Aetna Life Ins. Co. v. Moyer

• Decision Date: 11 September 1940
• Docket Number: No. 7033.,7033.
• Citation: 113 F.2d 974
• Parties: ÆTNA LIFE INS. CO. v. MOYER.
• Court: U.S. Court of Appeals — Third Circuit

113 F.2d 974 (1940)

ÆTNA LIFE INS. CO. v. MOYER.

No. 7033.

Circuit Court of Appeals, Third Circuit.

August 6, 1940.

Rehearing Denied September 11, 1940.

COPYRIGHT MATERIAL OMITTED

Edward W. Warren and Walter L. Hill, Sr. (of O'Malley, Hill, Harris & Harris), all of Scranton, Pa., for appellant.

A. W. Carpenter and J. P. Carpenter, both of Sunbury, Pa., for appellee.

Before BIGGS, CLARK, and JONES, Circuit Judges.

JONES, Circuit Judge.

This case involves the rights of the plaintiff beneficiary under two policies of life insurance (each containing provisions for lifetime benefits and abatement of premium payments if the insured became totally disabled) which the defendant insurer had issued on the life of the beneficiary's husband. The questions raised concern the insured's alleged disability and whether it was properly established so as to vest in him a right to the benefits called for by the policies.

As the pleadings stood at the time of trial, the plaintiff claimed for the face amounts of the policies as benefits due upon the insured's death and also for the benefits alleged to have been due the insured for total disability during the last several years of his life. At the request of the defendant, the trial court submitted several interrogatories for the jury's answer in connection with its general verdict. The jury returned a general verdict for the plaintiff for a sum considerably less than the amount of the plaintiff's claim. The verdict was irreconcilable with the plaintiff's claim or any of the items thereof and it was also inexplicable on the basis of the jury's answers to the interrogatories. Consequently, upon motion of the plaintiff, the court set the verdict aside and awarded a new trial. The court having reserved at trial a point for a directed verdict for the defendant, the latter accordingly moved for judgment n. o. v. upon the whole record. It is from the order of the court below dismissing the motion for judgment that the defendant took the present appeal.

In support of its motion, the defendant contends (1) that the plaintiff's claims under the policies are barred because of the insured's failure to furnish satisfactory evidence of his alleged total disability prior to the lapsing of the policies in his lifetime for nonpayment of premiums, and (2) that the plaintiff's amendment of her statement of claim, averring the insured's total disability and claiming therefor benefits said to have accrued during the insured's lifetime, introduced a new cause of action after the running of the statute of limitations.

The insured died August 16, 1931. The policies in suit had been taken out in February 1925 and, according to their terms, were incontestable at the expiration of a year from their issue except for nonpayment of premiums. Suit for death benefits under the policies was instituted by the beneficiary on August 16, 1933. The plaintiff's statement averred the insured's compliance with the terms of the policies to the time of his death. No claim was then made for benefits due the insured in his lifetime because of disability. The defendant denied liability for the death benefits on the grounds that the policies had severally lapsed on August 14 and August 24, 1929, for nonpayment of premiums and that the automatic extended insurance existing thereafter under the policies had expired prior to the insured's death without a reinstatement of the policies. On January 11, 1936, the plaintiff amended her statement of claim by averring the insured's total and permanent disability from June 1, 1928 (later amended to read September 1, 1927) to the date of his death; and, by reason of the provisions of the policies, the plaintiff claimed that premium payments required by the policies had been abated by the insured's total and permanent disability, that evidence thereof was furnished the insurer on December 1, 1927, and that benefits were also due under the policies for the insured's disability from September 1, 1927 until his death on August 16, 1931.

The appellant argues that the court below erred in concluding that the matter of the defendant's timely knowledge of the insured's disability depended, under the testimony in the case, upon a question of fact which was for the jury to resolve; and, further, in holding that such knowledge, if it be found to exist, served to supply the insurer with the requisite evidence of the insured's disability. The propriety of a provision in a policy requiring due proof of an insured's disability is self-evident. It is designed to give the insurer reasonable opportunity to investigate and test the validity of the claim. Lyford v. New England Mutual Life Ins. Co., 122 Pa. Super. 16, 29, 184 A. 469; Lucas v. John Hancock Mutual Life Ins. Co., 116 Pa. Super. 298, 301, 176 A. 514. Compliance with such a requirement has been held to be a condition precedent to the assertion of a claim under a policy. Equitable Life Assurance Society v. McCausland, 331 Pa. 107, 200 A. 85; Lyford v. New England Mutual Life Ins. Co., supra; Lucas v. John Hancock Mutual Life Ins. Co., supra.

The immediate inquiry goes directly to the question of the insured's duty to furnish the company in his lifetime with satisfactory evidence of his disability and the manner and form in which that duty was to be discharged. The appellant contends that the duty in the premises rests solely upon the insured; and, in support of this contention, the appellant points to certain provisions of the policies which we quote below.¹ It is clear that the provision upon which the appellant relies has to do with the time when disability benefits accrue. Whether they become payable within the ninety days following the onset of the disability or after the ninety day period depends upon whether evidence of the disability satisfactory to the company has or has not been received by the company at its home office within the ninety days. Whose duty it is to transmit evidence of an insured's disability is left entirely to inference. The policy provision merely specifies that the evidence shall be received by the company at its home office. The significance of this will be the more apparent when we come to consider the testimony of the defendant's agent who visited the insured in connection with his policies when the latter was seriously incapacitated, as the agent admittedly observed. So far as the company's knowledge of the insured's disability is concerned, evidence thereof is the policy's requirement, not formal proof, and, being evidence, it can be either oral or written. The policy makes no discrimination. Furthermore, the condition that the evidence be satisfactory to the company can mean no more than that it should be legally satisfactory. The policy does not leave it to the caprice of the company to reject arbitrarily any evidence which might reasonably inform the company of its insured's disability and, hence, of its own possible liability.

The importance of these matters, to a construction of the policy provision, is obvious when we consider that the policy is to be construed strictly against the insurer (Stipcich v. Metropolitan Life Ins. Co., 277 U.S. 311, 322, 48 S.Ct. 512, 72 L.Ed. 895; Stonsz v. Equitable Life Assurance Society, 324 Pa. 97, 108, 187 A. 403, 107 A.L.R. 178; Lewis et ux. v. Fidelity & Casualty Co., 304 Pa. 503, 508, 156 A. 73) and that doubts and ambiguities arising out of the policy's provisions are to be resolved favorably to the insured. Stroehmann v. Mutual Life Ins. Co. of New York, 300 U. S. 435, 439, 57 S.Ct. 607, 81 L.Ed. 732.

The most significant thing of all about the policy provision upon which the appellant relies is that it nowhere provides that the insured's failure to furnish within ninety days evidence of his disability satisfactory to the company shall abate all claims under the policy based upon the disability. In fact, the clear implication of the provision is to the contrary. The policy specifies that, if satisfactory evidence that the disability is permanent has not been furnished within ninety days, then "such disability shall be presumed to be permanent" and "In such a case, benefits shall accrue upon the expiration of the said ninety days, but not from a date more than six months prior to the date that evidence of such disability satisfactory to the Company is received at its Home Office". It follows, therefore, that once total and permanent disability in fact occurs, while the policy is in force, the insured's right to the disability benefits may thereafter be claimed and enforced until barred by the statute of limitations and subject further to the policy's own limitation that such benefits shall not accrue from a date more than six months prior to the furnishing of evidence of disability. Such was the construction placed upon an identical policy provision in Ætna Life Ins. Co. v. Davis et al., 187 Ark. 398, 60 S.W.2d 912, 913, and it is our opinion that the provision warrants the construction. The clause which calls for the furnishing of satisfactory evidence of disability while the insured is living applies only to the accrual of benefits prior to the expiration of ninety days from the incidence of the disability.

From the express terms of the disability provision in the policy and the applicable rules of law to which we have referred, the conclusion logically ensues that the waiver of premiums and the right to benefits attach upon the existence in fact of the insured's total and permanent disability, if the policy be then in force, and the benefits, both as to waiver of premiums and disability payments, accrue upon the company's receipt of evidence of the insured's disability within or without the ninety days following the onset of the disability, except that, when evidence of disability is not received by the company within the ninety days, then benefits shall not accrue from a date more than six months prior to the company's receipt of such evidence....