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holding is dictum; second, those in which the discussion is illogical; and, third, where there is no discussion whatsoever. The holding in the majority of cases is unalloyed dictum. The question decided was not involved in the case, and hence lacks the force of an adjudication. Rush v. French, 1 Ariz. 99, 25 Pac. 816; State v. Clarke, 3 Nev. 566, 672; Carroll v. Lessee of Carroll et al., 16 How. 275, 14 L. Ed. 936, 941; Words and Phrases, vol. 3, p. 2051. Of the authorities quoted from and relied upon by the court, whose holding is dictum, I notice the following:

Hartford Fire Insurance Co v. McKenzie, 70 Ill. App. 615. In this case the notice delivered the assured of the cancellation of the policy was not received until the day after the fire, and hence, of course, the tender or return of the premium could not be involved.

In the case of Williamson et al. v. Warfield-Pratt-Howell Co., 136 Ill. App. 168, 185, the court in the consideration thereof states specifically in reference to the cancellation that it does not find it necessary to consider, for "there is no cancellation provision relied upon. The cancellation claimed is an implied one, and we fail to recognize the implication." Neither does the case disclose that it presents the same or a similar policy to the one relied on in the case at bar.

The case of Peterson v. Hartford Fire Insurance Co., 87 Ill. App. 567, was likewise a case where the notice was not delivered to the insured until after the fire. The court, in the consideration of the case, says: "There is no pretense that the five days' notice of intended cancellation was given by the company."

The case of Hartford Fire Insurance Co. v. Tewes, 132 Ill. App. 321, was likewise a case where there was no notice given the insured, and hence any holding on the question involved in this case would be no more than dictum.

The case of Mississippi Valley Manufacturers' Mutual Insurance Co. v. Bermond, 45 Ill. App. 22, does not show that the policy involved was similar to the one in the case at bar, and the question therein involved is not the same as in this case, as no premium in that case had been paid, and a provision of the policy denied its force until the premium was paid.

In the case of Baldwin v. Pennsylvania Fire Insurance Co., 206 Pa. 248, 55 Atl. 970, the court in the opinion says the company gave no notice of its intention to cancel as required by its contract, nor did it return or offer to return five-sixths of the premium. The case of Hamburg-Bremen Insurance Co. v. Browning, 102 Va. 890, 48 S. E. 2, decides no question involved in the case at bar. The insured had been given notice of cancellation and had no credit with the company at the time of the notice. Six months there

The court says:

which was denied him. "The fire did not occur for more than six months after the cancellation notice, at which time the policy sued on had long since lapsed by the nonpayment of premium."

The case of Mississippi Fire Association v. Dobbins, 81 Miss. 630, 33 South. 506, is a case where, under the terms of the policy, it was void at the time the fire occurred by reason of the violation of the terms of the contract of insurance by the assured taking out additional insurance. No premium had been paid at the time of the fire, but was paid the day after the fire. The court holds that the policy was void, but by reason of the fact that the company retained the premium paid under the circumstances mentioned held it liable on the void contract. Richards, in his work on Insurance, utters the mild criticism on this case that it "seems to have gone to yet greater extremes in favor of the insured." No question of notice under the paragraph before us was before that court.

The case of Chrisman & Sawyer Banking Co. v. Hartford Fire Insurance Co., 75 Mo. App. 310, likewise did not present for the consideration of the court the question we have before us, and its holding on it was dictum. The defendant, before the fire occurred, directed the agent to suggest to the insured that it would have to take up the policy, and the court, in passing upon the situation presented, says that the policy was not canceled, and that there was no notice of cancellation; that what was done "was but the bare beginning of an effort, which, if proceeded with, would lead to cancellation, if nothing intervened to prevent it." This case is cited by Mr. Richards in his work on Insurance as sustaining the majority opinion of this court, and is criticised by that author by the statement that the reasoning contained in the case does not lead to the result.

In the case of Continental Insurance Co. v. Daniel, supra, decided in 1904, six years after the decision of the Tisdell Case, and after numerous other cases on this subject had been written by the courts of the United States, the court renders its opinion without noticing either or any of these cases, or any text of any author whatsoever. The court in that case makes such a manifest distortion of the language of this section of the policy that it finds no sanction in the expressions of any court before it was written, and no court has followed it since. Of this case Mr. Vance, in his work on Insurance, at section 183, says the construction therein made "seems to stretch the language of the condition almost beyond recognition." Yet even in that case, under the instructions of the court and the findings of the jury on the controverted questions as to the notice and tender, the question here presented was not before the Court of Appeals for determination, and its holding is dictum, because the fire occurred within five days after the notice was given, and even

the money, and the insured had accepted it | construction in the case of Nitsch v. Ameriand delivered his policy to the company, the can Central Insurance Co., 152 N. Y. 635, 46 company would have been liable, as the policy N. E. 1149, on December 15, 1894, which was under the terms would remain in force five decided without an opinion. The next case days after all of these things had taken place. in which it arose was in the case of Tisdell The elimination of the foregoing cases re- v. New Hampshire Fire Insurance Co., decidlied upon by the court, on the ground that ed in January, 1895, the report of which in the holding is dictum, leaves the following: the lower court is contained in 11 Misc. Rep. Hartford Fire Insurance Co. v. Cameron, 18 20, 32 N. Y. Supp. 166. In this case the court Tex. Civ. App. 237, 241, 45 S. W. 158, Gosch followed the Nitsch Case, and based its conv. Firemen's Insurance Co., 33 Pa. Super. Ct. clusion, as we have heretofore noted, upon 496, Philadelphia Linen Co. v. Manhattan the proposition that, although the provision Fire Insurance Co. of New York, 8 Pa. Dist. does not in express terms require a tender R. 261, and the New York cases, beginning or repayment of the premium, the condition with the case of Tisdell v. New Hampshire is to be implied, and there is no discussion of Fire Insurance Co., 11 Misc. Rep. 20, 32 N. Y. the actual terms of the contract. On appeal Supp. 166, and the same case on appeal in the this case is found reported in 155 N. Y. 163, Court of Appeals, 155 N. Y. 163, 49 N. E. 664, 49 N. E. 664, 40 L. R. A. 765, and here again 40 L. R. A. 765, and the case of Buckley v. the Court of Appeals of New York passes Citizens' Insurance Co. of Missouri, 188 N. Y. the question by without discussion, with the 399, 81 N. E. 165, 13 L. R. A. (N. S.) 889. simple statement that it is no longer an open The Pennsylvania courts predicated their con- question in that court. question in that court. The question was clusion largely upon the fact that the Court again before the Court of Appeals of New of Appeals of New York in the Tisdell Case York in the case of Buckley v. Citizens' Inhad held that the question was not an open surance Co., 188 N. Y. 399, 81 N. E. 165, 13 one in that state, saying that, "while these de- L. R. A. (N. S.) 889, and was decided upon cisions are not binding upon the courts of the authority of the Nitsch and Tisdell Cases, Pennsylvania, they are, of course, entitled to but without discussion of the underlying reagreat respect" (Philadelphia Linen Co. v. sons. The point is made that the court was Manhattan Fire Insurance Co. of New York, unanimous; but I apprehend judges frequentsupra), and, upon the proposition in the Gosch ly concur in subsequent opinions, even though Case that to permit one party to "retain the dissenting in the one originally rendered. benefits and at the same time repudiate the burdens of his own agreement would be highly unconscionable and shocking to our sense of natural justice," and that "it would be out of harmony with some of the fundamental principles on which our entire system of jurisprudence is built," thereby to my mind injecting into the case a proposition misleading to the court, and not germane to the subject, ignoring the contract before it for construction and the rule laid down by the Supreme Court of the United States in the case of Baltimore v. Baltimore & Ohio R. R. Co., supra, that it is competent for parties entering into a business arrangement to fix the terms of it, declaring what shall be their respective rights and liabilities, and that courts are required to give effect to the contract which the parties chose to make for themselves. The error into which this court fell was practically the same one made by the court in the Hartford Fire Insurance Co. v. Cameron Case, supra. This court, however, has frankly acknowledged that the cases which it cited arose on policies in which the terms of the cancellation clause clearly placed the right to cancel on the giving of notice and the returning of the unearned portion of the premium, and recognized that the first part of the clause under consideration indicated that the right to cancel was based upon the giving of the five days' notice alone, but said the difference is only a verbal one.

After the adoption of the uniform policy law by the state of New York, this section

The case of Equitable Life Assurance Society v. Brown, 213 U. S. 25, 29 Sup. Ct. 404, 53 L. Ed. 682, is not applicable; for in that case the contract was a New York contract, executed and to be carried out therein, and as to its meaning and construction it was held that the holding of the highest court of that state would be of most persuasive influence, even if not of binding force, in the absence of any federal question, while in the case at bar the contract provides that it would not be valid until countersigned by the local agent. In addition to this it was not to be carried out in New York, nor in any of the other states which have held on the subject, but was to be carried out in the Indian Territory. Where these conditions exist, the place of the local agent, that being the place where the last act necessary to complete the contract was done, is ordinarily construed the place of the contract, and some courts hold it conclusively so. Section 92, Richards on Insurance; Coverdale et al. v. Royal Arcanum, 193 Ill. 91, 61 N. E. 915; Born v. Home Insurance Co., 120 Iowa, 299, 94 N. W. 849; Meyer v. Supreme Lodge, Knights of Pythias, 178 N. Y. 63, 70 N. E. 111, 64 L. R. A. S39. So the New York cases can be no more than persuasive; and, as they do not discuss the question, their holding could hardly be said to be this.

In the Tisdell Case, the learned jurist, Chief Justice Parker, rendered a most vigorous dissent, which met the concurrence of Mr. Justice O'Brien, in which the actual

discussed, and which in ny judgment is so clear that it ought to carry the conviction that the language used is not susceptible to the construction placed upon it in the majority opinion. This dissenting opinion, in so far as it discussed the actual terms of the paragraph of the policy here under consideration, is as follows: "The standard policy, of which this forms a part, has been prepared under authority of law by men experienced in insurance contracts, and it is therefore fair to assume that the agreement may be treated as one prepared by men competent to use language adequate to convey clearly and distinctly the views of the parties. In such case it is the rule that, if the language of a statute or contract, read in the order of its clauses, presents no ambiguity, courts will not attempt, through transposition of clauses or ingenious argument as to the general intent, to qualify by construction its meaning. Doe (Poor) v. Considine, 6 Wall. 458, 18 L. Ed. 869. The first sentence provides for the cancellation of a policy. It declares that 'it shall be canceled * * * by the company by giving five days' notice of such cancellation.' In other words, the underwriter, by its contract, reserved to itself the right to cancel the contract of insurance by a notice of five days. Nothing else is provided to be done. Notice alone shall be sufficient, says the contract. The language is unambiguous. It admits of no debate, and requires no construction. Words more apt to accomplish the cancellation of a policy by the giving of the five days' notice cannot well be imagined. Having provided for a cancellation of the policy, either by the request of the insured or upon notice given by the company, the next clause of the agreement proceeds to make disposition of the unearned premiums, in the event of the exercise of the option to cancel by either of the parties. The opening phrase of the clause shows that what follows proceeds upon the assumption that the policy shall have been canceled before occasion arises for acting under its provisions. It reads: 'If this policy shall be canceled as herein before provided [referring necessarily to the company's five days' notice], the unearned portions of the premiums shall be returned.' When? At the time of the giving of the five days' notice of cancellation? Not at all. 'On the surrender of the policy' is the occasion fixed by the contract for its return. The scheme of this portion of the contract, then, is to provide, first, for the cancellation of the policy. That is to be accomplished by the simple request of the insured, if he desires to cancel it, or by a five days' notice on the part of the company, if it desires to terminate its obligation under the policy. The policy having been put an end to by cancellation, at the insistence of one party or the other, then the situation of the parties is such that the company has in its possession certain premiums which it has not

and the other party has in his possession the policy of insurance, no longer, of course, of use to him, and of no particular value to the company, except that, when it finally comes into the company's possession, it of itself furnishes evidence that the unearned premiums have been paid to the insured. With this situation, then, the agreement undertakes to deal, and it provides that upon the surrender of the policy the unearned premium, whether at short rate or pro rata premium, depending upon which party brought about the cancellation, shall be returned to the insured. Practically it says to the insured: 'You return the policy to the place where you got it from, and the company will at once turn over the unearned premium to which you are entitled under this contract.' This agreement is so clearly expressed that there does not seem to be opportunity for insisting that the language means something quite different from what is suggested to the mind upon the first reading. And still other readings will not prompt the thought that there is possibly any ambiguity. It is suggested in the opinion of the learned trial judge in the case of Nitsch v. American Cent. Ins. Co., subsequently affirmed in this court without an opinion (152 N. Y. 635, 46 N. E. 1149), that, under such a reading of the contract as on its face it is apparent it should have, 'a man might pay $1,000 for insurance to-day, receive a notice from the insurance company to-morrow, which would have the effect to cancel his policy in five days, and at the end of the week have no remedy except an action at law against the company.' Such a case could happen, undoubtedly; but it is not likely to. Courts cannot assume that insurance companies will act arbitrarily, or that they are so lacking in business prudence as to be willing to acquire a reputation for practicing a wrong of that character upon customers. On the contrary, we must assume that corporations, as well as individuals, intend faithfully to keep their contracts. But, were it our duty to indulge in a totally different presumption, the situation would not be changed; for the court is without authority to make contracts for the parties."

I believe the decided preponderance of text and judicial expression in the United States, supports the conclusion reached by Chief Justice Parker. 19 Cyc. 644; Vance on Insurance, § 183; Richards on Insurance (3d Ed.) § 288; Parsons & Arbaugh et al. v. Northwestern National Insurance Co., 133 Iowa, 532, 110 N. W. 907; Davidson v. German Insurance Co., 74 N. J. Law, 487, 65 Atl. 996, 13 L. R. A. (N. S.) 884, 12 Am. & Eng. Ann. Cas. 1065; Newark Fire Insurance Co. v. Sammons et al., 11 Ill. App. 230; Insurance Co. v. Brecheisen, 50 Ohio St. 542, 35 N. E. 53; Schwarzchild & Sulzberger Co. v. Phonix Insurance Co. of Hartford (C. C.) 115 Fed. 653; El Paso Reduction Co. v. Hartford Fire Insurance Co. (C. C.) 121 Fed. 937; Schwarzchild & Sulzberger Co. v. Phoenix Insurance

"If

In addition to the foregoing, the cases of | eral, to make personal tender. It is not Walthear v. Pennsylvania Fire Insurance Co., safe to send cash by mail, and, though the 2 App. Div. 328, 37 N. Y. Supp. 857, and Back-assured receive the remittance, if unscrupuus et al. v. Exchange Fire Insurance Co., 26 lous, he may deny it, and, though honest, App. Div. 91, 49 N. Y. Supp. 677, both being after getting his. cash, he will seldom take cases decided by the First Department of the the trouble to return the policy until it is Supreme Court of the state of New York, demanded. The framers of the standard polsustain the doctrine of the foregoing author- icy, therefore, inserted the seemingly unamities. biguous statement that the notice by itself shall cancel, but that 'the unearned premium shall be returned on surrender of this policy or last renewal.' In the opinion of some of the courts, the provision must be enforced as it reads. But, by the current of authority up to this date, the duty is laid upon the company, when seeking cancellation under the standard policy, to accompany its notice of cancellation with payment or actual tender of the return premium in order to make the notice operative. Such courts apparently consider it unconscionable to allow the company to get off the risk without simultaneously reinstating the assured, and putting him in funds with which to procure his substitute insurance. It is, indeed, difficult, however, to escape the conclusion of the dissenting judges in the New York Court of Appeals, voiced by the Chief Justice, that this is by interpretation to substitute a new contract in place of unambiguous terms adopted by the Legislature." In my judg ment, had the learned author investigated the cases a little more closely, he would not have come to the conclusion that the current of authority to the date of his expression laid the duty on the company to tender or return the premium in addition to giving notice.

Cyc. states the doctrine as follows: the policy gives the insurer the right at any time to cancel and return the unearned premium upon surrender of the policy,' or the right to cancel 'upon notice,' the return of the premium or tender thereof is not a condition precedent." On the same question, Vance on Insurance, supra, says: "The cancellation clause of the standard form of policy seems so clearly worded that one is surprised to see that disputes have arisen as to its construction. It is held by the better authority that, after the expiration of the five-day notice required in case the cancellation is by the company, the insurance is deemed to be terminated and inoperative, without further act on the part of the insurer or any actual cancellation of the policy. The Kentucky court, however, in its zeal to protect the insured, has recently decided that this condition requires of the insurer desiring to terminate the insurance that he shall first cancel the policy and return the pro rata premium, when the insurance will be terminated after five days' notice of such cancellation. Such a construction seems to stretch the language of the condition almost beyond recognition. By the weight of authority the repayment of the unearned premium is not, under the standard policy, a condition precedent to the termination of the insurance by the insurer. Such repayment becomes due only upon surrender of the policy. The New York Court of Appeals has, however, in a very unsatisfactory opinion, adopted the contrary rule" (referring to the Tisdell and Nitsch Cases).

The Supreme Court of New Jersey, 16 justices concurring in an opinion (Davidson v. German Insurance Co., supra) reached the unanimous conclusion that, "under the cancellation clause in a standard policy of fire insurance, the company is not required to pay or tender the unearned premiums in order to bring about a cancellation of the policy."

The federal Circuit Court of Appeals, in an opinion reported in 124 Fed. 52, 59 C. C. A. 572, affirmed a judgment rendered by the Circuit Court of the Southern District in New York, in the case of Schwarzchild & Sulzberger Co. v. Phoenix Insurance Co. and on the proposition before us in the syllabus said: "Under a provision in an insurance policy giving the insurer the right to cancel the same by giving five days' notice, and requiring it to return the unearned premium in case of cancellation 'on surrender of the policy,' it is not essential to the effectiveness of a notice of cancellation by the insurer that the unearned premium be returned or tendered in advance of the surrender of the policy by the insured." In the discussion thereof, Circuit Judge Townsend, who prepared the opinion of the court, said: "In support of its contention counsel for plaintiff relies upon the case of Tisdell v. New

A most elucidating and satisfactory discussion of the whole subject is contained in Richards on Insurance, supra, as follows: "Prior to the adoption of the standard form, it was held in many decisions under an earlier clause that, in order to effect a cancellation, the company, if in receipt of the premium, must accompany its notice with a payment or tender of the unearned portion of the premium. This rule was onerous to the companies. A company has a fixed habitation and is solvent, else the insurance department would not allow it to transact business. Upon cancellation of a policy the insurer is as much entitled to a surrender of the policy as the assured is to a return of the unearned premium. The insured are scattered all over the country. Sometimes Sometimes several notices must be sent before the right party can be found. Legal tender can be Legal tender can be made only in cash. Rates of premium are

this contract, in order to cancel the policy, is to give notice to that effect. What follows is not a condition precedent to the termination of the insurance, but only an obligation to return the premium note upon payment of the proper proportion of the losses and expenses. No contract is found in this policy for the return of the unearned premium as a condition precedent to the termination of the insurance, and the rights of the parties must be determined by the contract which they have made, and not by a contract to be made for them by the court. The question in such case is, not what contract the parties should have made, nor what would be equitable, but what contract did they in fact make? Each party must stand or fall upon the written contract found in the policy."

Y. 163, 49 N. E. 664, 40 L. R. A. 765. It is true that in said case the Court of Appeals of the state of New York, by a divided court, held that such repayment was a condition 'precedent to cancellation. We are not unmindful of the great weight which should ordinarily be given to the decisions of said court, especially upon a question involving the construction of a form of policy fixed by the statute of said state. But in the Tisdell Case we are wholly without any sufficient or satisfactory guide as to the process of reasoning by which a majority of the court reached its conclusion. The opinion states that: "The question presented on this appeal is no longer an open one in this court. It was decided in the case of Nitsch v. Amercan Central Insurance Company, 152 N. Y. 635, 46 N. E. 1149, affirmed in this court without any opinion.' The memorandum of To exactly the same effect is the language the decision in the Nitsch Case only shows of the Court of Appeals of Illinois of the that it affirmed a judgment of the Supreme First District in the case of Newark Fire Court, General Term, reported in 83 Hun, Insurance Company v. Sammons et al., su614, 31 N. Y. Supp. 1131, which affirmed a pra. On this proposition the court said: "It judgment in favor of plaintiff entered upon was unquestionably competent for the para verdict directed by the trial court. Ref- ties, in framing their contract, to provide erence to 83 Hun. 614, 31 N. Y. Supp. 1131, for the termination of the insurance at any shows that the General Term wrote no opin- time during the period covered by the policy, ion. We are, therefore, without anything in at the option of either party, and to prethe Reports to show what questions were describe the mode in which that option should cided, or even what issues were presented. be exercised. These matters being wholly Chief Justice Parker, however, in his dissenting opinion in the Tisdell Case, shows that the Court of Appeals was required to affirm a judgment of the General Term in the Nitsch Case upon another and unquestioned ground of waiver by defendant. these circumstances, we are unable to accept the conclusions of the Court of Appeals in the Tisdell Case."

In

The Circuit Court of the Eastern District in Pennsylvania, in the case of El Paso Reduction Company v. Hartford Fire Insurance Company, supra, reaches the same conclusion. So that we see that the federal courts in both Pennsylvania and New York disagree from the construction placed upon this contract by the state courts in which they were located.

The Supreme Court of Ohio, discussing the same principles here involved in a contract of insurance which, while slightly differently worded, is no different in effect, in the case of Insurance Co. v. Brecheisen, supra, speaks as follows: ""This insurance may also be terminated at any time, at the option of the company, on giving notice to that effect, and when the assured shall have paid the proportion of losses and expenses due the company under the provisions of his policy, at the date of such cancellation the premium note shall be surrendered.' Under the above provisions of the policy, it is clear that the giving of the notice terminates the insurance. When the losses and expenses due the company at the date of cancellation shall be paid, the premium note shall be returned.

within the discretion of the parties, the language of their contract, and that alone, if free from ambiguity, must be resorted to for the purpose of ascertaining the steps necessary to make the cancellation effectual. The policy provides that the insurance 'may be terminated at any time, by request of the assured, or by the company, on giving notice to that effect.' This language is entirely clear and unambiguous. Either party, desiring to terminate the insurance, may do so simply by giving notice to that effect to the other party. Nothing more is required. It is true the contract further provides, in the same paragraph, that, on surrender of the policy, the company shall refund to the insured the unearned premium; but the return of such premium is not made a prerequisite to the termination of the insurance. That is to be paid only on production and surrender of the policy. By notice the insurance is terminated, and the relations of the parties are changed from that of insurer and insured to that of debtor and creditor, for the amount of the unearned premium.”

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