New York Life Ins. Co. v. Jackson

• Decision Date: 10 August 1938
• Docket Number: No. 6225.,6225.
• Citation: 98 F.2d 950
• Parties: NEW YORK LIFE INS. CO. v. JACKSON et al.
• Court: U.S. Court of Appeals — Seventh Circuit

98 F.2d 950 (1938)

NEW YORK LIFE INS. CO. v. JACKSON et al.^*

No. 6225.

Circuit Court of Appeals, Seventh Circuit.

August 10, 1938.

Rudolph J. Kramer, Bruce A. Campbell, R. E. Costello, Roland H. Wiechert, and Norman J. Gundlach, all of East St. Louis, Ill. (James J. Graham, of Springfield, Ill., and Louis H. Cooke, of New York City, of counsel), for appellant.

M. W. Feuerbacher, Arthur J. Freund, and Fred A. Eppenberger, all of St. Louis, Mo., for appellees.

Before EVANS and SPARKS, Circuit Judges, and LINDLEY, District Judge.

SPARKS, Circuit Judge.

Appellant filed suit against the insured and the beneficiary of a policy, to cancel the reinstatement of the policy on the ground that such reinstatement was obtained by fraud. The defendants denied the responsibility of the insured for any misrepresentation because of his mental incapacity at the time it was alleged to have been made. They also filed a cross-bill seeking payment of monthly disability benefits provided by the policy. The District Court rendered a decree in favor of the defendants on the cross-bill, declaring void the reinstatement of the policy, but holding it in full force from the date of issue. We affirmed the decree (7 Cir., 94 F.2d 288), and the Supreme Court granted certiorari, 304 U.S. 261, 58 S.Ct. 871, 82 L.Ed. ___ and remanded the cause to this court for further consideration, stating that we had considered the question presented as one of general law instead of basing our decision on principles of the state law applicable. The insured resided in Missouri when the policy was issued and delivered to him.

In our opinion of January 10, 1938, we stated that the problem was "whether, under the provisions of the policy here involved, an insurer is liable for disability benefits to its insured who became totally and permanently disabled during the period of grace following the date on which a semi-annual premium payment fell due, which premium was not paid until after the expiration of the period of grace." We repeat the pertinent provisions of the policy:

"In event of default in payment of premium after the Insured has become totally disabled as above defined, the policy will be restored and the benefits shall be the same as if said default had not occurred, provided due proof that the Insured is and has been continuously from date of default so totally disabled and that such disability will continue for life or has continued for a period of not less than three consecutive months, is received by the Company not later than six months after said default."

"Grace. If any premium is not paid on or before the day it falls due the policyholder is in default; but a grace of one month (not less than 30 days) will be allowed for the payment of every premium after the first, during which time the insurance continues in force. If death occurs within the period of grace the overdue premium will be deducted from the amount payable thereunder."

"Payment of Premiums. All premiums are payable on or before their due date * * *. The payment of the premium shall not maintain the Policy in force beyond the date when the next payment becomes due, except as to the benefits provided for herein after default in premium payment."

"Waiver of Premium. The Company will waive the payment of any premium falling due during the period of continuous total disability * * *"

We rested our original decision on the ground that there was an inconsistency between the grace provision of the policy and other clauses, which inconsistency was to be construed in favor of the insured, and that since the grace clause provided that the policy was to be continued in force during the period of grace, the occurrence of either event insured against, namely death or total disability, served to mature the rights created by the policy, other provisions to the contrary notwithstanding.

Upon remand of the cause to this court, we afforded counsel an opportunity to file briefs on the applicable Missouri law. About two-thirds of the cases cited by appellant in response were decided by federal courts or the courts of states other than Missouri. Since the case was remanded for the purpose of decision according to the applicable principles of Missouri law, we do not find extensive citation of other authority helpful. We take it that the only question presented at this time is whether or not the decision previously reached by us upon consideration of the issues then presented to us as a matter of general law and studied by us accordingly, is out of harmony with principles of law of the state of Missouri. If there is no conflict, then our original...