Cullum v. New York Life Ins. Co. , 197 S.C. 6 ( 1941 )

May 1, 1941. The opinion of the Court was delivered by In the above-stated case opinion was filed April 10, 1941, since which and in due time petition for rehearing has been filed by the appellant; upon consideration of the latter, it is ordered, that the opinion heretofore filed be withdrawn from the files of the Court and that the following be substituted as the opinion of the Court in the case, and that the petition for rehearing be refused:

ON PETITION FOR REHEARING The clear and convincing Circuit decree of Judge Featherstone will be reported. From it the defendant has appealed upon exceptions which it stated in argument raise the following questions for determination by this Court:

1. Are the provisions in the insurance contract under consideration ambiguous, or is the language and intent of the policies clear?

2. Where it is admitted that the insured died before the anniversary named in the insurance contracts, upon which a benefit would otherwise have been payable, is the insured's estate entitled to an apportionment of said benefit?

Answering the first question, we agree with the Circuit Judge that the policy provisions are ambiguous. On the first page, as pointed out in the decree, "The Company agrees to pay to the insured one-tenth of the face of this policy per annum, during the lifetime of the insured, if the insured becomes wholly and permanently disabled before age 60," but the provision continues, "subject to all the terms and conditions contained in Section 1 hereof." Section 1 appears on page 2 and therein it is provided that the first payment of "life income to insured" will be made "one year after the anniversary of the policy next succeeding the receipt of such proof * * *."

That the policy is ambiguous in this particular is demonstrated by the consideration that the promise upon the face, first page, of the policy is to the effect that the insurer will pay one-tenth of the face amount per annum during the life-time and total disability of the insured and although it is expressly admitted by the insurer that the insured became totally and permanently disabled on or before November 24, 1937 (and due proof thereof was submitted to the company on December 13, 1937), and lived in that condition until January 6, 1939, considerably more than a year, liability thereunder is denied by the appellant.

"Per" is defined in Webster's New International Dictionary, Second Edition, Unabridged, 1939, as meaning "with equality, uniformity, or regularity, on a basis of a unit, as per annum." Volume 48 Corpus Juris, page 806, defines "per annum" as a Latin term "which may mean by the year, every year, through the year, yearly, also during the year," with separate citations of authorities for these various meanings.

It may be added that construction of the same policy form by other Courts of last resort has resulted in conflicting results, which seems to us proof of high order of the ambiguity of the provisions. See the A.L.R. annotations, particularly that in Volume 101, at page 899. We like the reasoning of the Maryland Court in the Brownstein case,158 Md., 51, 148 A., 273, in which the same result was reached as here upon the identical policy form and without the aid of statute. It is quoted from at length in the decree, reported herewith.

To sustain its view of the second question appellant has resort to the ancient rule of the English common law (long since there changed by statute) that annuities are not apportionable as of time. None of the old English or early American cases which we have found in which the rule was applied involved insurance contracts. In fact, the rule appears to have been established long before the latter were known. The rule seems never to have been applied in the Courts of this State although it has been recognized in departures from it whether they were held exceptions or necessary to carry out the intention of the creator of the annuity.Waring v. Purcell, 1 Hill Eq., 193; McLemore v.Blocker, Harp. Eq., 272; Ex parte Rutledge, Harp. Eq., 65, 14 Am. Dec., 696.

Appellant's position is, in our opinion, foreclosed by the rule of the last-cited case, Ex parte Rutledge. There one was given an annuity, payable semi-annually, consisting of the dividends upon certain bank stock. He died in a few days, as did the respondent here, before the payment date and the question was, as here, whether his representative should be paid pro rata. We quote the Court's disposition of the problem: "An entire interest, which only accrues at particular periods, cannot be apportioned, because it is not susceptible of any intermediate division, and therefore it was necessary in England to provide by a positive statute for the apportionment of rent. But it appears from all the cases which have been referred to, that wherever an interest is daily accruing, it may be apportioned, as in the case of interest on a bond, which accrues de die indiem. (Banner v. Lowe, 13 Ves., 135.) So when the fund is provided for maintenance, which is still more favored. "This (says the Court in Hay v. Palmer, 2 P.W., 503) is a stronger case than that of interest, for it is for daily support.' The present claim is of that nature, it is expressly declared by the deed of Mrs. Coslett, that the dividends on the stock settled, were intended as maintenance, and there is reason to believe that the advances made by the petitioner to his testator were on the credit of them. They were the only funds on which the testator depended for subsistence and they were daily accruing; for although payable only half yearly, yet they arose out of the daily profits of the bank, which might be ascertained at any intermediate time. It is therefore ordered and decreed, that it be referred to the commissioner to ascertain the amount of the dividends which had accrued at the time of the death of the petitioner's testator, on the stock settled on him for life, and that the same be paid to the petitioner as his executor."

It cannot be said that the case is distinguishable from that in hand on the ground that there it was expressly provided in the creation of the annuity that it was for the maintenance of the annuitant. This because the provision in the instant case was palpably for maintenance, for the annuity came into existence under the contract only when the annuitant became permanently and wholly disabled and was thereby continuously prevented from engaging in any occupation for remuneration or profit. Furthermore, if there were doubt that the annuity here was provided for the maintenance of the insured it would be removed by the failure of the appellant to except to the repeated findings to that effect in the decree and by the express agreement of appellant in its written argument with such conclusion of the trial Judge.

Just as the bank from day to day made the profits for its semi-annual dividends which constituted the annuity in theRutledge case, the appellant here from day to day accumulates the fun is which enable it to make the payments required under these and its other policies; so the apportionment is as practical and logical here as in the earlier case.

Appellant's questions are answered adversely to it, the exceptions overruled and the judgment below affirmed.

MR. CHIEF JUSTICE BONHAM and MESSRS. JUSTICES CARTER, BAKER and FISHBURNE concur.