Iannarelli v. Kan. City Life Ins. Co.

• Decision Date: 26 September 1933
• Docket Number: (No. 7549)
• Citation: 114 W.Va. 88
• Court: West Virginia Supreme Court
• Parties: Enrico Iannarelli, Committee, et al. v. Kansas City LifeInsurance Company

114 W.Va. 88

Enrico Iannarelli, Committee, et al.

v. Kansas City LifeInsurance Company

(No. 7549)

Supreme Court of Appeals of West Virginia.

Submitted September 12, 1933.

Decided September 26, 1933

(Rehearing denied December 11, 1933)

1. Insurance-

Contracts of life insurance, as other contracts, will be construed according to the plain meaning of the terms employed by the parties.

2. Insurance

Under the provisions of a life insurance policy waiving payment of premiums during total disability of insured upon receipt by the insurer of proof of the disability, the receipt of such proof before the policy lapses is, condition precedent to a waiver of premiums, and insanity of the insured at the time of such lapse will not excuse failure to furnish such proof.

Appeal from Circuit Court, Kanawha County.

Suit by Enrico Iannarelli, committee, and others, against the Kansas City Life Insurance Company. From an adverse decree, the defendant appeals.

Reversed and rendered.

Price, Smith & Spilman and A. B. Hodges, for appellant. M. H. Bowyer and E. B. Dyer, for appellees.

Maxwell, President:

Plaintiff, as committee, prevailed in the trial court in seeking to have a life insurance policy declared to be in full force and effect, the insured restored to all rights and benefits thereunder, and to require the defendant to keep the policy in force without further payment of premiums during insured's disability. An appeal was awarded the defendant.

The defendant cancelled the policy because the second annual premium had not been paid within the period of grace provided for in the policy. Insured was adjudged insane before the second annual premium became due and payable and while so incapacitated the period of grace expired.

The policy was dated July 11, 1927, "he premium for one year being paid in advance. October 19, 1927, the insured was adjudged insane and The Beckley National Bank appointed as committee for him. He was admitted to a hospital for the insane October 26th following. He was discharged five days later, as "improved". February 16, 1928, he was re-committed to the hospital and remained there until September 3, 1928, when he was sent to his home in Italy, unimproved. The bank resigned as committee in July, 1928, and plaintiff, Italian consul, was appointed and qualified as his committee.

Plaintiff testified that he did not learn of the existence of the policy of insurance until August 15, 1928, four days after the period of grace had expired. This information was contained in a letter from defendant to the insured, dated August 8, 1928, addressed to him at Beelick Knob, his home, which would have advised him that the period of grace was about to expire; and was forwarded to The Beckley National Bank and by it to the plaintiff. August 17th, plaintiff wrote to defendant stating that insured had been adjudged insane, asking for a photostatic copy of the policy of insurance and requesting blanks on which to make application for reinstatement of the policy. Defendant had received no information of insured's disability prior to this time.

The policy contained this provision, known as a "total disability" clause:

"Upon receipt, at the Home Office of the Company, of due proof, upon blanks furnished by the Company for that purpose, that, after the payment of the first annual premium upon this policy, and before default in the payment of any subsequent premium, and while this policy is in force, and before the insured has attained the age of sixty-five years, the insured has become and is totally and permanently disabled by bodily injury or disease, except as hereinafter provided, and will be continuously and wholly prevented thereby for life from engaging in any occupation, employment or work for wages, gain or profit, and that such permanent and total disability has existed during the preceding period of thirty days, the Company will waive the payment of any subsequent premiums on this policy which fall due during the continuance of such total and permanent disability. ''

It is the contention of the plaintiff, inasmuch as insured could not furnish the proof provided for in the policy because of his disability, and the plaintiff did not know of the existence of the policy before the period of grace for the payment of the second annual premium expired, that, under such circumstances, proof could be furnished within a reasonable time after expiration of the grace period; that the furnishing of such proof is a condition subsequent.

Defendant contends that receipt by it of proof of disability is a condition precedent to waiving the payment of subsequent premiums on the policy which fall clue within the period of such total and permanent disability.

As to whether the giving of notice to an insurance company by an insured or someone for him of the disability of the insured, within the meaning of an insurance contractual provision such as is here involved, is a condition precedent or subsequent, the courts differ widely. The claim is made for each of the views that it is supported by the weight of authority. For example, in the case of Bhyne v. Ins. Co., (N. C.) 154 S. E. 749, wherein support is given to the theory that the furnishing of proof of disability is a condition subsequent, it is opined that such position rests upon a solid legal foundation, and is in accordance with the weight of authority. On the other hand, in the case of Egan v. Life Ins. Co., 60 Fed. (2d) 268, wherein the giving of notice of disability is declared to be a condition precedent to the fixing of liability under the policy, the court said that such conclusion was supported by the overwehlming weight of authority. The subject stands res integra in this jurisdiction.

As we understand the cases, the main reason advanced by the courts which maintain the "condition subsequent" position is that it would be unreasonable to require an insured to furnish proof of disability if because of such disability he were rendered incapable of furnishing: he proof of or giving notice to the company of his condition. This view is adopted by the courts of last resort of quite a number of our states. Some of the cases in this line are: Swann v. Atlantic Life Ins. Co., 159 S. E. (Va.) 192, reported subsequently 168 S. E. 423; Minnesota Ins. Co. v. Marshall, 29 Fed. (2d) 977; Bhyne v. Life his. Co., supra; Pfeiffer v. Life Ins. Co., 174 Ark, 783, 297 S. W. 847; Marti v. Life Ins. Co., 108 Neb. 845, 189 N. W. 388; Metropolitan Life Ins. Co. v. Carroll, (Ky.) 273 S. W. 54; Missouri State Life Ins. Co. v. LeFevre, (Texas) 10 S. W. (2d) 267; Southern Life Ins. Co. v. Hazard, (Ky.) 146 S. W. 1107.

With the greatest deference to the learning and high authority of the courts which adopt the holding that the giving of notice or the furnishing of proof of disability is a condition subsequent, we are of opinion that in reaching such conclusion the contract between the insurer and the insured has sometimes been relegated to a position of secondary importance instead of there being accorded to it the primary im- portance to which it is entitled. This line of cases discloses two characteristics: (1) "Total disability" clauses are held to be ambiguous and a construction is adopted most favorable to the insured. Illustrative: Minn. Mu. Life Ins. Co. v. Marshall, 29 Fed. (2d) 977. (2) Cases arising from accident insurance contracts are relied on to sustain the proposition that the giving of notice of disability is a condition subsequent. Rhyne v. Jefferson Standard Life Ins. Co., (N. C.) 147 S. E. 6; Levanv. Metropolitan Life Ins. Co., (S. C.) 136 S. E. 304. The reasons which support the "condition subsequent" rule of the accident cases do not apply to the 11 total disability'1 clause of a life insurance policy. The distinction is succinctly pointed out in the case of New England Mut. Life Ins. Co. v. Reynolds, (Ala.) 116 So. 151, 153, wherein the court said: "We think there is a manifest distinction between that class of cases and this. In such accident cases, the provision is in the nature of a condition subsequent wherein the insurer defends against a liability already accrued. In this case the beneficiary relies upon the waiver clause to keep the policy alive, to excuse the payment of premiums. The disability set up in accident cases is usually the result of the injury insured against. Here there is no insurance against disability, physical or mental."

The policy in suit contains this provision: "Upon failure to pay a premium on or before the date when due, this Policy will become null and void without any action or notice by the Company, and all rights shall be forfeited to the Company, except as hereinafter provided." There is a provision for thirty-one days grace. Also there are certain non-forfeiture and loan features applicable after the payment of premiums for three or more full years. The "total disability" clause above quoted is also to be considered under the above phrase "except as hereinafter provided."

Insanity or incapacitating sickness of the insured will not excuse the payment of premium when due nor relieve...