Bennett v. New York Life Ins. Company

• Decision Date: 19 January 1942
• Docket Number: 6935
• Citation: 121 P.2d 551,63 Idaho 427
• Parties: ADDIE BENNETT, Appellant, v. NEW YORK LIFE INSURANCE COMPANY, Respondent
• Court: Idaho Supreme Court

121 P.2d 551

63 Idaho 427

ADDIE BENNETT, Appellant, v. NEW YORK LIFE INSURANCE COMPANY, Respondent

No. 6935

Supreme Court of Idaho

January 19, 1942

INSURANCE-CONTRACT CONSTRUCTION OF-DISABILITY CLAUSE-PROOF OF DISABILITY-NOTICE TO INSURER.

1. Decisions of court of the state of New York, where insurer was incorporated, with reference to disability provisions of insurer's life policies, should afford, outside the state, at least persuasive reasons for courts outside the state of New York following the construction and application of the disability provisions by the courts of New York.

2. Where life policy provided that, on receipt of due proof that insured was totally and permanently disabled for life premium would be waived during period of disability and in- sured would be entitled to disability benefits, requirement of due proof was a "condition precedent" and not a "condition subsequent," and hence insured and beneficiary were not excused, because of insured's mental incapacity, from giving notice to insurer of insured's total disability, and, where notice was not given, beneficiary, after insured's death, was not entitled to recover benefits and premiums paid by insured during time he was totally disabled, and mentally incapacitated.

3. An insurance contract, such as a life policy with disability benefits, is as binding as other contracts.

4. Where insured failed to give notice required by life policy as condition of waiver of premiums during period of total and permanent disability, denial of recovery of premiums paid without giving of notice of disability did not amount to a "forfeiture" since one cannot "forfeit" that which he never had.

APPEAL from the District Court of the Third Judicial District, for Elmore County. Hon. Charles E. Winstead, Judge.

Action for recovery of disability benefits under insurance policy. Judgment for defendant. Plaintiff appeals. Affirmed.

Judgment affirmed, with costs to respondent.

Eugene H. Anderson, C. Stanley Skiles, and Pete Leguineche, for Appellant.

Mental incompetency or mental incapacity excuses the failure of the insured to give notice and furnish proof of disability, and such mental incompetency or incapacity abrogates the provisions of a policy requiring that the insured give notice and furnish proof of disability. (McCoy v. New York Life Ins. Co., 219 Iowa 514, 258 N.W. 320; Pfeiffer v Missouri State Life Ins. Co., 174 Ark. 783, 297 S.W. 847, 54 A. L. R. 600; Johnson v. Mutual Life Ins. Co. of New York, 70 F.2d 41; Mutual Life Ins. Co. of New York v. Johnson, 293 U.S. 335, 55 S.Ct. 154, 79 L.Ed. 398.)

The fact that the insured is disabled, determines the rights of the parties to an insurance contract. The existence of the disability, while the policy is in force, is the condition precedent which determines the rights of the parties. Notice and proof of such disability is not a condition determining the liability, but is only a condition subsequent to the liability and precedent to a right of action. ( Metropolitan Life Ins. Co. v. Phillips, (Ala.) 182 So. 35; Prudential Life Insurance v. Grey (Ala.) 159 So. 265; Equitable Life v. Hill (Ala.) 161 So. 800; National Life Insurance v. Cook (Ark.) 109 S.W.2d 679.)

Richards & Haga, for Respondents.

The insurer may not be properly deprived of its essential right to have proof of claimed disability submitted during the continuance of such liability and during the insured's lifetime. (Smith v. Missouri State Life Ins. Co. (Kans.), 7 P.2d 65; New England Mut. Life Ins. Co. v. Reynolds (Ala.) 116 So. 151, 59 A. L. R. 1075; Conlon v. Northern Life Insurance Co. (Mont.) 92 P.2d 284; Farmers Trust Co. v. Reliance Life Ins. Co. (Pa.), 13 A.2d 111; Sherman v. Metropolitan Life Ins. Co. (Mass.), 8 N.E.2d 892, 895.)

The obligation of the insured, or someone in his behalf, to make proof of disability is not excused by the insanity of the insured or his personal inability to make the proof.

Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 491, 76 L.Ed. 416; Reingold v. N. Y. Life Ins. Co. (C. C. A. 9), 85 F.2d 776; N. Y. Life Ins. Co. v. Alexander (Miss.), 85 So. 93, 15 A. L. R. 314; Wicks v. Western Union Life Ins. Co. (Wash.), 175 P. 953.)

AILSHIE, J. Givens, C.J., Budge, Morgan and Holden, JJ., concur.

OPINION

AILSHIE, J.

This action was instituted by Addie Bennett, (appellant) as beneficiary against the New York Life Insurance Company (respondent), to recover disability benefits under insurance policy issued by the company, May 21, 1929, on the life of Elmer J. Bennett. The policy provided for payment, in case of death, in the sum of $ 3,000, also double indemnity under specified circumstances and total disability benefits to insured under specified conditions.

Proof of death was duly made and the death benefit of $ 3,000 was paid to appellant, the beneficiary. Claim for disability benefits was made and also claim for return of premiums paid by insured during disability.

So much of the insurance contract, as is thought to be material or important in the consideration of this case, is set out in the footnote hereto. ^[1]

An amended complaint was filed to which demurrers were interposed and sustained. The plaintiff declined to further plead and judgment of dismissal was entered, from which this appeal has been prosecuted.

For the purposes of our present consideration of the case, the allegations of the complaint must be accepted as true. The initial payment of $ 102.33 was made at the time of the issuance of the policy and all premiums were thereafter paid as they became due; and the policy was in full force and effect on the date of insured's death. Bennett, the insured, died March 24, 1939, leaving surviving him the appellant, who was named as beneficiary under the policy; that, on April 10, 1939, following the death of the insured, the beneficiary "gave due notice, and made proof, to the defendant at its home office" of the "permanent total disability of the said Elmer J. Bennett."

The plaintiff also alleged that insured was suffering from "permanent disability continuously from April 19, 1933, up to and including the date of his death, and that disability benefits were due under the policy at the time of his death in the sum $ 2130." Plaintiff further alleged "That the said Elmer J. Bennett during the period of continuous disability, . . . . paid to the said defendant premiums in the amount of $ 102.33, for each premium, for the years 1933, 1934, 1935, 1936, 1937, and 1938; that under and by reason of the terms and conditions of said policy of life insurance, the payment of each of said premiums was waived by the said defendant, and that there is now due, owing, and unpaid from the defendant to plaintiff, because of payment of premiums made by the said Elmer J. Bennett while he was mentally incompetent and incapable to understand or comprehend his rights and duties . . . . the sum of $ 613.98."

As excuse and justification for failure of the insured to give notice to the company of his disability, it was alleged that, after the issuance of the policy and on April 19, 1933, the insured "developed and suffered from pernicious anemia"; and "by reason of said pernicious anemia and attendant disorders and complications arising from and connected therewith, became totally and permanently disabled, and from the said 19th day of April, 1933, until his death on the 24th day of March, 1939, the said Elmer J. Bennett was wholly prevented from performing any work or following or engaging in any occupation or business for remuneration or profit, and that from the 19th day of April, 1933, and continuously thereafter, the said Elmer J. Bennett, because of and by reason of the complications connected with and resulting from said pernicious anemia was so disordered in mind and memory that he was incapable and incompetent to attend to or transact his ordinary business affairs, . . . ."

As further justification for failure on the part of the insured or the beneficiary, to give notice to the company of the insured's disability, it is alleged:

"That the said policy of life insurance was issued by the said defendant, as aforesaid, without the knowledge and consent of the plaintiff. That at the time of the issuance of the said policy of life insurance, said Elmer J. Bennett placed said policy of life insurance in a safety deposit box at the First Security Bank of Idaho, at Mountain Home, Idaho. That until after the death of the said Elmer J. Bennett, this plaintiff did not have access to said safety deposit box, or to said policy of life insurance, and that until after the death of the said Elmer J. Bennett, this plaintiff had no knowledge whatsoever of the terms and conditions of said life insurance policy."

For our present purposes, permanent disability of the insured, for the period alleged, is admitted, as is also his failure to give notice to the company of such disability. It is likewise admitted that the insured made the regular annual payments from the time of the issuance of the policy until his death; and that, at the time of his death, the policy was in full force and effect.

The question that we are called upon to determine and decide is, whether the insured and the beneficiary are excused for their failure to give notice of total disability, as provided for under the terms of the contract, so as to entitle the beneficiary to recover disability benefits and return of premiums paid during disability.

While this case presents a new question in this court, it is not new to the courts of many of the states. There seems to be abundant authority construing and determining the rights of beneficiaries under insurance contracts practically identical with the one here under consideration. The decisions on the...