Ætna Life Ins. Co v. Palmer, (No. 4238.)

• Decision Date: 15 December 1924
• Docket Number: (No. 4238.)
• Citation: 125 S.E. 829,159 Ga. 371
• Parties: ÆTNA LIFE INS. CO. v. PALMER.
• Court: Georgia Supreme Court

159 Ga. 371

125 S.E. 829

ÆTNA LIFE INS. CO.

v.PALMER.

(No. 4238.)

Supreme Court of Georgia.

Dec. 15, 1924.

(Syllabus by the Court.)

Beck, P. J., and Gilbert, J., dissenting.

Certified Questions from Court of Appeals.

Action by C. U. Palmer against the Ætna Life Insurance Company. Judgment for plaintiff, and defendant brought error to the Court of Appeals, which certified questions to Supreme Court. Questions answered.

E. E. Cox, of Camilla, for plaintiff in error.

M. A. Warren and E. M. Davis, both of Camilla, for defendant in error.

HILL, J. The Court of Appeals desires instructions from the Supreme Court upon the following question, a determination of which is necessary for a decision of this case:

"Where a life insurance policy provides that 'if any subsequent premium be not paid when due, then this policy shall cease, subject to the values and privileges hereinafter described, except that a grace of thirty-one days, during which time the policy remains in full force, will be allowed for the payment of any premium after the first, provided that with the payment of such premium interest at the rate of six per cent, per annum is also paid thereon for the days of grace taken; but for any reckoning herein named the time when a premium becomes due shall be the day herein stipulated therefor without grace, ' and that 'six months after proof is received at the home office of the company, before the sum of any installment thereof becomes payable, that the insured has become wholly, continuously, and permanently disabled * * * from causes originating after the delivery of this policy, the company will, if all premiums previously due have beenpaid, waive the payment of all premiums falling due thereafter during such disability, and * * * will pay to the life beneficiary' certain monthly indemnities provided therein, and where, after the arrival of the first anniversary of the policy, but during and before the expiration of the thirty-one day grace period, the insured becomes totally disabled, and continuously thereafter remains totally disabled, will the nonpayment of the second premium on or before the maturity of the grace period cause the policy to lapse, or prevent a recovery of the monthly indemnities therein provided for?

"If the preceding question should be answered in the negative, then instructions are desired in answer to the following additional questions:

"(2) Will the right to the indemnities as provided for in the policy be lost if the payment of such second premium is not made until after the receipt by the company of the proof referred to in the second of the stipulations set out in question No. 1?

"(3) Must such second premium be actually paid as a condition precedent to a suit to recover the indemnities, or will a suit He for the indemnities less the amount of the premium?"

In the view we take of this case, the first question propounded by the Court of Appeals should be answered in the negative. It will be observed from the question propounded that "after the arrival of the anniversary of the policy, " but during and before the expiration of the 31 days of grace allowed by the terms of the policy for the payment of the premium, the insured became totally disabled, but the second premium was not paid within the 31-day period allowed as days of grace. Where the language of an insurance policy is capable of two interpretations equally reasonable, it is the general rule that that construction which is most favorable to the insured must be adopted. Mass. Life Ass'n v. Robinson, 104 Ga. 256, 30 S. E. 918, 42 L. R. A. 261; 16 Am. & Eng. Enc. Law, 863 (3); Landrigan v. Mo. State Life Ins. Co., 211 Mo. App. 89, 245 S. W. 382 (3). Ordinarily, the failure to pay a premium on an insurance policy when due works a forfeiture of the insurance. Thompson v. Fidelity Ins. Co., 116 Tenn. 557. 92 S. W. 1098, 6 L. R. A. (N. S.) 1039, 115 Am. St. Rep. 823; Pacific, etc., Ins. Co. v. Galbraith, 115 Tenn. 471, 91 S. W. 204, 112 Am. St. Rep. 862. Forfeitures are not favored by the law, and should not be declared unless demanded by the terms of the contract. The language of the contract here is that—

"If any subsequent premium (after the first) be not paid when due, then this policy shall cease, subject to the values and privileges herein described, except that a grace of thirty-one days, during which time the policy remains in full force, will be allowed for the payment of any premium after the first, " etc.

Presumably the first payment had been made, and where "after the arrival of the first anniversary of the policy, but during and before the expiration of the 31-day grace period, " the insured became totally disabled, and continuously thereafter remained totally disabled, we are of the opinion that under the language of the policy it did not lapse on the anniversary of the policy but was valid and binding against the company for the total disability indemnity, not only for and during the year, but within the 31 days of grace allowed by the policy thereafter. The nonpayment of the second premium on or before the maturity of the grace period will not cause the policy to lapse or prevent a recovery of the monthly indemnities therein provided for. This identical question seems not to have been decided by our own courts, but there are a number of decisions in outside jurisdictions to the above effect. It has been held that where a premium falls due on October 1, which is Sunday, the 30 days grace allowed by the policy commenced to run at midnight of that day and expires at midnight on October 31. Ætna Life Ins. Co. v. Wimberly, 102 Tex. 46, 112 S. W. 1038, 23 L. R. A. (N. S.) 759, 132 Am....