
    Manhattan Life Insurance Company v. Smith.
    
      Life insurance — Notice to beneficiary of amount of premium due — When husband agent of wife — Attempt by husband to surrender policy — Tender.
    1. Where, by the terms of a contract of life insurance, the beneficiary named in the policy is entitled to participate in the profits, a portion of which, in the form of dividends, is to be applied each year in reduction of premiums, and it has been the uniform practice of the company to give timely notice of the amount of premium, amount of dividends, and of the balance to be paid in cash, and the company neglects to give such notice, having knowledge of the residence of the beneficiary, and by reason thereof a premium is not paid at the time specified in the policy, the company can not set up such failure to pay as a defense to a recovery upon the policj', although by its terms the same is to be forfeited in case of failure to pay a premium upon any of the dates stipulated therein.
    2. In such case, where the company has uniformly sent the notices to the insured (the husband of the beneficiary) and he has .made payment of premiums from year to year, the law will treat him, in making such payments, as agent for the wife; but where it is shown to the company, by letters from the husband, very shortly after notice sent, that he and' the wife have separated, she having commenced a proceeding for alimony against him, and that he is desirous of having the policy changed and made payable to his estate, the company is not justified in treating him as her agent, for the purpose either of receiving notice for her, or of malting a surrender of the policy.
    3. And, in such case, an attempt by the husband, without knowledge of the wife, to surrender the policy to the company, is inoperative, and the rights of the wife are not thereby impaired.
    4. Where, in such case, the company repudiates the contract, and by its course of conduct clearly indicates that a tender of the premium after the death of the insured, if made, would not be accepted, a failure to make such tender will not bar a recovery on the policy.
    Motion for leave to file petition in error to the Superior Court of Cincinnati.
    The material facts as shown by the record are as follows: June 4, 1863, the Manhattan Life Insurance Company issued to Rosehannah Smith an ordinary life policy upon the life of her husband, John W. II. Smith, of Cincinnati, Ohio, for three thousand dollars. The premium, $75, was payable June 4th of each year, the beneficiary being entitled to participate in the profits, and the dividend each year to be deducted from the premium. The policy contained a forfeiture clause to the effect that if the premiums ' should not be paid when due, the company should not be liable for payment of the sum assured, or any part thereof, and the policy should cease and determine. The applicacation is in the name of the wife. The first premium was acknowledged as being received from her and future premiums were to be paid by her. The husband kept the policy in his possession and transmitted to the company the premiums until and including the premium due June 4, 1879. In that year Smith and his wife had difficulty, and in the month of October she commenced an action in the court of common pleas of Hamilton -county against him for alimony. They at that time parted, and did not afterward resume marital relations. Both lived in the city of Cincinnati, which had been their home during the existence of the policy, he being engaged in business at the corner of Fifth street and Central avenue. In the month of April, 1880, the husband received a notice from the company, dated April 24th, informing him that the premium would be due the 4th of June following, and making this statement: Premium, $75; less dividend, $24; cash to be paid, $51. The company had uniformly sent him a notice each year about the same length of time before June 4th, containing a similar statement, showing amount of premium, amount of dividend, and balance to be paid in cash, and the amount paid was uniformly the annual premium, less the dividend for the year.
    Upon receipt of notice Smith wrote the company, under date of April 27th, asking if there was any way in which he could have the policy transferred; that he did not desire to continue it in its present form, as his wife was otherwise provided for, and asking if he could get a paid up policy. To this the company replied that the only chauge that could be made was to issue a paid up policy in its stead for $810, without profits, and, that if he wished this, to forward the policy and renewals prior to June 4th. Smith responded by letter, of which the following is a copy:
    “ Cincinnati, May 3,1880.
    
      “Dear Sir — In reply to your favor of April 29th, in regard to paid up policy, would say I desire to have it changed, and inclose the policy and renewals as requested. I will say that my wife has separated from me, and sued for alimony on the charge of not having provided for her. This is notoriously false, but, of course, does not particularly interest you. I greatly desire that the policy should be made payable to my estate, if it can be done, but, as I am obliged to provide for her with alimony, or otherwise support her, and as she is no longer a wife to me, I desire my children to have the benefit, if any. Some of the renewal receipts have been mislaid, but I return the last.”
    This elicited from the company a letter dated May 6th, acknowledging receipt of the policy, stating that “ no change can be made in this until the 4th day of June next, at which time we will give it our attention,” adding that all the renewal receipts had not been returned, and requesting that careful search for the others be made and that they be forwarded. May 19th he wrote: “Replying to yours of 6th, I herewith inclose you all the certificates that I have been able to find.” On the 26th the company again wrote to him: “We notice that the renewal receipts for the years 1865, 1869, 1870, 1871, 1878, 1874, and 1877 are missing, and request that you make a search for them, and failing to find them that yon make an affidavit stating the circumstances of the loss and that search had been made.” This ended the correspondence, and nothing further appears to have been done during Smith’s life. Rosehannah Smith was not consulted, and had no knowledge of these negotiations. He died on the 11th of January foilswing.
    Besides the dividends the policy earned additions yearly ; so that, at the time of the attempted surrender, Mrs. Smith ■would have been entitled upon surrender to a paid up policy for over eight hundred dollars. No paid up policy for any amount had been in fact written up to the date of Smith’s death.
    Rosehannah Smith was aware that a policy in this company on her husband’s life for her benefit had been issued. She did not know its date, although she knew it had been in existence a good many years, nor did she know the amount of the premium nor when due. ’ She received no notice from the company at any time, or from any source, as to the premium due June 4, 1880, nor did she know that any premium remained unpaid until a short time before suit brought. She has not paid that premium, nor tendered it, except that in her petition she offers to pay it in any way the court may direct. No notice of any intention to forfeit the policy was given her by the company. During the summer of 1880, and afterward, the company had an agent at Cincinnati. Mrs. Smith continued to reside there, and her place of residence was easily ascertainable.
    This action is brought on the original policy to. recover the three thousand dollars therein stipulated to be paid upon the death of John W. IT. Sraith. A verdict was rendered against the company for the above amount, less the premium due June 4, 1880, and interest, upon trial, in the superior court. Motion for new trial was reserved for decision of that court in general term. There the motion was overruled and judgment entered on the verdict
    
      McG-uffey $ Morrill, for the motion.
    Even although the husbaud could not put an end to the policy, he could dispose of it, except as to its equitable value based upon the premium paid. This is of the nature of an executed gift, of which he could not divest the wife by any arrangement with the company, but outside of this he could do as he pleased. Bickerton v. Jacques, 28 Hun, 119; Gambs v. C. M. Ins. Co., 50 Mo. 44; Clark v. Durand, 12 Wis. 223; Kerman v. Howard, 23 Wis. 112; Union Mut. Life Ins. Co. v. Slevin, 19 Fed. Rep. 671; Landrum v. Knowles, 22 N. J. Eq. 594.
    The prompt payment of the premium is of the essence of the contract, and the company has a right to plead forfeiture for non-payment, unless estopped by conduct which led to the failure to pay. New York Life Ins. Co. v. Statham, 93 U. S. 24.
    As a general rule the company is not bound to give notice of the maturity of the premium.
    “ The company is under no obligation to give such notice and assumes no obligation by giving it. The duty of the assured to pay at the day is the same whether the notice is given or not. It makes no difference that the company has been in the habit of giving such notice.” Thompson v. Ins. Co., 104 U. S. 252.
    "Testimony that the company was in the habit of giving such notice . . . is inadmissible unless it be shown that the notice has been purposely omitted with the design of forfeiting the policy.” Girard Life Ins. Co. v. Ins. Co., 97 Pa. St. 15.
    The facts in the case at bar distinguish it from Phœnix Ins. Co. v. Doster, 106 U. S. 30, where the premium being subject to a deduction equal in amount to the dividends, failure to give uotice prevented a forfeiture.
    In the latter case the company had been in the habit of sending notice and collecting premiums after due. It sent notice after the premium became due, but within the time it had been in the habit of receiving them, which notice, by mistake, it sent to the wrong address. The insured had made arrangements to pay and was awaiting notice. The beneficiaries tendered the amount of the premium three days after the death of the insured.
    Here there has never been any tender, and the burden is on the beneficiary to show why. A valid excuse for not paying promptly on the day is a different thing from not paying at all. Thompson v. Ins. Co., 104 U. S. 252.
    But in contemplation of law she was notified. Notice to an agent is notice to the principal. "Wharton on Agency, sec. 177.
    There is no authority that the wife must be notified. Indeed, to hold that the company must notify any other party than the one with whom it has dealt is without authority ; and such a rule would be impracticable of enforcement, especially when the beneficiaries were children.
    The rule ought to go no further than to require notice to the party whose life is insured, he being the party who has procured, kept alive, and controlled the policy. Any other rule would work hardship and confusion.
    The defendant in error was not misled by failure to receive notice.
    The company did not know her address. It is pressing the point too far to hold that because the application, a dozen years earlier, stated her address to be in Cincinnati, notice should have been sent her there.
    It is equally fallacious to claim that the company was bound to act upon the presumption that her residence was the same as her husband’s. No such presumption exists after the husband has separated from the wife. Mellen v. Mellen, 10 Abb. N. Cas. 329.
    
      
      John W. Herron and Nathaniel II. Davis, contra.
    The contract of insurance was between the company and Mrs. Smith. The application was made by her, the first premium was acknowledged as being received from her, and she was to pay the future premiums.
    She was entitled, before the policy could be forfeited, to a notice as to when the premium was payable, and the amount to be paid.
    The company was advised by the insured, a month before the premium fell due, that he was no longer the agent of his wife.
    “ Notice to the agent before the agency is begun or after it has terminated does not ordinarily affect the principal.” Story on Agency, see. 140.
    It was the duty of the company to give notice of the time the premium was due and its amount. Phœnix Ins. Co. v. Doster, 106 U. S. 30.
    No tender was necessary. The wife did not know that the premium was not paid until after the husband’s death. No tender could then avail anything. As the company had repudiated the contract, no tender was necessary, and was useless after the death of the insured. Isham, v. Greenham, 1 Handy, 361; Brock v. Hidy, 13 Ohio St. 310; Bickett v. White, 1 C. S. C. Rep. 175.
    Forfeitures are not presumed. The law wishes to avoid them. Ins. Co. v. Norton, 96 U. S. 234; Ins. Co. v. Pottker, 33 Ohio St. 462.
    It rests with the company to prove a forfeiture.
    The insured can not make any contract or arrangement with the insured to affect the vested rights of the beneficiaries. Bliss Life Ins. sec., 337; Lemon v. Phœnix Ins. Co., 38 Conn. 294; Ricker v. Ins. Co., 27 Minn. 193; Pilcher v. Ins. Co., 33 La. 322; Chapin v. Fellowes, 36 Conn. 132; Timayenis v. Ins. Co., 21 Fed. Rep. 223.
    The company, by negotiating with Smith for a paid up policy and holding the matter under consideration until the day the policy was due, waived the forfeiture which might have arisen from the non-payment of the premium. Bliss Life Ins., sec. 189; Appleton v. Phœnix Mut. Ins. Co., 59 N. H. 541; Viele v. Germania Fire Ins. Co., 26 Iowa, 9; Bodine v. Exchange Ins. Co., 51 N. Y. 117; Ins. Co. v. Eggleston, 96 U. S. 572; Williams v. Bank of U. S., 2 Pet. 102.
    No contract for a paid up policy was ever consummated. The paid up policy was not issued until after Smith’s death.
    There was no accord and satisfaction. Ellis v. Bitzer, 2 Ohio, 93; Kromer v. Heim, 75 N. Y. 574; Panzerbeiter v. Waydell, 21 Hun, 161; Pettis v. Ray, 12 R. I. 344.
   Spear, J.

At the outset we inquire : Had the husband, independent of any relation as agent for the wife, power to surrender the policy ? He could stop paying premiums. That would have left the wife to continue the policy in force for its full amount by herself making payment of premiums; or, she could have declined to pay and receive a paid up policy for a lesser amount, and this she would do, not by the grace or favor of the company, nor yet by virtue of any new agreement with the company, but by force of the original contract and the law applicable thereto.

It is now too well settled to admit of dispute that a beneficiary for whose benefit a promise has been made by one upon a sufficient consideration moving from a third person, may maintain an action upon that promise; and if the beneficiary has acted on the promise so as to have changed position, or acquired a vested right, the contract can not be changed without, his consent. The case at bar is a stronger case than the one supposed, in that the application was made in the name of the vrife and the contract itself made directly with her, though the risk was on the life of the husband. There was value in the policy, and at least to that extent the wife’s right in it was a vested right. She was the beneficiary named in it, and upon both reason and authority we think it clear that no new contract or arrangement of any kind which affects the vested rights of the beneficiary in the policy can be made with the company alone by the insured. Bliss on Life Insurance, sections 337, 345, 571, and the cases cited by counsel, abundantly sustain this position. "We conclude that the husband, in this case, had no power to surrender the policy merely because he was the insured party and had paid premiums. Had he any other standing regarding the transactions which gave him such right? In the payment of premiums he, in law, was her agent. If he had the right to act for her at all it was because of this relation as agent. Was he her agent at the time he attempted to surrender this policy? and what was the company, with the knowledge furnished by the letters as to his attitude toward his wife, bound to understand? By his letter of April 27th, in which he iuquired if the policy could be transferred, he gave the company to understand that he was seeking a result on the face of the transaction inconsistent with her interests. This was, of itself, significant and suggestive. And when it was followed by the letter of May 3d, giving the information that his wife had separated from him and sued for alimony, and renewing his request that the policy be made payable to his estate because he was obliged to provide her with alimony and because she was no longer a wife to him, it is idle to claim that the company was not apprised of facts from which it was bouud to presume that his relation of agent had ceased. He could not have made the fact clearer had he included a direct statement to that effect. The relation of principal and agent implies trust, confidence. Here was antagonism, and a direct effort to sacrifice her rights for his benefit. The company was bound to know that as agent he could not lawfully do that. The husband not having any authority then, either by reason of having paid premiums, or by his position as the insured in the policy, nor yet as agent for the wife, to make a surrender, it follows that the attempted surrender of the policy was inoperative, and that the rights of the beneficiary were not impaired by the attempt.

But the company claims that, independent of the question of surrender, there can be no recovery beyond the sum of $810, because the policy was forfeited by the failure to pay the premium due June 4,1880. To this it is replied that there could be no forfeiture without notice to the beneficiary, such as had been uniformly given during the entire life of the policy, 'and that she had not, up to the commencement of the suit, been notified either of the amount of the premium to be paid, or of any purpose on the part of the company to forfeit the policy. On this question of notice the company insists that the notice given the husband was, in law, a notice to the wife, for that, whatever was the fact as to his agency at the time his letters to the company were written, they do not show when the separation took place, and for all that appears, it was after the notice of April 24,1880, was received by him. We confess we are unable to perceive the force of this claim. As early as the 29th of April, five days after the notice was mailed, the company was apprised that Smith was acting contrary to the interest of his wife, and seven days later a full disclosure of his purpose was made. In the light of these facts, and of the irresistible inferences to be drawn from them, it will hardly do to claim seriously that the company was justified in assuming that he was agent for the wife April 24th. As matter of fact, the alimony suit had then been pending about six months. It being shown, therefore, that notice to the husband was not notice to the wife, and it appearing further that she had no actual notice, we are led to inquire what effect this state of facts has upon the rights of the parties ?

It will be borne in mind that by the contract Mrs. Smith was entitled to share in the profits of the company, and that, as to part of these profits, they were paid out by annual dividends, the remaining portion being retained by the company and inuring to her benefit by accretions to the policy, and that the uniform custom had been that the company should give timely notice, not only of the date when the amount to be paid as premium would become due, but as well the amount of the dividend and the ámount of balance to be paid in cash. What dividend in any year was declared, and what amount could be used to reduce the premium were facts known to the company, but not to the insured. Without this information the insured or beneficiary could not, in the ordinary course of business, know-how much was to be paid as premium each year, and could not, therefore, pay it. The ease is to be distinguished from one where the premium is a fixed amount; and from a ease, slightly differing, where, although there may be dividends which the policy-holder, at his option, may have applied as the.premium, yet there is no agreement and uniform practice that the dividends are to be deducted each year from the premium and the balance only paid to the company. It may, probably, he safely conceded that in either of the two supposed cases the assured would have no right to depend upon a notice from the company, not even if the company had ordinarily sent such notice. For the very life of successful life insurance depends upon prompt payment of premiums, and their business would be thrown into utter confusion if companies had no,means of protecting themselves by forfeiture for non-payment of premiums. But, while this is true, the contract is nevertheless an entire one of assurance for life, and the payment of the premiums, after the first, is not a condition precedent, but a condition subsequent, and the parties may deal in sucli way between each other as to estop the company from insisting upon a forfeiture where it would be inequitable for a forfeiture to be declared.

Can the company insist upon a forfeiture in this case? The premiums were paid regularly for sixteen years; the company undertook to make a new contract with a person wholly without authority to act for Mrs. Smith, ignoring her altogether; her residence was given in the application as at Cincinnati, and the presumption would be that she continued to reside there; the exact place of residence was not hard to find; the company had an agent in the city all the time, and could, without trouble, have given her notice, but no effort even of the slightest character was made to acquaint her with that which she, of all persons, was interested in knowing and entitled to know. Courts are liberal in construing transactions in favor of the avoidance of a forfeiture. There are no presumptions in favor of a right by forfeiture, for forfeitures are abhorred in equity, and are never favored in law. Upon the facts shown it appears manifest that this claim of the insurance company is inequitable, and we are of opinion that it is not maintainable in law.

A recent ease decided by the supreme court of the United States is believed to entirely cover the question here involved as to the effect of failure to give notice. We refer to Phœnix Ins. Co. v. Doster, 106 U. S. 30, and quote from it sufficiently to show its application to the case at bar. The policy was issued September, 1871, upon the life of Jackson Riddle, in consideration of the payment by the wife and children of the insured (who were named as payees in the policy) of the sum of $215, and the annual payment of a like amount on or before the 20th of September in every year during its continuance, and contained astipulation that if the premiums be not paid on or before the day of maturity the company should not be liable for any part of the sum insured, and the policy to cease and determine, all previous payments being forfeited. The policy was upon the half-note plan, which gave the insured the right to discharge one-half of the first four premiums by notes, and upon .the fifth and subsequent payments to have his dividends, if any, applied in reduction' of the premiums. Notices were sent to the insured prior to the 20th of September in 1872, 1873, and 1874, showing when premiums became due, amount of cash to be paid, interest on’ the notes, and amount for which additional note was required. Prior to the 20th of September, 1875, notice to the insured was sent, which stated amount of dividend to be applied in reduction of that premium, interest to be paid on notes previously executed, and the sum to be paid in cash.

On the 6th of October, 1876, the insured lost his life in a railroad accident, leaving unpaid the premium due on the 20th of September previous, though before starting from home he had made arrangements to pay the amount required as soon as notice was received. His residence and post-office for more than a year had been at Oxford, Ind., which was known to the company’s general agent at Chicago. On the 4th of October, 1876, there was sent from the general agent’s office, addressed, by mistake, to the insured at Fowler, Ind. (where he never resided), a notice similar to that given in 1875. This was received by a son of the insured the day the father was killed. On the 9th of October, 1876, the amount due was tendered to the company’s general agent at Chicago. He declined to receive' it, on the ground that the policy lapsed, by reason of nonpayment of premium due, the 20th of September, 1876.

On the trial in the circuit court the court charged the jury, among other things, to the effect that “if they found from the evidence that it bad been the invariable custom of the company to transmit to the insured a statement of the amount of the premium due, after deducting the dividend, with a notice of the time when, the place where, and the person to whom, the premium could be paid, then the insured had good reason to expect and rely on such statement and notice being sent to him; and that if the company, by its managing agent, had notice of the post-office address of the insured before the usual time of sending out notice, but failed and neglected to transmit such statement and notice until the 4th of October, and the same did not reach him or the payees in the policy until the 6th, and that the insured or payees were ready and waiting to pay said premium when notice and statement should be received, and by reason of such failure to send the notice and statement, and of that alone, the premium due in September, 1876, was not promptly paid; and that in a reasonable time thereafter the payees tendered the full amount of the premium, then the policy did not lapse or become forfeited, notwithstanding the premium was not paid on the day named in the policy, and in the life-time of the insured.”

Ajudgment was rendered against the company and the case taken upon ,error to the supreme court. The opinion was delivered by Mr. Justice Harlan, who, in commenting upon this part of the charge, uses this language: “We are of opinion that these propositions are substantially correct. Nor do we perceive that the rulings of the court below are in conflict with our decision in Thompson v. Ins. Co., 104 U. S. 252. . . . The present case has features which plainly distinguish it from the Thompson case. In the former there was a tender of the premium within a few days after the death of the insured, and as soon as the payees ascertained the sum required to be paid. In the latter, the amount to be paid was fixed. It was not liable to be reduced on account of dividends, or for any other reason, and the insured, therefore, knew the exact amount to be paid in order to prevent a forfeiture of the policy. Now, although the policy issued upon Riddle’s life required payment annually of a specific sum as a premium, that stipulation must be construed in connection with the agreement set out in the application, that the premium might be discharged pro tanto by such dividends as were allowed-to the insured From time to time. Whether the company, in any particular year, declared dividends, and what amount was available in reduction of the .premium, were facts known, in the first instance, only to the company, which had full control of the matter-of dividends. It certainly was not contemplated that the insured should every year make application, either at the home office or at the office of its general agent in Chicago, in order to ascertain the amount of dividends. The understanding between the parties upon this subject is, in part, shown by the practice of the company. Independently of that circumstance, and waiving any determination of the question whether the forfeiture was not absolutely waived by the act of the general agent, in sending notice to the insured after the day fixed for the payment of the premium due September 20, 1876, it was, we think, the company’s duty, under any fair interpretation of its contract, having received information as to the post-office of the insured, to give seasonable notice of the amount of dividends, and thereby inform him as to the cash to be paid in order to keep alive the policy. It did, as we have seen, give such notice in 1875, and received payment of the amount due after the date fixed in the policy. Within a reasonable time after the notice for 1876 came, in due course of mail, to the hauds of one of the payees, a tender of the amount was made to the general agent at Chicago. No such features were disclosed in the Thompson case, and they are, as we think, sufficient not only to distinguish th-e present case from that one, but to authorize the instructions of which the company complains. . . . Judgment affirmed.”

Undue importance must not be given to the fact of preparation by the insured for the payment of premiums before leaving home. The date of leaving home is not disclosed, and for aught that appears the preparation may have been made after the 20th of September. At best its tendency was but to show readiness on his part to comply. The fact is not alluded to at all by Justice Harlan in his comments upon: the action of the court below. It will be observed that a point of difference in the two cases is that in the Riddle case tender was made; in this case it was not. But it must be kept in mind that a notice which the company’s agent sent, actually reached one of the beneficiaries the day of his father’s death, and he had, therefore, the information on which to act. Mrs. Smith had no information, and the neglect of the company was the cause of that igno-. ranee. The beneficiary in the Riddle policy was apprised of the sum to be paid and that it was due; the beneficiary in the Smith policy was kept in ignorance of that sum and of time for payment. There are other questions involved in the Riddle case, but they are not believed to at all affect the case before this court.

The action of the company in the case at bar was in effect a repudiation of its promise to pay the amount stipulated in the policy. Even had Mrs. Smith learned the amount and time of payment after the death of her husband, a tender would have been a useless ceremony. “ On general principles, whenever the act of one party, to whom another is bound to tender money, services, or goods, indicates clearly that the tender, if made, would not be accepted the other party is excused from technical performance of his agreement. The law never requires a vain thing to be done.” Isham v. Greenham, 1 Handy, 361. See also Brock v. Hidy, 13 Ohio St. 310. Notice was essential to a forfeiture. The company gave none, and by its course of action waived the forfeiture which might have arisen from nonpayment of premium due June 4, 1880, and it is now es-topped from setting it up.

We are aware that the views herein expressed as to the effect of failure to give notice áre notin accord with a number of reported eases, but they are directly supported by the decision of the highest court in the land, and inferentially by decisions of'many other courts, and we believe they rest upon the firm ground of sound principles. There was no error in the instructions given the jury at the trial, nor in the refusals to charge as requested ; and an examinanation of the record discloses no error in the admission or exclusion of testimony prejudicial to the company. It follows that the action of the court at general term in overruling the motion for new trial and entering judgment on the verdict was not erroneous.

Motion overruled.

Johnson, J., did not sit in this case.  