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Young v. The Northwestern Mutual Life Insurance Company of Milwaukee, Wisconsin

Supreme Court of Arizona

June 13, 1932


APPEAL from a judgment of the Superior Court of the County of Pima. Albert M. Sames, Judge. Judgment affirmed.

Mr. Louis G. Hummel, for Appellant. Messrs. Kingan, Darnell & Nave, for Appellee.


Page 286


Josephine S. A. Young, hereinafter called plaintiff, brought suit against the Northwestern Mutual Life Insurance Company of Milwaukee, [40 Ariz. 341] Wisconsin, a corporation, hereinafter called defendant, to recover upon a certain insurance policy issued by defendant on the life of Mannierre E. Young, hereinafter called deceased.

Defendant answered, admitting the execution of the policy, but alleging in substance that the same had lapsed by reason of the failure of the deceased, or any person for him, to pay certain installments of the premium due thereon. It was admitted by plaintiff that the installments in question were not paid, and when the case came on for trial defendant moved for judgment upon the pleadings. The motion was granted and judgment ordered in favor of defendant, from which judgment this appeal was taken.

The facts shown by the pleadings are as follows: On February 20th, 1928, defendant issued the policy in question upon the life of deceased. Said policy contained, among other matters, the following provisions, which are the only ones necessary for us to consider in determining this appeal:

"In consideration of the payment of one hundred and thirty-eight dollars, the receipt of which is hereby acknowledged, and of the payment of a like sum on or before the 20th day of February, May, August and November in every year for five years from the date of this Policy or until the prior death of Mannierre E. Young. . . the Northwestern Mutual Life Insurance Company . . . promises to pay . . . the sum of Thirty Thousand Dollars, less any unpaid premium or premiums to the end of the current policy year to his wife Josephine S. A. Young . . . This policy is issued by the Company and accepted by the parties in interest subject to the provisions stated on the consecutively numbered pages hereof which are hereby made a part of this contract. . . . The Insurance under this policy is based upon annual premiums, but payment may be made in semiannual or quarterly installments at the published rates now in use by the Company. Change may be made upon any anniversary of the date hereof. [40 Ariz. 342] Upon default in the payment of any premium this Policy shall cease and determine except as hereinafter provided. Grace of 31 days, during which time the insurance will remain in full force, shall be allowed for the payment of every premium except the first. . . ." (Italics ours.)

Deceased paid defendant the sum of $138 on the twentieth day of February, 1928 and the same amount on the twentieth day of May of that year, but made no other or further payments. He died on the thirtieth day of October at Las Vegas, New Mexico.

It is the contention of plaintiff that under the terms of this policy and the facts, as above set forth, the payment by deceased of the first installment of $138, on February 20th, placed the policy in force for the full term of one year from the date of such payment even though deceased made no further payments thereon during that period, and that the only right of defendant, in case deceased died within the year without further payments, was to deduct from the face of the policy the balance of the premium due for the first year.

It is the position of defendant, on the other hand, that the policy lapsed automatically thirty-one days after the failure of deceased to pay any of the installments due on the twentieth days of February, May, August and November.

In support of her contention plaintiff states some twelve general propositions of law, to most of which no exception can be taken. It is doubtless true that both parties are bound by the terms of the contract, and that the courts in interpreting it can neither add to nor take anything away from it; that the policy must comply with the laws of Arizona, and that any ambiguity therein is to be construed against the insurer, and that a policy will not be considered forfeited for nonpayment of premium, or otherwise, [40 Ariz. 343] unless a reasonable construction of its terms so provides. There is no doubt that all these are true as abstract propositions of law, and defendant so admits, but insists that the terms of the policy in question show clearly, when interpreted in accordance with these very propositions, that it has automatically lapsed long before the death of the insured.

The first specific point made by defendant is that under the provisions of paragraph 3453, Revised Statutes of Arizona of 1913, which was in force when the policy was issued, it was necessary that all premiums after the first should be payable in advance.This is undoubtedly the law, but we see nothing in the policy or the facts as above set forth indicating any breach of this statute. The statute does not provide that all premiums must be annual ones or paid annually. We think its intent and purpose is to prevent the very contingency which plaintiff insists exists; that is, that the insured may be protected by insurance for which he had not paid.

We think the principle applicable to the policy in question is well laid down by the Supreme Court of the United States in the cases of New York Life Ins. Co. v. Statham,93 U.S. 24, 23 L.Ed. 789, and Klein ...

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