Anair v. Mut. Life Ins. Co. Of N.Y..

• Decision Date: 01 May 1945
• Docket Number: No. 320.,320.
• Citation: 42 A.2d 423
• Parties: ANAIR v. MUTUAL LIFE INS. CO. OF NEW YORK.
• Court: Vermont Supreme Court

42 A.2d 423

ANAIR

v.MUTUAL LIFE INS. CO. OF NEW YORK.

No. 320.

Supreme Court of Vermont.

May 1, 1945.

COPYRIGHT MATERIAL OMITTED.

Exceptions from Chittenden County Court; Cleary, Superior Judge.

Action on contract by Helen L. Anair against the Mutual Life Insurance Company of New York to recover total disability benefits under life policy. Verdict and judgment for plaintiff. On defendant's exceptions.

Affirmed.

A. Pearley Feen, of Burlington, for plaintiff.

George L. Hunt, of Montpelier, for defendant.

Before MOULTON, C. J., and SHERBURNE, BUTTLES, STURTEVANT, and JEFFORDS, JJ.

JEFFORDS, Justice.

This is an action of contract for the recovery of total disability benefits under a policy of life insurance issued by the defendant on the life of the plaintiff. The plaintiff had a verdict and judgment below and the case is here on the defendant's exceptions.

The policy was issued October 1, 1926, and provided for certain monthly payments if the insured became totally and presumably permanently disabled before age 60. The annual premium is $128.60 of which it is stated in parenthesis $5 is the premium for the double indemnity benefit and $16.15 is the premium for disability benefits.

In 1932 the plaintiff made a claim for total disability payments which were made to her from that time to and including May 5, 1942, when they were stopped; the defendant claiming that the plaintiff was no longer totally disabled. On November 12, 1935, the plaintiff assigned all her right, title and interest in the policy to the Union Savings Bank & Trust Co. Apparently this assignment was filed with the defendant. On November 25, 1935, this bank executed and delivered to the defendant its order which reads as follows:

‘You are hereby authorized and directed to pay to Helen L. Anair, any and all disability benefits that are now due or which may become due under policy No. 3745564 issued by you on the life of Helen L. Anair.

‘We reserve the right to revoke this order at any time as to future benefits which may become due; said revocation to become effective upon written notice thereof to the Mutual Life Insurance Company of New York.’

Both the assignment and the order were in effect at the time the case was tried.

The defendant in its answer pleaded three defenses to the plaintiff's complaint. The first was, in effect, that by reason of the assignment the plaintiff had parted with all her right, title and interest in or to the disability benefits under the policy and thus has no right, title or interest therein sufficient to maintain this action in her capacity as the insured, in which capacity only the action has been brought.

The second defense was, in effect, that the order above set forth gave no sole right of action to the plaintiff but required that the bank should be made a party thereto.

The third defense denied any liability under the policy upon the facts in the case.

The defendant requested the court, under P.L. 1581, to correct the alleged fault pointed out in its second defense, and the plaintiff demurred to the first defense.

At the hearing on these defenses the court found upon concession of counsel that the action is brought by the plaintiff in her own right and not by any assignee in her name. The court then denied the defendant's request and sustained the plaintiff's demurrer, with exceptions to the defendant.

The defendant contends that the cause of action is on the policy and not on the order. It says that the policy contract is entire and as it has been assigned in its entirety the provision for disability payments can survive and be enforced only as a part of the policy.

It is true that the right of recovery must have the policy for its basis. The order, however, amounts to a reassignment to the plaintiff from the bank of such rights under the policy as are set forth in the order. By virtue of the order the plaintiff did have a right and interest in or to the disability benefits contained in the policy.

The defendant says that the policy provides for the payment of a single premium and that this singleness of consideration is recognized by our cases as showing an entire contract. But here we do not have a single consideration within the meaning of these cases. The total premium of $128.60 is shown by the policy to be comprised of three different premiums, one of which for a specific amount is set forth as the premium for disability benefits. Thus the consideration was apportioned to the different covenants contained in the policy. The risks assumed by the defendant under the policy were distinct and severable with different premiums assigned to cover each of them. We conclude that the policy contract in question was not one entire contract, but constituted separate and distinct contracts. Rosso v. New York Life Ins. Co., 157 Miss. 469, 128 So. 343, 69 A.L.R. 883; Armstrong v. Illinois Bankers Life Ass'n, 217 Ind. 601, 29 N.E.2d 415, 953, 131 A.L.R. 769; 1 Am.Jur., Actions §§ 105, 106; Annotation, 69 A.L.R. 889.

An entire contract may be divisible into parts so that a right of action accrues for a breach of each part. Mixer v. Williams, 17 Vt. 457, 462. Also see McGowan v. People's Mutual Fire Ins. Co., 54 Vt. 211, 215, 41 Am.Rep. 843.

Apparently the defendant believed its policy contract was divisible for some purposes at least as it is stated therein that except for non-payment of premiums and except for the restrictions and provisions applying to the double indemnity and disability benefits the policy shall be incontestable after a stated period. In this connection see Penn Mutual Life Ins. Co. v. Hartle, 165 Md. 120, 166 A. 614, 91 A.L.R. 1466, and the annotation which follows in A.L.R.

The defendant attempts to distinguish the Armstrong case, supra, on the ground that the consideration here is single and its component parts are merely stated parenthetically in the policy. It seems to us that when an apportionment clearly appears, the method adopted to show it is immaterial.

If the cases cited by the defendant from other jurisdictions in support of its claim that the policy contract in question is entire and not divisible are contrary to our holdings, it is sufficient to say that we are not inclined to follow them.

Moreover, the rule against the splitting of an entire cause of action being for the benefit of a debtor he may by his consent to a splitting waive his right to enforce the rule. 1 Am.Jur. 484, § 101. In the present case the defendant recognized the order for about seven years and made payments to the plaintiff under it. It must be taken that it consented to the reassignment of the rights under the policy and waived its rights, if any it had, to raise this rule as a defense to an action based on the reassigned rights. Manchester Fire Assurance Co. v. Glenn, 13 Ind.App. 365, 40 N.E. 926, 41 N.E. 847, 55 Am.St.Rep. 225.

In support of its second defense, the defendant says that even assuming the plaintiff had a right of action for disability benefits the bank, as sole owner of the policy, was a necessary party to the action and should have been made so upon request under the provisions of P.L. 1581. In making this claim the defendant overlooks the effect of the order from the bank to the plaintiff. As we have seen, the order was a limited re-assignment of the policy rights to disability benefits. It was in force at the time suit was brought and under it all the payments sued for had become due. The plaintiff by virtue of the order was the only person entitled to sue for these payments. Under these circumstances the plaintiff had the right to bring suit in her name only. Udall v. School District, 48 Vt. 588; Moore v. Spiegel, 143 Mass. 413, 9 N.E. 827.

The defendant argues that it might have been prejudiced by the fact that the bank was not made a party if the bank had revoked its order at any time after suit was brought or should do so even now. It says it is immaterial to the decision of this question of necessary parties that no revocation was or has been made. The answer to this claim lies in the wording of the notice. All the benefits sued for had become due before suit was brought without any revocation of the order. No prejudice to the defendant has resulted or can result from the refusal of the court to grant the defendant's request to have the bank made a party to the action. If different facts had been presented or the limit of recovery had been enlarged, a different ruling on this question might have been called for but there is no occasion to indulge in speculation on this point.

No error has been made to appear in respect to the rulings of the court on the defendant's first and second defenses. Our holdings on these matters dispose of the exceptions of the defendant to the admission of the policy as an exhibit in the case.

At the close of all the evidence the defendant moved for a directed verdict. The first two grounds of the motion were similar to its first and second defenses heretofore dealt with. The remaining grounds of the motion were to the effect that there is no evidence in the case to support a finding that the plaintiff is totally disabled within the meaning of the policy provision and that the evidence shows conclusively that at all material times the plaintiff followed a gainful occupation of managing an apartment house with no impairment which continuously rendered it impossible for her to carry on that occupation.

The evidence in the case viewed favorably to the plaintiff is as follows. When the policy was issued the plaintiff was employed as a stenographer in a law office. The next year she was admitted to the bar of this state. Prior to 1928 she had enjoyed very good health. In that year she had an operation and has been receiving medical treatment ever since. She continued to practice law until her health broke down in 1931. She closed her office in 1932 and in that year made a claim for total disability payments under the policy. She had to give up...