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Vol. IV.]

THOMAS v. GAIN.

[No. 1.

natter of Haven, 30 frontaproveme

namely, whether the particular burden which it is proposed to levy is or is not a tax in the meaning of that term as it is employed in the Constitution, in making provision that taxes shall be laid by the value of property. If it is a tax in the ordinary sense it must be assessed by value ; if it is not a tax in that sense it must be apportioned on some other basis. But it does not follow that it may be apportioned on any basis whatsoever which the legislature may see fit to prescribe.

It has been decided in this state that an assessment of paving and similar taxes may constitutionally be made in proportion to the frontage of lots along the improvement. Williams v. Detroit, 2 Mich. 560; Motz v. Detroit, 18 Mich. 495; Hoyt v. East Saginaw, 19 Mich. 39. The idea that underlies statutes for this purpose is, that the benefit to the abutting lots is generally in proportion to the length of their respective front, and that as a rule this principle of apportionment is more just than any other. There is a basis of truth to this idea, and it is so generally accepted that assessments for street improvements are perhaps now more generally apportioned by the frontage than by any other standard. In Warner v. Grand Haven, 30 Mich. 24, it was held that the court could not say, as matter of law, that an assessment for a sewer, estimated by the foot front of abutting lots, was not laid in proportion to actual or probable benefits. In Brown y. Springfield, 97 Mass. 152, an assessment of benefits by the value of the lands exclusive of buildings was sustained. In several cases it has been decided that in assessing benefits the future probable advantages may be considered, as may, also, the incidental benefits equally with those which the land receives directly. See Loady v. Wilson, 3 Ad. & El. 247; Hammersmith Bridge Co. v. Overseers of Hammersmith, L. R. 6 Q. B. 230.

But it is generally agreed that an assessment levied without regard to actual or probable benefits is unlawful, as constituting an attempt to appropriate private property to public uses. This idea is strongly stated in Lodi Water Co. v. Costar, 18 N. J. (Eq.) 519, which has often been cited with approval in other cases. It is admitted that the legislature may prescribe the rule for the apportionment of benefits, but it is not conceded that its power in this regard is unlimited. The rule must at least be one which, it is legally possible, may be just and equal as between the parties assessed. If it is not conceivable that the rule prescribed is one which will apportion the burden justly, or with such proximate justice as is usually attainable in tax cases, it must fall to the ground, like any other merely arbitrary action which is supported by no principle.

The only discretion which the act in question allows to the common council as an assessing board is in determining what lots and lands are benefited by the improvement. When that determination is made the rule of apportionment is fixed, and it must be made according to the area. It is not required that the lands shall lie contiguous to each other, or that the benefits to be taken into the account shall be only the direct benefits to the land. We find nothing in the act to preclude the taxation of lots remote from the sewer if their market value, actual or speculative, is increased by means of it. While this increase of value might be a reason for general taxation for sewer purposes, it is manifest that it could

(No. 1.

Vol. IV.]

THOMAS v. Gain.

not possibly warrant an apportionment by superficial area, since that, under no circumstances, could be just unless limited to lands directly and peculiarly benefited. But this act makes no provision by which parties assessed may of right drain into the sewer so as to be enabled to reap the benefits they ought to derive from the expenditure. It makes no distinction between property actually occupied or capable of being occupied for city purposes, and that of an agricultural nature, of which there must be some within the city limits, upon which such a burden would fall with great severity and injustice. Nor does it confine the assessment to lands upon the street in which the sewer is laid; and in the assessment before us lots on a parallel street are assessed. These lots, it is to be assumed, will be assessed again if a sewer is constructed in the street on which they front, and there is nothing in the act or in the nature of things to prevent a lot being assessed several different times in different districts, as often as a sewer is constructed which, in the opinion of the common council, is productive of benefit to the neighborhood. This might not be unjust if each assessment was laid upon an estimate of actual benefits; but when it is levied by an arbitrary standard which requires the burden to be laid upon lands far from the sewer and only slightly benefited, equally with those fronting upon it and greatly benefited, it is manifest that it must not only work injustice, but that in some cases it may amount to actual confiscation. It is not, therefore, legally possible that such an apportionment of the costs of sewers can be just, or equal, or in proportion to benefits. And when injustice must result from its adoption, we have no alternative but to reject the assessment as an unlawful exaction. It is an assessment made in entire disregard of the principle upon which special assessments can alone be sustained: The principle, namely, that 66 Those who enjoy the benefits shall equally bear the burden.” Shaw, Ch. J., in Wright v. Boston, 9 Cush. 233, 241. See Matter of Washington Avenue, 99 Penn. St. 360 ; Patterson v. Society, fc. 24 N. J. 400.

In what has here been said, it is not intended to decide or to intimate that a sewer tax may not under some circumstances be lawful, though apportioned by the area of the lots assessed. If under the law providing therefor the assessment were confined exclusively to lots lying contiguous to each other, and on or near the street in which the sewer was to be constructed, and all properly urban lots, or, as they are sometimes designated in lots, as distinguished from the outer lands of the town which receive only slight and indirect benefit from such improvements, and if the law also provided for private drains into the sewer as matter of right on the part of the proprietors of the lots assessed, the case would be so different from the one now before us that much of what we have said could have no application. We confine our discussion strictly to the record before us, and to the act under which this assessment is laid, not caring to enter upon any discussion of hypothetical cases which may never arise, or which, if they do arise, can better be considered when their special features are presented for consideration.

The principle of the statute being thus found to be unsound, it does not become necessary to consider details. But as new lesislation will probably be procured, it seems proper to declare in this case, that parties whose property is to be taken under summary tax proceedings are entitled as of Vol. IV.]

Thomas v. Gain.

(No. 1.

by Ann an established Chme stage in the proc

right to be heard, at some stage in the proceedings, before the tax shall become an established charge against them or their property. It was said by Agnew, J., in Philadelphia v. Miller, 49 Penn. St. 440_448, that “notice, or at least the means of knowledge, is an essential element of every just proceeding which affects rights of persons or property.” The principle was recognized by this court in Butler v. Supervisor of Saginaw, 26 Mich. 22. In England, until appeals were given from sewer assessments, it was held that the party taxed might sue the officer in trespass or replevin for a levy on his property, and in that suit might defeat the assessment if he could show that he was not benefited as the commissioners had adjudged. See Dore v. Gray, 2 T. R. 358; Masters v. Scroggs, 3 M. & S. 447; Netherton v. Ward, 3 B. & Ald. 21 ; Stafford v. Hamston, 2 B. & B. 691; Loady v. Wilson, 3 Ad. & E. 247; Emmerson v. Saltmarshe, 7 Ad. & El. 266; Metropolitan Board of Works v. Vauxhall Bridge Co. 7 El. & Bl. 964. In this country we do not allow the justice of an assessment to be inquired into, in a suit to charge the officers with a personal liability; but it follows legitimately from this, that parties tased must have an opportunity to be heard regularly at some stage in the proceedings. Their rights are not to be concluded by proceedings which are wholly ex parte.

We have deferred to the last a question raised by the defendants which goes to the jurisdiction of the court. We have decided in several cases that equity has no jurisdiction to restrain the collection of a tax from goods and chattels. Youngblood v. Sexton, 32 Mich. 406; Hagenbush v. Howard, 34 Mich. 1; Mears v. Howarth, 1 B. 19. The bill in this case complains that the city marshal is about to proceed in the collection of the assessment from the personal property of the complainants; and had it been demurred to, the objection would have been fatal. But this case differs from Youngblood v. Sexton, in that the tax is one levied upon real estate, and which by the statute is made a lien. The case is consequently a proper one for a bill to remove a cloud from the title. But to such a bill the city should have been made a party, as the cloud would not be removed by merely enjoining the action of the marshal on his tax warrant. It was held in the similar case of Palmer v. Rich, 12 Mich. 414, that where the objection to want of parties was not seasonably made, it might be obviated by amendment made at the hearing; and, with a view to putting an end to expensive litigation, we are disposed to allow that course to be taken here. The case will be ordered remanded, with leave to the complainant to amend, by adding the city as a formal party, and with directions to enter final decree for complainants when the amendment is made. But under the circumstances, no costs will be awarded to either party.

New YORK Life Ins. Co. v. STATHAM.

[No. 1.

Vol. IV.)

SUPREME COURT OF THE UNITED STATES.

[OCTOBER TERM, 1876.]

LIFE INSURANCE. — PREMIUM AN ANNUITY. - EFFECT OF INTERVEN

TION OF WAR.

NEW YORK LIFE INS. CO. v. STATHAM.

SAME v. SEYMS.
MANHATTAN LIFE INS. CO. v. BUCK.

A policy of life insurance which stipulates for the payment of an annual premium by the

assured, with a condition to be void on non-payment, is not an insurance from year to year like a common fire policy ; but the premiums constitute an annuity, the whole of which is the consideration for the entire assurance for life; and the condition is a

condition subsequent, making void the policy by its non-performance. But the time of payment in such policies is material, and of the essence of the con

tract ; and failure to pay involves an absolute forfeiture, which cannot be relieved

against in equity. If failure to pay the annual premium be caused by the intervention of war between the

territories in which the insurance company and the assured respectively reside, which makes it unlawful for them to hold intercourse, the policy is nevertheless forfeited if the company insist on the condition; but in such case the assured is entitled to the

equitable value of the policy arising from the premiums actually paid. This equitable value is the difference between the cost of a new policy and the present

value of the premiums yet to be paid on the forfeited policy when the forfeiture oc

curred, and may be recovered in an action at law or suit in equity. The doctrine of revival of contracts, suspended during the war, is one based on considerations of equity and justice, and cannot be invoked to revive a contract which it would be unjust or inequitable to revive, — as where time is of the essence of the contract; or

the parties cannot be made equal. The average rate of mortality is the fundamental basis of life assurance, and as this is

subverted by giving to the assured the option to revive their policies or not after they have been suspended by a war (since none but the sick and dying would apply), it would be unjust to compel a revival against the company.

Mr. Justice BRADLEY delivered the opinion of the court.

The first of these cases is a bill in equity filed to recover the amount of a policy of life assurance, granted by the defendants (now plaintiffs in error) in 1851, on the life of Dr. A. D. Statham, of Mississippi, from the proceeds of certain funds belonging to the defendants attached in the hands of their agent at Jackson, in that state. It appears from the statements of the bill that the annual premiums accruing on the policy were all regularly paid until the breaking out of the late civil war; but that, in consequence of that event, the premium due on the 8th of December, 1861, was not paid ; the parties assured being residents of Mississippi, and the defendants a corporation of New York. Dr. Statham died in July, 1862.

The second case is an action at law brought in the same court against the same defendants to recover the amount of a policy issued in 1859 on the life of one Henry S. Seyms, the husband of the plaintiff. In this case also the premiums had been paid until the breaking out of the war, when

Vol. IV.)

NEW YORK LIFE Ins. Co. v. STATHAM.

[No. 1.

The po that the company, sured, and of an in in every yea

by reason thereof they ceased to be paid, the plaintiff and her husband being residents of Mississippi. Seyms died in May, 1862.

The third case is a similar action at law brought in the same court against the Manhattan Life Insurance Company of New York to recover the amount of a policy issued by them in 1858 on the life of C. L. Buck, of Vicksburg, Mississippi ; the circumstances being substantially the same as in the other cases.

The policies in all the cases were in the usual form of such instruments, declaring that the company, in consideration of a certain specified sum to them in hand paid by the assured, and of an annual premium of the same amount to be paid on the same day and month in every year during the continuance of the policy, did assure the life of the party named, in a specified amount, for the term of his natural life. The policies contained various conditions upon the breach of which they were to be null and void ; and amongst others the following: “ That in case the said (assured) shall not pay the said premium on or before the several days herein before mentioned for the payment thereof, then and in every such case, the said company shall not be liable to the payment of the sum insured, or in any part thereof, and this policy shall cease and determine.” The Manhattan policy contained the additional provision, that in every case where the policy should cease or become null and void, all previous payments made thereon should be forfeited to the company.

The non-payment of the premiums in arrear was set up in bar of the actions, and the plaintiffs respectively relied on the existence of the war as an excuse, offering to deduct the premiums in arrear from the amounts of the policies.

We agree with the court below, that the contract is not an assurance for a single year, with a privilege of renewal from year to year by paying the annual premium, but that it is an entire contract of assurance for life, subject to discontinuance and forfeiture for non-payment of any of the stipulated premiums. Such is the form of the contract, and such is its character. It has been contended that the payment of each premium is the consideration for insurance during the next following year, — as in fire policies. But the position is untenable. It often happens that the assured pays the entire premium in advance, or in five, ten, or twenty annual instalments. Such instalments are clearly not intended as the consideration for the respective years in which they are paid ; for, after they are all paid, the policy stands good for the balance of the life insured, without any further payment. Each instalment is, in fact, part consideration of the entire insurance for life. It is the same thing, where the annual premiums are spread over the whole life. The value of assurance for one year of a man's life when he is young, strong, and healthy, is manifestly not the same as when he is old and decrepit. There is no proper relation between the annual premium and the risk of assurance for the year in which it is paid. This idea of assurance from year to year is the suggestion of ingenious counsel. The annual premiums are an annuity, the present value of which is calculated to correspond with the present value of the amount assured, a reasonable percentage being added to the premiums to cover expenses and contingencies. The whole premiums are balanced against the whole insurance.

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