Levitt v. New York Life Ins. Co.

• Decision Date: 13 May 1941
• Docket Number: 45509.
• Citation: 297 N.W. 888,230 Iowa 456
• Parties: LEVITT v. NEW YORK LIFE. INS. CO.
• Court: Iowa Supreme Court

297 N.W. 888

230 Iowa 456

LEVITT v. NEW YORK LIFE. INS. CO.

No. 45509.

Supreme Court of Iowa.

May 13, 1941

Appeal from District Court, Woodbury County; D. C. Browning, Judge.

Action at law by the guardian of insured to recover disability benefit payments. Plaintiff demurred to the answer which alleged that notice of disability was not furnished within the time required by the policy. Plaintiff appeals from the overruling of his demurrer and judgment dismissing his petition.

Reversed and remanded.

MILLER, J., dissenting.

Lester C. Davidson and Robert J. O'Connor, both of Sioux City for appellant.

Shull & Marshall, of Sioux City, for appellee.

GARFIELD Justice.

Since the case comes to us following a ruling on demurrer, it will be necessary to summarize the pleadings. The petition of plaintiff-appellant as guardian of Bernard Kline, a minor and incompetent, alleges that on February 6, 1931 defendant-appellee issued to said Kline, then aged 15, its policy, copy of which was made a part of the petition; that annual premiums were paid in advance down to and including February 6, 1934; that on or about June 1, 1934, the insured became insane and therefore totally disabled and utterly incapable of transacting business, making contracts, and appreciating the nature or effect of his acts, and that said insanity continued to the present time; that insured was judicially adjudged insane on March 9, 1936, and committed to the state hospital for the insane; that said insanity commenced prior to June 1, 1934; that plaintiff first knew of the insanity on the 18th of February, 1936, the day he was appointed guardian; that as soon thereafter as was reasonably possible written notice of claim was sent by plaintiff and received by defendant on the 13th of March, 1936; that said written notice of claim contained a demand for the sums then due under the policy and an offer to furnish proper proof of all facts stated in the notice; that the insanity of insured was such as to make it impossible for him to give written notice of claim at any time after June 1, 1934; that at all times material hereto insured resided with his father, a physician, who knew of the existence of the policy, but did not know the contents thereof, and particularly did not know the requirements relating to the necessity of giving written notice of claim. Plaintiff sought to recover disability benefits of $25 for each month commencing June 1, 1934.

The policy attached to the petition is a $10,000 life policy in which insured's father is the beneficiary of the death benefits. An additional contract is included under which, for an added premium, the company agrees to pay the insured $25 per month for permanent disability and to waive all premiums during such disability upon receipt of due proof that the insured is so disabled. It is this part of the policy upon which plaintiff seeks to recover. The policy provisions with regard to the time of giving notice of disability are substantially as follows:

" * * * no premium shall be waived which shall have fallen due more than one year prior to the date of receipt of written notice of claim, as hereinafter provided * * * no such monthly (disability) payment shall be made * * * for any period more than one year prior to the date of receipt of written notice of claim.

Written notice of claim hereunder must be received by the Company during the lifetime and during the continuance of total disability of the Insured. Failure to give such notice within such times shall not invalidate any such claim if it shall be shown not to have been reasonably possible to give such notice within such times and that notice was given as soon as was reasonably possible.

Due proof of claim must be received before the expiration of one year after default in payment of premium under said Policy, and in any event, whether or not there be a default, not later than one year from the anniversary of said Policy on which Insured's age at nearest birthday is 60 * * * otherwise the claim shall be invalid."

Division V of the answer to the petition reads substantially as follows: " That as shown by plaintiff's petition, no premium was paid after February 6, 1934, and no notice of disability was given by any person as provided by the terms of said policy, until the written notice which was received by defendant on March 13, 1936. That more than one year had elapsed, as shown by plaintiff's petition, between the date when the premium became delinquent and the date when the first notice of disability and claim was received by defendant, and therefore said petition shows upon its face that said policy of insurance had lapsed and ceased to exist as a contract."

To the foregoing division of the answer plaintiff demurred on the grounds that it does not state a defense because it affirmatively appears on the face of the pleadings that (1) it was impossible to give written notice of claim at any time after June 1, 1934, (2) there was a good, legal and sufficient excuse for the delay in giving the written notice of claim, and (3) plaintiff, as soon after his appointment as guardian as was reasonably possible, gave written notice of claim. The trial court overruled the demurrer. Plaintiff elected to stand on his demurrer and suffered judgment against him dismissing his petition, from which this appeal was taken.

It will be noticed that the division of the answer assailed by demurrer is a separate and distinct division. It must be complete in itself. Section 11117, Code 1939; Redfield v. Boston P. & M. Co., 178 Iowa 1275, 1277, 160 N.W. 934. Division V of the answer contains no denial of any material allegation of the petition. Therefore, these allegations stand admitted by this division of the answer. Code, section 11201; 21 R.C.L. p. 561, § 120. Furthermore, the answer in three different places refers to what is shown by the petition and by these references, in effect, aside from the absence of a denial, admits plaintiff's allegations. The substance of the answer is that the petition shows the policy had lapsed because more than one year intervened between the date when the premium became delinquent and the date when notice and claim was received by the company. If, therefore, the petition shows that notice and claim of disability was given in proper time, Division V of the answer stated no defense and appellant's demurrer should have been sustained.

The policy provision upon which appellee relies is the paragraph last above quoted from the policy requiring proof of claim " before the expiration of one year after default in payment of premium." The petition alleges payment of an annual premium in advance on February 6, 1934. This, including the grace period of 31 days, paid the premium to March 9, 1935. Notice and claim of disability was received by the company on March 13, 1936, four days more than " one year after default in payment of premium." There can be no question but what the disability of insanity occurring on or before June 1, 1934, commenced while the policy was in good standing.

In connection with the provision on which appellee relies there must be read the policy provision that " Failure to give such notice within such times shall not invalidate any such claim if it shall be shown not to have been reasonably possible to give such notice within such times and that notice was given as soon as was reasonably possible." This provision would be of no benefit whatever to the insured unless it operated to excuse both the giving of notice and the making of due proof, where not reasonably possible. An extension of time to give notice of claim preceding the making of due proof surely must fairly be construed as an extension of time to furnish such proof of that claim. Appellee does not contend otherwise.

Notice and claim of disability was received by the company, according to the admitted allegations of the petition, just 23 days after appellant's appointment as guardian and knowledge of the insanity of insured. Appellee does not seriously contend that it was reasonably possible for the insane insured to have given notice nor that the guardian did not act promptly after his appointment. But appellee argues that the petition must allege facts showing it was not reasonably possible for the father of insured, to whom counsel refer as the beneficiary, to give notice of claim.

We hold that the admitted allegations of the petition sufficiently show that it was not reasonably possible to have given earlier notice of disability, that division V of the answer stated no defense and that appellant's demurrer thereto should have been sustained. Whether upon the trial appellant will be able to prove these allegations is a question with which we are not now concerned.

It is important to keep in mind the essential difference between life insurance and disability insurance. This distinction was considered in a case involving a life policy with an added disability contract, similar to the one now before us, in Kantor v. New York Life Ins. Co., 219 Iowa 1005, 1007, 258 N.W. 759, 760, wherein we said: " The essential difference between life insurance and disability insurance is obvious. The object of life insurance is to provide a fund for the benefit of the estate or the heirs or beneficiaries of the insured after the insured's death. The purpose of disability insurance, on the other hand, is to protect against, not a loss of life, but a loss of earning capacity. Disability insurance protects the insured himself; life insurance is primarily for the protection of others. Disability payments are therefore payable to the insured; life insurance benefits go to others."

Bernard Kline (who became 21 not later than February 6, 1937) is the insured and he, not his ...