Johnson v. Mutual Life Ins. Co.

• Decision Date: 03 April 1934
• Docket Number: No. 3575.,3575.
• Citation: 70 F.2d 41
• Parties: JOHNSON v. MUTUAL LIFE INS. CO. OF NEW YORK.
• Court: U.S. Court of Appeals — Fourth Circuit

70 F.2d 41 (1934)

JOHNSON v. MUTUAL LIFE INS. CO. OF NEW YORK.

No. 3575.

Circuit Court of Appeals, Fourth Circuit.

April 3, 1934.

John S. Barbour, of Fairfax, Va., and Burnett Miller, of Culpeper, Va. (W. F. Moffett, of Washington, Va., on the brief), for appellant.

James C. Martin and Earl L. Abbott, both of Roanoke, Va. (Frederick L. Allen, of New York City, and Martin & Abbott, of Roanoke, Va., on the brief), for appellee.

Before PARKER and SOPER, Circuit Judges, and BAKER, District Judge.

SOPER, Circuit Judge.

This is a suit to recover upon a policy of life insurance in the amount of $4,500, with disability benefits, issued on May 16, 1930, to Benjamin F. Cooksey, the insured, and made payable to his estate. The insured died of acute nephritis, or Bright's disease, on January 20, 1932, and the action was brought by his administrator and removed to the District Court. At the close of the plaintiff's evidence a verdict was directed for the defendant, and plaintiff has taken this appeal.

The ground upon which the case was taken from the jury was that the policy had lapsed on December 17, 1931, at the expiration of a grace period of 31 days, by reason of the failure of the insured to pay the quarterly premium which fell due November 16, 1931. The evidence of the plaintiff tended to show that the disease from which the insured suffered had developed gradually during the fall months, and had reached a stage rendering him totally and permanently disabled by December 14, 1931, when he was put to bed, to remain there until his death. These circumstances, the plaintiff contended, brought into operation a provision of the policy waiving premiums in the event that due proof should be furnished to the company, while no premium was in default, that the insured was totally and permanently disabled. It was urged that the occurrence of the disability was the sole condition required to be satisfied before the expiration of the period of grace, and that proof thereof, which was not in fact furnished during the lifetime of the insured, might properly be furnished within a reasonable time after default. An alternative contention was also made that, from the time that the disability was established, the mental condition of the insured was such, as a result of uremic poisoning induced by the disease, that he was incapable of furnishing the proof, and therefore the failure to comply with the condition prior to default was excused. These contentions, which were rejected by the District Court, present the principal questions to be considered.

On the first question, the relevant provisions of the policy are as follows: Upon the face of the policy it was provided that "* * * if the insured is totally and permanently disabled before age 60, (the company) will pay to the insured forty-five dollars monthly during such disability, increasing after five and ten years' continuous disability, besides waiving premium payments, all upon the conditions set forth in Section 3." Section 3 provides:

"If, before attaining the age of sixty years, and while no premium on this policy is in default, the insured shall furnish to the company due proof that he is totally and permanently disabled, * * * the company will grant the following benefits during the remaining lifetime of the insured so long as such disability continues."

"Benefits. (a) * * * The company will pay a monthly income to the insured of the amount stated on the first page hereof * * * beginning upon receipt of due proof of such disability. * * *"

"(b) Waiver of Premium. The company will also, after receipt of such due proof, waive payment of each premium as it thereafter becomes due during such disability."

The plaintiff relied, in the District Court and in this court on appeal, upon the case of Minnesota Mut. Life Ins. Co. v. Marshall (C. C. A.) 29 F.(2d) 977; but the pending case is ruled on this point by the decision of the Supreme Court in Bergholm v. Peoria Life Ins. Co., 284 U. S. 489, 52 S. Ct. 230, 76 L. Ed. 416. In the latter case the policy provisions were substantially similar to those in the case at bar, and the evidence showed a permanent and total disability before the premium became in arrears and also a failure to furnish proof thereof prior to the insured's death. The court rejected an argument, advanced to show liability under the policy, based on Minnesota Mut. Life Ins. Co. v. Marshall, supra, in these words (pages 491, 492 of 284 U. S., 52 S. Ct. 230, 231):

"The pertinent provisions of the policy there, however, differ from those found in the policy here under consideration. There the policy provided that if the insured, while the policy is in force and before default in payment of premiums, `shall become totally and permanently disabled * * * and shall furnish satisfactory proof thereof, the Company will waive the payment of premiums thereafter becoming due,' and that `upon the receipt of due proof of total and permanent disabilities * * * the Company will waive the payment of all premiums thereafter becoming due.' The court held that the waiver took effect at the time of the disability, and did not depend upon the time when proof thereof was furnished.

"We do not need to controvert this construction of the words quoted, or question the soundness of the view of the court that the existence of the disability before the premium became in arrears, standing alone, was enough to create the waiver. In that view, the obligation to furnish proof was no part of the condition precedent to the waiver; but such proof might be furnished within a reasonable time thereafter. 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. * * *"

The distinction thus pointed out, between the Bergholm and Marshall Cases, serves equally to differentiate the latter from the case at bar, for the language of the policy here is equally free from ambiguity, if, indeed, it is not more strongly in favor of the insurer than that in the Bergholm Case. It is agreed that, "If * * * while no premium on this policy is in default, the insured shall furnish to the company due proof that he is totally and permanently disabled * * *" the company will "* * * after receipt of such due proof, waive payment of each premium as it thereafter becomes due during such disability." It could not be more plain that the furnishing of proof was intended to be a part of the condition precedent, or that the condition as a whole was in terms required to be performed before any premium should be in default. The Circuit Court of Appeals for the Eighth Circuit, which decided the Marshall Case, has itself distinguished the form of expression there employed from one very similar to that involved in the present case. See Orr v. Mutual Life Ins. Co. of New York (C. C. A.) 64 F.(2d) 561. The language of the provision here compels the conclusion that proof of disability must be furnished before default as a condition precedent to the waiver of premiums.

Reference to other provisions of the policy, in aid of the construction for which plaintiff contends, is similarly without avail. The argument is made that the waiver of premiums is controlled by the broad language on the face of the...