Insurance Co. v. Heidel. pany which was furnished to plaintiff about the time the policy was taken out. The plaintiff testified that the agent of the company had represented to him, as an inducement to insure, that the dividends of the company in the past had paid the premium notes, and in the future would do the same thing; and that the cash payments would decrease every year. The prospectus also stated that the dividends for the last decade had averaged 72 per cent.; that they had, at no time, been less than 45 per cent.; and that they had always covered the amount of the premium notes. One of the conditions on the back of the policy was the following: "In case the holder of this policy wishes to cancel it after three annual premiums have been paid, a fair proportion of the premiums will be returned, if applied for before the policy has expired." The application by letter was proved as hereinbefore. stated. The prospectus of the company contained this provision: "Not a single policy is rendered invalid, if, at the non-payment of the premium, the assured applies to the company for a paid up policy to the amount of payments already made." The charge of the trial judge makes no direct reference to the pleadings. It recites, however, the substance of the fourth count in stating the contract claimed by the plaintiff to have been made, and the breaches complained of. It plainly proceeds, moroever, upon the hypothesis that the plaintiff is suing, both for a breach of the contract, and for the recovery of the money. Insuranee Co. v. Heidel. paid by him, upon the ground that the contract was avoided ab initio by the fraud of the defendant. For, he says: "If the defendant by fraud induced the plaintiff to pay his money, the contract was void from the beginning, and the plaintiff is entitled to recover back the money he has paid, and interest, if you think he ought to have interest. If you find that there was no fraud, but that defendant has broken its contract, the plaintiff would be entitled to such damages as he has sustained by the breach of the contract." The learned counsel of the appellee necessarily concedes the fact in his able argument, and says that it is plain to him that the jury went off on the judge's second alternative, viz, "that the plaintiff in error was liable for breach of contract in refusing to return a fair amount of the cash premium paid, and. in refusing to issue a paid up policy." His Honor, the trial judge, does reci e in full the three breaches relied on in the fourth count of the declaration, namely, to repeat them in short: 1st. That the company had not cancelled the premium notes. 2d. That it refused to return any part of the cash premiums paid. 3d. That it refused to issue a paid up policy. The averments of fact in the declaration and the proof on which the first of these breaches rests, the trial judge treats as representations, only bearing on the question of fraud which will avoid the contract ab initio. The other two breaches he treats as based on the contract, on which the plaintiff is entitled to the alternative relief of damages for the breach, if the promises were made in good faith and not fraudulently. "With regard to the other rep Insurance Co. v. Heidel. resentations and promises," he says after disposing of the first of the above breaches, "if you believe they were made, and made bona fide, with the intent at the time they were made to perform them in good faith, but afterwards the defendant became unable to perform them, or changed its mind and refused to perform them, that would not be fraud, but a mere breach of contract." It will be seen that his Honor's charge is open to the criticism of the counsel of the plaintiff in error, that upon a count in contract, the question is submitted whether that contract is not void ab initio. And the count itself, it must be admitted, is so worded as to admit of the double construction. But, in the absence of any objection to the count in the declaration on this particular ground in the court below, the plaintiff's counsel is justified in treating it as in contract, and in referring the language of the trial judge in relation to the avoiding of the contract ab initio to the other counts in the declaration. In this view, and considering the verdict as based upon the breach of contract, the first question which arises is, whether the jury were governed by the proper measure of damages in their verdict. They received on the point no assistance from the testimony or the court. For his Honor simply said to them: "If you find there was no fraud, but that defendant has broken its contract, the plaintiff would be entitled to recover such damages as he has sustained by the breach of the contract." And he refused to allow the company to prove, by an insurance agent of several Insurance Co. v. Heidel. year's experience, what was a fair premium per annum for carrying the risk of $5000 on a life policy, and what should be the balance payable in the form of a paid up policy after carrying the risk for ten years. If, however, the verdict of the jury were for the proper amount in view of the nature of the contract and the breaches complained of, we would not be inclined to interfere with it, merely because of the want of testimony or of proper instructions as to the dam ages. The policy was for $5000, in consideration of an annual premium of $153,20. The total amount of premium paid from May 7, 1866, when the policy was issued, to the 3d of May, 1877, when the demand of a return of premium was made, would be $1532, of which $529 were in the note of the defendant in error, and $213 had been returned in dividends. The verdict could only have been, under the charge, for a fair proportion of the premium, or for the value of a paid up policy based on the payments made, less the outstanding note, and the dividend If we deduct the note and the dividend from the total of the premiums, the remainder will be be $790. And if we add to this sum interest from May 3, 1876, to March 15, 1877, when the verdict was rendered, the aggregate will be about $836. But the verdict was for $1257, and was ble view. for too much, in any conceiva The learned counsel for the defendant in error argues that the jury are the proper judges of damages, and that the court will not disturb their verdict, when Insurance Co. v. Heidel. there is no certain measure of damages, unless it is flagrantly extravagrant. But it has long been settled in this State that it is in actions founded on torts, or quasi torts, that the jury must have the latitude and discretion contended for, there being in such cases. no certain means by which the court can say what the damages ought to be. In simple breaches of contract the rule is different, for there the nature of the contract usually admits of the establishment of certainty and precision: Headrick Headrick v. Stewart, 1 Tenn., 476; Me Whirter v. Douglass, 1 Cold., 592. The contract itself must give the measure of damages, and if it fails to do so the damages can only be nominal: State v. Ward, 9 Heisk., 100, 132. The contract of life insurance is based upon statistics, and governed by well settled rules, and the damages resulting from a breach thereof admits of being worked out with unusual accuracy. The assured, especially in a participating policy, becomes an associate with others in a common enterprise, and must bear his share of the joint risk. The annual premiums are not the consideration for the insurance for the particular year, but the graduated rate in view of the entire duration of the policy. The graduated rate increases as the insured advances in years, and the difference between the rate at one age and the rate at a later period constitutes the equitable value of the earlier policy. A well managed company will lay up out of the premiums paid a reserved fund to cover the the increase in the rate, and to meet the payment of the policy when it matures. It is this equitable value that the companies usually |