Hearin v. Standard Life Ins. Co.

• Decision Date: 19 October 1925
• Citation: 8 F.2d 202
• Parties: HEARIN v. STANDARD LIFE INS. CO. et al.
• Court: U.S. District Court — Eastern District of Arkansas

8 F.2d 202 (1925)

HEARIN v. STANDARD LIFE INS. CO. et al.

District Court, E. D. Arkansas, W. D.

October 19, 1925.

McMillan & McMillan, of Arkadelphia, Ark., and R. E. Wiley, of Little Rock, Ark., for plaintiff.

Carmichael & Hendricks, of Little Rock, Ark., for defendants.

TRIEBER, District Judge.

The facts, so far as necessary for the determination of the issues raised by the demurrer to parts of the answer, are:

The plaintiff, in his complaint filed June 15, 1925, seeks to recover on a life policy issued by the Standard Life Insurance Company on May 6, 1924, and at a later day assumed by its codefendant, International Life Insurance Company. It alleges that the policy contained the following provision: "This policy shall be incontestable after one year from its date for the amount due, except for nonpayment of premiums, and except for death while in military or naval service in time of war, which is a risk not assumed by the company under this policy, and except as to provisions and conditions relating to benefits in the event of total and permanent disability and those granting additional insurance specifically against death by accident, which provisions may be attached hereto by rider."

"That at the time of the institution of the action more than one year had elapsed since the policy had been delivered to the assured; that the assured died," but the complaint fails to state the date of his death. From the answer it appears that his death occurred on February 28, 1925, which, on the hearing of the demurrer, was admitted by counsel for plaintiff to be true; that the plaintiff complied with the terms of the policy in all respects as to notice and proof of death, but defendants refused to pay the amounts provided in the policy, denying all liability. It fails to state the date this refusal and denial of liability was made, or the reason for the denial of liability. A copy of the policy is filed with the complaint and made a part thereof.

The answer, so far as material to the demurrer, pleaded that: "That policy, in bold type on the first page thereof, provides, `This policy is subject to the privileges and conditions recited on the subsequent pages hereof;' and the second page contains the following provision: `Self-destruction, sane or insane, within one year from the date of this policy, is a risk not assumed by the company under this policy. In such event the company will return the premiums actually received.' And this defendant states the facts to be that on or about the 28th day of February, 1925, and before the year expired, the said Henry Clay Robbs (called H. C. Robbs and H. C. `Buster' Robbs) committed suicide by shooting himself with a gun, which caused his death. That the cause of his death was self-destruction, and it occurred within one year from the date of the policy, and is a risk not assumed by the company under the policy. That the premiums paid were tendered to the proper party and said tender was refused. Therefore this defendant pleads self-destruction within the period of one year from the date of the policy as a full and complete defense to any liability upon said policy."

Counsel for demurrant rely on two grounds to sustain the demurrer: First, that, as the incontestability clause in the face of the policy does not exempt suicide from liability, the condition as to suicide on the second page of the policy is inoperative; second, if it is operative, it does not constitute a defense, no proceeding to cancel the policy having been instituted within one year from the date of the policy.

I. It will serve no useful purpose to cite the numerous authorities to sustain the following well settled principles of law. It is sufficient to refer to Hawkeye Commercial Men's Association v. Christy (C. C. A.) 294 F. 208, 213, and St. Paul Fire & Marine Ins. Co. v. Ruddy, 299 F. 189, decided by the Circuit Court of Appeals for this Circuit, that, policies of insurance must be construed as other contracts and only if a provision is ambiguous will it be construed most favorably to the assured. As held in the Hawkeye Commercial Men's Association Case, supra:

"The parties to insurance contracts have the right and power to contract for what accidents and risks the companies shall and for what accidents and risks they shall not be liable and the courts may not make new or different contracts for them. The function and duty of the courts consist simply in enforcing and carrying out the contract actually made by the parties. Imperial Fire Ins. Co. v. Coös County, 151 U. S. 452, 462, 14 S. Ct. 379, 38 L. Ed. 231. The natural, obvious meaning of the provisions of a contract should be preferred to any curious, hidden sense which nothing but the exigency of a hard case and the ingenuity of a trained and acute mind would discover. Delaware Ins. Co. v. Greer, 120 F. 916, 921, 57 C. C. A. 188, 61 L. R. A. 137; Standard Life & Accident Ins. Co. v. McNulty, 157 F. 224, 226, 85 C. C. A. 22. The reasonable and probable meaning of a stipulation in an agreement should be preferred to one that is irrational and improbable. Pressed Steel Car Co. v. Eastern Railway Co. of Minnesota, 121 F. 609, 611, 57 C. C. A. 635."

It is equally well settled that in construing a contract or policy of insurance every part of it must be considered, and the contract construed as a whole. Green County v. Quinlan, 211 U. S. 582, 594, 29 S. Ct. 162, 53 L. Ed. 335; United States v. Ansonia Brass, etc., Co., 218 U. S. 452, 467, 31 S. Ct. 49, 54 L. Ed. 1107; Mutual Life Insurance Co. v. Kelly, 114 F. 268, 279, 52 C. C. A. 154 (C. C. A. 8th); National Life Insurance Co. v. Gregg, 168 Ark. ___, 269 S. W. 62; 13 C. J. p. 525; 32 C. J. p. 1148.

In the Gregg Case the Supreme Court of Arkansas, in which a similar question was in issue, aptly held: "Our conclusion is that this contention is not well founded, for the various clauses of the policy are to be read together, and clause F is a clear and unambiguous stipulation against liability where an injury results from either of the causes mentioned therein. The several clauses can be read together in harmony, and it is our duty to do so and give full effect to all of the clauses of the policy to the extent that they are harmonious."

In Mutual Life Ins. Co. v. Kelly, supra, the trial court, in 109 F. 56, 57, had held that: "The provisions on the back of the policy have no bearing on the case at bar, unless it be the one which provides that the policy is not contestable after two years. The entire defense consists in the recital of the policy that the consideration thereof is the application, and which is made a part of the policy as above recited, and a clause of the application to which I will presently refer."

This the Circuit Court of Appeals held to be error, saying: "Accordingly, treating the application and all its terms and provisions as a part of each contract entered into between the insurance company and Kelly, what does it mean? In answering this question there does not seem to be any necessity for resort to technical distinctions between representations and warranties or affirmative or promissory warranties. The cardinal rule to be observed in construing all contracts is to determine, from a consideration of the four corners of the instrument or instruments creating it, what was the intention of the parties to the same. Insurance Co. v. Gridley, 100 U. S. 614, 615, 25 L. Ed. 746; Long v. Timms, 107 Mo. 512, 519, 17 S. W. 898. Subjecting the contracts in question to this test, it is very apparent, as we have already indicated in disposing of other branches of the case, that the death of Kelly by suicide at any time within two years after the date of the policy, whether sane or insane, was not a risk assumed by the insurer at all."

The facts in that case were stronger against the insurer than those in the instant case, as the condition against liability for suicide was not in the policy, as in the case at bar, but only in the application for the policy, which was made a part of the policy and was a part of the warranties containing other exemptions of liability.

Nor does the fact that the suicide condition is on the back and not on the face of the policy make any difference, as was held in Iowa Life Ins. Co. v. Lewis, 187 U. S. 335, 23 S. Ct. 126, 47 L. Ed. 204. The facts in that case were:

The policy on the back contained the provision that "It shall not go into effect until the premium hereunder * * * shall have been actually paid during the lifetime and continuance in good health of the insured. Upon payment of the premium there shall be delivered a receipt, signed by the president or secretary, and countersigned by an authorized agent." The insured paid the first premium on March 4, 1899, by a note due six months after date. The policy and a receipt for the premium were delivered to the assured on March 18, 1899. The receipt contained the following: "Read the notice to policy holders on the back of this receipt."

On the back of the receipt was, among other provisions, the following: "Notice to Policy Holders. If note be given for the payment of the premium hereon or any part thereof, and same is not paid at maturity, the said policy shall cease and determine."

The company retained the note, which its agent had sent it. The note was not paid at maturity, but on September 29, 1899, when very sick,...