*1 A. No. 24049. In Bank. Feb. 8, [L. 1957.] ENSIGN, PAUL Respondent, R. v. PACIFIC MUTUAL Ap- (a LIFE Corporation), INSURANCE COMPANY pellant.
Gray, Cary, Frye Ames & Appellant. for Chandler & Durham and Robert J. Durham for Respondent. SCHAUER, J. Plaintiff brought this action to recover disability alleged benefits to be due from defendant under the terms an court, sitting without a jury, gave judgment for plaintiff, and appeals. We have concluded that is entitled to recover under policy, terms the judgment should there- fore be affirmed. facts, as disclosed record, appear to be sub- undisputed.
stantially 1929, plaintiff, physician, took Policy” out a Income of insurance “Non-cancellable from de- provided payments for fendant.1 injury necessary resulting “continuous, due to illness or By and total loss all business time.” terms right yearly to renew plaintiff had' the until he age, rights was 60 but reserved no to cancel paid. of estoppel, No element acceptance therefore, premiums, arises from the mere look it is to the alone that must right to recover. Army When entered defendant waived by the payment of since war risks were not covered given option to renew the illness upon discharge from Plaintiff suffered severe service. permanent discharged in 1946 with while in service and was rating. Following service, plaintiff, release inquired company, the effect to the insurance letter rights under would have *3 by the not cover replied letter that military disability resulting or from his service2 others injuries or in ac- of would, course, but “it cover illnesses Plaintiff there- policy. the ...” cordance with the renewal, policy. After option exercised his renew through kept in force and the 1952. permanent, was
Plaintiff’s service-incurred prac- physically he able return not was total, engage types other tice of medicine or to retire, at Instead, however, chose if he so desired. that he trial court found was and the temporarily, least discharge Army from subsequent gainfully in 1946. originally Pacific Mutual Life Insurance issued 1The 1936, pursuant Company a rehabilitation and re of California. agreement and the Insurance Commissioner between defendant insurance California, Pacific Mutual Insurance as conservator Com company, including California, pany policy latter the liabilities of plaintiff, assumed We were reinsured and defendant. issued to referring either to defendant or use term “defendant”
issuing company. provided: “This does not 2In 21 of section wholly disability partly, directly (3) resulting in or or cover ... directly (a) bodily injury contracted while sustained sickness military engaged naval time of war. ...” service Insured plaintiff In 1947, filed a claim under the dis- for ability payments plaintiff due to an illness. In the claim ” “Physician listed (retired) himself as but also indicated designated he was self-employed, his usual duties as Surgery,” “Medicine & stopped and stated that he had all work on March 18, 1947. Defendant’s claims adjuster, when plaintiff interviewed relative to that claim, learned practicing profession had not been discharge position from service. then Defendant took the ground illness was service-connected and on that alone denied the claim.
In September, 1952, plain- doctor discovered that suffering tiff was from a heart ailment and advised stop physical all exertion. Plaintiff filed a claim with for under the policy, the claim was refused, and instituted this action. The trial court found that totally the ailment did in fact disable and that it was not gave judgment service-incurred, for plaintiff. appeal This followed. claim of nonliability
Defendant’s rests on its construction the terms of the provides, pertinent portions: Company pay
“Part A. will rate of Two Hundred . . . period Dollars month for the throughout described above includes [which disability resulting from consists of continuous, sickness] necessary and total loss of all . time. . . Indemnity
“25. for will not be under this policy at a rate in excess of the Insured of time that actually he has been employed during years immediately preceding the commencement Company which the liable, paid during and all said two for that disability indemnity in excess of the amount earnings upon request of such will be returned of the In- sured. ...” *4 company raises First, two defenses: it asserts that recovery
plaintiff, bring as basic to the sought, must himself within the terms of Part A show loss time,” plaintiff of “business and that since had not years prior working at all for six ques- coming and had had no intention of tion out of retirement disabling requisite at the time he incurred ailment, company Second, was not satisfied. contends order to establish measure under the the policy, plaintiff average section 25 of had earn- to show ings part prior in excess of some zero of the two and this he years, could not did not do. The trial court rejected defendant’s construction of deter- favorably that, insured, mined construed provides recovery by plaintiff in of this the circumstances ease. recently following general
As this court, govern the of ambiguous rules construction clauses in in elementary surance contracts: “It is insurance law uncertainty in an ambiguity or insurance is to be against the semantically resolved insurer. If [Citations.] given permissible, contract will be such construction as fairly object securing indemnity achieve to the will its in for the losses to relates. sured [Citations.] language the insurer uses which is uncertain If doubt will be resolved if the doubt it; reasonable peril to extent or fact of whether as to coverage, relates liability amount against [citations], the [citations] persons person protected language or [citations], most sense, be understood in its inclusive benefit will (Continental Co. Phoenix Const. of the insured.” Cas. v. Co. 801].) P.2d (1956), 46 Cal.2d 437-438 [296 Defendant, arguing of its contention that coverage not does come within according time,” that, no asserts he lost “business because undoubtedly have not worked evidence, to the whether he had incurred it the time after may have been probable, a situation or not. But such speculation engage in as to whether this court to it is not for future not have worked in the would would fact is that disability. The heart it not for the had desired, have worked he so whereas plaintiff could ailment admits the he not. Defendant the illness could after working at fact that even obvious present disability and even if he had no of a claimed date keep might he returning work, want intention here) did the chance (as truth alive up mind and some business change take might later may recognize held to policy therefore activity. work, possesses the character not intention ability work, reached in conclusion was time.” This of “business Pacific (1941), Ark. 94 el S.W.2d Co. [149 Ins. Mut. v. Riff *5 interpreting a 59], where the of com- 57, court, pany containing a clause to A (1) here, similar Part “ability engage that time” means to in sustained “business sufficiently negative a effort of character substantial to power reasonably that there not a idea was total loss of profession.” continue the business foregoing controlling here, definition it While the is appears interpretation a as the be sound such one that company under consideration. concedes against purpose of the is not to insure loss time”; income as but of “business such, loss concession indicates that the essential attribute of “business time” is to be determined reference to actual earn without ings, past prospective. foregoing conclusions as to the character of “busi
ness time” also it refute the contention of defendant that only occupation plaintiff’s not liable under its because retired, prior that physician, was prevent performing would not him from gentleman.” (See Knapp ‘‘duties” of a “retired v. Preferred 58.) Regardless (1889), Mut. Acc. Assn. 6 N.Y.S. occupation plaintiff what pursuing had been disability, the fact remains that before but physically go not after able it, back to his former occupation physician gainful as a or to undertake other occu pation qualifications. suitable- to his In other until words, “necessary the onset of the last he had not suffered (Italics and total loss of all time.” added.) coverage Even comes within the of the policy, recovery by defendant urges, is barred specific requirements of of the herein- quoted. provision, argues, above This establishes recovery is the measure of reduced below the general set Part A to the extent standard average earnings during years pre- ceding disability standard, and, less than such years just prior nothing during the two to the dis- earned must be zero. In ability, his measure suggests purpose there is no this contention that an provide not to insured cannot if it is to section 25 earning. very stating But the than he has recover more emphasize argument serves to the mean- of defendant’s at best a debatable inference, an urges for such section ing the insurer adverse to the insured. favorable inference The trial court construed section 25 to mean that gainfully employed insured was “if two-year period the insurer mentioned, would be liable for an amount not in excess of the actually insured for the time he has been two-year period.” (Italics said added.) This inter pretation, harmony we and more in conclude, tenable, *6 applicable urged by rules of construction than defend provides ant. the Section 25 insured will not be at a rate in excess the actually employed” (italics time that “he has been added) during prior years. the If an insured two was idle two paying he continued then years, premiums, which day job and on the back on resumed first it permanent require incurred a and total would any subject policy found language different from in indemnity merely him because he had disqualify from years. If he had previous for the two not “been worked actually employed” at time within the two simply not come within the class or circumstance to by applicable. its terms the limitation of section 25 which nothing suggests in Certainly there is which voluntarily chosen to remain idle for that an insured who has pay accruing has continued to years more, but who two gainful may choose to resume oc- not thereafter premiums, he has or has not regardless of whether resumed cupation, or, may not thereafter gainful suffer occupation, necessary “continuous, and total time results for the first added.) only (Italics con- all time.” loss of business charged by defendant and for the sideration pay of the former to promise by plaintiff was disability consisting of such “con- period of sum all necessary and total loss of business time.” It tinuous, time clearly business established has been for lost to him necessarily totally continuously, has by contemplated the contract. Defendant’s through cause absolvatory primary as 25 its attempt invoke section case, circumstances of this com- not, does obligation manifestly appears to us to more It to us. mend itself applying only where to construe reasonable actually employed during least had been insured period. event, two-year part (at best, defendant’s stand- 25 meaning of section favorably construed must be questionable, point)
891 adversely (Continental to the insurer. Cas. Co. 437-438.) (1956), supra, 423, v. 46 Phoenix Const. Co. Cal.2d construing apparent it is that the trial court So correctly plaintiff. awarded judgment is affirmed. reasons above stated,
For the McComb, J., con- Gibson, Shenk, J., Carter, J., and J.,C. curred.
SPENCE, J. I dissent. question unambiguous in its is clear my application facts; and, opinion, to the admitted majority the trial court and result reached erroneously against based a “forced construction Co., (Coit v. Ins. 28 insurer.” Standard Cal.2d Jefferson Life 673]; 168 see also New York 1,11 163, P.2d A.L.R. [168 Hollender, 510].) v. P.2d Ins. Co. Cal.2d [237 Policy” policy here was a “Non-caneellable Income disability resulting in insuring “continuous, necessary all time,” and total loss of amount respects: (1) pos- a maximum limited two of two hundred dollars month and sible *7 providing forth in general limitation set “Indemnity will not be under this at a rate in excess of the of the Insured actually employed of time that he has been years immediately during preceding the two the commence- disability. ...” ment of the trial “That it is true that court found: Plaintiff has voluntarily gainfully employed and has not been retired January and it had of 1946 is true Plaintiff has years immediately earnings any during time
no of his which preceding the commencement occurred September 17, finding, 1952.” This which based clearly demonstrates that is not en- facts, admitted any indemnity under the terms of the titled to recover reasoning majority opinion. follow the of the It is difficult to meaning “questionable” of section 25 is that the It declares as “more reasonable construe section 25 it is actually employed the insured had been applying where two-year period.” part of the Thus during at least policy produces of the the fol- majority’s construction had average if the insured had lowing illogical results: month per during fifty dollars earnings preceding two-year period, have been limited indemnity fifty per month dur- dollars ing disability; but as the insured had had no earnings during preceding two-year period, indemnity possible entitled to recover the maximum of two disability. during hundred dollars month I cannot agree. provisions limiting indemnity section earnings during to a rate not excess of the insured’s conjunction specified whether read alone or in with period, and un- provisions the other of the are too clear ambiguous application per- in their to the admitted facts to mit such unreasonable “forced construction” recovery. appears it should said that to be conclusion, there inequitable nothing unfair or the terms of the policy was “non-cancellable” insofar as the written. concerned, but it could be terminated the in- insurer was light premium was no doubt fixed of the sured. The policy concerning pay- limitations of clear premiums could not refuse renewal ments. The insurer manifestly not control the insured’s activities. The could year solely or termination rested each of renewal choice insured, light him in choice could be made provision that “all plans and of probable of his years for that said two earnings the amount of such will be in excess of Insured. ...” upon request of the Pursuant returned upon learning had had provision, and premiums. offered to return his insurer here earnings, the no provisions plain facts and admitted Under only to the return of such was entitled policy, he indemnity. not entitled judgment the trial court. I would reverse concurred. Traynor, J.,