Missouri St. L. Ins. Co. v. Sargeant ( 1934 )

This law suit grows out of a contract for group insurance for the benefit of the Cincinnati Police Benefit Society, of which society, defendant in error, Joseph C. Sargeant, was a member.

Sargeant filed suit in the Court of Common Pleas on the insurance policy, claiming total and permanent disability under the terms of the policy, and sought to recover $2,000 with interest, the amount provided for in the policy of insurance. The trial of the case resulted in a verdict and judgment for $2,000, with interest, against the defendant insurance company. Plaintiff in error seeks a reversal of that judgment, and asks that judgment in favor of the insurance company be entered here.

It appears from the record that on the 5th day of October, 1926, the Cincinnati Police Benefit Society entered into a contract of insurance with The Missouri State Life Insurance Company, which insured in the amount of $2,000 members of the society who entered active service of the Cincinnati Police Department subsequent to September 3, 1926, and who had completed two months continuous service, the policy covering total and permanent disability. The policy also contained a death clause, which is not in question here. The policy was made effective from noon, standard time, September 3, 1926, for the period of one year, with a renewal privilege from year to year for the further term of one year, at the option of the society. The company reserved the right to decline to renew the policy at the end of any policy year if at that time less than seventy-five per cent of the policemen in the active service of the Cincinnati Police Department are members of the society and insured thereunder. The company further reserved the right to establish new premium rates at the end of each five-year period.

The policy contained the following provision:

"Total and Permanent Disability Benefits — If any member insured under this policy shall furnish this Company with due proof that before having attained the age of 60 years, he or she has become totally and permanently disabled by bodily injury or disease, and that he or she is then, and will be at all times thereafter, wholly prevented thereby from engaging in any gainful occupation, and that he or she has been so permanently and totally disabled for a period of six months, the Company will immediately pay to such Insured in full settlement of all obligations hereunder as to such Insured's life, the amount of the insurance in force hereunder on such insured at the time of the approval by the Company of the proofs as aforesaid."

The policy was renewed from year to year until September 3, 1931. On August 14, 1931, the parties entered into an agreement known as "Amendment to Group Life Insurance Policy No. G-2103," wherein "Total and Permanent Disability Benefits" of the group life insurance policy above referred to were eliminated and no longer constituted or were considered a part of this policy. This amendment became effective as of September 3, 1931, and no question is made of the elimination of the Total and Permanent Disability" clause.

Two questions are presented in the petition in error:

First: That there was no proof of total and permanent disability, wholly preventing the plaintiff Sargeant from engaging in any gainful occupation, or that he had been permanently or totally disabled for a period of six months.

Second: That under the total and permanent disability clause plaintiff was not covered, as the plaintiff's claim under the disability benefit clause was not filed until the 25th day of February, 1932, at which time, under the terms of the agreement, disability benefits had been eliminated on September 3, 1931, and, therefore, at the time of the filing of the proofs there was no insurance in force.

On the question of total and permanent disability, facts were submitted to the court and jury at the trial to the effect that during the spring and summer of 1931, prior to the elimination of the Disability Benefit Clause, Sargeant had contracted severe colds and continuous physical weakness. He, however, continued in his duties as policeman until October 12, 1931, which was more than a month after the cancellation of the disability benefit clause. He had made no complaint and given no notice of infirmity or disability of any kind until February 25, 1932, at which time he filed his claim for permanent disability benefits. At this time he was afflicted with tuberculosis. Under the claim as to permanent disability, there is some question as to whether he could bring himself within the terms of the policy, in view of the fact that prior to the cancellation of the disability benefit clause, and for some time subsequent, he did engage in gainful occupation and full time service. This, as heretofore stated, continued up to October 12, 1931. There is some evidence to show that the attack in the spring and summer of 1931 was a forerunner of the tubercular condition, with which he undoubtedly was afflicted at the time of the filing of the claim. We will, however, pass that question as containing some facts which present a jury question.

The second proposition presents the question of law as to the construction of the "Total and Permanent Disability Benefits" clause. The facts of the filing of the claim are not in dispute. On September 3, 1931, the permanent disability benefit was eliminated from the policy. Sargeant makes the claim that since the beginning of his affliction was during the life of the policy, liability was fixed as of that date, which was in the spring or summer of 1931, the exact date being unimportant, since it was prior to the elimination of the disability clause. If he was correct in that, he would be entitled to recover, provided the jury should determine under the facts that he was permanently disabled by his attack in the spring and summer of 1931. This brings us to the construction of the total and permanent disability benefit clause, as quoted. The policy contains a clause to the effect that "the Company will immediately pay to such Insured in full settlement of all obligations hereunder as to such Insured's life, the amount of the insurance in force hereunder on such insured at the time of the approval by theCompany of the proofs as aforesaid."

At the time of the filing of the proofs on February 25, 1932, there was no insurance under this policy in force.

The effect of the claimant's construction of this clause of the policy would require the court to write into the policy "in force at the time the injury or disability arose," and eliminate the words "at the time of the approval by the Company of the proofs as aforesaid." It must be borne in mind that this policy is a contract, and like any other contract must be construed according to the terms which the parties have used, and, in the absence of ambiguity, must be understood in its plain and popular sense. There is no ambiguity in this contract of insurance. It states plainly its terms, in the way any ordinary person may understand. It states that "the Company will immediately pay to such Insured in full settlement of all obligations hereunder as to such Insured's life, the amount of the insurance in force hereunder on such insured at the time of the approval by the Company of the proofs as aforesaid." The time is fixed in clear and express terms. It is true that where the terms of the policy are of doubtful meaning the construction most favorable to the insured will be adopted. As stated by Mr. Justice Sutherland in the case of Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 492,52 S. Ct., 230, 76 L. Ed., 416:

"This canon of construction is both reasonable and just, since the words of the policy are chosen by the insurance company; but it furnishes no warrant for avoiding hard consequences by importing into a contract an ambiguity which otherwise would not exist, or, under the guise of construction, by forcing from plain words unusual and unnatural meanings."

The Bergholm case, supra, involved questions much like those presented in this case, the difference being that in the Bergholm case the policy had lapsed by reason of non-payment of premiums, while in the case under consideration the coverage on permanent disability was eliminated by contract, which contract is not questioned. The rules of construction applied by the Supreme Court of the United States in the Bergholm case are applicable here. The third paragraph of the syllabus in that case reads:

"Clauses in a policy by which the company undertook to pay the premiums if the insured were totally and permanently disabled, but only upon receipt by it of proof of such disability and only the premiums becoming due after such receipt, held unambiguous and not to be construed, to save the policy from a lapse, as an agreement to pay premiums accruing after the disability occurred but before the company received proof of it."

The case under consideration is a stronger case in favor of the insurance company than the Bergholm case. As stated, the Bergholmcase involved the question of lapse by the non-payment of the premiums, which lapse might be waived by the conduct and acts of the company. In the instant case the permanent disability benefit clause had been absolutely and permanently eliminated from the policy by agreement. No question of waiver is presented in this case. The unfairness of the result of this construction is argued at length in the brief of counsel for Sargeant, defendant in error. It is also argued that since the policy provided that the money should be paid at the time of the approval of the proofs by the company, it would put it in the power of the company to never approve of the proofs and thereby escape liability. We have no difficulty with this, since the approval would have to be reasonable and within a reasonable time to avail the insurance company as a defense.

Our conclusion is that the policy provided in plain and express terms that it would pay the amount of insurance in force at the time of the approval of the proofs by the company, as aforesaid. We further find this to be a plain and unambiguous statement, and hard consequences would not justify this court in interpolating language which would in effect make a new contract for the parties, by forcing from plain words unusual and unnatural meanings.

Since there is no dispute of the facts that at the time of the filing of the claim there was no insurance in force, there is no liability on the part of the company to pay. The judgment will be reversed, and judgment will be entered here in favor of the insurance company, the plaintiff in error.

Judgment reversed and judgment for plaintiff in error.

CUSHING and ROSS, JJ., concur.