THOMAS J. DAVIS v. NATIONAL CASUALTY COMPANY

Minnesota Supreme Court1911-06-30No. Nos. 17,146—(190)

115 Minn. 125

Summary · law.co

Holding. The judgment in favor of the policyholder was affirmed. The insurance company's acceptance of a late premium payment waived any delinquency, and the company could not escape its contractual obligations on grounds that the endowment clause was ultra vires after it had accepted performance from the policyholder.

A policyholder sought to collect a $120 cash benefit under an insurance policy issued in 1899, conditioned on the policy remaining continuously in force without delinquency for ten years. The insurance company raised two defenses: first, that a premium payment made on August 31, 1905, rather than by the first of the month constituted a delinquency that forfeited the benefit, and second, that the endowment clause was beyond the company's legal authority.

The court rejected both defenses. As to the late payment, the company's acceptance of the overdue premium constituted a waiver of the strict timing requirement, and therefore no delinquency occurred that would prevent the policyholder from receiving the promised benefit. Regarding the ultra vires argument, the court held that even if the contract exceeded the company's corporate powers, the company could not avoid performance after the policyholder had fulfilled all obligations and the company had accepted the benefits of the arrangement.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a late premium payment constituted a delinquency under policy language requiring continuous force without delinquency
Whether acceptance of a past-due premium constituted a waiver of strict payment timing requirements
Whether a corporation may evade contract performance by claiming the contract is ultra vires after accepting benefits from the other party

Procedural posture

The trial court directed a verdict in favor of the plaintiff, denied the defendant's motion for judgment notwithstanding the verdict, and the defendant appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Bunn, J.

This action was brought by plaintiff to recover tbe sum of $120 and interest, claimed to be due from defendant under tbe terms of a policy of insurance issued to plaintiff December 11, 1899, by tbe Minnesota Mutual Casualty Company, tbe obligations of which -were assumed by tbe defendant. The policy provides that tbe insured shall be entitled to certain benefits in case of accident or sickness, and, “fourth, to a cash benefit of $120, less any indebtedness due tbe company, upon legal surrender of this policy, after it has been in continuous force, without delinquency, for the term of ten years from its date.” This is tbe provision under which plaintiff seeks to recover in this action.

Defendant made two defenses: (1) That tbe policy bad not been “in continuous force without delinquency” for ten years from-its date. (2) That the policy was ultra vires. Upon the conclusion of the testimony, the trial court directed a verdict in plaintiff’s favor, and thereafter denied defendant’s motion for judgment notwithstanding the verdict. Judgment was entered, and defendant appealed. The questions presented are as to the validity of the defenses-made as above stated.

1. Defendant urges that the policy had not been “in continuous force without delinquency” for the term of ten years from its date, because it appeared from plaintiff’s receipt book that the one dollar payment for the month of August, 1905, was made August 31, 1905 ; the policy requiring the payment of one dollar on the first day of each and every month during the ten years, and providing that, if premiums are not paid within ten days after they become due, the policy shall be “ipso facto null and void.” It is admitted that this-payment was accepted by the company, and that the policy has always been treated as in force by both the Minnesota Mutual Casualty Company and its successor, the defendant. Defendant does not contend that this delay in mailing the August, 1905, payment rendered the entire policy void, but insists that because thereof the policy was not “in continuous force without delinquency” for the term of ten years, and that therefore the cash benefit under the clause in question was forfeited.

We hold that this defense is without merit. The company, by accepting the past-due premium, waived, at least as to such premium, the conditions of the policy requiring payments to he made before the tenth of the month, and waived the provision that nonpayment-rendered the policy null and void. We cannot hold that there was a delinquency, or that the policy was not in continuous force, within the meaning of the clause in question.

2. The second defense is that the contract of insurance, so far as-the endowment clause is concerned, is ultra vires the corporation, because the statutes under which it was organized do not give it power to make such an agreement as that contained in the clause. This contention is easily disposed of. Even if the contract is ultra vires, it has been performed by plaintiff, and defendant has received and retained the benefits of such performance. It is too well settled to need the citation of authorities that in such a case a corporation will not be permitted to evade performance of its contract on the ground ■of ultra vires. Nor are we able to agree with defendant that there is a want of mutuality in the contract.

Judgment affirmed.