Lincoln Nat. Life Ins. Co. v. Ghio

• Decision Date: 06 May 1940
• Docket Number: No. 11665.,11665.
• Parties: LINCOLN NAT. LIFE INS. CO. v. GHIO.
• Court: U.S. Court of Appeals — Eighth Circuit

111 F.2d 307 (1940)

LINCOLN NAT. LIFE INS. CO. v. GHIO.

No. 11665.

Circuit Court of Appeals, Eighth Circuit.

May 6, 1940.

James C. Jones, Jr., of St. Louis, Mo. (James C. Jones, W. A. Welker, and Jones, Hocker, Gladney & Grand, all of St. Louis, Mo., on the brief), for appellant.

Richmond C. Coburn, of St. Louis, Mo. (Hartley Pollock, Jr., Thomas L. Croft, and Thompson, Mitchell, Thompson & Young, all of St. Louis, Mo., on the brief), for appellee.

Before GARDNER, SANBORN, and WOODROUGH, Circuit Judges.

SANBORN, Circuit Judge.

This appeal is from a declaratory judgment in favor of an insured (appellee) in a suit brought by appellant upon four policies of life insurance issued by it to the insured on November 6, 1928. Each of these policies contained the same provisions for waiver of premiums in case of the total and permanent disability of the insured. The provisions, so far as here pertinent, read:

"If the Insured, at any time before the policy anniversary nearest to his sixtieth birthday and before the sum insured or any instalment thereof becomes payable and while no premium is in default, shall submit proof satisfactory to the Company that he has become totally and permanently disabled by bodily injury or disease originating after the date hereof, and as hereinafter defined, then:

"The Company will waive the payment of all premiums falling due after receiving such satisfactory proof of disability and during the continuance of such disability of the Insured."

The insured became 60 years of age on December 8, 1936. Prior to that time he had furnished no proof of disability. On December 9, 1938, when he was 62 years old, he submitted proof to the appellant that he had become totally and permanently disabled, within the definition of his policies, on June 14, 1934. The company, in its complaint, alleged that the insured had not become totally and permanently disabled prior to age 60, and that, even if he had become so disabled, the company was not liable for a waiver of premiums, because the insured had failed to submit proof before the policy anniversary nearest to his sixtieth birthday. It prayed for a declaration of nonliability. The insured in his answer asserted that he had become totally and permanently disabled on June 14, 1934; but that he did not discover his disability until on or about December 9, 1938, when he notified the plaintiff and demanded the return of all premiums paid since June 14, 1934. He asked for a declaration that he was entitled to the return of all premiums paid since the date of his claimed disability. In a supplemental answer he modified his claim and asserted the right to a waiver of premiums subsequent to December 9, 1938, the date when proof of disability was furnished the company. After the denial of a motion of the company for a summary judgment, the case was tried to the court and a jury. At the close of the company's evidence, the court directed a verdict for the insured, and judgment was entered accordingly.

A number of errors are assigned, but if the company's contention that the failure of the insured to submit proof of disability prior to the anniversary of the policies nearest to the insured's sixtieth birthday defeated his claim for a waiver of premiums, regardless of when, if ever, he became disabled, is correct, it will not be necessary to consider more than this one question.

The language specifying upon what conditions the company would waive premiums in case the insured became disabled is clear, explicit and unambiguous. The right to the waiver was made clearly dependent upon the insured's submitting proof prior to age 60. Under a disability clause such as this, where the event upon which liability depends and which fixes the time from which premiums are to be waived is the furnishing of proof, and not the occurrence of disability, it is almost universally held that the right of the insured to the disability benefits depends upon the furnishing of the requisite proof as a condition precedent to the liability of the company. See and compare, Mutual Life Insurance Co. of New York v. Drummond, 8 Cir., 111 F.2d 282, opinion filed May 2, 1940.

The controlling law in this case is that of Missouri, since the policies in suit are Missouri contracts. The insured contends that under the law of that State the liability of the company does not depend upon the giving of proof by the insured, but upon the occurrence of disability, and he cites as authority the case of Hablutzel v. Home Life Insurance Co. of New York, Mo.App., 52 S.W.2d 480, affirmed 332 Mo. 920, 59 S.W.2d 639. An examination of the opinions in that case discloses a different situation and a different disability clause. The clause there considered provided: "If, after one full annual premium shall have been paid hereon and before default in the payment of any subsequent premium, the insured shall, before attaining the age of sixty years, furnish due proof to the Company that he has become totally disabled by bodily injury or by disease, so that he is and shall be permanently, continuously and wholly incapacitated for life and prevented thereby from pursuing any gainful occupation, the Company by endorsement hereon shall agree to waive the payment of premiums which may thereafter fall due during the continuance of such disability." The Missouri courts construed the clause as providing for the waiver of all premiums after disability occurred, provided the insured gave notice of disability before reaching age 60. It was held that the evidence disclosed that the company had received notice of the insured's disability before age 60, that his right to a waiver of premiums accrued when he became disabled, and that he then became entitled to a waiver of premiums. In its opinion, the Missouri Court of Appeals referred to Minnesota Mutual Life Insurance Co. v. Marshall, 8 Cir., 29 F.2d 977, a decision of this Court, and to Bergholm v. Peoria Life Insurance Co., 284 U.S. 489, 52 S.Ct. 230, 231, 76 L.Ed. 416. In the Marshall case the disability clause provided 29 F.2d 978: "If the insured * * * shall become totally and permanently disabled, * * * and shall furnish satisfactory proof thereof, the Company will waive the payment of premiums thereafter becoming due. * * * Upon the receipt of due proof of total and permanent disabilities as above defined, the Company will waive the payment of all premiums thereafter becoming due." This Court construed that clause as entitling the insured to waiver of premiums from the date of disability, and held that the furnishing of proof was not a condition precedent to liability. In the Bergholm case, the disability clause was as follows: "Upon receipt by the Company of satisfactory proof that the Insured is totally and permanently disabled * * * the Company will * * * 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." The Supreme Court of the United States distinguished the Bergholm policy from the Marshall policy by stating that this Court had construed the provisions of the Marshall policy as creating the obligation of the company to waive premiums upon the occurrence of disability if proof of disability was furnished within a reasonable time. It said, with respect to the disability clause of the Bergholm policy (page 491 of 284 U.S., page 231 of 52 S.Ct., 76 L.Ed. 416): "Here the...