Mutual Life Insurance v. Otto , 153 Md. 179 ( 1927 )

There are undoubtedly authorities in support of the conclusion which the court has reached in this case, but I question whether the weight of authority is in agreement with it. The author of the special study on "Delivery of a Life Insurance Policy," in 33Harvard Law Review, 198, 221, concluded that, "These stipulations requiring a delivery of the policy to the applicant have been literally construed in most instances, and it has accordingly been held by most of the courts which have passed upon the question that if the applicant dies before the delivery of the policy to him, no recovery on the policy can be had. * * * Adopting the traditional attitude toward ``freedom of contract,' a majority of the courts have strictly enforced such stipulations."

My view is that the intention, in the drafting of the present stipulations for "delivery" or "actual delivery" as a prerequisite to the effectiveness or validity of the insurance, can have been only that there must be a transfer of possession or control of the policy to the insured. That is the common, ordinary, meaning of delivery of an instrument (Harris v.Regester, 70 Md. 109, 120), and there seems to be no ground for supposing that the words were used in the stipulations with any meaning out of the ordinary. And in this view of the intention of the stipulations, there can be little, if any, question, I take it, that it would have to be held that the present policy did not become effective. There was no such transfer of possession or custody of it to the insured. We may say it was nearly so delivered and that only fortuitous circumstances prevented such delivery, but it was not so delivered, and could not, as I see it, be called delivered except by putting an unauthentic meaning into the word. And if this is correct, the beginning point fixed in the policy was not reached. And, of course, the court would not be authorized to substitute something which it thinks ought to suffice, for that which the instrument being enforced fixes for itself. The difference between custody by the insurance agent, and delivery by him as he intended, may be small in one aspect, but in another it is large, if my construction of the intention is correct, for, being the difference between what was intended and what was not, it may lead to just the difference between following the rule of the intention of the instrument and following no rule at all. There is no rule of law for the case except that which was intended by the words used.

The agent who had custody of the policy here seems to me to have been, clearly enough in fact, only the agent of the insurer, and finding a delivery to the insured by characterizing him as an agent or trustee of the insured, as suggested in some of the cases cited, would, I think, be a resort to fictions which would rather transparently cloak a departure from the principle of carrying out the intention of the instrument.

In the special study cited above, the author suggests that a frank departure from the rule of the intention in drafting the instrument might be desirable. He refers to the fact that many stipulations are embodied in contract forms and signed or accepted without actual negotiation or bargaining, and suggests that, by treating these in all cases as agreements when actually they are not such, bad results are accomplished, results which courts have sought to avoid by various escapes from the rule of construction of the contract while acknowledging allegiance to it. Similar suggestions have been made by others. I am inclined to agree that bad results are sometimes accomplished by the enforcement of unexpected stipulations in previously prepared forms. A saving compromise with the rule binding parties to whatever they sign or accept is difficult to work out, however, and, so far as I am aware, has not been worked out satisfactorily, and is not law. The dangers in that direction are obvious. And I do not see that there could be any compromise with a precise fixing of the beginning of the contract relation, so as to make the insurance begin earlier than the insurer has agreed that it shall begin. There is now no rule for guidance in such a case as this other than that of proper construction of the stipulation, and a departure from that rule, under any guise, would be proceeding outside of the law.