Davis v. Salem County Mutual Fire Insurance

I am satisfied that the motion of defendant, which has been made to test the sufficiency of complainant’s bill, must be denied. For the three years preceding January 1st,’ 1915, the premiums which fell due on January 1st of each year had been offset by dividends of the same amounts falling due on the same days. *327No money payments for the premiums for those years had been exacted by the insurance company; on the contrary, the method of payment directed by the company in each of those years was an exchange of receipts, and an exchange of receipts after the due day of the premiums had been in each year apparently satisfactory to the company. The conditions which existed January 1st, 1915, were exactly the same and appropriately called for the same course of action on the part of all parties concerned. It may be that by the terms of the policy payment of a new premium on that day should be regarded as a condition precedent to the right of complainant to renew or extend - his insurance; but the conduct of the company in making settlements with complainant by exchange of receipts after the premium due dajq without objection, for the preceding three years, in exactly similar circumstances, can be'only properly regarded as a waiver of any contractual right it may otherwise have had to forfeit the right of complainant to renew or continue his policy. The circumstance that during the three preceding years complainant had received notice from the company where to exchange receipts and received no notice for the last year is not without like force, but, irrespective of the failure of the company to give that notice, it seems clear that complainant was fully justified by the former course of ■ dealing in assuming that no forfeiture of his right to renew his policy would be exacted by reason of his delay in making settlement. This is especially so in view of the circumstance that no injury to the company could arise by reason of its being denied the money due as a premium.

The question of waiver of a contractual right of forfeiture by reason of the conduct or course of dealing of the party enjoying the right has given rise to a great diversity of views in insurance cases. Many cases will be found collected in 2 May Ins. §§ 358, 361, 363, and 19 Cyc. 789, 801. The rule is stated in 18 Cyc. 789, as follows:

“It may be stated as a general rule that the insurer is deemed to have waived the performance of conditions precedent or subsequent when in good conscience he ought not to be heard to assert them, as when by reason of his conduct he has led the insured to believe that they would not be insisted upon.”

*328The rule thus broadly stated, may perhaps be doubted when applied to acts- or conduct contemporaneous with the execution of the contract; but cannot be doubted as a sound principle of equity when applied to future acts..

Somewhat analogous situations have arisen in this state in mortgage foreclosures in cases in which the condition of the bond authorized the mortgagee to declare the whole debt due by reason of a default in the payment of an interest installment. These provisions are treated as stipulations for a period of credit on condition of prompt interest payment, rather than as clauses of forfeiture (Spring v. Fisk, 21 N. J. Eq. 175, 178; Bergman v. Fortescue, 74 N. J. Eq. 266, 269), but our court of errors and appeals has held that if the default or omission to pay interest within the time specified was the result of honest mistake or misapprehension, into which the mortgagor was led by the acts or declarations of the mortgagee, a court of equity will not, under such circumstances, hold the failure to pay operative as a forfeiture of the future credit, DeGroot v. McCotter, 19 N. J. Eq. 531.

I will advise an order denying defendant’s motion.