
187 U.S. 335 (1902)
IOWA LIFE INSURANCE COMPANY
v.
LEWIS.
No. 53.
Supreme Court of United States.
Argued October 21, 22, 1902.
Decided December 8, 1902.
ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF TEXAS.
*344 Mr. Maurice E. Locke for plaintiff in error.
Mr. Michael J. Colbert for defendant in error. Mr. William Capps and Mr. S.B. Cantey were with him on the brief.
MR. JUSTICE McKENNA, after making the foregoing statement, delivered the opinion of the court.
1. It will be observed that there was printed upon the back of the receipt given for the first premium the following: "If note be given for the payment of the premium hereon, or any part thereof, and same is not paid at maturity, the said policy shall cease and determine." The contention of plaintiff in error is that such provision constituted a part of the contract; and contending also that the note was not paid, it urges that the policy ceased and determined. The same contention was made in the trial court but rejected. The court held that the provision on the back of the receipt constituted no part of the contract, and instructed the jury, against the objection of plaintiff in error, "that the contract by its own explicit terms, is wholly included in the policy  the life insurance proper, and in the application for such life insurance policy, which, by the terms of the policy, is made a part of the contract. This is recited to be the case in the face of the policy and on the back of the receipt itself. Under the provisions and stipulations of these two instruments, by the passing of the insurance policy to the deceased and the note of the deceased and his promise to pay to the insurance company, the minds of the insurance company and the deceased met, upon the conditions and provisions of the note, contract and the application for the insurance, which made a part of the contract. In the opinion of the court there was no meeting of the minds, or agreement between the parties as to the *345 provision upon the back of the receipt. [The italics are ours.] Such provision is nowhere noted in the face of the contract of insurance; it is nowhere noted in the application for the insurance, and the only place it is found is upon the back of the receipt, no reference being made to any such provision elsewhere. Even if the provision were considered a part of the contract entered into between the parties, yet it is such a provision that, if taken advantage of, would require affirmative action on the part of the company; that is to say, when the note was not paid at maturity the company should have within a reasonable time thereafter notified the insured that in view of the fact that his note given in part payment of the premium upon the policy had not been paid, the policy, which was issued in consideration of such note, ceased and determined. There is no evidence that any such action was taken on the part of the insurance company."
The court also instructed the jury "that it was the duty of the company to notify the insured of the non-payment of the note, and that the policy, because of such non-payment, had ceased and determined, and that the company would no longer be liable thereunder."
As these instructions expressed the conception of the law and the rights of the parties as entertained by the court, the court, also regarding the conduct of the company as waiving proofs of death, naturally instructed the jury that it was its "duty to return a verdict for the plaintiff for the face of the policy," with interest and penalty, and attorney's fees, as prescribed by the Texas statute. "This, therefore," said the court, "leaves to the jury but one question to determine, the fixing of reasonable attorney's fees for the prosecution of this suit."
Were the instructions correct? And first, as to what papers constituted the contract.
The delivery of a policy of insurance and the payment of the premium are reciprocal or concurrent considerations. Necessarily, therefore, the payment of the premium can be exacted simultaneously with the delivery of the policy. Of course, such payment can be waived and a note  the credit of the assured  accepted, either absolutely or upon conditions. *346 And we do not see how it can make any difference where the conditions are expressed  whether in the policy, in the note or in the receipt given for the premium, or whether on the face of the latter or on its back. The agreements of parties may be expressed in many papers, and if the connection of the papers is not apparent it may be shown by parole. The present case does not even need the aid of that rule. The receipt expressed the conditions upon which the note was received  unmistakably expressed them. The receipt of the premium was expressed to be "subject to the terms of the contract and the conditions on the back" of the receipt. And the assured was directed to read the notice upon the back of the receipt. The notice was as follows: "If note be given for the payment of the premium hereon or any part thereof, and same is not paid at maturity, the said policy shall cease and determine."
It is not contended that it was not competent for the company to make the condition. It is asserted that it did not become a part of the contract upon which the minds of the parties met  that the minds of the parties only met upon the application, the policy and the note. We cannot assent to this view. The payment of the premium was a very essential thing, and the manner of its payment, whether in cash or by note, and provision for the payment of the note and the effect of its non-payment, were also essential things, and necessarily must have been of mutual concern to the parties and upon which their minds must be considered as having met. To hold otherwise would be to hold that the parties were indifferent to that which materially concerned them. It was certainly of concern to the assured to know whether he would be indebted upon an overdue note or whether his insurance had lapsed.
All of the papers, therefore, embodied the agreement of the parties. In Insurance Co. v. Norton, 96 U.S. 234, the agreement was considered as "embodied in the policy and the endorsement thereon, as well as in the notes and the receipt given therefor." (page 240.)
2. But determining that the minds of the parties met upon the receipt does not solve the main question in the case. The receipt provides that, if the note, or any part of it, be not paid *347 at maturity, the policy shall "cease and determine." What does this mean? That the policy shall cease and determine at the occurrence of maturity, or at the option and upon some affirmative action of the company? The latter is the contention of the defendant in error and, as we have seen, the ruling of the trial court; the former is the contention of the plaintiff in error. Upon the issue thus made the cases are not harmonious. The decisions of this court, however, support the contention of plaintiff in error.
In New York Life Insurance Company v. Statham et al., 93 U.S. 24, Mr. Justice Bradley, delivering the opinion of the court, said: "Promptness of payment is essential in the business of life insurance. . . . Delinquency cannot be tolerated nor redeemed, except at the option of the company. . . . Time is material and of the essence of the contract. Non-payment at the day involves absolute forfeiture, if such be the terms of the contract. . . . Courts cannot with safety vary the stipulation of the parties by introducing equities for the relief of the insured against their own negligence." The intervention of war was held not to avoid a forfeiture.
This case was quoted and its doctrine announced again in Klein v. Insurance Co., 104 U.S. 88; and again in Thompson v. Insurance Co., 104 U.S. 252.
In Klein v. Insurance Co. it was said: "If the assured can neglect payment at maturity and yet suffer no loss or forfeiture, premiums will not be punctually paid. The companies must have some efficient means of enforcing punctuality. Hence their contracts usually provide for the forfeiture of the policy upon default of prompt payment of the premiums. If they are not allowed to enforce this forfeiture they are deprived of the means which they have reserved by their contract of compelling the parties insured to meet their engagements. The provision, therefore, for the release of the company from liability on the failure of the insured to pay the premiums when due is of the very essence and substance of the contract of life insurance. To hold the company to its promise to pay the insurance, notwithstanding the default of the assured in making punctual payment of *348 the premiums, is to destroy the very substance of the contract."
A forfeiture, of course, may be waived, for the obvious reason expressed in Insurance Co. v. Norton, 96 U.S. 235, "a party always has the option to waive a condition or stipulation made in his own favor," and an agent can be given such power and whether it has been given or not may be proved by parol.
The latter case is an important one. The policy provided that not only a failure to pay any premium, but "the failure to pay at maturity any note, obligation or indebtedness (other than the annual credit or loan) for premium or interest due under said policy or contract, shall then and thereafter cause said policy to be void without notice to any party or parties interested therein."
The court not only asserted the doctrine of strict punctuality of payment ad diem, but applied the rule to a note for part payment.
Expressing its view of forfeitures, the court said: "Forfeitures are not favored in the law. They are often the means of great oppression and injustice. And, where adequate compensation can be made, the law in many cases, and equity in all cases, discharges the forfeiture, upon such compensation being made. It is true, we held in Statham's case, 93 U.S. 24, that in life insurance, time of payment is material, and cannot be extended by the courts against the assent of the company. But where such assent is given, the courts should be liberal in construing the transaction in favor of avoiding a forfeiture."
We shall presently consider how far these principles apply to a claim of waiver of forfeiture in the case at bar. Our present inquiry is when and how does forfeiture occur, and it seems an obvious conclusion from the cited cases that forfeiture occurs upon non-payment of the premium ad diem. But against the conclusion Insurance Co. v. French, 30 Ohio St. 240, and its approval by this court in Thompson v. Insurance Co. are cited.
It was contended in the latter case that the mere taking of notes in payment of the premium was, in itself, a waiver of the conditional forfeiture, and Insurance Company v. French, 30 Ohio St. 240, was cited to support the contention. To the *349 contention and citation it was replied: "But, in that case, no provision was made in the policy for a forfeiture in case of the non-payment of a note given for the premium, and an unconditional receipt for the premium had been given when the note was taken; and this fact was specially adverted to by the court. We think that the decision in that case was entirely correct. But in this case the policy does contain an express condition to be void if any note given in payment of premium should not be paid at maturity. We are of opinion, therefore, that whilst the primary condition of forfeiture for non-payment of the annual premium was waived by the acceptance of the notes, yet, that the secondary condition thereupon came into operation, by which the policy was to be void if the notes were not paid at maturity."
A review of Insurance Company v. French is demanded. Was the reasoning in that case approved or only its conclusion? The policy passed upon contained a provision for forfeiture if the premium should not be paid, but no provision for forfeiture if premium notes should not be paid. The receipt which had been given was absolute. The provision for forfeiture was contained in the note. The case was somewhat complicated by questions of fact regarding the power of the company's agent to accept the notes or to grant extensions of time, but that the power existed was accepted as concluded by the verdict. The insurance company, nevertheless, asserted as a conclusion from the non-payment of the note that the policy had been forfeited. To this the court (Supreme Court of Ohio) replied:
"In most of the cases which have been cited in argument the policy contained a clause, that it should be void upon nonpayment of the premium, or any note given for such premium. This policy, however, contains no clause of avoidance for the non-payment of notes given for premium.
"It is not insisted that the non-payment of the check alone forfeited the policy, but it is claimed that failure to pay the note does work out this result. It will be seen that the note stipulates in terms that, if it is `not paid at maturity, said policy is to be null and void.'
"It cannot be successfully maintained that this clause makes *350 the policy absolutely void upon non-payment of the note. Under the authorities such a clause, being introduced for the benefit of the insurance company, means that the policy shall be void if the company insist upon it; but it is their option to say whether this result shall follow or not."
And further 
"We, therefore, cannot consider payment of this note as absolutely necessary before the renewal attached. It may not perhaps be necessary to hold, as did the court below, that demand of payment the day the note was due was necessary to work a forfeiture, but certainly something must be done between the date the note was due and the end of the year to establish and proclaim the forfeiture, or it must be held to be waived."
To sustain the conclusion the following Illinois cases were cited: Teutonia Life Ins. Co. v. Anderson, 77 Illinois, 384; Illinois Central Ins. Co. v. Wolf, 37 Illinois, 354; Provident Life Ins. Co. v. Fennell, 49 Illinois, 180. The court also cited Joliffe v. Madison Ins. Co., 39 Wisconsin, 119, and quoted the following principle: "Forfeitures are not favored in the law, and will not be sustained upon mere inferences. Where, upon breach by one party of a condition or stipulation in a contract, the other party thereto has the option to declare the contract forfeited, and thus relieve himself from liability upon it, and seeks to exercise such option, he must do so unconditionally, and in plain, positive, and unmistakable terms." And the court finally concludes that, "in the case at bar, the company should not have retained the check and note, and remained silent, as they did. Yet it appears that on July 6, 1868, when Simpson refused the premium for that year, French offered to give up his policy if the company would return his check and note. This was refused."
What, then, did this court mean by pronouncing the decision in Insurance Company v. French as "entirely correct?" Were the various principles the law expressed in that case approved or only the conclusion of the court from the facts? Did this court intend to approve the proposition that to cause a forfeiture some affirmative action was necessary by the company  a *351 declaration to that effect and the surrender of the premium notes? To hold the latter would be to hold that this court intended to reverse a number of decisions made upon careful consideration. Indeed it would be contrary to the reasoning in the very opinion in which the French case is approved. A replication was set up alleging a usage of the insurance company to give notice to the assured of the date of payment and answering it this court said: "This is no excuse for non-payment. The assured knew, or was bound to know, when his premiums became due. . . . The reason why the insurance company gives notice to its members of the time of payment of premiums is to aid their memory and to stimulate them to prompt payment. The company is under no obligation to give such notice, and assumes no responsibility by giving it. The duty of the assured to pay at the day is the same, whether notice be given or not."
And again, as to the usage of the company not to demand punctual payment at the day, or to give thirty days of grace, it was said: "This was a mere matter of voluntary indulgence on the part of the company, or, as the plaintiff herself calls it, an act of `leniency.'"
In our other decisions, which we have cited, it was held that time is the essence of the contract, and non-payment at the day involves absolute forfeiture. In none of the cases was there any affirmative action by the company. Forfeiture occurred from non-payment of the premium. The same principle was announced and illustrated in Life Insurance Company v. Pendleton, 112 U.S. 696. In that case a foreign bill of exchange was accepted in payment of the premium, but upon presentation to the drawee was not accepted. There was some controversy as to whether it was presented for payment. The trial court (Circuit Court of the United States) held (7 Fed. Rep. 169) and instructed the jury that the true measure of the duty of the company was to be found in the rules of law governing the holder of commercial paper; that by taking the draft the company assumed all of the duties of the holder of such paper, and that it was, therefore, the duty of the company to have had the draft protested and to have given notice of non-acceptance *352 as a condition of forfeiture. This court disagreed with the Circuit Court and held that protest and notice were not necessary. In other words, held, not the law of commercial paper, but the contract of the parties determined the conditions of forfeiture, and that the contract of the parties was expressed in the draft to be that the policy should become void if the draft was not paid at maturity. "We think it clear," was said:
"Therefore, that notwithstanding the renewal receipt, the condition expressed in the draft was binding on the insured. As we have shown, that condition was that the policy should become void if the draft was not paid at maturity. The draft, being without grace, matured on the 14th of October, 1871. If not paid on that day the policy was forfeited, unless it was the usage of the New Orleans banks to grant days of grace even when they were waived, of which there was some evidence on the trial. In such case the forfeiture would take place, if the draft were not paid on the 17th of October. Of course, it must be presented for payment on the one day or the other  for the drawees could not pay it unless it was presented, for they would not know where to find it. But supposing it to have been presented for payment, and payment refused by the drawees, the condition of forfeiture was complete. Protest and notice of non-payment might be further necessary to hold the drawer, if the insurance company desired to hold him; but they were not necessary to the forfeiture. That occurred when nonpayment at maturity or presentation occurred. The drawer, Pendleton, who took entire charge of the policy for his children, put its existence on the condition of payment of the draft at maturity; and it was his business, as agent or guardian of his children, to see that the draft was thus paid; that the requisite funds were in the hands of the drawees, or that they would pay it whether in funds or not. Such, we think, was the clear purport of the condition, and as the court below took a different view, holding that the insurance company was bound not only to present the draft for payment, but to have it protested for non-payment, before a forfeiture of the policy would ensue, the judgment must be reversed."
*353 See also same case, 115 U.S. 339.
It has been held in cases in the state courts, as in Insurance Co. v. French, that no forfeiture is incurred until notice by the company has been given that it is claimed. And other cases hold that when the condition of forfeiture is in the note only, the mere fact of non-payment at maturity does not of itself avoid the policy. A review of the cases we do not consider necessary. We prefer to follow our own decisions.
Some of those decisions hold, however, as we have seen, that a waiver of forfeiture may be inferred from the conduct of the company, and that "courts seize hold of any circumstances that indicate an election or intent to waive a forfeiture." Insurance Co. v. Norton, 96 U.S. 244.
We do not think such circumstances exist in this case. Of course, such circumstances must have come from the company or from its agent acting within his authority. In the case at bar we need only look at that which took place after the note was given. What preceded that, including the arrangement between Starn, the agent of plaintiff in error, and the assured, for the employment of the latter by the former, must be considered as having been approved by the company. Its rights and the rights of the assured depend, therefore, upon what it did in regard to the note before or after it became due or what Starn did within his authority. The company did nothing but send the note to Starn for collection, and Starn deposited it for collection with the Farmers' and Mechanics' National Bank of Fort Worth, Texas, on August 24, 1898  a month before it was due. The assured did nothing; made no movement, as far as the record shows, for its payment. In other words, the day of maturity came and went, and the note was not paid, and the condition upon which the policy should "cease and determine" occurred, unless Starn's authority lasted and could be exercised after the note became due. He received the note back from the bank on the 25th of September, and on the 29th of September he called at the residence of the assured  the latter then being confined to his bed with typhoid fever (of which he died October 7). The evidence of what transpired there was conflicting, but the record admits would have supported a verdict; *354 "that Starn stated that he had called for the purpose of collecting the note; that the plaintiff promised that it should be fixed at once, and that Starn stated that it could be paid at any time before the date on which he was required to make his monthly report, to wit: October 1st following." And it must also be accepted as true that Starn told Dr. Green that he (Starn) had called at Lewis' house to collect the note, and that the doctor notified Starn that Reeves, the druggist, would pay it, and the latter, on September 30, in the presence of Dr. Green, tendered the amount of the note to Starn, who refused it.
On the 29th of September, as set out in the statement of facts, Starn telegraphed to the company that Lewis offered to pay the premium, and asked if he should receive it. On the 30th the company replied in the negative, and on the same day wrote to Starn. Were Starn's acts authorized? They can only be so held as an inference from the authority given him to collect the note. In other words, that the authority to collect the note conferred authority to extend the time of payment and to waive the forfeiture which had occurred by non-payment. It would be difficult to so hold even if his contract with the company did not forbid the exercise of such power and the provisions of the policy preclude it. The policy provides as follows: "All agreements made by this company are signed by the president or secretary. This power will not be delegated. No other person can alter or waive any of the conditions of this policy, or issue permits of any kind, or make an agreement binding upon said company."
And the contract constituting Starn the company's agent contains the following: "The party of the second part agrees to submit to and abide by all rules and regulations of said company.. . . Agents are not authorized to collect any renewal premium after the day on which the same becomes due, except in accordance with special instructions from the company in each individual case."
There is no evidence of any course of dealing of the company or of Starn which enlarged or modified these instructions, or which induced and excused the default of the assured.
3. The Circuit Court instructed the jury substantially that *355 the plaintiff in error was estopped from setting up the provision of the policy requiring proofs of death. The instruction is assigned as error. We concur with the Circuit Court. The conduct of the company was tantamount to a waiver. Life Insurance Co. v. Pendleton, 112 U.S. 696.
4. Notwithstanding our decision in Mutual Life Association v. Mettler, 185 U.S. 308, the plaintiff in error urges the unconstitutionality of the Texas statute, authorizing the recovery of damages and attorney's fees for failure by life and health insurance companies to pay losses. We are, however, entirely satisfied with the case and its reasoning.
It is insisted, however, that to justify a recovery of the statutory damages demand of payment of the policy before suit was necessary, notwithstanding the denial of liability by the company. The contention is sustained by the decision of the Court of Civil Appeals of Texas in the case of the Northwestern Life Assurance Co. v. Sturdivant, 24 Tex. Civ. App. 331. That case also decided "that the suit itself would not be such demand as the statute intended." It was held, however, that demand could be made after suit and set up by "an amended petition, as an original suit." The Supreme Court of Texas refused a writ of error to review the case. 94 Texas, 706. We may therefore adopt its construction of the state statute. It can be easily conformed to by defendant in error if a new trial of the case at bar be prosecuted.
On account of the errors indicated
The judgment of the Circuit Court is reversed and the cause remanded with directions to award a new trial.
