Prudential Ins. Co. of America v. Prescott

• Decision Date: 08 December 1933
• Citation: 115 Fla. 365,156 So. 109
• Parties: PRUDENTIAL INS. CO. OF AMERICA v. PRESCOTT et al.
• Court: Florida Supreme Court

156 So. 109

115 Fla. 365

PRUDENTIAL INS. CO. OF AMERICA v. PRESCOTT et al.

Florida Supreme Court, Division B.

December 8, 1933

On Rehearing June 26, 1934.

Suit by the Prudential Insurance Company of America against Mae Irene Prescott and others. From the judgment, complainant appeals.

Affirmed.

BROWN and BUFORD, JJ., dissenting on rehearing.

On Rehearing. Appeal from Circuit Court, Palm Beach County; C. E. Chillingworth, judge.

COUNSEL

Shutts & Bowen, Joseph F. McPherson, and L. S. Bonsteel, all of Miami, for appellant.

Blackwell Donnell & Moore, of West Palm Beach, for appellees.

OPINION

BUFORD Justice.

On the 18th day of September, 1931, Jerry Prescott made application to the Prudential Insurance Company, incorporated under the laws of the state of New Jersey, for life insurance and made written answers to questions propounded in such application. The application appears to have been dated October 5, 1931. On October 5, 1931, a policy was issued, pursuant to that application. The policy was dated October 5, 1931, and was delivered on the 10th day of October, 1931.

On May 29, 1932, the insured died and on October 4, 1932, the insurance company served a written notice upon appellees denying liability under the policy and on the same date October 4, 1932, filed its bill of complaint seeking to cancel the policy.

The grounds for cancellation alleged were: That the applicant and person to whom the policy was issued had knowingly misrepresented material facts relating to the condition of his health in the answers contained in his applications to questions propounded by the insurance company's application blanks.

The facts about which the misrepresentations were alleged to have been made were material and, if the answers to the questions concerning these facts were false to the extent alleged in the pleadings, such misrepresentations constituted sufficient ground to warrant cancellation of the policy provided action was taken by the insurer within the period in which the policy was contestable.

The controlling question in this case is whether or not the insurer moved in time to avail itself of the privilege of canceling the policy for cause. The application contained the following clause:

'It is understood and agreed, however, that if at the time of signing this application the full first premium is paid the insurance shall take effect from the date of this application, in accordance with the provisions of the policy hereby applied for, provided life proposed is in sound health on the date of this application and provided this application is approved and accepted at the Home Office of the Company in Newark, New Jersey, under the plan, for the premium paid and amount of insurance applied for.'

The insurance policy contained the following clauses:

'Preliminary Provision.--This policy shall not take effect if on the date hereof the Insured be not in sound health, but in such event the premium or premiums paid hereof, if any, shall be returned.'

'Monthly Premium.--Six and 96/100 Dollars, payable on the delivery of this policy and a like amount payable as hereinafter provided on or before the fifth day of each month after the date hereof in every year during the continuance of this policy, until twenty full years' premiums shall have been paid, or until the prior death of the Insured.'

'Incontestability.--This policy shall be incontestable after one year from its date of issue, except for non-payment of premium but if the age of the Insured be misstated the amount or amounts payable under this policy shall be such as the premium would have purchased at the correct age.'

It is contended by the appellant that the period of incontestability began one year after the date of the insurance policy and that any time prior to that date the insurer could contest the validity of the policy and that notice was given and suit instituted prior to the beginning of the period of incontestability and within the period in which the insurer by the terms of the policy could contest its validity.

It is the contention of the beneficiaries that the period of incontestability began to run one year after the application was made by the insured and that the application was made on September 18, 1931, thereby causing the period of incontestability to begin to run from the 18th day of September, 1932. That as the suit was not filed until October 4, 1932, it could not be maintained because the policy had become incontestable on that date by its terms.

It is contended that the trial court agreed with the contention of the beneficiaries.

The parties to this contract were sui juris and, therefore, could make and enter into such contracts and agreements as they saw fit to concur in. There is no ambiguity in the contract.

As noted above, the application provided that, if at the time of signing the application the full first premium is paid, the insurance shall take effect from the date of the application, in accordance with the provisions of the policy applied for, provided the life of the proposed insured is in sound health on the date of the application and provided the application is approved and accepted at the home office of the company in Newark, N. J., etc.

In other words, this provision of the application gave the insured protection pending the approval of the application and the issuing of a policy pursuant thereto.

The above-quoted clauses of the policy first provided that the policy should not take effect if on the date thereof the insured be not in sound health. Further in the policy it was provided that monthly premiums of $6.96 should be payable on delivery of the policy and a like amount should be payable on the 5th day of each month after the date of the policy in every year during the continuance of the policy until twenty full year premiums shall have been paid, or until the prior death of the insured. Then further it was provided that, 'This policy shall be incontestable after one year from its date of issue' etc.

While under the terms of the company's agreement contained in the application the insured was protected pending the issuance of the policy, no policy was issued until the application was approved at the home office and there is no contention that application was approved prior to the 5th of October, 1931. The very language of the policy shows that the contract sought to be canceled did not take effect until the date affixed to the policy. The second clause in the policy provides that it shall not take effect at all, if on the date thereof the insured should not be in sound health. Again, the policy provides that a monthly premium should be paid upon delivery of the policy on the 5th day of each month after the date thereof in every year during the continuance of the policy, etc.

The policy was dated the 5th day of October, 1931.

Then the incontestability clause provides, 'This policy shall be incontestable after one year from its date of issue.' This was not equivalent to a contract that it should be incontestable after one year from date on which insurance under the terms of the application became effective.

In Mutual Life Insurance Co. of New York v. Hurni Packing Co., 263 U.S. 167, 44 S.Ct. 90, 91, 68 L.Ed. 235, 31 A. L. R. 102, the Supreme Court of the United States, speaking through Mr. Justice Sutherland, in construing an incontestability clause in a policy, which policy was applied for on September 2, 1915, and which was in fact executed on September 7, 1915, but antidated as of August 23, 1915, and delivered to the insured about September 13, 1915, said:

'Here the words, referring to the written policy, are 'from its date of issue.' While the question, it must be conceded, is not certainly free from reasonable doubt, yet, having in mind the rule first above stated, that in such case the doubt must be resolved in the way most favorable to the insured, we conclude that the words refer not to the time of actual execution of the policy or the time of its delivery but to the date of issue as specified in the policy itself. Wood v. Brotherhood of American Yeoman, 148 Iowa, 400, 403, 404, 126 N.W. 949; Anderson v. Mutual L. Ins. Co., 164 Cal. 712, 130 P. 726, Ann. Cas. 1914B, 903; Harrington v. Mutual L. Ins. Co. 21 N.D. 447, 34 L. R. A. (N. S.) 373, 131 N.W. 246; Yesler v. Seattle, 1 Wash. 308, 322, 323, 25 P. 1014. It was competent for the parties to agree that the effective date of the policy should be one prior to its actual execution or issue; and this, in our opinion, is what they did. Plainly their agreement was effective to govern the amount of the premiums and the time of their future payment, reducing the former and shortening the latter, and, in the absence of words evincing a contrary intent, we are unable to avoid the conclusion that it was likewise effective in respect of other provisions of the policy, including the one here in question. This conclusion is fortified by a consideration of the precise words employed, which are 'from its (that is, the policy's) date of issue,' or, in other words, from the date of issue as specified in the policy. It was within the power of the insurance company if it meant otherwise, to say so in plain terms. Not having done so, it must accept the consequences resulting from the fact that the doubt for which its own lack of clearness was responsible must be resolved against it.'

It will be seen that in that case the Supreme Court of the United States held that the language used in the policy 'date of issue' would be construed to mean the date of issue as appearing in the policy, although it was conceded that that date was prior to the making of the application for the insurance, which application was made prior to the actual date...