McCutchen v. Pacific Mut. Life Ins.

This is an action for certain benefits, as will be explained, in a policy of insurance issued upon the life of the plaintiff, in the sum of $5,000.00. There was incorporated in this policy a clause by which the company agreed to waive payment of the premiums and to pay to the insured a monthly benefit of $75.00 if, before he reached the age of 60 years and while the policy was in force, the insured should become permanently and totally disabled as defined in the policy.

The plaintiff became totally deaf about the 10th of June, 1927, nearly three years after the issuance of the policy, and filed a claim with the company for the disability benefits in September following. The company declined to honor the claim upon the ground that the plaintiff was not so disabled by his deafness as to prevent him from performing any work or engaging in any occupation or profession for wages, compensation, or profit.

The plaintiff brought this action on February 13, 1928, seeking to recover twelve monthly payments of $75.00 each, alleged to be due, and for the return of a premium of $234.80 which he had paid under protest, during the pendency of the alleged disability.

The case was tried before his Honor, R.W. McLendon, Special Judge, and a jury, at the summer term of 1928.

At the conclusion of plaintiff's testimony, the defendant moved for a nonsuit upon the ground that his disability did not come within the terms of the policy. The motion was overruled, and, at the conclusion of all of the testimony the defendant moved for a directed verdict upon the same ground, which also was refused.

The jury returned a verdict in favor of the plaintiff for $935.51, and, from the judgment entered upon that verdict, the defendant has appealed upon exceptions which fairly present the questions hereinafter discussed.

The provisions of the policy, which were set up by the defendant as a defense to the plaintiff's action, are as follows:

"Permanent Total Disability Benefit.

"Should the insured, before the anniversary of this policy nearest the date on which he shall attain the age of sixty years and while this policy is in full force and no premium thereon in default, become permanently totally disabled, as hereinafter defined, the company, subject to the conditions hereinafter set forth, will waive the payment of all future premiums required under the conditions of the policy as they become due and pay the insured a monthly income of $75.00, such waiver to be effective and the first of such monthly income payments to become due and the period of liability to commence as of the date of receipt at the home office of the company of due written proof of such disability and a subsequent payment to be made on the first day of each month thereafter during the continuance of such disability. Such waiver of premiums and income payments shall not affect any other benefits or values provided under the policy.

"Permanent total disability, as used herein, is defined to mean:

"(1) Disability caused by accidental bodily injury or disease which totally and permanently prevents the insured from performing any work or engaging in any occupation or profession for wages, compensation or profit; or

"(2) Disability caused by accidental bodily injury or disease which totally prevents the insured from performing any work or engaging in any occupation or profession for wages, compensation or profit and which shall have totally and continuously so prevented the insured for not less than ninety days immediately preceding the date of receipt of due written proof thereof; or

"(3) The irrecoverable loss of the entire sight of both eyes, or the amputation at or above the wrist or ankle of both hands or both feet or a hand and foot, if such loss or amputation is caused by accidental bodily injury or disease."

The undisputed personal history of the insured was as follows: He attended the common and high schools at Bishopville; graduated at the University of South Carolina in the spring of 1903, and in the same year graduated in bookkeeping and banking at Eastman Business College, Poughkeepsie, N.Y.; in 1904 was assistant cashier of the People's Bank of Bishopville and so continued until 1906; he then commenced farming upon his father's place and continued such operations until 1912; he then became an organizer and general manager of a corporation known as Woodward-McCutchen Company, doing a general supply business and buying cotton; this engagement continued until 1925, when he bought out the mercantile business and continued it until its liquidation on January 1, 1928; since 1912 he has been jointly interested with his brother farming, and in 1928, at the time of the trial, they were jointly cultivating between 350 and 400 acres of cotton and in 1927 had made 65 to 75 bales of cotton; plaintiff admitted that he could grade cotton, and as well as he ever could, and that he was as good a farmer as the average; outside of his deafness his physical condition is good; he appears otherwise to be a normal, healthy, and educated man, certainly qualified to engage in some kind of gainful occupation, and, if so, not disabled within the terms of the policy.

It will be observed that the provision for disability benefits, in addition to the indemnity payable upon the death of the insured, is an extraordinary one, and of very great value where the insured shall have become entitled to it under the conditions named. Such being its character, it is but reasonable and just that the insured comply with such conditions in order that he may receive the benefit of it. The provision has no place in ordinary life policies; it is a matter of contract, perfectly legal and unambiguous; and no reason appears why the contract as voluntarily entered into between the parties may not be enforced. The policy provides not only life insurance in the ordinary acceptation of the term, but it provides for not only the cessation of the payments of annual premiums but for a monthly income of $75.00 so long as the disability continues. It is but natural that so great a benefit, carrying the insured for the whole amount of the policy, without the payment of premiums and with the payment of the monthly income, should be hedged about with what may be considered drastic conditions. Whether drastic or elastic, they are perfectly legitimate, and therefore such as may, by convention of the parties, be imposed.

The policy provides in general terms, first, that the insured shall become "permanently totally disabled," and, unwilling to leave these terms to be debated as to their meaning, proceeds to define "permanent total disability," and to give the insured the benefit of the condition if he can bring his disorder within one of three classes: (1) A disability whichtotally and permanently prevents him from performing anywork or engaging in any occupation or profession for wages, compensation or profit; (2) a disability which totally prevents him from such engagement for not less than ninety days immediately preceding proof thereof; (3) the loss of the sight of both eyes and other misfortunes named, not pertinent to the present inquiry. NOTE. — It will be observed that subdivision 1 refers to a total and permanent disability, lasting for all time while the second refers to a total disability which is temporary in its nature and continues for at least ninety days. The exclusion of deafness in the third subdivision, referring to the loss of both eyes and other misfortunes, is significant.

The insured is not claiming under either the second or third subdivision, but under the first; A total and permanent disability which prevents him from performing any work or engaging in any occupation or profession for wages, compensation, or profit, which, of course, if the contract is to be allowed to control, he is obliged to successfully maintain.

The only disability sought to be established by the insured was deafness. I do not think by any conceivable construction of the words "total disability" can deafness of itself be embraced within its meaning. The loss of this faculty by itself does not deprive one of the opportunity and privilege of "performing any work or engaging in any occupation or profession for wages, compensation or profit." Numerous fields of endeavor are open to such persons who are unfortunately deprived of this sense. There was no showing that deafness materially affected the proper functioning of the other senses and organs of the body, and the Court may well take cognizance of this fact. The insured is a highly trained man, exceedingly above the average in intelligence, judgment, and ability, and to say that his inability to perform any work by reason of such deafness is to assume that his education, natural talents, and business experiences are of no avail. It appears that he has been since the commencement of the disability complained of, and is now, performing work for compensation or profit, a fact which is abundantly supported by the record. He admits that he owned and had general supervision over the management of his large mercantile establishment until he decided to liquidate its affairs on December 31, 1927. He also stated that he and his brother have been for a number of years past, and were at the time of the trial of the case, engaged in intensive joint farming operations. These two instances, in themselves, are sufficient to refute the claim that he is disabled as provided in the policy, and that he is not now able to perform any work or to engage in an occupation or profession for compensation, gain, or profit.

The case of Brown v. Ins. Co., 136 S.C. 90,134 S.E., 224, 225, does not at all aid the case of the plaintiff. There was abundant evidence in that case to substantiate the claim of the plaintiff that his disability prevented him from engaging in any gainful occupation, as the policy provided; and, upon that ground, the judgment, in a law case, for the plaintiff, was affirmed. The plaintiff testified that he was totally unable to do anything, and had been advised by his physicians not to attempt it. His physicians testified that he was totally disabled from his waist down, and would remain so as long as he lived — that he could not and should not attempt to do any kind of work, mental or physical, that it would prolong and aggravate his disease; that "his disabilityis of such a nature as to prevent plaintiff at all times hereafterfrom engaging in any gainful occupation."

And so with the Taylor case, 106 S.C. 356,91 S.E., 326, 327, L.R.A., 1917-C, 910. That case was decided upon the theory that "the man of waning years, of small means, of no education, totally dependent upon the strength of his body for a livelihood, is bankrupt when the marvelous and mysterious parts of his organism go wrong. If they do not answer the summons of his will, if indeed it is able to summon them, to do the common tasks, he is undone, and for his purposes totally undone."

It is true that the learned justice in that case observed: "* * * He is deemed totally disabled when he is no longer able to do his accustomed task, and such work as he has only been trained to do, and upon which he must depend for a living."

The case did not call for such an expression which is clearly erroneous. The writer in his boyhood days knew a German who was a member of Co. B, Orr's regiment, his father's company; he was a shoemaker, and in one of the battles of the war lost a leg amputated near the hip, which totally incapacitated him for his accustomed occupation; at the close of the war his captain set him up as a cigarmaker, at which occupation he made a comfortable income and amassed a small fortune.

To hold that one may recover under a policy which provides that his disability must be such as is here described, upon proof simply that he has been disabled from pursuing his usual occupation, without showing that he is disabled from every other, is manifestly reading into contract something that is not there.

There is a sharp line of distinction between the cases which involve a disability clause which pertains to the usual occupation of the insured and those which involve the very different clause which appears in the present policy.

As is said in Hurley v. Ins. Co., 198 Iowa, 1129,199 N.W., 343, 344, 37 A.L.R. 146: "Many cases have been before the Courts involving construction of contracts of this character, which, however, are not always identical in phraseology. The cases fall quite readily in two general classes: Those wherein the policy provides for idemnity if the insured is disabled from transacting the duties pertaining to the occupation in which he is then engaged, and those wherein the policy provides for indemnity if the insured is disabled from performing any work or following any occupation. This case belongs to the latter class."

In that case the Court further said: "The fifth instruction is equally erroneous. The contract of insurance binds defendant to indemnify plaintiff for loss of time while totally disabled and prevented from the transaction of all kinds of business. The Court tells the jury that this does not mean what it plainly says, but that defendant will indemnify plaintiff for loss of time while disabled, and prevented from the transaction of any business in which he was qualified to engage. Under this instruction the defendant's liability is governed by the plaintiff's versatility. If the plaintiff is skilled in but one business, and can pursue but one employment, and is disabled from pursuing that he may recover; but if he has greater skill, and can turn his attention to other pursuits, he cannot recover, unless he is disabled from engaging in any employment for which he is qualified. The parties have not incorporated any such condition in the contract. There is no reason nor justification for wresting from the language employed its natural signification, and placing upon it a construction which substitutes for the contract which the parties have made one of entirely different signification, and one imposing upon the defendant a greatly enlarged liability. The language of the parties is plain, unambiguous, and needs no construction. It provides that defendant shall be liable for loss occassioned by being totally disabled from all kinds of business. Effect should be given to this language. It should be understood to mean what it says. It cannot be claimed that it means that defendant will indemnify on account of loss sustained by being partially disabled from some kinds of business; and yet this is the construction which the two instructions we have been considering place upon it."

In Buckner v. Ins. Co., 172 N.C. 762, 90 S.E., 897, the Court said: "If the policy contained an agreement to pay in case plaintiff was totally disabled from following his usual occupation (as was the contract in many of the adjudicated cases), we should hold that he is entitled to recover upon the facts of this case. But the evidence fails to disclose a total disability that will `permanently, continuously, and wholly' incapacitate plaintiff `from pursuing any and all gainful occupations.' The authorities are practically manimous that under the terms of this policy plaintiff cannot recover without showing a bodily injury that will incapacitate him, not only from following his usual avocation of fireman, but also from pursuing any other gainful occupation. The language is too plain, and the meaning too unmistakable, to permit an enlargement of the terms of the contract by construction."

Continuing: "Referring to the meaning of the words `wholly disabled,' May on Insurance, § 522, says that the ability of the insured to engage in some business will prevent recovery unless the insured is disqualified to engage in any occupation. Mr. Beach says, substantially, that `total disability' that would entitle a member of an insurance order to recover must be not only permanent, but total, so as to render him unable to perform or direct any kind of labor or business. Ins. § 262. Bacon says that `total disability' naturally means being totally disabled for all kinds of business unless by the contract the disability is to be only from the usual occupation of the insured."

Mr. Cooley, in the Second Edition of his Briefs on Insurance, vol. 6, p. 5548, says: "The provision may limit total disability to inability to carry on any and all kinds of business. Under such a clause the insured must be unable to perform, not only the duties of his usual occupation, but the duties of any other occupation" — citing Supreme Tent ofKnights of Maccabees of the World v. King, 79 Ill., App. 145; Lyon v. Railway Passenger Assur. Co., 46 Iowa, 631; Supreme Tent of Knights of Maccabees of the World v. Cox, 25 Tex. Civ. App. 366, 60 S.W. 791.

In Lee v. Ins. Co., 188 N.C. 538, 125 S.E., 186, the syllabus is: "Language of policy, `wholly incapacitated and thereby permanently and continuously prevented from engaging in any avocation whatsoever for remuneration or profit,' means that disability must incapacitate insured, not merely from pursuing usual avocation, but from engaging in any avocation for remuneration or profit, whether actually profitable or remunerative."

In Albert v. Order of Chosen Friends (C.C.) 34 F. 721, it was held: "So, where the contract provided that the insured must be unable to follow `his usual or other occupation,' one who, though unable to follow his own trade or profession, could perform the duties of another occupation, could not recover."

In 1 C.J. 465, it is said: "Where the policy, while providing indemnity when the insured is permanently disabled from following his usual or other occupation, at the same time defines disability which shall entitle him to recover as one which shall permanently prevent him from following any occupation whereby he can obtain a livelihood, it has been held that there can be no recovery if the insured can earn a living at any other occupation, although incapacitated for his original profession or occupation."

And: "But the question whether the insured is disabled from prosecuting some other occupation is to be determined by a consideration of his education, experience, age and natural ability."

And further: "Under a provision for an indemnity where the insured is `totally disabled and prevented from the transaction of all kinds of business' there can be no recovery when the insured is totally disabled in his own occupation merely, provided he is able to engage in some other pursuit."

And further: "Under a provision for the payment of indemnity where the insured sustains `a total permanent disability to perform or direct any kind of labor or business,' it is necessary to show that the disability is total as well as permanent. The phrase `total inability to labor' means a total disability to earn a livelihood at any employment and if the insured, although unable to earn a livelihood at the particular labor in which he was engaged at the time of the injury, is capable of making a living at some other employment, he may not recover."

In Starnes v. U.S. (D.C.), 13 F.2d 212, it is said: "`Total disability' is impairment of mind or body rendering it impossible for disabled person to follow any occupation, and is deemed permanent when founded on conditions rendering it reasonably certain throughout person's life."

In Baltimore Ohio Employees' Relief Ass'n v. Post,122 Pa. 579, 15 A. 885, 2 L.R.A. 44, 9 Am. St. Rep. 147, the Court said: "The phrase `total inability to labor,' contained in the constitution and by-laws of an employees' relief association, means a total inability to earn a livelihood in any employment, and not at the * * * employment at which the member was engaged at the time of his injury."

In 1 Cyc. 270, it is said: "Where the phrase `total inability to labor' is used, it is more inclusive, and means a total disability to earn a livelihood at any employment."

In Rhodes v. Ins. Co., 5 Lans. 71, 77, the Supreme Court of New York says, in a case similar to this: "While the policy is to be liberally construed, its provisions cannot be disregarded. To make the defendant liable, total disability to labor must be shown."

Mr. Joyce says: "Total disability and similar expressions in accident and benefit insurance. In ascertaining the meaning, reference must be had to the entire contract and the exact terms used. The words may necessitate that the assured should be so far disabled as to prevent his following any occupation or labor." Insurance, § 3031.

Mr. Joyce further says: "In an Ohio case, under a policy providing for periodical payments while insured is totally disabled and prevented from the transaction of all kinds of business, it is held that the contract should be enforced as it reads, and that the assured cannot recover because totally disabled for his own trade or business if he retains health, strength and physical ability sufficient for the pursuance of any other vocation, whether he is conversant with the same or not." § 3031.

If the contention of the plaintiff should be sustained, that the disability refers to the usual occupation of the insured, in spite of the express provisions of the policy, any permanent injury which would affect the ability of the insured to perform the customary duties of his occupations would be considered a total and permanent disability, regardless of his capacity to engage in some other occupation. Hundreds of men and women, blind or deaf, have filled position of honor and trust, congressmen, lawyers, teachers, ministers of the gospel, and many others. One notable instance that comes to mind is that of Helen Keller, deaf, dumb, and blind, who has made a national reputation as a scholar, teacher and philanthropist.

In 1 Couch Enc. Ins. Law, 363, it is said: "If the terms of the policy are clear, consistent, and unambiguous, no forced or strained construction can be indulged, even to give effect to the policy, for a contract of insurance cannot be given an interpretation at variance with the clear sense and meaning of the language in which it is expressed. So, while every reasonable inference should be drawn to sustain insurance written and accepted in good faith, this does not mean that facts should be distorted, and unnatural and unreasonable inferences resorted to."

And: "Where an insurance contract is not ambiguous, words will not be interpolated for the purpose of rendering it ambiguous, or subject to a construction other than that indicated to a construction other than that indicated by the clear import of the language used. And an insurance policy, like any other contract, cannot have new terms inserted therein, nor original terms altered or withdrawn, save with the consent of the contracting parties, or their duly authorized agents acting within the scope of their authority."

And: "In the absence of statutory provisions to the contrary, insurance companies have the same right as individuals to limit their liability and impose whatever conditions they please upon their mutual and reciprocal obligations, not inconsistent with public policy."

And: "Consequently, as the parties to a contract of insurance have the right to contract as to the risks the company will or will not assume, provided the same be not in contravention of law or public policy, and it is presumed that they fully understand its provisions, if the terms of the contract are clear and express, the Courts cannot extend or enlarge the contract by implication or construction so as to embrace an object or limitation distinct from that originally contemplated and not included in the express provisions; nor can the Court make or vary the contract to meet or fulfill any notions of abstract justice or moral obligation, no matter how stringent its terms may be. Again, since in insurance contracts the insurer undertakes to guarantee the insured against loss or damage upon the exact terms and conditions specified in the agreement, and upon no other, the Courts cannot change the contract, or make a new one for the parties, in violation of plain and unambiguous language used by the parties; rather, it is their duty to enforce and carry out the one already made, without importing anything into the contract by construction contrary to its plain meaning or express terms."

Even if the defendant's motion for a nonsuit or for a directed verdict cannot be sustained, an examination of the Judge's charge, the requests of the plaintiff charged, and those of the defendant refused, covered by exceptions, will demonstrate that the principles announced by him are completely and inevitably antipodal to the principles above announced, which are sustained by the overwhelming weight of authority.

The judgment of this Court should be that the judgment of the Circuit Court be reversed, and that the case be remanded to that Court, with instructions to enter judgment for the defendant under Rule 27.