Hickman v. Pan-American Life Ins. Co

• Decision Date: 01 March 1937
• Docket Number: 34016
• Court: Louisiana Supreme Court
• Parties: HICKMAN et al. v. PAN-AMERICAN LIFE INS. CO

173 So. 742

186 La. 997

HICKMAN et al. v. PAN-AMERICAN LIFE INS. CO

No. 34016

Supreme Court of Louisiana

March 1, 1937

Rehearing Denied March 29, 1937

Appeal from Ninth Judicial District Court, Parish of Rapides; R. C Culpepper, Judge.

Action by Mrs. Thomas J. Hickman, curatrix, and others, against Pan-American Life Insurance Company. From a judgment for plaintiffs, defendant appeals.

Affirmed.

Hawthorn Stafford & Pitts, of Alexandria, for appellant.

Hunter & Neilson, of Alexandria, for appellees.

OPINION

O'NIELL, Chief Justice.

The question in this case is whether, under a life insurance policy providing for a total disability benefit and requiring that proof of any such disability shall be furnished before default in the payment of a subsequent premium, a failure to give the notice before default in the payment of the premium is excusable when insanity is the cause of the disability and of the failure to give the notice. The judge of the district court decided in favor of the insured. He is an interdict, confined in a state hospital for the insane, and is represented in this suit by his wife, as curatrix. The insurance company has appealed from the decision.

This is the first time the question has been put to this court. In some jurisdictions the courts have decided the question one way, and in other jurisdictions they have decided it the other way. In the case of the Mutual Life Insurance Company v. Johnson, 293 U.S. 335-340, 55 S.Ct. 154, 156, 79 L.Ed. 398, the Supreme Court of the United States gave the lineup of the decisions on each side of the question, and said, "without suggesting an independent preference either one way or the other," that the court would follow the law of the state in which the insurance policy was delivered to the insured and in which the insured resided. The District Court of the United States for the Western District of Virginia upheld the insurance company's contention, that the insanity of the insured did not excuse his failure to furnish proof of his disability, so as to give him the benefit of the stipulation waiving premiums falling due during the disability; hence the court directed a verdict for the insurance company. The Court of Appeals for the Fourth Circuit reversed the ruling and remanded the case for trial. 70 F.2d 41. The Supreme Court affirmed the judgment of the Court of Appeals, following the decision of the Supreme Court of Virginia in Swann v. Atlantic Life Insurance Co., 156 Va. 852, 159 S.E. 192. The Supreme Court of the United States cited the following additional opinions supporting the ruling of the Circuit Court of Appeals, viz.: Rhyne v. Jefferson Standard Life Insurance Co., 196 N.C. 717, 147 S.E. 6; Id., 199 N.C. 419, 154 S.E. 749; Levan v. Metropolitan Life Insurance Co., 138 S.C. 253, 136 S.E. 304; Pfeiffer v. Missouri State Life Insurance Co., 174 Ark. 783, 297 S.W. 847, 54 A.L. R. 600; Reed v. Loyal Protective Association, 154 Mich. 161, 117 N.W. 600; Marti v. Midwest Life Insurance Co., 108 Neb. 845, 189 N.W. 388, 29 A.L.R. 1507; Roseberry v. American Benevolent Ass'n, 142 Mo.App. 552, 121 S.W. 785; Metropolitan Life Insurance Co. v. Carroll, 209 Ky. 522, 273 S.W. 54; Comstock v. Fraternal Accident Association, 116 Wis. 382, 93 N.W. 22; Missouri State Life Insurance Co. v. Le Fevre (Tex.Civ.App.) 10 S.W.2d 267. Cf. Trippe v. Provident Fund Society, 140 N.Y. 23, 35 N.E. 316, 22 L.R.A. 432, 37 Am.St.Rep. 529; Insurance Companies v. Boykin, 79 U.S. 433, 12 Wall. 433, 436, 20 L.Ed. 442, 443: American Law Institute's Restatement of the Law of Contracts, No. 301, Illustration 4. And the Supreme Court of the United States gave the following list of decisions supporting the insurance company's interpretation of the contract, viz.: New England Mutual Life Insurance Co. v. Reynolds, 217 Ala. 307, 116 So. 151, 59 A.L.R. 1075; Iannarelli v. Kansas City Life Insurance Co., 114 W.Va. 88, 171 S.E. 748; Smith v. Missouri State Life Insurance Co., 134 Kan. 426, 7 P.2d 65; Berry v. Lamar Life Insurance Co., 165 Miss. 405, 142 So. 445, 145 So. 887; Western & Southern Life Insurance Co. v. Smith, 41 Ohio App. 197, 180 N.E. 749; Reynolds v. Travelers' Insurance Co., 176 Wash. 36, 28 P.2d 310; Dean v. Northwestern Mutual Life Insurance Co., 175 Ga. 321, 165 S.E. 235; Hall v. Acacia Mutual Life Association, 164 Tenn. 93, 46 S.W.2d 56; Egan v. New York Life Insurance Co. (C.C.A.5th) 67 F.2d 899. Cf. Courson v. New York Life Insurance Co., 295 Pa. 518, 145 A. 530; Whiteside v. North American Accident Insurance Co., 200 N.Y. 320, 93 N.E. 948, 35 L.R.A.(N.S.) 696.

The insurance company quotes from Bergholm v. Peoria Life Insurance Co., 284 U.S. 489, 52 S.Ct. 230, 76 L.Ed. 416, an excerpt which was quoted by the Supreme Court of Mississippi as supporting the decision in Berry v. Lamar Life Insurance Company, 165 Miss. 405, 142 So. 445, 145 So. 887, 889, viz.:

"Here the obligation of the company does not rest upon the existence of the disability; but it is the receipt by the company of proof of the disability which is definitely made a condition precedent to an assumption by it of payment of the premiums becoming due after the receipt of such proof. The provision to that effect is wholly free from the ambiguity which the court thought existed in the Marshall policy. [Minnesota Mutual Life Insurance Co. v. Marshall (C.C.A.8th) 29 F.2d 977]."

In the Bergholm Case it does not appear to have been contended that insanity was the cause of the failure of the insured to pay the premium. For that reason it was said in Mutual Life Insurance Co. v. Johnson, supra, that the decision in the Bergholm Case did not support the argument for the Mutual Life Insurance Company, thus:

"Bergholm v. Peoria L. Ins. Co., 284 U.S. 489, 52 S.Ct. 230, 76 L.Ed. 416, is not apposite; there being no evidence in that case of incapacity, physical or mental, to give the prescribed notice."

The doctrine of the Bergholm Case is simply this: That the provision in a life insurance policy that, upon receipt by the insurer of satisfactory proof that the insured is totally and permanently disabled, he will be exempted from the payment of premiums thereafter during the continuance of the disability, does not save the policy from lapsing by reason of the nonpayment of a premium falling due at a time when the disability existed unless proof thereof was furnished to the insurer. That general rule was approved by this court in Compton v. Amicable Life Insurance Co., 182 La. 991, 162 So. 751, 105 A.L.R. 1087. But the doctrine that, if insanity is the cause of the disability and of the failure to pay a premium falling due during the disability, the policy shall not lapse because of the non-payment of the premium, is an exception to the general rule, which otherwise enforces rigorously the stipulation that all premiums must be paid on or before the day stipulated.

There is no good reason why we should analyze the conflicting opinions on this question. The courts that maintain that insanity is not an excuse for a failure of a policyholder to pay a premium falling due during such disability adhere to the letter of the contract, and maintain that such an excuse cannot avail the policyholder if it is not so stipulated in the policy. The courts that hold the other way say that the parties entering into a contract of insurance providing for a total disability benefit, and requiring proof thereof to be furnished by the insured to the insurer before default in the payment of a premium, do not contemplate that the cause of the disability may be insanity, and may therefore make it utterly impossible to give the notice within the period stipulated; hence these courts maintain that it goes without saying that one of the parties to such a contract shall not be obliged to do something which providence alone has made impossible. That is the opinion of a majority of the courts; and we have decided to approve and adopt it. In the editorial note in 54 A.L.R. 611, referring to the case of Pfeiffer v. Missouri...