Seabra v. Puritan Life Ins. Co.

• Decision Date: 26 January 1977
• Docket Number: No. 75-140-A,75-140-A
• Citation: 369 A.2d 652,117 R.I. 488
• Parties: Peter G. SEABRA et al. v. PURITAN LIFE INSURANCE COMPANY. ppeal.
• Court: Rhode Island Supreme Court

Page 652

369 A.2d 652

117 R.I. 488

Peter G. SEABRA et al. v. PURITAN LIFE INSURANCE COMPANY.

No. 75-140-Appeal.

Supreme Court of Rhode Island.

Jan. 26, 1977.

[117 R.I. 505] Albert B. Watt, Providence, for plaintiffs.

Hinckley, Allen, Salisbury & Parsons, Robert W. Lovegreen, Providence, for defendant.

OPINION

KELLEHER, Justice.

The plaintiff, the named beneficiary of a life insurance policy issued by the defendant, sued to recover the policy's proceeds following the death of her husband. The case was tried before a Superior Court jury, who in turn awarded the plaintiff the sum of $47,170. The defendant had appealed. Hereinafter we will refer to the plaintiff as Dolores, to her late husband as the insured or Dr. Seabra, and the defendant as Puritan.

On April 24, 1963, Puritan issued a 20-year decreasing term policy on the life of Dr. Seabra. Attached to the policy was a rider containing a so-called waiver of premiums agreement for which Dr. Seabra paid an additional charge. The policy called for a total annual premium of $480, which was to be paid in quarterly installments. If a payment was not made on its due date or within the policy's 31-day grace period, the policy would become void. However, the policy could be reinstated upon the insured's written request, the payment of all past-due premiums plus interest, and the furnishing of satisfactory evidence that the insured was in good health.

Unfortunately, the quarterly payment due April 24, 1966, was not paid by that date or within the grace period. However, in early August Puritan received from Dr. Seabra a check dated July 30, 1966, for $240, which Puritan cashed. Later, on August 3, 1966, Puritan mailed Dr. Seabra a form which, when completed, would attest to the insured's good health and told him that the form must be completed and returned to Puritan. After a month went by with no response, Puritan sent a second letter and a duplicate form to Dr. Seabra. It again asked its insured to complete the form and return it. This letter, which was dated September 2, 1966, closed with the warning: 'If we do not hear from you by October 3rd, the amount of $240.00 will be returned to you and the policy cancelled.' Doctor Seabra did not live to bear the brunt of that admonition. On September 4, 1966, he died, and this litigation ultimately ensued.

At trial an abundance of evidence was adduced on two basic questions. The first was whether Puritan had by its actions reinstated the policy during the summer of 1966. The second issue was whether the waiver of premiums rider had become operative, thereby preserving Dolores' right to the policy's proceeds. Dolores' suit was based on two theories: either the life policy, having lapsed, had been reinstated in August or there was no lapse because Puritan was bound by the waiver of premiums clause.

In its appeal Puritan claims that the trial justice should have granted its motions for a directed verdict and a new trial. It also contends that the trial justice erred in that portion of his jury instructions which related to the insured's failure to comply with the notice and proof of disability called for in the premium-waiver portion of his policy.

We will first concern ourselves with the waiver of premiums portion of the policy and the part it played in this litigation. In pertinent part, the agreement provides that upon the insurer's receipt of 'due proof' that an insured has become 'totally disabled,' Puritan will waive the payment of any premiums that are due after the commencement of and during the continuance of the insured's total permanent disability. The agreement goes on to define 'total disability' and then delineates a timetable for the providing of a written notice of claim and proof of total disability, including a stipulation that claim and proof be given during the insured's lifetime and the period he was disabled. The notice and proof portions of this proviso also provide that the falure to comply with the timetable will be overlooked upon a showing that the requisite notice and proof were given 'as soon as was reasonably possible.' The trial justice, after discussing the rider's notice and proof requirements, told the jury that 'an insured may be excused from notice and proof of disability if mentally incapacitated.' The trial justice then expounded on this proposition. It is obvious from the trial justice's instructions that he assumed that an insured's mental incapacity would excuse the giving of the necessary notice and proof. However, so far as we are concerned, this particular issue is one of first impression.

In Wolf v. Prudential Ins. Co. of America, 62 R.I. 270, 4 A.2d 897 (1939), we recognized that a properly phrased policy provision requiring proof of total and permanent disability could be a condition precedent to a successful suit on the policy. ¹ However, there is a world of difference between Wolf's amputated finger and Dr. Seabra's mental acuity. There has been and continues to be a diversity of judicial opinion as to whether 'insanity' or 'mental incompetency' of the insured excuses the lack of or the delay in filing notice of proof of disability. See the cases collected in Mutual Life Ins. Co. v. Johnson, 293 U.S. 335, 55 S.Ct. 154, 79 L.Ed. 398 (1934). In an annotation in 142 A.L.R 852, 853 (1943), appears the following statement:

'There is a conflict of authority upon the question whether the insanity of the insured will excuse the giving of notice of disability under life policies providing for disability benefits and (or) the waiver of premums, although, at least numerically, there seem to be more cases in favor of, than there are opposed to, the view that insanity excuses notice of disability.'

Appleman observes that the better rule holds that 'insanity' excuses a failure to make proof of disability within the time prescribed but he 'regrets' that a '* * * majority of cases * * * hold that the insured has an absolute duty to submit proofs which is not excused by his insanity.' 15 Appleman, Insurance Law and Practice § 8317 at 134-35 (1944).

To require a person who is described by some as being 'insane' or 'mentally incompetent' to do something that his disability prevents him from doing places that person in what some would refer to as a 'catch-22' situation. Thus, it is that we agree with the proposition that it would be unreasonable to assume that an insane or mentally incompetent person could accurately assess the nature and degree of his ailment. Magill v. Travelers Ins. Co., 133 F.2d 709 (8th Cir. 1943). The insured is not bound to give notice of his disability when he is unable to do so by reason of the very disability insured against. As the court observed in Harris v. Pacific Mut. Life Ins. Co., 137 F.2d 272 (10th Cir. 1943), while the furnishing of due proof of disability is a condition precedent to the insurer's obligation to waive premiums, it was not the event insured against, and since the inability to furnish proof grew out of the risk insured against, denial of recovery would be tantamount to a forfeiture. Consequently, the trial justice was correct when he ruled that 'mental incapacity' or 'insanity' could excuse the insured's failure to comply with the notice and proof requirements of the waiver of premium portion of the policy.

The question then remains as to what degree of insanity will operate as an excuse. As judges, lawyers, experts and laymen know, 'insanity' is not one but a myriad of illnesses. The various rules contending for preeminence in criminal law attest to that fact. See State v. Nault, 112 R.I. 687, 314 A.2d 627 (1974).

The trial justice in this case, however, employed a standard which we find eminently reasonable and accordingly adopt. The trial justice said : '(T)he impossibility of giving the notice required does not excuse giving the notice where it becomes possible to do so; and the insured will be excused only when he acts within a reasonable time after such disability is removed.' The disability must render the insured unable to comply with the policy requirements. Mental impairment will not excuse delay unless it is not reasonably possible to give notice during the entire period specified. See Jackson v. Kennesaw Life & Accident Ins. Co., 116 Ga.App. 107, 156 S.E.2d 470 (1967); Magill v. Travelers Ins. Co., supra. We realize that such disability may assume various forms. The insured's mental condition may render him incapable of knowing that he had a policy, that he was suffering from a mental derangement, or that he had to furnish proof of disability. Magill v. Travelers Ins. Co., supra. And we recognize further, as did the trial justice, that there may be periods of normalcy or sanity during which the insured can appreciate the nature of his illness and can be expected to provide the notice and proof. The rule that we adopt today is one of reason. It protects the insured in that limited situation where he is so mentally incapacitated as to be incapable of notifying his insurance company. Therefore, insofar as the trial justice assumed that an insured's mental incapacity would excuse notice of claim and proof of loss, we find no error.

In dealing with Puritan's objection to the denial of its motion for a directed verdict, we must look at the evidence in the same manner and fashion as the trial court, and we are bound by the same rules as govern it. The evidence must be viewed by us without weighing it or assessing the witnesses' credibility in the light most favorable to Dolores, and we must, as did the trial justice, draw therefrom only those reasonable inferences which support the two theories upon which her suit was based. If there is a proper evidentiary basis to support her claim, the controversy must be resolved by the jury. Fontaine v. Devonis, 114 R.I. 541, 336 A.2d 847 (1975).

Viewing the evidence as it related to the reinstatement status of the policy, we find that Puritan cashed the insured's July 1966 ...