cellation is not affected by the fact that the company, in instructing its agent to cancel, made some reference to its willingness to issue a new policy, on terms favorable to the assured, in certain contingencies.185 But the cancellation of an insurance policy has no effect in itself on any right of action which has previously accrued under the policy,188 and the assured will be entitled to recover the amount of loss or liability, less the amount of the premium earned up to the time of the loss, if it has not already been paid.187 A policy is also usually canceled on settlement for a loss occurring under it. But where an accident policy provided alternate indemnities for the loss of sight or for continued disability, and within thirty days after the accident the insured sent in a claim for continued disability and signed a release discharging the policy, and within ninety days, as stipulated in the policy, gave notice of loss of sight, it was held that the release did not constitute a bar to the claim for loss of sight.188

§ 490. Remedies for Wrongful Cancellation.-If a life insurance company illegally declares the cancellation or forfeiture of one of its policies, and refuses to accept any further premiums 'from the assured, he has a choice of several remedies. In the first place, he may maintain a bill in equity to set aside or annul the alleged unlawful cancellation and to reinstate the policy or declare it a valid and subsisting contract.189 In the next place, steadily refusing to acquiesce in the alleged cancellation, he may tender the

185 Mosser v. Knights Templars' & Masons' Life Indemnity Co., 115 Mich. 672, 74 N. W. 230.

188 Baker v. Citizens' Mut. Fire Ins. Co., 51 Mich. 243, 16 N. W. 391.

187 American Employers' Liability Ins. Co. v. Fordyce, 62 Ark. 562, 36 S. W. 1051, 54 Am. St. Rep. 305.

188 Cunningham v. Union Casualty & Surety Co., 82 Mo. App. 607. 189 Metropolitan Life Ins. Co. v. McCormick, 19 Ind. App. 49, 49 N. E. 44, 65 Am. St. Rep. 392; Clark v. Equitable Life Assur. Soc., 76 Miss. 22, 23 South. 453; Smoot v. Bankers' Life Ass'n, 138 Mo. App. 438, 120 S. W. 719; Prichard v. Security Mut. Life Ins. Co., 140 App. Div. 879, 124 N. Y. Supp. 650; Mincho v. Bankers' Life Ins. Co., 124 App. Div. 578, 109 N. Y. Supp. 179; Kelly v. Security Mut. Life Ins. Co., 106 App. Div. 352, 94 N. Y. Supp. 601. But compare Hayner v. American Popular Life Ins. Co., 35 N. Y. Super. Ct. 266.

amount of each premium as it becomes due, and if this is continued till his death, the full amount of the policy may then be recovered by the person entitled to receive it.190 Third, according to some of some of the authorities, the wrongful refusal of a life insurance company to receive premiums on a policy which are due by its terms and to continue the policy in force is a breach of the contract which entitles the policy holder to maintain an action to recover damages therefor.101 And in such a case the beneficiary may, during the life of the insured, recover the value of the policy at the time it was declared forfeited.192 In an action by the insured, the measure of damages is the damage resulting at the date of the cancellation, allowance being made for insurance already had.193 It is said that the present value of a life policy, not paid up, is the sum which, at reasonable compound interest, will equal the face of the policy at the end of the period of life expectancy of the insured, less the premiums becoming due during that period, with similar interest thereon, provided the insured is insurable; and if he is not, that fact may be shown, so that a greater premium would be required than that shown by the tables of life insurance.194 In the case of a paid-up policy, the fact that its present value is uncertain and difficult to ascertain will not prevent the courts from determining such value in an action for damages for its wrongful cancellation by the insurer.195 A variation of the same rule for ascertaining the damages recoverable is thus stated by some of the decisions: The measure of damages

190 Metropolitan Life Ins. Co. v. McCormick, 19 Ind. App. 49, 49 N. E. 44, 65 Am. St. Rep. 392.

191 Michaelsen v. Security Mut. Life Ins. Co., 154 Fed. 356, 83 C. C. A. 334, 12 Ann. Cas. 37. Contra, Kelly v. Security Mut. Life Ins. Co., 186 N. Y. 16, 78 N. E. 584, 9 Ann. Cas. 661. See Clifford v. Protective Life Ass'n, 36 Misc. Rep. 287, 73 N. Y. Supp. 467.

192 Merrick v. Northwestern Nat. Life Ins. Co., 124 Wis. 221, 102 N. W. 593, 109 Am. St. Rep. 931.

193 Ebert v. Mutual Reserve Fund Life Ass'n, 81 Minn. 116, 83 N. W. 506, 834, 84 N. W. 457. And see Mutual Life Ins. Co. v. Allen, 212 Ill. 134, 72 N. E. 200.

194 Supreme Lodge Knights of Pythias v. Neeley (Tex. Civ. App.) 135 S. W. 1046.

195 Palmer v. Mutual Life Ins. Co., 121 Minn. 395, 141 N. W. 518, Ann. Cas. 1914D, 160.

is the amount of the policy, less the cost of carrying it to maturity had it remained in force, all the amounts entering into the calculation to be valued on a six per cent basis, as of the date of cancellation.196 Still another rule is that, if the insured is in a state of health to enable him to procure other insurance of like nature and kind, his measure of damages is the difference between the cost of carrying the insurance which he has and the cost of new insurance for the same amount and term, with the addition, in case his policy has an investment feature or entitles him to accumulations and profits, of all such profits or accumulations.197

198

In such an action against an insurance company, the financial condition of the insured, with reference to his ability to continue the payment of premiums, is not material,1 nor is a previous intention of his to give up his policy, nor the fact that he took out other insurance in lieu of that claimed to be canceled.199 Where the beneficiary in the policy is the wife of the insured, it is not necessary for her to join him in an action against the insurance company for damages for its wrongful act in forfeiting the policy.200 But in any case, it is necessary that such an action should be brought with reasonable promptness, and that no such delay should intervene as would raise an estoppel against the plaintiff on the ground of laches.201

Although the policy has neither been canceled nor forfeited yet if it has been absolutely repudiated by the insurer, this is such a breach of contract as will give the insured an immediate right of action. And it has been held that where an insurance company assigns all its policies and

196 Mutual Reserve Fund Life Ass'n v. Ferrenbach, 144 Fed. 342, 75 C. C. A. 304, 7 L. R. A. (N. S.) 1163; Kelly v. Security Mut. Life Ins. Co., 106 App. Div. 352, 94 N. Y. Supp. 601.

197 Krebs v. Security Trust & Life Ins. Co. (C. C.) 156 Fed. 294; Provident Savings Life Assur. Soc. v. Ellinger (Tex. Civ. App.) 164 S. W. 1024.

198 Mutual Life Ins. Co. v. Allen, 212 Ill. 134, 72 N. E. 200. 199 Green v. Hartford Life Ins. Co., 139 N. C. 309, 51 S. E. 887, 1 L. R. A. (N. S.) 623, 4 Ann. Cas. 360.

200 Merrick v. Northwestern Nat. Life Ins. Co., 124 Wis. 221, 102 N. W. 593, 109 Am. St. Rep. 931.

201 Tabor v. Michigan Mut. Life Ins. Co., 44 Mich. 324, 6 N. W. 830.

transfers all its assets to another company, and either goes out of business or becomes consolidated with such other company, in either case shifting to the new company its obligation to the insured, and placing it beyond its own power to perform such obligation, except in so far as it can compel performance by such other company, there is a breach of its contract entitling the insured to a recovery of damages, and the fact that the assignee is solvent and able and willing to carry out the original contract does not prevent a breach.202 But in a case in Virginia, it was alleged that the defendant, a mutual insurance company, had given the assured notice that it would declare his policy forfeited if a certain assessment, alleged by him to be illegal, was not paid by a certain time; that there was an attempt by the company to coerce out of the assessment class all the young and good risks, thus leaving the burdens of the assessment class on those least able to bear them; and that there had been a fraudulent misappropriation by the officers of the company of large sums belonging to it as trustee of its members, and that they had made assessments in bad faith, and not to meet expenses, but to compel policy holders above a certain age to abandon their policies. But it was held that none of these acts constituted such an absolute repudiation of the policy as would justify an action by the insured, and that, at any rate, an action will not lie for an anticipatory breach of a policy before the death of the insured.20:

§ 491. Surrender of Policy by Insured.-Fire insurance policies commonly contain a provision for cancellation, at the instance and request of the assured, on his surrendering the policy, the company in that case retaining, out of the premium paid, the cost of the insurance for the time the policy has been in force at "customary short rates," that is, at the rate which would be charged for a short

202 Washington Life Ins. Co. v. Lovejoy (Tex. Civ. App.) 149 S. W. 398; Wolfe v. Washington Life Ins. Co., 63 Misc. Rep. 571, 118 N. Y. Supp. 599. See Provident Savings Life Assur. Soc. v. Ellinger (Tex. Civ. App.) 164 S. W. 1024.

203 Lee v. Mutual Reserve Fund Life Ass'n, 97 Va. 160, 33 S. E.

term risk, which is proportionally greater than for a policy. running for one or more years. Under such a provision, the assured has the right at any time to obtain the cancellation of the policy by simply complying with the provisions in the policy itself,204 and the company must cancel the policy on the request of the assured or his legal representatives.205 And it is said that where the policy was issued on an application containing false statements fraudulently inserted therein by the company's agent, it is the duty of the insured, on discovering the fraud, forthwith to disclose the same to the insurance company and tender the policy for cancellation.206 But the insured is not entitled to surrender the policy for cancellation until he has paid the premium or assessment, as the case may be.207 And a request for cancellation of a policy takes effect from the time of its receipt by the insurer with tender of the policy,208 and where the assured merely notifies his broker to cancel a policy, and he fails to do so, the policy remains in effect, since the insurance company must be notified of the cancellation in order to make it effective.200

As to the authority of insurance agents and brokers to surrender for cancellation policies issued to their principals, the decisions are not free from conflict. But in the first place, it is clear that when an agent has authority, either express or implied, to request the cancellation of an insurance policy, a cancellation by the company on his demand is valid,210 and authority to cancel a policy may be shown. to have been conferred on an insurance broker, and, when shown, his acts or agreements in that behalf will be imputed to and will bind the insured.211 But authority grant

204 Burlington Ins. Co. v. McLeod, 34 Kan. 189, 8 Pac. 124. 205 State Ins. Co. v. Farmers' Mut. Ins. Co., 65 Neb. 34, 90 N. W. 997.

206 Curry v. Stone (Tex. Civ. App.) 92 S. W. 263.

207 Home Ins. Co. v. Hamilton, 143 Mo. App. 237, 128 S. W. 273; Backenstoe v. O'Neil, 18 Pa. Super. Ct. 55.

208 Farmers' Mut. Ins. Co. v. Phoenix Ins. Co., 65 Neb. 14, 90 N. W. 1000, 95 N. W. 3.

209 Morris McGraw Wooden Ware Co. v. German Fire Ins. Co., 126 La. 32, 52 South, 183, 38 L. R. A. (N. S.) 614, 20 Ann. Cas. 1229. 210 Fowler Cycle Works v. Western Ins. Co., 111 Ill. App. 631. 211 Stevenson v. Sun Ins. Office, 17 Cal. App. 280, 119 Pac. 529.