State Mut. Life Assur. Co. v. Stapp

• Decision Date: 12 July 1934
• Docket Number: No. 5149-5151.,5149-5151.
• Parties: STATE MUT. LIFE ASSUR. CO. v. STAPP et al. SAME v. STAPP (two cases).
• Court: U.S. Court of Appeals — Seventh Circuit

72 F.2d 142 (1934)

STATE MUT. LIFE ASSUR. CO. v. STAPP et al.

SAME v. STAPP (two cases).

Nos. 5149-5151.

Circuit Court of Appeals, Seventh Circuit.

July 12, 1934.

C. L. Hubbard and Franklin P. Searle, both of Rock Island, Ill., for appellant.

Elmore H. Stafford and Edward W. Schoede, both of Rock Island, Ill., for appellees.

Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.

ALSCHULER, Circuit Judge.

The three appeals here involved were consolidated for hearing. In each case judgment had been given for appellees upon policies of insurance issued by appellant upon the life of John H. E. Stapp. In No. 5149, the action was upon two policies, each for $15,000, and the others were on policies of $10,000 and $15,000 respectively. All the policies bear date January 12, 1931, and each contains the following provisions:

"This policy shall not take effect until actually delivered and the first premium paid hereon during the lifetime of the insured."

"Incontestability. Except for non-payment of premium, this policy shall be incontestable after it has been in force for two full years from the date of its issue."

"Suicide. If the insured shall commit suicide within two years from the date hereof, while sane or insane, this policy shall be null and void, except for the amount of the premium paid thereon which amount shall be paid to the beneficiary herein named."

The causes were disposed of on demurrer, the court holding that the defenses interposed were not sufficient in law. Without discussing the pleadings, we proceed to consider the specific issues as they are set forth in appellant's brief, wherein it is said:

"The contested issues are:

"1. Does the incontestability clause of the policy bar the defense set up in the fourth and fifth pleas as amended, namely, intention on the part of the insured, at the time he applied for and took out the policy, to commit suicide at the end of the contestability period, and the later consummation of such fraudulent intent?

"2. Does the date appearing on the face of the policy, or the actual date of coming into effect of the policy, govern the policy provision that it shall be null and void, except as to return of premium, if the insured shall commit suicide within two years from the date thereof?"

From the pleadings admitted by appellees' demurrers it appears that the insured's death on January 27, 1933, was caused by his suicide; that the policies in issue were not delivered to the insured, nor were the premiums paid thereon, on January 12, 1931, but that, as to cause No. 5149, the premiums were paid and these policies delivered to the insured on February 10, 1931, and that, as to the other policies, the premiums were paid and the policies delivered on January 28, 1931. It further appears from certain of appellant's pleas that "after the said suicide of said John H. E. Stapp, said insured, and to-wit, on the 5th day of February, 1933, the defendant (appellant) tendered to the plaintiffs (appellees) said sums so paid by said insured as premiums on said policy with interest at the lawful rate from the respective dates of said payments of premiums; that said plaintiffs declined and refused to accept said sums so tendered to them; and the defendant further says that at all times since the making of the said tender it has been, and still is, ready to pay to the plaintiffs the said sums paid by said insured as premiums on said policy together with interest at the lawful rate from said respective dates of the payments of said premiums, and the defendant now brings the same into court here, ready to be paid to the plaintiffs if they will accept the same. * * *"

Respecting the issue of suicide, appellant contends that the policies, by their terms, did not come into force until their delivery and the payment of premiums, and that therefore the two-year period within which suicide of the insured would defeat recovery on the policies did not begin to run until the time when, through payment and delivery, the policies first came into force. Appellees contend that the date of "issue" of the policies must be considered the date which the policies bear and which the company's officers certify to be the date.

It would seem that the suicide clause itself would be determinative of this question. It specifies that suicide of the insured shall avoid the policy only if committed "within two years from the date hereof." This provision seems plain and unambiguous.

Notwithstanding the clause respecting the taking effect of the policies on payment of premium and actual delivery, the instruments by their very terms indicate that, for purposes other than maturity of obligations thereunder to the insured and his beneficiaries, the liability of the insured to the insurer is reckoned as from the date which the policies bear. The policy date is that from which the insurer is compensated for assuming the risk, notwithstanding it assumes no liability until subsequently premium payment and delivery occur. The annual premium paying date is the anniversary of the date of the policies. For the intervening time between date and delivery, during which the insured is paying for protection which he does not receive, we believe that the insurer, while exonerated from any liability otherwise accruing in that interval, may not disregard the policy date when fixing the period for giving full effect to the suicide clause.

We cannot see how operation of this provision may be restricted or enlarged by the provision which specifies when the policy goes into force. But whatever, if any, uncertainty or ambiguity might be imported into the contracts by reason of any contradiction or inconsistency between the clauses must be resolved in favor of the insured, under the very generally accepted doctrine that ambiguities and uncertainties in such instruments must be resolved against the insurer. Mutual Life Ins. Co. v. Hurni Packing Co., 263 U. S. 167, 44 S. Ct. 90, 91, 68 L. Ed. 235, 31 A. L. R. 102.

The question of when the two-year period begins to run where the insured died more than two years after the date borne by the policy and less than two years after it went into force by delivery and the payment of premium, was definitely passed upon by the Supreme Court in the Hurni Case, supra. The court said, inter alia:

"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."

Some other cases to like effect are: Harvey v. Union Central Life Ins. Co., 45 F.(2d) 78 (C. C. A. 4); Great Southern Life Ins. Co. v. Russ, 14 F.(2d) 27 (C. C. A. 8); Monahan v. Fidelity Life Ins. Co., 242 Ill. 488, 90 N. E. 213, 134 Am. St. Rep. 337. In the Monahan Case, where the court was dealing with the incontestability clause, the policy bore date of September 30, 1903, and was not delivered until October 30, 1903, and there was a clause in the policy, in substance, that it should not be effective until delivered. Insured died October 19, 1905. The court said, at page 492 of 242 Ill., 90 N. E. 213, 214:

"The insured paid the appellant for carrying the said insurance from September 30, 1903, and the policy provided if the policy should remain in continuous force `two years from the date hereof,' — that is, from September 30, 1903, — it should be incontestable except for nonpayment of premium. We do not see, therefore, why the date from which the two years should commence to run should not be held to be September 30, 1903. If, however, the two clauses found in the policy, — that is, the clause which provided if the policy should remain in force `two years from the date hereof,' and the clause which provided the policy should not become binding on the company until the first payment should have been made and the policy delivered, — are in conflict with each other and render the time uncertain from which the two years in which the policy might be contested should commence to run, we think the first clause, — that is, that the policy should be incontestable if it remained in continuous force after two years from the date thereof, — should be held to control, as that construction would be favorable to the insured, as the rule is that the language of an insurance policy, when uncertain or ambiguous, is always to be construed in favor of the...