Opinion
December, 1900.
Henry B. Heylman (Raphael J. Moses, of counsel) for plaintiff.
Gilbert E. Roe for defendant.
Formerly a life insurance policy became forfeited in accordance with its terms by a failure to pay the premium on the day it came due. A statute was passed prohibiting any life insurance company from forfeiting a policy unless a notice giving the amount of the premium, when it would be due and where it could be paid were mailed to the insured by the company at his last known post office address not less than 30 nor more than 60 days before it became due (ch. 341, Laws 1876). This was amended to the effect that such notice should be mailed to the insured, "or the assignee of the policy, if notice of the assignment has been given to the company"; and also requiring the notice to state that upon non-payment the policy would be forfeited (ch. 321, Laws 1877). This was substantially incorporated in section 92 of the Insurance Law passed in 1892; and in 1897 (ch. 218) this section was so amended as to prohibit that such a policy should "be forfeited, or lapsed, by reason of non-payment when due of any premium, interest or installment or any portion thereof required by the terms of the policy to be paid, within one year from the failure to pay such premium, interest or installment, unless a written or printed notice stating the amount of such premium, interest, installment, or portion thereof, due on such policy, the place where it shall be paid, and the person to whom the same is payable, shall have been 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 post office address in this state, postage paid, * * * at least fifteen and not more than forty five days prior to the day when the same is payable"; and it is further provided that the notice shall state that unless such payment shall be made "by or before the day it falls due the policy and all payments thereon will become forfeited and void except as to the right to a surrender value or paid up policy as in this chapter provided".
In this case a notice in conformity with the statute was given to the insured. But the plaintiff contends that that was insufficient; that notice should have been given to him as assignee of the policy. The statute is that the policy shall not be forfeited within a year after non-payment unless the prescribed notice shall have been 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". The first statute on the subject prescribed a notice to the insured only, as we have seen. What is the meaning of this addition, by amendment, "or the assignee of the policy"? Its object could only have been to protect the assignee. Still the statute is literally in the disjunctive or alternative, that there shall be no forfeiture within a year unless the notice be 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". Does this require the notice to be given to both? No. Then does it give the company the option to give it to either? If so, there was no object in enacting the amendment. It plainly was not for the sake of the insurance companies that it was enacted; it could be of no use of them to have the requirement to notify the insured changed to a requirement to notify at their option the insured "or" the assignee of the policy. The statute must according to an established rule of construction be construed with a view to its object, i.e., to require notice to be given to the person in interest for his protection, i.e., to the insured, unless he has assigned the policy, in which case the assignee is the person in interest; and it seems to me its words though loose are apt to express this meaning. If the assignment be absolute, the assignee is the only one in interest, and it would be folly to notify the insured; if it be only as security for a debt, the statute deems the assignee the one in interest who should be notified, and so requires. It does not put upon the companies the difficulty of ascertaining the character of the assignment, i.e., whether absolute or conditional, or of keeping track of and notifying both insured and assignee. If this be not the meaning of the amendment, then it was purposeless, and that cannot be taken to be true. Such notice is prescribed for the protection of the holder of the policy; and to say that it must be given to the insured, "or the assignee of the policy, if notice of the assignment has been given to the corporation", means to the insured unless he has assigned the policy, in which case it must be given to the assignee, if the company has been given notice of his ownership. To notify the insured after he had assigned the policy would be no protection to the assignee; or, at all events, not the protection contemplated by the statute; whereas notice to the assignee would in most cases be protection to both; the exception being when the policy is assigned to secure a loan or debt which does not exceed the forfeit or surrender value of the policy. As notice was not given to the plaintiff, the policy is not forfeited.
The condition in the unpaid note given for part of the premium that the policy should "without notice to any party or parties interested therein be null and void on the failure to pay this note on maturity", was ineffective. It has to be coupled with the like condition in the policy itself, that the policy shall be null and void on failure to pay any premium or note given therefor on the day it comes due, and can be given no greater force. The statute limits the operation of such agreements of forfeiture so that they can only take effect after the prescribed notice of forfeiture. It is prohibitive and cannot be evaded (Equitable Life Assur. Society v. Clements, 140 U.S. 226).
Judgment for the plaintiff.