
    Metropolitan Life Insurance Company v. Felix.
    
      Consideration for premium, payment on life insurance — Insurer must incur liability not affected by contract infirmity, when— Action to recover premium paid insurer — Rights of parties— Interpretation of contract — Insurance law — Pleadings.
    1. To constitute a consideration for the payment of premiums on a policy of life insurance it is essential that the insurer incur a liability by a contract which is not affected by any infirmity which it may elect to interpose as a defense to an action on the policy if the life insured should end.
    2. In an action to recover premiums paid to an insurer which has not incurred’such risk, the rights of the parties at the beginning of the action should determine the judgment and the insurer cannot by the averments of its answer effectively waive such defense.
    (No. 8828
    Decided October 31, 1905.)
    Error to the Circuit Court of Hamilton county.
    Mrs. Felix brought suit in the.court of common pleas to recover from the plaintiff in error the amount of premiums which she had paid to it upon the policy on the life of her husband, the right to recover being placed upon the ground that the policy was void. The company denied that the policy was void and alleged that it had treated it as valid from the time of its issuance in April, 1886, receiving premiums thereon until April, 1894, when she ceased to pay premiums and on June 25,1894, she forfeited the policy for non-payment of premiums and for no other reason. In the court of common pleas a jury was waived and the cause was submitted to the court upon the following agreed statement of facts:
    Minnie Felix, the plaintiff in the case, upon the solicitation of an agent of the defendant, insured her husband, Michael Felix, in the defendant company for the sum of $660.00, under the following circumstances :
    On April 2, 1886, Mrs. Felix, upon the solicitation of an agent of the defendant, stated to said agent that she would like to insure her husband for $1,000.00, but that her husband objected to being insured, and would not sign an application nor submit to a medical examination. The agent said he could insure the husband for $660.00, that he need not sign the application, nor be examined nor know anything whatever of the matter. Relying on these representations, Mrs. Felix consented to take out the policy and to pay for the same the sum of fifty-five cents weekly as premiums. An application was made out and the name of Michael Felix signed thereto, and it was upon said application that the company issued the policy, but it does not appear who made it out or signed the same, except that it was not done by either Mr. or Mrs. Felix, or anyone acting for them.
    April 12, 1886, Mrs. Felix received the policy in question and the receipt book, both of which are hereto attached. See Exhibits “A” and “C.”
    Mrs. Felix continued to pay the premiums from April 12, 1886, to April 16, 1894, when the same amounted to the sum of $233.20, at which time she discontinued payment of premiums and paid no more, and the policy was upon June 25, 1894, forfeited and canceled for non-payment. Mrs. Felix told her husband of the existence of the insurance in April, 1894, and because he still objected to being insured and also because she then became convinced that the policy had always been void, she refused to make further payment of premiums.
    
      The company had always treated the policy as valid, and after Mrs. Felix stopped payment, she was solicited .by the company’s agent to reinstate the policy and resume payments of premium, but she declined.
    Demand was made for a return of the premiums paid on the ground that the policy was void ab initio, and the premiums paid were unearned; the company refused to pay, and this suit is brought for their recovery.
    Plaintiff claims that the policy of insurance in question, No. 2485016, the application for the same (attached hereto as Exhibit “B”), and the premium receipt book, in which were entered premiums paid on said policy, and in which were printed “Rules and Regulations” of the company, to which plaintiff refers in her petition, all together constituted the contract of assurance.
    Defendant denies that the said rules and regulations constitute any part of said contract.
    Plaintiff never read the said rules and regulations until upon said- sixteenth day of April, 1894, her husband called her attention more particularly to that portion thereof, which is referred in the petition, and she then read all of said rules and regulations in said receipt book contained.
    Plaintiff had never read the application nor seen the original or a copy of it, until the original was exhibited to her in the court room at this trial.
    Michael Felix, the assured, was never examined by any physician for said insurance and never consented nor desired to be insured in this defendant company, nor did he know of the existence of the policy in question until the plaintiff accidentally revealed its existence to him on April 16, 1894, at which time he insisted that plaintiff cancel the same and called plaintiff’s attention to the fact that according to the rules and regulations there had been no valid insurance.
    The material representations and stipulations of the exhibits are the following:
    APPLICATION TO THE
    Metropolitan Life Insurance Co.
    J. Hurley, agent at Newport, under John Garrett, assistant superintendent.
    The undersigned hereby declares and warrants that the representations and answers made below, and in the examination on the other side, are strictly correct and wholly true; that they shall form the basis and become part of the contract of insurance (if one be issued), that any untrue answers will render the policy null and void, and that said contract shall not be binding upon the company unless upon its date and delivery the insured be alive and in sound health. The undersigned further agrees to be governed by the rules and regulations of the Metropolitan Life Insurance Company as they now exist, or may hereafter be altered or amended. The provisions of chap. 347 of the laws of New York, passed May 21, 1879, are hereby waived.
    Signature of Applicant: Michael Felix.
    RULES AND REGULATIONS.
    Under no circumstances can an application be written upon the life of a husband for the benefit of his wife, or vice versa, or upon the life of any person for the benefit of another (children excepted), unless the life proposed for insurance fully understands the matter and consents to the issuance of the policy, and personally signs the certificate of examination on the hack of the application. Any policy obtained in violation of this will be void.
    An adult application must be signed on its face directly under the warranty by the applicant in person, and on the back, at the foot of the examination form by the life proposed for insurance, and an infantile application by one of the parents of the child, or, if they be dead, by the person who has undertaken its support. * * *
    No policy on an adult life will be binding upon the company unless the person against whose death it insures is aware of the insurance — consents to the same — is examined by a physician of the company if the amount applied for is over $200, or by an agent if under that amount, and personally signs the examination form after the answers in said form are all recorded, and not otherwise.
    The material stipulations of the policy are: “In consideration of the representations and agreements in the printed and written application for this policy respecting the person named in the schedule hereinafter contained which application is hereby referred to and made a part of this contract” * * # “if any of the representations above referred to and upon which said policy is granted be not true this .policy shall thereupon become void.”
    Upon these facts the court of common pleas rendered judgment in favor of Mrs. Felix and that judgment was affirmed by the circuit court.
    
      Messrs. Robertson é Buchwalter, attorneys for plaintiff in error,
    cited and commented upon the following authorities:
    
      Joyce on Insurance, see. 192; Insurance Co. v. Bratt, 55 Md., 200; O’Dell v.' Manhattan Life, 9 Dec. Re., 589; 15 W. L. B., 197; Life Ins. Co. v. Buxer, 62 Ohio St., 385; Life Ins. Co. v. Hook, 62 Ohio St., 256; Shaddinger v. Life Ins. Co., 2 Dec., 402; 30 W. L. B., 337; Mailhoit v. Life Ins. Co., 87 Me., 374; Insurance Co. v. Pyle, 44 Ohio St., 19; Fisher v. Insurance Co., 160 Mass., 386; Fulton v. Insurance Co., 19 N. Y. Snpp., 660; secs. 3625 and 3626, Rev. Stat.
    
      Mr. S. B. Deal and Mr. Dudley P. Wayne, attorneys for defendant in error,
    cited and commented upon the following authorities:
    
      Insurance Co. v. Pyle, 44 Ohio St., 29; Foster v. Insurance Co., 11 Pick., 85; O’Niel v. Fire Ins. Co., 3 N. Y., 127; Ripley v. Insurance Co., 30 N. Y., 163; Fulton v. Insurance Co., 19 N. Y. Supp., 662; Life Ins. Co. v. Buxer, 62 Ohio St., 385; Life Ins. Co. v. Hook, 62 Ohio St., 256; Insurance Co. v. Martin, 13 Minn., 65; Shaddinger v. Life Ins. Co., 2 Dec., 402; 30 W. L. B., 337; Life Association v. Leflore, 53 Miss., 1; Tyre v. Fletcher, Cowp., 666; Hedden v. Griffin, 136 Mass., 229; Delavigne v. Insurance Co., 1 Johns. Cas., 310; Fisher v. Insurance Co., 38 N. E. Rep., 503; secs. 3624 and 3626 Rev. Stat.
   Shauck, J.

More than a century ago it was held ■ by Lord Mansfield in Tyre v. Fletcher, Cowp., 666, that premiums paid upon a void policy of insurance may be recovered because “the underwriter receives a premium for running the risk of indemnifying the insured, and whatever cause it may be owing to, if he does not run the risk the, consideration for which the premium or money was paid into his hands fails, and therefore he ought to return it. ” '

Such appears to have been the accepted law since that time. In supposed deference to it counsel for the Company here insists that the policy was not void, even if voidáble at the option of the Company, and that it did not declare the policy forfeited until the payment of the premiums had been refused. In this connection he directs our attention to the uncontroverted allegations of the Company’s answer that at the time of the refusal to pay the premiums and prior thereto the Company had treated said insurance as valid and was ready and willing to carry out the terms and conditions of said policy by it to be kept and performed and to keep in force said policy, and was never willing to rescind the contract or to have it rescinded. The Company’s willingness to keep the contract alive while that consisted only in accepting premiums may be readily believed; but the choice of its attitude, if the life insured had ended, would have been- determined by other considerations. In attempting to apply the admitted rule to the case we should look to the stipulations whereby the company has provided for immunity from liability rather than to its ineffectual declarations respecting its intentions. The rule requires the presumption that it would have paid the amount of the policy only in performance of a binding obligation to do so. If this presumption appears too weak to attract confidence it might be much strengthened by reference to reports of judicial proceedings in the several states illustrating this company’s dealings with holders of its policies. Since it cannot be assumed.that we are dealing with a sporadic case of philanthropy, we must inquire whether the Company bore a risk in consideration of the premium's paid. In this connection its counsel say that although the pretended application by the insured was a forgery, not perpetrated by the beneficiary, its representations may all have been true, and that, under the circumstances presented, sections 3625 and 3626 of the Revised Statutes prevented its interposing their falseness, if they w’ere false, as a defense to an action on the policy. These propositions need not be discussed for they miss the point in the case. The Company did not incur the liability which Minnie Felix thought it incurred, and for which she paid the premiums, because the terms of the application upon which the Company acted showed her express consent to be bound by its regulations; the terms of the policy made the application a part of the contract; the regulations provided that no policy on an adult life should be binding upon the Company unless the person against whose death it insures is aware of the insurance, and Michael Felix, the adult subject of the insurance, was not aware that it had been effected. The distinction between a policy void, and voidable at the election of the insurer, cannot be important here. It is of the essence of the doctrine stated by Lord Mansfield and approved in the considerate eases upon the subject that, there being no fraudulent conduct by the beneficiary, to constitute a consideration for the payment of premiums there must be a contract against which at the time of its execution the insurer cannot interpose a valid defense. Such a ground of defense is shown in the stipulations-and facts stated. The judgment below is in accordance with the doctrine of Insurance Co. v. Pyle, 44 Ohio St., 19. It is in all respects supported by Fisher v. The Metropolitan Life Ins. Co., 162 Mass., 236, where the company unavailingly urged the same objections to the right to recover the premiums paid. , ■

Judgment affirmed.

Davis, C. J., Price, Crew, Summers and Spear, JJ., concur.  