U.S. Supreme Court
Iowa Life Ins. Co. v. Lewis, 187 U.S. 335 (1902)
Iowa Life Insurance Company
Argued October 21-22, 1902
Decided December 8, 1902
187 U.S. 335
1. As the delivery of a policy of insurance and the payment of the premium are reciprocal or concurrent considerations and, together with the method of payment, are all essential things, it makes no difference, when the first premium is paid by a note, whether the words "if note be given for the payment of the premium hereon or any part thereof, and same is not paid at maturity, the said policy shall cease and determine" be printed upon the face or the back of the receipt given for the note or in the policy. As such receipt expressed the conditions upon which the note was received, the memorandum on the back must be considered as embodied in the policy and the endorsements thereon, as well as in the note and the receipt given therefor.
2. When the first premium on a policy of insurance is paid by note and a receipt with such an endorsement thereon is given and accepted therefor, whilst the primary condition of forfeiture for nonpayment of the annual premium is waived by the acceptance of the note, a secondary condition thereupon comes into operation by which the policy will be void if the chanroblesvirtualawlibrary
note be not paid at maturity, and no affirmative action cancelling the policy is necessary on the part of the insurance company if the note be not paid when due and presented, and if the policy contains a provision that no person other than the president or secretary can waive any of the conditions, a local agent has no power to extend the time of payment of the note after the same has become part due.
3. A life insurance company may, by its conduct, waive proof of death and estop itself from setting up the provisions of the policy requiring said proof.
4. This Court will adopt the construction of the state courts of a state statute as to the necessity of a demand's being made before commencement of an action.
This is an action upon a life insurance policy, and was originally brought in the District Court of Tarrant County, Texas, and removed by the defendant, plaintiff in error here, to the Circuit Court of the United States for the Northern District of Texas on the ground of diversity of citizenship.
The action was to recover $3,000, alleged to have become due upon a life insurance policy issued by plaintiff in error to Thomas M. Lewis, the husband of the defendant in error. The defendant in error also, under the laws of Texas, Revised Statutes of Texas of 1895, art. 3071, prayed judgment for interest on the said $3,000 from the date of the death of the said Thomas M. Lewis, together with a penalty of twelve percent on the amount due, and for an attorney's fee of $750.
The case was tried to a jury and resulted in a verdict for the defendant in error for $3,000, the principal of the policy, with interest from January 1, 1900, $300 damages, and an attorney's fee of $500. Judgment was entered in accordance with the verdict.
The statute of the State of Texas allowing interest and attorney fees was attacked by plaintiff in error as being in contravention of the Constitution of the United States. The statute was sustained, and the case was brought here under section 5 of the Judiciary Act of 1891
By the policy, the plaintiff in error promised to pay defendant in error the sum of $3,000 upon the death of Thomas M. Lewis if death should occur on or before the fourth day of March, 1900, and to pay the sum within sixty days after the chanroblesvirtualawlibrary
receipt by plaintiff in error of satisfactory proofs of death and its cause. Lewis died on the seventh of October, 1899.
The issues in the case, besides the constitutionality of the Texas statute, are (1) whether the insurance company waived proof of death; (2) whether the policy had ceased and determined before the death of the insured by nonpayment of the premium. The evidence bearing upon the issues is as follows:
"The first sentence of the policy sued upon, appearing upon the face thereof, reads as follows:"
" The Iowa Life Insurance Company, in consideration of the stipulations and agreements in the application herefor (a copy of which is hereto attached), and of the provisions and requirements upon the next page of this policy, all of which are a part of this contract, and in consideration also of the payment of seventy-four dollars and sixty-one cents, being the premium hereon for the first year, hereby promises to pay the sum of three thousand dollars to Lula T. Lewis (wife of the insured) if living; if not living, to the insured's executors, administrators, or assigns (less any indebtedness of the insured or beneficiary to this company, together with the balance of any year's premium remaining unpaid), within sixty days after receipt and acceptance at the company's office in Chicago, Illinois, of satisfactory proofs of the fact and cause of death, within the terms of this policy, of the said Thomas M. Lewis, of Fort Worth, County of Tarrant, State of Texas (the insured under this policy), provided such death shall occur on or before 12 o'clock noon of the fourth day of March, A.D. 1900."
"Upon the second page of the policy is a provision reading as follows, it being one of the provisions referred to in the sentence above quoted from the face of the policy:"
" This policy is a contract made and to be performed in accordance with the laws of the State of Iowa, and shall be construed only in accordance with the charter of said company and the laws of said state, and shall not go into effect until the premium hereunder, or a semi-annual or quarterly installment thereof, shall have been actually paid during the lifetime and continuance in good health of the insured. Upon payment of the premium, there shall be delivered a receipt signed by the
president or secretary and countersigned by an authorized agent."
"Another provision appearing upon the second page of the policy reads as follows: 'All agreements made by this company are signed by the president or secretary. This power will not be delegated. No other person can alter or waive any of the conditions of this policy, or issue permits of any kind, or make an agreement binding upon said company.'"
"The policy sued upon is of the kind designated by the defendant as a 'ten-year convertible term stock' policy. It is dated March 13, 1899. The annual premium thereon is $74.61."
"The policy sued upon was issued in pursuance of a written and printed application therefor made by the insured under date of March 4, 1899. Said application requests the issuance of a 'ten-year convertible term stock' policy, and states that the premium of $74.61 is to be paid annually. It concludes with a recital as follows:"
"A note for premium of $74.61 has been paid under this application, to make the insurance binding from the date hereof, on condition that, if the risk is not assumed by the company, this sum is to be returned in accordance with the receipt given as voucher for said payment."
"On March 4, 1899, the insured executed and delivere