Fed. Life Ins. Co. v. Kerr

• Court: Indiana Supreme Court
• Writing for the Court: MYERS
• Citation: Fed. Life Ins. Co. v. Kerr, 173 Ind. 613, 89 N.E. 398 (Ind. 1909)
• Decision Date: 15 October 1909
• Docket Number: No. 21,551.,21,551.
• Parties: FEDERAL LIFE INS. CO. v. KERR.

173 Ind. 613

89 N.E. 398

FEDERAL LIFE INS. CO.

v.KERR.

No. 21,551.

Supreme Court of Indiana.

Oct. 15, 1909.

Appeal from Circuit Court, Dubois County; E. A. Ely, Judge.

Action by William R. Kerr against the Federal Life Insurance Company. Judgment for plaintiff. Defendant appeals. Affirmed.

See, also, 82 N. E. 943;85 N. E. 796.

A. C. Harris, C. A. Atkinson, J. W. Wilson, H. H. Corn, and L. A. Whitcomb, for appellant. E. P. Richardson and A. H. Taylor, for appellee.

MYERS, J.

The Model Life Insurance Company, a mutual company organized under an act of the General Assembly of March 9, 1897 (Acts 1897, p. 318; Burns' Ann. St. 1908, § 4739 and following), issued a policy of insurance for $1,000 upon the life of Clara A. Kerr, dated March 4, 1902; appellee herein, her husband, being named as beneficiary. On March 12, 1904, appellant herein entered into a written contract with the Model Company, under the provisions of section 4753, Burns' Ann. St. 1908, for the transfer by the latter to the former of all its property, and assets, and risks, the consideration being the conditional assumption of the obligations of the Model Company. Appellee then issued what is called a policy of reinsurance as follows:

“Incorporated under the laws of Illinois.

“Federal Life Insurance Company.

“Number 6103 Amount, $1000.00

“Chicago.

“This policy of reinsurance is issued to Clara Kerr, of Algiers, county of Pike, state of Indiana, to be attached to certificate or policy No. 3251, of the Model Life Insurance Company of Indiana, and subject to all the provisions of the contract of reinsurance between the said Model Life Insurance Company and this company, dated March 12, 1904, constitutes policy 6103 of the Federal Life Insurance Company, of Chicago, Illinois. Whereas, the said Federal Life Insurance does hereby assume the foregoing certificate or policy of said, the Model Life Insurance Company, in accordance with the terms of said reinsurance contract: Now, therefore, this policy and the said certificate to which it is attached, constitute the holder thereof a policy holder of the said Federal Life Insurance Company; and the said Federal Life Insurance Company hereby assumes, and guarantees any obligation, or indebtedness which may hereafter be established on account of such original policy, or certificate, subject to the terms and conditions hereof, and of said reinsurance contract; provided, that all premiums or assessments required to maintain such policy or certificate in force, shall be paid to the said Federal Life Insurance Company, as provided in the said original policy, or certificate of said reinsurance contract. No change of policy, or certificate, further than the attachment of this reinsurance policy to said policy or certificate of the said, the Model Life Insurance Company is necessary, in order to bind the said Federal Life Insurance Company to the payment of the same, subject to the provisions hereof, and of the said reinsurance contract. The receipt and retention of this reinsurance policy by the policy holder above named, shall operate as a ratification of the obligation hereby assumed by the Federal Life Insurance Company, and as an acceptance of the terms hereof, by the said policy holder. In witness whereof, the said Federal Life Insurance Company has caused these presents to be signed by its president and assistant secretary, at the city of Chicago, state of Illinois, this 12th, day of March, 1904.

“W. E. Brimstin, Asst. Sec.

“Isaac Miller Hamilton, Pres.”

This certificate is dated the same day as the contract of transfer and reinsurance, though manifestly not executed on that date, because it must be presumed that the statutory period of 10 days intervened during which any certificate holder might elect to be transferred to some other company, under section 4753. The insured deceased December 8, 1904. Appellee set out in his complaint the original certificate and the certificate of appellant. A demurrer for want of facts was addressed to this complaint and overruled and exception reserved. The sufficiency of the complaint is vigorously challenged, on the ground that the transfer and so-called reinsurance contract is so referred to in the agreement denominated the “new policy” as to become part of it, to the extent that it must be copied or made an exhibit of the complaint under our Code, requiring written instruments or copies thereof, upon which “any pleading is founded,” to be filed with the pleading.

There are two distinct lines of cases in this state involved in this contention. On the one hand, a line holding that where one instrument refers to another which is necessary to its construction, or as defining the conditions of rights claimed under it, or as depending for its validity upon conditions expressed in another instrument, both, or more, instruments, when either is made the basis of a pleading, must be set out by copy, or in the original. Of this line of cases are: Carnahan v. Campbell, 158 Ind. 226, 63 N. E. 384;Landon v. White, 101 Ind. 249;Potts v. Hartman, 101 Ind. 359;Borchus v. Huntington, etc., Assoc., 97 Ind. 180;Wilson v. Wilson, 86 Ind. 472;Busch v. Columbia City, etc., Assoc., 75 Ind. 348;Titlow v. Hubbard, 63 Ind. 6. Another line of cases is that presented under building contracts, building and loan association notes, and contracts of insurance, under which it is held that collateral instruments, referred to in the instrument pleaded, or as inducements to contracts or agreements which, though referring to other instruments, are complete in themselves, need not be copied, filed, or exhibited. Of such are applications for insurance, specifications for buildings and machinery, and the like, and of these cases are: Bird v. St. John's Church, 154 Ind. 138, 56 N. E. 129;Phœenix, etc., Co. v. Stark, 120 Ind. 444, 22 N. E. 413;Penn Mut., etc., Co. v. Wiler, 100 Ind. 92, 50 Am. Rep. 769;Anderson Assoc. v. Thompson, 88 Ind. 410;Wilson v. Wilson, 86 Ind. 472;Continental, etc., Co. v. Kessler, 84 Ind. 310;Cassaday v. American, etc., Co., 72 Ind. 95;Mutual, etc., Co. v. Cannon, 48 Ind. 265;Commonwealth, etc., Co. v. Monninger, 18 Ind. 352;Buckeye, etc., Co. v. Wooley, 26 Ind. App. 7, 58 N. E. 1069;Indiana, etc., Co. v. Byrkett, 9 Ind. App. 443, 36 N. E. 779;Evansville, etc., Co. v. Frank, 3 Ind. App. 96, 29 N. E. 419. The distinction between these two lines of cases may not be at once apparent, in view of the general doctrine that practically all kinds of contracts are to be construed according to the same rules, but there is a distinction in practice, with respect to insurance contracts, in that, where they are doubtful or equivocal, they will be construed against insurance companies, based upon the theory that they are carefully prepared by the companies themselves, their effect carefully weighed, and the parties do not deal upon an equal footing in fact, and should be liberally construed in behalf of the insured, with a view to effectuate their purpose, and doubts are to be solved in favor of the insured, and that strict construction will be invoked against forfeitures. German, etc., Co. v. Yeagley, 163 Ind. 651, 71 N. E. 897;Rogers v. Phenix Co., 121 Ind. 570, 23 N. E. 498;Penn Mut. Co. v. Wiler, 100 Ind. 92, 50 Am. Rep. 769;Grant v. Lexington Co., 5 Ind. 23, 61 Am. Dec. 74;Union Life Co. v. Jameson, 31 Ind. App. 28, 67 N. E. 199;Hanover, etc., Co. v. Dole, 20 Ind. App. 333, 50 N. E. 772;Union, etc., Co. v. Jones, 17 Ind. App. 592, 47 N. E. 342;State Bk. v. U. S. & C. Co. (Ill. 1909) 87 N. E. 396;Iowa, etc., Co. v. Haughtan (Ind. App. 1909) 87 N. E. 702; Ætna, etc., Co. v. Strout, 16 Ind. App. 160, 44 N. E. 934;Reynolds v. Commerce Co., 47 N. Y. 604; Foot v. Ætna Life, etc., Co., 4 Ins. L. J. 260; Supreme Tent, etc., Co. v. Ethridge (Ind. App. 1909) 87 N. E. 1049.

Appellant is in no situation to raise the question upon the complaint. The certificate, whilst referring to another instrument for the conditions of its issuance, specifically provides that it “constitutes policy 6103” of appellant company, and “this policy, and the said certificate to which it is attached constitute the holder thereof a policy holder,” etc., and “no change of policy or certificate further than the attachment *** is necessary,” and the conditions of the reinsurance bear a very close analogy to applications for insurance; at least the certificate is so equivocal in character that the doubt ought to be resolved against the insurer, under the well-established rule that where the contract is capable of two constructions, the one most favorable to the insured shall be adopted. It is in fact treated in the answers as the reinsurance policy. Standard, etc., Co. v. Martin, 133 Ind. 376, 33 N. E. 105;Rogers v. Phenix, etc., Co., 121 Ind. 570, 23 N. E. 498; Penn Mut. Co. v. Wiler, supra. Thompson v. Phenix Co., 136 U. S. 287, 10 Sup. Ct. 1019, 34 L. Ed. 408;Imperial, etc., Co. v. Coos County, 151 U. S. 452, 14 Sup. Ct. 379, 38 L. Ed. 231.

The statute under which the transfer is authorized and was made is a public law, and must be regarded as entering into the contract itself, and that the statute, for reasons which appear in the discussion of the answers, contemplates the transfer of all the risks as they stand related to the original insurer at the time of the transfer, and the risks are not to be discriminated against by special contracts, which, if they can be made without restriction, can be made to destroy; and, whatever force the so-called reinsurance contract may have, if it has any, beyond the assumption of liability, one of the obligations assumed by the reinsurer is that which the former contract and law imposes, and the certificate is the written evidence of that obligation, and the so-called reinsurance contract itself is immaterial, and is not the basis of the action, and need not be set out or exhibited in the complaint, or its absence accounted for, and whatever, if any, force it may have is...