Mulcahy v. Travelers Ins. Co.

• Decision Date: 22 November 1927
• Parties: MARY A. MULCAHY v. THE TRAVELERS INSURANCE COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

261 Mass. 245

MARY A. MULCAHY v. THE TRAVELERS INSURANCE COMPANY.

Supreme Judicial Court of Massachusetts, Worcester.

November 22, 1927

September 26, 1927.

Present: BRALEY CROSBY, PIERCE, CARROLL, & WAIT, JJ.

Insurance Accident: insured's change of occupation. Contract Construction.

In 1921 a policy of accident insurance was issued for a term of three months renewable with the consent of the insurance company for three-month terms by payment of premiums in advance, to one who stated his occupation to be that of manager-proprietor of a custom shirt company, performing office, travelling and executive duties, which occupation was classified as "select" in the insurance company's statement of premiums and classification of risks then on file with the commissioner of insurance. At that time there was no such occupation as prohibition enforcement officer. In 1922 the company filed with the commissioner of insurance for the first time a classification as prohibition enforcement officer, and the premium rate for that occupation was over three times as large as that of the policy above described. The policy was kept in force by premium payments until the insured's death by accident in September, 1925. At the time of his death, he was occupied and employed as a prohibition enforcement officer. He never had informed the company of his change of occupation and never had paid any different rate of premium. In the policy was a statement that it contained "the entire contract of insurance except as it may be modified by the Company's classification of risks and premium rates in the event that the Insured is injured after having changed his occupation to one classified by the Company as more hazardous than that stated in the Policy, or while he is doing any act or thing pertaining to any occupation so classified, . . . in which event the Company will pay only such portion of the indemnities provided in the Policy as the premium paid would have purchased at the rate but within the limits so fixed by the Company for such more hazardous occupation. If the law of the state in which the Insured resides at the time this Policy is issued requires that prior to its issue a statement of the premium rates and classification of risks pertaining to it shall be filed with the state official having supervision of insurance in such state, then the premium rates and classification of risks mentioned in this Policy shall mean only such as have been last filed by the Company in accordance with such law, but if such filing is not required by such law then they shall mean the Company's premium rates and classification of risks last made effective by it in such state prior to the occurrence of the loss for which the Company is liable." Held, that

(1) G.L.c. 175, Section 108, in force when the policy was issued, contemplated that different classifications and rates of premium might be made after the issue of a policy but before the "occurrence of the injury" for which indemnity was claimed, and that, when filed in accordance with law, they would affect the amount recoverable;

(2) The words of the policy, "the premium rates and classification of risks mentioned in this Policy shall mean only such as have been last filed by the Company in accordance with" the statute requiring that previous to the issue of the policy "a statement of the premium rates and classification of risks pertaining to it shall be filed with" the proper State official, meant the last classification filed before the injury, and not a classification filed before the date of the policy;

(3) The company was liable only for a proportionate part of the named indemnity computed according to the ratio of the premium of insurance paid to the premium which should have been paid.

While it is a rule of construction that the language of an insurance policy is to be construed most strongly against the insurer, such rule does not require an interpretation which is unreasonable nor one which results unjustly.

CONTRACT upon a policy of insurance described in the opinion. Writ dated February 12, 1926.

The plaintiff demurred to a portion of the defendant's answer raising the question of law stated in the opinion. The demurrer was heard by Lummus, J., who sustained it and, being of opinion that the propriety of such interlocutory order ought to be determined by this court before further proceedings in the Superior Court, reported the case for such determination.

F.P. McKeon, for the plaintiff. C.C. Milton, for the defendant.

WAIT, J. The plaintiff, the beneficiary named in a policy of accident insurance issued by the defendant to her son John M. Mulcahy on March 11, 1921, brings suit to recover the full amount of the indemnity ($7,500) set out in the policy at the date of its issue. The defendant contends that if anything is due the plaintiff, the amount is $2,270.50.

At the date on which the policy took effect, John M. Mulcahy's occupation was that of manager-proprietor of a custom shirt company, performing office, travelling and executive duties. According to the statement of premiums and classification of risks then on file with the commissioner of insurance, it was classified as "select"; and the premium was fixed at $7.75 for insurance in $7,500. At the time of the injury for which indemnity was claimed, September 2, 1925, he was also occupied and was performing duties as a prohibition enforcement officer. No such occupation was in existence when the table of rates and manual of classification of risks in force at the issue of the policy was filed, and no such occupation was classified in March, 1921, nor had a premium for the risk of one so occupied then been fixed. On February 14, 1922, the defendant filed with the commissioner for the first time a classification as prohibition enforcement officer, and a premium rate of $25.60 for insurance in $7,500.

The policy was "issued for a term of Three months to commence on the 11th day of March 1921 . . . but it may be renewed with the consent of the Company, from term to term of Three...