116 So. 151 | Ala. | 1928
It was error to hold that due proof to the company of insured's disability before default in payment of premium was excused by the fact that insured had become non compos mentis before default. Watts v. Metropolitan Ins. Co.,
Hill, Hill, Whiting, Thomas Rives, of Montgomery, for appellee.
Insurance contracts are construed most favorably to the insured. Union Cent. Rel. Ass'n v. Johnson,
"If the insured * * * shall furnish due proof to the company, at its home office in the city of Boston, that he has become wholly disabled by bodily injury or disease, * * * the company will waive payment of each premium as it thereafter becomes due during the continuance of such disability."
The intervening clauses name the conditions under which such proof is allowable, and define the character of disability. They must all concur to make the waiver effective. But the furnishing of proof is the specific condition upon which the company "will" waive each premium "thereafter" to become due. "Thereafter" clearly refers to date of furnishing proof. The clause is in no way ambiguous or of doubtful meaning. The preceding paragraph recites the consideration upon which the insurer agrees to the "following waiver." A later clause provides that the insurer may, after acceptance of such proof as satisfactory, have a medical examination made, and if it appears the insured is able to perform work or engage in any occupation for compensation or profit, no further premiums will be waived.
The entire structure of the agreement negatives the idea of a self-operating waiver in the event of total disability, but imposes a contractual obligation on the company to waive premiums when "due proof" is furnished. Manifest reasons appear for thus limiting the agreement. The premium named in a policy of life insurance is the consideration for the contract. Its prompt payment is the life of the business. By the contract the renewal premium carries protection to a fixed date. Unless renewed by another stipulated premium it lapses, and the rights of the insured are measured by the nonforfeiture provisions, usually certain options for cash surrender value, paid-up insurance, or extended term insurance.
It is important that the status of each contract be known. Otherwise the insurer is *310 unadvised as to the amount of insurance outstanding — can make no accurate statement of resources and liabilities as often required by law. This case well illustrates the confusion which may ensue if the policy holder has a policy still in force by reason of a waiver of premiums without any notice thereof to the insurer. Here there was correspondence looking to payment of premium when due, notice of lapse for nonpayment, negotiations for examination and reinstatement, and, finally, a settlement surrendering the evidence of the policy loan, and showing the period of extended insurance — all received and apparently approved without a suggestion to the insurer that the insured had become insane. This status continued for about a year, when death of the insured intervened. It might have continued five or ten years.
It is further of importance that any issue as to the fact of disability be adjusted while the insured is living, not postponed until an issue must be made with the beneficiary after his death. In cases of insanity as the result of chronic disease, great difficulty may often arise in fixing the date when the border line is passed between mental capacity and incapacity to contract.
Appellee strongly relies upon the line of accident insurance cases, wherein the insured is required to give notice of his injury within a given time. In such cases the general rule is that if the insured is rendered physically or mentally incapable of giving notice as stipulated, it will be sufficient to give notice after such disability has passed, and if death ensues in the meantime, the indemnity will not be thereby forfeited. "The theory of these cases is that it could not have been in the contemplation of the parties that if the insured, who was required to give notice, was unable to do so by reason of the very accident against which indemnity was given, he should therefore lose such indemnity through no fault of his own." 4 Cooley's Briefs on Insurance (1st Ed.) p. 3462. See, also, 1 C. J. p. 472, note 4; 14 Rawle C. L. p. 133, § 504; Note 18 L.R.A. (N.S.) 109; Roseberry v. Amer. Ben. Ass'n,
This is but an application of the general rule that insurance contracts are to be liberally construed in favor of the insured as often stated by this court. A construction whereby the contract is made to operate unfairly and oppressively is to be avoided.
We think there is a manifest distinction between that class of cases and this. In such accident cases, the provision is in the nature of a condition subsequent wherein the insurer defends against a liability already accrued. In this case the beneficiary relies upon the waiver clause to keep the policy alive, to excuse the payment of premiums. The disability set up in accident cases is usually the result of the injury insured against. Here there is no insurance against disability, physical or mental.
Dealing with the argument that the insured could not be expected to make proof while mentally incapable of so doing, let us look at this policy without this waiver clause. In that event the actual payment of the premium when due could alone prevent a lapse of the policy. No sickness, insanity, or disability of any kind would excuse payment as stipulated. The law does not class such event as one rendering performance impossible, nor its requirement unreasonable. The insured, by his contract, assumes the risk of any disability rendering it impossible for him to make payment in person, and is thereby warned to place the beneficiary or some next friend in position to take care of his contract in such event. See note to 15 A.L.R. p. 318.
Now, by the terms of the waiver agreement before us, the insured may pay the premium or cause it to be paid, or may avoid so doing by furnishing the proof of disability as stipulated. In case of insanity, the required proof could be furnished by the beneficiary or next friend, just as the premium could be paid.
The cases involving kindred provisions in life insurance policies sustain the views above expressed. Watts v. Metropolitan Life Ins. Co.,
Appellee relies upon Marti v. Midwest Life Insurance Co.,
Touching the contention that the insurer had, or should have had, sufficient funds in hand to extend the insurance beyond the date of the death of the insured, little need be said. If it be true that the insured was insane in August, 1925, when he made application and got a policy loan in settlement of a prior loan obtained when not insane, with a balance of $19.13 cash paid on the draft of the insured, the evidence, without conflict, shows this transaction was *311 without notice of insanity, and in good faith. It was a completed transaction, in which the insured received and held this cash paid on his policy in the form of a loan. We know of no principle by which the company can be treated as still constructively in possession of this cash to be made available for extended insurance. 32 C. J. p. 734.
With reference to the note for $18 made by the insured of date of November 12, 1925, to be used in part payment of premium due on that date, without question it was taken subject to the condition that the balance of the premium be paid in cash, and on failure to thus make the note available, it was returned. Under appellee's view the note was void, and subject to return for that reason.
Our conclusion is that under the undisputed evidence the plaintiff cannot recover. The affirmative charge should have been given for defendant as requested.
The judgment is reversed and the cause remanded.
Reversed and remanded.
ANDERSON, C. J., and SAYRE and GARDNER, JJ., concur.