Kahn v. Cont'l Cas. Co.

• Decision Date: 14 February 1945
• Docket Number: Gen. No. 42799.
• Citation: 325 Ill.App. 1,59 N.E.2d 524
• Parties: KAHN v. CONTINENTAL CASUALTY CO.
• Court: United States Appellate Court of Illinois

325 Ill.App. 1

59 N.E.2d 524

KAHN

v.CONTINENTAL CASUALTY CO.

Gen. No. 42799.

Appellate Court of Illinois, First District, Third Division.

Feb. 14, 1945.

Appeal from Superior Court, Cook County; John F. Bolton, Judge.

Suit by Nat M. Kahn against the Continental Casualty Company to compel defendant to reinstate a lapsed noncancellable health and accident insurance policy contending that policy had not lapsed, but that if it had lapsed, defendant acted unreasonably, arbitrarily and capriciously in refusing to reinstate it. From a decree in favor of plaintiff, defendant appeals.

Decree reversed and cause remanded with directions.Taylor, Miller, Busch & Boyden, of Chicago (James J. Magner and Dallas I. Kephart, both of Chicago, of counsel), for appellant.

Nat M. Kahn, of Chicago, pro se.

BURKE, Presiding Justice.

The Continental Casualty Company, a corporation, defendant, appeals from a decree of the Superior Court of Cook County in favor of Nat M. Kahn, plaintiff, which held that on payment of all accrued premiums, defendant should reinstate plaintiff's lapsed noncancellable health and accident insurance policy. The case was heard by the chancellor.

Plaintiff is an attorney and has practiced his profession in Chicago continuously since 1916. He has a good practice and bears a good reputation. He believed in providing for himself and his family by building up an adequate insurance program and this included the protection he would have in the event he should become completely disabled before he reached the age of 61 years. On May 15, 1923, following the submission and consideration of the conventional written application and a medical examination, defendant issued to plaintiff its noncancellable accident and health income policy No. C-100697. This policy was good for a term of one year from its date. The insured had the right to renew the policy from year to year by the payment of an annual premium of $172.00 on or before May 15th, or within a 31 days grace period thereafter. Unless so renewed each year, the policy would automatically come to an end, subject to the operation of the ‘Reinstatement Clause.’ This was a noncancellable health and accident policy and derives its name from the fact that it reserves no right to the Company to cancel the policy for reasons deemed sufficient by the Company. Contrariwise, it was the insured's right, by the payment of the annual premium, to keep the policy in force from year to year until he should reach the age of 60 years. Indemnities under the policy were as follows: For permanent disability from accidental injuries or sickness $400 a month for life; for accidental death $10,000. For 18 consecutive years prior to June 15, 1941, plaintiff paid premiums under the policy aggregating $3,096. At no time during this period did plaintiff make a claim of any nature for disability payments under the policy. Certain clauses of the policy are pertinent to this review. On the face of the policy, it is said: ‘The date of this policy is May 15th, 1923, and its annual premium is $172.00, to be paid in advance.’ Clause 21 provides: ‘This policy becomes effective upon its issue and delivery, if said annual premium has then been paid in full, but otherwise it does not become effective until said premium has been paid. It expires at 12 o'clock noon (Standard Time at residence of Insured) one year from date except as it may be continued by renewal for terms of one year each or by the period of grace hereinafter given.’

Clause 22 reads: ‘Until the Insured becomes sixty years of age, he shall have the right to renew this policy from year to year by the payment of premium as herein provided. All premiums are due and payable on or before the anniversary date of this policy either at the General Office of the Company in the City of Chicago or to any authorized agent of the Company, but a grace period of thirty-one days shall be granted for the payment of every premium after the first, during which time the insurance hereunder shall continue in force. No premium receipt is valid unless signed by the President or a Vice-President or the Secretary or an Assistant Secretary of the Company. After any default in payment of premium, this policy may be reinstated as provided in standard provision number three at any time within six months from the date of such default on written application by the Insured to the General Office of the Company and the payment of the defaulted premium, provided the Insured shall submit with such application evidence of insurability satisfactory to the Company.’

Standard provision 3, mentioned in Clause 22, reads: ‘3. If default be made in the payment of the agreed premium for this policy, the subsequent acceptance of a premium by the Company or by any of its duly authorized agents shall reinstate the policy but only to cover accidental injury thereafter sustained and such sickness as may begin more than ten days after the date of such acceptance.’

Clause 24 reads, in part: ‘24. Indemnity for disability will not be paid under this policy at a rate in excess of the average earnings of the Insured for the period of time that he has been actually employed during the two years immediately preceding the commencement of disability for which the Company is liable. All premium paid during said two years for that portion of the disability indemnity in excess of the amount thus determined will be returned upon request of the Insured. The Insured shall have the right to reduce all or any of the indemnities of this policy on any anniversary of the date hereof and upon his request and the temporary surrender of the policy for endorsement, the Company will endorse it making such reduction of indemnity and a proportionate reduction in premium.’

Clause 23 states, inter alia, that ‘this insurance does not cover suicide or self-destruction while either sane or insane.’ Clause 27 provides for the surrender of the policy and the issuance of a new policy, should the insured change his occupation.

Plaintiff's premium in the amount of $172 became due on May 15, 1941, and he received a notice thereof. About May 24, 1941, after the due day of the premium on the policy in suit, he took delivery of an accident policy issued by the Fidelity and Casualty Company of New York, providing indemnity in the amount of $233.33 per month. Plaintiff did not pay the Continental premium on May 15, 1941. The 31st day after May 15, 1941 was June 15, 1941. That day fell on a Sunday. On Monday, June 16, 1941, plaintiff prepared a check in the amount of $172, payable to the defendant, but did not mail it. On Tuesday, June 17, 1941, plaintiff caused the check to be certified and sent the check by messenger to a branch office of the Company, where it was declined. He then sent it by messenger to the main office of the Company, where it was also declined as ‘late’. The messenger was given an application form for reinstatement. Later that day defendant wrote a letter to plaintiff, explaining that the policy had expired; that it regretted that no exceptions to their rules could be made in the plaintiff's case, and suggested that he fill our the ‘enclosed’ application for reinstatement. Between the dates of June 18, 1941 and June 26, 1941 there were conferences between plaintiff and the officers of the defendant, and numerous letters were exchanged. In this correspondence they argued their respective positions. Plaintiff insisted that his payment was not late, and if late, not very late, and that he was not required to apply for reinstatement. The defendant explained that the policy had lapsed and expired with the grace period; that no exception could be made in his case, and suggested that he fill our the application for reinstatement, which would be given prompt and careful attention. On June 25, 1941 plaintiff interlined and amended the reinstatement form, striking out the words ‘Application for reinstatement’ and calling it simply a ‘Statement’. He answered all the question in the form, altering the text of some of them, and then mailed the form to the Company. The questions and answers pertinent to the issues were as follows: may we suggest that if you have the time to visit us, we can then go into this matter more thoroughly and in greater detail, or if that would not be convenient for you,

‘4. Were your earnings from your dail occupations excluding interest, rentals, royalties, dividends, etc., in the last twelve months, at least double all the indemnities in this Policy? Yes.’

‘13. What is the maximum indemnity payable to you from all policies, in all companies, life, accident, and accident and health, at present owned or now being applied for? (A: Life insurance. B. Accident and Health insurance).

+-----------------------------------------------------------------------------+
                ¦                               ¦             ¦Amt.          ¦Amt. payable    ¦
                +-------------------------------+-------------+--------------+----------------¦
                ¦                               ¦             ¦payable for   ¦monthly in      ¦
                +-------------------------------+-------------+--------------+----------------¦
                ¦                               ¦Amount       ¦Accidental    ¦case of         ¦
                +-------------------------------+-------------+--------------+----------------¦
                ¦a-Name of Company              ¦of policy    ¦Death         ¦Disability      ¦
                +-------------------------------+-------------+--------------+----------------¦
                ¦Equitable of N. Y.             ¦15,000.00    ¦15,000.00     ¦. . . .         ¦
                +-------------------------------+-------------+--------------+----------------¦
                ¦Metropolitan Life Ins.         ¦25,000.00    ¦25,000.00     ¦250.00          ¦
                +-------------------------------+-------------+--------------+----------------¦
                ¦Northwestern Mut. Life         ¦5,000.00     ¦              ¦                ¦
                +-------------------------------+-------------+--------------+----------------¦
                ¦Prudential Life Ins.

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