Mullaney v. Equitable Life Assur. Soc. of U.S.

• Decision Date: 20 January 1936
• Docket Number: No. 6395.,6395.
• Parties: MULLANEY v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.
• Court: North Dakota Supreme Court

66 N.D. 235

264 N.W. 663

MULLANEY

v.EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.

No. 6395.

Supreme Court of North Dakota.

Jan. 20, 1936.

Syllabus by the Court.

1. Where, in a contract of insurance to pay disability benefits, it is agreed between the parties to the contract that these disability benefits shall be effective upon receipt by the insurer of due proof of such disability, the right to such benefits does not accrue until such due proof is given to the insurer.

2. Where, in such contract of insurance, the insurer agrees to make to the insured monthly payments for total and permanent disabilities, disability payments being effective upon receipt by the insurer of due proof of such disability, the insured cannot collect monthly payments for the period of disability existing prior to the furnishing of due proof.

Appeal from District Court, Stark County; Harvey J. Miller, Judge.

Action by John F. Mullaney, as administrator of the estate of Vera H. Mullaney, deceased, against the Equitable Life Assurance Society of the United States. From a judgment for plaintiff, defendant appeals.

Reversed.

Dullam & Young, of Bismarck, for appellant.

Murtha & Murtha, of Dickinson, for respondent.

BURR, Judge.

In 1925 the defendant issued to Vera Mullaney a policy of life insurance which contained the following provision:

“Total and Permanent Disability.

(1) Disability benefits before age 60 shall be effective upon receipt of due proof, before default in the payment of premium, that the Insured became totally and permanently disabled by bodily injury or disease after this policy became effective and before its anniversary upon which the Insured's age at nearest birthday is 60 years, in which event the Society will grant the following benefits:

(a) Waive Payment of All Premiums payable upon this policy falling due after the receipt of such proof and during the continuance of such total and permanent Disability; and

(b) Pay to the Insured a Monthly Disability-Annuity as stated on the face hereof; the first payment to be payable upon receipt of due proof of such Disability and subsequent payments monthly thereafter during the continuance of such total and permanent Disability * * *.”

The insured died from cancer in 1933, being then less than sixty years of age. She was under permanent disability for the preceding two years. All premiums were paid as they became due. No notice of any disability whatever was submitted to the defendant by or on behalf of the insured prior to her death. After her death the defendant received a letter wherein a doctor certified he had examined the insured in July, 1933, and found she was suffering with a large, malignant abdominal tumor of ovarian origin; that he advised an immediate operation; that such operation was performed July 11, 1933; that the insured was bedridden from that time until her death, etc.

Upon his appointment as administrator the plaintiff made demand for disability benefits for the two years prior to the death of the insured, which demand was refused on the ground: “that under the contract of insurance benefits could not be allowed for a period of total disability alleged to have existed prior to the receipt of proof of total and permanent disability, and that no proof of disability was made prior to the death of the insured. * * *” The trial court held the plaintiff could recover, and the defendant appeals.

We will assume, without deciding, that such letter was “due proof” of total and permanent disability-a very doubtful proposition.

As usual in such policies, the life of Vera Mullaney was insured, but this amount has been paid. The plaintiff's claim is based on the supplementary contract covering disabilities.

There is nothing ambiguous in the contract dealing with total and permanent disabilities. It is in essence an annuity to go into effect upon the happening of certain events, as shown in Legg, Petitioner, v. St. John, Trustee, 56 S.Ct. 336, 339, 80 L.Ed. ---, decided by the United States Supreme Court January 6, 1936. Here the court says: “The fact that the disability benefits are provided for in a ‘Supplementary Contract’ issued on the same day as the policy and physically attached thereto does not make them life insurance. The life policy and the contract were executed as distinct instruments. The ‘Supplementary Contract’ was to operate for some purposes as if a part of the life policy. But for all other purposes it is a separate obligation. The hazards covered by the two instruments are obviously different.”

The beneficiaries differ also. The payment under the life policy was to be made to the designated beneficiary; the disability benefits are to be paid to the insured herself. A separate and different premium was exacted for the obligations assumed in each instrument.

[1][2] The contract went into effect July, 1925. If after that date, and before the insured reached the age of sixty years, she furnished to the company due proof that she had become totally and permanently disabled by bodily injury or disease, the defendant agreed to waive the payment of further premiums on the life insurance as well as disability benefits, and to pay her a stipulated monthly payment. But such benefits and payments did not become effective until the company received due proof of the disability. After such proof was furnished the first monthly payment was payable from the date of the receipt of the due proof of disability, and subsequent...