Belser v. Mutual Life Ins. Co. of New York

• Decision Date: 25 May 1948
• Docket Number: Civil Action No. 1078.
• Citation: 77 F. Supp. 826
• Court: U.S. District Court — District of South Carolina
• Parties: BELSER v. MUTUAL LIFE INS. CO. OF NEW YORK.

77 F. Supp. 826

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

Civil Action No. 1078.

District Court, E. D. South Carolina, Columbia Division.

May 25, 1948.

C. T. Graydon and R. Beverly Herbert, both of Columbia, S. C., for plaintiff.

Pinckney L. Cain and John W. Thomas, Jr., both of Columbia, S. C., for defendant.

WYCHE, District Judge.

Pursuant to application the defendant issued its policy of insurance dated April 25, 1917, insuring the life of the plaintiff in the amount of $5000, in consideration of the payment of an annual premium of $112.80. The policy of insurance was kept in force until 1941 when it lapsed for nonpayment of the premium due on April 25, 1941, the time of payment for which was extended to July 25, 1941, under the provisions of the policy. When the policy lapsed it was continued as extended term insurance under its automatic non-forfeiture provisions until January 16, 1942.

The provisions of the policy pertinent to the issues involved in this controversy are as follows:

"Reinstatement. — Unless it shall have been surrendered for its cash value, this Policy may be reinstated at any time within three years from date of default in payment of any premium, upon evidence of insurability satisfactory to the Company and upon payment of the arrears of premiums with interest thereon at the rate of five per centum per annum; and, at the option of the Insured, either (a) upon payment in cash to the Company of any indebtedness which existed at said date of default, together with interest thereon as specified in the loan provisions of this Policy; or (b) upon reinstatement of such indebtedness, increased by interest thereon as specified in the loan provisions of this Policy, provided such reinstated increased indebtedness does not exceed the loan value at the date of reinstatement."

"Conditions: * * *

"Occupation. — If, within the period of one year after the date of issue of this Policy, the Insured shall engage in military or naval service in time of war or in any work as a civilian in any capacity whatever in connection with actual warfare, and shall die within one year from the date of beginning such service or work, the Company's liability hereunder shall be limited to one-fifth of the face amount of the Policy, unless, prior to the date of beginning such service or work, a single extra payment of three per centum of the face amount of the Policy shall have been made to the Company. As to other occupations of the Insured, the Policy is subject, during the first year following its date of issue, to the restrictions stated in the application, copy of which is endorsed hereon or attached hereto.

"After one year from its date of issue, this Policy is free from any restriction as to military and naval service, and is free from any restriction as to all other occupations of the Insured."

Certain questions and answers in the original application for the policy of insurance, also pertinent to the issues involved herein, are as follows: "7. I do not contemplate any change of occupation, or becoming connected with any military or naval organization or service or going to any foreign or tropical countries except: (if none, so state). Officers' Reserve Corps. 8. Are you connected with any military or naval organization or service, officially or otherwise? (Ans. Yes or No). Not yet commissioned but qualified."

The application also contained the following provision: "It is understood and agreed that during the period of one year following the date of issue of the Policy of Insurance for which application is hereby made, * * * (c) if, during said year, I shall engage in military or naval service in time of war or in any work as a civilian in any capacity whatever in connection with actual warfare, and shall die within one year from the date of beginning such service or work, the Company's liability shall be limited to one-fifth of the face amount of the Policy unless, prior to beginning such service or work, payment shall have been made to the Company of a sum equal to three per centum of the face amount of the Policy (or of the present value of the amounts payable after death if the insurance is not payable in one sum). * * *."

In due time, on September 30, 1942, the plaintiff made written application for reinstatement of the policy, in accordance with the provisions thereof relating to reinstatement, and complied with all the necessary conditions, and asked that the insurance policy be reinstated in full force and effect, and in accordance with the same terms which had existed prior to its termination. The insured underwent a physical examination in connection with such application and was found satisfactory from a medical standpoint. However, the defendant company took the position that the evidence of insurability submitted by the plaintiff was not satisfactory to the defendant because the plaintiff was then in the United States Army, and for this reason refused to reinstate the policy as originally issued, but offered to reinstate the policy subject to what is commonly known as a war clause, informing him that a policy with the war clause was the only type of policy it was then willing to issue to him.

The plaintiff chose to treat this action on the part of the defendant as a breach of the contract of insurance, and he so notified the defendant. The defendant replied by stating that its position was the same as before, but that because of the necessity for cooperation in the United States, in view of world affairs at that time, it would reinstate plaintiff's policy according to its old terms without a war clause. The plaintiff stood steadfast in his position that defendant had broken its contract with him and that there was no longer any contractual relations existing between them. He stated on the witnessstand that at this point in his dealings with the defendant he had lost all faith in the fairness and future bona fides of the defendant and that he did not believe that he would get a square deal from the defendant. The plaintiff was then in the military service and was therefore unable to obtain other insurance without the so-called "war clause", which restricted his recovery, in case of death in connection with war activities, to premiums actually paid.

Plaintiff, during pendency of negotiations with the defendant, undertook and did take out a policy of life insurance with the John Hancock Mutual Life Insurance Company, which provided for a yearly premium of $152.15 for a period of five years from date, and thereafter until the death of the insured, for a yearly premium of $304.30. Under the John Hancock policy, during the probable life of the plaintiff, based upon the ordinary mortuary tables, and disregarding the fact that he was engaged at the time in the military service, the premiums which plaintiff would be required to pay in excess of the premiums under the policy with the defendant company, would amount to $3,069.25. It appears from the evidence that in order to secure a policy of insurance free from such war clause, if such a one could be obtained, it would probably be necessary for the plaintiff to pay an additional premium of $90. per thousand dollars of insurance, amounting to $450 per year, or for the four year period of the last war, a total of $1800. It would follow that plaintiff would be required to pay at his then age an additional premium of $3,069. for the John Hancock policy of life insurance, subject to the war clause, or possibly an amount of $4,869.25 for an ordinary life policy without such war clause.

Plaintiff is still a member of the Reserve Officers Corps, holding a commission of Colonel of Field Artillery in the United States, and is liable again to be called back to serve in the event of war, which is a possibility.

At the conclusion of plaintiff's case, the defendant moved for an involuntary nonsuit, and at the conclusion of all the evidence, for a directed verdict. I took both motions under advisement. Counsel for plaintiff and defendant agreed with the Court that as to the action for actual damages only a question of law was presented, as to whether there was a breach of the contract, as to whether there were any actual damages, and as to what the actual damages, if any, were. I submitted the issue of punitive damages to the jury, reserving my decision upon defendant's motion for directed verdict. The jury found a verdict for the plaintiff in the sum of $4,500 punitive damages. Within seasonable time the defendant moved for judgment notwithstanding the verdict, and in the alternative, also moved for a new trial.

The main question to be determined in this case is, did the defendant insurance company have the right to refuse to reinstate plaintiff's policy of insurance on the ground that he was a member of the armed forces, and for this reason no longer insurable?

As hereinbefore stated, the policy provides that "After one year from its date of issue, this Policy is free from any restriction as to military and naval service, and is free from any restriction as to all other occupations of the Insured." It appears from the plaintiff's original application for the policy of insurance that he contemplated at that time becoming a member of the armed forces if the occasion arose. The contract of insurance was entered into with this possibility in the minds of the parties. The defendant then contracted that it would not consider this as an element of the plaintiff's insurability upon his request for a reinstatement of the policy under the provisions thereof. Under the terms of the policy the last date upon which the defendant could deny full liability under the policy because of plaintiff's death in the armed forces was April 24, 1919. If the plaintiff lived beyond that date without dying from some injury received in the armed forces the company expressly contracted not to deny the company's full liability under the policy because of the fact that the...