Opinion
Decided November 16, 1934.
Insurance — Health and accident — Insured entitled to benefits of "total and permanent disability" clause, when — "Permanent" construed — Total disability need not be of life long duration.
1. A health and accident policy providing for the payment of benefits in case of "total and permanent disability" entitles the insured to receive the income benefits and waives the premium payments, when evidence is furnished of total disability in compliance with the policy and proof is adduced raising a reasonable inference that the disability will continue indefinitely.
2. The word "permanent" as used in "total and permanent disability" clause must be construed according to its nature and relation to the subject-matter of the insurance and the health and accident endorsements, and, in view of provisions of the policy requiring total disability to have "existed for not less than sixty days", and providing for the termination of monthly benefit payments when the disability ceases, the use of the word "permanent" in the policy means the total disability need only be for an indefinite and indeterminate period and need not be of life long duration.
ERROR: Court of Appeals for Muskingum county.
Messrs. Frazier Holliday, for plaintiff in error.
Messrs. Meyer Crossan and Messrs. Knepper, White, Smith Dempsey, for defendant in error.
This case comes into this court upon a petition in error from the Court of Common Pleas of Muskingum county, and was submitted to the court below, a jury having been waived. The case was tried upon an agreed statement of facts and is submitted to this court upon the same agreed statement.
The briefs of counsel for both plaintiff in error and defendant in error are very lengthy and voluminous, and it is not the purpose or intention of this court to deal at great length with or to discuss the many cases presented in those briefs, but to deal with such issues as are really pertinent to a proper decision of this case.
For a proper background for this opinion we refer to the statement of facts agreed upon, which is in substance as follows:
Ethel A. Gerwick, plaintiff in the court below, was insured by the defendant company through four policies of insurance, referred to in the amended petition. To each of those policies is attached a disability rider, which provides that:
"If during the lifetime of the insured and continuance of said policy * * * due proof is furnished to the Company * * * that the insured has become totally disabled by bodily injury or disease so that she will thereby be permanently, wholly and continuously prevented from engaging in any occupation whatsoever for remuneration or profit and that such total disability has then existed for not less than sixty days:
"1. The premium payments on said several policies will be waived and
"2. She will receive monthly payments, in specific amounts, during the continuance of such disability."
The policies further provide:
"The Company may at any time and from time to time, but not oftener than once a year, demand due proof of such continued disability, and upon failure to furnish such proof, or if it appears that the insured is no longer wholly disabled as aforesaid, no further premiums shall be waived nor income payments made."
For a year from May, 1931, plaintiff below suffered intense pain, due to a physical ailment, and then, in May, to wit, May 31, 1932, while said policies were in full force and effect, she became very ill and wholly disabled from performing any of her duties as stenographer and court reporter. She was promptly taken to the Good Samaritan Hospital in Zanesville, Ohio, and on June 7, 1932, a major operation was performed. She was confined to her bed in said hospital for a period of three weeks, and then was taken to her home, where she was kept in bed, under the care of a special nurse. On August 22, 1932, more than sixty days after the commencement of said total disability, and while plaintiff was still confined to her home and totally disabled, she filled out and gave to the defendant company proof of claim blanks, furnished by the defendant, and thereby made claim for disability benefits on the basis that she was totally and permanently disabled since May, 1932. On the same date Dr. C.N. Rambo, plaintiff's surgeon and attending physician, filled out and furnished to defendant a physician's statement, on a blank provided by defendant, in which he stated the nature and extent of plaintiff's illness. The following questions were asked and the following answers given by Dr. Rambo on said blank:
"Q. What is your diagnosis? A. Fibroid tumor of uterus.
"Q. Is disability likely to increase? If not, what is the prognosis? A. I do not know.
"Q. Is insured now capable of engaging in any kind of work? A. No.
"Q. When is she likely to be able to perform work of some kind? A. Unable to state definitely."
Plaintiff's total disability continued, and on October 11, 1932, Dr. Rambo made the following statement in writing, the same being delivered to defendant:
"To Whom it May Concern —
"From May, 1931, to time of operation June 7, 1932, Miss Ethel Gerwick suffered intense pain due to pressure from large fibroid tumor of uterus.
"Since operation (June 7, 1932) she has been much debilitated and unable to follow her vocation. In my opinion it will be an indefinite time before she can do her usual work."
The defendant refused to waive the payment of premiums and refused to make monthly income payments as provided for in the policies, giving as a reason therefor that plaintiff had not been permanently disabled.
In order to keep the policies from lapsing plaintiff paid, under protest, the several premiums as the payment dates occurred.
On November 15, 1932, plaintiff returned to her work on a part time basis and her total disability ceased. Then suit was brought to recover the amounts of said premiums paid under protest and the monthly income payment to which she claims she was entitled under the policies during the period of her disability, to wit, the total sum of $919.86, with interest from November 15, 1932.
It is conceded in this action that plaintiff was totally, wholly and continuously disabled from May 31, 1932, until November 15, 1932, and that her disability was caused by disease. The four policies in question and the proofs of loss filed thereunder are made a part of the statement of facts. So that, upon the foregoing statement of facts, the only question presented in the court below and the question at issue now, is whether such disability of the plaintiff was permanent as contemplated by the policies which were attached to said agreed statement of facts and made a portion thereof.
In determining the right of recovery of the defendant in error, it is necessary to consider the provisions of the health and accident endorsements attached to the policies hereinbefore referred to. The parties have agreed on the facts and therefore the question as to whether the disability of defendant in error was permanent within the terms of the policies becomes a question of law for the court to determine.
In the court below defendant in error contended that the insurance company meant that the total disability, on proof of which it would grant the benefits named, was not one which must last during the entire life of the insured, but was rather a disability from which there might be hope of recovery and which might terminate prior to the insured's death.
Plaintiff in error refused to adopt this view, but, instead, contended that since defendant in error had recovered from her total disability prior to the time of trial her disability was not covered by these policies.
Where the language of a clause used in an insurance contract is such that courts of numerous jurisdictions have found it necessary to construe it and in such construction have arrived at conflicting conclusions as to the correct meaning, intent and effect thereof, the question whether such clause is ambiguous ceases to be an open one. The rule in Ohio is that ambiguous language is to be construed most strongly against the party selecting the language and is especially applicable to contracts executed subsequently to such conflicting constructions. Policies, which are prepared by the insurance company, and which are reasonably open to different interpretations, will be construed most favorably to the insured.
Courts should always have in mind the relation of the parties to each other. They should give the language of the contract the meaning on which the minds of the parties may be said to have met and which will effectuate their object in entering into it. The reason for this rule is that the insured has no voice in the selection or arrangement of the words employed and that the language of the contract is selected with great care and deliberation by experts and legal advisers employed by and acting exclusively in the interest of the insurance company, and therefore it is at fault for any ambiguity or uncertainty therein. This principle is ably discussed in 14 Ruling Case Law, 926, Section 103. It would then follow that in the case at bar, the language of this policy being ambiguous and subject to more than one reasonable interpretation, it must be construed favorably to the defendant in error in order to grant indemnity rather than to deny it.
We believe the law is well settled that by virtue of the circumstances under which these insurance policies were issued they are Ohio contracts and governed by Ohio law. The general rule is well stated in 14 Ruling Case Law, 892, Section 69, where it is said:
"The general rule is that the contract is governed by the laws of the place where the last act is done which is necessary to complete the transaction and bind both parties — and where delivery and payment of the first premium are the final acts, the place of delivery and payment is the place of contract."
In the instant case the application was filled out in Zanesville, Ohio, and handed to the general agent of the plaintiff in error company in that city, and a physician selected by the plaintiff in error examined defendant in error in the same city. The policies, after having been written by the home office, were forwarded to the general agent in Zanesville, and by him delivered to the defendant in error in Zanesville. The first premium on each of the policies was paid by the defendant in error to the general agent in that city. These facts bring this case squarely within the rule laid down in the case of Plaut, Admr., v. Mutual Life Ins. Co., 4 C.C. (N.S.), 94, 16 C.D., 499. This rule is likewise stated in 22 Ohio Jurisprudence, 349, Section 192. The same rule was followed in Connecticut General Life Ins. Co. v. Richardson, 11 Ohio App. 405.
The word "permanent" must be construed according to its nature and character and its relation to the subject matter of the policies of insurance and the health and accident endorsements contained therein.
The plain, unequivocal rule is that a contract must be construed as a whole and the intent of the parties must be determined from the entire instrument and not from detached parts. It is necessary to construe all the parts of the contract in order to determine the meaning of any particular part as well as the meaning of the whole. Particular words must be considered in connection with the rest of the agreement, and all parts of the writing and each word in it must be given effect, if at all possible.
The Ohio rule is to this effect and is well stated in the case of German Fire Ins. Co. v. Roost, 55 Ohio St. 581, 45 N.E. 1097, 60 Am. St. Rep., 711, 36 L.R.A., 236, where the court says, at page 585:
"It is a rule of construction, founded in reason and resting upon abundant authority, that the meaning of the contract is to be gathered from a consideration of all its parts, and that no provision is to be wholly disregarded because inconsistent with other provisions unless no other reasonable construction is possible; and that a special provision will be held to override a general provision only where the two cannot stand together. If reasonable effect can be given to both, then both are to be retained."
The same rule is laid down in the case of Legler, Admr., v. U.S. Fidelity Guaranty Co., 88 Ohio St. 336, 103 N.E. 899.
We note that in a very recent case against this same plaintiff in error, determined by the Supreme Court of the state of Minnesota, with the identical policy provisions, these provisions were construed in favor of the insured, under facts very similar to the facts in the case at bar; that being the case of Maze v. Equitable Life Ins. Co. of Iowa, 188 Minn. 139, 246 N.W. 737; decided by the Supreme Court of Minnesota, February 3, 1933.
The facts in the Maze case are so similar to the facts in the case at bar as to make the finding in that case conclusive. The plaintiff in error knew of this decision long before the petition in the instant case was filed, and yet it continued to refuse to return Miss Gerwick's premiums, and continued to refuse to pay her the benefits to which she was entitled under this clear construction of her policies.
The great weight of authority in other jurisdictions following the Ohio rule of policy construction establishes the right of the defendant in error to a judgment in her favor.
In practically all the cases the courts of last resort, having analyzed and interpreted policies identical to the ones in question here, have said that the word "permanent" can not mean everlasting or for life in view of the provision that when it is made to appear "that such total disability has then existed for not less than sixty days", the company will grant certain benefits.
This principle was followed in the case of Wenstrom v. Aetna Life Ins. Co., 55 N.D. 647, 215 N.W. 93, decided in North Dakota in 1927.
Insurance policies such as the ones in the instant case contemplate the accrual of liability for income payments and waiver of premiums under conditions which, at the time, are indicative of permanency, but may later prove to be of less than life long duration. The fair interpretation of the policies is that the parties intended payment to be made as long as an apparent permanency lasted, with the proviso that if time proved the seemingly permanent condition to be not such, the payments should cease. This is the gist of the equitable construction of the contracts and is the consequence of interpreting the phrase "total and permanent disability" according to its nature and its relation to the subject matter and intent of the policies.
When Miss Gerwick furnished evidence of her total disability for sixty days and adduced proof raising a reasonable presumption that her disability would continue for an indefinite time, she then became entitled to receive her income benefits and waiver of premiums during the continuance of her disability.
The plaintiff in error company can not evade its contractual obligations by shielding itself behind a fabricated smoke screen of untenable conclusions, based upon ambiguous verbiage, prepared and selected by the company itself. The experts and legal advisers of the plaintiff in error drew these policies with great care and deliberation. The company alone is responsible for the ambiguities and uncertainties therein contained. It would be unjust to allow this insurance company to profit therefrom, at the expense of the policy holder, who had paid out hard earned cash in an honest effort to protect herself and her dependents from unseen contingencies, caused by accident or illness.
The clause of these policies providing for payment during the continuance of the disability on a monthly basis, and to be discontinued when disability had ceased, modified and limited and defined the word "permanent" so that it means for an indefinite and indeterminable period.
We think this definition is in line with the manifest intention of the parties to these contracts and is supported by a long line of well reasoned cases which follow the Ohio rules of insurance policy construction.
The construction for which plaintiff in error contends can not be adopted in Ohio, for — as it was well said in Equitable Life Assur. Soc. v. Serio, 155 Miss. 515, 521, 124 So. 485:
"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 that could not have been intended.
So that in the instant case the facts are undisputed and the law is clear cut. Under the overwhelming weight of authority the judgment of the trial court should be and the same is hereby affirmed.
Judgment affirmed.
SHERICK, P.J., and MONTGOMERY, J., concur.