Opinion
No. 33373.
December 12, 1938. Suggestion of Error Overruled March 20, 1939.
1. INSURANCE.
As used in combination life, health and accident policy providing for benefits for illness preventing member "from following or directing any gainful labor, trade, occupation, business or profession," the phrase "directing any gainful labor" should be interpreted not literally, but as applicable only to an insured whose usual and ordinary occupation is that of directing others in performance of their duties and not to an insured who usually or ordinarily does the work, or a substantial portion of it, himself.
2. EVIDENCE.
The court may take notice of the fact that in counties where the business in the circuit court is not large, the circuit clerks usually do nearly all the work of the office themselves, or the larger part thereof.
3. INSURANCE.
Under combination life, health and accident policy providing for benefits for illness preventing insured "from following or directing any gainful labor, trade, occupation, business or profession," and insured disabled by incurable arthritis deformans, who was unable to bend back or legs, could move only with pain, and could handle books and papers only when within easy reach, was not precluded from recovery by having held office of circuit clerk, in which he directed hired help to perform the duties.
4. INSURANCE.
Where insured under combination life, health and accident policy forwarded certificate showing total disability, and insurer denied liability and declined to furnish blanks for formal proof of loss, within 60 days after due date of premiums, insured was relieved of duty to furnish formal proof of loss, under policy provision that "insurance" should continue in force for 60 days from date when premiums were due, as against contention that 60-day extension was applicable only to death benefits.
5. INSURANCE.
As respects a feature wherein there is no practical difficulty in making the language plain and free from doubt, any doubtful provision in insurance policy or certificate should be construed against the insurer.
6. LIMITATION OF ACTIONS.
Where disability benefits were payable under combination life, health and accident policy at the end of each year, a cause of action accrued for each installment when it became due and not before, as respects six-year statute of limitations, and hence only installments which became due more than six years before the commencement of action were barred (Code 1930, sec. 2292).
7. LIMITATION OF ACTIONS.
Where there was an honest difference of opinion, based on reasonable grounds, concerning insurer's liability to pay disability benefits under combination life, health and accident policy, the statute providing that a fraudulently concealed cause of action shall be deemed to accrue at time of discovery of the fraud was inapplicable (Code 1930, secs. 2292, 2312).
APPEAL from the circuit court of Smith county; HON.E.M. LANE, J.
Stevens Stevens, and George R. Nobles, all of Jackson, for appellant.
The motion for a directed verdict at the conclusion of all the testimony was erroneously overruled and the peremptory charge, same being Instruction No. 1, should have been granted and was erroneously refused.
There is no liability in this case and the peremptory instruction asked for should have been granted, because: first, it was pleaded in this cause and the proof shows that plaintiff's entire cause of action was and is barred by the statute of limitations; secondly, there is no liability in this case on the law and the facts even though the cause of action might have been instituted within six years from the time it accrued.
Jones v. Rogers, 85 Miss. 802, 38 So. 742; Young v. Cook, 30 Miss. 320; First National Bank v. Johnson, 177 Miss. 634, 171 So. 11; Pilot Life Ins. Co. v. Wade, 153 Miss. 874, 121 So. 844; New York Life Ins. Co. v. Gill, 182 So. 109.
There were no fraudulent representations in this case, but even if there had been it must have been made under such circumstances and be of such nature that a reasonably prudent person would act thereon. The plaintiff must exercise reasonable diligence to discover the fraud or show that he could not have with reasonable diligence discovered it sooner.
New York Life Ins. Co. v. Gill, 182 So. 109; Pilot Life Ins. Co. v. Wade, 153 Miss. 874; Section 2312, Code of 1930; Fleming v. Grafton, 54 Miss. 79; Young v. Cook, 30 Miss. 320.
The burden of proof was upon the plaintiff to show that he was a member in good standing at the time he undertook to make claim for disability benefits. It is admitted that he paid no monthly dues for June, 1927, or any month thereafter.
Mr. Craft permitted his membership to lapse and he had no further interest of any kind after June 10, 1927. We might concede for argument that he became disabled prior to June 10, 1927, but this would not relieve him of his obligation to pay his monthly dues. If he had been utterly helpless or even insane, he would not be excused.
New York Life Ins. Co. v. Alexander, 122 Miss. 813, 85 So. 93; Berry v. Lamar Life Ins. Co., 163 Miss. 462, 142 So. 445, 165 Miss. 405, 145 So. 887; Clement v. Knights of Maccabees of the World, 113 Miss. 392, 74 So. 287; Alton v. Most Worshipful St. John's Grand Lodge, 135 So. 679; Brotherhood of Railroad Trainmen v. Bridges, 164 Miss. 356, 144 So. 554; Sovereign Camp, W.O.W. v. Hynde, 99 So. 259; Odd Fellows v. Smith, 101 Miss. 332, 58 So. 100; Sovereign Camp, W.O.W. v. Muse, 163 So. 682; Sovereign Camp W.O.W. v. Williamson, 164 So. 47; Bruton v. Brotherhood of Locomotive Firemen Engineers, 176 Miss. 224, 167 So. 423; Sovereign Camp, W.O.W. v. McClure, 176 Miss. 536, 168 So. 611; Afro-American Sons Daughters v. Williams, 176 So. 725; Mixon v. Sovereign Camp W.O.W., 155 Miss. 841, 125 So. 113.
In Mississippi, we have Chapter 206, Laws of 1916, brought forward as a separate article in the present code, regulating fraternal benefit societies. Our court has several times construed this act and pointed out that it is all embrasive and exclusive, and any other provisions of the code, relating to insurance companies, do not apply. Such societies have no capital stock, are organized solely for the benefit of its members and not for profit. It is governed and managed by its membership and there is a representative form of government. To carry out the underlying principles of mutuality, all members agree to be bound by the laws of the society. Ordinary life insurance companies are commercial corporations, engaged in business for profit. The policyholder is purely in the status of one insured. In a fraternal society, there is the underlying principle of mutuality. The differentiation is pointed out in many cases.
Peterson v. Manhattan Life Ins. Co., 244 Ill. 329; Barrows v. Mutual Life Ins. Co., 151 Fed. 461; Supreme Lodge, etc. v. Mims, 241 U.S. 574; Thomas v. Knights of Maccabees, 149 P. 7, 85 Wn. 665, L.R.A. 1916A 750; Miller v. National Council, etc., 76 P. 799, 69 Kan. 234; Reynolds v. Royal Arcanum, 7 L.R.A. (N.S.) 1154, 78 N.E. 129, 192 Mass. 150; Clarkson v. Supreme Lodge, 82 S.E. 1043, 99 S.C. 134; DeGraw v. I.O.O.F., 182 Mich. 366, 148 N.W. 703; Holt v. Supreme Lodge, 235 Fed. 885; Newman v. Supreme Lodge, 70 So. 241, 110 Miss. 371; Supreme Council v. Green, 237 U.S. 531, L.R.A. 1916A 771; Wineland v. K.O.T.M., 148 Mich. 608, 114 N.W. 696; Supreme Lodge K. of H. v. Bieler, 105 N.E. 244, 53 Ind. App. 550; Fullenweider v. Royal Leage, 180 Ill. 621, 54 N.E. 485; Champion v. Hannahan, 138 Ill. App. 387; Mock v. Supreme Council R.A., 121 App. Div. 474, 106 N.Y.S. 155; Messer v. Grand Lodge, 180 Mass. 321, 62 N.E. 252; Miller v. National Council K. L. of S., 69 Kan. 234, 76 P. 830; Supreme Ruling Mystic Circle v. Ericson, 131 S.W. 92; Williams v. Supreme Council C.M.B.A., 152 Mich. 1, 115 N.W. 1060; Conner v. Golden Cross, 117 Tenn. 549, 97 S.W. 306; Shepperd v. Banker's Union, 77 Neb. 85, 108 N.W. 188; Supreme Lodge K. of P. v. Knight, 117 Ind. 489, 3 L.R.A. 409, 20 N.E. 279; Woodmen of the World v. Woods, 34 Colo. 1, 81 P. 261; Barbot v. Mut. Res., etc., Assn., 100 Ga. 681, 28 S.E. 498; Mutual Reserve Fund Life Assn. v. Taylor, 99 Va. 208, 37 S.E. 854; Richmond v. Supreme Lodge, etc., 100 Mo. App. 8; Haydel v. Mutual Reserve Fund Life Assn., 98 Fed. 220, 104 Fed. 718.
Indeed by the terms of the last paragraph of Section 12 of the Fraternal Benefit Societies Act of 1916 it is provided that every such society shall have the power to make a constitution and by-laws for the government of the society and the admission of its members, the management of its affairs and the fixing and readjusting of the rates of contribution of its members from time to time, and shall have the power to change, alter, add to or amend such constitution and by-laws, and shall have such other powers as are necessary and incidental to carry into effect the objects and purposes of the society.
Odd Fellows Benefit Assn. v. Smith, 58 So. 100; National Council of Knights Ladies of Security v. Smiley, 100 So. 153; Locomotive Engineers Mutual Life Acc. Ins. Assn. v. Hughes, 77 So. 352; Columbian Mutual Life v. Harrington, 139 Miss. 826, 104 So. 297.
There is no merit in the contention made by learned counsel for appellee, in the court below, that under Paragraph 3 of the covenant, Mr. Craft had sixty days in which to propound a claim for disability and that he was misled as to his rights in that regard.
Chattanooga Sewer Pipe Works v. Dumler, 120 So. 450.
It is a cardinal principle of construction that a contract is to be construed as a whole; that all its parts are to be harmonized so far as reasonably possible; that every word in it is to be given effect, if possible; and that no part is to be taken as eliminated or stricken by some other part unless such a result is fairly inescapable.
Continental Casualty Co. v. Pierce, 154 So. 281.
There was no proof or offer to make proof of appellee's alleged disability while he was a member in good standing and while the covenant was in force and effect.
O.B. Triplett, Jr., of Forest, and Homer Currie, of Raleigh, for appellee.
Appellee, Craft, was totally and permanently disabled at a time when the policy involved was in full force and effect.
American Bankers Ins. Co. v. White, 158 So. 348, 171 Miss. 677; Equitable Life Ins. Co. v. Serio, 124 So. 485, 155 Miss. 515; Metropolitan Life Ins. Co. v. Lambert, 128 So. 750, 157 Miss. 759; Lamar Life Ins. Co. v. Catlett, 139 So. 455; New York Life Ins. Co. v. Bain, 152 So. 845.
The policy involved was in full force at the time when appellee applied for disability benefits, for two reasons: (a) Appellee's act in mailing the "Dr. Spencer Certificate" on June 9, 1927, to C.W. Mangum of Magee, Miss., was sufficient notice of disability and the recipient, Mangum, was, by statute, a general agent of appellant.
Sec. 5196, Code of 1930; Travelers Fire Ins. Co. v. Price, 152 So. 891, 169 Miss. 531; Reliance Life Ins. Co. v. Cassity, 163 So. 508, 173 Miss. 840.
(b) Under an automatic option applicable to appellee's policy, which was one year old, the "insurance under the covenant" was "continued in force" for sixty days, within which time appellant's Home Office had received appellee's application and had denied liability.
Identical words or phrases will be given the same meaning and interpretation when used and repeated in one single contract.
13 C.J. 532, sec. 491; Broom's Legal Maxims (7 Ed.) page 593.
The interpretation urged by appellee is reasonable and exclusively affords harmony to all of the policy provisions.
A.L.I. Restatement, Contracts, sec. 235, Clause (c).
Even though there were two reasonable interpretations which might be given to the policy, that construction favorable to appellee would be required.
A.L.I. Restatement, Contracts, sec. 236, Clause (d).
The existence of a total permanent disability, but not the filing of proof, while the policy was in force was a condition precedent.
Sec. 2294, Code of 1930; Dodson v. Telegraph Co., 97 Miss. 104, 52 So. 693; Standard Acc. Ins. Co. v. Broom, 111 Miss. 409, 71 So. 653; Berry v. Lamar Life Ins. Co., 165 Miss. 405, 142 So. 445, 145 So. 887.
The policy language in the instant case is substantially dissimilar to the language in Berry v. Lamar Life Ins. Co., 165 Miss. 405; Mutual Life Ins. Co. v. Hebron, 146 So. 445, 166 Miss. 145; New York Life Ins. Co. v. Quinn, 157 So. 902, 171 Miss. 396.
The policy language in Craft's policy is substantially similar and almost identical with the policy language involved in Minnesota Mut. Life Ins. Co. v. Marshall, 29 F.2d 977; Prudential Ins. Co. of America v. Gray, 159 So. 265, 26 Ala. 268; Herschman v. John Hancock Mut. Life Ins. Co., 284 N.Y.S. 561; Prudential Ins. Co. of America v. Kendrick, 90 S.W.2d 52.
Appellant's letter of July 11, 1927, stating that appellee's "Covenant — terminated by lapse for nonpayment of — the premium due June 1, 1929 — (and) the provisions of the covenant for the payment of special disability benefits were rendered null and void" was a misrepresentation; and, whether one of law or fact, it was fraudulent.
Restatement, Torts, secs. 601, 613, 616 and 621; Reliance Life Ins. Co. v. Cassity, 163 So. 508, 173 Miss. 840.
Appellant's statement in the same letter that it was "obligatory" on appellee to appeal to appellant's executive committee and thence to the National Council was also a misrepresentation of law, constituting legal fraud.
Eminent Household of Columbia Woodmen v. Ramsey, 79 So. 351, 118 Miss. 454.
The statement of appellant's officials made to appellee when he went to Memphis for advice that appellee lost his "rights to recover anything on the policy" because he "failed to continue paying (his) premiums until (he) received (his) first disability payment from the company" was a misrepresentation of law which constituted fraud.
Provident Life Acc. Ins. Co. v. Jemison, 120 So. 836, 153 Miss. 60; Atlantic Horse Ins. Co. v. Nero, 66 So. 780, 108 Miss. 321.
These fraudulent misrepresentations concealed from appellee his cause of action; wherefore, no statute of limitations can be asserted by appellant in bar of appellee's action.
Sec. 2312, Code of 1930; Dunn v. Dent, 153 So. 798, 169 Miss. 574; First Natl. Bk. of Laurel v. Johnson, 171 So. 11, 177 Miss. 634; Buckner v. Calcote, 28 Miss. 432.
Argued orally by J.M. Stevens, for appellant, and by O.B. Triplett, Jr., for appellee.
Appellee was insured by appellant on February 8, 1926, by a combination life, health and accident insurance policy, and a fixed, composite premium was payable thereon by the insured on or before the tenth day of each succeeding month. About the last of the year 1926, appellee's knees became sore and swollen and on January 25, 1927, he went to the Touro Infirmary for treatment, where he remained until sometime in July, 1927. After some observation, his trouble was diagnosed as arthritis deformans of so-called atrophic type, and on July 9, 1927, the attending physician gave his certificate that appellee was totally and permanently disabled on account of said disease, which certificate was forwarded to and received by appellant late in the month of June, 1927, as hereinafter mentioned. Appellee had paid all monthly premiums up to and including the entire month of May, 1927.
Upon being sent away from the Infirmary with the opinion by those in charge that there was no treatment which was likely to bring about any improvement, appellee returned to his home and continued there and elsewhere such treatment as he could get, but his condition grew worse. Seeking something by which he could derive a livelihood he was elected circuit clerk of Smith County in 1931, and has since that time held that office, performing the duties thereof by the hands of employed help, but under his directions.
The condition of appellee is, and since the date of the certificate aforesaid has been, that of a helpless cripple, painfully making his way, to the limited extent that he can move about at all, on crutches. He is unable to bend his back, or legs, or to turn his head; unable to get in or out of bed or in or out of a car without help; unable to take off or put on any of his clothes; unable to comb his hair or tie his tie; but in a manner he can handle books and papers when, but only when, put in an easy position and within his easy reach. All his limited movements are attended with pain, and alleviating sedatives are constantly necessary. The medical testimony is undisputed that there is no known remedy which, in any probability, will effect a cure.
Appellant contends that because, nevertheless, appellee is able to direct the work of his office, and does direct it to the satisfaction of the electorate, the stated disability is not within the particular policy, called by appellant a Covenant; and that therefore appellant is not liable in this action by appellee which is for all the annual installments of the disability insurance which have accrued since June, 1927.
The provision in respect to the total and permanent disability insurance under the Covenant or Policy is for a certain annual payment in case the insured shall suffer "any permanent and disabling illness . . . as shall render a member helpless to the extent of permanently preventing him from following or directing any gainful labor, trade, occupation, business or profession. . . ." If the quoted provision in reference to "directing any gainful labor," etc., were omitted, there would be no debatable question, under the undisputed proof and under many decisions in this state, as well as under the weight of authority everywhere, that the insured would be entitled to recover.
The question then is, What is the meaning which ought to be ascribed to the terms, "directing any gainful labor," etc.? If they are to have a literal interpretation, they would operate to exclude liability in all but the rarest cases. Any man that knows how to do any given piece of work, or how to conduct any particular business, can direct others how to do it, unless he is insane or is in a coma or is so distracted with constant pain as to render him incapable of rational thought. Directions for the conduct of a business, literally speaking, might be given from the bedside by the bedridden, or from a rolling chair by a helpless paralytic. The language used in Equitable Life Assur. Soc. v. Serio, 155 Miss. 515, 520, 124 So. 485, thus becomes applicable. There it was said [page 486] "Courts must give these contracts a reasonable interpretation, an interpretation which will stand the test of honesty of purpose in their meaning, and which will square the transaction between the parties in making the contract with some valuable object in contemplation at the time. . . . To give said terms the strict or literal interpretation stated would be to convict a reputable insurance company of having put out among our people, and having collected from them premiums on, a policy provision which in effect would be scarcely more than a cheat, a pretense and a fraud. Certainly no such could have been intended."
In order to save the last quoted terms from the extremity above mentioned, it becomes necessary to interpret them as having application only to an insured whose usual and ordinary occupation is that of directing others in the performance of their duties, and not to an insured who, in the conduct of his business or occupation, usually or ordinarily does the work or a substantial portion of it himself. This is the holding of the court in Beach v. Supreme Tent, 74 App. Div. 527, 77 N.Y.S. 770, affirmed 177 N.Y. 100, 69 N.E. 281, liberally quoted from and relied on in Halperin v. Equitable Life Assur. Soc., 125 Misc. 422, 210 N.Y.S. 720. These are the only cases, so far as we have been able to presently find, which have definitely and pointedly discussed the particular terms here under consideration, and we are in agreement with what they have said.
We may take notice of the fact that, in counties where the business in the circuit court is not large, as is the case of the county and of the clerk's office here before us, the circuit clerks usually do nearly all the work of the office themselves, or the larger part thereof, and hence when one of them, insured under a policy such as this, becomes helpless to do more than give directions to hired help, and even that under constant pain, the insured is not precluded from the protection of the insurance, because of any such terms in the policy as that dealt with herein. And there is no suggestion that there is any other business open to appellee at which he could earn a penny in his present and prospective condition.
Appellant contends, in the next place, that the policy, so far as disability benefits are concerned, had lapsed by the nonpayment of the monthly premium due on or before June 10, 1927, and that it received no notice or proof of such disability before the date last mentioned. Pertinent stipulations of the policy on that point are as follows: "If this Covenant after being in force one full year shall lapse for non-payment of premiums, the Society will continue in force the insurance under the Covenant for a period of sixty days from the date such premiums were due." Under this provision, unless expressly qualified by some other provision, the entire contract and all its benefits remained in force until August 1, 1927. Within this sixty days, and before the date last aforesaid, the insured had forwarded the certificate showing his total disability, the head office of the Society had received it, had denied all liability, had declined to furnish blanks for formal proof of loss or disability, and hence, the insured was relieved of any duty to furnish such formal proof. The case stands as if every requisite of the proof of loss had been fully and satisfactorily complied with or furnished within the period of sixty days, which, as stated, was the allowable period therefor.
Appellant argues, however that the provision quoted in the next foregoing paragraph applies only to the insurance for death benefits and not to the health or accident features, and appellant calls attention to paragraph 7 under the provisions respecting Total and Permanent Disability which provides compensation for such disability "if all installment premiums have been paid and this Covenant is in full force," and to paragraph 15 which is as follows: "Provisions of this Covenant for the payment of Special Disability and Accident Benefit become null and void upon failure of the Assured to pay all installments of premiums required on this Covenant;" and appellant points also to the table of values affixed to the policy — from which however we find no appreciable aid.
Reading all these provisions, quoted in the foregoing paragraphs, together, it may as well be said that since the payment of all installments of premiums as and when due throughout the preceding one year had accomplished the result of continuing the insurance in force for sixty days, the payment of premiums during the sixty days were not required so far as concerns that period — were not required to accomplish a result that had already been accomplished. Compare McCain v. Lamar Life Ins. Co., 178 Miss. 459, 475, 172 So. 495. In any event, plausible and persuasive as the agreement of appellant may seem, it introduces no more than a contention that we eke out by doubtful construction a result favorable to the insurer, when the rule is that questions of doubtful construction of insurance policies shall be resolved in favor of the insured. All that appellant would have had to do in order to take its contention out of the field of doubt would have been to insert the words "death benefit" next preceding the word "insurance" in the extended insurance provision above quoted; and having failed to do so, we decline to make the insertion for it. As respects a feature wherein there is no practical difficulty in making the language plain and free from doubt, we are in accord with the remark found in Turner v. Fidelity, etc., Co., 112 Mich. 425, 70 N.W. 898, 38 L.R.A. 529, 67 Am. St. Rep. 428, that a policy or certificate or insurance "should be framed with such deliberate care that no form or expression by which, on the one hand, the party assured can be caught, or by which, on the other, the company can be cheated, should be found on the face of it;" [page 899] and the only effective way to foster that result is to construe any doubtful provision against the company or society which prepared and put forth the policy.
The declaration in this case was not filed until June 25, 1937. Appellant urges that the entire action was barred by the six-year statute of limitation, Code 1930, Section 2292, to which appellee has replied that no part of the demand is barred because, as he avers, appellant fraudulently concealed the cause of action by misrepsentations. The disability benefits were payable at the end of each year, or in annual installments; and a cause of action accrued for each of them when respectively due, and not before. The installments which became due more than six years before the commencement of the action are bared, and the remainder are not. 37 C.J. pp. 854, 855. The facts show an honest difference of opinion, and with reasonable grounds for that difference, as respects liability, and not a case of fraudulent concealment or wilful misrepresentation. Section 2312, Code 1930, on fraudulent concealment of the cause of action, has no application to the case.
The judgment will be affirmed as to all installments which become due within six years next before the commencement of the action, and reversed as to the others; and the cause will be remanded that the proper calculations may be made in the trial court.
Affirmed in part and in part reversed, and remanded.