Madison v. Northwestern Mutual Life Insurance

This is an action upon a policy of life insurance, and was submitted upon an agreed statement of facts. Defendant had judgment, and plaintiff appeals. The policy was issued upon the life of P. T. Madison, payable to his wife, plaintiff herein. The face of the policy is two thousand dollars, and was on what is termed “the ten-payment life plan with premiums payable annually, $87.42, and provided for payment of the premiums partly in cash and partly by note. The cash portion was $53.24, and the note portion was $34.18.” The principal of the notes was not required to be paid before the death of the insured, but the interest thereon was to be paid annually. The dividends on the policy were to be applied to the payment of the notes. On July 16, 1867, the date of the policy, Madison paid the company cash $53.24 and executed to the company his note for $34.18, in full payment of the first annual premium. On July 16th of each succeeding year to and including the year 1872, he “duly and seasonably paid to the defendant herein, and defendant received and accepted the premiums required by the terms of the policy to be paid, viz., the said sum of $53.24 in cash, and his note for the sum of…

I dissent from the order denying a rehearing. The language of this policy was chosen by the defendant, and seems to have been chosen not for the purpose of expressing a clear intention, but rather with a view of giving it the appearance of intending one thing while really providing for something inconsistent. In one clause (clause 3) it provides that in a certain contingency there shall be a partial forfeiture of. the policy, and this provision is set out with considerable fullness and rotundity of expression. In another clause, by a half-dozen words at the end of a sentence, an absolute forfeiture is provided upon the same contingency. I do not think that the defendant is entitled to claim for itself the most favorable construction of a contract which it has purposely made ambiguous, and especially where the result is manifestly unjust.

In this particular case, perhaps, no serious injustice is done, for the notes given by the insured in payment of the premiums, which by the terms of the policy were payable only in cash, and were forfeitable in case of default, would, with interest, amount to as much as the unforfeited portion of the policy, and they, in my opinion, constitute a…