Levan v. Metropolitan Life Ins. Co.

January 6, 1927. The opinion of the Court was delivered by This was an action upon a policy of insurance tried before his Honor, Judge Wilson, and a jury at the summer term of the Court of Common Pleas for Sumter County, 1925, resulting in a verdict for the plaintiff below in the full amount of the policy. From the verdict the defendant appealed.

A life insurance policy on the life of Barton Levan was written number of years ago. The policy, in addition to the usual provisions, contained a special clause, commonly called a total disability clause, which provided that in consideration of an additional premium the insurance company agreed "that if while the above-numbered policy is in full force and effect and before default in the payment of any premium, the company receives due proof that the insured as result of injury or disease * * * has become totally and permanently disabled so as to be unable at any time to perform any work or engage in any business for compensation or profit, the company will allow the following benefits. * * * The company, commencing with the anniversary of the policy next following receipt of such proof, will waive payment of each premium becoming due during such disability." By way of defense, it was alleged that the policy had been forfeited by reason of the non-payment of the semiannual premium, which became due on June 5, 1923.

The plaintiff, who was the widow of Levan and the beneficiary under the policy, admitted that the premium due on June 5, 1923, had not been paid, and contended that by the total disability clause in the policy above set out the company had excused the payment of this premium for the reason that at the time it became due Levan was totally and permanently disabled within the purview of the policy provisions. In reply to this contention, the company asserted that the provisions of the total disability clause had remained inoperative because Levan had failed to give notice and proof of his disability. The plaintiff asserted that the failure to give notice was excused because the disability itself rendered the insured incapable of giving the notice and proof required, and further, that the giving of notice had been waived.

The testimony tends to show the following facts: So far as the insured, or any one else, knew, he was in good health in January, 1923. However, in the spring of that year he began to betray symptoms of mental disease. By May he had become disagreeable. He was a barber by trade, running a barber shop, and on account of his condition ran customers away. He was crazy when the June, 1923, premium fell due, and through the grace period he was not able to conduct his business, and got worse and worse until he finally was sent to the State Hospital for the Insane late in 1923, where he died on January 12, 1924. I was discovered in the State Hospital that he was suffering with general paralysis of the spine, which was caused by syphilitic infection. The usual Wassermann test did not reveal the condition, which was ascertained by an examination of the spinal fluid. During the period prior to the due date of the premium until the time of his death Levan never realized he was crazy.

There are three exceptions which make only two questions: First, did the total disability of the insured due to insanity excuse failure to comply with the policy provision to giving notice of such disability? Second, did his Honor err in charging the law of waiver?

The exception alleges that the trial Judge erred in charging the law of waiver, because no such issue arose in the case, or was made by the pleadings. It is, of course, unnecessary to plead waiver of a claimed forfeiture. The issue of waiver was present in the case in regard to two matters. First, it was contended by the plaintiff that the letters passing between plaintiff's attorneys and the manager of the defendant company, and especially the letter to plaintiff's attorneys, constitute a waiver of the second defense set up in the answer, which was that Levan had procured a reinstatement of the policy by misrepresentations; the argument being that, since the company had refused to pay the policy on the single ground that Levan was not totally and permanently disable, the jury would be justified in concluding that other possible defenses known to the company were not relied upon. Second, on the same theory, and for the same reason, it was contended by plaintiff that this letter constituted a waiver of the policy provision requiring proof of disability before the total disability clause became operative; the argument being that, since the company had refused to pay on the alleged ground that no disability in fact existed, an inference arose that they were waiving any supposed defense arising out of the failure of the insured to give notice or proof of the claimed disability. 32 Corpus Juris, 1354 (section 636), and cases cited. It is difficult to see how any prejudice could have resulted from this charge, even had waived not been in issue.

Since error is alleged in the Court's construction of the total disability clause, at the outset, it seem proper to remark that the evident purpose of such a provision in the policy was to preserve the insurance in the event the insured, on account of disability, became unable to make the money to pay the premiums; and the clause should be construed so as to effectuate this intention. Accordingly, where the insured was rendered incapable of furnishing proofs of his disability by reason of disability, then it must be presumed that the parties did not intend by the language used to deprive the insured of the benefit he was to receive.

The Circuit Judge adopted the plaintiff's view of the law, and held, in charging the plaintiff's first request, that if at the time the unpaid premium became due Levan was totally and permanently disabled as defined in the policy, and was incapable of furnishing proofs of his disability by reason of the disability itself, and that his beneficiary complied with the policy provisions with reasonable promptness under all the circumstances, then the policy would not be considered forfeited for nonpayment of premiums. The precise point was passed on by the Supreme Court of Nebraska in Marti v. Midwest Life Insurance Co., 108 Neb. 845;189 N.W., 388; 29 A.L.R., 1507. In this case the company claimed the policy lapsed for nonpayment of premium on February 10, 1917. It was alleged and proved that the insured became totally disabled and incurably insane on or about March 1, 1916. His wife, who was the beneficiary, was not aware of the existence of the policy. She gave notice and proofs of death to the company, which refused to pay on the ground that the policy had lapsed. The policy contained the usual provisions for forfeiture upon the non-payment of premiums, and contained a total disability clause. The Court states the plaintiff's position to be that she based her right to recover upon the proposition that, since the insured became totally and permanently disabled on March 1, 1916, and remained so until his death, he was incapable of giving the proofs or exercising any of the policy options set out in the policy, and that therefore she had the right after his death to furnish the proofs and exercise the option. This view was adopted by the Supreme Court. It held that, since the beneficiary had acted within reasonable time, under all the circumstances, she was entitled to recover. There are many citations bearing out this view. The Court concluded by saying:

"Furthermore, it would be a harsh rule that would say that in a case where a man was injured, so as to be totallynon compos mentis, within a few hours before the next payment on his policy became due, and while it was still in force, the occurrence of the very contingency he was insuring against should deprive him or his beneficiaries of the benefit of the contract."

In North American Accident Insurance Co. v. Watson,6 Ga. App., 193; 64 S.E., 693, Watson sued the insurance company for a sick benefit. The defense was that the plaintiff had failed to comply with a policy provision that written notice of sickness should be given the company within ten days of the commencement thereof, and failure to give such notice would invalidate any and all claims under the policy. The plaintiff showed, in reply, that he was prevented from giving the notice within the time by reason of mental and physical incapacity caused by his sickness, and that upon his recovery he gave notice within a reasonable time. The Court pointed out that the majority rule was to hold stipulation as to the time in which notice or proof of injury or sickness should be given as not necessarily to be literally complied with. The provisions operate upon the contract only subsequent to the fact of injury or sickness. The following quotation is very pertinent:

"It is settled by an overwhelming weight of authority that where the failure to give prompt notice is not due to the negligence of the insured or the beneficiary, but such compliance has been prevented and rendered impossible by an act of God, this would furnish a sufficient legal excuse for the delay in giving the stipulated notice; and this doctrine has been applied in cases in which a specified time for the giving of the notice has been fixed by the contract. The theory of these cases, as stated by Cooley (4 Briefs on the Law of Insurance, 3462), is that, ``It could not have been in the contemplation of the parties that if the insured, who was required to give notice, was unable to do so by reason of the very accident against which indemnity was given, he should therefore loose such indemnity through no fault of his own.'" Reed v. Loyal Protective Association,154 Mich., 161; 117 N.W., 600; 37 Insurance Law Journal, 1024.Brown v. Fraternal Accident Association, 18 Utah, 265;55 P., 63. Comstock v. Fraternal Accident Association,116 Wis. 382; 93 N.W., 22. Hayes v. Continental CasualtyCo., 98 Mo. App., 410; 72 S.W. 135. Insurance Co. v.Boykin, 12 Wall., 433; 20 L.Ed., 442. Woodmen AccidentAssociation v. Pratt, 62 Neb. 674; 87 N.W., 546; 55 L.R.A., 291; 89 Am. St. Rep., 777.

In Germania Fire Insurance Co. v. Boykin, 12 Wall, (79 U.S.), 433; 20 L.Ed., 442, judgment of the District Court of the United States for the District of South Carolina was under review. The suit was upon certain fire insurance policies, and it appeared that Boykin, at the time he had gone through the act of signing certain affidavits constituting the proof of loss required by the policy, was, in fact, insane. The company contended that the contract assumed that the company should receive proof of loss by Boykin signed when he was insane was insufficient. The United States Supreme Court in overruling this contention says:

"If he was so insane as to be incapable of making an intelligent statement, this would of itself excuse that condition of the policy."

In Edgefield Mfg. Co. v. Maryland Casualty Co.,78 S.C., p. 72; 58 S.E., 696, the manufacturing company had a policy of insurance against its liability as an employer. It appeared that one Jennings had sued the manufacturing company and had recovered judgment which the manufacturing company had been forced to pay, and it brought suit against the casualty company to recover the amount paid to the extent of the face of the policy. Among other defenses the defendant set up that it was relieved from liability by plaintiff's failure to comply with a provision in the policy to the effect that the assured, upon the occurrence of accident, shall give immediate written notice thereof, and should likewise give notice of any claim made on account thereof, and that if a suit is brought the insured should immediately forward the process to the home office of the company as soon as the same shall have been served on him. The Court, speaking through Mr. Justice Woods, points out there was no evidence of waiver by defendant of this requirement, but that it appeared as a matter of fact that the vice president and treasurer of plaintiff was in extremely ill health at the time of the accident, and that his temporary successor did not know of the existence of the policy until after the bringing of the suit, and that the same day he found the policy he gave the casualty company notice of the accident. It seems that practically all the office force of the manufacturing company had contracted smallpox about this time, which accounted for the failure to discover the policy. Mr. Justice Woods says:

"In view of these facts, it is evident a jury could not reasonably reach any other conclusion than that the delay was excusable, and the notice given and the summons send with all promptness to be fairly expected and exacted."

The case of Craig v. Insurance Co., 80 S.C. 151;61 S.E., 423; 18 L.R.A. (N.S.), 128; Am. St. Rep., 877; 15 Ann. Cas., 216, seems to be squarely on the point. This was a suit on a health accident policy, which provided that written notice of an injury, or of any illness for which claim can be made, must be given to the company within ten days from date of accident or beginning of illness. "Failure on the part of the assured or the beneficiary to comply strictly with such notice requirements shall limit the liability of the company to one-fifth the amount which would otherwise be payable under this policy." The Court, speaking through Mr. Justice Woods again, held that the contract was reasonable, saying:

"The provision on which the defendant relies is not unreasonable, but, on the contrary, it is evident some such stipulation is necessary to the protection of the defendant, as an insurer against sickness, to enable it to investigate alleged illness, and thus protect itself against imposition. Of course the insured would be excused from giving the notice if, from sudden and extreme illness or other cause, it became impossible for him to comply with the contract."Stickley v. Insurance Co., 37 S.C. 69; 16 S.E., 280, 838.Johnson v. Maryland Cas. Co., 73 N.H. 259, 60 A., 1009; 111 Am. St. Rep., 609. Whalen v. Equitable Acc. Co.,99 Me., 231; 58 A., 1057. Travelers' Insurance Co. v. Thornton,119 Ga. 455; 46 S.E., 678.

Coming to the case at bar, it was for the jury to say whether or not Levan was totally and permanently disabled as defined in the policy, and at the time the premium came due, by reason of this disability, whether he was incapable of furnishing proof, and whether the beneficiary gave notice with reasonable promptness under all the circumstances.

The appellant cites the case of New York Life Ins.Co. v. Alexander, 122 Miss., 813; 85 So., 93; 15 A.L.R., 314, which holds that insanity does not of itself excuse the payment of premium under a life insurance policy. There is no dispute about this as a general proposition, but in the case at bar the authority is inapplicable, because here the insurance company itself stipulated that total disability, whether caused by insanity or otherwise, would excuse the payment of further premiums, and the sole question of law raised by the exceptions is whether or not insanity, being the cause of disability and rendering the insured incapable of furnishing proofs, was an excuse for insured's failure to comply with the policy provisions in regard thereto.

It may be argued that the beneficiary should not have waited until after insured's death to give the company notice of his condition. In the first place, there is some evidence that the company had notice of the condition itself. The agent who went to collect the premiums before the policy lapsed testified that when he called on the insured he appeared to be a little peculiar, and it was testified to by the plaintiff, and not denied by this agent, that when she went to the agent to see about the policy the agent told her that when he went to see the insured to try to collect the premium he could not get any sense out of him. Further, it appears that while the beneficiary knew that a policy was in existence she had no knowledge of its terms, and could not secure possession of the policy for the reason that her insane husband had it locked up in a certain black box. Finally, prior to insured's death, she managed to get the policy, and she took it to the company's agent, who told her that it had lapsed, and, although she then and there informed him that insured was insane and incapable of making his living, the agent failed to acquaint her with the policy provisions touching total disability, or with the fact that she must make proofs of disability, and admitted on the stand that at the time he did not know whether or not the policy had a disability provision. It therefore seems clear that there was evidence to go to the jury upon the question whether reasonable notice was given the company under all of the circumstances.

It is the judgment of this Court that the judgment of the Circuit Court be affirmed.

MESSRS. JUSTICES WATTS, BLEASE, and STABLER, concur.