — 
Ind. App. — , 93 N. E. 869. 

Iowa. — Matt v. Roman Catholic 
Mutual & Protective Soc. 70 Iowa, 
455, 30 N. W. 799. 

Massachusetts. — McLaughlin v. 
Supreme Council Catholic Knights 
of America, 184 Mass. 298, 68 N. E. 
344; Merchants' Ins. Co. v. Clapp, 11 
Pick. (28 Mass.) 56; Hoyt v. Gil- 
man, 8 Mass. 336; Taylor v. Lowell, 
3 .Mass. 331, 3 Am. Dec. 141. 

Minnesota. — National Council of 
Knights & Ladies of Security v. Gar- 
ber, — Minn. — , 154 N. W. 512. 

Ohio. — Connecticut Mutual Life 
Ins. Co. v. Pyle, 44 Ohio St. 19, 32, 
58 Am. Rep. 781, 4 N. E. 465 (but 



here the risk had not attached and the 
premium was recovered back). 

New York. — Hendricks v. Connec- 
ticut Ins. Co. 8 Johns. (N. Y.) 1; 
New York Marine & Fire Ins. Co. v. 
Roberts, 4 Duer (N. Y.) 141; Waters 
v. Allen, 5 Hill (N. Y.) 421; Stein- 
back v. Columbian Ins. Co. 2 Caines 
(N. Y.) 129, 132. 

Texas. — Harris v. Schrivener, — 
Tex. Civ. App. — , 78 S. W. 705. 

Wisconsin. — Blaeser v. Milwaukee 
Mutual Ins. Co. 37 Wis. 31, 19 Am. 
Rep. 747 (need not tender or offer to 
return premium paid where fraudu- 
lent misrepresentations). 

England. — Moses v. Pratt, 4 Camp. 
297; Furtado v. Rogers, 3 Bos. & P. 
191, 14 Eng. Rul. Cas. 125 ; Tvrie 
v. Fletcher, 2 Cowp. 666, 14 Eng. 
Rul. Cas. 502, per Lord Mansfield, 
C. J.; Bermon v. Woodbridge, 
Don-. 789, 14 Eng. Rul. Cas. 507, 
per Lord Mansfield. 

Cal. Civ. Code, sees. 2616, 2618. 
Emerigon on Ins. (Meredith's ed. 
1850) c. xvi. sec. 2, pp. 654, 655; c. 
iii. sec. 1, p. 52. As to marine ins. 
act 1906, of England, see § 1392 here- 
in. 

16 Mailhoit v. Metropolitan Life 
Ins. Co. 87 Me. 374, 47 Am. St. Rep. 
336, 32 Atl. 989. 

"Juhel v. Church, 2 Johns. Cas. 
(N. Y.) 333. 

18 Boehm v. Bell, 8 Term Rep. 154. 



2570 



RETURN OF PREMIUMS AND ASSESSMENTS §§ 1397a, 1398 

with warranty to sail between October 20th and December 1st, and 
the cargo was all in before the last date, although the ship had not 
then sailed, but did so between December 2d and 21st, it was held 
that the risk attached in port, and the premium was not return- 
able. 19 There may be such an attachment of the risk that, although 
the policy be not made when the risk has terminated, a loss would 
have been covered during the continuance of the risk. In such 
case there can be no return of the premium. 20 

And where the risk has attached neither it nor the premium 
can be apportioned and this applies to preclude an administratrix 
of a county trustee from recovering back one-half the premiums ] iaid 
in advance on a bond with a surety company for one year although 
said trustee died within six months and the major portion of the 
funds had been collected and disposed of. 1 

So assessments paid for a series of years to a mutual insurance 
association by a member, cannot be recovered back simply because 
he failed to read or to understand the provisions of his contract. 2 
And where the member is legally expelled there can be no recovery 
back of premiums paid prior to such expulsion. 3 

§ 1397a. Election to refund premium or pay insurance: waiver. — 
And an option of the insurer to refund premiums paid, with in- 
terest, or pay the amount of the policy on the life of one who died 
by his own hand while insane, according to the equities of the case, 
is not waived by failure to make it within sixty days allowed after 
proofs of loss for payment, if it is made within a reasonable time. 4 

§ 1398. Premium returnable where policy ab initio void: general- 
ly. — The policy may be void ab initio, and the risk never have at- 
tached, there being no fault of the insured, as in case of breach of 
warranty whereby no liability is ever incurred by the assurer; or 
there may be an entire want of interest ; or the policy may be void 
for illegality, the parties not being in pari delicto; or it may be 
void ab initio by some act or omission of the assurer ; in all of which 
cases the premium is returnable. 5 Cases of this character are, how- 

19 Hendricks v. Commercial Ins. 3 National Council of Knights & 
Co. 8 Johns. (N. Y.) 1. Ladies of Securitv v. Garber, — 

20 2 Phillips on Ins. (3d ed.) 505, Minn. — , 154 N. W. 512. See Mc- 
sec. 1826, citing Park on Ins. 563. Laughlin v. Supreme Council Catho- 
Mr. Phillips says: "Policies not un- lie Knights of America, 184 Mass. 
frequently admit of this construe- 298, 68 N. E. 344. 

tion." 4 Salentine v. Mutual Benefit Life 

1 Crouch v. Southern Surety Co. Ins. Co. 79 Wis. 580, 12 L.R.A. 
131 Tenn. 260, L.R.A.1915D, 966, 174 690, 48 N. W. 855. 

S. W. 1116. 5 Connecticut. — Hogben v. Metro- 

2 Condon v. Mutual Reserve Fund politan Life Ins. Co. 69 Conn. 503, 
Life Assoc. 89 Md. 99, 44 L.R.A. 149, 61 Am. St. Rep. 53, 38 Atl. 214. 

73 Am. St. Rep. 169, 42 Atl. 944. 

2571 



§ 13!'!' JOYCE ON INSURANCE 

ever, to be distinguished from those where the policy is void, the 
parties being in pari delicto, and those where it is void through the 
fraud of the assured or his agent, and cases where the policy hav- 
ing once attached, it has become subsequently void by an ad or 
omission of the assured, whereby the policy has become forfeited. 6 

A note given for the premium is not recoverable where the policy 
is one which the company has no authority under its charter to 
issue, the act being ultra vires, as in case where a corporation, 
formed to insure againsl fire and marine risks, issues a policy in- 
suring the lives of animals. 7 So also where the Interest is of a char- 
acter that should he described and is not. 8 So the premium note 
may be void because the policy was never countersigned, it being 
issued by one without authority therefor. 9 And though the policy 
be illegal, yet if the parties be ignorant thereof, the premium is 
returnable. 10 

§ 1399. Insurance contract with infant: return of premium. — If 
a solvent insurer enters into a contract which it may fairly and 
reasonably make, with an infant for a sum fairly commensurate 
with his estate and ability to pay, and at the ordinary and usual 
rates, there being no fraud or unlawful practices in procuring the 
risk, the infant may not rescind mid recover back the premiums, 
but the insurer is entitled to those intended to cover the current 
annual risks under the policy. 11 It is held, however, that the in- 

lllinois. — iEtna Life Ins. Co. v. rine ins. act, 1906, of England, see 

Paul, 10 Bradw. (111.) 431. § 1392 herein. 

Imliana. — American Mutual Life On return of assessment on benefit 

Ins. Co. v. Bertram, 163 Ind. 51, 64 certificate proving void for fraud, see 

L.R.A. 935, 70 N. E. 258, 33 Ins. note in 3 L.R.A.(N.S.) 114. 

L. J. 491, 494; Metropolitan Life 6 See sections following. 

Ins. Co. v. Bowser, 20 Ind. App. 557, 7 Rochester Ins. Co. v. Martin, 13 

50 N. E. 86. Minn. 59. And see § 334 herein. 

Iowa. — Waller v. Northern Assur. 8 Robertson v. United Ins. Co. 2 

Co. 64 Iowa, 101, 19 N. W. 865. Johus - Cas. (N. Y.) 250. 

Kentucky.— Metropolitan Life Ins. 9 Lynn v. Burgoyne, 13 B. Mon. 

Co. v. Asmus, 25 Kv. L. Rep. 1550, ^^ 40 °- . See §§ 1 - (, 7 V' t se( *' llc>n '- 

78 S W 204 1U on P rc>miul " notes. The premium 

m .', , i,7, n 'n i\r^r < „ v, , •]» r . _ is returnahle "when by any del mil l 
Massachusetts. MLc( ann v. .Metro- «,, . , ,, ,, J ■ , . , 

„ i;. T p T n -.r-r, n T OQA oi : the insured other than actual fraud 

politan Lite Ins. Co. 1< / Mass. 280, ,, .... 

-o xt -n moo -n • xi « > ll( ' insurer never incurred any Jia- 

i)0 N. h>. J()2(>; 1 nesinuth v. Agra- i i ■. i ,i i- » ., ,' ,, 

_, ' _ \ ZT & , hilitv under the policy." Cal. Civ. 

warn Mutual lire Ins. Co. 10 Cush. Q 0( je sec 9519 

(64 Mass.) 587 10 Henry" v. Stainforth, 4 Camp. 

New York.— Mount v. Waite, 7 270 ; Orme v. Bruce, 12 East, 225. 
Johns. (N. Y.) 434. "Johnson v. Northwest cm Mutual 

England.— Anderson v. Thornton, Life Ins. Co. 56 Minn. 365, 45 Am. 

8 Ex. 425; Hentig v. Stainforth, 5 St. Rep. 473, 26 L.R.A. 187, 57 N. 

M. & S. 122. W. 934, 59 N. W. 992, 39 Cent. L. 

See sections following. As to ma- J. 337. 

2572 



RETURN OF PREMIUMS AND ASSESSMENTS L400 

surer is not entitled to deduct the cost of carrying the policy from 
the premiums to be returned in case of a repudiation by an infant 
of a contract of insurance upon his life but that the entire amount 
paid may be recovered from insurer. 12 

§ 1400. Premium returnable where contract voidable or void for 
misrepresentations or fraud of assurer. — That the insured is enti- 
tled to a return of the premium when the contract is voidable for 
the misrepresentation or fraud of the assurer, is well settled. 13 
But if the statement relied on of the insurer is only a belief or ex- 
pectation on his part, without fraud, there shall be no return. 14 
This rule is further illustrated by the oft-cited instance where the 
underwriter effects an insurance "lost or not lost," the safe arrival 
of the ship being already known to him. 15 

In a New York case the defendant advertised and represented 
that its patrons could be insured at half the expense of insuring in 
other companies by paying half the premiums in cash and giving 
notes for the other half, the dividends always paying the notes. 
The dividend never paid the notes, but generally fell far short, as 
the managers knew. The plaintiff procured an endowment policy 
for five hundred dollars, payable in five years, paying half cash 
and giving notes for the other half. Only one small dividend was 
made during the term. At the end of the five years the plaintiff 
demanded the five hundred dollars, but the defendant refused to 
pay more than the difference after deducting the amount due on 
the notes. It was held that an action for fraud was maintainable, 
that the plaintiff was not estopped by the delay, and that the meas- 
ure of recovery would be the money paid and interest. 16 Again, if 
insured refuses to comply with an agreement to make a loan to in- 
sured, which offer was made to induce her to take out the policy, 
it may be surrendered and the premiums paid be recovered. 16 * 

12 Simpson v. Prudential Ins. Co. Boyle, 3 Barn. & Adol. 877; Cal. Civ. 

184 Mass. 348, 63 L.R.A. 741, 100 Code, sec. 2619. As to marine ins. 

Am. St. Rep. 560, 68 N. E. 673. act, 1906, of England, see § 1392 

13 Boland v. Whitman, 33 Ind. 64; herein. 
McCann v. Metropolitan Life Ins. Co. 14 Pauson v. Watson, Cowp. 787, 13 

177 Mass. 280, 58 N. E. 1026; United Eng. Rul. Cas. 540. 
States Life Ins. Co. v. Wright, 33 15 Carter v. Boelin, 3 Burr. 1909, 

Ohio St. 533, 8 Ins. L. J. 169 ; Cald- 13 Eng. Rul. Cas. 501, per Lord 

well v. Life Ins. Co. of Va. 140 N. Mansfield. See also Emerigon on In- 

Car. 100, 52 S. E. 252; Martin v. surance (Meredith's ed.) 1850, c. 

JEtna Life Ins. Co. (1 Tenn.) Cas. xvi. p. 663. 

361, 4 Ins. L. J. 899 ; Carter v. 16 Rohrsehneider v. Knickerbocker 

Boehm, 3 Burr. 1909, 13 Eng. Rul. Life Ins. Co. 76 N. Y. 216, 32 Am 

Cas. 501, per Lord Mansfield; Court Rep. 290. 

v. Martineux, 3 Doug. 161; Duffel v. 16a Kev v. National Life Ins. Co. 

AVilson, 1 Camp. 401; Lefevre v. 107 Iowa, 446, 78 N. W. 68, 28 In* 

2573 



§ 1400a JOYCE ON INSURANCE 

In an action for damages for fraudulently inducing insured to 
take oul insurance, instructions to the jury should conform to the 
issues submitted which require a finding whether insurer falsely 
represented thai premiums with interest would he repaid at the 
end of a certain number of years. 17 

§ 1400a. Premium returnable where contract voidable or void for 
misrepresentations or fraud of assurer's agent. — The rule stated un- 
der the last preceding section applies where the company is charge- 
able with its agent's knowledge of the invalidity of the policies, and 
receives premiums thereafter, said invalidity having been occa- 
sioned by the statements of said agent; as in case of a policy taken 
,ut by plaintiff on the lives of her brother and sister, payable to 
elf, she having signed their names to the application with the 
knowledge of the company's agent who had solicited the insurance, 
and had assured her of her competency to sign their name-, and 
the premiums having been paid thereon for several years before 
she ascertained that the policies were void, it was held that the 
premiums should be recovered back. 18 And where insured was in- 
duced by the false and fraudulent representations of insurer's 
agents that at the end of a stated period he would receive his money 
Lack with interest, and upon the expiration of said period he de- 
manded his money but was induced by like representations to 
remain with insurer and continue payments for another like period 
at the expiration of which the insurer again failed to pay, the tort 
can be waived and the money paid be recovered hack in an action 
for money had and received and it constitutes no waiver that pay- 
ments were continued after the end of the first period or notice by 
the failure of insurer to then pay as agreed. 19 So where insurer's 
agent by false representations induces insured to continue payments 
of premiums when she had intended to discontinue them, she is 
entitled to recover from insurer, who had retained the same, the 
amount so paid, even though said representations were made with- 
in J. 259, citing Harniekle v. New R. 111. See also McCann v. Metro- 
York Life [ns. Co. Ill N. Y. 390, 2 politan Life Ins. Co. 177 Muss. 280, 
L.R.A. 150, 18 N. E. 632. Compare 58 N. E. 1026. 
Burns & Reilly Real Estate Co. v. On right of holder of policy to 
Philadelphia Life Ins. Co. 239 Pa. recover premiums paid upon t Ik; laith 
St. 22, 86 All. 642 (considered un- of tin- agent's false representations, 
der § 1400a herein); Lewis v. New notwithstanding part, performance, 
York Life Ins. Co. (U. S. C. C.) 173 see note in 3 B. R. C. 852. 
K,,l 100!), aim 30 L.R.A.(N.S-) 19 Stroud v. Life Ins. Co. of Vir- 
1202, 181 Fed. 133, in I ('. O. A. 181. ginia, 148 N. Car. 54, 61 S. E. 626, 

17 .(ones v. Life Ins. Co. of Vir- 37 [ns. L. J. 627; following Caldwell 
ginia, 151 N. Car. 51, 05 S. E. 602. v. Life Ins. Co. of Virginia, 140 N. 

"Fulton v. Metropolitan Life Ins. Car. 100, 52 S. E. 252. 
Co. 19 N. Y. Supp. 000,47 N. Y. St. 

2574 



RETURN OF PREMIUMS AND ASSESSMENTS § 1400a 

out the insurer's authority. 20 And where the assured was not ex- 
amined by a physician as required, and the beneficiary had paid 
premiums under an assurance from the company's agent that he 
should have his money or the policy, they may be recovered back. 1 
It is also held in a Maine case that a life policy, regular in every 
respect except that through the fraud of the agent there has been no 
medical examination of insured, and the application has not been 
signed by him, although it purports to have been, and the whole 
transaction has taken place without his knowledge or consent, is 
voidable at the election of insurer, but not absolutely void, and the 
insured cannot recover premiums paid thereon if the insurer has 
treated the policy as a valid subsisting contract. 2 If the policy is 
void because of misrepresentation of material facts in that the 
agent fraudulently inserted in the application false answers, when 
the answers made by the assured were truthful, and both insurer 
and assured have acted bona fide and have been deceived thereby, 
the policy should be canceled and the premiums returned. 3 Again, 

20 Refuse Assurance Co. v. Ket- is held to be valid: Massachusetts 

tlewell [1009] App. Cas. L. Rep. 243 Life Ins. Co. v. Eshelman, 30 Ohio 

aff'g [1908] 1 K. B. 545. St. 647. In Iowa, the policy is held 

1 Frain v. Life Ins. Co. 67 Mich, valid : McArthur v. Home Life Assoc. 
527, 35 N. W. 108. 73 Iowa, 336, 5 Am. St. Rep. 684. 

2 Mailhoit v. Metropolitan Life In this case the agent inserted with- 
Ins. Co. 87 Me. 374, 47 Am. St. Rep. out the knowledge of the assured 
336, 32 Atl. 989. The court, per false answers in the application, and 
Foster, J., says : "In Massachusetts, forged the certificate of medical ex- 
the court in recent decisions has held animation. In Michigan, the policy 
the policy voidable: Leonard v. is held to be valid and binding upon 
Washburn, 100 Mass. 251; Plympton the company: Brown v. Metropolitan 
v. Dunn, 148 Mass. 523, 20 N. E. Life Ins. Co. 65 Mich. 306, 8 Am. 
180. The supreme court of the St. Rep. 894; Temmink v. Metropoli- 
United States holds such acts to be tan L. Ins. Co. 72 Mich. 388. So in 
the acts of the company, and bind Colorado State Ins. Co. v. Taylor, 
it; Ins. Co. v. Wilkinson, 13 Wall. 14 Colo. 499; 20 Am. St. Rep. 281. 
(80 U. S.) 222, 20 L. ed. 617; Insur- While in different jurisdictions there 
ance Co. v. Mahone, 21 Wall. (88 is a contrariety of opinion as to the 
U. S.) 152, 22 L. ed. 593; New Jer- effect of the acts of agents which are 
sey Mutual Life Ins. Co. v. Baker, a fraud upon the company, they are 
94 U. S. 610, 24 L. ed. 268. In New held either to have estopped the corn- 
York the policy is held to be binding pany from taking advantage of them, 
upon the companv: Baker v. Home or to have rendered the policy void- 
Life Ins. Co. 64 N. Y. 648 ; Miller v. able only." 

Phcenix Life Ins. Co. 107 N. Y. 292, 3 New York Life Ins. Co. v. Fletch- 
14 N. E. 271; O'Brien v. Home Ben. er, 117 U. S. 519, 29 L. ed. 934, 6 
Soc. 117 N. Y. 310, 22 N. E. 954. In Sup. Ct. 837. 

Connecticut, the policy is held to be Cited in: United States. — Northern 
voidable: Ryan v. World Mutual Ins. Assurance Co. v. Grand View Build- 
Co. 41 Conn. 168, 35 N. W. 430, 19 ing Assoc. 183 U. S. 308, 35 <, 40 
Am. Rep. 490. In Ohio, the policv L. ed. 233, 22 Sup. Ct. 133 ; Maier v. 

2575 



* 1400a JOYCE <>X INSURANCE 

an insured person induced by false representations material to him 
to take out a policy upon his life may elect to rescind and avoid 
the policy, and is then entitled to recover the premiums paid, but 
if such false representations are noi material to him, and arc a 
fraud upon the insurer alone, he is noi entitled to recover. 4 And if 
it is alleged thai insured was induced to surrender an old policy 
and accept a new one by false and fraudulenl representations of 
insurer's agent upon which he relied, the evidence should be clear 
and convincing to sustain such a claim and if it is sustained the 
insurer will be liable for the premiums paid less the actual cosl of 
carrying the insurance while it was in force, and credit should 
also be given for the value if any of the old policy at the time it 
was surrendered, and in such case insured is not estopped to seek 
a cancelation by any notice implied from his acceptance and reten- 
tion of the policy containing the condition of the contract. 5 It is 
held, however, that the right of an assured, who, has been induced 
to pay premiums on a policy of insurance by the false representa- 
tions of the insured's agent, to rescind the policy and recover the 
premiums in an action for money had and received, is not affected 
by the fact that while the policy was in force the insurer was under 
a contingent liability; since a mere risk of that kind, which has qoI 
produced any benefit in fact to the assured, is not a part perform- 
ance so as to bar the assured from the exercise of an option to a\ oid 
it. 6 Again, it is decided that premiums cannot be recovered hack 
from the insurer where its agent without authority so to do, as an 
inducement to take out insurance, represents to a person desiring 
to obtain a loan, that it is necessary to make an application for a 
policy and that if the loan is refused the premium paid will be re- 
Fidelity Mutual Life Ins. Co. 78 Fed. 589. 45 Atl. 414: McDonald v. Met- 
5G6, 571, 24 C. C. A. '-'It, 47 U. S. ropolitan Life Ins. Co. 68 N. II. I. 
App. 322; Selby v. Mutual Life Ins. 6, 73 Am. St. Rep. 548, 38 Atl. 500. 
Co. 67 Fed. 490, 492. New York.— Bernard v. United 

California. — McKay v. New York Life Ins. Assoc. 43 N. Y. Supp. 527, 
Life Ins. Co. 124 Cal. 270, 273, 56 14 App. Div. 142, 140. 
Pac 1112. *Mailhoitv. Metropolitan Life Ins. 

Indiana. — American Life Ins. Co Co. 87 Me. 374, 47 Am. St. Rep. 336, 
v. Bertram, 163 Ind. 51, 57, 64 L.R.A. 32 Atl. 089. 
938, 70 N. E. 258. B Provident Savings' Life Assur- 

Maine.- — Mailhoit v. Metropolitan ance Soc. of N. Y. v. Shearer, 151 
Life Ins. Co. 87 Me. 374, 382, 47 Am. Ky. 298, 151 S. W. 93S, 42 Ins. h. 
St. Rep. 336, 32 Atl. 989. J. 379. 

Minnesota. — McCarty v. New York 6 Kettlewell v. Refuse Assur. Co. 3 
Life Ins. Co. 74 Minn. 430, 534, 77 B. R. C. 844 (1908)' 1 K. B. 545. 
N. W. 426. Also reported in 77 L. J. K. B. N. S. 

New Hampshire.— Delouche v. Met- 421, 97 L. T. N. S. 896, 24 Tunes L. 
ropolitan Life Ins. Co. 69 N. H. 587. R. 217, 52 Sol. Jo. 158. 

2576 



RETURN OF PREMIUMS AND ASSESSMENTS § 140] 

turned. 7 And if the alleged false representations relate to the com- 
pany's solvency, there can be no recovery back of the premiums 
paid on proof of insolvency long after the payment of the pre- 
miums sought to be recovered. 8 And even though the meaning 
of the policy is fraudulently represented by insurer's agent, insured 
is not entitled to recover the premiums paid where he avail- him- 
self of legal advice as to said construction. 9 So an agent's misrepre- 
sentation as to premiums decreasing in the future are waived where 
insured continues to make payments for several years after lie finds 
such statements untrue. 10 But an insured whose application has 
been rejected does not waive insurer's obligation to repay premium- 
by waiting for the insurer's agents to repay advance premiums for 
which they had given their personal note, even though said agents' 
acts were fraudulent as to the insurer. 11 

If it is attempted to recover back money paid upon a contracl 
alleged to be void because of fraudulent misrepresentations in ob- 
taining the same, parol evidence is not excluded within the gen- 
eral rule as to the inadmissibility of such evidence, and the ques- 
tion, whether the nature of such claimed fraudulent misrepresenta- 
tions was such as to have deceived insured, will be one for the jury. 12 

§ 1401. Premium returnable when paid by mistake of facts: 
policy based upon mistake: mistake of law. — As a general rule, if 
the premium is paid through mistake as to the facts, under the sup- 
position, which is unfounded, that there is an obligation to pay. it 
is returnable; or, in other words, if a premium is paid under a sup- 
position that a certain state of facts exists whereby the company 
would be entitled to the money, and the supposed facts do not exist, 
and the premium would presumably not have been paid had the 
actual facts been shown by the payer, such premium so paid may 
be recovered back. 13 

7 Burns &Reillv Real Estate Co. v. 12 State Life Ins. Co. v. Johnson, 
Philadelphia Life Ins. Co. 239 Pa. 73 Kan. 567, 85 Pac. 597. But com- 
St. 22, 8G Atl. 042. Compare Kev v. pare International Ferry Co. v. 
National Life Ins. Co. 107 Iowa, 446, American Fidelity Co. 207 N. Y. 350, 
78 N. W. 68, 28 Ins. L. J. 259, con- 101 N. E. 160, 42 Ins. L. J. 875. 
sidered under § 1400 herein. 13 Kelly v. Solari, 9 Mees. & W. 55, 

8 Life Assoc, of America v. Goode, per Parke, B., and cases following. 
71 Tex. 90, 8 S. W. 639. "A person is entitled to a return 

9 Frazell v. Life Ins. Co. of Va. of the premium when the contract 
153 N. Car. 60, 68 S. E. 912. is voidable ... on account of 

10 Hartford life Ins. Co. v. Han- facts of the existence of which the 
Ion, 139 Kv. 346, 104 S. W. 729. insured was ignorant without his 

11 Mutual Life Ins. Co. v. Her- fault :" Cal. Civ. Code, sec. 2619. See 
ron, 79 Miss. 381, 30 So. 691, 31 Ins. § 140 herein. 

L. J. 68. 

Jovce Ins. Vol. III.— 162. 2577 



/ 

V 



§ 1401 JOYCE <'\ [NS1 RANCE 

Thus, if a premium be paid after a forfeiture of the policy under 
a mistake as to the facl of waiver, it shall be returnable. 14 So also 

• an assessment collected by mistake after a forfeiture. 16 
So where a policy is issued under an honesl supposition of the par- 

: state of facts exists which does aot, as in case of a block- 
ade erroneously supposed to exist, there shall be a return of the 

1G And where contributions are made by members of a 
benefit order to a relief fund, under the belief that they were com- 
pulsory, they may be recovered back after a decision by the court 
: , . itributions are not compulsory. 17 So if an assessmenl 
is levied and collected by a receiver, which under the lads there is 
no absolute legal duty on the part of the members to pay, it shall 
>aid. 18 So also where the illegality of the voyage rests on facts 
of which the parties are in ignorance, without their fault, or where 
both parties contemplated a legal voyage and contract, but are mis- 
•,. the premium shall be returned. 19 But where a supposed 
deviation has been made, and the insurer, for an additional pre- 
mium, agrees in the margin of the policy for an additional pre* 
iniuin thai it shall uo1 ailed the risk, the fact that the entire devi- 
ation had not been made as supposed does not entitle the assured to 
a return of the premium so paid. 20 Where a mi-lake of law is made 
by both parties in ignorance of the facts, and in consequence an 
additional premium is paid, such a mistake cannot he used to the 
prejudice of cither party, and the additional premium must he re- 
turned. 1 And premiums paid under a mistake of law. may he re- 
covered back, even though paid upon a policy which is illegal, as 
where it was taken out by a daughter upon her father's life without 
hi- consent under the belief induced by insurer's agent that the 
policy was valid. 2 So premiums paid upon a policy which is void 
as against public policy for want of insurable interest, may he re- 
covered by the assignee as it is a mi-take of law. 3 . Where insured, 
without knowledge of all the fads hut upon representations that 

14 Dc TIalin v. Hartley, 1 Term. R. S. Til'; Henty v. Stainforth, 1 Stark. 
343, 1 I Eng. Rul. Cas. 171 ; McKee v. 254; Oom v. Bruce, L2 East, 225. 
Phoenix Ins. Co. 28 Mo. 383, 75 Am. 20 Crowningshield v. New York Ins. 
Dec. L29; Elting v. Scott, 2 Johns. Co. 3 Johns. Cas. (N. Y.) 142. 

,X y.) [57. l Scriba v. [nsurance Co. of North 

15 Hazard v. Franklin Fire Ins. Co. America, 2 Wash. (U. S. C. C.) 10-, 
7 1;. I. 429. Fed. Cas. No. 13,107. 

16 Taylor v. Summer, -1 Ma--. 56. 8 Metropolitan Life Tns. Co. v. 
"Murray v. Buckley, 1 N. Y. Blesch, 22 Ky. L. Rep. 530, 58 S. W. 

Supp. 436. See Brokamp v. Metropolitan 

i 8 In re Equitable Reserve Fund Life Ins. Co. 8 Ohio Cir, Dec. 116, 5 

I N. V. 354, 43 N. Y. Ohio Leg. N. 116, 16 Ohio Cir. Ct. 

. 30 X. E. 11 1. 630. 

1 9 Hentig v. Stainforth, 5 Maule & 'American Mutual Life Ins. Co. 

2578 



RETURN OF PREMIUMS AND ASSESSMENTS § L40L 

it is necessary to keep the policy from lapsing or becoming void, 
continues payments of premiums after he has become entitled to 
an endowment fund under the contract, it constitutes such a mis- 
take, if one at all, of material facts as to justify a recovery back of 
premiums so paid especially so where the payee is responsible foi 
the mistake. 4 

§ 1401a. Return of premium where policy does not conform with 
agreement. — The insured cannot recover back the premium paid or 
a part thereof on the ground of partial failure of consideration 
where the policy issued was represented to conform to a prior parol 
agreement to insure, but it did not, since the assured may enforce 
the terms of the original contract or have the policy reformed. 5 
So where it is claimed that it was fraudulently represented by in- 
surer's agent, that the policy should contain certain provisions, but 
that it did not contain them, there can be no recover)' of premiums 
paid where assured had read the policy. 6 And acceptance by as- 
sured of a policy and retention thereof without objection for some 
time after ascertaining the facts, when a casual examination would 
have shown that it was different from that for which he contracted, 
waives the fraud of insurer's agent in delivering said policy. 7 So 
where the policy, although different from that applied for, is ac- 
cepted by insured, retained without objection, a receipt given there- 
for, and one of the premium notes paid, he cannot several months 
thereafter recover the amount so paid or rescind the contract and 
enforce collection of a judgment on the other note. 8 But if the 
applicant has refused the policy because it does not comply with 
the oral representations of insurer's agent, he may recover the 
amount paid to a bona fide holder of a premium note given at the 
time the application was made. 9 

So a verdict for the amount of the advance premium paid is sup- 
ported by evidence that the policy described in the application was 
not delivered to and accepted by insured, and that the policy ac- 

v. Bertram, 163 Ind. 51, 61 L.R.A. 6 Cathcart v. Life Ins. Co. of Va. 

935, 70 N. E. 258, 33 Ins. L. J. 491. 144 N. Car. 023, 57 S. E. 390. 

4 Hopkins v. Northwestern Na- 7 Bostwick v. Mutual Life Ins. Co. 

tional Life Ins. Co. 41 Wash. 592, 83 of N. Y. 11 (i Wis. 302, 67 L.R.A. 

Pac. 1019, 35 Ins. L. J. 267. 705, 89 N. W. 53S, 92 X. W. 246. 

6 International Ferry Co. v. Amer- 8 Smith v. Smith, 86 Ark. 284, 110 

ican Fidelity Co. 207 N. Y. 350, 101 S. W. 1038, 37 Ins. L. J. 090. 

N. E. 160, 42 Ins. L. J. 875 (marine: 9 Evans v. Central Life Ins. Co. 87 

vessel liability insurance), rev'g 129 Kan. 641,41 L.R,A.(N.S.) 1130 (an- 

N. Y. Supp. 1*129, 145 App. Div. 906. notated on right to rescind or reject 

As to acceptance or rejection of pol- policy not conforming to represen- 

icy not conforming to agreement ; tations of insurer's agent), 125 Pac. 

neglect to read; rescission, see §§ 60f- 86. 
60i herein. 

2579 



§ 1401b JOYCE (>N ENSURANCE 

tually tend< red did nol conform to thai applied for. but was for a 
different sum and a differenl amount and was never accepted; al- 
though l1 may be shown in such case that insurer's agent stated to 
the applicant thai he could not then obtain the kind of policy ap- 
plied for bu1 might be able to do so later ; and it may also be shown 
thai the applicant obtained insurance of a similar character from 
another company after insurer's refusal to issue the policy applied 
for. 10 Again, if a policy issued to an illiterate woman does not con- 
-iiii the agreement which the insurer's a-ent represented it would 
contain, bu< provided to the contrary, and upon ascertaining the 
fraud she protested and demanded her rights, she was held cniii led 
in recover the amount of premiums paid with interest. 11 So where 
insurer's agent fills in the application so that the policy issued does 
not conform to that orally agreed upon, insured may rescind and 
recover the premium paid on making the application. 12 

§ 1401b. Premium not returnable: voluntary payments under 
claim of right: — And although the insurer has for several years 
collected premiums in excess of the maximum rates fixed by the 
contract and of those which he was legally obligated to pay, and 
even though he has protested against said excessive rates, neverthe- 
less it is decided that such excessive payments cannot be recovered 
back as they were voluntarily made under a claim of right, the 
ground of the decision being that, in the absence of a statute, fraud. 
compulsion or duress, a person who with full knowledge of the 
facts voluntarily pays another money cannot thereafter recover 
hack the same even though he protests at the time against his lia- 
bility and declarer that he makes the payment under coercion. A 
distinction was made between such a case and one of payment under 
a mistake of facts. 13 So one voluntarily paying insurance premi- 
ums with know Ledge of the facts, cannot recover them on the theory 
that they were not in accord with his contract, 14 So where, under 

10 International Life Ins. Co. v. payments: Maryland Casualty Co. v. 

Nix, 11 Ga. App. 664, 75 S. E. 1058. Little Rock Ry & Electric Co. 92 

"Caldwell v. Life Ins. Co. of Va. Ark. 306, 122 S. W. 994; Millers & 

140 N. Car. 100, 52 S. E. 252. Manufacturers Ins. Co. In re, 97 

As to misrepresentations by agenl Minn. 98, 4 L.R.A.(N.S.) 231, 106 

where applicant is illiterate, sec § X. W. 485; Sas:e v. Finney, 1.16 Mo. 

490 herein. App. 30, 135 S. W. 996; Ross v. 

12 I^si. Man-he v. New York Life Rubin, 25 Misc. 479, 54 N. Y. Supp. 

Ins. Co. 126 Cal. 498, 58 Par. 1053. 1036. Compare Hall v. Prudential 

18 Rosenfeld v. Boston Mutual Life Ins. Co. 72 Misc. 525, 130 N. Y. 

Ins. Co. 222 Mass. 284, 110 N. E. 304; Supp. 355. 

Boward v. Mutual Reserve Fund Life 14 Jones v. Provident Savings' Life 

Assoc. 125 N. Car. 49, 45 L.R.A. Assur. Soc. 117 N. Car. 540, 25 

853, 34 S. E. 199. See also as sus- L.R.A.(N.S-) 803, 61 S. E. 388. 
taining the principle as to voluntary 

2580 



RETURN OF PREMUMS AND ASSESSMENTS $$ 1402, 1403 

an employers' liability policy, an additional premium was paid 
after the expiration of the contract, based upon w;igcs of employees 
not in the class included by the terms of the policy, it was held that 
.siid payment was a voluntary one made under ;i mistake of law 
and not recoveraUe. 15 

§ 1402. Whether premium returnable where foreign company has 
not complied with state laws. — In so far as the decisions of a state 
hold that noncompliance by a foreign company with the statutes 
under which alone it is authorized to do business therein renders 
the policy void, 16 it would -vein to logically follow that the premium 
paid under such policies should be recovered back. It has been 
held that a premium note given under such circumstances is not 
enforceable. 17 But it is also held that the policy holder is not ex- 
cused thereby from payment of his premiums, and llmt the policy 
is valid. 18 So it is declared in Indiana that the insured may, both 
as to the company and its agents, recover back his premiums paid 
under such a contract, irrespective of the doctrine of recovery of 
the consideration upon rescission. 19 And it is also held that the 
premiums paid can be received back in such case upon the ground 
of failure of consideration. 20 

§ 1403. Return of premium: breach of warranty. — If there be a 
breach of a warranty, express or implied, rendering the policy void 
ab initio, there being no actual fraud, the premium is returnable. 1 
Nor can the insurer retain premiums received after a breach of 
promissory warranty not to use liquor to excess. 2 And where a 
warranty is fraudulently inserted by insurer's agent without the 
applicant's consent, the insurer, even if there is no estoppel against 
it, must return the premiums paid less the value of the insurance 

15 Maryland Casualty Co. v. Little 21 Am. Rep. 89 ; Haverhill Ins. Co. 
Rock Rv. & Electric Co. 92 Ark. 306, v. Prescott, 42 N. H. 547, 80 Am. 
122 S. W. 994. Dec. 123. 

16 See §§ 332, 333 herein. 20 Barrett v. Elliott, 24 Canadian 
^ Gent v. Manufacturers' & Mer- L. T. 344. See Hudson v. Compere, 

chants' Mutual Ins. Co. 107 111. 6.52, 94 Tex. 449, 61 S. W. 389. 
s. c. 13 111. App. 308; Hoffman v. 1 Delavino-e v. United Statas Ins. 
Banks, 41 Ind. 1; Washington Mti- Co. 1 Johns. Cas. (X. Y. ) 310; El- 
tual Ins. Co. v. Hastings, 2 Allen bers v. United Ins. Co. 16 Johns. ( X. 
(84 Mass.) 398; Barboi r v. Boehm, Y.) 128; Waddington v. United Ins. 
21 Neb. 450, 32 N. W. 221; JEtna Co. 17 Johns. (X. Y.) 23. See Corn- 
Ins. Co. v. Harvey, 11 Wis. 394. See mercial Life Ins. Co. v. Schreyer, 176 
§§ 333, 1216 herein. Ind. 654, 95 X. E. 1004, 40 "ins. L. 

18 Union Mutual Life Ins. Co. v. J. 2087, and opinion of court (under 
McMillen, 24 Ohio St. 67. See § § 1406 herein). 

330 herein. 2 Supreme Lodge of Modern Amcr- 

19 Union Central Life Ins. Co. v. ica Fraternal Order v. Watkins, 60 
Thomas, 46 Ind. 44. See also Thorne Ind. App. 384, 110 N. E. 1008. 

v. Travelers' Ins. Co. 80 Pa. St. 15, 

2581 



§ 1 ; JOYCE ON INSURANCE 

by which insured has been benefited, or it cannot take advantage of 
a forfeiture provision where the warranty is false. 3 So where in a 
fire policy on lumber there was a warranty for maintaining a con- 
tinuous clear .-pace between the Lumber and a sawmill, which war- 
t inty was untrue when made, and no risk ever attached, in the 
nee of intentional fraud by the assured the premiums paid are 
returnable. 4 So also if the ship be unseaworthy at the time the risk 
would commence, and the risk does not attach, 6 or there be a breach 
of warranty of neutrality, so thai the risk docs not attach; 6 or 
there is a breach of warranty of the time of sailing; 7 or the ship 
I eing insured with warranty to sail from a certain port with con- 
\oy for the voyage, and on arrival there finds the convoy gone, and 
never sails on the voyage, the insured having given notice imme- 
diately to the underwriters, the premium is. returnable from the 
time of the breach, on the ground that there are two distinct con- 
tacts, but it is not returnable for the risk run prior to the breach. 8 
So in the case of a warranty to depart with convoy, which is not 
satisfied, the premium is returnable as to that risk to which the 
warranty relates. 9 

If, however, the policy has once attached and is in full force and 
effect ai the time of the loss and the risk is entire and there is no 
liability by reason of a breach of warranty as to seaworthiness there 
can be no recovery back of the premium. 10 And although a vessel 
may not be seaworthy for the voyage, hut is seaworthy for port, and 
the policy ha- attached in poll, there; shall be no return of the 
premium. 11 And there shall be no return of the premium for a 

3 McDonald v. Metropolitan Life 8 Stevenson v. Snow, 3 Burr. 1237, 
Ins. Co. (iS X. II. 1, ?:; Am. St. Rep. per Lord Mansfield; Tyrie v. Fletch- 
548, 38 Atl. 500. er, Cowp. 666, 14 Eng. Rul. Cas. 502, 

4 Jones v. Insurance Co. of North per Lord Mansfield. 

America, no Tenn. 604, 25 Am. St. 9 Long v. Allen, 4 Doug*. 277, 14 
Rep. 706, is S. W. 260. Eng. Rul. Cas. 517. See § 1394 here- 

6 Scriba \. Insurance Co. of North in. 

America, 2 Wash. (U. S. C. C.) 107, 10 Mummer v. Insurance Co. of 

Fed. Cas. No. 13,107; Merchants' Ins. North America, 114 Me. 128, 95 Atl. 

Co. v. Clapp, 11 Pick. (28 Mass.) 56; 605. So decided although the court 

Taylor v. Lowell, 3 Mass. 331, 3 Am. declared that it did not understand 

Dec. Ill: Porter v. Bussey, 1 Mass. that a recovery back of the premium 

436; Richards v. Marine Ins. Co. 3 paid was sought and there was no 

Johns. (N. Y.) i!"7: Graves v. Ma- discussion of the point, 

rine Tns. Co. 2 Caines (N. V.) 339; "In this case the policy was "at 

Annam v. Woodman. 3 Taunt. 299. and from" and the vessel had arrived 

6 Henkle v. Royal Exch. Assur. Co. at the outer port ami had taken on 

1 Ves. Sen. 317. a cargo for the homeward voyage: 

7 Meyer v. Gregson, :\ Doug. 102, Annan v. Woodman. :: Taunt. 299. 
reported in 1 Marshall on Ins. led. See Merchants' Ins. Co. v. Clapp, 11 
1810) G.~)8. Pick. (28 Mass.) .">(j; Hendricks v. 

2582 



RETURN OF PREMIUMS AND ASSESSMENTS §§ 1404, 1404a 

deviation on the voyage, for the deviation annuls the contract as 
to subsequent ports of the voyage, and not the contract ab initio, 
and forfeits the premium, the risk being entire. 12 

In case of breach of a warrant}- that an automobile insured 
against loss by fire, shall not be used for carrying passengers, no 
part of the premium can be recovered back, for where the policy 
has attached insured cannot by his voluntary breach deprive in- 
surer of the benefits of its contract when it is without fault, 13 

§ 1404. Premium returnable for misrepresentation or conceal- 
ment of assured without fraud. — If the policy is avoided by a mis- 
representation of the assured made without fraud, the premium 
is returnable, 14 especially where the company lias positive knowl- 
edge of that which it insists effected the forfeiture, for in such case 
it would be inequitable for the company to retain the premium, 
and at the same time claim that it is not bound thereby. 15 Thus, 
a representation that lamps were not used in the building and they 
were, and the loss was occasioned thereby, avoids the policy, and the 
risk never having attached, and there being no fraud on the part 
of the assured, the premium shall be returned. 16 So also where the 
insured represents that the building is furnished with a brick chim- 
ney, and it is not, the policy does not attach, and the premium is 
returnable. 17 So also where the interest of the insured mortgagee 
is not the sole ownership as represented, there being no fraud, the 
premiums are returnable, as the risk has never attached. 18 

§ 1404a. Same subject: knowledge of insurer's agent where both 
parties act in good faith. — When both parties to a contract of in- 
surance act in good faith, but are alike deceived by reason of false 
representations of material facts, such as those concerning the 
plaintiff's business, made unwittingly on the applicant's part, but 
with full knowledge of the company's agent, the insured should, 
in an action for money had and received, be allowed to recover the 

Commercial Ins. Co. 8 Johns. (N. Y.) On right of insured to return of 

1. premium where policy is void or 

12 Hearne v. Marine Ins. Co. 20 voidable because of misrepresenta- 
Wall. (S7 U. S.) 488, 22 L. ed. tions on his part, see note in 32 
30.3; Tait v. Levi, 14 East, 481; Ber- L.R.A.(N.S.) 298. 

mon v. Woodbridge, 2 Doug. 781, 14 16 Clark v. Manufacturers' Ins. Co. 

Eng. Rul. Cas. 507. 8 How. (49 U. S.) 235, 12 L. ed. 

13 Elder v. Federal Ins. Co. 213 1061, 2 Wood & M. (U. S.) 472, Fed. 
Mass. 389, 100 N. E. 655, 42 Ins. Cas. No. 2829. 

L J 524. 17 Scott v. Niagara Dist. Mutual 

14 Feise v. Parkinson, 4 Taunt. 640, Ins. Co. 25 U. C. Q. B. 119. 

14 Eng. Rul. Cas. 530; Penson v 18 Waller v. Northern Assur. Co. 64 
Lee, 2 Bos. & P. 330. Iowa, 101, 19 N. W. 865. 

15 Williamsburg City Fire Ins. Co. 
v. Can-, 83 111. 453. 

2583 



§ 1405 



JOYCE (>X [NSURANOE 



premiums paid, less the value of the insurance enjoyed by him 
during the existence of the policy. 19 

§ 1405. Premium not returnable: policy illegal: parties in pari 
delicto. — If the contract be illegal in its inception as being a \\ 
policy, or one illegal as being prohibited by positive law, the parties 
being pari delicto, and the premium having been paid and the risk 
nm, the premium is not returnable. 80 But a premium paid for in- 
suring lottery tickets has been held returnable, the parties not being 
in pari delicto. 1 A distinct ion has been made in some of the early 
English cases between contracts executed and executory, it being 
held that before the event happens, and while the contract is ex- 



19 McDonald v. Metropolitan Life 
Co. 08 N. H. 4,73 Am. St. Rep. 

.148, 38 All. 500. Compare Metropol- 
itan Life Ins. Co. v. Ereedman, HO 
Mich. 114, 32 L.R.A.(N.S-) 298, 123 
N. W. 147. See § 477 herein. 

20 Security .Mutual Life tns. Co. v. 
Little, 119 Ark. 49, L.R.A.1917A, 475, 
178 S. W. 418; Russell v. De Grand, 
L5 Mass. 35: Juhel v. Church, 2 
Johns, ('as. (N. Y.) 333; Harse v. 
Pearl Life Assur. Co. [1904] 1 K. B. 
L. R. 558, rev'g [1903] 2 K. B. 92; 
Howarth v. Pioneer Life Assur. Co. 
L07 L. T. 155; Andree v. Fletcher, 3 
Term Rep. 266; Lowry v. Bourdrea, 
2 Doug. 468, 14 Eng. Rul. Cas. 533; 
Paterson v. Powell, 2 L. J. Com. P. 
X. S. 13; Vandyck v. Hewitt, 1 East, 
96, 14 Eng. Rul. Cas. 538 ; Monk v. 
Abel, 3 Bos. & P. 35. The English 
statute, 8 & 9 Vict. e. 109, sec. 18, 
forbids all wagers. See statutes un- 
der 5? 11!' herein. 

As to marine ins. act, 1906, of Eng- 
land, see § 1392 herein. 

As to return of premium for want 
of interest, see § 1110 herein. 

As to rebates contrary to statute 
not being 1 illegal and parties not in 
pari delicto, see § 1408e herein. 

As to the general rule that money 
paid under an illegal contract cannot 
be recovered hack, see Kilpatrick v. 
Clark, L32 111. 342, 8 L.R.A. 511, 24 
N. E. 71. 

Ioica. — Cole v. Brown-TTurlov 
Hardware Co. 139 Iowa, 187, 18 
L.R.A. (N.S.) 1161, 117 N. W. 7 Hi. 



Louisiana. — Rudolf v. Costa, 119 
La. 781, 44 So. 477. 

Michigan. — Richardson v. Buhl, 77 
Mich. 032, 6 L.R.A. 457, 43 N. W. 
1102. 

Nebraska. — Davis v. Hinman, 73 
Neb. 850, 103 N. W. 668; Storz v. 
Finkelstein, 46 Neb. 577, 30 L.R.A. 
044, 65 N. W. 195. 

Neiv Hampshire. — Welsh v. Cutter, 
44 N. II. 501. 

New Jersey. — Brooks v. Cooper, 50 
N. J. Eq. 761, 21 L.R.A. 617, 26 
Atl. 978. 

Oklahoma. — Atchison, Topeka & 
Santa Fe Ry. Co. v. Holmes, 18 Okla. 
92, 90 Pac. 22. 

Vermont. — Danforth v. Evans, 10 
Yt. 538. 

Washington. — Stirtan v. Blethen, 
79 Wash. 10, 51 L.R.A. (N.S.) 623, 
139 Pac. 618; Reed v. Johnson, 27 
Wash. 42, 57 L.R.A. 404, 67 Pac. 
381. 

West Virginia. — Lanham v. 
Meadows, 72~ W. Va. 610, 47 L.R.A. 
(N.S.) 592 (annotated on right to 
recover what has been paid or trans- 
ferred in consideration of illicit rela- 
tions), 7S S. E. 750. 

England. — -Taylor v. Chester, L. R. 
4 Q. B. 309, 6 Eng. Rul. Cas. 477; 
Edgar v. Fowler, 3 East. 225, per 
Lord Ellenborough. 

See also 1 Story's Equity Jurispru- 
dence (6th cd.) 69. 

1 Jacques v. Golightly, 2 W. Black. 
1073. 



2584 



RETURN OF PREMIUMS AND ASSESSMENTS-'' § 1405 

ecutory, the money paid or advanced may be received back ; 2 and 
such was the opinion of Butler, J., in Lowry v. Bordien, 3 although 
Lord Mansfield held in that case that the policy, being without in- 
terest, was a gaming policy against the statute, and the court would 
not interfere to assist either party, in accordance with the maxim 
that in pari delicto melior est conditio possidentis, thereby implicit- 
ly not concurring in the opinion of Butler, J., although in this case 
the action was not brought until after the risk had been run. So 
Lord Ellenborough doubted the soundness of the distinction when 
it was sought to recover back premiums under illegal insurances, and 
in this opinion Lord Tenterden 4 coincided, on the ground that the 
contract was completed and the consideration paid. 5 Mr. Marshall, 
however, notes a case of two wagers in the nature of wagering in- 
surances, where, although the action, which was brought on the 
ground that the plaintiff had won his wager, was nonsuited, Lord 
Mansfield permitted a return of the premium, 6 and that author is 
of the opinion that Mr. Justice Butler's doctrine applied only "to 
the case of an insurance without interest innocently made." 7 Mr. 
Arnould doubts whether the distinction between contracts executed 
and executory can be sustained as to illegal insurances, and says 
that if both parties are in pari delicto, "and no case of oppression 
or peculiar hardship be made out, the simple and intelligible rule 
of potior est conditio possidentis ought to apply in all its general- 
ity." 8 Mr. Phillips states the rule thus broadly: "If the contract 
is void on account of illegality, the assured is, in general, not en- 
titled to a return of the premium, upon the principle that when 
parties are in pari delicto, neither has a remedy against the other." 
So also Mr. Parsons. 10 In Massachusetts it is held that the amount 
of a premium note given on an illegal insurance is not collectable. 11 
In cases of wagers generally it is also held that a promissory note 

2 Aubert v. Walsh, 3 Taunt. 276; 7 2 Marshall on Ins. (ed. 1810) 643. 
Tappenden v. Randall, 2 Bos. & P. 8 2 Arnould on Marine Ins. (Per- 
467. As to the general rule, see also kins' ed. 1850) 1235, *1221. As to 
Hasleton v. Jackson, 8 Barn. & C. premium being returnable where no 
221; Cotton v. Thurland, 5 Term insurable interest, wager policies ex- 
Rep. 405; Edgar v. Fowler, 3 East, cepted, see marine ins.- act, 1906, of 
225; Smith v. Bickmore, 4 Taunt. England, § 1392 herein. 
474. 9 2 Phillips on Ins. (3d ed.) sec. 

3 2 Doug. 468, 14 Eng. Rul. Cas. 1846. 

533_ 10 1 Parsons on Marine Ins. (ed. 

4 Then Abbott, J. 1868) 515. See also 2 May on Ins. 

5 Palyart v. Leckie, 6 Maule & S. (3d ed.) 1304, sec. 567. 

290. ' u Russell v. De Grand, 15 Mass. 

*" 6 Wharton v. De la Rive, at N. P. 35. 
1782, reported in 2 Marshall on Ins. 
(ed. 1810) 642, note a. 

2585 



§ 1405 JOYCE ON INSURANCE 

executed upon a void wager cannol be collected. 18 It would be diffi- 
uowever, to deduce a rule applicable to illegal insurances from 
analogous cases of wagers and like illegal contracts generally, for 
in such cases the matter is one largely dependent upon statutory 
regulations iu the several states. Thus, while it is held if the con- 
tract is executed and the money paid it cannot be recovered back, 
yet in many of the stales money paid on an illegal wager can by 
statute be recovered back, and other decisions hold that whore a 
■ contracl is nol executed, that is, the event has no1 transpired 
or the money paid over, the contracl may be rescinded and the 
money is returnable. 18 In addition it has frequently been a ques- 
tion whether or nol a policy is within the class denominated as 
wagering contracts. 14 Iu a New York ease it is declared that if a 
er contracl is void as against public policy it would be uncon- 
scientious for the insurer to retain the premium. 15 The difficulty, 
therefore, of stating a rule which is less general than the one given 
at the beginning of this section, is apparent. It would seem, how- 
ever, extremely doubtful if parties to an illegal contract of insur- 
ance, being both in pari delicto, have any standing in court to 
claim a return of the premium, even though the event has not oc- 
curred or the risk run. except in eases where some statute provides 
a remedy, or perhaps in eases of oppression or peculiar hardship, 
or those where public policy clearly necessitates the court's inter- 
ference. The rule necessarily excludes those cases where the cir- 
cumstances are such that the parties are not both in pari delicto. 
Lord Mansfield has made an exception by holding that the parties 
are not in pari delicto in cases where the prohibitory statute, by 
virtue of which the contract is made illegal is intended to prevent 
oppression or imposition upon one set of men by another. 16 And 
in other cases than those concerning insurances relating to con- 
tract- in violation of law it lias been held in law and equity that 
two parties may concur in an illegal act without being necessarily in 
all respects in pari delicto, and also that the case may be such that 
public policy requires the court's interference. 17 If the policy is 

12 Eldred v. Molloy, 2 Colo. 320, Wait's Actions and Defenses, 83- 
•J.") Am. Rep. 752. See also Conley v. !M ; "J Parsons on Contracts ( rth ed.) 
Billegras, '.'1 Pa. St. L32, 39 Am. 758, *626 et seq., 896, *755 et seq. 
Etep. 774; Blasdel v. Powle, L20 Mass. " See SS 894-89-11) herein. 

447, 21 Am. Rep. 533. But see 16 Mount v. Waite, 7 Johns. (X. 

Boughner v. Meyer, 5 Colo. 71, 40 Y.) 434. 

Am. Rep. 139, where a check so given 16 Browning v. Morris, 2 Cowp. 

was held valid iti the hands of a 790. 

bona tide transferee. 17 Osborne v. Williams, 18 Ves. 379. 

13 For a review of the law as to 11 R. R. 218; Reynell v. Sprye, 1 
wagers and illegal contracts, see 7 De Gex. M. & (!. 660; 1 Story's 

258(3 



RETURN OF PREMIUMS AND ASSESSMENTS § 1405a 

made illegal by a subsequently enacted statute, the risk having at- 
tached, both parties are discharged from their contract obligation, 
and the insurer loses his premium. 18 So if the policy is invalid. 
and the insured was guilty of no fraud in procuring it, the pre- 
mium is returnable. 19 But if a policy is intended to coven- a trade, 
in contravention of the regulations of a statute, the assured, even 
though a foreigner and ignorant of the law, is not entitled to a 
return of the premium. 20 And a license to trade in a prohibited 
district cannot operate retrospectively so as to entitle the assured to 
a return of the premium, even though the license was procured 
before the insured knew of the loss; 1 although where both parties 
intend a license should be procured, the premium is returnable, 
even though the same is afterward declared invalid ; 2 and so also in 
case of trading with an enemy, the same being undertaken owing 
to a mistaken construction of a license. 3 But the rule in pari delicto 
does not apply to a case where the broker receives money from the 
underwriters for the use of the assured, the contract being illegal, 
but such money may be recovered from the broker as money re- 
ceived to and for the use of assured. 4 

§ 1405a. Return of premiums: ultra vires contracts. — It is de- 
clared by high authority in England that if the issue of marine 
policies is ultra vires of the company, the policies are invalid, and 
the premiums may be recovered back. 5 And where insurer has no 
power to issue an endowment policy for which it has accepted the 
premium but has delivered a straight life policy pending delivery 
of the one agreed upon and for which the premium was paid, it 
must, after refusal of a demand, to comply with its agreement or 
to credit the excess of premium paid upon the straight life policy, 
either return the premium paid upon a contract which it had no 
power to fulfill or give the credit demanded. 6 But a beneficiary cer- 
tificate containing an ultra vires agreement for endowment insur- 

Equitv Jurisprudence (9th ed.) 284, 5 2 Arnould on Marine Ins. (8th 

286; Clough v. Ratcliffe, 16 L. J. Ch. ed. Hart & Simey) sec. 79, p. 104, 

477 citing Re Phoenix Life Ins. Co. 

18 Gray v. Sims, 3 Wash. (U. S. C. Burg-es & Stock's Case (1862) 2 J. & 

C.) 276." Fed. Cas. No. 5729. H. 441; Hainbro v. Hull & London 

19 -Mutual Assur. Co. v. Mahon, 5 Fire Assurance Co. (1858) 3H.&N. 

Call. (Va.) 517. 789. 

20 Morck v. Abel, 3 Bos. & P. 35. As to acts ultra vires of insurance 

1 Cowie v. Barber, 4 Maule & S. corporations, societies or associations, 
16. defenses, benefits received, etc., see §§ 

2 Siffkin v. Allnutt, 1 M. & S. 39. 334, 350 et seq. herein. 

3 Siffkin v. Allnutt, 1 M. & S. 39. 6 Calandra v. Life Assoc, of Amer- 

4 Tennant v. Elliott, 1 Bos. & P. ica, 84 N. Y. Supp. 498. 
3. See Smith v. Liudo, 5 Com. B. 

N. S. 587. 

2587 



§ 1406 JOYCE OX INSURANCE 

ance will be valid in so far as it is payable to the beneficiaries on 
the death of the member; and when the member has not season- 
ably rescinded the contract, and the benefits of the beneficiaries 
thereunder have intervened, hecannol recover from the corporation 
;m< ni- paid by him, none of such assessments having been for 
endow menl insurance. 7 

§ 1406. Premium not returnable: policy void for fraud or ma- 
terial misrepresentations of assured or his agent. — If the policy is 
void by reason of the fraudulent representation or concealment of 
the assured or his agent, or if, by deception and false pretenses in 
matters material to the risk, he induces the assurer to assume a 
risk which would either have been refused or if taken at all would 
only have been taken on different terms, there shall be no return 
of the premium. 8 So the general rule first above Mated as to non- 
attachment of the risk precluding insurer from retaining the pre- 
miums 8 * is subject to such exceptions as may exist by reason of 
some intentional fraud on insured's part whereby the risk has been 
prevented from attaching and the contract becoming of effect, 9 If 
;, wife intends to defraud the insurer, or knowingly participates in 
its agent's fraud, in procuring a policy on her husband's life with- 
out his knowledge and against the company's rules, there can be no 
recovery back of premiums paid on such policy, and there being 
evidence from which the jury may or may not find her innocent 
of such fraud or participation, it is error to refuse a charge of the 

7 Rockhold v. Canton Masonic Mu- South Carolina.— Himely v. South 
tual Benevolent Assoc. — 111. — , 2 Carolina Ins. Co. 1 Mill Const. (S. 
L.R.A. 420, 19 N. E. 710, aff'd 129 C.) 154, 12 Am. Dec. 023. 
111. 4 10, 21 N. E. 794. Wisconsin. — Blaeser v. Milwaukee 

'^United States.— Schwartz v. Mutual Ins. Co. 37 Wis. 31, 19 Am. 
United States Ins. Co. 3 Wash. (C. Rep. 747. 
C.) 170, Fed. Cas. No. 12,505. England.— Chapman v. Frazer, 3 

Connecticut.— Lewis v. Phoenix Ins. Burr. 1361; Prince of Wales Assur. 
Co. 39 Conn. 100. Co. v. Palmer, 25 Beav. 605; Car- 

Kentucky.— Royal Neighbors of ter v. Boehm, 3 Burr. 1909, 13 Eng. 
America v. Spere, 160 Kv. 572, 169 Bui. Cas. 501. Formerly otherwise: 
S. W. 984. See cases cited and doubted in Mar- 

Massachusetts — Trabandl v. Con- shall on Ins. (ed. 1810) 648 52. 
neeticut Mutual Life Ins. Co. 131 See note 32 L.K.A.i N.s. | -JOS, on 
Mass. Ki7; Friesmuth v. Agawam right of insured to return of premium 
Mutual Fire [ns. Co. 10 Cush. (64 where policy is void or voidable be- 
Mass.) 587; Hoyt v. Gilman, 8 Mass. cause of misrepresentations on his 
336. part. 

New York. — Waters v. Allen, 5 8a See § 1300 herein. 
Hill (N. Y.) 421; Palmer v. Metro- 9 National Council of Knights & 
politan Life Ins. Co. 47 X. Y. Supp. Ladies of Security v. Garber, 131 
347, 21 App. Div. 287. Minn. 60, 154 N. W. 512. 

2588 



RETURN OF PREMIUMS AND ASSESSMENTS § 1406 

character above stated. 10 And if through fraud of an applicant 
and insurer's agent, membership is obtained by misrepresentations 
as to age, and the certificate provides for forfeiture of assessments 
in case of false statements on that subject, insured cannot demand 
a return of assessments paid when his fraud is discovered and the 
certificate declared forfeited, especially so where said payments are 
disbursed and the society is not one for profit. 11 So one who has 
secured a mutual benefit certificate by fraud cannot, after the as- 
sessments paid by him have been disbursed to pay claims againsl 
the association, demand a return of the amounts paid when his cer- 
tificate is forfeited for the fraud, since the parlies cannot be placed 
in statu quo. 12 So misstatements as to age made to- a fraternal 
order, which limits the age at which a person may become a mem- 
ber, precludes a recovery back by him of premiums paid while the 
order had no knowledge of said misstatements and the by-laws pro- 
vided for forfeiture of all premiums paid in such case. 13 So a ben- 
efit society from which a beneficary certificate has been obtained 
by fraudulent understatement of the age of the applicant is under 
no legal obligation to return what has been paid as assessments 
before it can claim that the contract is not in force. 14 Under an 
Indiana decision although the contract provides that fraudulent and 
untrue statements of insured shall render the insurance void and 
work a forfeiture of all premiums paid, still the contract is not ren- 
dered absolutely void but only voidable at the election of insurer 
who must tender back the premiums received as one of the neces- 
sary steps to an election to rescind or avoid the policy. This is 
held to be the rule as settled by decisions of that state and it is 
applied to statements as to insured's occupation which are warrant- 
ed to be true. 15 

10 Fisher v. Metropolitan Life Ins. Schroyer, 176 Ind. 654, 95 N. E. 
Co. 162 Mass. 236, 38 N. E. 503. 1004, 40 Ins. L. J. 2087. The court 

11 Elliott v. Knights of Modern per Cox, J., said : "The rule as set- 
Maccabees, 46 Wash. 320, 13 L.R.A. tied by the decisions of the courts 
(N.S.) 856, 89 Pac. 929. of this state is that contracts of in- 

12 Elliott v. Knights of Modern surance with such provisions are not 
Maccabees, 46 Wash. 320, 13 L.R.A. rendered absolutely void by a breach 
(N.S.) 856, 89 Pac. 929. of warranty or by reason of false 

13 Criscuolo v. Societa Monarchica answers to questions affecting the risk 
Di Mutuo Soccorso Vittorio Emanu- contained in the application as a part 
ele III. 89 Conn. 249, 93 Atl. 532. of the contract of insurance, such as 

14 Taylor v. Grand Lodge Ancient are involved in this case, but that they 
Order United Workmen, 96 Minn, are voidable at the election of the in- 
441, 3 L.R.A. (N.S.) 114 (anno- surer; that, before a defense on such 
tated on return of assessment on ben- ground can defeat a recovery by the 
etit certificate proving void for beneficiary in a suit on the policy, the 
fraud), 105 N. W. 408. insurer must take proper steps to ex- 

15 Commercial Life Ins. Co. v. orcise its election to avoid and rescind 

2589 



§ 1407 JOYCE OX INSURANCE 

i 
§ 1407. Premium not returnable: material alteration of policy. — 
[f there be a material alteration of the contract by the assured with- 

the contract; and thai tendering back even though a contract of insurance 
the premiums received is one of the is procured by fraud of the insured 
necessary steps in making the election and the insurer is in ignorance, and 
!,, rescind. Glens Kails Ins. Co. v. the risk attaches, the premium musl 
Michael (1906) L67 [nd. 659, 8 be returned where the defense is in- 
L.R.A.(N.S.) 708, 7! N. E. 964, 79 terposed in an action at law upon the 
X. i-;. 905; American Central Life policy. The rule may be otherwise in 
Co. v. Rosenstein, 16 End. App. case of an action in equity to cancel 
537, ! ! 'J X. E. 380; State Life Ins. the policy upon the ground of the 
Co. v. Jones, 48 End. App. 186, 92 requirement thai the moving party 
X. E. 879. See also IS Harvard shall do equity, and the ground of the 
Law Review, 364. Answers to a com- distinction between actions inequity 
plaint to recover on a policy in such and actions at law on the policy has 
eases must, to be sufficient, allege the been lost sight of, and much con- 

s showing the condition, its fusion has thereby arisen. 

breach, and the election to avoid or "It seems to me no answer to say 

rescind the contract; and to defeat when there is an action on the policy 

a recovery by reason thereof proof thai the contract becomes noneffective 

must be made of the facts so alleged, from the beginning, and hence no risk 

"But counsel for appellant contend attaches. That depends upon the fact 

the rule as laid down in the cases as to whether there is a discovery, so 

cited above does not apply to this that there may he ground for an elec- 

because of the provision in the con- tion to rescind, for until discovery, 

tract here that the insured shall in some risk necessarily attaches, even 

such case forfeit premiums paid. Of though it should not be the full risk 

course, it is obvious that, if the in- contracted for, and, in addition, the 

surer elect to avoid or rescind the fact that there is a necessary expense 

policy, it is as if no contract had in procuring the contract. It is not 

been made. The termination of the wholly unilateral. Some risk neces- 

contract in case the insurer elects to sarily attaches as an element of non- 

rescind it does not date from the time discovery itself, and from the fact of 

of the election, but from the breach issuance of the policy, but the con- 

of the condition. In this case the tract is none the less fraudulent, 

breach was before the consummation though there be no discovery, and, so 

of the contract, and at the election of long as any risk attaches, it becomes 

the insurer the contract became null in effect a wagering contract, and 

from its inception, leaving no obliga- it seems to me in such case, even 

tion resting upon either party to it. though there is discovery of the 

Appellant could not renounce the con- fraud, there should be no recovery of 

tracl for the purpose of refusing to the premium, and this court has held 

pay the amount it called for to the that, so long as any risk attaches, 

beneficiary, and in the same breath there can be no recovery of premiums 

claim it to he in force for enabling it on the ground that there can be no 

to retain the premium paid." apportionment risk. American Mu- 

Myers, .1. (dissenting) said: "I tual Life Ins. Co. v. Bertram, 163 

concur in the result reached in the Ind. 51, 64 L.R.A. 935, 70 N. E. 258; 

majoritv opinion on the »round of Continental Life Ins. Co. v. Bouser, 

election by appellant after notice of 111 Ind. 266, 12 N. E. 479; Standley 

the alleged false answer, but I am v. Northwestern Mutual Life Ins. Co. 

impelled to dissent, from so much of 95 Ind. 254. The appellate court has 

the opinion as in effect holds that held the same. American .Mutual 

'J",! Id 



RETURN OF PREMIUMS AND ASSESSMENTS § 1407 

out consent of the assurer, whereby it is avoided, the premium is 
not returnable, even though there is no fraud on the part of the 
assured, for it, is a general rule thai the assure I cannot by his own 
act, the risk having attached, rescind the contract, and so compel 
a return of the premium, although he might have prevented the 
inception of the risk. 16 



Life Ins. Co. v. Mead, 39 Ind. A pp. 
215, 79 N. E. 526; Metropolitan life 
Ins. Co. v. Bowser, 20 Ind. A pp. 557, 
50 N. E. 86; Metropolitan Life Ins. 
Co. v. McCormick, 19 Ind. A pp. 49, 
65 Am. St. Rep. 392, 49 N. E. 44. 
If it be said that it is a wagering 
contract on the part of the insurer, 
then the law should leave the par- 
ties where they place themselves. It 
seems to me that any other rule in- 
vites wagering contracts, deception, 
and perjury, and that a wise public 
policy would be subverted in the rule 
I suggest, which has been held by 
many of the courts. Tavlor v. Grand 
Lodee, 96 Minn. 441, 3 L.R.A.(N.S-) 
114, 105 N. W. 408; Ronald v. Mutual 
Life Assoc. 132 N. Y. 378, 30 N. E. 
739; Thompson v. Travelers' Life 
Ins. Co. 11 N. Dak. 274, 91 N. W. 
75; Id. 13 N. Dak. 444, 101 N. W. 
900; Stringham v. Mutual Ins. Co. 
44 Oreg. 447, 75 Pac. 822; Blaeser 
v. Mechanics Life Ins. Assoc. 37 Wis. 
31, 19 Am. Rep. 747; Georgia Home 
Tns. Co. v. Rosenfield, 95 Fed. 358, 
37 C. C. A. 96; United States Life 
Ins. Co. v. Smith, 92 Fed. 503. 34 C. 
C. A. 506: Lewis v. Phoenix Mutual 
Life Ins. Co. 39 Conn. 100; Hoyt v. 
Gilman, 8 Mass. 336; Metropolitan 
Life Ins. Co. v. McTague, 49 N. J. 
Law 587, 60 Am. Rep. 661, 9 Atl. 
766; Joyce on Insurance, sec. 1406. 
The rule of requiring the return of 
premiums paid applies in case of ac- 
tions in equity to cancel the policy, 
and not in actions at law upon the 
policy, is asserted in numerous well- 
reasoned cases, which seem to me to 
declare the true rule. United States 
v. Smith, supra; National Mutual 
Fire Ins. Co. v. Duncan, 44 Colo. 
472, 20 L.R,A.(N.S.) 340, 98 Pac 



634; Provident Savings Life As 
ance Co. v. Whayne, 131 Ky. 84, 
S. W, 1049; Venner v. Sun Life Ens. 
Co. 17 Can. S. C. 394. 

"It can scarcely be questioned that, 
although the contract provides that 
fraud shall render the policy void, 
they are universally held not to be 
void, but voidable at the election of 
the insurer, and for that reason alone 
a risk attaches, subject to be defeat- 
ed at the election of the insurer, and 
hence the reason for the rule of re- 
quiring tender of the premiums when 
equity is appealed to to cancel the 
policy, while, on the other hand, when 
an action is brought on the law side 
of the court on the policy, the in- 
surer may stand on his legal defense, 
and the law leaves the insured where 
he lias placed himself by his own 
fraud, from which he is not permitted 
to take advantage, or speculate upon 
the fact of his having paid money on 
a contract rendered fraudulent by his 
own conduct." See also Metropoli- 
tan Life Ins. Co. v. Freedman, 159 
Mich. 114. 32 L.R.A.(N.S.) 298 and 
note on right of insured to return of 
premium where policy is void or void- 
able because of misrepresentations on 
his part, 123 N. W. 147. 

16 Langhorn v. Cologan, 4 Taunt. 
430, per Lord Mansfield, who says: 
"The underwriter has fulfilled his 
part. The assured can no more com- 
pel the underwriter to return the pre- 
mium than the underwriter can com- 
pel him to relinquish the contract." 
The case was one of insurance on 
goods and merchandise generally, and 
on the vessel, and written words were 
inserted describing specific goods 
without the consent of the defer 



assurer. 



2591 



§§ i4ii7a. 1 108 JOYCE ON INSURANT E 

§ 1407a. Return of premiums: demand for additional medical 
examination.— It is held that insured is qoI entitled to recover back 
an advanced premium paid on his application for a policy where 
he refuses to submit to a required additional medical examination 
unless he shows thai his refusal was justified as a matter of law and 
go entitled him to rescind the contract." 

§ 1408. Return of premium: breach of contract by assurer. — If 
the contract is valid and the company is lawfully entitled there- 
under to receive premiums, and there is nothing which .-hows that 
the refusal of the company to fulfil its contract is not fully justi- 
fied by its terms, an action for a return of premium cannot be main- 
tained. 18 So also in case of assessments claimed to be recovered 
hack as overpayments, there shall he no return where there is a 
finding that the same arc lawfully levied, and duly and properly 
used by the company, and thai they were voluntarily paid by the 
assured with a full knowledge of all the facts. 19 Again, a policy of 
life insurance stipulated that default in the payment of any of the 
annual premiums to become due after the first two should not work 
a forfeiture of the policy, hut that the amount insured should he 
then commuted or reduced to the sum of the annual premiums 
paid. The insured brought suit to have the contract declared re- 
scinded, and to obtain a decree against the insurance company for 
the sums which he paid as premiums, upon the ground that the 
company asserted that the policy was forfeited by his failure to pa} , 
and declined to issue a "paid-up policy" equal to the sum of the 
several annual premiums paid. It was held that such suit could 

17 Witt v. Old Line Bankers' Life tinent in this case. What risk or lia- 
Ins. Co. 94 Neb. 748, 144 N. W. 801. bility had the company incurred? 
Reese, J., who had dissented from for- If the premium had not been ad~ 
mer decisions in the case, concurred vanced could the company have recov- 
"upon the express condition that, ered the amount thereof in an action 
should plaintiff submit to another ex- therefor against insured.' What lim- 
amination, and the application be ac- itation exists as to the right to de- 
cepted, he shall receive a policy with- mand additional examinations? 
out further cost or expense to him As to right to recover back pre- 
than if a policy had been issued upon miums paid and as to demand for an 
the first examination, and that the an- additional examination being an evi- 
nual premium be not increased, dence at the most of an intent to 
Should defendant fail or refuse to effect a cancelation of policies, see 
accede to these conditions, it is liable Armstrong v. .Mutual Life Ins. Co. 
to plaintiff for a return of the ad- 121 Iowa. 362, 96 X. W. 954. 
vance premium paid, with legal in- 18 Continental Life Ins. Co. v. 
terest from the time of payment.' 7 llouscr, 89 Iml. 258. 
See dissent imr opinion in Witt v. Old 19 <'lanccv v. .Mutual Reserve Fund 
Line Bankers' Life [ns. Co. 80 Neb. Life Assoc. (N. Y. City Ct. 1891) 10 
Ki:;, 168, 131 N. W. 189. It seems to Court Jour. 1. 
the author thai the questions are per- 

•_»-.!)2 



RETURN OF PREMIUMS AND ASSESSMENTS § 1408a 

not be maintained where the only obligation imported by the terms 
of the policy was to pay within ninety clays after due notice and 
proof of the death of the assured. 20 Again, although the policy by 
its terms entitles assured to obtain a loan from insurer on the se- 
curity of the policy alone, it is held that such a provision is only 
a conditional one independent of the contract to insure, and that 
both on this account and because statements made by insured at 
one of the insurer's subordinate offices when requesting a second 
loan were held to have constituted an abandonment of the con- 
tract, the refusal of the cashier of the subordinate office to make 
said loan, did not operate as a repudiation of the insurance con- 
tract, and there could be no recovery back on the premiums paid. 1 

But the premiums are returnable when the company does not 
deliver the policy as agreed, although the parol contract has at- 
tached. 2 And where the company refuses to receive a premium 
when due, it is held that at least all the premiums paid may be 
recovered back with proper interest. 3 The question, however, of 
return of premiums in case of the wrongful cancelation or termi- 
nation of the contract by insurer is hereinafter fully considered. 4 

§ 1408a. Same subject: transfer of assets to another company: 
winding up: reorganization: change of insurance plan. — Assured 
may rescind and recover back all premiums paid with interest in an 
action for money had and received where the company violates its 
contract, by transferring all its assets to another company and ceas- 
ing to do business. 5 A policyholder is under no obligation to con- 
tinue his insurance with a new company to which the company 

20 Harlow v. St. Louis Mutual Life 238. But see Leonard v. Washburn. 

Ins. Co. 54 Miss. 425, 28 Am. Rep. 100 Mass. 251. 

358. See Continental Life Ins. Co. 3 Alabama Gold Life Ins. Co. v. 

v. Houser, 111 Ind. 206, 12 N. E. Garmany, 74 Ga. 51; xKtna Life Ins. 

479. Compare Pbcenix Mutual Life Co. v. Paul, 10 Bradw. (111.) 431; 

Ins. Co. v. Baker, 85 111. 410. McKee v. Phcenix Ins. Co. 28 Mo. 

1 Lewis v. New York Life Ins. Co. 383, 75 Am. Dec. 129: Cohen v. 
(U. S. C. C.) 173 Fed. 1009, aff'd New York Mutual Life Ins. Co. 50 
30 L.R.A.(N.S.) 1202, 181 Fed. 433, N. Y. 010. 10 Am. Rep. 522; Meyer 
104 C. C. A. 181. Examine Key v. v. Knickerbocker Life Ins. Co. 7.'! 
National Life Ins. Co. 107 Iowa, 446, N. Y. 516, 29 Am. Rep. 200; Phoe- 
78 N. W. 68, 28 Ins. L. J. 259; nix Mutual Life Ins. Co. 9 W. Ya. 
Bums & Reillv Real Estate Co. v. 237, 27 Am. Rep. 558. But see Sneer 
Philadelphia Life Ins. Co. 239 Pa. v. Phoenix Mutual Life Ins. Co. 36 
St. 22, 86 Atl. 642. Hun (43 N. Y.) 322. 

On breach of agreement of insurer 4 See § 1659 herein, 

to make loan on policy as justifying 5 Meade v. St. Louis Mutual Life 

rescission and recovery of premiums Ins. Co. 51 How. Pr. (N. Y.) 1. 

by insured, see note in 30 L.R.A. As to rescission and cancelation: 

(N.S.) 1202. transfer of business and assets, see 

2 Collier v. Bedell, 39 Hun (N. Y.) § 1644 herein. 

Joyce Ins. Vol. III.— 163. 2593 



§ 1408a JOYCE ON ENSURANt E 

insuring him has transferred its business, but has a right to con- 
the contract al an end, and to demand what is due him by 
;i of its abandonment, which is the amount of the premiums 
paid less the value of his insurance of which he had the benefit and 
the sum to which he is so equitably entitled may be recovered from 
the assets and he has also the right to resorl to the fund on deposit 
with the -late to protect policyholders. This is held to resl upon 
the principal that if Ihe performance of an executory contract is 
prevented by one of the parties thereto or he puts it out of his 
power to perform it. it may be regarded by the other party as termi- 
nated and he may demand whatever damages he may have sustained 
thereby. 6 So in a Texas case in which there were seventeen assign- 
ments of error, it is held that if the original insurer transfers prac- 
tically all of its assets and assigns its policies to another company 
and virtually abandons its business and ceases to be a going con- 
cern and has thereby placed it beyond its power to fulfil its obli- 
gations directly with a policyholder, such acts constitute a breach 
or repudiation of its contract, with him. where said insured does not 
consent to the transfer, and the fact that the transferee company is 
solvent and willing to carry out the original contract with insured, 
does not render it the less a breach of contract for which the trans- 
company is liable in an action by assured himself for recovery 
of premiums paid and for damages. And it was also held that an 
objection that there could be no recovery of damages by insured for 
an anticipatory breach of contracl would not be sustained so thai 
assured upon his election to consider the contract terminated can 
recover hack all premiums paid by him with interest on the several 
payments computed from the date when each was made. It further 
appeared that at the time of said breach insured on account of his 
changed physical condition was unable to obtain life insurance with 
other desirable and solvent insurers. 7 So where a contract of insur- 

6 Lovell v. St. Louis Mutual Life tual Life Ins. Co. Ill U. S. 264, 

Ins. Co. Ill l\ S. 264, 28 L. ed. 28 L. ed. 423, 4 Sup. Ct. 390; Men 

123, 1 Sup. Ct. 390, relying upon ger v. Ward, 87 Tex. 622, 30 S. W. 

i aited States v. Behan, 110 U. S. 583; Meade v. St. Louis Mutual Life 

!8 L ed. L68, I Sup. Ct. 81. Ins. Co. 51 How. Prac. (N. Y.) 1, 

7 Washington Life Ins. Co. v. I. eve- and cites as sustaining the ahove rule 

joy, Tex. Civ. App. - , L49 S. W. upon the measure of damages. 

,] In . L. .J. L553. The court, Georgia- Alabama Gold Life fns. 

per McMeans, J., cites as sustaining Co. v. Garmany, 74 Ga. 51. 

the poinl that if, was not within the Illinois. — ./Etna hif'e Ins. Co. v. 

power of the original insurer, against Paul, 10 111. App. 431. 

insured's consent, i<> substitute an- Iowa. — Van Werden v. Equitable 

other company in carrying out its un- Assur. Soc. 99 Iowa, 621, 68 X. W. 

dertakings. Lovell v." St. Louis Mu- 892. 

2594 



RETURN OF PREMIUMS AND ASSESSMENTS § 14081 

ance is terminated by the insurer transferring its business to another 
without the consent of the insured, one policyholder alone can 
maintain a suit for the recovery for what is due him by reason of 
the abandonment of the contract, where it does not appear that 
any others have not accepted the terms of the arrangement be- 
tween the two companies, nor that the fund is insufficient to nice; 
all demands upon it. 8 But it is held that a reorganization of a 
mutual company which does not change its liabilities, rights, or 
identity, is not a ground for the recovery back of premiums. 9 

If the company, by virtue of an act of the legislature, abandons 
its plan of insurance without the assured's knowledge or consent, 
and thereby reduces its funds upon which the assured relies for 
payment of endowments contracted for, he may rescind the con- 
tract, and is entitled to a return of his assessments paid thereon. 10 

§ 1408b. Same subject: insolvency. — Where there is a breach of 
the contract obligations by the insolvency of the assurer, the as- 
sured, who is the holder of a cash premium policy, is entitled to a 
return of his premiums. 11 So premiums and assessments which 
the policyholders of a stock company, in ignorance of its dissolu- 
tion, have paid to a receiver, are without consideration and must be 
returned, for when such a corporation is dissolved the insurance 
does not continue in force. 12 And where insurer fails in insured's 

Michigan. — Frain v. Metropolitan Reserve Fund Life Assoc. 81 Minn. 

Life Ins. Co. 67 Mich. 527, 35 N. W. 116, 83 N. W. 506, 84 N. W. 457. 

108. 8 Lovell v. St. Louis Mutual Life 

Missouri.— McKee v. Phoenix Ins. Ins. Co. Ill U. S. 264, 28 L. ed. 423, 

Co. 28 Mo. 383, 75 Am. Dec. 129. 4 Sup. Ct. 390. Cited in Black v. 

North Carolina. — Braswell v. Homeopathic Mutual Life Ins. Co. 47 

American Life Ins. Co. 75 N. Car. 8. Hun (N. Y.) 212. 

Pennsylvania. — American Life Ins. 9 Muller v. State Life Ins. Co. 27 

Co. v. McAden, 109 Pa. 399, 1 Atl. Ind. App. 45, 60 N. E. 958. 

256; March v. Metropolitan Life Ins. 10 People's Mutual Assur. Fund v. 

Co. 186 Pa. 628, 65 Am. St. Rep. Brieken, 92 Ky. 297, 13 Ky. L. Rep. 

887, 40 Atl. 1100. 58(1. 17 S. W. 625. 

Texas. — American Legion of Hon- n In re Minneapolis Mutual Fire 

or v. Battle, 34 Tex. Civ. App. 456, Ins. Co. (Powell v. Wyman) 49 

79 S. W. 629. Minn. 291, 51 N. E. 921; Clark v. 

West Virginia, — McCall v. Pboe- Manufacturers' Mutual Fire Ins. Co. 

nix Mut. Life Ins. Co. 9 W. Va. 130 Ind. 332, 30 N. E. 212. See note 

237, 27 Am. Rep. 558. 19 L.R.A.(N.S.) 639, on right to re- 

19 Am. & Eng. Enc. Law, 99. turn of premiums on adjudication of 

The court also considers upon the insolvency of insurer, 

same point the case of Supreme As to rights of policyholders after 

Lodge of Knights of Pythias v. Neely, dissolution of company, see §§ 3595 

— Tex. Civ. App. — , 135 S. W. 1046, et seq. herein. 

and holds that it is not applicable. As to rescission and cancelation; 

The court also criticizes on the same insolvency, see § 1644 herein, 

point the case of Ebert v. Mutual 12 Ensworth v. National Life Assoc. 

2595 



L08c JOYCE ON INSURANCE 

lifetime the latter is entitled to recover premiums paid on a policy 
on his life for his wife's benefit. 18 So where there is a failure on 
the part of insurer to keep on hand the legally required funds and 
it becomes insolvent and discontinues business and does qo1 carry 
mil its contracts with its policyholders it constitutes a breach of 
contract for which said insurers are liable in damages to the value 
of the extinguished policy and the excess of premiums over the 
cosl of carrying the risk during the early years of the contract con- 
stitutes the presenl value in the absence of any change other than 
that ordinarily caused by the efflux of time 14 Bu< in the case of 
insolvency of insurer the holders of unmatured life policies are not 
entitled to have refunded to them a pro rata portion of the pre- 
miums paid by them before payment out of the assets of any other 
< reditors, as such policyholders are not within a statute which pro- 
vides for refunding by receivers to holders of open and subsisting 
contracts, in the nature of insurance, the premium paid or a pro 
rata portion thereof, where such enactment can by its terms apply 
only tn insurances which have a definite term to run. 15 

§ 1408c. Same subject: insolvency of foreign mutual fire insur- 
ance companies. — If by the statutes of the state the liabilities of 
foreign mutual fire insurance companies are the same as those of 
stock fire insurance companies, and policies issued by the former 
provide that insured incurs no other or greater liability for pre- 
mium or otherwise than that expressly provided in said policy and 
also contains a clause providing for cancelation by insured and 
payment to him of the unearned premium, and said policies eon- 
form in all other respects to the form of standard policies issued by 
stock companies, and said policies do not refer to the articles of 
incorporation or the by-laws of the company, it follows that the 
right of a policyholder to return of the unearned part of the pre- 
mium on account of insolvency of insurer, is the same in such case 
as in that of a stock company as to which the courts agree that upon 
its dissolution insured is a creditor to the amount of the unearned 
premium. 16 

81 Conn. 592, 71 Atl. 791, 38 Ins. L. porations cited in Barney v. Dudley, 

J. 401. 42 Kan. 212, 16 Am. St. Rep. 176, 

18 Universal Life Ins. Co. v. Cog- 21 Pac. 107, to the point that the 

bill, 30 Gratt. (Va.) 72. rule is just and equitable but dis- 

l4 People v. Security Life & An- tinguished in that in the citing case 

unity Ins. Co. 78 N. Y. 114, 34 Am. the insurer was still carrying the 

Rep. 522. policy. 

16 People v. Security Life Ins. Co. 16 Federal Union Surety Co. v. 

78 N. Y. 114, 34 Am. Rep. 522; 2 Flemister, 95 Ark. 389, 130 S. W. 

Rev. Stat. 1829, p. 170, sec. 75, gov- 574, 30 Jus. L. J. 1485, relying upon 

erning voluntary dissolution of eor- note 10 L.R,A.(N.S.) 639, on right 

2596 



RETURN OF PREMIUMS AND ASSESSMENTS §§ 1408d, 1408e 

§ 1403d. Same subject: insolvency of title insurance company: 
credit insurance company. — The holder of a policy of insurance 
issued by a real estate title insurance company is, upon a cancel- 
ation or annulment of the policy by a judicial decree declaring the 
company insolvent and appointing a receiver to wind up its affairs, 
entitled to a return of a proportionate part of the premium paid 
therefor, measured by the time elapsing between the date of the 
policy and the date on which the company was so adjudged in- 
solvent. But such policyholder is not entitled to the return of 
that part of the unearned premium upon the winding up of such 
company's affairs which the application for insurance stipulated 
might be retained by the company for its services in investigating 
the title insured. 17 The insolvency, however, of a credit insurance 
company during the period for which a policy was issued and be- 
fore any loss was suffered by the insured, does not entitle him to 
rescind the contract and recover back the whole premium paid, but 
only to recover back the unearned premium for the remainder of 
the term. 18 

§ 1408e. Same subject: discrimination as to rates: rebates. — The 
question whether or not premiums are returnable in cases of dis- 
crimination as to rates, or rebates contrary to statutes prohibiting 
the same, depends upon the view taken as to the construction of 
such statutes and the effect thereof upon the insurance contract in 
respect to its illegality, and also the questions whether or not the 
risk has attached and there has been a breach or repudiation of the 

to return of premium on adjudiea- Misc. Rep. 727; Ex Parte Independ- 

tion of insolvency of insurer, citing ence Ins. Co. 13 Fed. Cas. at page 

Franzen v. Hutchinson, 94 Iowa, 95, '12; State Ins. Co. v. Horner, 14 Colo. 

62 N. W. 698. On rehearing the 391, 23 Pac. at page 7S8; Van Val- 

court said: "Counsel for the Fed- kenburg v. Lennox Fire Ins. Co. 51 

eral Union Surety Company contend N. Y. 4C5 at page 468; Burlington 

that the policies of insurance are can- Ins. Co. v. McLeod, 34 Kan. at page 

celed by act of the insured, and that 192, 8 Pac. 124. As an abstract prop- 

the basis of settlement should be the osition of law, we think the views of 

rate paid for a short-term policy; in counsel are correct; but we also are 

short, that the insurance company is of opinion that the state of the ree- 

entitled to charge the customary short ord in the case precludes him from 

rates, and the policyholder is only availing his client of that principle of 

entitled to the difference between the law." 

amount paid by him and the short 17 State ex rel. Schaefer v. Minne- 

rate. In support of his contention, sota Title Ins. & Trust Co. 104 Minn, 

he cites the following cases: Insur- 447, 19 L.R,A.(N.S.) 639 and note, 

ance Commissioners v. Peoples' Fire supra, 116 N. W. 944. 

Ins. Co. 68 N. H. 51 at page 63, 44 18 Smith v. National Credit Ins. Co. 

Atl. 82; McKenna v. Firemens' Ins. 65 Minn. 283, 33 L.R.A. 511, 68 N. 

Co. 63 N. Y. Sirpp. at page 164, 30 W. 28. 

2597 



§ 1408e JOYCE <>\ [XSURA.NCE 

contract by insurer. 19 Under a North Carolina decision insured is 
entitled to recover, as for money had and received, the premiums 
paid by him on ;i contract of insurance, where the parties had 
agreed upon a rebate of premium contrary to the statute against 
discrimination, and rebates and said reduced rate had been accept- 
ed by insurer for several years until it repudiated the contract as 
illegal, lor the statute was held to operate upon insurer alone, the 
offense being only a prohibited one and the parties not in pari 
delicto. 20 So in Oregon where a policy was issued by the company's 
agent, who allowed a rebate of premiums, and the evidence tended 
;<» show a ratification by the company of its agent's acts, and the 
company repudiated the contract after the third year's premium 
was tendered, the whole amount of the premiums paid was al- 
lowed to be recovered with interest, although the insured had 
.'•■reived the benefit of the insurance for the years the policy 
was in force. 1 It is decided, however, thai the granting of a 
rebate of premium on a life policy, contrary to a statute againsl 
rebates, does not render the contract void so as to permit insured 
to recover back premiums paid thereon, where the only rem- 
edy provided by the statute for its violation is the imposition 
upon insurer of a penalty of forfeiture of its license to do business 
within the -tale, and a reduction of the face of the policy to the 
amount which could have been purchased by the premium paid. 2 
It is also held that what is known as a "Board of Consultation Con- 
tract." whereby for services rendered the second premium is to be 
reduced in amount, does not invalidate a policy so as to enable as- 
sured to recover back the first premium paid when he has had full 
protection under the policy and in case of his death while it was in 
force a claim for the amount thereof would have been sustained. 3 
It is pertinent in this connection to state that it is held in England 
that there can be no recovery back of premiums paid on a policy 
prohibited by statute under penalty, and recovery in such case is not 

19 As lei discrimination as to rate-; fecting validity of a contract made; 

rebates, and effeel thereof, sec SS by a foreign corporation without 

L093 el seq. herein. complying with the statutory condi- 

20 Robinson v. Security Life & An- lions of doing business, see note in 

nuity Co. L63 N. Car. 415, 7!) S. E. 4 L.K.A.(N.S.) 688. 

681. 'Commonwealth Life Jns. Co. v. 

1 Thompson v. New York Life Ins. Bowling, — Ky. — , 114 S. W. .'127, 
Co. 21 Or. 466, 28 Pac. 028. 38 Ins." L. J. 144. 

2 Laun v. Pacific Mutual Life Ins. As to agreements for services: ad- 
Co. 131 Wis. 555, 9 L.R.A,(N.S.) visory boards: rebates, see §§ 1092d, 
1204, 111 N. \Y. 660. L092e herein. 

On imposition of a penalty as af- 

2598 



RETURN OF PREMIUMS AND ASSESSMENTS §§ 1408f, 1408g 

aided by the claim thai payment of the premiums was induced by 
the fraudulent representations of the insurer or its agents. 4 

§ 140Sf. Same subject: reduction of amount of insurance. — Where 
there is an illegal reduction of the amount of insurance by chang- 
ing the by-laws and impairing vested rights it constitutes such a 
repudiation of the contract by insurer as entitles insured to sue 
for and recover the premiums paid with interest. 5 

§ 1408g. Same subject: increase of assessments. — Tf by election 
of insured no anticipatory breach of contract is committed by con- 
stantly increasing assessments contrary to the terms of the con- 
tract and he stands on his tender of the amount due for asse>.-uienK 
which is refused and there is no rescission by him, under the cir- 
cumstances he is not entitled to recover either principal or interest 
nor should interest be recoverable where the money paid into the 
company's treasury for mortality assessments was not used for 

4 Hughes v. Liverpool Victoria Le- before a specified day. or in case of 
gal Friendly Soe. 31 T. L. R. 635. short interest. In such cases there is 

5 Makely v. American Legion of a returnable premium, and unless 
Honor, 133 N. Car. 367, 45 S. E. otherwise agreed, where a marine pol- 
649; Black v. Supreme Council icy is effected on behalf of the as- 
American Legion of Honor (U. S. sured by a broker, the insurer is di- 
C. C.) 120 Fed. 580, aff'd Supreme rectly responsible to the assured in 
Council American Legion of Honor v. respect of returnable premiums (ma- 
Black, 123 Fed. 650, 61 C. C. A. 5; rine insurance act 1906 [6 Edw. VII. 
Supreme Council American Legion of c. 41] sec. 53, [1]). The mode in 
Honor v. Jordan, 117 Ga. 808, 45 S. which it was customary to deal with 
E. 33. See McAlarney v. Supreme returnable premiums as between the 
Council American Legion of Honor assured, the broker, and the under- 
(U. S. C. C.) 131 Fed. 538, rev'd writer, and the rules of law which 
Supreme Council American Legion of were applicable in the case of the 
Honor v. McAlarney, 135 Fed. 72, 67 death or bankruptcy of the under- 
C. C. A. 546. Compare Porter v. writer are set out in Arnould on Ma- 
American Legion of Honor, 183 Mass. rine Insurance, sees. 116-118. Such 
326, 67 N. E. 238. custom no longer exists, and returns 

As to change of by-laws : vested of premium are now dealt with as 
rights : increasing assessments or losses or averages. The underwriter 
dues or reducing amounts payable, is credited with the initial premium, 
see §§ 380 et seq. herein. and if a return is afterwards found 

Marine insurance: return of to be due, it is adjusted on the pol- 
premiums on reduction of risk: re- icy and credited to the broker, just 
turn as between insured, broker, and as a loss would be adjusted or cred- 
underwriter. "The amount of pre- ited. It suffices, therefore, to refer 
miums ultimately payable to the un- to the above-mentioned sections of 
derwriter may frequently depend on Arnould for the old custom and the 
contingencies which cannot at once be law appertaining thereto." 17 Earl 
ascertained, as for instance where it of Halsbury's Laws of England, sec. 
is agreed that the premium should be C94, p. 351. 
reduced if the ship should sail on or 

2599 



§§ 1408b, 1409 JOYCE ON INSURANCE 

the company's benefil but was al once distributed to other policy- 
holders for death Losses and no profil was bad from its use. 6 

§ 1408h. Same subject: reinsurance. — It is decided that there 
must be proof of actual loss Ln order to recover in implied assump- 
sit the premiums recited in repudiated policies of reinsurance to 
have been paid, although it is declared thai if policies of reinsurance 
I without complying with the statute are invalid, the con- 
sideration received therefor should be returned upon repudiation 
of the contract and that rescission would have the same effect. 7 

§ 1409. Return where note is given. — Although a premium note 
is given, it' the maker thereof is entitled to a return of the premium 
on the same policy, he may have the amount of the return de- 
ducted from the amount of the note; 8 and this is so held although 
the maker was at the same time indebted to the insurers for other 
notes given for premiums on other policies of insurance, and had 
become insolvent. 9 And the rule obtains where a promissory note 
i- given for the premium, which note is prima facie payment there- 
of, the insurer having acknowledged in the policy the receipt of the 
premium, and the insured may recover the return premiums by an 
action for money had and received, though his note remains un- 
paid. 10 As will be observed, this is not the case of a promissory 
note conditionally received in payment, the policy to he forfeited 
if it is not paid at maturity. 11 

An aj plicant for life insurance who has been compelled to pay 
to an innocent holder a negotiable premium note given at the time 
<if such application may recover from (he company the amount so 
paid, where he has refused the policy because it does not comply 
with the oral representations of the agent. 12 And where an appli- 
cant, who has executed his note to insurer's agent for the pre- 
mium on a life policy, is rejected, the fact that he has allowed said 
agent to apply to another insurer for a policy does not cancel in- 
surer's debt for money received by its agent where no other policy 

6 Blakely v. Fidelity Mutual Life 9 Phoenix Ins. Co. v. Fiquet, 7 

[ns. Co. 143 Fed. 619, 35 Ins. L. J. Johns. (N. Y.) 383. 

699, aff'd 151 Fed. 43, 83 C. C. A. 10 Hemmenway v. Bradford, 14 

L55, 36 tns. L. J. 884, certiorari de- Mass. 121. 

pied, 207 0. S. 592, 52 L. ed. 355, 28 « Martin v. Sitwell, 1 Show, 156. 

Sup. CI. 257. 12 Evans v. Central Life Ins. Co. 87 

As to changes in by-laws increas- Kan. 641,41 L.R.A.(N.S.) 1130 (an- 

ing assessments or dues, see §§ 380c notated on rigbt to rescind or reject, 

et eq. herein. policy not coni'ormin"; to represcn- 

7 Iowa Life ln~. Co. v. Eastern tations of insurer's agent), 125 Pac. 

Mutual Life Ins. Co. 63 N. J. L. 439, 8G, 41 Ins. L. J. 1540. 
13 All. 720. 

8 Phoenix Ins. Co. v. Fiquet, 7 
Johns. (N. V.) 383. 

2600 



RETURN OF PREMIUMS AND ASSESSMENTS § 1409a 

is obtained and no money is returned to the applicant. 13 So where 
a nolo is given in consideration of the issuance and delivery, within 
a stated time, of a policy, and the proceeds of the note are appropri- 
ated by the insurer without issuance of the policy, the applicant 
may recover such proceeds, although the insurance may actually 
have been in effect for some time. 14 And where insurer's agent 
fraudulently obtained a note from insured on the promise to return 
it if the applicant did not accept the policy, and the note is trans- 
ferred to a bona fide holder, the insurer is liable therefor even 
though it did not authorize the agent's statement. 15 So where upon 
the false representations of insurer's agent as to the terms of the 
application, and the applicant signs it without reading it, he is 
entitled to recover from the insurer the amount which he has been 
compelled to pay an innocent holder of a negotiable premium 
note. 16 And if insured is induced to enter into the contract and to 
give his note by the agent's representations as to the terms of the 
policy, and he relied thereon and they were not true, the policy 
never attached and he may maintain an action to avoid the con- 
tract and note. 17 

It is held that a contract for present insurance is not made by 
an applicant who gives his note for the first premium in consider- 
ation that a policy shall be issued, where his examination is to be 
made in the future, and he expressly stipulates that the note shall 
not be negotiated until the policy has been delivered and accepted. 18 

§ 1409a. When no return where note is given. — Where an agent 
fraudulently procured from an illiterate person a note for the pre- 
mium and it did not appear that the agent's employment was au- 
thorized and the note was negotiated and the application rejected, 
the insurer, in the absence of ratification, was held not liable to 
said applicant for the amount of the note. 19 And a mere change 
in the time of payment is not such a change from the terms of an 
application as to constitute fraud so as to entitle assured to recover 
back premium notes. 20 So a written agreement by insurer's agent 

13 Reserve Loan Life Ins. Co. v. v. Maverick, — Tex. Civ. App. — , 78 

Benson, — Tex. Civ. App. — , 167 S. W. 560. 

S W °66. 18 Summers v. Mutual Life Ins. Co. 

' 14 Summers v. Mutual Life Ins. Co. 12 Wyo. 369, 66 L.R.A. 812, 75 Pac. 

12 Wvo. 369, 66 L.R.A. 812, 109 Am. 937. 
St. Rep. 992, 75 Pac. 937. 19 Weideriaar v. New York Life 

15 Mutual Reserve Life Ins. Co. v. Ins. Co. 36 Mont. 592, 94 Pac. 1. 
Seidel, 52 Tex. Civ. App. 278, 113 As to misrepresentations by agent 
S. W. 91">. where applicant is illiterate, see § 

16 Evans v. Central Life Ins. Co. 190 herein. 

87 Kan. 641, 41 L.R.A. (N.S.) 1130, 20 New York Life Ins. Co. v. Mil- 
125 Pac, 86. ler, 11 Tex. Civ. App. 536, 32 S. W. 

17 Equitable Life Assurance Soc, 550. 

2601 



§ 14 io JOYCE ON [NSURANCE 

who was payee for a note for the premium to refund the nolo or its 
amount in cash it' within a certain time the maker thereof should, 
upon investigation, find the company unsatisfactory or not as rep- 
resented, does not prevenl the negotiation thereof nor preclude 
recover) thereon by the transferee for value in duo course as to 
"refund" means, to restore or pay and not to return the note itself. 1 
An, I where a state agent, as an inducement to obtain a physician's 
application, personally executed a separate agreemenl whereby in 
consideration of the Latter's notes for the premium it was agreed 
thai he should examine applicants for the company to the amount 
of his premium, but none v. ire senl to be examined, and the agenl 
transferred said note-, retained his commission out of the proceeds 
and remitted the balance to the insurer, it tfas held that the amount 
of said notes could no1 be recovered from the insurer upon demand 
and action therefor after the policy had been in force for six 

, iths and a part of the premium earned as the agreement was 

unauthorized by the insurer under the restrictions in the applica- 
tion on the agent's authority. 8 Again, if, under a policy stipula- 
tion, the whole premium and not merely a pro rata part of it, is 
«ained on default in payment of an instalment due, assured is not 
entitled to a reduction under a code providing for the return of 
insurance premiums in certain cases, in the amount of his pre- 
mium note which he has given for live years' insurance, if he for- 
feits his insurance by failing to pay an instalment due on the note 
after the risk has attached and been in operation for one year. 3 
§ 1410. Return for want of interest. — If through mistake, mis- 
information, misdescription, or other innocent cause, an insurance 
he effected which is not illegal, and the insured has in fact no inter- 
est whatever at risk, so that the underwriters arc not liable for a 
loss, there shall be a return of the premium. 4 Thus, where the 
captors of a vessel had no claim of right, it being seized before war 
was actually declared, they were held to have no insurable interest, 
and the premium was returned. 5 So if the policy is issued without 

1 Farmers' Bank of RoflE v. Nidi- * Martin v. Sitwell, 1 Show. L56; 
(1 |s. 25 Okla. 547, L06 Pac. 834. See Steinback v. Rhinelander, 3 Johns. 
St. Louis National Life Ins. Co. v. Cas. (N. Y.) 26!); 2 Marshall on Ins. 
Inlonuitioiial Hank of St. Louis, IIS (ed. 1810) 639 ; 2 Phillips on Ins. (3d 
ko. A|>|'- 551, L28 S. \Y. 761. See ed.) 504, sec 1824; 2 Arnould on 
SJj 1221a el seq., 3734, 3435 herein. Marine Ins. (Perkins' ed. 1868) 1239, 

2 Dickinson v. National Life & see. 424. 

Trust. Co. 20 S. Dak. 437, 107 N. W. 5 Routt v. Thompson, 11 East, 428. 
537, 35 Tns. L. J. 710. See also Boehm v. Bell, 8 Term Rep. 

8 St. Paul Fire & Marine Tns. Co. 154. 
v. Coleman, 6 Dak. 458, 6 L.R.A. 
87, 43 N. W. 693; Dak. Civ. Code, 
sees. 1542-1544. 

2602 



RETURN OF PREMIUMS AND ASSESSMENTS § 1410a 

any insurable interest in the property, there is no consideration 
for the payment of the premiums, and the company cannot, in 
equity and' good conscience, retain them, and the same may be 
recovered back in an action for money had and received. 6 And if 
the ship is insured and there is no interest other than a bottomry 
interest, the premium shall be returned; 7 and the premium may 
be recovered back when paid for insurance on goods expected at the 
insured's own risk, but which come only consigned to him. 8 
Again, if one having no insurable interest in the life of another 
pays the premiums on a policy purporting to be issued on the life 
of the latter, such policy, having never been accepted by the as- 
sured, and such payments having been made in the mistaken be- 
lief that the policy was valid and might result in benefit to the 
payor, he may recover of the insurer the premiums so paid, though 
the latter might have been estopped, had the assured died, from 
contesting the validity and binding obligation of the policy. 9 And 
even though in the absence of fraud or mistake, there can be no 
recovery of premiums voluntarily paid by one without insurable 
interest, 10 still the insurer may be so far estopped to set up a want 
of insurable interest as to enable the person so paying said pre- 
miums to establish a lien against the policy to the extent of such 
payments in a proper action. 11 

§ 1410a. Same subject: when no return. — Where a policy is 
fraudulently obtained by one upon the life of another, in whom he 
has no insurable interest, there can be no recovery back of the pre- 
mium, for the party seeking a return is estopped to show a want of 
insurable interest. 12 And where no insurable interest exists in 
favor of a son, even though he was induced to take out the policy 
through fraud of the insurer's agent, and notwithstanding a vali- 
dating statute in certain cases where there is no insurable interest, 
he cannot have rescission and repayment of premiums paid. 13 
Again, if a son effects policies in several companies to cover funeral 

6 New Holland Turnpike Co. v. insurable interest as affecting right to 
Farmers' Mutual Ins. Co. 144 Pa. St. recover back premiums paid, see note 
541, 22 Atl. 923, 48 Leg. Intell. 527. in L.R.A.1917A, 477, also 3 B. R. C. 

7 Robertson v. United Ins. Co. 2 839. 

Johns. Cas. (N. Y.) 250, 3 Am. Dec, 12 Lewis v. Phoenix Mutual Life 

415. Ins. Co. 39 Conn. 100. 

8 Toppan v. Atkinson, 2 Mass. 365. 13 Tofts v. Pearl Life Assur. Co. 84 

9 Hogben v. Metropolitan Life Ins. L. J. K. B. 286, [1915] 1 K. B. 189, 
Co. 69 Conn. 503, 61 Am. St. Rep. 112 L. B. 140, 59 S. J. 73, 31 T. L. R, 
53, 38 Atl. 214. 29, C. A. dismissing appeal, S. J. 73, 

10 See § 1401b herein. 31 L. T. N. S. 29, which affirms 110 L. 

11 Hall v. Prudential Ins. Co. 130 T. 190 (see opinion in note § 1063a 
N. Y. Supp. 355, 72 Misc. 525. herein). 

On illegality of policy for lack of 

2603 



§ 1410a JOYCE ON INSURANCE 

expenses which mighl be incurred by the death of his mother, and 
the full amount thereof is paid by one or more companies, he can- 
qoI recover the amount of ,-uk »i1km- of said insurances nor in the 
absence of fraud or mistake can he recover premiums paid thereon 
as the insurer was under risk during the period covered by the 
policy. 14 And one who, withoul an insurable interest in the life 
insured, has paid premiums upon a policy, under the belief that 
she was named as beneficiary therein, being induced so to do by 
the fraudulent statements of a broker or agent who procured the in- 
surance, cannot recover back the amount so paid even though she 
has possession of the policy until assured's death, where the policy 
money was actually paid to the administrator of assured's estate 
upon surrender of the policy, which ho was alleged to have obtained 
from her by false representations. What amount of premiums 
were paid to the agent or broker, or what he did with the money 
was not shown, hut it appeared that she had knowledge that she was 
not named as beneficiary for over a year prior to assured's death. 15 
Nor can premiums paid be recovered by one who has procured in- 
surance on the life of another in whom she has no insurable 
interest, and in order to obtain the policy she has signed a card, 
tilled out by insurer's agent, containing untrue statements as to 
her relationship to assured, and the policy provides for forfeiture 
in case of material misrepresentations. In such ease, as the con- 
tract is illegal, the parties are prima facie in pari delicto and the 
party seeking such recovery must, in order to succeed, show the 
agent's fraud and also obtain a finding of the jury exculpating 
her. 16 So one who, in reliance upon the representation of the agent 
of an insurer that an insurance effected by him upon the life of 
another person would be a valid insurance, has taken out such an 
insurance, is not, assuming such insurance to be illegal and void 
for want of an insurable interest, entitled to a return of the pre 
miums paid, even though the agent made the representation in 
good faith, believing it to be true; the parties being in such case 
in pari delicto. 17 And premiums paid under an illegal contract, 
cannot lie recovered back as where a school district had been com- 
pelled to pay negotiated premium notes on policies obtained on 
lives of persons by school directors without insurable interest as 

14 Wolenberg v. Royal Co-operative 16 Howarth v. Pioneer Life Assur- 
Collecting Soe. 84 L. J. K. B. 1316, ance Co. 107 L. T. 155. 

112 L. T. 103G. 17 Harse v. Pearl L. Assur. Co. 

15 Monast v. Manhattan Tale Ins. [1904] 1 K. B. L. K. 558, 3 B. R. C. 
Co. 32 R. I. 1, 79 Ail. 932, 40 Ins. 832, 73 L. J. K. B. N. S. 373, 52 
L. J. 1551, afF d 35 R. I. 294, 86 Atl. Week. Rep. 157, 90 L. T. N. S. 
728, 42 Ins. L. J. 909. 245, 20 Times L. R. 264n, rev'g 

2004 



RETURN OF PREMIUMS AND ASSESSMENTS § 1410b 

such. 18 Nor is the premium returnable for want of insurable in- 
terest if the risk has been run, as in case of an insurance on ship 
and freight, and safe arrival, and defective title to the ship. 19 

In an action by insured to recover the unearned premium under 
a policy payable to the mortgagee under the standard mortgagee 
clause, the claim that the insurer has without insured's consent, 
transferred, on its books or elsewhere, her interest in a policy to 
some other person does not, even though it might be the basis of 
some relief in equity fixing insured's interest, constitute a ground 
for an action for the return of the premium. 1 

§ 1410b. Return where insurance without consent of insured. — 
The right to a return of premiums paid on a policy taken out upon 
another's life without the hitter's consent, depends, even though 
such a policy is void or voidable, 2 to a great extent upon whether 
the insurance was taken out with knowledge of its invalidity or 
with a fraudulent intent, or whether it was procured in good faith 
under the honest belief that it was valid, or whether such belief 
was induced by insurer's agent. 

Therefore, a wife, who takes out insurance on her husband's life 
and pays premiums thereon under the belief induced by insurer's 
agent that the policy is valid, is entitled to recover back the pre- 
miums so paid, such insurance being illegal under the company's 
rules. 3 So insurance procured upon misrepresentations of insurer's 
agent, by a wife upon her husband's life without his consent, where 
it is provided in the contract that no policy on an adult life shall 
bind insurer where the insurance is without insured's knowledge, 
is void from its inception and the premiums paid thereon can be 
recovered back by her. 4 Again, if a wife procures insurance upon 
the life of her husband without his knowledge, but at the suggestion 
of an agent of the insurer, by signing the husband's name to an 
application, and to the examination on the back thereof, and sub- 
sequently pays the premiums on. such insurance for several years, 
and, on being informed that, under the rules if the company and 

[1903] 2 K. B. 92. See § 1063a here- tile Ins. Co. 156 N. Y. Supp. 692, 

j n _ to point that mortgagee should have 

18 Security Mutual Life Ins. Co. v. been made a party to insurer's ac- 

Little, 119 ' Ark. 498, L.R.A.1917A, tion for unearned premium. 

475, ITS S. W. 418. 2 See § 2531a herein. 

19 McCnlloch v. Royal Exch. Co. 3 On action to recover premiums 

Camp. 406. paid on life of adult insured without 

1 Lewis v. London & Lancashire his consent, see note in 56 L.R.A. 586. 

Fire Ins. Co. 137 N. Y. Supp. 887, 3 Metropolitan Life Ins. Co. v. As- 

78 Misc. Rep. 176, 42 Ins. L. J. 131 mus, 25 Ky. L. R. 1550, 78 S. W. 

(the court, however, merely stated the 204. 

point without discussion)*. Cited in 4 Metropolitan Life Ins. Co. v. Fe- 

Loew v. North British & Mercan- lix, 73 Ohio St. 46, 75 N. E. 941. 

2605 



§ 14iub JOYCE ON INSURANCE 

the conditions of the policy, it is void, because of want of such con- 
. ( .,,i. an d thereupon she demands the repayment to her of moneys 
so paid, her right to maintain an action therefor depends upon 
whether or not she was innocent of any fraudulent design against 
the company, who caused her to obtain the insurance in the manner 
employed by her, and told her that it would be valid though so 
obtained. 6 

It is held, however, that where payments of premiums are made 
by a wife on policies on her husband's life, they are not recover- 
able out of the policy moneys even though, because of his impecu- 
aiosity, they were paid by her to keep the policy in force. 6 It. is 
also decided that the agent's fraud in misrepresenting to the wife of 
insured that a policy taken out by her upon her husband's Life 
without his consent is regular and valid, are not available as an 
aid to the recovery hack by them of premiums paid, as such fraud 
is a mailer between the agenl and the insurer, where the risk has 
attached even though the policy is within a statute making a policy 
incontestable for misrepresentations, except those as to age, in the 
absence of fraud. 7 

Where the policy is void because obtained by a wife upon her 
husband's life without his knowledge or consent, premiums paid 
by her with his money or with money furnished by him for house- 
hold expenses can be recovered by him from the insurer. 8 So the 
husband is entitled to recover premiums paid with his money on a 
policy on his life obtained by his wife without his consent, even 
though said premiums were partly paid by him, where he paid 
them under the belief that the policy insured the life of his wife 
and upon discovering the mistake, repudiated the contract. 9 

But a verdict for a recovery of premiums paid on a policy on a 
husband's life, procured without his consent, will not be sustained 
where the evidence does not show that the premiums were paid 
with his money. 10 So where the policy is regular in every respect, 
except for fraud of insurer's agent and the whole transaction is 

5 Fisher v. Metropolitan Life Ins. Ins. Co. 8 Ohio Cir. Dec. 110. 5 Ohio 
Co. 160 Mass. 386, 39 Am. St. Rep. Leg. N. 11G, 1G Ohio Cir. Ct, 630; 
495, 35 X. E. si". Sec also Delouehe Rev. Stat. sec. 3626. 

v. Metropolitan Lite Ins. Co. 69 N. 8 Metropolitan Life Ins. Co. v. 

II. 587, 45 Ai!. 114, 2!) Ins. L. J. Smith, 22 K.\. I>. Rep. 868, 59 S. W. 

284. 24, 53 Lit. A. 817; Metropolitan Life 

6 Leslie v. French, .~>2 L. J. Ch. Ins. Co. v. Trende, 21 Ky. L. Rep. 
762, 23 Ch. I). 552, L6 Eng. Kul. ('as. 90S), 53 S. W. 412. 

97. See Stunt v. Jones [1915] 1 Ch. "Mahoney v. Metropolitan Life 
373, 84 L. .1. Ch. 106 | mi:.] \V. C. & Ins. Co. 80 N. J. L. 136, 76 Atl. 458, 
I. Rep. 277, 112 L. T. t067, 59 S. J. 39 Ins. L. J. 1221. 
364. 10 Metropolitan Lite Tns. Co. v. 

'Brokamp v. Metropolitan Life Monahon, 102 Ky. 13, 42 S. W. 924. 

2606 



RETURN OF PREMIUMS AND ASSESSMENTS § 1410c 

without insured's knowledge or consent, the insured cannot recover 
the premiums paid where the insurer, instead of treating the policy 
as void, has elected to consider it as a valid substituting contract, 11 

Again, although, a policy issued to a wife on her husband's life 
may be void because not issued on his application, still such re- 
quirement may be waived and the policy being then valid the 
premiums cannot be recovered back. 12 And there is such a ratifica- 
tion by insured as to validate the policy and prevent the recovery 
by him of premiums paid, where for several years he recognizes 
the policy as in force and obtains a revival thereof after its lapse. 13 

Although a policy taken out by a daughter upon her father's 
life without his consent, is void as against public policy, neverthe- 
less she is entitled to receive back the premiums paid, where she 
acted in good faith, induced thereto by the representations of as- 
sured's agent that she would be entitled to recover upon said poli- 
cy. 14 So where, upon the fraudulent representations of insurer's 
agent that certain requirements as conditions precedent to obtain 
insurance need not be complied with, a policy is taken out by a 
person upon another's life without his knowledge, for his daughter's 
benefit, a. recovery may be had of premiums paid by said person 
where it does not appear that the contract was a wager or that said 
person was a party to the fraud. 15 

§ 1410c. Same subject: statutes. — The New York statute pro- 
hibits insurance without the consent of the insured with certain ex- 
ceptions, including the right of a wife to take out a policy upon 
the life or health of her husband or against loss by his disablement 
by accident, the right of an employer to insure collectively his em- 
ployees' lives, and the insurance of minors' lives. 16 One who, with- 

11 Mailhoit v. Metropolitan Life the property. No policy or agree- 
Ins. Co. 87 Me. 374, 47 Am. St. Rep. ment for insurance shall be issued up- 
336, 32 Atl. 989, considered under §§ on the life or health of another or 
1397, 1400a herein. against loss by disablement by acci- 

12 McElwain v. Metropolitan Life dent except upon the application of 
Ins. Co. 63 N. Y. Supp. 293, 50 App. the person insured; but a wife may 
Div. 63. take out a policy of insurance upon 

13 Wakeman v. Metropolitan Life the life or health of her husband or 
Ins. Co. 30 Ont. 705. against loss by his disablement by ac- 

14 Metropolitan Life Ins. Co. v. cident; an employer may take out a 
Blesch, 22 Ky. L. Rep. 530, 58 S. W. policy of insurance covering his em- 
436. ployees collectively for the benefit of 

15 McCann v. Metropolitan Life such as inay suffer loss from in. jury, 
Ins. Co. 177 Mass. 280, 58 N. E. death, or disablement resulting from 
1026. sickness, and a person liable for the 

16 "No policy of insurance shall be support of a child of the age of one 
issued upon any property except up- year and upward may take a policy of 
on the application and in the name of insurance thereon, the amount pay- 
some person having an interest in able under which may be made to in- 

2607 



§ mod JOYCE ON INSURANCE 

out insurable interest in the life assured and without knowledge of 
the facts, takes an assignment of a policy of life insurance which, 
under the statute, is void for such want of interest and because 
taken without his consent, and which is also void as against public 
policy, and pays the premiums thereon, in reliance upon the assur- 
i, v the aucnt of the company, continued by its vice president, 
that the policy is valid and the assignment good, may recover hack 
i he premiums paid. 17 

§ 1410d. Payment by check of municipal corporation: misappro- 
priated funds: recovery back. — Where a city treasurer pays his 
premiums with checks of a municipal corporation signed by him 
as treasurer, the company is charged with the knowledge of theii 
character and thai they were in payment of the individual debt of 
iho treasurer and thai he was using the city's funds to pay his 
own debt, and the payee being so charged with notice and knowl- 
edge cannot return the proceeds without showing that the execu- 
tion of the paper was duly authorized, and the city can recover from 
the insurer the amount of said checks so received by it, and this is 
so whether or not such acts are prohibited by ordinance. Interest 
may also be recovered on said amount from the time it was received. 
Nor is the payee aided in such case by the negligence of the audit- 
ing officers of the city in not discovering said facts, nor by the fa 
insurer had distributed the money. Nor is it any defense thai i1 
was customary to receive checks in payment which were drawn on 
funds other than those of the maker, nor that it would be prac- 

crease with advancing age and discharge for any benefit accruing, or 

which shall not exceed the sum for money payable under the coi 

specified in the following table, tract." N. Y. Ins. L. 1909, c. 33, 

the ages therein specified being the sec. 55, Consol. L. c. 28; Ins. L. lsi 12, 

ages at time of death, for an c. 690, sec. 55, am'd by L. 1902, c. 

nit not exceeding the sum 437; L. 1910, c. 634; L. 1913, c. 519. 

ied in the table." The table is See Domestic Relation Law. 1009, c. 

given and the statute continues: L9, sec. 52; Ga. Code L895, sec. 2091; 

"In respeel of insurance heretofore Burns' Annot. Stat. Rev. 1908, sec. 

or hereafter, by any person not of the 4728; Mass. acts & Res. 1907, sec. 

lull age of twenty-one years but of 7.'!. p. SUP 

the age of fifteen years or upwards. "American Mutual Life Ins. Co. 
effected upon the life of such minor, v. Bertram, 163 Ind. 51, 64 L.R.A. 
for the benefil of such minor or for 935, 70 X. E. 258, 33 Ens. L. J. 191; 
the benefil of the father, mother, acts 1883, c. 136, p. 204, providing 
husband, wife, brother, or sister of that when payments of assessments 
such minor, the assured shall not, by were made by any person oilier than 
reason only of such minority, be insured and without his written con 
deemed incompetent to contract for sent, the beneficiary must have an in- 
such insurance or for the surrender surable interest in the Life assured. 
of such insurance, or to give a valid 

2608 



RETURN OF PREMIUMS AND ASSESSMENTS 



1411 



tically impossible to carry on business if inquiry were made as to 
all checks received in payment of premiums. 18 

§ 1411. Proportionate return: overvaluation: short interest. — If 
tin* insurance in a single policy be to a larger amount than the real 
value of the property actually covered and at, risk, there shall be a 
proportionate return of the premium for short interest, because the 
insurer shall not receive the price of a risk which he has not run, 
and so even though there is no stipulation for such proportionate 
return. 19 Mr. Phillips says a proportionate premium shall be re- 
turned for short interest on "a policy subscribed by only one under- 
writer or one company or one set of joint underwriters," and that 
"it is observed that Mr. Marshall 20 limits his proposition to an 'in- 
surance in a single policy.' though the French Ordonnance of 1681 
and Valin's commentary referred to by him explicitly extend 
the rule to divers policies; " and he is also of the opinion that there 
shall be a proportionate return of the premium in case the same 
policy is subscribed by several underwriters, each for a distinct 
amount. 1 If one of the joint owners of a ship effects a policy to 



18 City of Newburyport v. Fidelity 
MutuafLife Ins. Co. 197 Mass. 596, 
84 N. E. Ill, 38 Ins. L. J. 117. 

19 2 Marshall on Insurance fed. 
1810) 639; Holmes v. United Ins. Co. 
2 Johns. Cas. (N. Y.) 329; Finney 
v. Warren Ins. Co. 1 Met. (42 Mass.) 
16, 35 Am. Dec. 343 ; Foster v. United 
Ins. Co. 11 Pick. (28 Mass.) 85; 2 
Arnould on Marine Ins. (Perkins' ed. 
1850) 1241, *1226 et seq., sec. 425; 
Id. (8th ed. Hart & Simey, sees. 1259 
et seq., pp. 1520 et seq. ; 17 Earl of 
Halsburv's Laws of England, sec. 
987, p.* 500. The French Ordon- 
nance of 1681 provides for a return 
of the premium on the surplus by 
the insurers "in the case of one pol- 
icy made without fraud which exceeds 
the value of the effects shipped," and 
Emerigon applies this clause to in- 
surers who under the same date have 
signed the policy, but distinguishes 
between this and a case where there 
are several policies : Emerigon on 
Insurance (Meredith's ed. 1850) c. 
xvi. sec. 4, p. 658. He says : "It is 
necessary to distinguish the case 
where there is only a single policy 
from that in which there are several. 



'In the case,' says the Ordonnance, 
'of one policy made without fraud 
which exceeds the value of the ef- 
fects shipped, it shall subsist pro- 
portionably to the valuation. In case 
of loss, the insurers shall be held 
each in proportion to the sums by 
them insured, as also to return the 
premium on the surplus;' Art. 23, h. 
t. Thus, the insurer who under the 
same date has signed the policy last 
shall participate as well as the first 
in the profit or the loss. That is to 
say, that livre for livre (au sol la 
livre) they shall bear the loss in pro- 
portion to the valuation of the ef- 
fects insured, and shall profit by the 
premium only in the same propor- 
tion ; the whole relatively to the sums 
by them insured. . . . The same 
decision is found in the forms of 
Hamburg, Antwerp, Rouen, and Bor- 
deaux;" Id. As to marine ins. act 
1906 (6 Edw. VII. c 41) of Eng- 
land, see § 1392 herein. 

20 See 2 Marshall on lbs. (ed. 1810) 
639. 

1 2 Phillips on Ins. (3d ed.) 514, 
sees. 1836, 1837. See sections next 
following. 



Jovce Ins. Vol. III.— 164. 2609 



§ 1412 JOYCE ON INSURANCE 

the full value of the ship in his owd name, the loss being averred 
to be in him only, it is held thai he is entitled to a return of one- 
half of the premium paid on the whole sum, and ran recover for 
the loss only according to the value of his interest proved. 2 And 
where the insured's interesl in the cargo, he being one of the joint 
owners, was of the value of thirteen thousand dollars, and the whole 
amounl at risk was twenty-five thousand dollar,-, the insured was 
held entitled to a proportionate return of premium for the differ- 
ence. 3 So also in case of a policy on profits, if only pari of the 
goods are at risk, a proportionate return of the premium shall In- 
had. 4 And there may he a proportionate return of the premium 
where the amounl of insurance on a debtor's Life by hi- creditor 
exceeds, by mistake of law of both parties, the actual debt on which 
Ins insurable interesl is based. 5 So also shall there he a propor- 
tionate return of the premium if a pari only of the goods are 
shipped, whether the policy he a valued «]]• open one, although in 
case of ;1 valued policy, if all the property is pul at risk, there -hill 
be no return of the premium lor overinsurance. 6 Bu1 an action 
for return of premium on account of short interest will not lie if 
the plaintiff's interest to the extent insured is covered at any time 
during the voyage. 7 

§ 1412. Whether premium returnable for overinsurance by sev- 
eral insurers: pro rata contribution. — Some question has been made 
concerning the right of the assured to a proportionate return of 
the premium in cases of several insurers or of several policies, and 
also whether, in case of a right to such return, there shall he a pro 
rata apportionment among the several underwriters. The classes 
of overinsurance presented and considered by the authorities are 
these: 1. Where there are several insurers of separate amounts 
under one policy, all the insurance-; aggregating an excess of the 
value of the interest covered; 2. Where there are several policies 
aggregating an excess of such value, all made prior to the com- 
mencement of the risk and all attaching; 3. Where there are sev- 
eral policies aggregating an excess of such value, which take effect 
simultaneously; -I. Where there are successive insurances, and the 
prior policy or policies equal the value of the property, while the 

2 Murray v. Columbia Ins. Co. 11 kins' .,1. L850) 1241, 1242; [d. (8th 

Johns. (X. V.) 302. ed. Earl ,v, Simey) sees. L259 et seq., 

3 Eolmes \ . 1 faited I as. <'>>. - pp. l"'- !l <'t seq. 

Johns, Cas. .(X. Y.) 329. 7 Howland v. Commonwealth Ins. 

*-l Phillips .in In-. (3d ed.) 507, Co. Ami.. X. I'. (N. Y.i 26; 2 Ar- 

see. L831. nould on Marine [ns. (Perkins' ed. 

5 London & Liverpool [ns. Co.. v. 1868) L241; [d. (8th ed. Hart & 

Lapione, 1 Leg. News, 506. Simey) sees. 1254 et seq., pp. 1520 et 

6 'J Arnould on .Marine ins. (Per- seq. 

2G10 



RETURN OF PREMIUMS AND ASSESSMENTS § 1413 

subsequent insurance represents the excess in amount; 5. Where 
the prior policy or policies do not equal the value of the property, 
and the subsequent insurance attaches up to the value, the aggre- 
gate of all the policies exceeding such value. 

§ 1413. Same subject: opinions of the text-v/riters. — Emerigon, 
having reference to the Ordonnance, distinguishes between the case 
of one policy by several insurers who under the same date have 
signed the policy, and the case where there are several policies, the 
insurance in both classes being made without; fraud. In the first 
case, the insurers are to bear the loss, each in proportion to the 
sums by them insured, and to return the premium "in the same 
proportion, the whole relatively to the sums by them insured." If 
there are several policies, and the first equals the value of the effects 
shipped, it shall subsist alone, and the other or subsequent insurers 
are released and must return the premium. If the first policy does 
not equal the value of the property at risk, the second insurer shall 
answer for the surplus, and that several policies of the same date 
form but one, and come into concurrence. 8 Mr. Marshall instances 
the cases of a policy by several insurers and several policies. In 
the first he declares that all the underwriters must repay a part of 
the premium in proportion to their respective subscriptions, with- 
out regard to the priority of their dates, and in case of several poli- 
cies made without fraud, such policies make in effect but one in- 
surance, valid to the extent of the true interest of the assured, all 
the underwriters being liable to the extent of the value, without 
regard to the priority of dates, and are bound equally to make a 
return of the premium for the residue in proportion to their re- 
spective subscriptions. 9 Mr. Arnould first states the general propo- 
sition that if the insurer could at any time, under any conceivable 
circumstances, have been obligated to pay the whole sum on which 
he has received the premium, the premium is then earned and is 
not returnable, but if he could never in any event have been ob- 
ligated only to a part of the amount of his subscription, that he 
must return a proportionate amount of the premium or the residue. 
He then considers the case of double insurances, when, after effect- 
ing one insurance on his property, the merchant, who is ignorant 
of its real value, in order to fully protect himself, effects other poli- 
cies with different underwriters, and says the law is clearly sot lied 
in England that there can be a recovery only to the extent of the 
value from any set of underwriters, leaving them to contribute 
ratably amongst themselves to the loss, and that the insured is 
entitled "to a ratable return of premium, proportioned to the 

8 Emerigon on Ins. (Meredith's ed. 9 2 Marshall on Ins. (ed. 1810) 639, 
1850) c. xvi. sees. 4, 658 et seq. 040. 

2611 



§ 1413 JOYCE ON [NSURANCE 

amount by which the aggregate sum Insured in all the policies ex- 
ceeds the insurable value of the property at risk." He add- that in 
case of over insurance od a single policy, all the underwriters there- 
on contribute ratably to the return of premium, without regard to 
the date of their subscriptions, and that Mr. Marshall's rule on this 
point is ••accurately laid down." and that the rule stated by Emeri- 
gon, thai several policies on the >ame date are considered as one 
policy, obtains, and is the rule in England. The rule as to return of 
the premium in such case is the same as in the last. Mr. Arnould 
!ic\t considers the case where there ;irc several policies of different 
dates <m the same subject, and states Mr. Marshall's rule on this 
point, already given, ami notes thai subsequent writers have recog- 
nized that rule, hut have made adverse comments thereon, 10 and 
says that the English law in such case is, that the underwriters on 
the prior policies which do not equal the value at risk shall make 
no return of the premium, as they have earned the same, but that 
the underwriters on the subsequent policies shall make a ratable 
return. 11 Mi'. Phillips considers first the case of a policy "having 
divers distinct subscriptions for separate amounts," and says there 
is reasonable ground for the conclusion that the construction of 
such a policy "will be in favor of a return of premium for short 
interest, though the policy contains no provision for such a return," 
and that if the subscriptions are simultaneous, or if they "are all 
made prior to the commencement of the risk, they all attach and are 
all subject to a return of premium pro rata," without any question 
as to the right to a return, the only point being whether the return 
is to he made on the latter subscriptions or all of them pro rata, and 
says "in this respect the London custom seems, according to Mi'. 
Marshall, to have changed since Lord Holt's time; " the decision re- 
ferred to being one where it was held that prior insurers were 
liable to the full value, the subsequent ones not so, hut only 
liable for a return of premium. 12 Mr. Phillips next considers the 
case of "divers distinct, independent policies," exceeding in the 
aggregate the true value of the interest, each policy being under 
that amount, and no provision for a return. He says: "Accord- 

10 Referring to Stevens on Aver- 12 Referring to the African Co. v. 
age (5th ed.) tit. Return of Premi- Bull, 1 Show. L32, Gilb. 238, and Mr. 
urn, pp. 205, 207 L5; McCulloch's Marshall's statement that "the cus- 
Commereial Diet. (ed. 1837) tit. Ma- torn" proven in that ease and upon 
line [ns. p. 702. which the decision was based "seems 

11 2 Arnould on Marine Ins. (Per- now to be forgotten, for at present 
kins' ed. 1850) pp. 1226-32, 1210- the underwriters would he held all 
46, sec. 412"); Id. (8th ed. Hart & liable in proportion to their several 
Simey) sees. 1259 et seq., pp. 1520 et subscriptions." See 1 Marshall on 
seq. Insurance (ed. 1810) *149. 

2G12 



RETURN OF PREMIUMS AND ASSESSMENTS § 1413 

ing to uniform jurisprudence of* a whole century, beginning in 
England and followed in the United States, the presumption lias 
been that the policies are to be treated as double insurances," 
with the exception of one decision, which he notes at Length and 
distinguishes. 13 He further considers the rule given by Mr. Mar- 
shall, and declares it to be "plainly erroneous in. reference to a 
return of the premium on prior policies effected while the risk is 
pending and until the value of the subject is covered," on the 
ground that the underwriters on prior policies are liable for a 
loss until the subsequent insurances are effected, and the premium 
is therefore earned, and at the most the rule could only be appli- 
cable where all the policies attach before the risk commences. 14 
In conclusion, this author states no rule other than this, that 
if it appears that "an overinsurance was not intended by the as- 
sured nor understood by the underwriters," there shall be a return 
of the premium for the "excess of the insurance" by "the latter of 
the policies made while the risk is pending, and a pro rata return" 
on "all the insurances which take effect simultaneously," although 
there be no stipulation therefor that a double insurance is prima 
facie presumed, the burden of proof being "on the party asserting 
the contrary." 15 Mr. Parsons thinks the whole subject in an 
obscure position, although he says this: "If there be many simul- 
taneous policies on the same subject-matter, no one of which is 
beyond the interest, but all together are, as all make but one insur- 
ance with mutual claim of contributions, there is a return of pre- 
mium paid pro rata by all. If the policies are not simultaneous 
the same rule seems to apply, except in cases where the later ones 
were not made until after the former ones attached," in which case 
the prior insurances might have been held for the whole loss, and 
as to them there is no return, but that "it should follow that the 
later policies made after the whole interest was covered should re- 
turn pro rata, according to the excess of the premium over what 
they could in any event have been liable to pay ; " that policies may 
be simultaneous, even though made on different days and bear dif- 
ferent dates ; that the presumption is that policies of the same date 
are simultaneous, but that they may be proven otherwise by evi- 
dence of the order of signing, although this may be rebutted by 
proof that they were intended to be simultaneous, and that policies, 
"if for the same parties, on the same property, against the same 

"Referring to Fisk v. Masterman, 15 2 Phillips on Ins. (3d ed.) 515, 
8 Mees. & W. 165, 10 L. J. Ex. 306. 520, sees. 1837, 1838, and see Id. 504, 

14 Citing Parke, B., and Lord Abin- sec. 1823. 
ger, C. B., in Fisk v. Masterman, 8 
Mees. & W. 165, 10 L. J. Ex. 306. 

2613 



i 11.-) JOYCE ON [NSURANCE 

," are regarded "very much as if they constituted one policy; 
in thai case the insured may recover his whole amount, from any 
one or more whom he elects to sue" up to the amounl of the loss. 16 

§ 1414. Same subject: the case of Fisk v. Masterman. — In the 
case of Fisk v. Masterman, 17 a marine risk noted by Dearly all the 
text-writers on this subject, there were several insurances written 
by several underwriters on the twelfth, their total amounl being 
less than half the value of the property insured. Several policies 
Avcre on the thirteenth effected with several other underwriters for 
an amount, which being added to the prior insurances aggregated 
an excess of aboul six thousand one hundred and sixteen pounds 
overinsurance, thus, the first se1 aggregated fourteen thousand one 
hundred and fifty pounds, the second sel twenty-two thousand 
three hundred pounds, and the value of the property was thirty 
thousand three hundred and thirty-three pound-. The premium 
paid to the firs! set of underwriters was at a much higher rate than 
that paid to the second set. The underwriters with whom the 
policies were effected on the twelfth were held, the risk having 
attached, to have earned their premium, and to be entitled thereto, 
inasmuch a-- they mighl have been liable to \\w whole amount of 
their policies up to the time the later set of policies attached. It 
was also held that the amounts under all the policies should be 
aggregated to ascertain the overinsurance. and that the policies 
effected on the thirteenth should contribute ratably to a return of 
the premium in proportion to the respective amounts insured. 
It is on this decision that Mr. Arnould bases the English rule, 18 
applicable in similar eases, saying that it is an important modifica- 
tion of the doctrine stated by Mr. Marshall, and assimilates the 
English to the Continental rule. While Mr. Phillips says of the 
I hat he i< reluctant to put so broad a construction thereon 
as to agree that it overrules "the whole array of antecedent rulings 
.Mid judgments in England, respecting double insurances supported 
by the American jurisprudence;" 19 and Mr. Parsons says: "It 
is obvious thai the reason on which this decision is based will only 
apply to cases where the risk actually commences under the first 
insurance before the second is effected." 20 

§ 1415. Same subject: code provisions. — In California, express 
provisions are made by the code concerning the return of premium 
in such cases, it being provided that if there be overinsurance by 
several insurers, there shall he a "ratable return of the premium 

16 1 Parsons on Marine Ins. (ed. 18 Noted in text under lasl section. 
1868) 21)1-96, 511, 512 and notes. 19 2 Phillips on Ins. (3d ed.) .")19. 

17 H Mees. & W. 165, 10 L. .J. Ex. 20 2 Parsons on Marine Ins. (ed. 
306. L868) 512, 513 note. 

2614 



RETURN OF PREMIUMS AND ASSESSMENTS §§ L416, 1417 

proportioned to the amount by which the aggregate .sum insured in 
all the policies exceeds the insurable value of the thing at risk ;" * 
that if the overinsurance is effected by simultaneous policies, the 
insurers shall contribute to the return in proportion to the amount 
insured by the respective policies, but that in case of overinsurance 
by successive policies, those only contribute who are exonerated, 
by i >rior insurances, from the liability assumed by them in pro- 
portion as the sum for which the premium paid exceeds the 
amount for which, on account of prior insurance, they could be 
held liable. 2 

§ 1416. Same subject: the rule as to double insurances. — In this 
connection it is without doubt the rule that in cases of double in- 
surances, either simultaneously or by successive policies, the in- 
sured may recover the whole amount from any underwriter, and 
leave that company to seek contribution from the others, or he 
may recover a proportionate part of the loss from each company. 
Although he is entitled to but one satisfaction, all the policies are 
considered as one, the insurers being liable pro rata, and are 
entitled to contribution to equalize payments made on account of 
losses. But the rule is subject to such exceptions as arise in cases 
of express stipulations to the contrary, and fire policies generally 
express and exact provisions on this subject, 3 

§ 1417. Same subject: summary and conclusion. — Of the text- 
writers above noted, those who state a positive rule substantially 
agree that the assured is entitled to a ratable return of the premium 

1 Above code quotation is, with a Ins. Co. v. Kepler, 106 Pa. St. 28, 
sino-le excention in the exact words 3.") ; Wiggin v. Suffolk, 18 Pick. (3.") 
of Mr. Arnould. Mass.) 145, 29 Am. Dec. 576, per 

2 Deering's Annot. Civ. Code Cal. Shaw, C. J.; Lucas v. Jefferson Ins. 
(Civ. Code 1903) sees. 2020-2622. Co. 6 Cow. (N. Y.) 635; Godin v. 
Sec Mont. Rev. Code, 1007, sec. 5620; London Assur. Co. 1 Burr. 489, 402. 
N. Dak. Rev. Code, 1890, sec. 5967; per Lord Mansfield ; 1 W. Black. 103 ; 
S. Dak. Civ. Code 1903, sec. 1865. JBtna Ins. Co. v. Tyler, 16 Wend. (N. 
See marine ins. act 1906 (6 Edw. Y.) 385, 30 Am. Dec. 90; Thurston 
VII. c. 41) of England, § 1392 here- v. Kock, 4 Dall. (4 U. S.) 348, 352, 
i n _ 1 L. ed. 802, per the court. See Bcn- 

3 Sloat v. Royal Ins. Co. 49 Pa. St. nett v. Council Bluffs Ins. Co. - 
14, 18, 88 Am. Dec. 477, per the Iowa, 600, 31 N. W. 948. And see 
court; followed in Clarke v. Western *§ 2489, 2491, 2492, 2494-2497 here- 
Assur. Co. 29 Week. Not. Cas. 237, in; 3 Kent's Commentaries (5th ed.) 
240, and following as to pro rata and 280, 281; 2 Arnould on Marine Ins. 
contribution, Howard Ins. Co. of New (Perkins' ed. 1850) 298, *293; Id. 
York v. Scribner, 5 Hill (N. Y.) (8th ed. Hart & Simey) sec. 1260, p. 
^98, 301; followed in Roval Ins. Co. 1522. As to marine ins. act, 1906, of 
v. Roedel, 78 Pa. St. 19, 22, 21 England (6 Edw. VII. c. 41) see § 
Am. Rep. 1, also adopted in Lebanon 1392 herein. 

2615 



§ 1417 JOYCE (>N [NSURANCE 

in all the cases instanced at the beginning of the discussion, 4 but 
the difficulty arises upon the point of apportionment of premium 
among the underwriters, where there are several policies of dif- 
ferent dates, and Mr. Phillips extends this doubl to all the c 
I;,,,, the code provisions above noted are substantially a restatement 
of the rules given by Mr. Arnould as the English rules, at leasl 
as to simultaneous policies, and also as to several policies of dif- 
ferent dates, where the amount of the first insurance is not equal 
to the value of the risk, though the aggregate amount of both 
insurances exceed it. Mr. Arnould declares thai in the United 
is the common-law rule is as stated by Mr. Marshall, but he 
cites no authority other than Mr. Phillips, and that author, as we 
have seen, is in doubl as to the doctrine here, and in fact declares 
that Mr. Marshall's rule "is plainly erroneous" as to prior insur- 
ances; while Mr. Parsons, in a note in the edition of 18G8 of Ids 
work on Marine Cnsurance, 6 applies Mr. Marshall's rule only to 
the case of simultaneous policies in the United Slates, and says the 
whole suhjecl '•needs the light of further adjudication," and the 
doctrine is unsettled and obscure. Again, the doctrine here as to 
double insurance differs from the rule as stated by Emerigon under 
the Ordonnance of 1681, whereby the insurances which equal the 
"value of the effects shipped . . . subsist alone, and the other 
insurers shall go out of the insurance," but if the first "does not 
equal" such value, "the second shall answer the surplus." 6 So 
that the principle which underlies the foundation of the rule given 
by Emerigon for a return of the premium in such cases does not 
exist in the United States or in England. The difficulty, therefore,, 
of stating a general rule is apparent, and in view of the fact that 
such learned writers as Mr. Phillips and Mr. Parsons hesitate to 
formulate a positive rule, we can hardly assume, for want of ad- 
ditional authority, to go further than they have done; although we 
would suggest that the conclusion which necessarily follows from 
the doctrine in this country as to double insurances is not con- 
sistent with the rule stated by Mr. Arnould and based upon Fisk 
v. Masterman. 7 And the rule suggested by Mr. Phillips, as de- 
duced from thai ease, must necessarily be limited in its application. 
;md the code provisions above noted on this subject seem just and 
equitable. 8 

4 See § 1412 herein. 7 S Mecs & W. 1G5, 10 L. J. Ex. 

5 2 Parsons on Marine Ins. (ed. 30G. 

18G8) 512 note 1. 8 See further on this question, 

6 Emerigon on Ins. (Meredith's ed. Thurston v. Koch, 4 Dall. (4 U. S.) 
1850) c. xvi. sec 4, p. 658; e. 1, see. 348, 1 L. ed. 862; Whiting v. Inde- 
7, p. 23; c. ix. sec. 2, p. 214. pendent Mutual Ins. Co. 15 Md. 297. 

2616 



RETURN OF PREMIUMS AND ASSESSMENTS §§ 1418, 1419 

§ 1418. Stipulations for return of premium: prior and subse- 
quent insurance: the American clause. — In lire policies, as wo have 
above stated, express provisions are generally made with reference 
to prior and subsequent insurances on the property, and in marine 
risks there is usually inserted in the policies what is known as the 
American clause, which substantially stipulates that if the assured 
shall have made any other assurance upon the property prior in 
date, the assurer shall be answerable only for so much of the 
amount thereof as may be deficient toward fully covering the 
premises assured, and the assurer shall return the premium on so 
much of the sum by them assured as they shall be, by such prior 
insurance, exonerated from ; that in case of assurances on the same 
property subsequent in date, the assurers shall be liable to the full 
extent of the sum subscribed by them, without right to claim con- 
tribution from such subsequent assurers, and shall accordingly be 
entitled to retain the premium by them received in the same man- 
ner as if no subsequent assurance had been made. The manifest 
object of such clauses is to prevent contribution, in view of the 
decisions as to double insurances. 9 In some policies the American 
clause does not expressly appear, the code provisions being incor- 
porated therein by reference. Under the American clause, it is 
held that the subsequent insurers are liable for such proportion of 
the loss as the amount they insure bears to the whole value, and 
that this clause is of no effect except in cases of double insurance ; 10 
also that so much of the clause as relates to prior insurances re- 
stricts the insured from recovering the excess of the value of the 
vessel, when lost, over the amount of the prior insurance, not ex- 
ceeding the sum insured in said policy. 11 And that part of the 
clause in an open policy relating to subsequent insurances on the 
property will not apply in the case of a subsequent valued policy 
expressed as intended to cover that part of the property left un- 
covered by the prior open policy. 12 Further consideration will, 
however, be hereafter given to the construction of this clause. 13 

§ 1419. When no return in case of several policies. — Where there 
are several policies on the same subject, but on different risks, they 
cannot be taken into consideration in a computation of short 
interest, nor can there, for that purpose, be an apportionment of 

See §§ 2480, 2489, 2491, 2492, 2494- folk Ins. Co. 18 Pick. (35 Mass.) 145, 

97 herein. 153, 29 Am. Dee. 57G, per the court. 

9 See Kemble v. Bowne, 1 Caines n Stephenson v. Piscataqua Fire & 
(N. Y.) 75; New York Ins. Co. v. Marine Ins. Co. 54 Me. 55. 
Thomas, 3 Johns. Cas. (N. Y.) 1. 12 Millaudon v. Western Mutual 

10 Whiting v. Independent Mutual Ins. Co. 9 La. 27, 29 Am. Dec. 433. 
Ins. Co. 15 Md. 297; Wiggin v. Suf- 13 See § 2496 herein. 

2617 



1 ;•_>() JOYCE ON [NSURANCE 

premium. 14 And where insurance was effected here on condition 
thai if il had already been effected abroad a certain proportion of 
premium was to be returned, it was held that insurance made 
abroad after the dale of the policy here did nol entitle the insured 
to ,-i return of the premium. 15 

§ 1420. Premium not returnable when risk entire. — If the in- 
surance is for a specified term, the risk being entire and indivisible, 
il,,. premium is earned from the instant the risk attaches, and is 
therefore qo1 returnable thereafter, 16 and though the voyage con- 
sists of several distind pari- and to several places, there shall be uo 
apportionment of the premium if it be in fact one entire risk and 
for one entire premium, and not several distinct risks." And if 
the premium be a gross sum for the year, the fact that it is com- 
puted at so much each month does not make it a monthly con- 
tract, for the premium is entire. 18 So Lord Mansfield said in a 
similar case: "They might have insured from two months to 
two months, or in any less or greater proportion, if they had 
thought proper to do so. But the fact is they have made no 
division of time al all, bul the contract entered into was one entire 
contract" lor the year; in this case the insurance was a time policy 
for one yeai-. 10 ' So one who insures his property for a stated 
definite period, and the risk having commenced, cannol by his 
own act, contrary to the terms of the policy, surrender or terminate 
il at pleasure, and reclaim a ratable return of the premium. 20 So 
in policies "at and from,"' the risk being entire and having com- 
menced, the premium is not returnable. 1 A voyage may he en- 
tire, though the ship is to go to a number of places, and take 

l4 Howland v. Commonwealth Ins. 17 2 Marshall on Tns. (ed. 1810) 
Co. Anlh. X. P. (X. Y. ) 'J(i. 662 and cases Inst cited. 

15 New York Ins. Co. v. Thomas, 3 1S Lorraine v. Thomlinson, Don-;. 
Johns, ('as. (N. V.) 1. 564. 

"Lorraine v. Thomlinson, Doug. 19 Tyrie v. Fletcher, Cowp. 666, II 
564; 'J Anioulil mi Marine Ins. (Per- Eng. Rul. Cas. 502, per Lord Mans- 
ions' ed. L850) 1230, *1215 et sen.. Held. 

120; Tyrie v. Fletcher, 'J Cowp. 20 Joshua Hendy .Machine Works 
. l! Eng. Rul. Cas. 502 ; 2 Phillips v. American Steam Boiler [ns. Co. 
on [ns. (3d ed.) 508, sec. L832; 1 86 Cal. 248, 21 Am. St. Rep. 33, 24 
Duer on Marine Ins. (ed. 1845) 201; Pac. 1018. 

2 Marshall on Ins. (ed. 1810) 664 el l Annan v. Woodman, 3 Taunt. 
en.; Emerigon on [ns. (.Meredith's 299 ; Columbian Ins. Co. v. Lynch, 11 
.-il. is.)0i c. di. sec. •_*. pp. 52, 53; Johns. (N. V.) 233; Bermon v. 
Stone v. Marine Ins. Co. 1 Ex. D. 81 ; Woodbridge, 2 Doug. 781, II Eng. 
Samuel v. Royal Exch. Assur. Co. 8 Rul. Cas. 507; Meyer v. Gregson, 'A 
Pain. & C. 119, 13 Eng. Rul. Cas. Don-. 402, reported in 2 Marshall on 
till; Plummer v. Insurance Co. of Ins. (ed. 1810) 658; Moses v. Pratt. 
North America, 114 Me. 128, It.") All. :> Camp. 296; Emerigon on Ins. 
G05. (Meredith's ed. 1850) c. iii. see. 2, p. 

2618 



RETURN OF PREMIUMS AND ASSESSMENTS § 1421 

in different cargoes, but the voyage may be supposed to have 
been divided in the contemplation of the parties, where con- 
tingencies are introduced in tlic insurance which at certain periods 
of the voyage may so operate as to avoid the insurance. Thus, 
in case goods "out and home"' are covered, a proportionate pre- 
mium to be returned if the returns are remitted in bills of ex- 
change, the stipulated premium is returnable where neither goods 
nor bills are returned. 2 

§ 1421. Premium returnable when risk divisible. — If the insur- 
ance is divisible into separate and distinct risks, the premium may 
be apportioned with reference to the several risks, and there shall 
be a proportionate return of the premium covering such risk or 
risks as have not attached. This rule also applies to cases where 
from the contract it is evident that it was in the contemplation 
of the parties that there should be several risks or distinct parts to 
the contract, and that the premium may be divided in distinct 
parts with reference thereto. 3 That the contract is divisible may 
be deduced by construction from the manifest intention of the 
parties evidenced in the contract, the nature of the contract itself, 
and the obvious consequences of its terms; as in case of a con- 
tingency specified in the policy, upon the not happening of which 
the insurance ceases. This is illustrated by the case of an insur- 
ance on a ship from A to C, warranted to depart with convoy from 
B. Here it was held that the contract was from A to C, but on a 
certain contingency only a contract from A to B, which made it 
a contract divisible into two distinct parts, relative, as it were, to 
two distinct voyages, and the ship not having complied with the 
condition as to convoy, and not having sailed from B to C, a pro- 
portionate return of the premium was ordered. In this case the 
policy was "at and from." 4 So in case of a policy "at and from" 

53 et seq. ; Marine Ins. Co. of Alex- 421 ; Bunyon on Insurance, 95 ; Love- 

andria v. Tucker, 3 Craneh (7 U. S.) ring- v. Mercantile Marine Ins. Co. 

357, 2 L. ed. 466; Marine Ins. Co. v. 12 Pick. (29 Mass.) 348; Ogden v. 

Stras, 1 Munf. (Va.) 408. But see New York Firemen's Ins. Co. 12 

Tvrie v. Fletcher, Cowp. 666, 14 Eng. Johns. (N. Y.) 114. See Stone v. 

Rul. Ca.s. 502, per Lord Mansfield; Marine Ins. Co. 1 Ex. D. 81; Samuel 

Gale v. Machell, reported in 2 Marsh- v. Royal Exch. Assur. Co. 8 Barn. & 

all on Ins. (ed. 1810) 659. C. 119, 13 Eng. Rul. Cas. 641. 

2 Donath v. Insurance Co. of North 4 Stevenson v. Snow, 3 Burr. 1237 
America, 4 Ball. (4 U. S.) 463, 471, per Lord Mansfield; 1 W. Black. 318 
1 L. ed. 910; 2 Phillips on Ins. (3d Tyrie v. Fletcher, Cowp. 666, 14 Eng 
ed.) 513. See Homer v. Dorr, 10 Rul. Cas. 502, per Lord Mansfield 
Mass. 26; Pollock v. Donaldson, 3 Rothwell v. Cooke, 1 Bos. & P. 172 
Dall. (3 U. S.) 510, 1 L. ed. 699. Long v. Allen, 4 Doug. 276, 14 Eng 

3 Marshall on Insurance (ed. 1810) Rul. Cas. 517. 
655; Waters v. Allen, 5 Hill (N. Y.) 

2619 



§ 14 22 JOYCE ON INSURANCE 

A and P> to C, thence Lack to A, affixing a separate premium for 
eac h risk, and a certain per cenl to be returned if the vessel does 
no t go to C, and after the first risk the vessel is destroyed by fraud 
of the assured, whereby the other risks are not incurred, the voyage 
is divisible, and the assured may recover the premium paid for 
such oilier risks. 5 Lord Mansfield says, in a case of a policy "at 
and from," where the contingency is specified, that "there are 
great difficulties in the way of apportionments, and therefore the 
court has always seemed against them. 6 And where the contrad 
shows that it is divisible, as where an additional premium is paid 
for a licence to perform certain acts, which are never performed, 
and the risk paid for is never incepted, the premium is returnable. 7 
Where the ship, for an additional premium, was to go from Tene- 
riil'c to the Isle of May and Bonavista, thence to New York, with 
a contingency that if she should not go to Bonavista. and the risk 
end safely, one per cent was to be returned, and refusing to per- 
form quarantine, she was not permitted to enter Teneriffe, but 
wen