Merchants Nat. Bank v. Commonwealth Life Ins. Co.

The Commonwealth Life Insurance Company of Louisville, Kentucky, issued a policy of insurance on the life of Eugene J. George on May 17, 1935, in the face amount of $1,000 with a provision for double indemnity in certain circumstances, the double indemnity provision of the policy being in the following language:

"The Commonwealth Life Insurance Company of Louisville, Kentucky, in consideration of an additional premium of $1.05, which is included in the premium stated on the face of this Policy, payable at the same time and under the same condition as the regular premium, will pay double the sum of this Policy or Two Thousand Dollars, in lieu of all other benefits, upon receipt of due proof * * *

"This provision for Double Indemnity Benefits shall be void and shall not apply if the death of the Insured has resulted (a) from self destruction * * * (b) from bodily injury inflicted by the Insured * * * (and other enumerated causes of death) * * *

"The provision for Double Indemnity Benefits shall cease to be in force * * * (b) if the Insured engages in military or naval service in time of war * * *

"Whenever this provision shall become inoperative, the additional charge therefor shall no longer be payable, but acceptance by the Company of the additional premium, should the Double Indemnity Benefits cease to be in force on account of any of the conditions named above, shall not constitute a waiver of such restrictions and premiums so collected will be returned on demand."

The policy was in force and effect at the time of the death of Mr. George on November 22, 1944.

In 1943 Mr. George created a trust for the benefit of his wife and others and made the insurance policy payable into this trust. The Insurance Company accepted this assignment. The Merchants National Bank of Mobile was made trustee under this trust.

On November 14, 1944, Mr. George was inducted into the United States Army and stationed at Hattiesburg, Miss. On November 18, 1944, Mr. George was granted a weekend leave and while on leave to visit his wife in Biloxi, Miss., and while driving his own car from Hattiesburg to Biloxi, Mr. George's car struck a bridge abutment and he was injured so severely that as a result of the injuries he died on November 22, 1944.

The case was tried in the court below on an agreed statement of facts, which we have summarized. The trial court rendered a judgment in favor of the Insurance Company and the Bank, as trustee, appealed.

The problem presented by the record is whether the double indemnity benefits were forfeited by reason of the provision in the policy: "The provision for Double Indemnity shall cease to be in force * * * (b) if said insured engages in military or naval service in time of war. * * *."

The court below held that under this provision the double indemnity benefits were not payable since Mr. George was in the military service at the time of his death, although he was on leave at the time he received the injuries that resulted in his death.

It is axiomatic that a provision of the kind quoted must be construed most strongly against the insurance company. The condition imposed, whereby double indemnity benefits cease to be in force, is: "If the insured engages in military or naval service." The policy does not provide that double indemnity benefits cease merely because the insured is inducted into the service. The inhibition is against engaging in military or naval service. A member of the military or naval service may be in line of duty at the time he is injured, without "engaging in military service" and may be inducted into the service without "engaging in the military service."

[4] "Induction is completed upon acceptance by the government of the draftee. United States ex rel. Diamond v. Smith, D.C., 46 F. Supp. 607, 609. Ex parte Billings, D.C.,46 F. Supp. 663, 668.

One inducted into the military service may never engage in military service.

We construe the double indemnity provision to mean that the double indemnity benefits cease while the insured engages in military or naval service in time of war, but such benefits do not cease, nor are they suspended by a mere induction into the military or naval service. There being no evidence that the insured was engaged in military or naval service at the time of his death, or that he had ever engaged in such service prior to his death, the opinion here prevails that the judgment appealed from was erroneously rendered. It should be, and is, reversed, and a judgment here rendered in favor of appellant.

Reversed and rendered.