The company acknowledged payment and returned the note. A verdict for plaintiff was reversed, the court saying in part: "It is urged that the return of the note to the insured at the same time defendant deposited the check amounts to a nonconditional acceptance by it of the check as payment of the note. To our apprehension the law is clearly otherwise. An agreement that a check is received in satisfaction of a note is not implied from the surrender or cancellation of the note. Until the check was paid the note was in force, and unless it was paid at the time to which it was extended, the policy was by its terms forfeited. Forfeitures, it is true, are not favored in the law, but promptness of payment is essential in the business of life insurance."
The same case was before the Supreme Court of North Carolina, and is reported in 190 N.C. 757, 130 S.E. 612, 613; the Supreme Court of that state stated: "A worthless check is not a payment. There is no fact in the complaint that tends to show that the check was accepted as a payment. It was a conditional payment, and, when it was not paid, the condition which prevented it from operating as a payment happened and the policy lapsed. The failure to have the funds in the bank to meet the check was the fault of the drawer, and no loss resulted from any delay on the part of the payee."
In National Life Insurance Co. v. Goble, 51 Neb. 5, 70 N.W. 503, the insurance company sent a notice of premium due to the insured with the statement that remittance might be made by draft. Remittance was made by draft. Upon receipt of draft from the insured, receipt for premium was forwarded to the insured. The draft was not paid by reason of the failure of the drawer bank. Judgment of the lower court in favor of the beneficiary was reversed by the Supreme Court of Nebraska; that court stating in part:
"In regard to this claim it is the established rule that a draft or check is not a payment of a debt, in the absence of an express agreement that it is taken or received in payment. It is but a means by which payment may be obtained. It is conditional upon its being honored when presented, and, if dishonored when presented, it effects no payment of the debt for which it was drawn, unless there was an express agreement that it was to be accepted or received in payment. * * *
"The fact that the agent of the company acknowledged the receipt of the draft, and forwarded to the defendant in error his renewal receipt, was not conclusive. The draft, when presented, was dishonored; hence there was no payments, and the receipt was of no force."
For other illustrative cases see Knickerbocker Life Insurance Co. v. Pendleton, 112 U.S. 696, 5 S. Ct. 314, 28 L. Ed. 866; Segrist v. Crabtree, 131 U.S. 267, 287, 9 S. Ct. 687, 33 L. Ed. 125; Chandler v. American Central Life Insurance Co., 27 Ga. App. 810, 109 S.E. 919; and Brady v. Northwestern Masonic Aid Association, 190 Pa. 595, 42 A. 962. The cases of McMahon v. United States Life Insurance Co., 128 F. 388, 68 L.R.A. 87 (C.C.A. 5), and Mutual Life Insurance Co. v. Chattanooga Savings Bank, 47 Okl. 748, 150 P. 190, L.R.A. 1916A, 669, are distinguishable on the facts from the present case.
The parties to the policy in suit evidently intended by their contract that payment of the premium specified was essential to the life of the policy; that nonpayment of premium when due or during the term of grace would cause it to lapse. The premium due November 22, 1930, was not paid when due or during the grace period of one month, or at any time thereafter. The mailing of the check and letter of December 22, 1930, by the insured's son (not shown to have any authority to act in the premises), together with a receipt issued for the premium, was at most a conditional payment; the condition being that the check would be honored and paid, if presented in due course. That this was the intent of defendant is strongly manifested by its letter of January 8, 1931, wherein it notified the insured of the dishonoring of the check mailed by the son, that the policy had lapsed and what would be necessary to have the policy reinstated. No objection to the company's attitude was made.
The court, under the undisputed facts, would probably have been justified in holding as a matter of law that the payment made was conditional and that the policy had lapsed. This question, however, was submitted to the jury as a question of fact. The verdict is amply sustained by the evidence. Plaintiffs do not have any just reason to complain of the verdict rendered.
Plaintiffs argued at some length that they were prejudiced by the court in allowing the defendant to reopen its case and to amend its affidavit of defense by denying that the policy had any loan value December 22, 1930. Plaintiffs admitted that the court had discretionary power to do what was done, and that they were not surprised as to the facts, but alleged that they were surprised as to the law raised by the amendment aforesaid. This contention, if properly before us, could not be sustained. It was immaterial whether the policy had a loan value at the time mentioned or not. The only material question was the question of payment of the premium due November 22, 1930.
Plaintiffs further argued that since the trial they have found a form of notice for premiums due wich was used by the company at the time involved, and that this form of notice stated that remittance might be made by check, etc. There is no affidavit or proof that this evidence, with reasonable diligence, could not have been procured at the trial as required, 5 Cyc. of Federal Procedure, § 1481, or that the form of notice found since the trial was the form used in this case. At any rate, the question of fact and law as to payment would have been the same.
Being of the opinion that under the law and the facts the verdict of the jury should not be set aside, the motion for a new trial is refused.
© 1992-2004 VersusLaw Inc.