
    ANNA H. BUTLER, Plaintiff, v. THE AMERICAN POPULAR LIFE INSURANCE COMPANY, Defendant.
    I. INSURANCE.
    
    1. PREMIUMS, PAYMENT OF.
    1. Charging to the account op the assured operates as
    PAYMENT, WHEN.
    
      (a.) When mutual accounts are kept between the insurance company and the insured (the business being transacted between the acting officers of the company and the insured), the charging the premium to the account of the insured is equivalent to payment.
    1. Mutual accounts Tcept; what evidence sufficient to establish.
    
    3. Waiver op non-payment.
    
      (a.) • Effect of receipt of subsequent pi'emiums.
    
    1. Where the assured makes a payment specifically appropriating it to the payment of the premium falling due on a certain day, and the company accepts the same; such payment and acceptance continue the policy in force, notwithstanding default in the’ payment of premiums which had previously fallen due.
    3. CANCELLATION OF POLICY.
    1. Cancellation and practice of company as to actual entry thereof.
    
      (a.) Proof of, when inadmissible.
    It not appearing that the assured had any knowledge or intimation of the cancellation; and the facts proved showing that there could be no valid cancellation; evidence as to the fact of cancellation and the practice of the company in relation thereto is inadmissible.
    H. FRAUD.
    
    1. Questions as to, when properly withheld prom the JURY.
    
      {a.) When the alleged fraud was merely a mistake from which no injury resulted, and the party who it is claimed committed the fraud, immediately on discovering the mistake called the other party’s attention to it, and the defendant, who is the one desiring the question to go to the jury, makes no allegation in his answer that there was any fraud in the bill (in respect whereof fraud is alleged at the trial), at the time of the settlement thereof, though the facts must then have been well known, the question as to fraud is properly withheld from the jury.
    Before Curtis, Ch. J., and Speir, J.
    
      Decided May 8, 1877.
    Exceptions ordered to be heard at general term.
    The action was brought to recover $2,000 and interest upon a policy of insurance issued upon the life of Dr. Samuel H. Butler, the husband of the plaintiff, for her benefit, on July 18, 1870.
    At the date of the policy Dr. Butler had been a physician residing and practicing in Philadelphia, and the editor, proprietor, and publisher of a .periodical known as the Medical and Surgical Reporter, and had inserted advertisements and made medical examinations for the defendant prior to the date of the policy, and published editorials in its favor.
    It was agreed between the parties that the defendant should issue two policies of insurance upon Dr. Butler’s life for $2,000 and $3,000 ; that the premiums upon the $2,000 policy—the one in suit—should be paid in cash at the end of the year, with intimations that the defendant would need Dr. Butler’s services as medical examiner, and that he might pay the premiums on the $3,000 policy in that way. Both policies were sent to Dr. Butler, countersigned and in force, and his promissory note for $57.14, due July 18, 1871, was taken'for the premiums upon the $2,000 for the first year, and his due-bill for $80.37, payable in advertising, was taken for the premiums for the same period upon the $3,000 policy.,
    Dr. Butler inserted advertisements for defendant for the first year on both policies', and sent in a bill for $135, being $2.51 less than the aggregate of the premiums, and on September 28, 1871, defendant returned the note and due-bill to Dr. Butler, and charged the balance of $2.51 in its favor against him in the second year. At the same time defendant sent to him renewal receipts for the second year of both policies, and wrote to him that the premiums, amounting to $130, were charged to him. Dr. Butler inserted advertisements for the defendant during the second insurance year; and in July, 1872, he sent to defendant Ms check for $66.15, payable to defendant or order, being the semiannual premiums on the two policies for the first half of the third year. This check was received with the notices prior to July 18, 1872, and collected by the defendant, who applied it upon a balance they claimed to be.due on Ms account for the second insurance year. The premiums were duly tendered to defendant for the second half of the third insurance year, and for the first half of the fourth year, during which last named period Dr. Butler died.
    A verdict was rendered for the plaintiff by direction of the court for $2,124.16, with directions that the exceptions should be heard in the first instance at general term.
    
      P. H. Vernon, attorney, and of counsel, for plaintiff, among other things, urged:
    I. The right and power of insurers to make agreements changing the terms and conditions of their policies, or waiving compliance therewith, have been fully established by a long line of decisions, and “is not a disputable proposition” (Trustees of First Bap. Church v. Brooklyn Fire Ins. Co., 19 N. Y. 305 ; Boehen v. Williamsburgh City Fire Ins. Co., 35 Id. 131; Bodine v. Exchange F. Ins. Co., 51 Id. 117-122 ; Kolgers v. Guardian Life Ins. Co., 10 Abb. Pr. [N. S.] 176 ; O’Reilly v. Guardian M. Life Ins. Co., 1 Hun, 460 ; Heaton v. Manhattan F. Ins. Co., 7 R. I. 502; Sheldon v. Conn. Mut. Life Ins. Co., 25 Conn. 207-218).
    II. “Fraud is not to be inferred, but must be proved, and will not be allowed to be made out from mere conjecture, or loose inference from ambiguous and inconclusive circumstances, which are as consistent with honesty as with falsehood” (Sullivan v. Warren, 23 How. Pr. 188-192; Henry v. Henry, 8 Barb. 588).
    III. There is no allegation of fraud or unfair dealings contained in defendant’s answer, and no issue involving fraud exists in the case. Fraud must be pleaded (Faure v. Martin, 7 N. Y. 210).
    IV. The defendant having charged the second year’s premiums to Dr. Butler, and notified him thereof, and sent him a renewal receipt, and he having acquiesced in the charge, and retained the renewal receipt, Dr. Butler became liable to pay such premium, and the policy was continued in force, and even if the premiums were never actually paid by advertising, or otherwise, the defendant could not forfeit the policy, but has only a claim for the amount unpaid against Dr. Butler’s estate (Sheldon v. Atlantic F. & M. Ins. Co., 26 N. Y. 461-466 ; Miller v. Brooklyn Life Ins. Co., 12 Wall. 285; Mutual Benefit Life Ins. Co. v. French, 2 Cin. Superior Ct. 321).
    
      V. Where mutual accounts are kept, charging a premium to the account of the insured is equivalent to payment (Marsh v. Northwestern N. Ins. Co., 3 Biss. 351; Prince of Wales L. & E. A. Co. v. Harding, El. & B. 183, 211, 223).
    VI. The check for $66.15, sent by Dr. Butler on July 12,1872, and accepted and collected by defendant, paid the first semi-annual premium for the third year of the policy; and such acceptance and-collection waived any previous default, and continued the policy in force to January 18, 1873 (Carroll v. Charter Oak Ins. Co., 38 Barb. 402 ; 2 Am. Leading Cases, 625 ; Frost v. Saratoga M. Ins. Co., 5 Den. 154; Viall v. Genesee M. Ins. Co., 19 Barb. 440; Bovier v. Connecticut Life Ins. Co., 23 Conn. 244).
    VII. The defendant had no right to apply Dr. Butler’s check to any purpose except that for which it was sent; but if unwilling to accept it for such purpose should have returned it at once.
    “The rule is that the party paying has power to make the application at the time of payment, which he may do, either by express words, or a conduct indicative of his intention” (Smith’s Mer. Law, 8 Eng. Ed. 538 ; Simson v. Ingham, 2 B. & C. 65 ; Stone v. Seymour, 15 Wend. 19, 23; Patty v. Milne, 16 Id. 557; affirmed, 22 Id. 558 ; Hall v. Montrose, 2 Hall, 185.
    VIII. But even if defendant had a right to divert the check sent to pay the premium for the first half of the third insurance year, the check was effective as a tender of that premium, and its application upon the account for the second year, admitted that the policy was in force during that year (for if not in force, there was nothing due for premiums), and was a continuing waiver of any existing default (Washoe Tool Manufacturing Co. v. Hibernia Fire Ins. Co. of Ohio, 14 Supreme Ct. 75; affirmed by court of appeals, N. Y. Weekly Dig. vol. 3, p. 3).
    
      This case decides that a waiver for an indefinite time cannot be terminated, even by unheeded demands for payment, but only by notice that unless payment is made at a given time the policy will be void or canceled ; and no such notice was given in the case of the Butler policy.
    IX. Forfeitures are not favored, but are odious in law.
    “Forfeitures are only enforced where it is clearly shown that they were meant by the actual agreement of the parties” (Worden v. Guardian Mut. Life Ins. Co., 39 Superior Ct. 317-328, opinion by Curtis, J.).
    “Forfeitures are not favored, especially where delay can be compensated for in money” (Mut. Benefit Life Ins. Co. v. French, 2 Cin. Superior Ct. 327).
    “Forfeitures are enforced only where there is the clearest evidence that that was meant by the stipulation of the parties” (Helme v. Philadelphia Life Ins. Co., 61 Pa. St. 107).
    X. A clause in a policy of insurance, forfeiting the same for the non-payment of premiums, refers only to premiums becoming due at the times stated in the policy, and; if different times of payment are agreed upon outside of the policy, the clause of forfeiture contained therein does not apply (N. E. Mut. Life Ins. Co. v. Hasbrook, 32 Ind. 447; McAllister v. N. E. Mut. Life Ins., 101 Mass. 558).
    XI. If the defendant by its course of dealing with Dr. Butler led him to believe that payment of premiums would not be required at the times stated in the policy, it is estopped from claiming a violation of the conditions of the policy in that regard (Helme v. Philadelphia Life Ins. Co., 61 Pa. St. 107; Thompson St. Louis Mut. Life Ins. Co., 2 Ins. Law J. 422; Heaton v. Manhattan Fire Ins. Co., 7 R. I. 502 ; Meyer v. Knickerbocker Life Ins. Co., 51 How. Pr. 263).
    XII. The defendant’s second exception, relating to the exclusion of testimony concerning its cancellation of the policy, in December, 1872, and concerning its practice, with reference to the actual entry of the cancellation, is untenable.
    
      George Bliss, attorney, and of counsel for defendant, among other things urged:
    I. The premiums were never in fact paid, either in money or advertising.
    II. There was no credit given or waiver which operated to excuse the defaults and leave the policy in force at the time of the death, because by Dr. Butler’s own avowal to Lambert, he procured the receipt to be sent him by an agreement to send the money as soon as he got them, i.e., on delivery, and because a waiver of condition of prompt payment was beyond the power of the persons who are alleged to have made the waiver, and that want of power was known to Dr. Butler, though this was not necessary (Van Allen v. Farmers’ Joint Stock Insurance Co., Court of Appeals, 5 Ins. Law J. October, 1876, 729, 732; Mersereau v. Phœnix Mut. Life Ins. Co., Ct of Appeals, May 30,1870, 5 Ins. Law J. October, 1876, 765 ; Blossom v. Lycoming Fire Ins. Co., Ct. of Appeals, 5 Ins. Law J. April, 1876, 302 ; Bush v. Westchester Fire Ins. Co., 63 N. Y. 531).
    The same objection of a want of power applies to all subsequent acts which may be alleged to constitute a waiver of the condition as to payment,—such as the sending of the notices in January, 1872,—though that was obviously an inadvertence.
    III. The letter, May 8, 1872, from Butler, bases a claim upon the possession' of the receipts. If up to that time it could be held that there was a binding recognition of the policies as in force, and a giving of credit for the premiums, this was surely terminated by Mr. Keyes’ letter of May 10, 1872, and the statement of account inclosed in it, that showed a balance due the company of $132.52, and called for payment, which was not made.
    That being the condition of matters, in July, 1872, Dr. Butler sent his check for $66.15. Even if we concede that he intended it to apply in payment of the premiums to become due on July 18, he did not say so, and the company were not bound to so apply it. They had notified him that he owed them money before that—an assertion which is now shown to be true beyond question. They could refuse to receive his money entirely, or receive it and apply it on the overdue balance; certainly if, in the latter case, they notified him of their action. This they did by letter of July 15, 1872, three days before the maturity of the first of the premiums, to which it is now alleged it should be- applied, and from that application he never dissented until November following.
    It seemed at the trial to be claimed that the action in so receiving and crediting the money received was to be regarded as a waiver and a conclusive recognition that the policy was then in force. But the company’s act—if it was the act of the company—must be taken as a whole. You cannot say the receiving the money was a recognition of a valid policy, but the application of the money was unauthorized. That would be like taking half of an admission (Insurance Co. v. Newton, 22 Wall. 32). You must take it all together. So regarded, it was at most an expression of the willingness of the company to treat the policy as in force provided the overdue premiums were paid.
    IV. When the fraud practiced upon the company in the matter of the advertising bill was discovered by them they had a right to revoke all their action based thereon and to be put back in the same position they were before they were misled by such fraud. This included a right to declare the policy forfeited for non-payment of premiums. Even if it is conceded that under ordinary circumstances the company could not, after it had once given credit for a premium, thereafter declare the policy forfeited for non-payment of that premium, still this has no application to a case where the credit is obtained by a false and fraudulent representation, as we claim was made to us by the presentation of the bill for advertising which had not been done. If it is denied that the act was fraudulent, then we say the denial of our request to go to the jury on that ground was error. Here we exercised our right to declare the policy forfeited, when in January, 1873, we refused to receive the premium tendered for the next six months, notifying his agent who made the tender that we had been deceived by Dr. Butler. Mr. Rollins expressly tendered only for the premium then about becoming due. But we do not admit that if a temporary credit is given for the payment of a premium, thereby-all right of forfeiture for that premium is forever gone. We say that the company must still have the right to insist upon the forfeiture after reasonable notice to pay up is given, and that in this case such notice was given.
   By the Court.—Speir, J.

As to the question of the payment of the premiums for the second insurance year the evidence is conclusive that a receipt for the annual premium of $52, on the policy for $2000, was sent to Dr. Butler by defendant with a statement that they were charged to him. The -first semi-annual premium of the third years’ insurance was paid to defendant together with the premium on a $3000 policy, by Dr. Butler’s check for $66.15. These are the facts relating to the payment of the premiums involved in the issue by the pleadings. The second semi-annual premium of the third insurance year, and the first semiannual premium of the fourth insurance year, during which Dr. Butler died, were duly tendered to the defendant.

The first question of law in the case is—Did Dr. Butler become liable to pay such premium, and was the policy continued in force by the delivery of the renewal receipts for the second year, accompanied with the statement by the defendant that they were charged to him ?

There can be no question where mutual accounts are kept between the parties, that charging a premium to the account of the insured, is equivalent to payment. It is to be remembered in this case, the business was transacted between the insured and the acting officers of the company, and not by its agents. The defendant’s president, Dr. Lambert, testified that Dr. Butler told him he had asked the company’s secretary to send him the receipts, telling him that he would send the money, and thereupon Lambert told Dr. Butler that by the provisions of the policy the receipts would not be good for anything until he had paid, and that they were good for nothing. It is evident that the defendant did not cancel the insurance, but considered the policy still in force and the credit still continuing for three months after the alleged conversation. In January, 1873, it sent prematurely to Dr. Butler a notice of premium to become due on the 18th of that month. The defendant’s secretary wrote to him May 10, 1873, that the sending the notice in January was “of course an inadvertence,” and he enclosed a statement of account, and proposed that thereafter when Dr. Butler took defendant’s receipts for premiums,- he should give “at the same time a due-bill, and then each side has evidence of the settlement up to a given date.” The defendant’s secretary wrote to him on July 15, 1873, that his check for §66.15 had been credited to Ms account. The defendant also wrote to Butler on September 35, 1871, that he was charged on the second year with $2.51, the balance against Mm on the settlement for the first year. The facts conclusively show that the defendant did keep an account with Dr. Butler during the second insurance year, and did continue to give him credit. The premium was paid when the receipts were given (Prince of Wales, &c. Co. v. Harding, Ellis & Bl. Q. B. 181).

The second question is—Did the acceptance of Dr. Butler’s check for $66.15, sent July 12,1872, enclosed with a notice of premium falling due on July 18, 1872, and its collection by defendant, waive any previous default, and continue the policy in force to January 18, 18731

The company wrote to Mm that his check had been received and credited to his account, and that it was not sufficient to balance his indebtedness on the last year’s premiums, and requested a remittance. Dr. Butler had paid the second year’s premiums by the insertion of advertisements, and he held the defendant’s receipts therefor; and in May, 1872, he wrote its secretary that notices had been erroneously sent in January, for payments to fall due that montli. The defendant’s secretary replied that the sending of notice in January was of course an inadvertence. Moreover, Dr. Butler had specified the purpose for which the check was sent. The rule is, that the party paying has the right to make the application at the time of payment, which he may do either by words or by conduct indicating his intention (Stone v. Seymour, 15 Wend. 19 ; Simpson v. Jughan, 2 Barn. & Cress. 65).

The defendant’s fifth exception was to the denial of its request to go to the jury upon the ground of fraud alleged to have been practiced by Dr. Butler in rendering bills for advertisements which were not inserted.

From an examination of all the evidence it is apparent that the alleged fraud was merely a mistake, to which Dr. Butler called defendant’s attention as soon as discovered and from which no injury resulted. There is no allegation in the answer that there was any fraud in the bills presented for payment for the insertion of advertisements in the “ Reporter,” at the time of settlement and the delivery of the renewal receipts, though, the facts - at the time must have been well known.

The defendant’s second exception relates to the exclusion of testimony concerning its cancellation of the policy in December, 1872, and what its practice was with reference to the actual entry of the cancellation. There was no evidence or offer of evidence to show that Dr. Butler or the plaintiff had any knowledge or intimation of the cancellation or of defendant’s practice. Ho valid cancellation of, a policy can be made during a period covered by a paid or tendered premium, or during the term of a credit which has not been terminated by a legal demand of payment and notice that default will be followed by forfeiture.

The plaintiff must have judgment upon the verdict in accordance with plaintiff’s motion.

Curtis, Ch. J., concurred.  