This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Whether one who has received benefits under a real or supposed contract is obliged to make restitution to the adversary party when such contract is discharged by breach of condition, depends, in the absence of specific statutory provision or of specific provisions in the contract requiring restitution or providing against restitution, as the case may be, on the question "whether such condition was in the nature of a condition precedent so that the contract in question never took effect, or whether it is in the nature of a condition subsequent so that rights took effect and the party who seeks restitution had in fact, for a greater or less period of time, received benefits under such contract. If the condition is in the nature of a condition precedent, so that no rights ever attached under such contract, the party who received benefits under such contract must make restitution to the adversary party,1 at least in the absence of fraud or bad faith on the part of the party who seeks restitution. On the other hand, if the condition is in the nature of a condition subsequent, and rights have arisen under the contract prior to the breach, so that the party who seeks restitution has received benefits of some sort under such contract, it is generally held that no right to restitution exists,2 in the absence of statutory provisions requiring such restitution, and in the absence of provisions in the contract on such subject. If a policy of life insurance contains a condition against liability arising out of death from certain specified causes, the insurer is not bound to return the premiums if the insured dies from one of such specified causes.3
4 Waterman-Waterbury Co. v. School Dist. No 2, 182 Mich. 498, L. R. A. 1915B, 026, 148 N. W. 673.
5 Iowa. Adams v. Atlas Mutual Ins. Co., 135 la. 299, 112 N. W. 651.
Kentucky. Bennett v. Howard, 175 Ky. 797, L. R. A. 1917E, 1075, 195 S. W.
Massachusetts. Gray v. Gardner, 17 Mass. 188; Fuller v. New York Fire Ins. Co., 184 Mass. 12, 67 N. E. 879.
Minnesota. Taylor v. Security Mutual Fire Ins. Co., 88 Minn. 231, 92 N. W. 952.
Ohio. Moody v. Amazon Ins. Co., 52 O. S. 12. 38 X. N. 1011.
West Virginia. Houseman v. Home
Ins. Co., 78 W. Va. 203, L. R. A. 1917A, 299, 88 S. E. 1048.
Wisconsin. Clute v. Clintonville Mutual Fire Ins. Co., 144 Wis. 638, 32 L. R. A. (N.S.) 240, 129 N. W. 661.
6 Rochester German Ins. Co. v. Monumental Sav. Asso., 107 Va. 701, 60 S. E. 93; Sheppard v. Peabody Ins. Co., 21 \V. Va. 368; Houseman v. Home Ins. Co., 78 W. Va. 203, L. R. A. 1917A, 299, 88 S. E. 1048.
7 Bennett v. Howard, 175 Ky. 797, L. R. A. 1917E, 1075, 195 S. W. 117.
8 Bennett v. Howard, 175 Ky. 797, L. R. A. 1917E, 1075. 195 S. W. 117.
9 Beebe v. Redward, 35 Wash. 615, 77 Pac 1052.
Contracts, especially contracts of insurance, frequently contain provisions for the restitution of benefits in case the contract should become void for breach of certain specified conditions. Under provisions of this sort, the question which usually arises is whether the restoration of the benefits is a condition precedent to the right to take advantage of the breach of condition. If the policy of insurance provides for the return of the premium, in case the policy-becomes void, "on surrender of this policy" it has been held in some jurisdictions that the return of the premium is not a condition precedent to the termination of the policy and that the payment of such premiums is not necessary until the policy has been surrendered.4 In other jurisdictions it has been held that the use of such language does not indicate an intention to permit the cancellation of the insurance policy until the premium is repaid to the insured; and accordingly it is held that such restitution of the premium is a condition precedent to the cancellation of the policy.5 If a parent sends his son to a private school with knowledge of the provisions contained in the catalogue to the effect that pupils whose conduct is hurtful to the scholarship of his associates will be expelled, and with knowledge of the fact that tuition is payable in advance, such parent is liable for the unpaid portion of the tuition, even though the pupil has been expelled for cause.6
1 Fisher v. Metropolitan Life Ins. Co., 162 Mass. 236, 38 N. E. 503; Connecticut Mutual Life Ins. Co. v. Pyle, 44 O. S. 19, 58 Am. Rep. 781, 4 N. £. 465; Metropolitan Life Ins. Co. v. Felix, 73 0. S. 46, 75 N. E. 041; Grabinski v. United States Annuity & Life Ins. Co., 33 S. D. 300, 145 N. W. 553.
2 Illinois. Dickerson v. Northwestern Mutual Life Ins. Co., 200 Ill. 270, 65 N. E. 694.
Indiana. Red Men's Fraternal Accident Asso. v. Rippey, 181 Ind. 434, 50 L. R. A. (N.S.) 1006, 103 N. B. 345, 104 N. E. 641.
Massachusetts. Elder v. Federal Ins. Co., 213 Maes. 3S9, 100 N. E. 655.
Michigan, Warren v. Federal Ins. Co., 108 Mich. 342, 164 N. W. 449.
Nebraska. Meyers v. German Fire Ins. Co., 101 Neb. 855, 166 N. W. 247.
North Carolina. Teeter v. Harner Military School, 165 N. Car. 564, 51 L. R. A. (N.S.) 975, 81 S. E. 767.
3 Red Men's Fraternal Accident Asso. v. Rippey, 181 Ind. 454, 60 L. R. A. (N.S.) 1006, 103 N. E. 345, 104 N. E. 641.