Summary
In Mutual Life Ins. Co. of New York v. Lovejoy, 203 Ala. 452, 83 So. 591, this court approved the principle that the reinstatement of a contract of insurance after breach is not a new contract but on the contrary is a mere continuance of the original contract which but for the reinstatement would have been forfeited and void.
Summary of this case from Gilford v. Emergency Aid Ins. Co.Opinion
3 Div. 387.
June 26, 1919. On Rehearing, October 30, 1919.
Appeal from Circuit Court, Montgomery County; Leon McCord, Judge.
Steiner, Crum Weil, of Montgomery, for appellant.
The court had no right by instructions to the jury to change the issues or mitigate the requirements its pleadings. 173 Ala. 674, 55 So. 886; 35 Mo. 452. The right to reinstate was not an absolute right, but only a privilege to be exercised, and was made dependent upon the judgment of the Insurance Company, 198 Ala. 363, 73 So. 535; 197 Ala. 76, 72 So. 352; 13 Corpus Juris, 75. The reinstatement application bound the insured not to commit suicide not within two years thereof. 71 Ala. 447; 99 Ala. 620, 13 So. 118; 166 Ala. 174, 52 So. 45; 145 Ala. 616, 40 So. 126.
Ball Beckwith, of Montgomery, for appellee.
The cause should be affirmed on the authority of Mutual Life Insurance Co. v. Lovejoy, 78 So. 299, L.R.A. 1918D, 860. Compliance with the conditions gave insured the absolute right to reinstatement. 94 Mo. App. 442, 68 S.W. 369; 38 N.J. Eq. 72; 47 Hun, 338; 76 Hun, 522, 28 N.Y. Supp. 119; 3 Cooley's Briefs, 2395; 84 Ill. 304. The reinstatement canceled the forfeiture, leaving the original contract in force. 97 Iowa, 226, 66 N.W. 157, 32 L.R.A. 473; 84 Iowa, 734, 50 N.W. 29; 111 N.C. 391, 16 S.E. 427; 80 Ala. 565, 1 So. 38; 93 U.S. 24, 23 L.Ed. 789; 1 Cooley's Briefs, 100; 3 Id. 2405. The suicide was no defense to the policy. Section 4579, Code 1907; 156 Ala. 592, 47 So. 72; 42 Hun, 245; 24 Ill. App. 357.
This is the second appeal in this case. See report of case on former appeal, 201 Ala. 337, 78 So. 299, L.R.A. 1918D, 860, for statement of case.
The record on this appeal differs from that on the former to the extent that the agreement in the application for reinstatement is now shown to be a part of the policy in such manner and form as to meet the requirements of section 4579 of the Code, as construed in Gee's Case, 171 Ala. 435, 55 So. 166; Satterfield's Case, 171 Ala. 429, 55 So. 200; and Allen's Case, 174 Ala. 511, 56 So. 568.
The reinstatement of the policy or contract of insurance did not have the effect of creating a new contract of insurance, dating from the time of the renewal. It had the effect only of continuing in force the original contract of insurance, which would, under its terms, have terminated and become void if it had not been reinstated in the manner and within the time provided in the original contract.
This right to renew, or to reinstate the original contract, after a breach of some of the conditions by the insured — that is, a failure to pay premiums at times named — was a part of the original contract, and, after it was so renewed or reinstated in accordance with the original contract of insurance, the original contract was binding and of force as to each party just as if there had never been a breach, a renewal, or reinstatement. The original policy then stood as if there had never been a failure to pay to any of the premiums when due, or any cause for forfeiture of the original.
On the former appeal, we declined to follow that line of cases which treat a renewal or reinstatement of a contract after breach as a new contract and a forfeiture of the original. We approve and follow the line of cases which hold that the renewal or reinstatement is a mere continuance of the old or original contract which, but for the renewal or reinstatement, would have been forfeited and void. Silliman v. Ins. Co., 131 Tenn. 303, 174 S.W. 1131, L.R.A. 1915F, 707, and note, which cites and reviews many cases. Of course, the facts and circumstances in each case are somewhat different, the terms of the original policies were different in many of the cases, and so were the provisions as to renewals or reinstatement.
Under the facts and circumstances of this case, we hold that the policy in force when the insured died was, in effect, the original policy made with the insurance company, and the time intervening between the making of the contract and the death of insured is the time from the date of the original policy to the date of his death.
The insurance company pleaded several special pleas, setting up the suicide clause of the policy of insurance — to which plaintiff replied setting up the nonforfeiture clause. To these replications defendant attempted to rejoin by stating its conclusions as to the legal effect of the application for renewal or reinstatement, and of the acceptance by defendant of the application. The pleas, replications, and rejoinders must be construed in reference to the complaint, the insurance policy, the application, and renewal, which were made parts thereof. So construing them, the trial court ruled correctly as to the demurrer thereto, and as to instructions to the jury. To these special rejoinders the court sustained demurrers. The trial was had on an agreed statement of facts, and resulted in judgment for plaintiff, and defendant prosecutes this appeal.
It would serve no good purpose to again discuss the questions raised on this appeal. The main question, and the one which controls the rights and liabilities of the parties, viz., the effect of the nonforfeiture clause of the contract of insurance, has been several times considered by this court, and has been decided both ways. There has been and is now a difference of opinion among the justices of this court on the question, as may be seen from the opinions in this case on former appeal. 201 Ala. 337, 78 So. 299 et seq., L.R.A. 1918D, 860.
This court has since that decision reaffirmed and followed the rules of law and construction in the majority opinion on that appeal, and we are not yet convinced of its error, and again adhere to it. It may not be out of place, however, to here repeat in part what we hold:
"Without either affirming or denying that suicide while sane is a crime, or that it is not within the risk of a life insurance policy unless expressly so provided, or that, if so provided, the provision would be void as against public policy, we hold that the object and effect of the incontestable clause is to prevent any such questions from arising, or being set up by the insurer as a defense to an action on the contract, after the death of the insured. We fail to see why such a clause or provision is not valid, or why the courts should not enforce it. We cannot presume, in the absence of proof, that either party to the contract intended to violate the law, or to make a contract against public policy. If parties to an insurance contract or any other contract should attempt to incorporate a provision in violation of a statute or against public policy, the attempt would fail; the contract would be void, and would not be enforced by the courts. The contract of insurance here sued upon, on its face shows no such attempt on the part of either party."
The cases following the above rule are Ex parte Weil, 201 Ala. 409, 78 So. 528; Knights of Pythias v. Overton, ante, p. 193, 82 So. 443.
Affirmed.
McCLELLAN, SAYRE, SOMERVILLE, and THOMAS, JJ., concur.
ANDERSON, C. J., and GARDNER, J., dissent, relying on opinion on former appeal.
On Rehearing.
The writer was in error in saying in the opinion that this was the second appeal in this case. The report of the case in 78 So. 299, L.R.A. 1918D, 860, was between the same parties, but was on a different policy. The only excuse the writer has to offer is that the policies in the two cases are as near alike as if one were a copy of the other. The parties are the same, and the policies were issued on the same date, for the same amount, were forfeited the same day, reinstated the same day, and the same attorneys appeared for the respective parties in the same court; hence it never occurred to the writer that the cases were not the same, The writer compared the original record on the former appeal with the one on this appeal, and, finding the above similarities, he concluded it was a second appeal in the same case. This mistake led to another of referring to some pleas and subsequent pleadings on the former appeal, not in the record on this appeal.
The real questions of law involved in the two appeals are however, the same, except as pointed out and decided on the original hearing.
On the former appeal we held that the application for reinstatement was not made a part of the policy in such sense as to authorize us to consider it as a part of the contract. On this appeal we held that it was so made a part thereof, and we did consider it as a part of it, but declined to hold with appellant that the insured or beneficiary was bound by the stipulations contained in the application, that the insurer should not be liable if the "insured should die by his own hand or act whether sane or insane, within one year from the date of such placing in force."
It appears without dispute, except as conclusions of the pleader, that there was no consideration to support this condition.
The original policy, on which the action was brought and which was reinstated, gave the insured the right to have it reinstated without the above condition, and the condition together with others were on printed forms or blanks furnished by the company, and there was absolutely no consideration to support the new agreement; but it was the intention and contract right of the insured under the original contract of insurance, which is here sued on, that the policy should be reinstated on certain conditions which were complied with, and the original policy thus reinstated. It is certain that the contract was to reinstate the original, not to make a new contract, or amend or change the old; and that the rights and liabilities of both parties after the renewal or reinstatement should be the same as if there never had been a forfeiture. The rights and liabilities of the parties dated from the time of the original contract, and not from the time of the renewal — as the conditions in the application for renewal would indicate, or would follow if they were binding.
If these conditions contained in the application for renewal are binding, then the original contract and the renewal contract set up by the defendant contain conflicting provisions. In other words, if the original policy as it was written is the contract which controls, then the incontestable clause precludes any defense here attempted to be set up. On the other hand, if the original policy is changed by having the conditions contained in the application made a part thereof, then the incontestable clause is either wholly avoided, or its operation and effect postponed for two years. If the conditions in the application are a part of the policy, then the policy contains conflicting provisions, and, if the conditions are to be enforced, then there can be no recovery; if the pleas are true, then the replications setting up the incontestable clause would be no answer to the pleas. On the other hand, if they are not binding, so as to become a part of the policy, then the incontestable clause is in force and precludes any defense here attempted to be set up. The right to reinstatement is a part of the original policy, and was binding on the insurance company when the forfeiture occurred and when the reinstatement occurred. The insurance company certainly had no right, under the original contract, to require that the policy should be reinstated only on the conditions contained in the blank application which the insured signed.
It is true the insured could have waived his right to reinstatement, and could have contracted for a new policy with different conditions, and could have waived benefits in the original policy; but did he do this? Did he not exercise his right under the original policy to have it reinstated as it was originally, and not to make a new contract as the insurance company now insists? We are unable to find any consideration to support these conditions in the blank application for reinstatement, and for this reason we hold they are not binding.
The clause of the contract to "reinstate" does not mean to reinsure under another and different contract; it implies the right of the insured to be placed in the same condition that he occupied before the forfeiture, and it implies the duty on the part of the insurer to place the insured in that condition, and it allows no right to exact other conditions, precedent or subsequent, to reinstatement. Lovick v. Providence Life Ass'n, 110 N.C. 93, 14 S.E. 506, 507; Goodwin v. Assur. Ass'n, 97 Iowa, 226, 66 N.W. 157, 32 L.R.A. 473, 59 Am. St. Rep. 411.
The insured had the legal right to have his policy reinstated after forfeiture without any additional consideration, within the time specified in the policy, if the insured paid or offered to pay the premiums and the accrued interest, and to furnish evidence satisfactory to the company of his insurability. This he did. The insured having done all that was required of him, he could have compelled, by a bill in equity, the reinstatement of his policy as it was. Bradbury v. Mutual Reserve Fund Life Co., 53 N.J. Eq. 306, 31 A. 775. It has been held that where the insured fully performed his part of the contract as to reinstatement after forfeiture, and the insurance company declined to reinstate, or to accept the offer, the beneficiary could recover on death of insured as if the contract had been reinstated. Van Houten v. Pine, 38 N.J. Eq. 72.
The contract in question was not for a year, with privilege to renew; it was for life, with right of reinstatement if forfeited. The contract is an entirety, subject, of course, to forfeiture or discontinuance for failure to pay premiums. Fearn v. Ward, 80 Ala. 555, 2 So. 114. The insurer has no right to impose or add other conditions to the right of reinstatement than those contained in the contract. Biddle on Ins. vol. 2, p. 1122; Davidson v. People's Ben. Ass'n, 39 Minn. 303, 39 N.W. 803, 1 L.R.A. 482. If other conditions are so added by the insurer, they are not binding on the insured unless supported by a consideration. 9 Cyc. 593; Rowell v. Covenant Mut. Life Ass'n, 84 Ill. App. 304.
It follows that the application for rehearing must be overruled.