Mid-Continent Life Ins. Co. v. Harrison

• Decision Date: 22 October 1935
• Docket Number: Case Number: 25923
• Citation: 175 Okla. 543,1935 OK 1020,53 P.2d 266
• Parties: MID-CONTINENT LIFE INS. CO. v. HARRISON
• Court: Oklahoma Supreme Court

1935 OK 1020

53 P.2d 266

175 Okla. 543

MID-CONTINENT LIFE INS. CO. v. HARRISON

Case Number: 25923

Supreme Court of Oklahoma

Decided: October 22, 1935

Syllabus

¶0 Insurance -- Liability on Policy Insuring Against Death and Total Permanent Disability Held to Attach Witch Such Disability Begins Before Delft in Payment of Premium Though Proof not Furnished Till After Lapsing Date.

When a policy insures against death and total permanent disability, and promises certain payments in full settlement of the policy--"if the insured shall furnish due proof that he has, within the premium paying period,-and before a default in the payment of premium, become wholly disabled, and will be permanently, continuously and wholly prevented thereby for life from engaging in any gainful occupation," the other provisions of the policy not conflicting with that provision, the insurer's, liability attaches when total permanent continuous disability begins before default in payment of premium and proof thereof is subsequently furnished, notwithstanding delay in furnishing said proof until after the date upon which the policy would have lapsed had the disability not occurred.

Appeal from District Court. Le Flore County; D. C. McCurtain, Judge.

Action on insurance policy by Minnette Harrison against Mid-Continent Life Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Rittenhouse, Webster & Rittenhouse, for plaintiff in error.

Dan Welch and Hal Welch, for defendant in error.

PHELPS, J.

¶1 This is an action on an insurance policy providing for payments in case of permanent disability or death. The question is whether the insured's beneficiary is precluded from recovery by the fact that the insured failed to serve proof of total permanent disability upon the insurer prior to the lapsing date of the policy, under the provisions of the particular policy herein construed. (Strictly speaking, there was no "lapse"; when we use that term we mean the date upon which the policy would have lapsed but for the facts herein recited.) The facts fairly deducible from the evidence are as follows:

¶2 On March 15, 1919, the defendant insurance company issued its policy on the life of plaintiff's husband, wherein plaintiff was named beneficiary. The insured, William H. Harrison, regularly paid the annual premiums in advance until March 15, 1928, at which time he gave the Insurance company his note for the premium due on that date. It appears that this note was never paid, but due to the fact that both the plaintiff and defendant insurance company in their pleadings treated the date of lapsation as March 15, 1929, 31 days grace period thereafter, being April 15, 1929, was considered as the date upon which the policy "lapsed," at which time it had no cash surrender or paid-up insurance value. About two and a half months before the lapsing date of the policy the insured became totally and permanently disabled (January 1, 1929), but no notice of said disability was furnished the insurance company. In September, 1929, the insured died. On July 25, 1931, the beneficiary, plaintiff herein, first furnished proof to the insurance company of the aforesaid disability and death. Replying that the the policy had lapsed on March 15, 1929, the company refused payment.

¶3 All of the policy's pertinent provisions concerning proof of total permanent disability are condensed as follows:

"Mid-Continent Life Insurance CO., agrees to pay ten thousand dollars upon receipt of due proof of the death of William H. Harrison, the insured, to Minnette Harrison, beneficiary, or * * * five hundred dollars per annum, during the lifetime of the insured, if the insured becomes wholly and permanently disabled, subject to all the terms, conditions and limitations contained in Section 1 hereof; * * * Section 1. Permanent Total Disability. If the insured shall furnish due proof that he has, within the premium paying period, * * * and before a default in the payment of premium, become wholly disabled by bodily injuries or disease, * * * and will be permanently, continuously and wholly prevented thereby for life from engaging in any gainful occupation, the company will pay to him, during his lifetime and such disability and in full settlement of this policy, annual instalments-the first installment to be paid six months after receipt of due proof of permanent total disability. The amount of each such annual installment shall be. * * * If the insured shall die during such disability and before twenty such annual instalments shall have been paid, the instalments will continue to be paid to the beneficiary of the insured until 20 instalments in all, including those paid to the insured shall have been paid. z * * Section 4. Renewal Premium. * * * Failure to pay when due any premium or any note given therefor, shall cause this policy to cease and determine except as herein provided, and all payments made thereon shall remain the property of the company."

¶4 Plaintiff obtained a judgment on the total permanent disability provision of the policy, and defendant appeals. There is no contention that the insured himself should have furnished the proof of total permanent disability, or that the beneficiary could not demand payments therefor except in continuation of prior disability payments already being made to the insured himself before his death. It was not urged in the pleadings or the briefs that the unusual delay in filing proof bars recovery,--though the matter is touched upon, by way of passing observation, in defendant's brief. Therefore this opinion does not consider those issues of law.

¶5 Plaintiff does not deny that premiums were unpaid for the period following March 15, 1929, which would have been the normal lapsing date of the policy, but contends that the liability of the insurance company became fixed when the insured became totally, permanently, and continuously disabled on January 1, 1929, which was prior to the lapsing date of the policy.

¶6 On the other hand, the insurance company asserts that the only manner in which the insured or his beneficiary could claim payments under the disability provision, was by furnishing proof of said disability to the company prior to the lapsing date of the policy (March 15, 1929, or with grace, April 15, 1929), even though it De admitted that his disability began before that date. That, then, is the only question before us.

¶7 The question of whether, in order for insured or beneficiary to claim total permanent disability benefits provided in life Insurance policies, notice of such disability must be furnished the insurance company before the policy lapses for nonpayment of premium, is a subject of comparatively recent and prolific litigation. That is because it is only recently that insurance companies have incorporated those provisions in their contracts. In the various cases which we have examined, disability benefits appear to be of three classes, waiver of premiums, payment of stipulated monthly sums to the insured, and waiver of premiums plus payment of the monthly sums.

¶8 It is stated by some authorities that the cases are in hopeless conflict on this subject. Having come across that statement early in the study of this case, we decided to and did read virtually every opinion involving the precise point here considered and thereby came to the conclusion that. barring a few isolated cases, the authorities are not in hopeless conflict, but that nearly all of the cases wherein recovery was denied in valued policies wherein the right to recovery, or right to waiver of premium, was expressly conditioned upon the furnishing of notice of disability prior to default in payment of premiums. On the other hand, virtually all of the cases permitting recovery involved policies wherein the notice of disability was not expressly required to be furnished before default in payment of premiums. It is merely the difference between conditions precedent and conditions subsequent. As stated above, there are several decisions paying little heed to the distinction, but in the main the great majority of decisions on both sides of the line hinge on that general distinction. It is believed that a safe guiding rule is to examine the entire contract in each individual case, and determine, if possible, whether notification within the premium paying period is made a condition precedent to liability, or whether, on the other hand, liability becomes fixed by the mere occurrence of the disability within the premium paying period, later notification thereof being only a condition subsequent. If the contract is clear and explicit on the subject, there will usually be no need of resorting to the many principles applicable solely to insurance law.

¶9 Analysis of the following cases denying recovery reveals that, in each and an of the policies involved, notification within the premium paying period was made a condition precedent: New England Mutual Life Ins. Co. v. Reynolds (Ala.) 116 So. 151; Walters v. Jefferson Standard Life Ins. Co. (Tenn.) 20 S.W.2d 1038; Yohalem v. Columbian Nat. Life Ins. Co., 240 N.Y.S. 666; Orr v. Mutual Life Ins. Co., 57 F.2d 901; Fauer v. Aetna Life Ins. Co., 70 F.2d 693 (condition precedent not apparent in first provision of policy but apparent in subsequent provisions); Mid-Continent Life Ins. Co. v. Skye, 113 Okla. 184, 240 P. 630; Mid-Continent Life Ins, Co. v. Walker, 128 Okla. 75, 260 P. 1109 (dictum); Franklin IAfe ins. Co. v. Fisher, 164 Okla. 193, 23 P.2d 151; Smith v. Missouri State Life Ins. Co. (Kan.) 7 P.2d 65; Bergholm et al. v. Peoria Life Ins. Co., 284 U.S. 489, 52 S. Ct. 230, 76 L. Ed. 416.

¶10 Conversely, analysis of the following cases permitting recovery reveals that in the policies involved therein notification within the premium paying period was made condition subsequent: American Nat. Ins. Co v. Rardin, 74 Okla. 146, 177 P. 601; Pfeiffer v. Missouri State Life Ins. Co. (Ark.) 297 S.W. 847, 54 A. L. R....