109 F. 56 | U.S. Circuit Court for the Southern District of Iowa | 1901
By written stipulation a jury was waived, and the case was tried to the court on an agreed statement of facts. The action is one at law upon two life insurance policies issued by defendant on the life of Edward Kelley, the one for $2,500, in May, 1893, and the other in December, 1893, for §5,000. Edward Kelley died by his own hand while insane, in February, 1895, less than two years from the date of the older policy.
1. I will first consider the policy for §2,500. It is a tersely written policy, in large type and script, and could not possibly be misunderstood by even the most ignorant nonprofessional man, but for the first sentence thereof. The policy recites: “In consideration of the .application for this policy, which is hereby made a part of this contract.” Then follows an absolute promise to pay plaintiff herein the sum of §2,500 upon receipt of satisfactory proofs of death of Edward Kelley, subject to the provisions on the back of the policy, and subject to one condition, viz. the payment of all annual premiums when due. The company makes but one defense, that of suicide of the insured, while insane, within two years from the date of the policy. The beneficiary named in the policy is plaintiff herein, wife of the insured. The provisions on the back of the policy have no bearing on the case at bar, unless it be the one which provides that the policy is not contestable after two years. The entire defense consists in the recital of the policy that the consideration thereof is the application, and which is made a part of the policy as above recited, and a clause of the application to which I will presently refer. The application is like those usually annexed to policies. It has a great many recitals pertaining to the insured, his habits, his health, his past life, his ailments, and so forth and so on, as well as those pertaining to his relatives, their ailments, age, and cause of death. Every one of Hie statements in the application are conceded to have been truthfully made. But in the application pasted to the policy was a recital as
But it is urged that the application is annexed as part of the contract. And herein arises the difficulty in this case.
2. Kelley and wife resided at the date of the application and the issuance of the policy in Iowa. The medical examination was in Iowa. The application was made in Iowa. Kelley until his death resided in Iowa, and Mrs. Kelley is still a resident of Iowa. Therefore, regardless of all things recited, the policy is an Iowa contract, and all Iowa laws upon the subject then in force entered into and formed part of the contract. Society v. Clements, 140 U. S. 220, 11 Sup. Ct. 822, 35 L. Ed. 497. Qne of those láws was the statute of April 17, 1890. That statute, among other things, provides, “nor shall any company make any contract, other than is plainly expressed in the policy issued thereon.” Both by the general rules of construction, and by those rules of the Iowa statutes for the construction of statutes, words must be given the usual and generally accepted meaning. Section 48, par. 2, Code Iowa. We all know what the word “policy” means, and we know that it does not mean the “application.” If that clause of the statute stood alone, the suicide clause in the application would be in contravention of the Iowa statute, and would be void, because it is not “expressed in the policy issued thereon.” The title of the act in question is in conformity to the Iowa constitution, and is “An act to prevent discrimination in life insurance.” Acts 23d Gen. Assem. c. 33. There are several specific recitals of the statute prohibiting discriminations in insurance. They are all followed by a section fixing a penalty for its violation. We have an older statute providing that, if the application is relied on as a defense, it must be annexed to the policy. That statute is still in force, unless repealed by implication, which is never looked upon with favor. It is also a rule that, when particular words of a statute or other writings are followed by general words, such general words in their meaning are controlled by the particular things recited. Eor these reasons I do not believe the statute in question is of any avail to plaintiff. The statute is against discrimination. Many things are condemned as acts of discrimination. But it is not claimed in the case at bar that the company was guilty of any discrimination. And I conclude that the general language of the statute above quoted can only be construed as referring to discriminations.
3. Another contention of plaintiff is without merit. Her counsel contend that under the Iowa laws, as suit could not have been brought until a time more than two years after the date of the policy,
4. If the premiums were paid, the company agreed to pay Mrs. Kelley the amount of the policy after the death of the insured. The insured agreed "that I will not die by my own act * * * while insane.” He did die by suicide in February, 1895, while insane. To what extent he was insane the evidence does not show. He may have known right from wrong. He left a letter announcing his purpose, and giving some directions about his funeral and his insurance. He may have been driven to suicide by an irresistible and uncontrollable impulse. I am warranted in holding the latter. If this be so, then when Kelley agreed to not suicide while insane he was agreeing to that which was impossible to observe. He knew this when he so agreed, and the company knew it equally well. It was an impossible contract; impossible to observe, and an impossibility known by both parties when they so agreed. A text writer says: "A mutual undertaking between parties to do what both know to be impossible is vain and idle, lacking the elements of contract.” And I refer generally to chapter 20, Bish. Cont. (1887 Ed.), for a discussion of this subject. It will not do to say the consequences could have been avoided by contract. The answer is that which has the form of a contract is nothing but words, and these words are "vain” and "idle.” This is not a case where both parties, or even one of the parties, at the time the contract was entered into, had reason to believe the contract could be carried out. In such a case the rule is that the obligpv is bound, even though it afterwards becomes impossible for him to observe the agreement. In such a case the obligor must provide against such a contingency. But here we have mere words thrown together in the form of a contract, impossible to observe, and so known to be by both the company and the insured, when the policy was issued. The company received the cash premium wlien the policy was issued, and a premium in like amount in 1894. Botli these premiums the company retains. It: has not paid them back, nor lias it offered to pay them back. This is grossly inequitable, and should not be allowed.
5. But in allowing the plaintiff to recover I have greater confidence in another proposition, to which I have given much time. Whether sane or insane, I think the case turns on the question whether the conditions or covenants are dependent or independent. Aside from what I have said in paragraph 4 hereof, if the covenants are dependent, then the company has a defense in the fact that the insured suicided when insane. But, if the covenants are independent, the plaintiff is entitled to a recovery. Formerly, contracts were quite generally construed as making the covenants independent; but now, in cases of doubt, they are construed as having dependent covenants. But, after all, the contract must be considered in its entirety, and such construction given as will be fair and reasonable. For some of the cases throwing light upon this question of covenants, see Hyde v. Booraem, 16 Pet. 169, 177, 10 L. Ed. 925; Bank v. Hagner, 1 Pet. 455,
“It is, indeed, the geneial rule that a policy, and the money to become-due under it, belong, the moment it is issued, to the person or persons named in it as beneficiary or beneficiaries, and that there is no power in the person procuring the insurance by any act of his, by deed or by will, to transfer to any other person the interest of the person named.”
I am not unmindful of some judicial history. There was a policy before the supreme court which in terms provided that, if the insured suicided, the policy should be treated as null and void. The supreme court held that, if the insured suicided when insane, the beneficiary could recover. Insurance Co. v. Terry, 15 Wall. 580, 21 L. Ed. 236. In 1876, the case of Bigelow v. Insurance Co., 93 U. S. 284, 23 L. Ed. 918, was decided. In that case the policy provided that it became null and void “if the insured suicided when sane or insane.” The insured having suicided while insane, the supreme court held that there could be no recovery. But the supreme court so held, as announced, because in the policy the contract was that the policy should be null and void in the event of suicide while insane. In the case at bar there is nothing in the policy to the effect that it becomes null and void if Mr. Kelley suicided, sane or insane. There is nothing in tin; application to the effect that no recovery can be had if Mr. Kelley violates his covenant to not suicide, while sane or insane; and I therefore insist that the decision of the supreme court in the Bigelow Case has no bearing on the case now under consideration. And there is no pretense that Kelley intended suicide when he procured the insurance. Therefore the case of Ritter v. Insurance Co., 169 U. S. 139, 18 Sup. Ct. 300, 42 L. Ed. 693, has no bearing on the question now being considered.
It is a fact of but little importance, and yet it is a curious fact, as appears from decisions of courts of last resort, that at one time
6. The other policy in the suit is of date December 28, 1898, and is for $5,000. The receipt annexed shows that the 189á premium was paid by the “owner.” The other receipt for the premiums on account of the two policies are not produced, but presumably they are of the same form. This policy, excepting as to date and amount, is of the same form and words as the smaller policy in suit, excepting in one other particular; and the application corresponds with the application annexed to the other policy, excepting as to date, amount, and one other particular. This policy is payable to the insured, Edward S. Kelley, his executors, administrators, or assigns. Seven days after the policy is dated it was assigned by Mr. Kelley to R. P. Mu-lock, the father of Mrs. Kelley, who, it seems, was a creditor, and who at a still later date assigned the policy to plaintiff. But the application expressly stated that the policy was to be issued to Mu-lock. And this fact, coupled with the other fact, that Kelley in a very few days assigned the policy to Mulock, on a printed form furnished by the company, forces the conclusion that it was never intended to make the policy payable to the insured or his estate. This being so, I reach the conclusion that this policy is governed by the same rules as govern the other. And from what I have said it follows that plaintiff is entitled to a judgment for $7,500, with 6 per cent, interest thereon from a reasonable time after proofs of death were furnished, and 90 days thereafter will be fixed as the time when the interest shall commence. To each and all of .which conclusions of