Lefler v. New York Life Ins. , 74 C.C.A. 488 ( 1906 )

VAN DEVANTER, Circuit Judge,

after stating the case as above, delivered the opinion of the court.

If the premium notes were payable, without grace, six months after their date, it is plain the insurance had terminated long prior to the death of the insured, and no recovery can be had upon the policies. But the plaintiff contends (1) that the provision in the policies relating to grace in the payment of premiums gave the insured a grace of one month within which to pay the notes after the expiration of the stipulated six months; and (2) that, if the notes contain any provision to the contrary, the defendant is estopped from enforcing it by reason of the statements made to the insured by the agent before the notes were given. The time within which the premiums on a policy of insurance shall be paid, and whether with or without grace, is a subject in respect of which it is competent for the insurer and the insured to make any contract which is satisfactory to them at the time; and such a contract is as obligatory upon the parties to it as is any other contract competently made.

What agreement do the policies and notes show was made in this instance? Each policy, after providing for the payment of premiums in regular course on the 18th day of March in each year declared that “a grace of one month during which the policy remains in full force will be allowed in payment of all premiums except the first”; and that “if any premium is not paid on or before due, or within the month of grace,” the liability of the insurer shall be only that stated in the automatic nonforfeiture provision of the policy. Each note, in extending the time for paying a portion of the second premium, provided that it should be paid, “without grace, six months after date,” and that, if it should not be paid “at maturity,” all benefits which full payment in cash of the premium would have secured should become “immediately” void and forfeited, except as otherwise provided in the policy. These provisions of the policies and notes when read together, as it is conceded they must be, show without any uncertainty or ambiguity that it was the intention of the parties that the provision for a grace of one month should be applicable to the payment of all premiums in regular course according to the terms of the policies, but without application to that portion of the second premium which was taken out of the regular course and made the subject of a special agreement extending the time for payment and expressly excluding grace. The only objections urged against this conclusion are that the words “without grace” in the notes have reference, not to the month of grace named in the policies, but to the three days of grace allowed by the law merchant in the payment of certain negotiable instruments, and that in the concluding provision of the notes, viz., “and all benefits whatever which full payment in cash of said premium would have secured, shall become immediately void and forfeited to the New York Life Insurance Company, if this note is not paid at maturity, except as otherwise provided in the policy itself,” the excepting clause qualifies, not the operative words “shall become immediately void and forfeited,” but the words “at maturity.” Both objections are without merit. The words “without grace” obviously include the month of grace named in the policies and make the notes payable six months after date without further indulgence or respite. The excepting clause in the concluding portion of the notes clearly has reference to the automatic nonforfeiture provision in the policies, a highly beneficial feature of the insurance which would otherwise be immediately cut off by a failure to pay the notes. It follows that the plaintiff’s first contention cannot be sustained.

The remaining question, although spoken of by counsel as one of estoppel, is really whether, in an action at law upon the contract evidenced by the written policies and notes, the certain and unambiguous terms of the latter can be contradicted or varied by parol evidence of the negotiations which resulted in their execution and acceptance. This question, including the authorities now relied upon by counsel, was fully considered by this court in the recent case of Connecticut Fire Insurance Co. v. Buchanan (C. C. A.) 141 Fed. 877, and was ruled adversely to the plaintiff’s contention. See, also, Coombs v. Charter Oak Life Insurance Co., 65 Me. 382; Insurance Co. v. Mowry, 96 U. S. 544, 547, 24 L. Ed. 674; Ivinson v. Hutton, 98 U. S. 79, 82, 25 L. Ed. 66; George v. Tate, 102 U. S. 564, 570, 26 L. Ed. 232. A reexamination of the subject satisfies us that upon both reason and authority that ruling should be adhered to.

The judgment is affirmed.