Caruso v. John Hancock Mut. Life Ins. Co.

• Decision Date: 13 May 1947
• Citation: 53 A.2d 222
• Parties: CARUSO v. JOHN HANCOCK MUT. LIFE INS. CO.
• Court: New Jersey Supreme Court

53 A.2d 222

CARUSO

v.JOHN HANCOCK MUT. LIFE INS. CO.

Supreme Court of New Jersey, Passaic County.

May 13, 1947.

Action on a life insurance policy by Paul Caruso against the John Hancock Mutual Life Insurance Company.

Judgment for plaintiff in a limited amount.

Nathan Rabinowitz, of Paterson, for plaintiff.

McCarter, English & Studer, of Newark, for defendant.

DAVIDSON, Circuit Judge.

This case, of novel impression, and involving no disputed questions of fact, was, by stipulation, tried by the Court without a jury.

Plaintiff seeks to recover the face amount of a policy of insurance issued to Frank Caruso, his son, on June 18, 1942, in which policy he was named as beneficiary. Insured, while serving as a soldier in the United States Army, was killed by enemy action on March 26, 1945, in the Battle of the Bulge during an advance in Brey, Germany.

The policy contained a War and Aviation Risk Exclusion Provision, the pertinent clauses of which read as follows: ‘Anything in this Policy to the contrary notwithstanding, it is hereby provided that death as hereinafter described is not a risk assumed under the Policy and in the event of such death the liability of the Company shall be limited as hereinafter set forth.

‘(a) Death while the Insured is serving outside the forty-eight states of the United States, the District of Columbia and the Dominion of Canada in the military or naval or air forces of any country at war, whether such war be declared or undeclared, or death within six months after the termination of such service from any injury or disease sustained or contracted while in such service.

‘(c) Death within two years from the date of issue of the Policy, as a result of war or any cause incident thereto, whether such war be declared or undeclared, while the Insured is outside the States of the United States, the District of Columbia and the Dominion of Canada.

‘In the event of any such death, the liability of the Company shall be limited to the amount of the premiums paid on the policy less any dividends apportioned and credited, plus interest at the rate of 3% compounded annually, plus any dividends left to accumulate, plus the reserve on any paid-up policy additions, and less any indebtedness on the Policy existing at the date of death or when extended term or paid-up insurance may have become effective.’

The sole question presented for determination is the interpretation of the foregoing clauses. If clause (a) is applicable to the admitted facts, plaintiff's recovery is limited to the amount of premiums paid, plus dividends and interest, an aggregate of $91.97; whereas, if clause (c) is applicable, defendant is liable for the face amount of the policy.

The authorities are in agreement as to the fundamental rules of construction, for a policy of insurance is simply a contract and its provisions should, of course, be construed as in any other contract. The insurer having a larger part in the selection and terminology of clauses, policies of insurance will be liberally construed to uphold the contract, and conditions in them which create forfeitures will be construed most strongly against the insurer and will never be extended beyond the strict words of the policy. Snyder v. Dwelling-House Insurance Company, 59 N.J.L. 544, 37 A. 1022, 59 Am.St.Rep. 625. This rule of construction, favorable to the insured, clearly can only have application where there is ambiguity, so that the intent is not clear and doubt arises upon perusal. Harris v. American Casualty Company, 83 N.J.L. 641, 85 A. 194, 44 L.R.A.,N.S., 70, Ann.Cas.1914B, 846; Connell v. Commonwealth Casualty Company, 96 N.J.L. 510, 115 A. 352.

The elemental rule of construction is to arrive at and determine the intention of the parties as demonstrated by the language employed, when read and considered as a whole. Effect, if possible, will be given to all parts of the instrument, and the construction which gives a reasonable meaning to all its provisions will be preferred to one which leaves a portion of the writing useless or inexplicable. Bullowa v. Thermoid Company, 114 N.J.L. 205, 176 A. 596.

It is not a proper function of the Court to rewrite or distort a contract under the guise of judicial construction. Chief Justice Gummere aptly remarked in Kupfersmith v. The Delaware Insurance Company, 84 N.J.L. 271, 86 A. 399, 401, ...