Hoar v. Union Mutual Life Ins. Co. , 103 N.Y.S. 1059 ( 1907 )

Kellogg, J.:

By the contract of insurance between the company and the husband, he agreed to make certain annual payments on each July first for ten years, in consideration of which it was to pay the wife the amount of the policy upon his death. Whether she would ever realize anything upon the contract depended upon the mariner in which he performed his contract. She stood iñ no contract relations with the company, except that as the beneficiary of her husband-she was to reap the benefits of his performance. . Hot one of the cash payments provided for by the policy was made by the husband. He gave his promissory note for a part of each. The giving of a debtor’s note does not pay a debt. It may extend the time of payment, but if default is made in the payment of the note the original indebtedness is revived with all its incidents.

The non-forfeiture clause in the policy applies only where two annual premiums have been fully paid, and the provision as to payment is made more certain by the further provision in the policy where, in speaking of the non-payment of a cash note, check or draft, it provides that upon such non-payment the policy shall be void “except as respects payments for prior years which shall have been promptly and fully realized by the Company in all respects according to their terms, and the benefits of which'are thus secured from forfeiture as above provided.” The provision in the premium notes that they shall not be allowed under the non-forfeiture clause as full payment until paid really adds nothing to the transaction. They were not payments, but were only means of procuring payment, and until paid were practically unimportant except to show extension of time for payment, but when past due they ceased to have any material effect. The maker had defaulted in his contract and could gain no benefit from his broken promise, but falls back upon the original contract, which he never has performed. But these notes make certain the understanding of the parties that after default they cannot give the delinquent any benefit under the non-forfeiture clause.

The neglect to continue this provision as to the non-forfeiture clause in some of the renewal notes does not benefit the plaintiff. Upon failure to pay such renewal note, the former note was revived with all its provisions and incidents; and clearly all notes containing this clause which are represented in the last renewal note cannot now be considered under the non-forfeiture clause. The long-continued default in payment of the last renewal note, representing an unpaid part of each annual premium on the policy, deprived the plaintiff of any benefit under the non-forfeiture clause.

If the clau'se in the policy that any claim that the company has against the assured may be set off -against the amount due upon the policy relates only to a claim against the wife of the party making the contract, that clause would clearly indicate that none of the notes was intended as actual payment under the non-forfeiture clause.

The policy seems to draw a distinction between the words “insured” and “assured,” treating the husband as the insured and the wife as the assured; but she had no dealings with the company, and it could not have any claim against her arising out of the policy. He bad dealings with it, and naturally would be indebted to it on account of matters arising out of the policy. The words “assured” and “insured” are so nearly synonymous that they are frequently used interchangeably. It is not probable that the company would accept the notes of the husband from year to year, relying upon his personal responsibility, agreeing to pay the wife the full amount of the' policy, without the right to offset the notes. Any claim against the wife for any cause could be legally offset against the amount payable úpon the policy. It is not probable that that right of offset was intended to- be limited to a claim arising out of the policy only. Neither is it probable that the parties inserted this provision without intending that ;t should have some reasonable effect. The situation indicates clearly that it was the intention that-any indebtedness on account of the policy should be an offset against any amount due upon it.. In either view of the case there can be no recovery. , ■

The judgment should he reversed on the law and the facts and a new trial ordered, with costs to the appellant to abide the event.

Chester, J., concurred ; Coohbane,- J., concurred in result iqion ground last stated; Smith, J., dissented in opinion ; Parker, P. J., not voting, not being a member of this court at the time the decision was handed down.