Kearns v. Penn Mut. Life Ins. Co.

• Decision Date: 17 July 1934
• Docket Number: 24962.
• Parties: KEARNS v. PENN MUT. LIFE INS. CO.
• Court: Washington Supreme Court

34 P.2d 888

178 Wash. 235

KEARNS v. PENN MUT. LIFE INS. CO.

No. 24962.

Supreme Court of Washington, En Banc.

July 17, 1934

Appeal from Superior Court, Spokane County; William A. Huneke Judge.

Action by Robert J. Kearns against the Penn Mutual Life Insurance Company of Philadelphia. Judgment for plaintiff, and defendant appeals.

Reversed and cause remanded, with direction to dismiss the action.

Graves, Kizer & Graves, of Spokane, for appellant.

O. C Moore, of Spokane, for respondent.

MILLARD Justice.

The defendant insurance company issued two life insurance policies, a 20-pay limited life policy in 1916 and a 14-year endowment policy in 1921, to Robert J. Kearns. Under the terms of each of the policies, which differ in no particular material to this action, the defendant insurer was obligated to pay a monthly income to the plaintiff insured in the event that he became totally and permanently disabled. The pertinent provisions of the two insurance contracts are as follows:

'If after one year's premium shall have been paid on this Policy and Before default in the payment of any subsequent premium the insured shall furnish to the Company due proof that, Before attaining the age of sixty, he has become wholly disabled by bodily injury or disease so that he is and thereby will be permanently and continuously unable to engage in any occupation whatever for remuneration or profit, and that such disability has existed continuously for not less than sixty days prior to the furnishing of proof, thereupon the Company will grant the following benefits:

'a. Waiver of Premium.--The Company, by endorsement hereon, shall waive the payment of the premiums which thereafter may become due under this Policy during the continuance of the said total disability of the insured. In making any settlement under this Policy the Company shall not deduct any part of the premiums so waived, and the Non-Forfeiture values of this Policy shall increase from year to year in the same manner as though any premium waived under this provision had been paid in cash;

'b. Annuity Payment.--Furthermore, the Company will pay to the insured a monthly sum equal to one one-hundred-and-twentieth of the face of this Policy, the first monthly payment to be made six months after receipt of due proof of the said total disability accompanied by this Policy for endorsement, and subsequent payments monthly thereafter during the continuance of the said total disability of the insured prior to the maturity of this Policy. The Company will admit the age of the insured when furnished with satisfactory evidence of the date of birth and reserves the right to require such proof of date of birth at the time proof of disability is furnished. The amount of this Policy payable at maturity either as an endowment or as a death claim shall not be reduced by any payments made under this disability provision.'

On July 13, 1932, Kearns, then fifty-seven years old, suffered a 'stroke.' Defendant stipulated that from that time Kearns has been totally and continuously disabled within the meaning of the above-quoted provision of the policies. The insured did not realize the seriousness of his condition. The court's finding, amply sustained by the evidence, is to the effect that for several months subsequent to July 13, 1932, Kearns' condition was such that he was incapable of understanding the terms and conditions of his insurance policies. On December 12, 1932, finding himself unable to continue the practice of his profession--the insured is a physician and surgeon--Kearns furnished to the insurer proof of his disability, and claimed the benefit of the policy provision quoted above. The claim of disability was allowed; annuity payments to begin six months after the receipt of proof of disability. The insured rejected the allowance, insisting that the liability to pay accrued at the moment of the disabling injury, and was not postponed by delay in claiming and proving disability. The insured further insisted that the provision that 'the first monthly payment to be made six months after receipt of due proof of the said total disability' was invalid. An action was commenced by the insured to recover the annuity payments under both policies from July 13, 1932, the date the insured became disabled. Trial of the action to the court resulted in judgment for plaintiff in the amount for which he prayed. The defendant has appealed.

Counsel for appellant contend that the insurer's liability for the annuity payments did not accrue upon the occurrence of the disabling injury. It is insisted that the furnishing to the insurer of proof of the disability is a condition precedent to liability of the insurer to pay disability benefits under the provisions of the policies in question.

'* * * 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. * * *' Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 492, 52 S.Ct. 230, 231, 76 L.Ed. 416.

So far as is material here, the total disability clause reads as follows:

'If * * * the insured shall furnish to the Company due proof that * * * he has become wholly disabled by bodily injury or disease * * * the Company will grant the following benefits: * * *

'b. * * * the Company will pay to the insured each month One Hundred Dollars, * * * the first monthly payment to be made six months after receipt of due proof of the said total disability, * * * and subsequent payments monthly thereafter during the continuance of the said total disability of the insured. * * *'

In Wick v. Western Union Life Ins. Co., 104 Wash. 129, 175 P. 953, the insurance policy contained a total disability provision reading as follows: 'If the insured * * * shall furnish due proof that he has, Before default in the payment of any premium, become wholly disabled by bodily injury or disease * * * the company will pay for said insured all premiums which shall become due. * * *'

In Jones v. New York Life Ins. Co., 158 Wash. 12, 290 P. 333, 334, the $2,000 life endowment policy issued to the plaintiff contained the following disability benefit provision: 'Whenever the Company receives due proof, Before default in the payment of premium, that the Insured, * * * has become wholly disabled by bodily injury or disease, * * * then * * * commencing with the anniversary of the Policy next succeeding the receipt of such proof, the Company will on each anniversary waive payment of the premium for the ensuing insurance year. * * * One year after the anniversary of the Policy next succeeding the receipt of such proof, the Company will pay the Insured a sum equal to one-tenth of the face of the Policy, and a like sum on each anniversary thereafter during the continued disability of the Insured. * * *'

In Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 52 S.Ct. 230, 231, 76 L.Ed. 416, the insurance policy contained the following income disability provision:

'Upon receipt by the Company of satisfactory proof that the Insured is totally and permanently disabled as hereinafter defined the Company will

'1. Pay for the Insured all premiums becoming due hereon after the receipt of such proof and during the continuance of the total and permanent disability of the Insured and will also

'2. Pay to the Insured a Monthly Income for life of 1% of this Policy; The first payment of such income to be paid immediately upon receipt of such proof. * * *'

The provisions in the insurance policy in the case at bar, for payment of an annuity to the insured and waiver of payment of all insurance premiums in the event that the insured became totally and permanently disabled, is identical in effect with the disability indemnity provision in the cases cited.

In the Wick Case, an en banc decision which has never been overruled or modified, the insured was disabled while the policy was still in force, but no proof was furnished until after the policy had lapsed for nonpayment of premiums. Recovery was denied, on the ground that the insured was bound by the disability indemnity provision requiring due proof of total and permanent disability Before default in the payment of premium; that such requirement was a condition precedent to a recovery on the policy.

In Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 52 S.Ct. 230, 231, 76 L.Ed. 416, the plaintiff sought recovery of the face of a life insurance policy, in which she was the named beneficiary, and certain sums for disability benefits alleged to have accrued prior to the death of the insured. In that case, as in the Wick Case, the insured became totally disabled Before there was a default in the payment of premiums, but he failed to furnish proof of such disability, whereupon the insurance company canceled the policy. Affirming the judgment of the Circuit Court of Appeals ( Peoria Life Ins. Co. v. Bergholm, 50 F. (2d) 67), reversing a recovery in favor of the plaintiff beneficiary, the Supreme Court of the United States distinguished the case of Minnesota Mutual Life v. Marshall (C. C. A.) 29 F. (2d) 977, and said:

'The insured died on April 18, 1929. Judgment was sought for disability benefits from December 1, 1927, to April 1, 1929 at the rate of $50 per month, with interest. The last premium paid was due on May 27, 1927. The next, allowing a month's period of grace, should have been paid not later than September 27, 1927. Neither that nor any subsequent premium was ever paid. Long prior to the death of the insured, the policy, therefore, had lapsed, unless saved by the terms of the disability clause above quoted. There is evidence in the record from which it reasonably may...