Supreme Court of Canada
Pense v. Northern Life Assurance Co., (1908) 42 S.C.R. 246
Date: 1908-10-06
Pense
and
The Northern Life Assurance Co.
1908: June 3; 1908: October 6.
Present: Girouard, Davies, Idington, Maclennan and Duff JJ.
Life insurance—Construction of policy—Payment of premium—Time for payment—Forfeiture.
APPEAL from the decision of the Court of Appeal for Ontario, reversing the judgment of Mabee J., at the trial, in favour of the plaintiff, and dismissing the plaintiff’s action with costs.
The plaintiff’s action was upon two life insurance policies for $1,000 each assigned to him by the insured.
The first policy provided that if, after the payment of three full years’ premiums the policy should lapse for non-payment of any premium, the insurers would, upon application, payment of all indebtedness and the surrender of the policy and the last renewal receipt, within three months after such lapse, issue a non-participating paid-up policy “for as many twentieth parts of its principal amount as complete annual premiums shall have been paid or apply the same towards the purchase of extended insurance in accordance with a schedule indorsed; secondly, that if, after the payment of five full years’ premiums, the policy should lapse as aforesaid, the insurers would, upon application, etc., within three months after such lapse, pay to the holder of the policy the cash surrender value shown in the schedule, or, at the option of the holder, lend him any sum, not exceeding the sum shown in the schedule, for one year.” The premiums on the policy were paid for
[Page 247]
five years; those for the sixth and subsequent years were not paid when the insured died. The trial judge held that the holder of the policy had a right to have it extended under the first of the above provisions without an application therefor and compliance with the other conditions, as the insurers were bound to apply the moneys in hand to his credit, and that the policy, therefore, was in force when the insured died. This the Court of Appeal reversed, holding that the application, payment, etc., applied to all the benefits to be given to the holder under these conditions, that the policy had lapsed when the insured died and there was no right of action.
The question on the second policy was whether or not the premiums after the first two years were payable in advance. The policy was dated 31st March, 1903, and provided that “in consideration of the application * * and of the sum of $17.95, being the premium for one year’s term insurance, to be paid in advance to the company, * * * on the delivery of this policy and the further sum of $33.90 payable annually for an additional term of nineteen years, the first of such additional payments to be made on the 20th day of March, A.D. 1904, insured the life, etc.” The premiums were paid up to the year 1905. The insured died in November, 1906. If the premium was due in advance, in 1906, the policy had lapsed for non‑payment. The trial judge held that this provision of the policy, not being clear and explicit, should be construed most favourably to the insured and so as to avoid a forfeiture, and, so reading it, his conclusion was that only the first two years’ premiums were payable in advance and that, therefore, the policy was in force when the insured died. The Court of Appeal
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reversed this holding also, deciding that every year’s premium was payable on the 20th of March, and that there was no policy, therefore, in existence, in November, 1906, when the insured died.
The action was dismissed as to both policies.
After hearing counsel for both parties, the Supreme Court of Canada reserved judgment and, on a subsequent day, dismissed the appeal with costs. Girouard, Maclennan and Duff JJ. adopted the reasoning of Meredith J., in the Court of Appeal, and Davies J, was of opinion that the appeal should be dismissed for the reasons given by the Court of Appeal. Idington J. could see no reason to disturb the conclusions reached by the Court of Appeal.
Appeal dismissed with costs.
A.B. Cunningham for the appellant.
Purdom K.C. for the respondents.
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