MERCANTILE-COMMERCE B. & T. CO. v. Equitable Life Assur. Soc.

• Decision Date: 31 December 1942
• Docket Number: No. 699.,699.
• Citation: 48 F. Supp. 561
• Court: U.S. District Court — Eastern District of Missouri
• Parties: MERCANTILE-COMMERCE BANK & TRUST CO. et al. v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.

48 F. Supp. 561

MERCANTILE-COMMERCE BANK & TRUST CO. et al. v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.

No. 699.

District Court, E. D. Missouri, E. D.

December 31, 1942.

Cobbs, Logan, Roos & Armstrong, of St. Louis, Mo., for plaintiff.

Rassieur & Rassieur, of St. Louis, Mo., for defendant.

COLLET, District Judge.

This action is to recover disability benefits and for the return of premiums paid on an insurance policy. The amount involved is $29,203.50, exclusive of interest. Plaintiffs are residents of Missouri. Defendant is a New York corporation.

In November, 1921, two life insurance policies, one for $15,000, the other for $10,000, were issued by defendant to Clarence R. Comfort of St. Louis, Missouri. Both policies are Missouri contracts. Each contained the following provisions: "If the insured becomes wholly and permanently disabled before age 60, the Society will waive subsequent premiums and pay to the insured a disability annuity of One Hundred Fifty Dollars a month", (and One Hundred Dollars a month in the other policy.)

"(I) Disability Benefits before age 60 shall be effective upon receipt of due proof, before default in the payment of premium, that the Insured became totally and permanently disabled by bodily injury or disease after this policy became effective and before its anniversary upon which the Insured's age at the nearest birthday is 60 years, in which event the Society will grant the following benefits:

"(a) Waive Payment of All Premiums payable upon this policy falling due after the receipt of such proof and during the continuance of such total and permanent Disability; and

"(b) Pay to the Insured a Monthly Disability-Annuity as stated above; the first payment to be payable upon receipt of due proof of such Disability and subsequent payments monthly thereafter during the continuance of such total and permanent Disability.

"(Note: Any Premiums so waived and any Disability-Annuity so paid shall not be deducted from any amount payable in any settlement of this policy.)

"Disability shall be deemed to be Total when it is of such an extent that the Insured is prevented thereby from engaging in any occupation or performing any work for compensation of financial value, and such Total Disability shall be presumed to be Permanent when it is present and has existed continuously for not less than three months; and, further, the entire and irrecoverable loss of sight of both eyes, or the severance of both hands at or above the wrists, or of both feet at or above the ankles, or of one entire hand and one entire foot, will of themselves be considered as Total and Permanent Disability within the meaning of this provision.

* * * * *

"(III) Recovery from Disability.

"The Society shall have the right at any time or times during the first two years after receipt of such proof of disability, but thereafter not more frequently than once a year, to require proof of the continuance of such total disability. If the insured shall fail to furnish satisfactory proof thereof, or if it appears at any time that the Insured has become able to engage in any occupation or perform any work for compensation of financial value, no further premiums will be waived and no further Disability-Annuity payments will be made hereunder on account of such disability."

The annual premiums were "written up" because of a chronic heart ailment with which the insured had been afflicted for several years and which is referred to as a "heart block". On May 29th, 1930, the insured had a severe attack of this ailment, the technical term for which need not be used, and the premiums having been paid on the policies, claim for disability was thereafter made and allowed on November 3, 1930. The claim as allowed included monthly payments of $250, commencing August 29, 1930, and the waiver of annual premiums beginning November 3, 1930. During the period from May 29th, 1930, until February 12, 1932, the insured was constantly away from his business totally disabled. At the time the policies were issued he was for all practical purposes the owner of the Comfort Printing and Stationery Company and the Comfort Speciality Company, corporations which he had organized and of which he was President. He had started and built up both businesses. Prior to his illness in 1930, a large part of his activity had been in personally soliciting sales. In that work he had led a very active life. During his illness he continued to receive from both corporations his monthly salary which was based to a large extent upon net earnings. Both businesses appear to have been successful and profitable.

On March 15, 1932, the insured wrote defendant a letter of which the following is material:

"I wish to advise you that I am back at my desk for short periods each day. I hope to regain my strength sufficiently to be able to continue at work and unless you hear from me to the contrary before the end of the month, you need not send the checks on the above claims."

No further disability payments were made after March, 1932, and the payment of annual premiums was resumed November 3, 1932.

The record depicts another of the frequent cases where an active businessman returns to his work against the advice of his physician and at the risk of bringing about his death or hastening it.

But when the insured returned to his business his conduct was completely different. His office was moved from a place easily accessible to visitors and employees to a location where seclusion would result. Strict orders were given employees that he was not to be unnecessarily disturbed. He occupied a short period of time each day in going through more important mail, examining trade journals and advising with his son and one or two of the older executives concerning the operation of the business. His son drove him home at noon each day. After a time this inconvenience to his son was remedied by the installation in the insured's office of a bed or couch where he could lie down. He was instructed to and did rest in that manner for two or two-and-a-half hours immediately after lunch each day, during which time no one disturbed him. When his son was through for the day he drove them home. Contacts with business acquaintances and customers were maintained as best they could be at luncheon and occasional visits but the active life of a salesman was never resumed. Before his illness he had been accustomed to taking his family to Michigan for vacations. These trips were resumed and he drove the automobile for short periods of time but never alone. Once on such a vacation he engaged in a game of badminton and had a reasonably severe heart attack as a result, which confined him to his bed.

The disease from which he was suffering was incurable and progressive. It had progressed to such an extent in May, 1939, that he was again hospitalized and after careful examination any further connection with his business was forbidden. He died July 26, 1940.

In 1937, the insured brought suit against the Travelers' Insurance Company on another policy similar to those now involved in which he asserted his total and permanent disability from May 30, 1930. At the trial of that case the jury was instructed in substance that if the insured returned to his business and had been performing a substantial portion of the duties of President and receiving the salary therefor, he was not totally disabled. The verdict was for the defendant, the trial court granted a new trial on account of the error of the instruction noted, and the St. Louis Court of Appeals affirmed. Comfort v. Travelers' Insurance Co., 131 S.W.2d 734. That opinion was filed September 12, 1939, and a rehearing was denied on October 10, 1939.

On June 22, 1939, the insured wrote defendant asking that the disability benefits be resumed and further premiums waived. In that letter he stated that by exercising care he had been able "to attend to (his) work at the office", but that his heart muscles had deteriorated to such an extent that his physician advised him to discontinue work. He requested that the payment of the disability benefits be resumed as of May 18, 1939. Defendant declined to consider the commencement of the payments as of May 18th, on the ground that the benefits did not begin until the expiration of a three months' waiting period. Whereupon an argument ensued which was settled September 9, 1939, by the defendant approving the claim as of May 18th and waiving subsequent premiums. Nothing was said by either party in that discussion about any claim for disability during the interim between February, 1932, and May, 1939.

October 24, 1939, the insured wrote the defendant as follows:

"It is my present intention to file a claim for disability benefits under the above two policies and the Group Certificate for disability benefits for the period from February 12, 1932, to May 17, 1939.

"You will recognize this period as being that time running between the closing of my 1930 claim and the opening of my 1939 claim.

"I am prepared to submit medical evidence that I was totally and permanently disabled during that period of time, and that the disability under which I am now resting is the same disability from which I suffered in 1930 and it has been continuous all the way through."

To which defendant replied on November 29: "As to your request for benefits over the period you were working from March 15, 1932 up to May 18, 1939, we are very sorry to say that we shall be unable to comply with your request as your contract makes no provision for benefits for partial disability or for disability that merely prevents you from engaging in your own particular line of work."

On October 24th, insured complained to defendant that the disability payment checks carried a stamped endorsement on the reverse side: "In full settlement of any and all disability claims to the date of this check", and asked that it be removed or that defendant agree that such...