Armstrong v. Illinois Bankers Life Ass'n

• Decision Date: 21 October 1940
• Docket Number: 27461.
• Citation: 29 N.E.2d 415,217 Ind. 601
• Parties: ARMSTRONG v. ILLINOIS BANKERS LIFE ASS'N et al.
• Court: Indiana Supreme Court

29 N.E.2d 415

217 Ind. 601

ARMSTRONG v. ILLINOIS BANKERS LIFE ASS'N et al.

No. 27461.

Supreme Court of Indiana

October 21, 1940

Rehearing Denied Nov. 25, 1940.

See 29 N.E.2d 953.

Appeal from Superior Court, Knox County; Wm. F Calverley, judge.

Sanford Trippet and McDonald & McDonald, all of Princeton, for appellant.

Denny Adams, Baker & Orbison, of Indianapolis, and Kessinger Hill & Arterburn, of Vincennes, for appellees.

ROLL Chief Justice.

This action was instituted by appellant, as assignee, to recover damages for breach of an insurance contract.

The issues were formed by the complaint, an answer in general denial, and a second, third, fourth, fifth, sixth, and seventh paragraphs of affirmative answer. Appellant replied by a denial to the several paragraphs of answer, and also filed an affirmative reply to the second paragraph of answer.

The facts are not in dispute, and are substantially as alleged in the several pleadings.

The court, upon request, found the facts specially and stated conclusions of law thereon. The conclusions of law were favorable to appellees. To each conclusion appellant reserved exceptions. Appellant filed her motion for a new trial, which was overruled, and this appeal followed. The questions on appeal relate to the correctness of the court's conclusions of law and in overruling appellant's motion for a new trial.

The facts as disclosed by the record are substantially as follows:

On October 5, 1927, appellee, Russell Armstrong, purchased of and from the Illinois Bankers Life Association a policy of life insurance on his life, naming his wife, Gertrude Armstrong, as the beneficiary. The amount payable under the policy as death benefits was $5,000. The policy also contained what is known as a 'total disability benefits clause.'

The pertinent parts of the policy in question read as follows:

'The Illinois Bankers Life Association * * * hereby insures Russell Armstrong (herein called the Insured) of Hazelton, State of Indiana, and agrees to pay the Beneficiary Gertrude Armstrong of the Insured (with the right on the part of the insured to change the beneficiary in the manner provided herein), the Principal Sum of Five Thousand Dollars upon receipt of due proof of the death of the insured, while this policy is in full force, or * * *'

'* * * Upon receipt of due proof that the Insured is totally and permanently disabled before the age Sixty, as defined under 'Total and Permanent Disability' herein; and while this policy is in full force, the Association agrees to waive premium payments hereunder as they become due and to pay a Life Income to the Insured of Fifty Dollars per month, beginning six months after receipt of proof. Any such income payments shall not be deducted from the Principal Sum payable to the Beneficiary at the death of the Insured.

'This insurance is granted in consideration of the application of the Insured, a copy of which is hereto attached and made a part of this contract, and the payment in advance of Thirty-five and 05/100 Dollars, as a first payment, receipt whereof is hereby acknowledged, which pays for the period ending January 5, 1928, with grace as herein provided, and the payment of all subsequent premiums required under this contract at or before the time when due and payable, during the life time of the Insured, until premiums for twenty years in all shall have been paid. * * *'

'Total and Permanent Disability Benefits.

'Subject to the following conditions the Total and Permanent Disability benefits provided for on page one shall accrue to the insured upon written request of the insured and upon due proof of disability from any cause as herein set forth occurring before the insured reaches the age of sixty years.

'This provision shall become null and void after the insured has reached the age of sixty years; or during default of the payment of any premium or installment thereof; or during any time, if any, in which the insured is in the army or navy of any country. Said disability must be such that there is neither then or at any time thereafter any work, occupation, or profession that the insured can sufficiently do or follow to earn any wages, compensation or profit, and the Insured must furnish from time to time, not more frequently than once a year, upon request of the Association, evidence satisfactory to the Association of continued total disability; and if the insured shall recover from such total disability sufficiently to enable him to engage in any gainful occupation he shall thereupon resume the payment of full premiums on the next succeeding due date of premium and the monthly allowances herein provided shall cease. * * *'

'The consideration for this provision is an additional annual premium of $9.15, which consideration is included in the premium named in this policy but such additional premium will not be required after this provision terminates. * * *'

'Total and Permanent Disability Benefits.

'The provision for the disability, double or triple indemnity benefits hereunder set forth may be terminated at any time on the written request of the insured accompanied by this policy for endorsement, and thereafter the premium for this policy shall be reduced by the amount charged for the terminated benefit or benefits.

'Any premium paid to the Association for the aforesaid benefits for any period not covered will be returned. In any event the premium for the double and triple indemnity benefits and that for the disability benefits shall cease on the anniversary of the policy next succeeding the date when the insured attains the age of 60 years.'

It is made to appear by the seventh paragraph of answer, that appellant, the Illinois Bankers Life Association, was an assessment association under the law of Illinois, and that in November, 1929, the appellant, the Illinois Bankers Assurance Company, a legal reserve company, reinsured all the risks of the Illinois Bankers Life Association.

By the complaint it is made to appear that in June, 1928, and while said policy was in full force, and while said Russell Armstrong was under the age of sixty years (the insured was 30 years of age when the policy was issued in October 1927), he, the insured, suffered a nervous breakdown. By reason of this physical condition he then and there became totally and permanently disabled within the provisions of said policy, and became entitled to all the benefits of the policy as above set out without further payment of premiums. Proof of total disability was made and forwarded to the company together with a request that the company fulfill its contract and pay him the monthly benefits due under the terms of the policy, and to waive the payment of premiums thereafter to become due as provided therein. The company refused payment of total benefits and refused to waive premiums, and thereafter lapsed said policy for nonpayment of premiums due July 5, 1929, and wholly and wrongfully lapsed, renounced and repudiated its said policy of insurance and denied any and all liability thereunder.

It is further alleged in the complaint that in October, 1931, Russell Armstrong instituted an action against the Illinois Bankers Life Association in the Warrick Circuit Court. Gertrude Armstrong, wife of Russell Armstrong and the appellant herein, was also made a defendant in said action. This action was to recover damages for breach of the total disability feature contained in the said policy.

By the second paragraph of answer and by the second paragraph of reply the following facts with reference to the action instituted by Russell Armstrong above mentioned are made to appear. Gertrude Armstrong, appellant herein, was served with process in said action and filed a cross complaint, wherein she set forth the same cause of action and the same facts as she now pleads in this present action, which facts, in addition to those heretofore mentioned, are in substance as follows: that she was named the beneficiary in said policy of insurance, and that on the eighth day of October, 1930, Russell Armstrong assigned to her all of his right, title and interest in and to the aforesaid policy of insurance, save and excepting as to the total and permanent disability benefits which assignment is in words and figures following to-wit:

'For Value Received I hereby sell, assign, transfer and set over to my wife, Gertrude Armstrong, her Executors, administrators and assigns all my right, title and interest in and to a certain policy of life insurance, numbered 172533, issued by the Illinois Bankers Life Association, Home Office, Monmouth, Illinois, under date of October 5, 1927, upon my life, together with all rights of action accrued, accruing or which may hereafter accrue to me thereunder, save and excepting herein, however, all of my right, and title and interest in and to the total and permanent disability benefits provided for by said policy of insurance, and save and excepting also all rights of action accrued, accruing or which may hereafter accrue to me by reason of the breach of said permanent and total disability provisions set forth in said policy.

'Witness my hand and seal, at Hazelton, Indiana, this 8th day of October, 1930.

'(Signed) Russell Armstrong.

'Witness:

(Seal)

'Helena E. Riley.'

By this cross-complaint, Gertrude Armstrong sought to recover upon the alleged breach of the life insurance contract.

Appellee Life Association filed its motion to strike out said cross-complaint for two reasons; (1) 'Said cross-complaint did not arise out of, nor was it germane to the points of plaintiff's complaint.' (2) 'Said cross-complaint disclosed on its face that the counter-claim set out herein did not exist at the time plaintiff's action herein was...