Berry v. Lamar Life Ins. Co. ( 1932 )

This is an appeal from the judgment of the court below sustaining a demurrer to the declaration filed by the appellant against the appellee for the recovery of five thousand dollars under an insurance policy on the life of Meyer E. Berry, the husband of the appellant. It was alleged in the declaration that the policy was issued upon the life of Meyer E. Berry for the above-mentioned sum, and that, among other things, provided that:

"The Lamar Life Insurance Company hereby agrees that if, prior to attaining the age of sixty years, while this contract is in full force by the payment of premiums, the insured shall furnish proof satisfactory to the Company that, from causes originating after delivery of this contract and entirely beyond the control of the insured, he has become totally and permanently disabled, and will by such disablement be prevented for life from engaging in any gainful occupation, this company shall by endorsement hereon agree to, (1) Waive the payment of premiums thereafter falling due during the continuance of such disability, during which period of waiver the right of the insured to surrender values and all other benefits under said contract shall continue with the same force and effect as if premiums were duly paid by the insured, and in addition thereto; (2) Pay to the insured, on the first day of the month, after satisfactory proof of disability has been furnished the company, the sum of fifty and no/100 dollars, and a like sum on the first day of each month thereafter during the life of the insured, and the continuation of such disability. Such monthly payments to the insured shall not be a charge against the policy and shall not be deducted in the settlement of any claim hereunder."

The declaration charges that Meyer E. Berry became insane and totally disabled to follow a gainful occupation while the policy was in force, and that he died while insane. It was further alleged that by reason of his insanity he was unable to give notice and make proof of such disability, and that no member of his family knew of the terms of the contract until after his death. It was further alleged that three premium paying dates elapsed without the premiums having been paid, but that during this period the deceased, Meyer E. Berry, was, by reason of his insanity, unable to report or make such proof.

It was not alleged that the insurance company had any knowledge or notice of the alleged insanity at any time prior to the death of said Meyer E. Berry. The premiums which were not paid were due August 8, 1929, August 8, 1930, and August 8, 1931, and it was claimed in the declaration that, by reason of the insanity of Meyer E. Berry, and the resultant inability to make proof, the policy remained in force, although the insurance company had no knowledge of, and no proof had been submitted to the company of, said alleged disability.

The trial judge ruled that this case was controlled by the announcement of this court in the case of New York Life Insurance Co. v. Alexander, 122 Miss. 813, 85 So. 93, 15 A.L.R. 314, but indicated that, if it were not for this decision, he would hold to the contrary.

It is frankly conceded by the appellant that, if the decision in that case is not overruled, the judgment of the court below in sustaining the demurrer was correct; but presents an elaborate and learned argument contending that said decision is unsound and should be overruled.

This decision was rendered by a full court without any dissent, and has been relied upon for several years in the insurance field. While the authorities in other states are conflicting as to such provisions under such circumstances, we see no reason to overrule the decision in New York Life Ins. Co. v. Alexander, supra. We are unable to see that it is manifestly wrong and mischievous in its results.

The life insurance business has become one of the most extensive businesses in the country, and such business depends almost entirely upon contracts. The power to make such contracts as the parties desire to make, when not prohibited by law or public policy, is a fundamental principle of the life insurance business, and is essential to its successful conduct.

There is, in our opinion, sound reason why insurance companies should be permitted in their policies a provision requiring proof to be made before the waiver of the policy becomes effective. It is, of course, necessary for the success of the life insurance business that unmerited or fraudulent claims should be rejected, and, in order to determine whether a claim is just and bona fide, it should have opportunity to investigate the facts at the time the disability occurs or accrues upon which the waiver of premiums depends. Suppose a party taking a policy should pay one or two annual premiums, and then cease paying them without any notice to the company of any disability, continue to live many years, and then dies, and his family claims that there was a disability existing at the time which excused payment of premiums. It would manifestly be impossible, or, at least, exceedingly difficult and expensive, to develop the facts after a long time.

But, at all events, the parties were not prohibited from making this contract by any statute, nor by public policy of the state, and we have repeatedly announced that the court would enforce contracts made by parties, if not prohibited by law or public policy, according to the terms of the contracts.

It is contended also that section 2294, Code 1930, reading as follows: "The limitations prescribed in this chapter shall not be changed in any way whatsoever by contract between parties, and any change in such limitations made by any contract stipulation whatsoever shall be absolutely null and void; the object of this statute being to make the period of limitations for the various causes of action the same for all litigants," prohibits the making of a contract, under such circumstances, as was upheld in New York Life Ins. Co. v. Alexander, supra, and that the existence of this statute was not called to the attention of the court, and the court therefore did not pass upon or adjudicate the legality of the requirement of giving notice and making proof, as a condition precedent to liability under the contract. In our opinion, this statute has no application to this case. It was designed to leave the statute of limitations in force as the Legislature made it. It did not intend to prevent parties making stipulations amounting to conditions precedent to liability in assuming obligations in contractual matters. In the case before us, the furnishing of proof was a condition precedent to waiver of premiums.

We think it is a reasonable and lawful provision. The Legislature has never undertaken to regulate for what length of time a party under such stipulation should have to make proof, or to excuse the making of proof, because of such physical or mental inability.

We are therefore of the opinion that the court below was correct, and that its judgment should be affirmed.

Affirmed.