Manhattan Life Ins. Co. v. Parker , 204 Ala. 313 ( 1920 )

I am unable to concur in the treatment given to the statute (section 4579 of the Code) by the majority opinion. The policies in suit did not offend against the statute. They contained every stipulation of the contract between the parties. One stipulation I quote:

"Except as herein provided the payment of a premium or installment thereof shall not maintain the policy in force beyond the date when the next premium or installment thereof is payable."

The exception provided was that —

"A grace of one month (not less than thirty days) shall be granted for the payment of every premium after the first during which time the insurance shall continue in force," etc.

That exception does not affect this case. If the contract evidenced by these policies could not be affected by subsequent agreements — which, being subsequently made, could not be incorporated therein — then plaintiff could not recover, for the second premium was not paid, nor did the exception save plaintiff's claim. The fact is that plaintiff's claim rests entirely upon the subsequent agreement by which the insurance company, for the benefit of the insured, agreed to waive the default by which the life of the policy, according to its own precise terms, had been terminated. Or, if it be said that the subsequent agreement was for the benefit of both parties to the contract, it is nevertheless true that plaintiff claims under so much of it as was for the benefit of the insured, or the beneficiary named by him. But to the continued life of the policy, notwithstanding the failure to pay the second installment, the insurance company agreed upon the express condition that the note for the second premium (or a part of it) should be paid at maturity, and now the court says, in effect, that, by reason of the statute, it will ignore the condition, though insisting upon so much of the contract as was for the benefit of the insured, with result, palpably, that plaintiff is given the benefit of a large insurance for which the insured has not paid. I would have thought that some other course would be sought. I should have thought that the rule of this court, of the Supreme Court of the United States, and of other courts, as shown by the citation of authorities in Pan-American Life Insurance Co. v. Carter, 202 Ala. 237,80 So. 75, would have been allowed to perform its office of justice and right. In the case just referred to it was said of a similar situation:

"The effect of the default in paying the note on its due date was to forfeit the policy, because the policy holder, by plain words, agreed that it should have that effect. The validity of the contract in reference to the note and its payment cannot be successfully assailed. 'It did not undertake to destroy any existing right of the beneficiary under the policy. The extension of time was a favor, not a right, and the allowance of additional time for payment of a premium beyond its maturity did not operate to confer still further rights in spite of the terms of the extension.' "

The determination to reject an application of that rule, as it seems to me, can result only from an opinion that a contract of insurance, once made, can never be altered, or, if such a contract is subsequently altered, the courts will give effect only to such stipulations of the altered contract as favor the insured or his named beneficiary. My judgment is that the decision in Pan-American Life Insurance Co. v. Carter, supra, has been overruled in effect, and if the principle of that case and the cases upon which it was planted is to be no longer observed, the fact may as well be plainly noted and understood.

SOMERVILLE and GARDNER, JJ., concur in this dissent.