Kearns v. Penn Mutual Life Insurance Co.

I dissent. On July 13, 1932, while the policies of insurance were in good standing, the insured became wholly disabled, within the terms of the policies, and on December 12, 1932, made proof thereof, to the satisfaction of the insurance company, and claimed benefits to which he was entitled. The insurance company denied liability to pay benefits for any period of time earlier than June 12, 1933, six months after proof of the disability of the insured. On May 10, 1933, the insured commenced this action on the policies. Upon issues framed, trial was had in October, 1933, which resulted in findings and judgment in favor of the plaintiff. The defendant has appealed.

The evidence and findings were to the effect that the insured became totally disabled July 13, 1932, furnished due proof thereof on December 12, 1932, and has been paid nothing on account of his disability for time prior to June 12, 1933, but that all installments due under the policies for time commencing June 13, 1933, six months after proof of disability, have been paid. As I understand, these facts are not at all disputed.

Plainly stated, the appellant makes two contentions on the appeal: (1) that there is no liability for payments upon the occurrence of total disability, nor until claim and proof of disability were made; and (2) that the insured is not entitled to benefits at all for any time prior to six months after due proof of disability, because of a clause in the policy that "the first monthly payment to be made six months after receipt of due proof of total disability." According to these contentions, the appellant demands that the judgment of the trial court be reversed and the action dismissed. The decision in this court gives that relief, so that for a period of eleven months of total disability the insured gets nothing.

There is no claim that, at any time, there has been anydefault in the payment of any premium upon the policies.

As to the first point, the argument, as I understand it, is that, since by the terms of the policies due proof of disability is a condition precedent to the right to collect, therefore the insured is not entitled to pay at any time, even after due proof, for that period of time happening prior to the making of due proof. The policies, however, do not say that, unless the decision on the second point in the case is correct. Due proof is a condition precedent to the right only to collect, and not to the commencement of time for which benefits may be collected after the condition precedent has been complied with by the making of due proof of disability. Significantly, the present action was not commenced until after due proof of total disability, to the satisfaction of the company, had been made.

Only several of the leading cases relied on in the decision may be discussed to show their inapplicability, as I understand them, to the situation in the present case.

Wick v. Western Union Life Ins. Co., 104 Wn. 129,175 P. 953, was decided against the beneficiary under the policy because of defaults in the payment of premiums as a condition precedent to the right to recover.

Jones v. New York Life Ins. Co., 158 Wn. 12, 290 P. 333, was determined upon a provision in the policy that:

"One year after the anniversary of the policy next succeedingthe receipt of such proof, the company will pay the insured a sum equal to one-tenth of the face of the policy, and a like sum on each anniversary thereafter during the continued disability of the insured within the endowment period." (Italics mine.)

The only thing decided in the case, as indicated by the one syllabus, was that the company was not obligated to pay benefits for any period of time prior to the presentation of proof to the company. In that respect, the decision simply followed the plain, unambiguous language of the contract. No other result could have been reached. That policy definitely specified the date and amount, not only of the first, but each and all subsequent payments during the continued disability of the insured within the endowment period. It was as definite as though it had provided for the payment of an amount equal to the face of the policy one year or any other specified time after the company received due proof; or as though promissory notes, with specified due dates, had been given for payment of benefits. But the policies in the present case are not that kind. Suppose in that case the contract had provided for payments each year of ten per cent of the face of the policy, the first yearly payment to be made six years after receipt of due proof of total disability, would it have been held that, notwithstanding due proof, the insured could not have collected anything within six years; and that, if he had died on the sixth anniversary of his total disability, the insurance company would have been altogether free?

Nor is Bergholm v. Peoria Life Ins. Co., 284 U.S. 489,52 S.Ct. 230, in point. The provision in that contract for the first monthly payment to be made immediately upon receipt of proof of total disability was not involved. There had been a default in the payment of premiums, and, to excuse it, the insured invoked the promise of the company to pay certain specified premiums becoming due on the policy, and the decision, succinctly stated in the syllabus, was:

"Clauses in a policy by which the company undertook to pay the premiums if the insured were totally and permanently disabled, but only upon receipt by it of proof of such disability and only the premiums becoming due after such receipt, held unambiguous and not to be construed, to save the policy from a lapse, as an agreement to pay premiums accruing after the disability occurred but before the company received proof of it."

Nor do I think the decision on the second point in the present case is right. As already noticed, the contract in this respect provides:

"b. . . . the Company will pay to the insured each month One Hundred Dollars, . . . the first monthly payment to be made six months after receipt of due proof of the said total disability, .. . and subsequent payments monthly thereafter during the continuance of the said total disability of the insured. . . ."

The majority opinion in its result mistakenly makes the words "six months," found in the phrase "the first monthly payment to be made six months after receipt of proof of the said total disability," speak of the period of time or first month of the commencement of the right to benefits, rather than of "the date the first monthly payment to be made." It is construed as if it read, "the first month for which payment is to be made shall be the sixth month after receipt of due proof of total disability."

These are total disability insurance contracts, each carrying benefits of one hundred dollars per month, and provide, not that the first payment shall be made or paid immediately upon due proof, nor one day, week or month thereafter, but six months thereafter. But this does not lessen or avoid liability for the payment at some time of benefits for each month of total disability. It simply defers for the time specified payments that otherwise would be presently due.

Contracts and statutes differ upon the subject of time within which payments will or must be made after due proof of facts fixing liability. Manifestly, the form of these policies with respect to this feature was gotten up for general use in the different states, knowing that, if used in a state having a statute fixing a different time, the statute would control. There is such regulation in this state, mentioned in the majority opinion, Rem. Rev. Stat., § 7235, subd. 9, relative to the time within which payments, other than for loss of time on account of disability, shall be made, requiring a provision for immediate payment or a period of time to be designated, not exceeding sixty days. But whether considered from the standpoint of the contract or of the statute, this kind of a provision relates only to the time of payments, and not to the period or periods of time for which income or benefits shall be paid.

The language in question must be held to mean that, during the continuance of total disability, which is the case here, the company will pay one hundred dollars per month, and on principle, the facts in this case are clearly within the doctrine ofStorwick v. Reliance Life Ins. Co., 151 Wn. 153,275 P. 550, which involved several policies, differing somewhat in phraseology, though in ultimate effect the same, upon the feature we are now considering, and with the same general effect as in the present case. In that case, it was said:

"It will be remembered that the policy of February 7, 1917, above quoted from, provides that:

"`During the period of total and permanent disability and at any time one year after the premium anniversary date first following the date of such disability,'

the company will pay the monthly benefit. This language does seem to furnish some room for arguing that Storwick would not be entitled to the payment of the monthly installments for the months preceding one year after the premium anniversary following the date of disability, but the preceding words are `during the period of total and permanent disability.' We think the mostthat can be successfully claimed is that Storwick would not beentitled to receive the payments until one year after the premiumanniversary following the date of disability. This, we think,does not successfully argue that he would not then be entitled tothe back installments during the whole period of his totaldisability. This view, we think, is equally applicable to the two policies of February 10, 1920, though by the terms ofthose policies the time for making the payments by the company toStorwick begins six months after the receipt of proof of thedisability." (Italics mine.)

This case was referred to in Jones v. New York Life Ins. Co.,supra, and held not to be controlling in that case because of manifest differences in the wording of the policies, as mentioned in that decision.

The case of Aetna Life Insurance Co. v. Phifer, 160 Ark. 98,254 S.W. 335, appears also to be directly in point. The language of the policy in that case is similar to the language in the present case, though the arrangement of the words is somewhat different. In that case, the policy provided:

"Six months after proof is received at the home office of the company, before the sum insured, or any installment thereof, becomes payable, that the insured has become wholly, continuously and permanently disabled, and will for life be unable to perform any work, or conduct any business for compensation or profit, . .. the company will, if all premiums previously due have been paid, waive the payment of all premiums falling due thereafter during such disability, and, if such disability was sustained as above described, and before the insured attained the age of 60 years, the company will pay to the life beneficiary the sum of $10 for each thousand dollars of the sum herein described as the sum insured, and will pay the same sum on the same day of every month thereafter, during the lifetime and during the disability of the insured."

A question similar to the one involved in the present case was presented in that case, with respect to which the court said:

"Appellant next contends for a reversal of the judgment because nothing was due appellee under the terms of the permanent total disability clause when this suit was commenced, claiming that liability under the clause did not begin until six months after the final proof of the injury and disability was made. In other words, that liability did not begin when the injury and consequent disability occurred. The correct construction of the clause is that liability began with the disability."

Payment deferred does not cancel a promise to pay. I think the judgment appealed from should be affirmed.

HOLCOMB, J., concurs with MITCHELL, J.