Laidlaw v. Commercial Ins. Co. of Newark

Decision Date03 June 1977
Docket NumberNo. 46856,46856
Citation255 N.W.2d 807
PartiesWalter W. LAIDLAW, Respondent, v. The COMMERCIAL INSURANCE COMPANY OF NEWARK, New Jersey, Appellant.
CourtMinnesota Supreme Court

Syllabus by the Court

1-2. Under the standard accident and disability insurance provisions required by Minn.St. 62A.04, subd. 2, providing that no action can be brought more than 3 years after the time written proof of loss is required to be furnished and providing that written proof of loss must be furnished within 90 days after the termination of the period for which the insurer is liable, the insured was only required to furnish proof of loss within 90 days after the termination of the aggregate period for which the insurer was claimed to be liable and to commence an action within 3 years of that date. The most natural interpretation of the phrase "the period for which the Company is liable" is the total continuous period of liability, be it short or long.

3-4. Total occupational disability is the inability to perform the substantial and material parts of one's occupation in the customary and usual manner and with substantial continuity; total general disability is the inability to perform the substantial and material parts of any gainful occupation with reasonable continuity.

Total disability is to be measured by the absence of earning capacity rather than the absence of income.

5. The trial court's finding that plaintiff's injury to his hand caused severe psychological problems and physical pain and thereby rendered him totally disabled in both the occupational and the general sense was not clearly erroneous.

6. The trial court may, in its discretion, vacate a settlement on grounds of mutual mistake. On the facts present in this case, we find no abuse of discretion in vacating a settlement.

Geraghty, O'Loughlin & Kenney, James R. Gowling and James W. Kenney, St. Paul, for appellants.

DeParcq, Anderson, Perl, Hunegs & Rudquist, Richard G. Hunegs, and O. C. Adamson II, Minneapolis, for respondent.

Heard before MacLAUGHLIN, SCOTT and STAHLER, JJ., and considered and decided by the court en banc.

THOMAS J. STAHLER, Justice. *

Walter Laidlaw brought this action against the Commercial Insurance Company of Newark, New Jersey, seeking total disability benefits allegedly due under an insurance policy. The district court sitting without a jury awarded plaintiff the disability benefits. Defendant appeals from the denial of its motion for amended findings or, in the alternative, for a new trial and from the judgment. We affirm.

In 1960, plaintiff, an attorney, obtained a "Professional Men's Disability Policy" with defendant. The policy provided for the payment of specified sums in the event of death or dismemberment and weekly payments of $250 for total disability. 1 The payments were to continue up to 5 years for any occupational disability which prevented plaintiff from performing the duties of the occupation he was engaged in at the time of the accident and were to continue indefinitely for any general disability which prevented plaintiff from engaging in any gainful employment for which he was suited.

On June 19, 1964, plaintiff sustained an injury to his left wrist in a power lawnmower accident. His left hand, which was practically severed at the wrist, was surgically reattached and now appears as a "claw" which is virtually useless. The injury has also caused unusual, severe pain known as causalgia, which is apparently permanent. Plaintiff claims that the deformed hand and accompanying pain have caused psychological problems rendering him totally disabled in both the occupational and the general sense.

Plaintiff's evidence of disability tended to show the following: Prior to his injury, plaintiff was a very energetic, high-strung, hardworking person. He maintained an active solo law practice, engaging largely in trial work. Since his injury he has suffered from constant pain, acute anxiety, depression, and frustration, accompanied by a variety of physical complaints, such as headaches, bowel disorders, stomach cramps, and insomnia. He has made occasional attempts to work, followed by long periods of inactivity. As a result, his law practice has deteriorated; he closed his downtown Minneapolis office in 1966 and moved his files into his home. Despite the irregularity of his law practice, he has earned substantial income. Plaintiff's experts, treating physicians, psychiatrists, and attorneys who knew him, testified that in their opinion plaintiff was totally disabled during the time period at issue. 2

Defendant received notice of the accident shortly after its occurrence. In January 1965, defendant first received proof of loss. Defendant requested further information and undertook its own investigation of the claim. In March 1965, it paid $3,750 for total disability up to October 30, 1964, less a 4-week waiting period; in May 1965, it paid an additional $1,750 for total disability to December 18, 1964. After this payment, defendant made a number of requests for further information, and plaintiff made some attempt to comply. Defendant made no further payments but did not deny liability at that time. On August 10, 1967, a complaint, which was never served, was filed in the Federal District Court requesting relief similar to that requested in this action; the suit in Federal court was voluntarily dismissed by plaintiff without prejudice in August 1968. After another demand for payment, defendant wrote plaintiff in March 1970, denying further liability under the policy. On December 11, 1970, plaintiff, employing different counsel, commenced the instant action. 3

On December 4, 1974, plaintiff and defendant entered into an agreement to settle the case for $39,000 in the chambers of Honorable A. W. Danielson. By order dated May 29, 1975, Judge Danielson denied a motion by defendant to enter a dismissal upon payment of the $39,000 to the clerk of court, in effect nullifying the settlement on grounds of mutual mistake.

Trial began before Honorable Stanley D. Kane in November 1975. The trial court held that the action was not barred by the statute of limitations and that plaintiff was totally disabled in both the occupational and the general sense.

The policy contained the following provisions, as required by Minn.St. 62A.04, subd. 2:

"PROOFS OF LOSS: Written proof of loss must be furnished to the (Company) at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within 90 days after the termination of the period for which the (Company) is liable and in case of claim for any other loss within 90 days after the date of such loss. * * *

"LEGAL ACTIONS: No action at law or in equity shall be brought to recover on this policy prior to the expiration of sixty days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of three years after the time written proof of loss is required to be furnished."

The trial court took the view that under the proof-of-loss provision "the period for which the (Company) is liable" means the aggregate period of liability and that the statute of limitations does not begin to run until 90 days after the end of such period. Defendant claims that "the period for which the (Company) is liable" refers to each monthly period for which it may demand proof of continuing disability under the "payment of claims" provision. Under defendant's construction, plaintiff would be required to furnish proof of loss within 90 days of December 18, 1964, the expiration of the period for which the company paid benefits, which would be some time in March 1965, and he would be required to commence the action within 3 years of that date.

1-2. The usual rule of construction most favorable to the insured does not apply to a provision required by statute. Johnson v. Central Life Assurance Society, 187 Minn. 611, 246 N.W. 354 (1933); Cement, Sand & Gravel Co. v. Agricultural Ins. Co., 225 Minn. 211, 30 N.W.2d 341 (1947). However, we believe the most natural interpretation of the phrase "the period for which the (Company) is liable" is that adopted by the trial court. This conclusion is supported by a portion of the "Time of Payment of Claims" section of the policy, which provides:

" * * * Subject to due written proof of loss, all accrued indemnities for loss for which this policy provides periodic payment will be paid (at the expiration of each four weeks during the continuance of the period for which the Company is liable * * *."

From the context of this sentence it is clear that "the period for which the (Company) is liable" refers to the total continuous period of liability, be it short or long, and not individual 4-week periods. It is reasonable to infer that this phrase has the same meaning in both sections of the policy. We note that the Kentucky Court of Appeals has reached the same conclusion in construing this identical phrase. Continental Cas. Co. v. Freeman, 481 S.W.2d 309 (Ky. 1972).

We recognize that under our interpretation the statute of limitations does not begin to run until 90 days after the death of the insured in the case of permanent disability for which the policy provides lifetime benefits. Defendant exaggerates the consequences of this holding. An insured is not likely to wait years before filing proof of loss because he will want to receive benefits as soon as possible. He is required to give prompt notice of his claim, which was done in this case. If the insurer is actually prejudiced by a delay in presenting a claim, the claim may be barred by principles similar to those underlying the doctrine of laches. Mitchell v. Equitable Life Assur. Soc., Minn., 245 N.W.2d 618 (1976). There is no indication of actual prejudice to defendant by reason of the delay in filing the instant suit. D...

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