Melick v. Metro. Life Ins. Co.

• Decision Date: 08 June 1913
• Citation: 84 N.J.L. 437,87 A. 75
• Parties: MELICK v. METROPOLITAN LIFE INS. CO.
• Court: New Jersey Supreme Court

87 A. 75

84 N.J.L. 437

MELICK

v. METROPOLITAN LIFE INS. CO.

Supreme Court of New Jersey.

June 8, 1913.

(Syllabus by the Court.)

Appeal from District Court of Newark.

Action by Annie Melick against the Metropolitan Life Insurance Company. Judgment for defendant, and plaintiff appeals. Reversed.

This is an action brought on a life insurance policy by the beneficiary named therein.

Number of policy, 45295500.

Date, August 14, 1911.

Name of insured, Johanna Essig.

Name of beneficiary, Annie Melick (sister).

Weekly premium, 20 cents.

Amount of insurance, $124.

The weekly premium was regularly paid until the death of the insured on May 1, 1912.

The policy contained the following condition:

"Unless otherwise stated in the blank space below in a waiver signed by the secretary, this policy is void if the insured before its date has been rejected for insurance by this or any other company, order or association, or has been attended by a physician for any serious disease or complaint; or has had before said date any pulmonary disease, or chronic bronchitis, or cancer, or disease of the heart, liver or kidneys; or if any policy on the life of the insured has been issued by this company and is in force at the date hereof, unless this policy contains an indorsement signed by the secretary that such prior policy may be in force. The company shall not be presumed or held to know of the existence of any previous policy, and in such case the issue of this policy shall not be deemed a waiver of this condition.

"Permission granted to hold policy numbered 45074331.

"Jas. S. Roberts, Secretary.

"If this policy is or shall become void, all premiums paid shall be forfeited to the company, except as provided under 'privileges and concessions to policy holders.'"

This concession relates to surrenders made within two weeks after issue of policy.

At the time the policy was issued there was in force on the life of the insured in the same company policy No. 10901685, dated May 22, 1899.

The company obtained a nonsuit upon the ground that under the foregoing condition the existence of this earlier policy rendered void the policy on which suit was brought.

Argued February term, 1913, before GARRISON, SWAYZE, and MINTURN, JJ.

Samuel Press, of Newark, for appellant.

McCarter & English, of Newark, for appellee.

GARRISON, J. (after stating the facts as above). The meaning of a written contract is determined by the application of established canons to the language employed by the contracting parties. Where such contracting parties are, on the one hand, an insurance company that has formulated the contract in advance with the business foresight and legal advice at its command and, on the other, a person who, upon the presentation of such contract to him must accept or reject it with no other aid than his own limited experience and lack of legal knowledge, a further canon is invoked which is thus stated in our decisions. "It has become a settled rule in the construction of contracts of insurance," said Mr. Justice Depue in Carson v. Jersey City Insurance Co., 43 N. J. Law, 300, 39 Am. Rep. 584, "that policies of insurance will be liberally construed to uphold the contract, and conditions contained in them which create forfeitures will be construed most strongly against the insurer, and will never be extended beyond the strict words of the policy." This language is quoted with approval in the opinion delivered in the Court of Errors and Appeals in the case of Hampton v. Hartford Fire Ins. Co., 65 N. J. Law, 265, 47 Atl. 433, 52 L. R. A. 344, with the additional declaration: "The court will never seek for a construction of a forfeiture clause in a policy which will sustain it, if one which will defeat it is reasonably deducible from the terms or words used to express it" In Snyder v. Insurance Co., 59 N. J. Law, 544, 37 Atl. 1022, 59 Am. St Rep. 625, it was said: "Policies of insurance against fire are taken out by all classes of persons, educated and uneducated, and no rule of law is more salutary than that conditions in these instruments, expressed in terms ambiguous and capable of misleading, shall not be allowed to avoid the contract." In the more recent case of Mackinnon v. Fidelity & Casualty Co., 72 N. J. Law, 29, 60 Atl. 180, it is pointed out that: "The doctrine upon this subject arises from the relative positions of the parties. * * * Such questions are formulated by the insurer under circumstances that admit of their being clear and direct. The purpose for which they are to be used is thoroughly understood, and, presumably, they are the result both of experience and forethought. On the other hand, they are submitted to applicants for accident insurance, who as a class are not experts in matters of this sort or in the construction of language by other than the simplest rules, to be answered under conditions that are, to say the least, none too favorable for critical examination." If these judicial comments and precepts are properly applied to ordinary life insurance, to accident insurance, and to fire insurance, with how much more force are they applicable to that class of persons who insure their lives for small sums by the payment of weekly premiums. If a canon of construction, based upon the gross disparity between the contracting parties, is ever applicable, it is to this class of cases.

Guided, indeed controlled, by these considerations, we approach the language of the condition of this policy, the first clause of which informs the insured in unmistakable language that this policy is void if the...