IMPOSSIBILITY 227 not created by the act or default of the plaintiff but resulted from the acts of the governments of which the respective parties were subjects. There is a mani-

fest distinction between mere impediments and difficulties in the way of the performance of a condition and an impossibility created by law or the act of the government. * * * She [the beneficiary] was guilty of no lathes, and why subject her to a forfeiture? No injustice is done the defendant in this case by permitting the plaintiff to make, now, the payments which she could not lawfully make between 1861 and 1865.

"The interest will compensate for the nonpayment at the time, and the defendant, in legal contemplation, will be precisely in the situation it would have been had the money been paid on the law day." Cohen v. New York Mut. Life Ins. Co. (1872) 50 N. Y. 610, 10 Am. Rep. 522. Compare New York Life Ins. Co. v. Statham (1876) 93 U. S. 24, 23 L. ed. 789, where the beneficiary recovered the "equitable" value of the policy, the payment of the premium having become impossible because of the Civil War.

"* * * 1. It will be seen from what has already been said, that we regard the payment of the premiums as a condition precedent to any subsequent liability on the part of the defendants. If this had been an absolute contract by the insured to pay a sum of money by a given time, neither accident, inevitable necessity, nor the act of God, would excuse a nonperformance. But if payment was unlawful, that would be an excuse. School District v. Dauchy, 25 Conn., 530. But that doctrine has no application to a case where it is at the option of the party to do or not to do the thing contemplated. He has a perfect right to do it or not to do it. He needs no excuse, whatever his action may be. The question is, if he omits to perform, from any cause whatever, does he thereby obligate the other party precisely as he would if he had performed? The answer to this question must be found in the contract itself. By a reference to it, it will be seen that there is nothing in it which gives the slightest indication that such was the intention of the parties, and there is no legal ground on which we can interpolate in the contract such a provision. We venture to say that no precedent can be found for such action by a court of justice, prior to some of the recent decisions upon this subject. If any such exist they have escaped our notice. We can not, therefore, accept as sound the doctrine that the existence of the war, making it illegal to pay the premiums, saved the rights of the party and kept the policy in force. * * *" Worthington v. Charter Oak Life Ins. Co. (1874) 41 Conn. 372, 19 Ani. Rep. 495. Cf. Howell v. Knickerbocker Life Ins. Co. (1871) 44 N. Y. 276, 4 Am. Rep 675.

"The chief controversy has been, not as to excuses for the fact of non-payment, but as to excuses for delay in payment. At first blush it might seem that if the premium is paid after the due (late, with interest at least equal to that which the company would have obtained by investing the same amount of money according to its usual practices, the company is made whole, has received the expected equivalent for its promise, and the hardship of the insured may be relieved with-out doing any substantial injustice to the insurer. Such an argument overlooks the phenomenon known as adverse selection. Where the insured is under no obligation to pay the premium, but has an option to pay it or not, as he chooses, he will be much more likely to pay it if he is in poor health than if he continues to be in good health. A policy holder whose health becomes so poor that he cannot get other insurance will prefer to pay up the back premiums rather than have no insurance at all. The policy holder who continues in good health will not pay the delinquent premiums because he can get a second policy at a premium which, though based on a higher rate because of his greater age, is still less than the aggregate amount of delinquent premiums under his first policy. Thus the good risks will tend to drop out, while the poor risks will hold on to their insurance. This process of adverse selection goes on all the time in life insurance, and where the time for payment is unalterably fixed, the insurer's actuaries can reckon with it and calculate the premiums accordingly. But if the insured were allowed an indefinite period in which to pay his premuims, the effect of adverse

selection could not be estimated and the business would be thrown into confusion. * * *

"All this is upon the assumption that the assured is under no obligation to pay the premium. Where he is under an obligation to pay whether he wants to or not, the argument based on adverse selection is largely vitiated, and far less