New York Life Ins. Co. v. Hardison
| Decision Date | 25 May 1908 |
| Parties | NEW YORK LIFE INS. CO. v. HARDISON, Ins. Com'r. MUTUAL BENEFIT LIFE INS. CO. v. SAME. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
William A. Morse and Francis J. Geogan, for petitioners.
Dana
Malone Atty. Gen., and James F. Curtis, Asst. Atty. Gen., for respondent.
Fred
H. Nash, for other life insurance companies and the Association of Life Insurance Presidents.
These are petitions under St. 1907, p. 895, c. 576, § 75, for a review of the action of the Insurance Commissioner in refusing to approve forms of policies for life insurance filed with him by the petitioners, respectively. Certain preliminary questions that arise in each case are the same as arose and were decided in AEtna Life Insurance Company v. Hardison, 199 Mass. 181, 85 N.E. 407.
In the first of these cases the form of policy provided for a grace of 1 month for the payment of every premium after the first. St. 1907, p. 896, c. 576, § 75, subsec. 1, provides for a grace of 30 days. A grace of 1 month is not the same as a grace of 30 days. It might be a longer or a shorter period, according to the time in the year when the payment became due. One month from February 10th would ordinarily be 28 days. In leap year it would be 29 days, but it never would be 30 days. The form of policy was insufficient in this particular.
Instead of the provision required by section 75, subsec. 3, the form filed by the petitioner contains this language: 'This policy constitutes the entire contract between the parties, and is free of conditions as to residence, occupation, habits of life, and manner, time or place of death.' For reasons stated in Travelers' Insurance Company v. Hardison, 199 Mass. 181, 85 N.E. 407, and for other reasons, this language should be changed so as to make it conform to the statute. The application should be included in the statement of the contract. It is conceivable that something in the application might be advantageous to the insured, as a part of the contract. Millard v. Brayton, 177 Mass. 533-537, 59 N.E. 436, 52 L. R. A. 117, 83 Am. St. Rep. 294. It was doubtless the intention of the Legislature that the insured should have in the policy an affirmative assurance that no statement will be used in defense of a claim, unless it is contained in a written application, a copy of which is indorsed upon or attached to the policy. See Moore v. Northwestern, etc., Insurance Company, 192 Mass. 468-471, 78 N.E. 488. No departure from the exact provisions required by the statute should be permitted, unless it is too plain for doubt that the substitution is in every way as advantageous to the insured and as desirable as the prescribed provision.
The provision that the policy shall be incontestable from date, contained in the petitioners' form of policy, is not the same as the provision that it 'shall be incontestable after two years from its date,' except, etc., required by subsection 2 of section 75 of the statute. Such a provision is not in accordance with public policy. Reagan v. Union Mutual Life Insurance Company, 189 Mass. 555, 76 N.E. 217, 2 L. R. A. (N. S.) 821, 109 Am. St. Rep. 659. The action of the Insurance Commissioner in reference to this form of policy was right.
In the second case, the first objection to the form of policy, made by the Commissioner, was that the clause providing for reinstatement gives the privilege 'upon payment of all arrears, with interest thereon not to exceed 6 per cent. per annum,' etc., while the statute gives the privilege 'upon the payment of all overdue premiums and any other indebtedness to the company upon said policy, with interest at the rate of not exceeding 6 per cent. per annum.' Under the statute, all loans and other indebtedness must be paid. Under this form of policy, if the arrears of premiums are paid, it is unnecessary to pay the other indebtedness to the company. Everything secured to the insured by the statute is secured by this language. The chief objection of the Commissioner was that the other indebtedness is not expressly referred to in the form. But we think the meaning is clear, and that the form is sufficient.
The statute calls for a table upon or attached to the policy, 'showing in figures the loan values, if any, and the options available under the policy each year, upon default in premium payments,' etc. The table in the petitioners' form shows the 'cash surrender value' accurately, the column being headed with these words. Just before the table, under the head 'Loans,' in large type, is a statement that 'at any time while this policy is in force, the company will loan up to the limit secured by the cash surrender value,' etc. We are of opinion that the table, with the accompanying statement, sufficiently shows the loan value.
For reasons already stated in this opinion and in Travelers' Insurance Company v. Hardison, supra, the form is defective in not containing a provision that the contract includes the application, as well as the policy, and also a provision that no statement made by the insured shall be used in defense to a claim under the policy, unless it is contained in a written application, and a copy of the application is indorsed upon or attached to the policy when issued. The policy holder is entitled to have the agreement in the policy substantially as it is stated in the provision. Not only the legal effect of the contract, but the character of it, should be stated in the policy. This clause of the statute should be construed strictly. In former cases, under Rev. Laws, c. 118, § 73, where the conditions were peculiar, applications were admitted in evidence, notwithstanding certain safeguards for the insured which were less strict than some of those furnished by this statute. Holden v. Prudential Insurance Company, 191 Mass. 153, 77 N.E. 309; Moore v. Northwestern, etc., Insurance Company, 192 Mass. 468, 78 N.E. 488; Paquette v. Prudential Insurance Company, 193 Mass. 215, 79 N.E. 250; Holden v. Metropolitan Life Insurance Company, 188 Mass. 212, 74 N.E. 337; Reagan v. Union Mutual Life Insurance Company, 189 Mass. 555, 76 N.E. 217, 2 L. R. A. (N. S.) 821, 109 Am. St. Rep. 659.
In the first of the cases before us, a gentleman of the bar appeared as amicus curiae, by leave of the court, representing parties interested in the decision that might be made upon the construction and effect of the statute, and presented a brief suggesting that the section under which the petitions are brought is unconstitutional. The parties who invoke the aid of the court are precluded from making this contention ( Pitkin v. City of Springfield, 112 Mass. 509), and the respondent does not desire to make it. It is a general rule that the court will not consider the constitutionality of a statute upon an objection made by persons whose rights are not affected by it, and usually the parties to the suit are the only ones who are permitted to raise such a question. But where, as in this case, the jurisdiction of the court depends entirely upon the validity of the act, and the attention of the court is brought to that fact by persons interested in the effect to be given to the statute, although not interested in the cause before the court, we deem it our duty to consider whether we have jurisdiction, before taking affirmative action. Action of a court that has no jurisdiction is void. Belcher v. Sheehan, 171 Mass. 513, 51 N.E. 19, 68 Am. St. Rep. 445.
The first suggestion is that the Legislature could not give the Insurance Commissioner power to pass upon the forms of policies to be issued, and especially, could not provide that an insurance company should be liable criminally for issuing a policy in a form not approved by him. Secondly, it is suggested that jurisdiction could not be given to this court to review the action of the Insurance Commissioner in a case of this kind.
The Insurance Commissioner is an administrative officer. The Legislature prescribed the requirements in the forms of policies. It did not see fit to prescribe a standard form for life insurance companies, but stopped with an enactment of substantive provisions for all policies. It was proper to leave to the Insurance Commissioner the management of details in the administration of the law. It was proper to prohibit the use of policies that did not conform to the law, and to punish disobedience on the part of an insurance company. It was a reasonable regulation to require companies to submit the forms of policies to the Insurance Commissioner before using them, so that he could see whether the law was being obeyed. His duty was to approve of every form of policy that seemed to him correct. The insurance companies, after submitting their forms to him, had nothing to do but to go on with their business, unless he made objection within 30 days. If he made such objection, they were given a right to bring a suit in this court for the determination of the question whether their proposed action was within the law.
With the power of regulation of the business of insurance, and of the conduct of corporations, domestic and foreign, belonging to the Legislature, it...
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