Travelers Ins. Co. v. Wolfe

• Decision Date: 06 June 1935
• Docket Number: No. 6715.,6715.
• Citation: 78 F.2d 78
• Parties: TRAVELERS INS. CO. v. WOLFE.
• Court: U.S. Court of Appeals — Sixth Circuit

78 F.2d 78 (1935)

TRAVELERS INS. CO. v. WOLFE.^*

No. 6715.

Circuit Court of Appeals, Sixth Circuit.

June 6, 1935.

C. M. Horn, of Cleveland, Ohio (McKeehan, Merrick, Arter & Stewart, of Cleveland, Ohio, on the brief), for appellant.

A. E. Emmerman, of Cleveland, Ohio (M. J. Draegin, of Cleveland, Ohio, on the brief), for appellee.

Before MOORMAN, HICKS, and SIMONS, Circuit Judges.

SIMONS, Circuit Judge.

The principal question presented by this appeal is whether a life insurance term policy providing for disability benefits to the insured was in force upon the date of the accident out of which the disability arose, or whether it had lapsed by the insured's failure to pay premiums. The answer to the question must depend upon whether the policy took effect as of the date therein specified as its effective date, or in view of a provision in the application, that it should not take effect unless the first premium should be actually paid, it took effect only upon its delivery, and also upon whether by the giving of a promissory note for a second premium payment by the insured to a subordinate agent of the insurer the policy was continued for the second premium year, although the note was never paid.

The appellant is the insurer. The policy was a five-year term life insurance policy, with benefits for permanent total disability. The application therefor was signed by appellee, Wolfe, on September 26, 1927. It was issued October 10, 1927, and was delivered to Wolfe by the insurer's agent, Flemming, on October 20, 1927, upon which date a note was given to the agent for the first year's premium, which was later paid. On November 14, 1928, Wolfe was injured. Prior to that, however, on October 10, 1928, he claims to have given another note to Flemming for the second year's premium. It is conceded that this note has never been paid. The plaintiff below had judgment, and the defendant company appeals.

The precise wording of the provision in the application relied upon is: "* * * And that the contract issued hereupon shall not take effect unless the first premium shall be actually paid while I am in good health. * * *" Upon the first page of the policy appears the following: "5. Effective Date. This insurance shall be effective from October 3d, 1927." It shall be seen that if the effective date of the insurance contract is October 3, 1927, the accident occurred outside of the first premium year, and beyond the expiration of the thirty-one-day grace period provided in the contract, but if the term began upon October 20th, the date of the delivery of the contract, the loss occurred during the first premium year. If the latter is the determining date, no consideration need be given to the problem presented by the alleged payment of the second year's premium; if the former is the critical date, it will become necessary to consider whether the second note effected a continuation of the policy for a second premium year.

It is briefly the plaintiff's contention that the provision in the application, which is made a part of the policy, is controlling; that by its terms the insurance contract did not come into existence until the policy was executed and delivered and the first year's premium paid; that having contracted for a five-year term, no less period of protection can satisfy the insurer's obligation, and in any event there is a conflict between the application and the policy out of which an ambiguity arises, which under familiar principles must be resolved against the insurer, by whom the contract was drawn. We have given careful consideration to this contention, but as we read the contract it is perfectly clear. Its effective date is October 3, 1927. This is the date which controls the payment of premiums, and the running of suicide, incontestable, and other clauses. There is no conflict between this provision and the provision in the application. Read together, they mean that the contract shall not take effect unless the first premium is paid while the insured is in good health, but that when it does take effect it operates from the date stated therein. This is the ordinary connotation of the terms used, and we see no occasion for giving them a strained construction.

The question is not new. It appears in similar, if not identical, form in many cases which have been decided against similar contentions advanced by both insurer and insured. Mutual Life Ins. 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; Sellars v. Continental Life Ins. Co., 30 F.(2d) 42, 45 (C. C. A. 4); Whitney et al. v. Union Central Life Ins. Co., 47 F.(2d) 861, 864 (C. C. A. 8); Subar v. New York Life Ins. Co., 60 F.(2d) 239 (C. C. A. 6), to mention but a few. As was said in the Hurni Case, supra, "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," or as in the Sellars Case, "Courts cannot make contracts for parties. They can only enforce the contracts which the parties themselves have made," or as in the Whitney Case, "There is no reason why parties cannot agree that a policy may be antedated, and that the policy shall take effect from said date agreed upon, for a policy of insurance is a voluntary contract." The contention that an insurance contract imports a risk, and that there can be no such contract until the risk is assumed, is noted and rejected by Judge Parker in the Sellars Case. It is true that in that and other cases the reason for antedating the contract was to give the insured a premium rate applying to an earlier age, but such considerations were said by the court to be "beside the point," and to the same contention the Fifth Circuit Court of Appeals in McCampbell v. New York Life Insurance Co., 288 F. 465, 469, made response that "a conclusive answer is that parties are entitled to make their own contracts."

The appellee endeavors to distinguish the above cases on the ground that the antedating of the policies therein was in conformity with the provisions of the respective applications, while here there is conflict. It must be borne in mind, however, that the application when made is not a contract. It may be accepted or rejected by the insurer. If accepted without qualification, and delivery and premium payment follow, a contract results. If the policy, however, does not conform to the application (though we do not agree that such is the case here), the policy, as noted in the Sellars Case, is merely a counter offer which the insured may at his pleasure accept or reject. If he does accept it, pays the premium, keeps the contract until the loss occurs, he cannot in a suit at law upon it ask to have it enforced otherwise than according to its terms. Lumber Underwriters v. Rife, 237 U. S. 605, 35 S. Ct. 717, 59 L. Ed. 1140; Taylor et al. v. American Liability Co., 48 F.(2d) 592 (C. C. A. 6)....