Mutual Life Insurance Company of New York v. Phinney

On September 22, 1890, Guy C. Phinney, a resident of the state of Washington, applied to the Mutual Life Insurance Company of New York for a policy of insurance on his life for the sum of $100,000 payable to his executors, administrators, or assigns. This application was forwarded by the local agent at Seattle to the general agent of the company at San Francisco, and by him to the home office of the company in New York city. By reason of such application a policy was issued to Phinney, bearing date September 24, 1890, forwarded to the general agent at San Francisco, by him to the local agent at Seattle, and by the latter delivered to Phinney, who received it, and at the same time paid the first year's premium, amounting to $3,770. The policy provided that Phinney should pay the annual premium of $3,770 on September 24 of each year thereafter for twenty full years, provided he should live so long, and also 'this policy shall become void by nonpayment of the premium; all payments previously made shall be forfeited to the company, except as hereinafter provided.' This last exception referred to certain provisions as to surrender value and readjustment of the amount of insurance on the payment of a certain number of payments, none of which are material to the question at issue in this case. Prior to September 24, 1891, notices were sent by both the general agent at San Francisco and the local agent at Seattle to Phinney that his premium would be due on September 24, 1891. Twice between the time of the receipt of this notice and the 24th of September, 1891, Phinney met Stinson, and requested him to accept his notes for the payment of the premium. This proposition was declined by Stinson, who declared at the time that he was unable to advance the premium for Phinney. Some time after September 24, 1891 (the exact date being unknown, but, according to the testimony, from four to six weeks thereafter), Phinney again met Stinson, and stated that he was prepared to pay the premium, but was told that it could not be accepted unless a certificate of health was furnished. No certificate of health was ever furnished. Phinney stated that he could not obtain it, as he had been rejected by another company a few days before, nor was there ever any formal tender of the premium. In December, 1891, or January, 1892, Stinson requested Phinney to allow him to have the policy to use for canvassing purposes, and Phinney thereupon surrendered the policy to the agent, with the statement that as the same had lapsed he had no further use for it. Stinson received the policy, and never returned it to Phinney. On September 24, 1892, the premium falling due on that day was neither paid nor tendered by Phinney, nor did he after the surrender of the policy in December,1891, or January, 1892, ever take any action in regard thereto, or pay, or offer to pay, any premium thereon. On September 12, 1893, Phinney died, leaving his last will and testament, wherein he nominated the plaintiff as executrix. Nothing was done by her under this policy until July, 1894, although Phinney held policies in two other companies at the time of his death, proofs in respect to which were presented by the executrix within one month after his death. At that time she wrote to the insurance company a letter, in which she stated as follows:

Seattle, Wash., July 11, 1894.

The Mutual Life Insurance Co. of New York:

Gentlemen: On September 24, 1890, my husband, Guy C. Phinney, took out a policy, No. 442, 198, in your company in the sum of one hundred thousand dollars. He died in this city last September 12, 1893. Not being familiar with his affairs, and the policy being mislaid, I was not aware that he held such a policy until a few days ago, when the matter was brought to my attention.

In addition, it appears that on the 16th day of September, 1893, in her application for probate of her husband's will, she filed an affidavit, which contained these statements:

'Real estate, consisting of lands in said King county, of town lots in the city of Seattle, and of improved city property, the exact description of all which is at this time unknown to your petitioner, but which is entirely community estate, the value of which is about $300,000; that there is personal property of various kinds, all of the same being community property of the value of about $50,000; that the total estate of said deceased, including the community interest of your petitioner, who is the widow of the said deceased, does not exceed in value the sum of about $350,000.'

In July, 1894 (evidently at the suggestion of counsel), she presented her claim under the policy, which was rejected, and thereupon this suit to recover thereon was brought in the circuit court of the United States for the district of Washington.

At the time the application was made and the policy issued the following statute was in force in the state of New York:

'Section one of chapter 341 of the laws of eighteen hundred and seventy-six, entitled 'An Act Regulating the Forfeiture of Life Insurance Policies,' is hereby amended so as to read as follows:

'Sec. 1. No life insurance company doing business in the state of New York shall have power to declare forfeited or lapsed any policy hereafter issued or renewed by reason of nonpayment of any annual premium or interest, or any portion thereof, except as hereinafter provided. Whenever any premium or interest due upon any such policy shall remain unpaid when due, a written or printed notice stating the amount of such premium or interest due on such policy, the place where said premium or interest should be paid, and the person to whom the same is payable, shall be duly addressed and mailed to the person whose life is assured, or the assignee of the policy, if notice of the assignment has been given to the company, at his or her last-known postoffice address, postage paid by the company, or by an agent of such company, or person appointed by it to collect such premium. Such notice shall further state that unless the said premium or interest then due shall be paid to the company or to a duly appointed agent or other person authorized to collect such premium within thirty days after the mailing of such notice, the said policy and all payments thereon will become forfeited and void. In case the payment demanded by such notice shall be made within the thirty days limited therefor, the same shall be taken to be in full compliance with the requirements of the policy in respect to the payment of said premium or interest, anything therein contained to the contrary notwithstanding; but no such policy shall in any case be forfeited or declared forfeited or lapsed until the expiration of thirty days after the mailing of such notice. Provided, however, that a notice stating when the premium will fall due, and that if not paid the policy and all payments thereon will become forfeited and void, served in the manner hereinbefore provided, at least thirty and not more than sixty days prior to the day when the premium is payable, shall have the same effet as the service of the notice hereinbefore provided for.

'Sec. 2. The affidavit of anyone authorized by section one to mail such notice, that the same was duly addressed to the person whose life is assured by the policy, or to the assignee of the policy, if notice of the assignment has been given to the company, in pursuance of said section, shall be presumptive evidence of such notice having been given.' Laws 1877, chap. 321.

In 1892, and after the first default in the payment of premium by Phinney and the surrender of his policy to the agent, Stinson, the following statute was substituted for the act of 1877:

'Sec. 92. No forfeiture of policy without notice.-No life insurance corporation doing business in this state shall declare forfeited, or lapsed, any policy hereafter issued or renewed, and not issued upon the payment of monthly or weekly premiums, or unless the same is a term insurance contract for one year or less, nor shall any such policy be forfeited, or lapsed, by reason of nonpayment when due of any premium, interest, or instalment or any portion thereof required by the terms of the policy to be paid, unless a written or printed notice stating the amount of such premium, interest, instalment, or portion thereof, due on such policy, the place where it should be paid, and the person to whom the same is payable, shall be duly addressed and mailed to the person whose life is insured, or the assignee of the policy, if notice of the assignment has been given to the corporation, at his or her last-known postoffice address, postage paid by the corporation, or by an officer thereof, or person appointed by it to collect such premium, at least fifteen and not more than forty-five days prior to the day when the same is payable.

'The notice shall also state that unless such premium, interest, instalment, or portion thereof, then due, shall be paid to the corporation or to a duly appointed agent or person authorized to collect such premium by or before the day it falls due, the policy and all payments thereon will beeome forfeited and void except as the right to a surrender value or paid-up policy as in this chapter provided.

'If the payment demanded by such notice shall be made within its time limited therefor, it shall be taken to be in full compliance with the requirements of the policy in respect to the time of such payment; and no such policy shall in any case be forfeited or declared forfeited or lapsed, until the expiration of thirty days after the mailing of such notice.

'The affidavit of any officer, clerk, or agent of the corporation, or of anyone authorized to mail such notice, that the notice required by this section has been duly addressed and mailed by the corporation issuing such policy, shall be presumptive evidence that such notice has been duly given.' Laws 1892, chap. 690.

The application made by Phinney for the policy contained this statement: 'This application is made to the Mutual Life Insurance Company of New York, subject to the charter of the company and the laws of the state of New York.' The policy stipulated that on its maturing the insurance company would 'pay at its home office in the city of New York.' It also stipulated that the annual premium should be payable 'to the company at its home office in the city of New York.' The policy also contained this provision:

'Payment of premiums.-Each premium is due and payable at the home office of the company in the city of New York, but will be accepted elsewhere when duly made in exchange for the company's receipt, signed by the president or secretary. Notice that each and every such payment is due at the date named in the policy is given and accepted by the delivery and acceptance of this policy, and any further notice, required by any statute, is thereby expressly waived.'

In its answer the company pleaded that the contract was to be taken as a contract made in the state of Washington, and not controlled by the laws of the state of New York, because he application stipulated that the contract 'shall not take effect until the first premium shall have been paid and the policy shall have been delivered.' In fact, the policy was delivered and the premium paid in the state of Washington. It also pleaded the other provisions in reference to the failure to pay the annual premium, and the waiver, abandonment, and rescission of the contract by the assured under the circumstances hereinbefore named.

The case came on for trial on these pleadings before the court and a jury, and resulted in a verdict and judgment for the plaintiff for the amount of the policy, less the unpaid premiums. The case was thereupon taken on error to the United States circuit court of appeals for the ninth circuit, which court dismissed the writ of error on the ground that it had no jurisdiction by reason of a failure on the part of the plaintiff in error to file the writ of error in the office of the clerk of the trial court. 48 U.S. App. 78, 76 Fed. Rep. 617, 22 C. C. A. 425. Thereupon application was made to this court, and the case brought here on certiorari.

Messrs. Julien T. Davies, Edward Lyman Short, John B. Allen, Frederick D. McKenney, and Robert Sewell for petitioner.

Messrs. Stanton Warburton and A. F. Burleigh for respondent.

Mr. Justice Brewer delivered the opinion of the court: