Swanson v. Provident Life Ins. Co.

• Decision Date: 23 June 1922
• Docket Number: No. 34326.,34326.
• Citation: 194 Iowa 7,188 N.W. 677
• Parties: SWANSON v. PROVIDENT LIFE INS. CO. ET AL.
• Court: Iowa Supreme Court

194 Iowa 7

188 N.W. 677

SWANSON

v.PROVIDENT LIFE INS. CO. ET AL.

No. 34326.

Supreme Court of Iowa.

June 23, 1922.

Appeal from District Court, Wapello County; C. W. Vermillion, Judge.

Action at law to recover upon a policy of life insurance. There was a trial to the court, which rendered judgment for the plaintiff, and defendants appeal. Reversed and remanded.

Preston, J., dissenting.W. K. Whitfield, of Decatur, Ill., and Casper Schenk, of Des Moines, for appellants.

Roberts & Webber, of Ottumwa, for appellee.

WEAVER, J.

On January 8, 1914, the defendant Provident Life Insurance Company issued its policy upon the life of William Swanson for the sum of $2,000. This company was later absorbed by the Standard Life Insurance Company, which assumed the liability of its assignor upon said contract. The insured died in France in the military service of the United States on October 3, 1918, and this action is brought by the administrator of his estate to recover upon the policy.

There is no dispute concerning the essential facts. As will be noted from its date, the policy was issued some 3 years before the United States became a party to the so-called “World War” with Germany. In the form in which it was issued, the policy, among other things, provided as follows:

“This policy is issued and accepted subject to all of the conditions, benefits and privileges stated on the subsequent pages hereof. * * * If the insured at any time engage in military or naval service in time of war (militia or National Guard not in active service excepted) and death shall occur during such engagement or as a result thereof, the liability hereunder shall be limited to the cash-surrender value of the policy at the date of death, unless the insured shall have obtained the company's written consent and paid the extra premium therefor, at its established rate.”

On February 1, 1918, the United States being then involved in said war, and the insured person, William Swanson, being liable to be drafted into the military service, he made application to the insuring company for, and obtained, the substitution of a new war service clause in lieu of the one just quoted from his policy. The application being granted, the substituted clause was executed, attached to, and became a part of the contract of insurance. That clause was in the following words:

“If the insured engage in military, naval or Red Cross service outside the continental limits of the United States in time of war, or within the United States in resisting invasion or insurrection, and death occur during such engagement, or as a result thereof within one year of discontinuance of said engagement or service, the company's liability hereunder shall be limited to the sum of all premiums that have actually been paid, together with five per cent. compound interest thereon from date of payment.”

In May of the same year deceased was inducted into the military service of the United States, and after two or three months of such service at army posts in this country he was transferred to France, where he served as bugler in Company H of the 349th United States Infantry, and continued in that capacity during the remainder of his life. He was not wounded or killed in action, but died of pneumonia contracted after his arrival in France. Stated otherwise, it is conceded that at the time of his death and for about 60 days prior thereto, deceased was in France in said military service of the United States in time of war between the United States and Germany, and at the time of his death was still in said military service outside of the continental limits of the United States in time of war.

[1][2] I. The sole question in the case before us is whether the liability of the insurer upon the policy in suit is governed by the last-quoted military service clause of the contract which limits the recoverable insurance to the sum of all the premiums actually paid with compound interest thereon at 5 per cent. from the date of payment, or is such liability to be measured by the full amount of the indemnity named in the policy? It cannot well be denied that the insurer's liability is to be measured by the terms of the contract. If the parties so agree, it is entirely competent to provide in the policy that the insurance shall be effective only while the insured continues to live in a certain locality, or shall become void or be suspended if the insured shall without consent of the insurer extend his travels beyond a given parallel of latitude, or shall expose himself to the perils of the sea by an ocean voyage. It is not material that the court shall see any good reason for these restrictions or limitations. It is enough that the parties have treated them as sufficiently material or desirable to embody them in their contract, and, in the absence of some controlling statutory rule to the contrary, the courts give them effect according to their terms. Had the parties to the contract in suit so agreed and the policy had provided that the insurance should at once become void and of no effect if the insured should thereafter enlist or be drafted into the military service, we could not do otherwise than hold that no recovery of the indemnity was legally possible. If this be true, it can be no less true that it was competent for the insurer and insured to agree that if the death of insured should occur under certain specified conditions, the indemnity payable should be limited by some measure less than the full face of the policy. The substituted military service clause of this policy was concededly a voluntary agreement, made with express reference to the fact that a state of war then existed and the probability that the deceased would be called into the service, and that in such service he was subject to be called beyond the continental limits of the United States, where he would be exposed to greater hazards than would ordinarily be the case if he remained in this country, far removed from the scene of active hostilities. Even if the reasonableness of the agreement were open to review by the court it could not well be condemned on that ground.

Assuming, as we think we must, that the substituted military service clause is a valid provision of the insurance contract, we have then to ask whether the admitted circumstances of the death of the insured requires the court to assess the recovery for the benefit of his estate upon that basis. Returning to the language of said clause to ascertain the precise condition upon which the company's liability is to be limited to a return of the premiums paid with interest, we find it in the following words:

“If the insured engage in military, naval, or Red Cross service outside the continental limits of the United States in time of war; or within the United States in resisting invasion or insurrection, and death occur during such engagement, or as a result thereof within one year of the discontinuance of such engagement or service, the company's liability shall be limited,” etc.

Note that the conditions are in the alternative, and need not be in any sense cumulative in order to bring the provision into effect. It applies: (1) To the death of the insured if it occur during his engagement in the military service outside the continental limits of the United States; or (2) to his death in military service within the United States in resisting invasion or insurrection; or (3) to his death within one year after such service is discontinued and as a result of such service. Now of the several contingencies, the occurrence of either of which would call for an application of the limiting clause all but one may be eliminated, for the insured did not die in the military service resisting invasion or insurrection in the United States, and he did not die within a year after his service was discontinued, but he did engage in the military service outside the continental limits of the United States, and his death did occur during such engagement, and unless we are to assume authority to remake or to destroy the contract freely made by the parties where neither fraud nor mistake is charged or proved, we discover no way of avoiding the conclusion that plaintiff's recovery must be limited by its terms to a repayment of the premium paid with the stipulated interest.

II. Considerable reliance is placed by the appellee upon the decision of this court in Boatwright v. Insurance Co., 180 N. W. 321, 11 A. L. R. 1085. We think, however, that a clear distinction exists between that precedent and the case at bar. While Boatwright had enlisted in the navy, he was still in the training school, and, as pointed out in the opinion, had not been assigned to any duty in the naval service when he sickened and died, and, following the established rule of interpretation of insurance contracts, we construed the language most strongly against the insurer, and held that the deceased was not engaged in the military or naval service within the meaning of the policy. This court is not disposed to retreat from the position there taken, but it is a border-line case, beyond which we cannot go without introducing confusion into the law upon the subject. In the case at bar, no question is made that deceased was engaged in the military service of the United States, and had been in such service overseas for some two months, and that he died in such service stands admitted. This, as we read it, fulfills literally the condition of the contract upon which the limited liability was predicated.

III. It is sought to avoid this result by the argument that, to give the death of the insured in France the effect claimed for it by the defendant, it is not enough to show that he died while in the service, but it must further appear that his death was the result of some hazard peculiar to war, and that, having died of pneumonia, a disease of common occurrence in civil life, the restricted clause of the policy has no...