Wahl v. Interstate Business Men's Acc. Ass'n of Des Moines

• Decision Date: 16 February 1926
• Docket Number: 36604
• Citation: 207 N.W. 395,201 Iowa 1355
• Parties: HENRY WAHL, Administrator, et al., Appellees, v. INTER-STATE BUSINESS MEN'S ACCIDENT ASSOCIATION OF DES MOINES, Appellant
• Court: Iowa Supreme Court

207 N.W. 395

201 Iowa 1355

HENRY WAHL, Administrator, et al., Appellees, v. INTER-STATE BUSINESS MEN'S ACCIDENT ASSOCIATION OF DES MOINES, Appellant

No. 36604

Supreme Court of Iowa, Des Moines

February 16, 1926

REHEARING DENIED JUNE 21, 1926.

Appeal from Iowa District Court.--RALPH OTTO, Judge.

SUIT in equity upon an accident policy, to recover death benefit. Reformation in respect to beneficiary was asked and decreed and no question arises here upon that part of the decree. Judgment was also rendered in favor of the beneficiaries for the full amount claimed, and the defendant appeals.

Affirmed.

Nourse & Nourse and Hatter & Harned, for appellant.

W. E Wallace and E. P. Cronin, for appellees.

MORLING, J. DE GRAFF, C. J., and EVANS and ALBERT, JJ., concur.

OPINION

MORLING, J.

The one question presented is whether the defendant is liable for the total amount of the death benefit promised, or only for a pro rata of it. The defendant contends for a pro-rata liability, based upon a so-called prorating clause, reading as follows:

"If insured shall carry with another company * * * other insurance covering the same loss, without giving written notice to the association, then and in that case, the association shall be liable only for such portion of the indemnity promised as the said indemnity bears to the total amount of like indemnity in all policies covering such loss, and for the return of such part of the premium paid as shall exceed the pro rata for the indemnity thus determined."

The amount of the death benefit named in the policy (or certificate) is $ 5,000. By reason of advance payment of premiums, however, the conceded amount is $ 6,000. The policy contains, also, the usual provisions for benefits for certain specified injuries, such as $ 5,000 for loss of both hands or both feet. It also promises, for total loss of time, $ 25 a week for life; for partial loss of time, $ 10 a week for 10 weeks; for house confinement, $ 25 a week for 52 weeks; for nonhouse confinement, $ 10 a week for 10 weeks; for physicians and surgeons' fees, under certain circumstances, $ 10; for communication with friends and care by strangers, $ 100. The policy also contains a mutual cancellation clause.

The policy sued upon was issued in 1917. At that time, the insured was carrying a Woodmen's accidental-death policy for $ 1,500, issued in 1914. In 1921, insured took out a third policy, in the National Travelers Benefit Association, for $ 5,000, and in 1923, one in the Mutual Benefit, for $ 5,000,--both granting accidental-death benefits. All of the policies except that in the Woodmen contain substantially the same prorating clause. The defendant Inter-state was informed of the Woodmen policy, but did not know of the National Travelers or of the Mutual Benefit certificates until after death occurred. The National Travelers knew of the Woodmen and the Inter-state policies, but did not know of the Mutual Benefit policy until after the death of the insured. The Mutual Benefit did not know of the Travelers policy, but knew of the Woodmen policy. After learning of the National Travelers and Mutual Benefit policies, the defendant Inter-state Association denied liability, except for a pro rata of the policies and premiums.

The defendant contends that, as the total amount of the four policies is $ 17,500, it is only liable for that proportion of $ 6,000 which $ 6,000 bears to $ 17,500, or 12/35ths of $ 6,000, $ 2,057.14, together with a pro rata of the premiums paid.

In the companion case of Wahl v. National Travelers, submitted herewith, the National Travelers claims the pro rata of its policy to be $ 1,515.16. If we are not mistaken in our computation, this amount, on the basis of defendant's computations, would be $ 1,428.57. No other basis of computation, and none by which the amount of the death benefit named in the policy may be realized, has been suggested by the defendant.

It will be noted that the defendant proposes to prorate with the policy of which it had notice, as well as to prorate with the policies of which it had no notice. The method, if applicable to the defendant's policy, would likewise be applicable to later policies; though the insurers knew of the antecedent policies and were insuring upon the basis of the total amount of those policies and agreeing (except for the clause in question) that they and its own should be paid in full. We disregard the matter of return of premiums. From the standpoint of both parties, the matter of refund of premiums was a minor incident.

The defendant's promise was to pay the $ 6,000 in addition to the $ 1,500 to be paid by the Woodmen. The policy was issued on the defendant's assumption that the benefits, at the time the policy was issued, would be, anyhow, $ 7,500. We think it will throw some light on the difficulties of the defendant's position to make some computations.

If we carry out the computations on the basis of the defendant's contention, if the Woodmen policy contained the same prorating clause, the Woodmen would pay $ 128.57, the Travelers $ 1,428.57, and the Mutual $ 1,428.57,--a total, with the defendant's $ 2,057.14, of $ 5,042.85. That is, the insured, with $ 17,500 total insurance, would recover in the total nearly a thousand dollars less than the amount of the defendant's policy.

If we vary the amounts of the policies, assuming that there was one for $ 3,000, one for $ 4,000, one for $ 2,000, one for $ 3,500, and one for $ 5,000, making the same total, of $ 17,500, the estate of the insured would recover a total sum of $ 3,785.70. If the $ 17,500 were made up of a $ 1,500 policy, one for $ 500, one for $ 1,000, one for $ 2,000, one for $ 3,500, one for $ 4,000, and one for $ 5,000, the estate would realize a total of $ 3,471.41. If the total were made up of eleven $ 1,000 policies, one $ 1,500 policy, and one $ 5,000 policy, the total amount realized would be $ 2,185.68.

If we accept the defendant's figures, the beneficiaries (prorating the Woodmen policy) are not getting the $ 6,000 which the defendant promised itself to pay, or (not prorating the Woodmen policy) the $ 7,500 that it was expected would be paid on both. The defendant furnishes no basis upon which, by granting its contention, the indemnity expected will be realized; and later policies might have been so arranged as to amounts that, the more nominal insurance taken out without notice (though all the policies remained in force, and although the insured apprehended that thereby he was increasing his estate), the less actual insurance would be paid.

In the following considerations we may bear in mind that the clause reads that, if insured shall carry other insurance without giving notice, etc., the policy will prorate. If, on defendant's contention, it had been notified of $ 10,500 of insurance besides its own, and both parties were, therefore, counting on insurance amounting to $ 16,500, and if there were a policy of $ 1,000 of which the defendant was not notified, then defendant's policies and all others containing this clause would prorate, with the result that, instead of getting the $ 16,500 which was intended by defendant, as well as by the insured, the estate would get considerably less than the face of defendant's policy.

A prorating is of the loss or injury suffered. The purpose of prorating is not to diminish compensation for the loss, but to apportion it. Defendant, adhering to the letter of one part of the clause, does not propose to ascertain what the loss amounts to, and to apportion that. Instead of prorating the loss, defendant proposes to prorate the amount of its policy, and to prorate with the prior policy of which it knew, and which it expected would be paid in full with its own. Defendant proposes that the later companies shall do the same. One will prorate on the basis of $ 6,000, another on the basis of $ 5,000. Instead of prorating the loss that was suffered, as determined by the actual injury, defendant proposes that the companies shall prorate what they may severally choose to call the indemnity promised, or their several liabilities.

The language of the policy is that chosen by the defendant. The presumption is that the defendant, in using it, was not intending any jugglery or equivocation. At this point we may call attention to the fact that there are benefits specified in the policy as to which this uncertainty (though we refer to this as a matter of illustration, and not of determination,) may not exist. The value of time lost, amount of surgeon's fees, and expense of communication, might be ascertainable.

The clause has reference to other insurance, covering the same "loss." What is the loss in case of death? An accident policy, in respect to the amount to be paid upon death, is essentially a policy of life insurance. Logan v. Fidelity & Cas. Co., 146 Mo. 114 (47 S.W 948); Johnson v. Fidelity & Cas. Co., 184 Mich. 406 (151 N.W. 593); ...