Mutual Life Ins. Co. of New York v. Smith

• Decision Date: 22 January 1935
• Citation: 257 Ky. 709
• Parties: Mutual Life Insurance Co. of New York v. Smith.
• Court: United States State Supreme Court — District of Kentucky

257 Ky. 709

Mutual Life Insurance Co. of New York v. Smith.

Court of Appeals of Kentucky.

Decided January 22, 1935.

1. Insurance. — Parties to insurance contract can insert therein any provision they desire, and court cannot make contract for parties under guise of interpretation or construction by inserting words or phrases not contained in contract, or by excluding words or phrases that are contained in contract, but must define liability of insurer and determine right of insured under contract according to words, terms, and conditions as made by parties.

2. Insurance. — Courts must construe words of insurance policy as found therein, and as persons with usual and ordinary understanding would construe words when used to express purpose for which they are employed, giving insured benefit of all doubt as to their meaning.

3. Insurance. — Where life policy contained provision for benefits in event of disability before age 60, provided insured furnished due proof of disability, insured's furnishing proof of disability was not condition precedent to creation of coverage for his disability or of liability for disability benefits, but was condition precedent only to his right to enforce payment of disability benefits.

4. Evidence. — It is matter of general knowledge that policies of insurance companies seldom contain identical terms or conditions, or employ same words, phrases, or clauses, so that every company's policy must be construed as it is written and applied to developed facts in particular case.

5. Insurance. — Where insurance policy requires giving of notice or furnishing of proof "immediately" or "forthwith," notice or proof must be furnished within reasonable time, and failure to give notice or furnish proof within reasonable time is fatal, unless notice or proof is waived.

6. Insurance. — Where insurance policy provides that proof shall be made within definite time and stipulates that no action shall be maintained until all of policy's conditions have been complied with by insured, failure to make proof within specified period will not forfeit policy, but only postpone right of action until furnished.

7. Insurance. — Under life policy waiving premiums during insured's disability, insured could not recover premiums paid while insured was disabled and before proof of disability was furnished.

8. Insurance. — Under life policy providing for benefits in event of disability before age 60, provided insured furnished due proof of disability, insured who became disabled 4 years before reaching age 60 but did not furnish proof of disability until about 2 years after reaching age 60, could recover disability benefits accruing after proof of disability was furnished, but not before proof of disability was furnished.

Appeal from Warren Circuit Court.

BRUCE & BULLITT and R. LEE BLACKWELL for appellant.

RODES K. MYERS and W.R. GARDNER for appellee.

OPINION OF THE COURT BY JUDGE RICHARDSON.

Reversing.

For paid premiums, the Mutual Life Insurance Company of New York, in October, 1919, issued and delivered to Jasper A. Smith two policies by which it agreed to pay Carrie Smith "upon receipt at its home office of due proof of the death of Jasper A. Smith," $1,000 on each of the policies. In so far as the policies provide for the payment of the benefits to the beneficiary in the event of the death of Jasper A. Smith they are not here involved. The terms, provisions, and conditions of the policies are identical. They contain the following:

"Benefits in the Event of Total and Permanent Disability Before Age 60.

"When Such Benefits Take Effect. — If the Insured, after payment of premiums for at least one full year, provided all past due premiums have been duly paid, shall before attaining the age of sixty years at nearest birthday and while this Policy is in full force furnish due proof to the Company at its Home Office that he has become totally and permanently disabled by bodily injury or disease, so that he is, and will be, permanently, continuously and wholly prevented thereby from performing any work for compensation, gain, or profit, or from following any gainful occupation, and that such disability has then existed continuously for not less than sixty days, the Company will grant the following benefits."

"Income to Insured. — One year after the anniversary of the date of issue of this Policy next succeeding the receipt of said due proof, the Company will pay to the Insured, if then living and such disability still continue, a sum equal to one-tenth of the face amount of the Policy, [but not including dividend additions] and a like sum on each such anniversary thereafter, if the Insured be then living and such disability still continue."

Declaring in his petition that he had, in 1926, become "totally and permanently disabled by bodily disease, so that he was, is, and will be, permanently, continuously and wholly prevented thereby from performing any work for compensation, gain or profit, or from following any gainful occupation, and that such disability" had "existed continuously for not less than sixty days next before he had furnished, to the Mutual Life proof of disability," Jasper A. Smith sought to recover on the disability benefit clause of the policies one-tenth of the face amount of each policy, claiming the same was due "one year after the anniversary of the date of the issue of the policy, next succeeding the receipt of the due proof of the disability." He alleged that he had paid the company, after the commencement of his total and permanent disability, $809 in premiums which he averred he did not owe, the same being waived by a clause in the policies, by reason of his disability; that his total and permanent disability occurred before arriving at the age of sixty, and he had furnished the Mutual Life, at its request, proof of disability. The date on which the proof was furnished is not stated in the petition.

The Mutual Life traversed the petition and set forth the above-quoted clauses of the policies and an additional clause, reading:

"An additional annual premium of $2.55 in consideration of which these disability benefits are granted, is payable for eleven full years, or until the prior termination of the provision for these benefits. The premium stated on the face of the policy includes such an additional premium and the premium payable after the provision for these benefits terminates, will be the premium stated on the face of the policy, less the amount of such additional premium."

And charged that on October 16, 1930, the annual premium on each of the policies was reduced to $47.46, when the insured reached the age of sixty; that he became sixty years of age on November 15, 1930; but "did not furnish due, or any, proof, to the Mutual Life that he had become totally and permanently or at all disabled by bodily injury or disease or otherwise; nor otherwise given notice to it that he had suffered a total or other disability from disease or otherwise." It pleaded these provisions of the policies and these facts as a bar to his recovery of the disability benefits and the premiums paid between October, 1926, and the date of the furnishing proof of disability.

On a submission of the issues to the jury, under the instructions of the court, a verdict was returned in Smith's favor for $1,884.84, with 6 per cent. interest on $1,589.92 from October 3, 1932, and like interest on $294.92 from October 16, 1932.

To sustain the judgment from which this appeal was taken, Smith contends "the policies sued on, indemnify the insured against permanent, total disability before reaching the age of sixty, and if such disability is established, indemnity dates from date of disability, notwithstanding notice and proof of disability was filed until after reaching that age." "If the disability is total, but not permanent in character, being only presumably permanent on account of its existence for the required length of time, indemnity dates from filing of proof." In support of this construction of the policies, he cites to us Mutual Life Ins. Co. v. Wheatley, 243 Ky. 69, 47 S.W. (2d) 961; Standiford v. American Ins. Co., 208 Ky. 731, 271 S.W. 1042; Kenton Ins. Co. v. Downs, 90 Ky. 236, 13 S.W. 882, 12 Ky. Law Rep. 115; Phenix Ins. Co. v. Coomes, 20 S.W. 900, 14 Ky. Law Rep. 603; German Ins. Co. v. Brown, 29 S.W. 313, 16 Ky. Law Rep. 601; AEtna Life Ins. Co. v. Bethel, 140 Ky. 609, 131 S.W. 523; New York Life Ins. Co. v. Gunn, 253 Ky. 596, 69 S.W. (2d) 1018, and many foreign cases. The Mutual Life insists that "the requirement that such proof be furnished before he attained that age [sixty] was a condition precedent to the creation of [1] of a coverage for his alleged disability or [2] of any liability for disability benefits"; his "inexcusable delay [1] of more than six years after the commencement of his alleged disability and [2] almost two years after he attained the age of sixty years, in furnishing proof of disability was unreasonable as a matter of law"; that "Smith was not totally disabled at any time"; he "did not, `before attaining the age of sixty years,'" furnish proof that he had become totally and permanently disabled. In support of its insistence, it cites to us "thirty-one decisions, in the federal courts and in sixteen states." Typical of them are: Epstein v. Mutual Life Ins. Co. of N.Y., 143 Misc. 587, 257 N.Y.S. 772, 773; Berry v. Lamar Life Ins. Co., 165 Miss. 405, 142 So. 445, 145 So. 887; Peters v. Mutual Life Ins. Co. of New York (D.C.) 4 F. Supp. 928; Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 52 S. Ct. 230, 231, 76 L. Ed. 416.

In the Epstein Case, the complaint of the insured sought to recover disability benefits alleged to be due under three policies of the Mutual Life (the company here involved). The facts set forth in the complaint are not stated in the opinion of the court. "The complaint prays for a judgment decreeing the policies be adjudged in full force and...