Mutual Life Ins. Co. of Baltimore v. Bratt
| Decision Date | 17 December 1880 |
| Citation | 55 Md. 200 |
| Parties | THE MUTUAL LIFE INSURANCE COMPANY OF BALTIMONE v. MARY A. BRATT, by her next friend, JOSHUA OWINGS. |
| Court | Maryland Court of Appeals |
APPEAL from the Circuit Court for Howard County, on removal from the Baltimore City Court.
The case is stated in the opinion of the Court.
Exception.--At the trial of the case before the Court without a jury, the plaintiff offered four prayers, and the defendant, two. The substance of these prayers with their modifications is stated in the opinion, and also the instruction given by the Court below (MILLER and HAMMOND, J.) in lieu of the plaintiff's first prayer. On the rejection by the Court of the defendant's prayers, he excepted, and the finding of the Court and judgment thereon being in favor of the plaintiff for $1819.15, with interest and costs, the defendant appealed.
The cause was argued before BARTOL, C.J., BOWIE, ALVEY and IRVING, J.
William M. Merrick, for the appellant.
The Court erred in rejecting the tables and printed rules of the company, printed and circulated prior to issuing this policy because the company, being a mutual company, the insured was a party to those printed rules and regulations and declarations, as to the meaning and mode of computing payments upon policies, and the same were to be taken as if incorporated with the policy itself, and as guides to its meaning and interpretation. These are not oral evidence offered to explain, alter or vary a written contract; but existing writings, to which the parties to the contract refer and adopt as parcels of the contract itself, so far as applicable thereto. (See Bliss on Insur., sec. 426 pp. 766, 767, and authorities in notes thereto; 34 Md., 553, and Taylor on Evid., sec. 1082.)
The evidence of the expert was merely a statement of those extrinsic facts and scientific principles to which the subject-matter of the contract related, and an acquaintance with which was essential to the proper understanding of the terms used in the contract. (See Taylor on Evid sec. 1058, 1060 to 1065, and 1082.)
But after all, the question remains, what is the meaning of the expression, "the company shall not be liable for the payment of the whole sum assured, but only for an amount proportionate to the number of premiums paid?"
Now, if we take the natural sense of the words, and do not by intendment supply anything which has been omitted by accident, ignorance or inadvertence, the expression here, since there were twenty-seven quarterly payments, is the same as saying the company shall be liable to a part of the sum insured, proportioned to twenty-seven. This is a manifest ambiguity, or to speak more correctly, is an expression having no meaning at all. Whether considered as a patent ambiguity, or a totally insensible expression, the same result must follow, that the plaintiff cannot recover.
We are necessarily driven to conjecture what was the meaning of the parties, for they have not expressed any in words, nor by any legitimate deductions from the words themselves, apart from the unexpressed principles and rules and motives of both contracting parties, which enter into every policy of life insurance.
The question then is, shall we resort to conjecture, or shall we interpret this contract according to the rules of equity, which this company has written, printed and promulgated, and to which the assured is a party, being by the terms of the charter, section third, a member of the company, and a participant in its benefits and gains?
By turning to table No. 1 of this company, and its general rule, the Court will see that there is a standard of valuation assigned to every policy, as non-forfeitable, after payment of the annual premiums, and this standard is still more sharply defined in the printed regulations for computing values on default, when the whole policy is to be paid up within a definite number of years. The testimony of the expert, as to the proper mode of computing the valuation under the claim in question, corresponds with those rules, and makes a basis of calculation accordant with the theory of the defendant's second prayer, which the Court rejected.
Again, if we leave out of view those special rules, and interpret the expressions in the policy by the standard of the principles regulating general life insurance, and by the rules adopted for ascertaining the value of policies, when accidents, or contingencies unprovided for, call for an equitable valuation, we reach the rule and mode of valuation expressed in the defendant's first prayer, and which is based upon the doctrines of life insurance as explained by the expert, Hall, the actuary.
This principle of calculation accords with the doctrines announced by the Supreme Court of the United States, in 92 Otto, 24 to 35, and by the English Courts in Bell's Case, 9 Law Reports, Equity Div., 706, and Holdick's Case, 14 Law Rep., Equity Div., 72.
Another mode of computation which may be presumed to have been in the contemplation of the parties, is derived from the table of the expectation of life, table 14 of this company. The age of the insured being sixty-one, the expectation of his life was thirteen and a half years He reasonably calculated to pay premiums for thirteen and a half years, then the proportion which he actually paid, seven, to the number contemplated, thirteen and a half, may well be taken in analogy to the rule expressed in defendant's second prayer, and to the rule in all policies for fixed terms of years, as the true proportion for which the company should be liable upon death after default, viz., 7-13 1/2 of the sum insured.
It is a well ascertained principle in life insurance, that a policy-holder is expected to confer a benefit by his contributions, and if he suffers the payments to lapse, he inflicts upon the company an injury equal to the present value at the term of breach of the future profits which the company might reasonably anticipate from his continued payments. Hence, as the injury is inflicted upon the company at the date of the first breach, the measure of their injury should be the correlative measure of the price or proportion to be paid to him upon the hypothesis of non-forfeiture, in other words, the surrender value of the policy.
If it be alleged that there is no evidence, or that the testimony of the expert, or the passage from the work on insurance, verified by him and read to the Court, are not to be accepted as legal evidence; nevertheless, those are matters of which the Court can and ought to take judicial notice, and the Court may rightfully call in aid those sources of instruction in aid of its own knowledge. It may be well to advert also to the non-forfeiture law of Massachusetts, which is explained and quoted in Bliss, sec. 203, for the purpose of ascertaining that great underlying rule of equity, between the insurer and insured, which must be taken into account in interpreting the clauses of the policy now before the Court. For it is too clear for controversy, that the words of the policy, unaided by extrinsic circumstances, are not expressive of any exact meeting between the minds of the contracting parties, and the question, therefore recurs, what rule of interpretation will best effectuate justice between the parties?
Samuel Snowden, for the appellee.
The construction of policies of insurance is to be governed by the same principles as are applied in the construction of other contracts. National Insurance Company vs. Crane, 16 Md., 260; 7 U.S. Digest, (1 st Series,) p. 638, sec. 72; 4 Wait's Actions and Defences, 106.
They are to be construed liberally in favor of the insured. Rolker vs. Great Western Insurance Company, 4 Abb. App. Dec., 76; Wells vs. Pacific Insurance Company, 44 Cal., 39; Com. Ins. Co. vs. Robinson, 64 Ill., 265.
And in case of ambiguity, the language must be considered that of the company, and construed most strongly against it. Conditions of forfeiture receive a strict construction against the company for whose benefit they are introduced. Symonds vs. North W. M. L. I. Co., 6 Ins. Laws Jour., 648, sec. 149.
And the policy must be taken as expressing the final agreement of the parties, and as merging all previous verbal stipulations. Insurance Company vs. Mowry, 96 U. S. (6 Otto.)
Applying these well settled rules to the construction of this policy, it is susceptible of a reasonable construction upon its face, without resorting to extrinsic evidence. The insurance was to continue " for the natural life of Henry Bell;" and if the quarterly premiums were paid by him up to the time of his death, then the company agreed to pay to the plaintiff the sum of $2000, but in case he failed to pay the premiums, then the company provided " that it should not be liable for the payment of the whole sum insured, but only for an amount proportionate to the number of premiums paid. " This language is restrictive, limiting the liability, but implying liability within the limitation imposed, according to the rule laid down by the Supreme Court of Maine, in construing a similar provision. Dorr vs. Ph nix Life Insurance Company, 67 Maine, 438.
As soon as Bell made default in the payment of the premiums, the policy became an insurance upon his life, for such an amount as might be ascertained at his death to be proportionate to the number of premiums paid by him. As, therefore, he paid twenty-seven quarterly premiums, and lived until after thirty-one quarterly payments became due, the company became bound...
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