McQuillan v. Mutual Reserve Fund Life Ass'n

The following opinion was filed November 29, 1901:

Marshall, J.

As we view this case, several reasons advanced for a reversal, and several reasons given in support of the judgment, need not be considered. The pleadings admit, or the evidence establishes beyond controversy, that payment of the assessment of August 31, 1898, was made by the city of Eau Claire, the owner of the policy, several days too late; that the money was retained by appellant several months with knowledge of all the facts, before its duty to refund the same, or be bound to consider mere time of payment thereof immaterial, was recognized; that no notice whatever that the money was conditionally received and retained was given to the o wner of the policy; and that no valid tender back of the money was made to such owner or to *671 any one. The mere retention of the money for a reasonable length of time, for the purpose of ascertaining whether the facts warranted a reinstatement of the forfeited policy under the company’s by-laws, and enabling the assured to comply with the conditions precedent to such reinstatement, did not waive the forfeiture caused by the late payment, if we give effect to the conditional receipt. Rockwell v. Mut. L. Ins. Co. 20 Wis. 335; Miles v. Mut. R. F. L. Asso. 108 Wis. 421; Ronald v. Mut. R. F. L. Asso. 132 N. Y 378; Lewis v. Phœnix M. L. Ins. Co. 44 Conn. 72; Crossman v. Mass. B. Asso. 143 Mass. 435; Unsell v. Hartford L. & A. Ins. Co. 32 Fed. Rep. 443. That rule, however, did not militate against a waiver of the forfeiture occurring by appellant’s retention of the money long after it ascertained the facts as to the ability of McQuillan to secure reinstatement of his membership under its by-laws. In Miles v. Mut. R. F. L. Asso., supra, the rule deduced from the authorities was that acceptance of an overdue assessment on condition that the assured is in. good health does not waive a forfeiture caused by the delinquency if the member is not then in good health and the assurer offers, promptly, to return the money upon discovering that fact. In the absence of any provision of the contract or circumstance to effect a different result, the general rule applies, that the retention of money paid to an insurance company, for an instalment due upon one of its policies, with knowledge of facts rendering the policy void, ratifies and affirms it as a subsisting obligation. Joliffe v. Madison Mut. Ins. Co. 39 Wis. 111; Erdmann v. Mut. Ins. Co. 44 Wis. 376; Underwood v. Iowa Legion of Honor, 66 Iowa, 134; Shea v. Mass. B. Asso. 160 Mass. 289; Gray v. Nat. B. Asso. 111 Ind. 531. In this case appellant retained the money paid upon the policy after a forfeiture had occurred, without notifying the owner that any condition was affixed to such retention, notwithstanding a special request accompanied the money for *672 an immediate return of evidence indicating that it had been received and applied for the purposes for which it was sent. Doubtless the rule stated in Shea v. Mass. B. Asso., supra, cited to our attention by respondent’s counsel, that the owner of the policy, where money is paid too late, is entitled to have notice brought home to him of any condition affixed to the retention thereof, is correct and should be applied to this case. Here, appellant, with full knowledge that the policy of insurance had ceased to be binding upon it if it saw fit to insist upon the full effect of the late payment of the assessment, not only retained the money and kept silent, so far as notifying the owner of the policy of its attitude, till the death of the assured, but continued in such attitude till such owner had been put to the trouble and expense of making and transmitting proofs of death, and for a long time thereafter. There can be no question but that, under such circumstances, an insurance company is bound by its conduct indicating a waiver of the forfeiture. The law is so well settled that forfeitures are not favored by courts, and that circumstances similar to those which characterized the conduct of appellant irrevocably indicate an intention on the part of the assurer to treat the insurance contract as subsisting, that no complaint can reasonably be made by appellant because its conduct is held to result that way. When the money for the assessment was received, appellant not only knew the policy of insurance was forfeited, but knew that the money came from the party that, under the terms of the insurance contract, was the owner of the entire beneficial interest therein, and that such party desired the money to be received and retained unconditionally or not at all, and to have evidence of appellant’s position in that regard by due course of the mails. Nevertheless it kept the money without making any attempt to reach the owner of the certificate with information that a condition was affixed to such retention, and its attitude, so far as regards *673 such owner, was not changed until the latter had been put to the trouble and expense of making proofs of death, and did not change at all by any legitimate offer to return the money. That such conduct constitutes a waiver of the default in making payment in time, is too clear for discussion.

Appellant, from the beginning to the end of this controversy, seems to have assumed that the city of Eau Claire, the owner of the policy, was bound by the receipt claimed to have been sent to McQuillan. If that were so, it would not avail appellant, as we have seen, because of its failure to return the money seasonably after receiving knowledge of facts rendering compliance with the conditions named in the receipt impossible. While appellant insists that Mc-Quillan and his wife parted absolutely with the policy by the assignment, except his interest in having it extinguish his liability to the city, that situation seems to have been entirely overlooked so far as it bears on appellant’s transactions with him in respect to the receipt. When the assignment of the policy was perfected, the city became substituted, for most purposes, for McQuillan and for his wife as well. All communications thereafter, by the association, affecting the validity of the insurance contract, ivere due to the new party, and it was not affected by any made to Mc-Quillan any more than it would have been by communications made to a mere stranger to the contract. We cannot see any excuse for appellant’s neglect in that regard. It not only knew the city was the sole and unconditional owner of the policy, but that, under the conditions of its ownership, it was expected to keep up the payments thereon, was, to all intents and purposes, except the mere circumstance necessary to the maturity of the contract of insurance, substituted for McQuillan and his wife. Bowen v. Nat. L. Asso. 63 Conn. 460. From this it will be seen that the conditional receipt is immaterial to appellant’s liability. The case stands the same, as regards total forfeiture of the *674 insurance contract, as if McQuillan bad not assigned it, and bad made tbe payment in question accompanied by a request for immediate notification as to whether a forfeiture would be insisted upon, and tbe money bad been retained without any condition being brought home to him, as in Shea v. Mass. B. Asso. 160 Mass. 289, which, the court there said, was fatal to the claim of forfeiture.

What has been said does not militate against appellant’s insisting upon the right to recover being limited to the amount due the city of Eau Claire from McQuillan when he died, with interest. As before indicated, the McQuillans irrevocably parted with all interest in the policy by the assignment. The condition in that regard may be considered harsh, but courts must enforce contracts as they find them. If a person sees fit to make an insurance contract so that an assignment thereof to one of his creditors will have the effect of limiting all liability thereon to the amount due such creditor from him at the time of his death, there is no law to prevent it, and he and those who come after him must abide thereby. There can be no question but that an insurance company may, by contract, place such restraints upon the assignment of its insurance policies as it sees fit, not inconsistent with its own laws or some statute. Niblack, Ben. Soc. & Acc. Ins. §§ 168, 169. We cannot escape the conclusion that, by the terms of the contract before us, respondent must suffer, as a penalty for the assignment of the policy, the loss of all interest therein. That is as plainly stipulated in the policy as language can make it. The effect thereof, and of the assignment, was to substitute a new contract for the policy as originally written, with like conditions except that the liability of the assurer was limited solely to the city of Eau Claire and to the amount due the city from McQuillan at the time of his death, including payments by it to keep up the policy and interest thereon, not exceeding in all the amount payable under the contract in the absence of the *675 assignment. The amount of the city’s claim, including payments made to keep the policy alive, and interest up to August 11, 1899, was $20.13. Tbe right of action therefor passed to the plaintiff by the assignment made to her by the city before the commencement of this suit. Such right constitutes plaintiff’s only claim against appellant.

Some questions are discussed in appellant’s brief to which we have not alluded, but so far as. they could in any event .affect the result of the appeal they have been considered, but are not deemed of sufficient significance to justify speaking of them specifically.

By the Court.— The judgment of the circuit courtis reduced to $20.13 and interest thereon from August 11, 1899 and costs as taxed, and is affirmed as modified, costs in this court to go in favor of the appellant.

Bardeen, J., took no part.