Werner v. State Life Insurance Co.

DISSENTING OPINION. Since I am firmly convinced that ruling precedents of the Supreme Court are being violated by the majority opinion in this case it is my duty to state what I conceive the law to be as applied to the facts in this case. In the first place the statute says specifically that all policies should be incontestable after two years except for non-payment of premiums. Conceding that the statute is written into and becomes a part of all policies it follows then that under the statute this policy could be contested only for non-payment of premiums. The Supreme Court and this court have said, many times, that the incontestable statute means exactly what it says.

Again this policy is ambiguous and since it is ambiguous such ambiguity must be construed strictly against the insurer where an exception is involved. The majority opinion also says that there is a difference in the risk assumed by the insurer as to suicide and murder and this is absolutely groundless. I will concede that if this was a question as to the coverage intended to be placed in force or omitted and there was no assumption of risk at all that there could be no liability and that it would be the better rule probably to allow the insurer to defend on the ground that the risk had never been assumed but this is not the situation here, and for a further reason that an identical situation has been decided by this court wherein it was held that one who is murdered without fault on his part, without his expectation and foresight and he did not intend it that it was accidental.

In addition to the fact that the legislature knew exactly what it intended when it adopted the incontestable clause, the accumulation of the cases show that this state has held not only once, but many times that an incontestable clause means that the policy is not to be contested for any purpose except for statutory reasons, contained in the act.

The people of Indiana in 1909 through their legislature in "defining their powers and prescribing their duties" of all life insurance companies "organized under . . . or doing business" in this state said that such policies should contain the following: "that the policy . . . shall constitute the entire contract between the parties and shall be incontestable after not more than two years from its date except for non-payment of premiums and except for violation of the conditions of the policy relating to naval and military service in time of war." The legislature at that time also had all of our language at its command. It used ordinary common everyday words that were familiar to and part of the vocabulary of at least every legislator and every high school student. They decreed, as the supreme law of state, that policies ("entire contract") shall be incontestable after the stated period except for non-payment of premiums and except for violation of conditions of the policy relating to certain service in time of war. If it had been the idea of the legislature that there should have been other exceptions it would have been very easy to have added another or other "except for" clauses. The only conclusion that can be reached is that it did not want any other exceptions. Nor has any other legislature since that time deemed there was any need for any additional exceptions. And there have been seventeen meetings of that body in those twenty-eight years.

The insurer can, of course, make any contract that its agents can persuade a gullible purchaser to buy. The whole of the English language is at their disposal to be used as they dictate. Most of the words used in insurance policies have been interpreted judicially not once but many times. There is no necessity today for the use of uncertain terms in life insurance. It was because of the use of loose language and the consequent endeavor of the companies to avoid liability thereunder that the Hughes investigation in New York revealed such practice. Realization that some radical measures were necessary caused the better companies and others to write incontestable clauses into their policies and sponsor legislation that would stabilize and revitalize the toppling business of life insurance. One of the outgrowths of this investigation was statutory incontestable clauses. They were enacted first and last to guarantee to the world that thereafter policies upon which premiums were paid could be collected in full and without delay, costly, expensive and exasperating litigation.

In 1887, which is the date of the earliest case I have been able to find in this state, the Supreme Court used language from which the only inference is that the court at that time believed that a policy containing an incontestable clause should be absolutely indisputable for any reason than that contained in the incontestable clause and that the company should never make any other defense under such a clause except for those reasons. Kline v. National Benefit Association (1887), 111 Ind. 462, 11 N.E. 620.

In 1896 this court in a case wherein it was being asserted that this clause meant that the insurer was "precluded from the rightto make any defense whatever to the payment of the full amount" the assumption of the court was that a policy containing such clause was incontestable. (Our italics.) The Peoples MutualBenefit Society v. Templeton (1896), 16 Ind. App. 126, 44 N.E. 809.

In 1908, the year before the statute was adopted in this state, this court held that suicide was no defense and that an incontestable clause in the policy prevented the defense from suicide being asserted. Court of Honor v. Hutchins (1908),43 Ind. App. 321, 82 N.E. 89.

The Supreme Court again in Federal Life Insurance Company v.Kerr (1909), 173 Ind. 613, 89 N.E. 398, expressed the idea that the incontestable clause in the policy cuts off the rights of the insurer to contest the policy for any reason other than that excepted to in the incontestable clause.

This court again in 1911 in Court of Honor v. Rausch (1911), 50 Ind. App. 161, 95 N.E. 1018, said that "after the expiration of two years the defense of suicide became unavailable and the contract of insurance contained in the certificate becameincontestable for any reasons except those stated in the incontestable clause. . . ."

This court again in the same volume, page 630, in CommercialLife Insurance Company v. McGinnis reaffirmed and reiterated the same idea and held that in a policy containing an incontestable clause that the insurer could not, after the expiration of the time, avoid such policy for any cause not included within the exception and said, in effect, that the incontestable clause was a sort of statute of limitations in favor of the insured within which time the insurer must, if ever, test the validity of the policy.

In 1913 in the first case written by the Supreme Court after the statute in this state went into effect, and with the clause in the policy, the court followed the great weight of authority in the United States and cited some of the Indiana cases herein mentioned and said that at that time they conceived the law to be that an incontestable clause precluded every defense to the policy other than the defenses excepted in the provision itself.Indiana, etc., Life Ins. Co. v. McGinnis (1913), 180 Ind. 9, 101 N.E. 289.

The next time this court was called upon to pass upon such clause was in Ebner, Admr. v. Ohio, etc., Ins. Co. (1918),69 Ind. App. 32, 118 N.E. 829, wherein it again said that the insurer must, if ever, test the validity of the policy within the incontestable period.

This court followed the McGinnis case, supra, again in NorthAmerican Life Insurance Co. of Chicago v. Copeland (1929),91 Ind. App. 710, 170 N.E. 927. This court in the last case touching upon this subject quoted from the Ebner and McGinnis cases,supra, to the effect that affirmative action should be taken within the period named in the incontestable clause and held that the affirmative action must be taken within the time limit or not at all. Federal Life Insurance Co. v. Relias (1934),99 Ind. App. 115, 185 N.E. 319.

The policy here provides that double indemnity shall be paid if all premiums have been paid ". . . in the event of the death of the insured, resulting from bodily injury, sustained and effected directly through external, violent and accidental means (murder . . . not included) exclusively and independently of all other causes, provided such death shall occur within ninety days from the date of the accident." It is my contention that this is ambiguous in that under the decisions in this state one who meets his death through "external, violent and accidental means" even though such means be received by the insured while someone else was perpetrating the felony of robbery, it was accidental.

The earliest Indiana case on the question of ambiguous insurance contracts is Grant et al. v. The Lexington Fire,Life and Marine Insurance Company (1854), 5 Ind. 23, wherein the court said (p. 27): "Insurance policies are to be liberally construed in favor of the assured; and an exception is to be STRICTLY construed against the underwriters." (Our italics.) In the same volume in the case of The Kentucky Mutual InsuranceCompany v. Jenks (1854), page 96, the court said (p. 103):"It is not good policy in the Courts to favor such cunninglydevised insurance policies, as that whatever event happens, the underwriters may reap the premium and escape the risk. On the contrary, some degree of acuteness should be called in to uphold and enforce such agreements, whenever there has been a fair contract and a substantial compliance." (Our italics.)

In the case of Pacific, etc., Ins. Co. v. Alsop, Exr. (1922), 191 Ind. 638, 640, 134 N.E. 290, the court said: "The established rule is that an insurance policy prepared by the insurer, the form of which the insured can not control nor alter, which may not even be seen by the insured until it is delivered to him in final consummation of the contract of insurance, shall not receive a strained construction as against the insured, but that doubts as to its construction arising from contradictoryprovisions or ambiguous expressions which it may contain are to be resolved against the company that issued it." (Our italics.)

In the more recent case, if not the last expression of opinion by the Supreme Court, the court said the following with citation of authority for each statement: "Since the policy in the instant case insures generally by clear and comprehensive language against death from bodily injuries by accidental means, of which there are visible marks or wounds on the body, liability for such a death will not bedestroyed by language of exception, unless such exception shallbe clear, AND FREE FROM REASONABLE DOUBT. If a policy be ambiguous, the doubt will be resolved against the insurer. . . .

"An insurance policy should be so construed as to effectuate indemnification to the insured or his dependent beneficiary against loss, rather than to defeat it. . . . Where any reasonable construction can be placed on a policy that will prevent the defeat of the insured's indemnification for a loss covered by general language, that construction will be given . ..

"It is the duty of the court to give such construction to the policy, if the language fairly admits, as will make it of some substantial value and carry out the intention expressed therein that liability is incurred where death occurs from accidental injury." Masonic Acc. Ins. Co. v. Jackson (1929),200 Ind. 472, 481, 482, 164 N.E. 628.

If these rules of construction mean anything I believe that we should follow them. The appellee here in its brief and in oral argument admits that as to the deceased policy holder this wasdeath through injuries sustained and due to external, violent andaccidental means, exclusively and independently of all othercauses. If this was such to him, and it seems to be without dispute, then there is ambiguity in the policy. If the policy is capable of more than one construction and if one contracting party believes that the policy means one thing while the other contends that it means something else I can not understand why it can be anything else but ambiguous.

In the case of Atkinson, Admr. v. Indiana, etc., Ins. Co. (1923), 194 Ind. 563, 143 N.E. 629, the Supreme Court had before it a case where the insurance company contended that an exception stated in language no clearer than the present case was not ambiguous but it was held that such an exception should not control. In that case the policy provided that "after one year from the date of issue this policy shall become incontestable if the premiums have been duly paid, except in case of self-destruction within two years, whether sane or insane, and except that military or naval service in time of war without a permit from the company, is a risk not assumed under this policy at any time." The insurance company contended that since the exception provided that one in military service in time of war without a permit from the company was a risk not assumed while the appellant contended that at the time the insured met his death he was not in military service in that he had been given a pass to absent himself from camp for a few hours, although he, during that time, was subject to call by the military authorities. The court there said that the possibility of such a construction by the insurance company in the face of the construction contended for by the insured discloses an ambiguity. If that policy was ambiguous the one in the case at bar is more so and we are bound by the prior decisions of the Supreme Court. The court there said (p. 568): "This very state of conjecture suggests the rule of law, long adhered to, that, in construing an insurance contract, which, by ambiguities, is capable of two reasonable interpretations, that interpretation will be adopted which is most favorable to the insured, and against the insurer," and cited a long list of authorities to sustain its view.

In the case of Travelers' Protective Association v. Fawcett (1914), 56 Ind. App. 111, 104 N.E. 991, the identical question as presented in the instant case was before this court. The insurance company there contended that the condition relied upon exempted it from liability for injury or death resulting from intentional injury inflicted by another person on the insured and for the purpose of that case the court adopted that construction. The insurance company contended that a complaint that showed upon its face that the insured met his death from intentional injury inflicted by another when the policy specifically excepted it, was bad on demurrer. The court there said (p. 116): "It is true that this paragraph shows that the assured was assassinated by a person who was attempting to rob the bank, but this does not amount to a showing that his death did not result from accidental means within the terms of the certificate and by-laws" and that since the complaint alleged that Fawcett was shot through the body by a ball from a pistol and thereby instantly and accidentally killed by Thomas Hoal the other allegations are not sufficient to overcome this general allegation that the insured was accidentally shot and injured and that therefore the complaint is clearly sufficient. The majority opinion says that they agree with this proposition and then proceed to arrive at the opposite conclusion. Of course I will agree that this court can overrule any of its former opinions but certainly it can not do this by saying that it agrees with the result reached in the opinion attempted to be overruled as to the only question presented in that case, which question is identical to the one presented here, that is, whether or not the demurrer to the complaint here was properly sustained. I believe that, for one of many reasons, we are bound by the Fawcett case.

The majority opinion quotes from a Louisiana case using dicta of that court which is clearly outside the matter decided. The only question in the Louisiana case was whether or not the insured met his death by accidental means, and the court held that he did not because he had been the aggressor in the fight which caused his death. The citation of this case along with the case of State LifeInsurance Company v. Allison (1920), (C.C.A.), 269 Fed. 93, 14 A.L.R. 412 (cases which the insured cites) and also the cases ofState Life Insurance Company v. Little (1924), (Tex. Civ. App.), 264 S.W. 319; State Life Insurance Company v. Allen (1936), (C.C.A. Tex.), 81 F.2d 618; State Life InsuranceCompany v. Parry (1935), (Tex. Civ. App.), 88 S.W.2d 763;State Life Insurance Company v. Barnes (1933), (Tex. Civ. App.), 58 S.W.2d 189; State Life Insurance Company v.Cumpton (1932), 144 So. 769 (La. App.); State Life InsuranceCompany v. Spencer (1933), (C.C.A. Tex.), 62 F.2d 640;State Life Insurance Company v. Wilson (1933), (Tex. Civ. App.), 57 S.W.2d 355; State Life Insurance Company v.Sullivan (1932), (C.C.A. Cal.), 58 F.2d 741; State LifeInsurance Company v. Nolen (1930), (Tex. Com. App.), 24 S.W.2d 22; State Life Insurance Company v. Coffrini (1922), (C.C.A. Pa.), 285 Fed. 560, which I found while investigating this matter show clearly that the insurer could not have meant the same thing in any one of these cases as to the attempt to exempt murder. These policies were issued in Texas, Louisiana, Alabama, California and Pennsylvania as well as the instant case in Indiana.

Murder as defined by their respective criminal codes is not the same in any of these states and this brings us to a discussion of what the average man, in common parlance, conceives murder to be. If the average man believes murder to be the statutory definition in Indiana as interpreted by the majority opinion it means that "whoever, in the perpetration of or attempt to perpetrate a rape, arson, robbery or burglary, kills any human being, is guilty of murder in the first degree. . . ." If it could be said that this was the average man's idea of "murder" it might be that there was no ambiguity in the use of this word and that a person meeting his death by violent, external and accidental means when there had been an attempt on the part of one unknown to the insured to perpetrate a rape, arson, robbery or burglary he was not covered by such a policy. But this is not all that the statute of Indiana regards as murder. If a railroad, interurban or street-car track is obstructed willfully and maliciously and as a result a person is killed in the crash it follows that if murder is to be interpreted as the majority opinion herein interprets it, anyone with a policy that provided that if he meet his death by violent, external and accidental means could not recover under such policy because that by statute is held to be murder in Indiana. Acts 1905, ch. 169, § 413, p. 584, § 10-3902 Burns 1933, § 2496 Baldwin's 1934. Or if anyone maliciously or even mischievously shoots a gun, rifle, pistol or other weapon, or throws a stone, stick, club or any other substance whatever, at or against any stage coach, or any locomotive, railroad car or train of cars, street car, or interurban car on any railroad or against any water craft and anyone is injured or wounded by such act from which death ensues, recovery could not be had under the majority opinion herein, because this would also be murder. Acts 1905, ch. 169, § 410, p. 584, § 10-4520 Burns 1933, § 2493 Baldwin's 1934. Or if there should be a duel and death resulted therefrom the beneficiaries of the deceased duelist could not collect under a policy under the majority opinion, although clearly he would have met his death by violent, external and accidental means. Acts 1905, ch. 169, § 348, p. 584, § 10-3402 Burns 1933, § 2405 Baldwin's 1934, whether the duel be fought in this state or in some other state where dueling might not be prohibited by law.

One of the strangest anomalies to be found is where any number of persons assemble for an unlawful purpose and intend to injure any person by violence and as a result thereof do actually injure or assault another person and that person thereby meets his death by violent, external and accidental means, his representatives could recover under this policy as such is deemed to be lynching and not murder within our statute. Acts 1905, ch. 169, § 440, p. 584, § 10-3306 Burns 1933, § 2526 Baldwin's 1934.

Neither the insurance company nor the insured had any idea that murder was as fixed by the majority opinion here. Had the policyholder, immediately after receiving this policy, some doubt as to whether murder was excepted and he resorted to a dictionary or encyclopedia to set his mind at rest, as to the probable definition of murder, after such search he would, no doubt, have concluded that if he met his death by violent, external and accidental means even at the hand of a third person as in this particular case, the definition that he found there could not have led to any such conclusion. Webster's New International Dictionary, 1931, defines murder as "The offense of unlawfully killing a human being with malice aforethought, express or implied." The foregoing is one of the two most usual definitions of murder occurring in the judicial decisions; the other is essentially that given by Blackstone, quoting Sir Edward Coke. In the United States this is stated as follows: The offense committed "where a person of sound memory and discretion unlawfully kills any reasonable creature in being and in the peace of the commonwealth with malice aforethought expressed or implied." At common law there were no grades or degrees of murder, but by statute in many states of the United States the offense is divided into two degrees; murder in the first degree being the most severely punished and restricted to those cases where the killing was willful, deliberate, premeditated, or especially cruel, or where it was done in the commission of some heinous felony, as arson, rape, etc. Murder is intentional and unlawful homicide."

"The unlawful killing of a human being with malice aforethought; the unlawful killing of another with malice; the killing of a human being directly or indirectly without excuse or justification and by any other means other than perjured or false evidence before a tribunal of justices." New Standard Dictionary of the English Language, 1932, Funk and Wagnalls.

"Murder, in law, the unlawful killing of a person with malice aforethought." The Ency. Brit. 14th Ed. 1929, Vol. 15.

"Murder is the unlawful and intentional killing of a human being by a human being." Chambers Ency.

"The unlawful killing of a human being with malice aforethought." The New International Ency. 1916.

From these definitions it is clear that the common idea of murder is not that malice is implied by law and in the interpretation of this word this court or any court is bound to interpret it as the man of the common ordinary understanding conceives it to be or as used ordinarily by the common man in everyday usage. As the majority opinion interprets it it is used in a highly technical or strictly statutory sense. The cases have held the word "murder" to be a technical word and as the Indiana cases have said a "term of art." This court should not so interpret it nor should it be so interpreted at all in a civil case. The parties here did not have the least idea that they were contracting to be bound by a criminal statutory definition.

In the beginning of incontestability clauses it was strenuously contended by the insurers that such a clause did not prevent them from relying on fraud because fraud had always been a defense to almost every conceivable situation, and they could not see how an incontestable clause could bar them from their right to set up fraud as a defense. In the beginning there was probably some doubt on the part of some of the courts as to whether or not fraud was excluded by this clause but today a vast majority of the jurisdictions hold that fraud is barred absolutely by the incontestable clause. Cooley (2) Volume 5, page 4501. "Life insurance companies long ago discovered that resistance to prompt and full payment of death benefit proceeds of policies was prejudicial to increase of business. Particularly was harmful resentment created when premiums had been paid for many years by an insured who confidently expected he would leave his dependents provided for. No matter how fraudulent had been the conduct of the applicant while procuring issuance of his policy, the public noted only the fact of refusal to pay.

"To overcome such fears and uncertainties on the part of persons solicited to invest in life insurance, the companies invented a so-called incontestable clause which was inserted in and made a part of the policy contracts. The insurer thereby covenanted that after a lapse of a specified period of time from date of issuance the validity of the policy never would be questioned by the company. Occasionally the status of incontestability was made to attach at the date of issuance, but usually the insurer reserved one or two years within which it might make an issue of the obligation to pay death benefits.

"Competition forced the old line life insurance companies to adopt the clause in some form two decades ago. The few companies which lingered outside the pale were drawn in by enactment of statutes in nearly all American states. It is well-nigh impossible to find a life insurance policy of recent date issued by any insurance company except some fraternal benefit organization, which does not contain an incontestable provision." 19 Ill. Law Review 226.

The same vigorous contention was made in the first suicide cases but today a majority of all the states follow the well recognized weight of authority that the incontestable clause also bars the defense of suicide. Here the insurance company is starting the same cycle and eventually the same result will be reached, so why should not the sane and modern viewpoint be adopted and the rule be declared to be that the incontestable clause covers murder as well as fraud and suicide.

The majority of the court in their opinion say that they think that the incontestability clause should not be applied to murder in Indiana although they concede that it is applied to suicide, and that the incontestability clause should not be allowed to be set up against the defense of murder "because of the differences in the risks assumed by insurance companies when they insure against suicide or murder." By this they inferentially say that there is a greater risk assumed by the insurer in murder cases than in suicide. This statement was evidently made without any regard to the facts, as all the figures available in any compilation of statistics show conclusively that there are many, many more suicides than murders. In a compilation based on the combined mortality experience of companies having 83.2% of the number of ordinary policies outstanding on December 31, 1935 in all U.S. legal reserve life insurance companies it was found that in the total number of deaths for ten months in 1935 that suicide was accountable for 4,084 and that homicides of all grades totaled only 501; and that there were 25 suicides to each 100,000 deaths and only three homicides of all degrees to each 100,000 deaths and that in 1936 for a period of ten months there were 3,768 suicides and only 470 in all degrees of homicide.

From data based on the combined mortality experience of companies having 86.9% of the number of industrial policies outstanding on December 31, 1935, in all U.S. legal reserve life insurance companies for 10 months of 1935 there were 3,187 deaths all due to suicides and 1,684 due to all degrees of homicide. For 10 months in 1936 suicides accounted for 3,010 while all degrees of homicide totaled 1,483.

The statistical abstract of the United States in 1935, table 78, page 83, shows that out of 1,342,106 deaths in 1933, 19,993 were due to suicide while there were only 12,124 due to all grades of homicide.

These figures disclose that if all these 1,342,106 people had been insurable risks that the probability of an insurance company having to pay for one murdered as to the probability of its having to pay in case of those committing suicide would be about 1 to 25, or, in other words, there are 25 times as many suicides as murders. From these figures it is more than clear that the inference in the majority opinion that the risk is greater in murder than in suicide is absolutely without foundation in fact.

As a further indication that the legislature conceived incontestable clauses to be exactly what the courts had interpreted them to be, namely, that the policy should be incontestable for any purpose except those stated in the Act of 1909, supra, the legislature in 1935 (Acts of 1935, ch. 162, § 151, at page 683) added to the former act by making it possible for the insurance companies, at their option, to add to the incontestable clause provisions which granted additional insurance specifically against death by accident. If this could have been done under the 1909 act as interpreted by the courts there would have been no reason or necessity for adding this to the law in 1935.

The interpretation placed upon the incontestable clause by the United States District Court for the Northern District of Indiana and the Circuit Court of Appeals for this circuit is the same as that placed thereon by the Indiana courts, and this is an additional and further reason why the incontestable clause should govern here. Columbian Nat. LifeIns. Co. v. Wallerstein (1936), 13 F. Supp. 865; FederalLife Ins. Co. v. Zebec (1936), 82 F.2d 961.

The appellee contended in oral argument and there was some discussion in this court to the effect that this was the first opportunity that the appellee had had to have this ambiguous language construed. Four years before this policy was issued the legislature made it possible to have such contract construed by the judgment of a competent court under the declaratory judgment act of 1927. The insurance company here could have had, at any time after the policy was issued, these words construed by a court but they preferred rather to let this ambiguous language stand until after the death of the insured and then attempt this contest, which contest the incontestable statute says they should not have.

From all of the above it seems clear to me that the complaint in the instant case states a good cause of action and the demurrer thereto should have been overruled.

See also the following cases: Travelers Insurance Company ofHartford, Conn. v. McConkey (1888), 127 U.S. 661, 8 S. Ct. 1360; The Imperial Fire Insurance Company of London, England v.The County of Coos (1894), 151 U.S. 452, 14 S. Ct. 379;Northwestern Mutual Life Insurance Company v. Johnson (1920),254 U.S. 96, 41 S. Ct. 47; Mutual Life Ins. Co. v. HurniPacking Co. (1923), 263 U.S. 167, 44 S. Ct. 90; Aschenbrenner v. U.S. Fidelity Guaranty Co. (1934), 292 U.S. 80, 54 S. Ct. 590, 78 L. Ed. 1138; Kascoutas et al. v. Federal Life InsuranceCompany (1922), 193 Iowa 343, 185 N.W. 125, 22 A.L.R. 294;Myers v. Liberty Life Ins. Co. (1927), 124 Kan. 191, 257 P. 933, 55 A.L.R. 542, and annotation following; Fore v. N.Y. Life Ins. Co. (1929),180 Ark. 536, 22 S.W.2d 401, 67 A.L.R. 1358, and annotation following; New York Life Ins. Co. v. Adams (1931),202 Ind. 493, 176 N.E. 146; Metropolitan Life Ins. Co. v. Conway (1930), 252 N.Y. 449, 169 N.E. 642; Tulane Law Review, Vol. 6, page 634, and Virginia Law Review, Vol. 19, page 744.