Mid-Continent Life Insurance v. Christian , 164 Okla. 161 ( 1932 )

After an investigation of the questions raised on rehearing, I desire to file this as a special concurring opinion. It appears that counsel for plaintiff have relied on the case of Donlen v. Fidelity Casualty Co., 192 N.Y. Sup. 513. It is to be observed that the policy sued upon in this case is for the payment of a specified indemnity payable "at the expiration of each four weeks during the continuance of the period for which the company is liable."

In the case of Woods v. Provident Life Accident Ins. Co. of Chattanooga, 240 Ky. 398, 42 S.W.2d 499, the court announced in its syllabus, paragraph No. 4, the following:

"Under accident policy providing for monthly indemnity, insured could not recover accident indemnity in lump sum for entire period of life expectancy as shown by mortality tables."

In the case of Howard v. Benefit Ass'n of R.R. Employees,239 Ky. 465, 39 S.W.2d 657, the court considered an accidental and health insurance policy which provided that "the insurer agreed to pay the insured $80 per month for the first year of any illness (except such as is due to venereal disease), which is contracted and begins during the life of this policy and after it has been maintained in continuous force for 15 days from its date, then for the period of total loss of time, not exceeding 12 consecutive months, during which "such illness" shall wholly and continuously disable and prevent the insured from performing an and every kind of work or occupation for wages or profit'." The policy also provided that "immediately following such period of 12 months, and so long thereafter as insured shall continuously suffer total disability, * * *" the association would pay one-fourth of said monthly illness indemnity, etc. In that case the insured brought an action alleging that he had become totally disabled by illness by reason of injury. The company paid the stipulated monthly indemnity for a certain period and then ceased paying the monthly indemnity, and sought to cancel its policy. The insured alleged in this petition that his life expectancy was 32.36 years; that he was entitled to $15.60 per month during the remainder of his life, but on account of his physical condition he did not expect to live the full period of 32.36 years; that his physical condition was such that he would live for a period of 16 years, and he prayed damages for a breach of contract in the sum of $2,999.99. Subsequently he alleged in his amended petition "that he was wholly disabled from performing any duty and every kind of work or occupation for wages or profit and would be wholly and continuously disabled during the remainder of the period of his life, and on account of his physical condition he could not procure any other policy of insurance on his health of the same character and with the same provisions" contained in the policy issued to him. The trial court sustained the demurrer to the petition as amended. The Court of Appeals of Kentucky, on page 467 (239 Ky.) said:

"Here, if the appellee wrongfully fails or refuses to pay the idemnity due under the policy, a remedy is available to appellant by which he can recover the exact amount owing to him by the terms of the contract. If the averments of his petition are true and he has become totally disabled by illness for the remainder of his life, the appellee will be indebted to him at the end of each month during his life in the sum of $20, subject to a credit of $4.40, the amount of the monthly premium. Under a contract like this the appellant should not be permitted to recover payments which, by reason of his death or recovery from his illness, might never accrue. Keith's Executor v. Hinkston, 72 Ky. (9 Bush.) 283; Frankfort C. Railway Company v. Jackson, 153 Ky. 534, 156 S.W. 103. We have been cited and have found no case from this jurisdiction involving a suit on a health policy of insurance, the monthly indemnity being payable in installments, where the question now raised was presented, but there are numerous authorities from other jurisdictions in which the courts have held that a renunciation of the contract by the insurer would not authorize the insured in treating the contract as breached and suing for gross damages. It was further held in these cases that the insured could recover only for installments due, though all of the matured installments could be joined in one action. Some of the cases so holding are Metropoliton Life Insurance Co. v. Lambert, 157 Miss. 759, 128 So. 750; Donlen v. Fidelity Casualty Co., 117 Misc. Rep. 414, 192 N.Y. S. 513; New York Life Insurance Co. v. English, 96 Tex. 268, 72 S.W. 58; State Life Insurance Co. v. Atkins (Tex. Civ. App.) 9 S.W.2d 290; Hardie v. Metropolitan Life Insurance Co. (Mo. App.) 7 S.W.2d 746; Bonslett v. New York Life Insurance Co. (Mo. Sup.) 190 S.W. 870; Commercial Casualty Insurance Co. v. Campfield,243 Ill. App. 453; Atkinson v. Railroad Employees' Mutual Relief Society. 160 Tenn. 158, 22 S.W.2d 631. * * *

"In the instant case the contract was executed on appellant's part. Furthermore, the monthly indemnity to which he claims he is entitled is for total disability resulting from illness and not from injury, and he concedes in his pleading that his expectancy in life is uncertain by reason of the very illness which, as he claims, has disabled him. The case of Aetna Life Insurance Co. v. Phifer, 160 Ark. 98, 254 S.W. 335, likewise held that denial of all liability under the permanent total disability clause of an accident insurance policy by the insurer justified the insured in treating the contract as breached. It was held that the measure of damages was the amount the insurer would have been required to pay the insured under the contract, if it had not breached it, reduced to its present value. The injury to the insured, however, which resulted in his permanent disability, was not such as was calculated to reduce his expectancy in life. The rule announced in Aetna Life Insurance Co. v. Phifer, supra, seems to have been modified in the later case of Manufacturers' Furniture Co. v. Read, 172 Ark. 642, 290 S.W. 353, 354, wherein the court said: 'The most serious question raised in the case is whether or not there can be a recovery for immature installments of the compensation earned under the contract. According to the uncontradicted proof, the compensation of $10 for each month after the renewal contract was payable monthly, and at the time of the commencement of the action there were only four payments, aggregating $40, matured. Counsel for appellee invoke the rule that where one party to a contract incapacitates himself from performance, or unequivocally refuses to perform, the other party may sue for the whole of the anticipated damages resulting from the breach. Counsel cite authorities in support of that rule, but the rule does not apply to contracts, either written or verbal, to pay money at specified times. Roehm v. Horst, 178 U.S. 1, 20 S. Ct. 780, 44 L. Ed. 953; Moore v. Security Trust Life Ins. Co. (C. C. A.) 168 F. 496. Where the contract, or the unperformed portion of it, is merely to pay money at specified times, the refusal to pay does not accelerate the maturity of installments which are not due under the contract."

In the case of Atkinson v. R. R. Employees Mutual Relief Soc., 22 S.W.2d 631, the Supreme Court of Tennessee announced this rule:

"In action at law for breach of contract of insurance payable in weekly or periodical installments, it is generally held that only those installments in default at time suit was brought may be recovered.

This same reasoning was applied by Judge Sanborn in the case of Moore v. Security Trust Life Ins. Co., reported in 168 Fed. 497. In this opinion. Judge Sanborn states:

"But this rule is inapplicable to, and it does not govern, actions upon bonds, notes, and upon other contracts to pay money at times specified, where the party of one part has completely executed the contract and it is executory only upon the part of the other party. No action for damages lies before the time of payment arrives against one who disables himself from paying, or gives notice that he will not pay, his obligations under contracts of this kind. Roehm v. Horst,178 U.S. 1, 17, 18, 20 Sup. Ct. 780, 44 L. Ed. 953; Nichols v. Steel Co., 137 N.Y. 471, 487, 33 N.E. 561; Washington County v. Williams, 111 Fed. 810, 810, 49 Cow. C. A. 621, 630."

From the foregoing it appears that the policy provides for the payment of specified sums of money at specified times, and that the rule announced by the court of Appeals of Kentucky in the Howard Case, supra, is the correct rule to apply in an action to recover damages on a health insurance policy which provides for the payment of a specified indemnity at specified times, whenever the insurer ceases to pay. The insured cannot sue for gross damages, but only for those installments in default at the time suit is instituted.

The rule contended for by plaintiff is applicable to mutual executory contracts, but does not govern in an action for the payment of money at times specified in a health and accident insurance policy, in the absence of an acceleration clause, where the party of one part has completely executed the contract, and it is executory only upon the part of the other party to the contract.

Note. — See under (1), annotation in 28 L. R. A. (N. S.) 730: 14 Rawle C. L. 1315.