Federal Life Insurance Company v. Kerr

• Decision Date: 15 October 1909
• Docket Number: 21,551
• Citation: 89 N.E. 398,173 Ind. 613
• Parties: Federal Life Insurance Company v. Kerr
• Court: Indiana Supreme Court

89 N.E. 398

173 Ind. 613

Federal Life Insurance Company v. Kerr

No. 21,551

Supreme Court of Indiana

October 15, 1909

Rehearing Denied March 16, 1910, Reported at: 173 Ind. 613 at 628.

From Dubois Circuit Court; E. A. Ely, Judge.

Action by William R. Kerr against the Federal Life Insurance Company. From a judgment for plaintiff, defendant appeals. Transferred from Appellate Court under § 1394 Burns 1908, subd. 2, Acts 1901, p. 565, § 10.

Affirmed.

C. A Atkinson, J. W. Wilson, L. A. Whitcomb, D. D. Corn and A. C Harris, for appellant.

E. P. Richardson and A. H. Taylor, for appellee.

OPINION

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, § 4739 et seq. Burns 1908), issued a policy of insurance for $ 1,000 on 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 Life Insurance Company, under the provisions of § 4753, supra, for the transfer by the latter to the former of all its property, assets and risks, the consideration being the conditional assumption of the obligations of the Model Life Insurance Company. Appellant then issued what is called a policy of reinsurance, as follows:

"Incorporated Under the Laws of Illinois. Federal Life Insurance Company.

Number 6,103. Amount, $ 1,000.

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. 3,251, of the Model Life Insurance Company of Indiana, and subject to all the provisions of the contract of reinsurance between said Model Life Insurance Company and this company, dated March 12, 1904, and constitutes policy 6,103 of the Federal Life Insurance Company, of Chicago, Illinois. Whereas, said Federal Life Insurance Company 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 said certificate to which it is attached, constitute the holder thereof a policy-holder of said Federal Life Insurance Company; and 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 said Federal Life Insurance Company, as provided in 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 said Model Life Insurance Company is necessary, in order to bind said Federal Life Insurance Company to the payment of the same, subject to the provisions hereof, and of 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 said policy-holder. In witness whereof, 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 ten days intervened, during which any certificate holder might elect to be transferred to some other company, under § 4753, supra. The insured died 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 an exception reserved. The sufficiency of the complaint is vigorously challenged, on the ground that the transfer and the so-called reinsurance contract are so referred to in the agreement denominated the new policy as to become a part of it, to the extent that it must be 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. One line holds that where one instrument refers to another which is necessary to its construction, or defines the conditions of rights claimed under it, or depends for its validity upon conditions expressed in another instrument, said instruments, when made the basis of a pleading, must be set out by copy or in the original. For this line of cases see Carnahan v. Campbell (1902), 158 Ind. 226; Landon v. White (1885), 101 Ind. 249; Potts v. Hartman (1885), 101 Ind. 359; Borchus v. Huntington Bldg., etc., Assn. (1884), 97 Ind. 180; Wilson v. Wilson (1882), 86 Ind. 472; Busch v. Columbia City, etc., Sav. Assn. (1881), 75 Ind. 348; Titlow v. Hubbard (1878), 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. For cases of this class, see Bird v. St. John's Episcopal Church (1900), 154 Ind. 138, 56 N.E. 129; Phoenix Ins. Co. v. Stark (1889), 120 Ind. 444, 22 N.E. 413; Penn Mut. Life Ins. Co. v. Wiler (1885), 100 Ind. 92, 50 Am. Rep. 769; Anderson Bldg., etc., Assn. v. Thompson (1882), 88 Ind. 405, 410; Wilson v. Wilson, supra; Continental Life Ins. Co. v. Kessler (1882), 84 Ind. 310; Cassaday v. American Ins. Co. (1880), 72 Ind. 95; Mutual Benefit Life Ins. Co. v. Cannon (1874), 48 Ind. 264; Commonwealth Ins. Co. v. Monninger (1862), 18 Ind. 352; Buckeye Mfg. Co. v. Woolley, etc., Machine Works (1900), 26 Ind.App. 7, 58 N.E. 1069; Indiana Farmers', etc., Ins. Co. v. Byrkett (1884), 9 Ind.App. 443, 36 N.E. 779; Evansville, etc., R. Co. v. Frank (1891), 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 such contracts are carefully prepared by the companies themselves, their effect carefully weighed, and the parties do not deal upon an equal footing in fact. They should be liberally construed in behalf of the insured, so as 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-American Ins. Co. v. Yeagley (1904), 163 Ind. 651, 71 N.E. 897; Rogers v. Phenix Ins. Co. (1890), 121 Ind. 570, 23 N.E. 498; Penn Mut. Life Ins. Co. v. Wiler, supra; Grant v. Lexington Fire, etc., Ins. Co. (1854), 5 Ind. 23, 61 Am. Dec. 74; Union Life Ins. Co. v. Jameson (1903), 31 Ind.App. 28, 67 N.E. 199; Hanover Fire Ins. Co. v. Dole (1898), 20 Ind.App. 333, 50 N.E. 772; Union Cent. Life Ins. Co. v. Jones (1897), 17 Ind.App. 592, 47 N.E. 342; State Nat. Bank v. United States Life Ins. Co. (1909), 238 Ill. 148, 87 N.E. 396; Iowa Life Ins. Co. v. Haughton (-----), (Ind. App.), 46 Ind.App. 467, 87 N.E. 702; Aetna Ins. Co. v. Strout (1896), 16 Ind.App. 160, 44 N.E. 934; Reynolds v. Commerce Fire Ins. Co. (1872), 47 N.Y. 597; Foot v. Aetna Life Ins. Co. (1875), 4 Ins. L. J. 260; Supreme Tent, etc., v. Ethridge (1909), 43 Ind.App. 475, 87 N.E. 1049.

Appellant is in no situation to raise the question upon the complaint. The certificate, while referring to another instrument for the conditions of its issuance, specifically provides that it "constitutes policy 6,103" of appellant company, and "this policy and 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." 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 Life, etc., Ins. Co. v. Martin (1893), 133 Ind. 376, 33 N.E. 105; Rogers v. Phenix Ins. Co., supra; Penn Mut. Life Ins. Co. v. Wiler, supra; Thompson v. Phenix Ins. Co. (1890), 136 U.S. 287, 10 S.Ct. 1019, 34 L.Ed. 408; Imperial Fire Ins. Co. v. Coos County (1894), 151 U.S. 452, 14 S.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. That 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. The risks are not to be discriminated against by special...