Kascoutas v. Federal Life Insurance , 189 Iowa 889 ( 1920 )

Salinger, J.

Insurance: strict construction of “death” and “disability” clauses. I. Grant that public policy forbids that a beneficiary in a life insurance policy shall receive a benefit’ from that policy where he murders the insured. But no public policy condemns an undertaking to pay insurance to the estate of one insured who has died from injuries inflicted by the named beneficiary. We do not understand appellee to question this proposition, and do understand its position to be that it is liable to no one because it has a valid contract that there shall be no liability if the death of the insured is caused or results “from intentional injury of the insured inflicted by * * * any other person,, whether fatal or nonfatal.”

If the policy has such a proviso, it may well be claimed that no question exists here as to what shall be done about the payment of a policy where public policy prohibits the beneficiary from taking, and whether, in such case, payment must be made to the estate of the murdered insured. We may concede that, if there be such agreement as appellee claims, no such questions can arise, because, by contract, payment is due to no one. Decisions too numerous to cite So declare.

The first inquiry, then, is what contract exemptions has the appellee? It has but one, and it is this:

“This policy does not cover disability resulting from intentional injury of the insured, inflicted by himself or any other person (assaults for the purpose of robbery or burglary excepted), whether fatal or nonfatal.”

If this proviso does not work total release from liability, then the trial court erred in holding that the estate of the murdered man had no rights, and that the fact that he was intentionally murdered not only destroyed the rights of the named beneficiary, who was the murderer,, but as well released from liability to pay to anyone.

Had no beneficiary been named in the policy, then, in the absence of contract exemption, the policy was payable to the estate of the deceased, even though he came to his death through assassination. See Grand Lodge I. O. M. A. v. Wieting, 168 Ill. 408. As said, then, a most important question is whether there be a contract which discharges from liability solely because intentional murder caused the death.

1-a

Beyond the need of interpretation, there is a proviso that nothing shall be paid on account of disability caused by intentional injury by a third person, whether the injury does or fails to result in death. True, the policy does purport to deal with both loss of life and with disability. But it does not follow that, therefore, the exempting clause deals with anything more than disability. And if the only contract exemption is confined to disability, caused by intentional injuries, then no contract relieves as to death from such injuries. And, as said, no law stands in the way of collecting insurance on the death of a murdered insured, except that,, if the murderer be the beneficiary, he cannot be. the recipient of the payment. We must, then, settle whether the exempting proviso is not limited to disability caused by the murder — to what is suffered from the crime during the time in which the victim survives the attack. And here comes into action the elementary rule that, in construing such exceptions, the court will deal strictly with the insurer, who drafted the proviso, and will resolve all doubt in favor of payment.

In various parts of the policy, death and specified disabilities are, in terms, differentiated. There is specific provision as to whom indemnity for loss of life shall be payable in certain contingencies, and in this connection it is said that “all other indemnities are payable to the insured.” With this distinction recognized by the insurer*, it still, and in terms, limited the proviso to “disability.” It may, therefore, well be said that no exemption from payment of death loss was intended. This is strict construction, but is demanded by the law. See American Acc. Co. v. Carson, (Ky.) 30 S. W. 879, and Rosenberry v. Fidelity & Gas. Co., 14 Ind. App. 625 (43 N. E. 317). The contract, construed in entirety, can work such a distinction and justify such a construction. Allen v. Travelers Prot. Assn., 163 Iowa 217. This is recognized in Brown v. United States Gas. Co., (Tenn.) 88 Fed. 38, at 42. But in that case, the proviso exempts “from the result of intentional injuries,” and the decision is that such wording cannot be construed to mean that the exemption is limited to harm from the injuries short of death. In Burnett v. Railway O. & E. Acc. Assn., 107 Tenn. 185 (64 S. W. 18), an indemnity policy indemnified against physical injury resulting in disabilities described (up to a certain number of weeks), and provided further that death should immediately terminate liability. There was no express provision as to death and payment therefor, and it is held the policy did not insure against death. The text i'n 1 Corpus Juris 466 declares that:

“A provision for the payment of a weekly indemnity during the period of total disability refers to the condition of a living person, and no recovery can be had thereunder for the death of the insured.”

And see Brown v. United States Gas. Co., (Calif.) 95 Fed. 935. And our statute (Section 3386, Code Supplement, 1913,) makes a distinction in terms betAveen death and disability, by specifically speaking of both. It first deals Avith cases AArhere life is taken, and declares that no beneficiary in a policy payable on death or disability, or Avho procures life to be taken or procures a disability, shall take the proceeds of the policy; next, that all benefits accruing to such beneficiary, either on death or disability, shall either become subject to distribution among the other heirs ; or, if it be a case of causing disability merely, the benefits shall be paid to the disabled person.

2. Insurance murder of insured by beneficiary. II. The statute, Section 3386, Code Supplement.. 1913, provides for a reverter to the estate of decedent, if he be murdered by the designated beneficiary. Such reversion is upheld in Schmidt v. Northern Life Assn., 112 Iowa 41. In that case, it is declared: “The Avife (murderess and designated beneficiary) cannot recover, because it is contrary to public policy to alloAv her to enforce the claim. But this rule of public policy ought not to be'extended so as to defeat all claims on the policy.”

It is further said that, though public policy prevents recovery by the Avife, the interest in the benefits to which the assured was entitled from the association was not destroyed. It expressly approved Cleaver v. Mutual R. F. L. Assn., 1 Q. B. Div. (1892) 147. There it Avas held that, notAvithstanding the Avife murdered her husband, and was named as a beneficiary in his certificate, and though she could not recover, still the insurance money formed a part of the husband’s estate, and could be recovered by his administrator.

2-a

We do not understand that appellee challenges the rule formulated by what has just been said. What it does do, is to urge an avoidance.

It is the fact that the Schmidt case is but an application of said statute provision. And the statute deals Avith none but policies of insurance and certificates of membership issued by “benevolent associations or organizations.” It is not shoAvn that appellee is such association or organization, and, on the contrary, it is indicated that appellee is a commercial enterprise. But, for the purposes of the point now to be considered, it suffices that there is failure of proof as to the nature of defendant’s structure.

Upon these premises, appellee malees the counter point that the statute does fiot apply because the policy sued upon was not the certificate of a benevolent association or organization, as contemplated in Section 3386, Code Supplement, 1913.

The statute reference to benevolent associations is not a casual one. It intends to recognize that equitable considerations enter into requiring a reverter, in the case of a certificate issued by a benevolent organization. It is pointed out in Schmidt v. Northern Life Assn., 112 Iowa 41, that designating the beneficiary in such a certificate is an act revocable at the pleasure of the insured member; that, therefore, no beneficiary can have a vested interest until the insured dies; that sentence of life imprisonment is not generally recognized in this country to create civil death; that, therefore,, all the named beneficiary has, Avhile insured lives,, is a mere expectancy; that if, for any reason, such beneficiary cannot take at the death, equity creates the condition of unenforeible trust, or lapse of legacy,— equal to a case of no beneficiary’s having been named, — and the trust fund goes to those avIio would take, had no beneficiary been designated (citing Rindge v. New England M. A. Soc., 146 Mass. 286 [15 N. E. 628], and Newman v. Covenant Mut. Ins. Assn., 76 Iowa 61). Again, the Schmidt case grounds itself on the doctrine that, in the case of felonious killing by the named beneficiary in the certificate of a benevolent association, there exists a fund created by the payments made by the insured for the benefit of himself and others in his class, and that, if such trust fails, a resulting trust arises in favor of him who made such payments,, or of his estate. In this, it is squarely supported by 1 Bacon on Benefit Societies (2d Ed.), Sec. 248 a, and Bancroft v. Russell, 157 Mass. 47 (31 N. E. 710).

2-b

Clearly, then, Section 3386, Code Supplement, 1913, controls nothing but policies issued by an association named in the statute. Defendant is not shown to be such association. ' Therefore, the statute gives plaintiffs no right to recover. And, if the statute is exclusive, — if it amounts to a declaration that there shall be no reverter to the estate unless the certificate is that of a benevolent association, — then plaintiffs may not recover in any form of action. We are of opinion the statute is not exclusive; that it does no more than single out and emphasize as to certificates of benevolent associations, and make rules as to reverter on such.

3. Appeal and Error : affirmance without prejudice. III. But does it follow there must be a reversal? An appellant may háve good grounds for reversal, and fail because he presents none but untenable ones. In other words, the presentation may lose an appeal. We shall not cite cases for the proposition that appellant must stand or fall by his “brief points.” He has but one on the vital point. It is this:

“Administrators can recover on a policy where the beneficiary has become disqualified from receiving under policy. Section 3386,, Code Supplement, 1913. Schmidt v. Northern Life Assn., 112 Iowa 41.” In the argument in extenso, this “point” is interpreted by quoting said statute, to establish the basis for recovery. We have said that the statute gives no right to recover. That position is one of the grounds of the sustained motion to direct verdict for defendant. As the court rightly sustained this one ground, it is immaterial now whether it erred in sustaining any or all of the others. It follows there must he an affirmance. But it is without prejudice to amending on remand by asserting a right to recover not based on said statute, or bringing new suit not based on said statute. We hold that the judgment appealed from should be deemed not in bar but in abatement; wherefore, we modify and affirm at cost of appellant. — Modified and affirmed.

Weaver, C. J., Evans and Preston, JJ., concur.