insured demanded a return of all the premiums paid by him, with interest, less the amount of his premium notes, and that said notes should be delivered up to be canceled; but the court held that he was not entitled to a recovery for such amount, and said that he had the benefit of insurance during the life of the policy, and that the value of that insurance should be deducted from the aggregate amount of his payments.

In Mutual Reserve Fund Life Asso. v. Ferrenbach (1906) 7 L.R.A. (N.S.) 1163, 75 C. C. A. 304, 144 Fed. 342, the court, in discussing numerous cases in which the measure of recovery for unlawful cancelation of a life insurance policy had been held to be the total amount of premiums paid by the insured prior to the time of the wrongful cancelation, said: "Some of these proceed upon the assumption that, prior to the time of wrongful cancelation, the insured or beneficiary never received any benefit from the policy, and, on the other hand, that the insurance company gave nothing of value for the premiums paid to it. There is involved in this a misconception of the theory and business of life insurance. Not only is the protection of insurance of actual, positive value while it endures, but the cost to the insurer of carrying the risk can be ascertained almost to a mathematical certainty. There is no more reason for saying that an insured has nothing of value until he dies, than there is for saying that one is not benefited by a policy of fire insurance unless his house is destroyed by fire."

In McKee v. Phoenix Ins. Co. (1859) 28 Mo. 383, 75 Am. Dec. 129, it is held that, if an insurance company wrongfully determines a contract by refusing to receive a premium when it is due, the insured has a right to treat the policy as at an end and to recover all the money he has paid under it. (With regard to the measure of damages, the court said in this case: "The question of the measure of damages for a breach of the contract to insure the life of the husband, he being still alive, has not been argued, and we express no opinion in relation to it.

Certainly, the mere return of the premiums, with interest, would not be the standard in all cases. In many it would be very unjust, especially after the policy had continued for years and the period of existence had consequently been shortened. If the person whose life is insured, though alive, should be laboring under a disease which must speedily result in his dissolution, the insurer would not be permitted to escape the payment of the amount for which the life was assured, by putting an end to the contract of insurance.")

Metropolitan L. Ins. Co. v. McCormick (1898) 19 Ind. App. 49, 65 Am. St. Rep. 392, 49 N. E. 44, holds that the only case in which premiums paid for life insurance can be recovered is where no risk has attached.

In Ebert v. Mutual Reserve Fund Life Asso. (1900) 81 Minn. 116, 83 N. W. 506, the court, in discussing the amount of damages that could be recovered for wrongful cancelation of a policy, upon the ground of nonpayment of premiums or assessments, without specifically deciding the question, said: Appellant "can only recover such damages as naturally result from the act complained of. He had the benefit of several years' insurance, and that was a consideration for the money he paid. If death had occurred during that period, the beneficiary of the policy could have enforced payment. There are decisions to the effect that the measure of damages in such a case is the amount of the premiums paid, but the weight of authority is against that proposition. The sounder rule is, that the damages are to be measured by the position the parties occupied at the time of cancelation. If, at that time, plaintiff's health had become impaired to such an extent as made it impossible to secure other insurance, the extent of his damages would be different than if new insurance could be had. If he could at that time have taken out other insurance in a similar company, the measure of damages would be the difference between the cost of such new insurance for the term of his natural life, according to the mortu

ary tables, and the cost of carrying the canceled policy for such term according to the rates established by the 1889 tables as of the age of entry. But if his health had become impaired, and new insurance could not have been procured, then the measure of damages would seem to be the present value of such a policy as of the date of death, according to the mortuary tables, less the estimated cost of carrying the same from the date of cancelation at his then age. The rates, as of the age of entry, as fixed by the 1889 tables, would be prima facie the cost of such insurance, and the burden would be upon the defendant to show it otherwise."

In Keyser v. Mutual Reserve Fund Life Asso. (1901) 60 App. Div. 297, 70 N. Y. Supp. 32, the defendant was

an

assessment insurance company. The plaintiff, as insured, refused to pay an assessment which he considered illegal as being above the amount which his certificate of membership called for. By this action the plaintiff seeks to recover the amount of premiums paid, with interest. The court, in holding that he was not entitled to recover, said: "If there was a breach of the contract by the defendant, the plaintiff would be entitled to recover the damages sustained by the breach, but upon no principle would he be entitled to recover the amount that he had paid during the years that he had been a member of the association. During that period he had received from the defendant the benefit of an insurance upon his life. . . At least to the extent of the reasonable value of that insurance during this period, the defendant was entitled to retain the amount that it had received."

In the following cases, without considering the question of deduction for the insurer's risk in affording the insured the enjoyment of protection, the courts hold that the insured may recover the amount paid as premiums or assessments, but the recovery of interest is uncertain, since the court does not specifically hold that interest is included (however, in most cases it may be inferred from the fact that 48 A.L.R.-8.

the action is brought for the recovery of premiums and interest, or that the court cites or follows cases in which the recovery of premiums and interest has been permitted):

United States.-Michaelsen v. Security Mut. L. Ins. Co. (1907) 83 C. C. A. 334, 154 Fed. 356, 12 Ann. Cas. 37.

Iowa. Fort v. Iowa Legion of Honor (1909) 146 Iowa, 183, 123 N. W. 224 (question of interest not decided). Missouri.-McKee v. Phoenix Ins. Co. (1859) 28 Mo. 383, 75 Am. Dec. 129.

North Carolina.-Lovick v. Providence Life Asso. (1892) 110 N. C. 93, 14 S. E. 506.

Ohio.-Northwestern Nat. L. Ins. Co. v. Hare (1904) 26 Ohio C. C. 197. Pennsylvania. Tilow v. Reliance L. Ins. Co. (1914) 246 Pa. 503, 92 Atl. 747; Kerns v. Prudential Ins. Co. (1899) 11 Pa. Super. Ct. 209.

West Virginia.-McCall v. Phoenix Mut. L. Ins. Co. (1876) 9 W. Va. 237, 27 Am. Rep. 558.

In the following cases, the court, after considering the question of a deduction for the benefit of insurance afforded the insured, refused to grant any deduction, and held that the insured was entitled to recover the amount paid as premiums or assessments (however, it is uncertain as to whether interest is included): Supreme Council, A. L. H. v. Black (1903) 59 C. C. A. 414, 123 Fed. 650, affirming (1903; C. C.) 120 Fed. 580, certiorari denied in (1903) 191 U. S. 568, 48 L. ed. 305, 24 Sup. Ct. Rep. 841; Henderson v. Supreme Council, A. L. H. (1903; C. C.) 120 Fed. 585 (tried with above case); Suess v. Imperial L. Ins. Co. (1895) 64 Mo. App. 1.

In the Alabama Gold L. Ins. Co. v. Garmany (1884) 74 Ga. 51, the court, in considering the abatement of damages on account of intermediate benefits which the plaintiff derived from the policy during its existence, said: "It rests upon the well-established principle that a party to an entire contract, who has partly performed it, and thereupon subsequently abandons its further performance according to

its stipulations, voluntarily and without fault upon the part of the other party, or his consent thereto, can recover nothing for such part performance."

In Fort v. Iowa Legion of Honor (1909) 146 Iowa, 183, 123 N. W. 224, the court said, in speaking of the proper amount of damages for wrongful cancelation of an insurance policy by a mutual benefit association, that there was much ground for saying that the amount of premiums paid, with interest, should not be the true measure of recovery; however, that, since the question was not properly before them, they would not decide upon it.

In Grand Lodge, B. R. T. v. Martin (1919) Tex. Civ. App. —, 218 S. W. 40, the court, in holding erroneous an instruction to the effect that the measure of damages is the amount which, if paid "now," would represent plaintiff's damage, and that the jury should take into consideration the amount of the policy, the length of time the insured would probably live, and the cost to plaintiff of carrying insurance under the contract issued by defendant, said: "When the repudiation of the contract by the insurer has no legal effect upon his obligation specified in the policy, and is not attended with any condition or circumstances which impair the value of the contract, the election of the insured to acquiesce in the abandonment, and thus terminate the policy, is purely voluntary. The parties are then in the attitude of having agreed to rescind their contract. The appropriate remedy would then be not an action by the insured for a breach of the contract, but one for reimbursement. There can be no breach of an executory contract in advance of its maturity, unless the offending party has placed some obstacle in the way of performance. In such instances, the termination of the insurance contract results not from the misconduct of the insurer, but from the act of the insured in exercising his option to rescind. The policy ceases to be effective because the insured consents that it may be canceled. Hence, whatever right he thereby loses is such as he voluntarily

surrenders; and he cannot thus surrender a legal right and then claim damages for its loss. The contract being out of the way by his concurrence in the acts of the insurer, the most the insured may claim is restoration to his original status. This, it seems, may be accomplished by a return of the premiums paid, together with legal interest. That rule, however, is not applicable to cases where the cancelation of the policy by the insurance company, in legal effect, terminates the insurance, or is attended by conditions which impair or destroy the value of the insurance contract. In such instances the loss resulting from the wrongful conduct of the insurer may exceed the sum of the premiums paid. But whether they do or not, that rule does not furnish the correct standard for loss. The amount recoverable should be controlled by that standard which best determines the extent of the loss occasioned by the wrong committed, and it is doubtless true that the value of the lost insurance policy would furnish the most satisfactory test."

In Supreme Lodge, K. P. v. Neeley (1911) Tex. Civ. App., 135 S. W. 1046, where suit was brought to recover damages on account of the wrongful cancelation of an insurance policy, the insured claiming as his measure of damages the premiums paid by him, with lawful interest thereon from the respective payments, the court, in discussing the measure of damages, said: "The reasoning of the courts holding that the premiums paid, with the interest thereon, is the proper measure of damages, where an insurance company has undertaken to repudiate its contract, is not at all satisfactory to our minds. We think much confusion on this subject would have been avoided had the courts considered the fact that a suit upon such breach of contract is simply a suit for damages, and had they kept in mind the well-settled standard in all such cases. Punitory damages and penalties given by statute aside, there is no principle of law better settled than that the measure of damages is the pecuniary loss sustained." The

court continuing said: "It is a wellestablished rule that, if a party sues for breach of an executory contract, he must account for the benefits, if any, which he has received under such contract."

And in Speer v. Phoenix Mut. L. Ins. Co. (1885) 36 Hun (N. Y.) 322, the court said: "The plaintiff had two remedies,-one, to enforce the policy in equity by compelling the company to receive the premium and continue the insurance in force; the other, to recover at law such damages as he sustained by reason of the breach. He elected the second of those remedies, and succeeded in establishing that the defendant is liable to pay the damages that have resulted to the plaintiff by its unjustifiable acts. As such damages he has been allowed to recover the full amount of each annaal premium paid by him from year to year, with interest from the date of each payment. This measure of damages can only be sustained upon the basis of a total failure of consideration for the premiums annually paid. But there has been no such failure, because, the policy being obligatory upon the company, each one of those payments was necessary by its terms to keep it in force, and each secured to the plaintiff for the year for which it was paid the continued assurance of the life covered by the policy. He acquired and received by each annual payment precisely what he contracted for, to wit, the valid insurance of his father's life; and the verdict has established that, had the father died at any point of the period during which the payments were made, the plaintiff would have been entitled to recover the $10,000 of insurance. There has been, therefore, no failure of consideration, but each party has received under the contract from year to year precisely what was contracted for: the company has received its premiums, the plaintiff has received the obligation of the company to pay the amount insured in the contingency of death. This state of facts and of law necessarily results from the establishment by the verdict of the obligatory character of the policy. But the

plaintiff had an additional right secured to him by the policy, which was to have it continued by the payment of the same rate of premium annually, until the death of his father. That right was based upon an average valuation of the probabilities of his father's life, according to established tables or rules. When the company broke this contract, and the plaintiff decided to sue for damages instead of compelling the continuance of the contract, he was entitled to recover a sum that equaled the value to him of the policy; or, in other words, that would make good to him the loss he sustained by its breach. One mode of ascertaining that would be to determine the actual value of the policy at the time of its breach. By that is not meant what the company would be willing to pay for it as the surrender value under some rule of its own, but what it would cost the plaintiff to replace the broken contract by another of equal value to him for the same amount of insurance and at the same rate of annual premium. His father, on whose life the policy was taken, had advanced in years and doubtless in infirmities. The difference in cost, in a responsible company, of a policy upon his life, assuring the same at $10,000 during life, would make good the loss caused by the breach. That amount could easily be ascertained; and the payment of that difference, together with the amount of premium called for by the present policy, would put the plaintiff in the position in which he would have been, had no breach occurred."

In Krebs v. Security Trust & L. Ins. Co. (1907; C. C.) 156 Fed. 294, Wolver ton, District Judge, after stating the two rules on the subject of the measure of damages for wrongful breach of an insurance contract, one or the other of which the majority of courts have followed, but between which there is an irreconcilable conflict, said: "None of these cases seem to have made any distinction between a policy of insurance that provides for insurance alone and one that provides for such insurance with an investment feature added, or when the

assured is entitled also to accumulations and profits. A case has come to my notice from West Virginia (Abell v. Penn Mut. L. Ins. Co. (1881) 18 W. Va. 400), where this distinction is discussed very intelligently and ably, and the measure of damages is there stated. In such a case the company can only claim payment for the actual risk it has run, and cannot rightfully claim to be paid anything as profit on the policy. The company must, therefore, when it is at fault, surrender the entire profits of the insurance contract, and be content to retain only what will compensate it for the risk it has run. It would follow, then, that the measure of damages in such a case would be increased by the amount of profits to which the assured would be entitled, none of which the company could claim, because it has rendered no just consideration therefor to the assured." Continuing, however, he said: "Unaccompanied by the feature discussed in the West Virginia case, I am constrained to adopt the latter of the two rules, indicating the measure of damages to which the assured is entitled, because it has the sanction of the Supreme Court of the United States. However, as the present policy, as appears from the complaint, has the accumulation feature added, it seems to me, and I so hold, that the measure of damages should be in accordance with the West Virginia doctrine."

c. Value of policy.

The second rule above set out, to the effect that the measure of damages for wrongful cancelation, repudiation, or termination of the policy of insurance, is the value of the policy, is supported by the following decisions, among which may be noted the reported case and a decision of the United States Supreme Court:

In Lovell v. St. Louis Mut. L. Ins. Co. (1884) 111 U. S. 264, 28 L. ed. 423, 4 Sup. Ct. Rep. 390, where the insurance company transferred its business to a new company, thus putting it out of its own power to fulfil its contract with the insured, the court held that the amount for which the complainant

was entitled as damages was what is called and known in the life insurance business as the value of the policy at the time it was surrendered, with interest, less the amount of his premium note which should be surrendered and canceled. The court, with regard to the equitable value of the policy, said that it could be shown by the ordinary tables used by every life insurance company, taking into consideration the age of the insured at the time it was issued, and the number of years it has run.

In Capital City Ben. Soc. v. Travers (1925) 55 App. D. C. 214, 4 F. (2d) 290, in an action to recover damages for the wrongful cancelation of an insurance policy, the court held that the insured only lost the value of the policy at the time of cancelation, and that, since the insured had died, the measure of damages would be the face value of the policy, together with interest from the date of cancelation, less the unpaid assessments due thereon at the time of cancelation, without deduction because of any benefits which had been received at any time by the insured.

In Brooklyn L. Ins. Co. v. Weck (1881) 9 Ill. App. 358, it is held that, where the assured receives notice from the company that it is canceling the insurance policy, the insured may elect to consider the contract at an end or else he may consider it in full force. If he elects to consider the policy at an end, then the question arises whether the company was justified in the declaration of forfeiture. If it was, there can be no further liability; if it was not, then the assured ought to have the value of the policy at the time of the forfeiture, which would be the difference between the amount paid and the cost of carrying the risk.

In Mutual Reserve Fund Life Asso. v. Ferrenbach (1906) 7 L.R.A. (N.S.) 1163, 75 C. C. A. 304, 144 Fed. 342, where a policy of insurance issued on the investment plan was wrongfully canceled by the insurance company, the court held that the measure of damages should be for the amount of the policy, less the cost of carrying it to maturity had it remained in force;