holding that a provision in a life insurance policy which allowed for the waiver of premiums and a monthly income if the insured supplied the insurer with proof of permanent disability by the anniversary date of the policy nearest the insured's sixtieth birthday was a condition precedent to the insurer's liability and therefore not a restriction on the applicable statute of limitationsSummary of this case from Exxon Corp. v. Crosby-Mississippi Resources
January 23, 1950.
1. Insurance — permanent disability — notice of — condition precedent.
A life insurance policy provided that upon proof of permanent disability the premiums would be waived and a stated monthly income would be paid during the continuance of the disability; provided the insured shall furnish such proof before the anniversary date of policy nearest insured's attained age of sixty years; but insured did not make claim or proof until about two years after its due date: Held that proof of claim within the specified time was a condition precedent to liability for the stated benefits.
2. Insurance — statute of limitations — conditions precedent to liability.
A stipulation in a life insurance policy such as above mentioned prescribes a condition upon which the liability may arise, and does not undertake to change the limitation prescribed by our statute as to when a suit may be brought after the liability accrues. Sec. 724, Code 1942.
Headnotes as approved by McGehee, C.J.
APPEAL from the chancery court of Lowndes County; A.F. McKEIGNEY, Chancellor.
Robin Weaver and John F. Frierson, for appellant.
I. Was proof required before 60th anniversary? In the case at bar, Clause "B" of the policy requires "that such disability has then existed for not less than sixty days" which at once distinguishes this policy from others which will be reviewed later. The foregoing language established the 60 days requirement of existence of disability as the real condition precedent to recovery of insured and without which all else must have failed, and which condition was amply met and set forth by insured in his bill of complaint and was well pleaded therein and the general demurrer against same, therefore, should have been overruled.
There are several cases in Mississippi touching upon this matter of conditions precedent that have been misunderstood and misquoted. Among them are Berry v. Lamar Life Insurance Co., 165 Miss. 405, 142 So. 445, 145 So. 887, and New York Life Insurance Co. v. Alexander, 122 Miss. 813, 85 So. 93.
Both of the foregoing cases are cited as authority for the general contention that notice, or proof, is a condition precedent to recovery under this type of policy. But the fallacy of this bald statement, standing alone, is that in both the Berry and Alexander cases, the policy was already void and forfeited at the time the notice was given, because of default in premiums and the policies had "ceased and determined". Such is not true in the policy at bar, wherein all premiums were fully paid, the policy had never lapsed, and was fully paid up and in full force and effect on Oct. 12, 1942, when the insured first became disabled, and was likewise in full force and effect 60 days thereafter, and likewise on Dec. 20, 1945 (the anniversary of the policy nearest the 60th birthday of insured) and likewise on May 21, 1947, when first notice was given to the company, and likewise in October, 1947, when second notice was given, and likewise on Sept. 20, 1948 when suit was filed.
Nowhere in the Berry or Alexander cases is there any statement of the court which would have barred recovery if the premiums had been paid and if the policies had been valid and in force. It seems to be the contention of appellee, as voiced in its general demurrer, that failure of insured to furnish proof prior to Dec. 20, 1945 (which was anniversary of policy nearest insured's 60th birthday) worked a forfeiture of insured's rights to recover under Clause "B" as to disability payments. Such is not the law of the Berry case or the Alexander case, nor of any other case in Mississippi that we have seen. The Berry case is exactly to the contrary. In like manner, there is no stipulation in the policy at bar which requires proof to be furnished by insured by Dec. 20, 1945, or within any other time limit. The Berry case was decided solely on the proposition that, the policy having lapsed for failure to pay premium, all other rights and benefits thereunder ceased (except as to certain nonforfeiture values).
Another case in point is that of Aetna Insurance Co. v. Roberts, 174 Miss. 278, 164 So. 311, in which the court quoted with approval from Kimel v. Missouri Insurance Co., 71 F.2d 921, (C.C.A. 10) as follows ". . . the issue was as to whether notice and proofs were required to be furnished prior to the time the insured attained the age of sixty years, as a condition precedent to recovery, and the court held that, under the provisions of the policy, the furnishing of notice and proof of disability before age sixty was not a condition precedent to the right of recovery. In the course of the opinion the court said that: `Under the insurance contract, the obligation to pay total and permanent disability benefits is not conditioned on disability arising and proof being made thereof before the insured attains the age of sixty, but only on such disability arising before the insured attains that age . . . Proof of such disability is only required to mature the first and subsequent monthly installments . . .'"
II. As to complaint of laches. Appellee, in its general demurrer, seems to contend also that appellant was derelict in not making proof of disability earlier than he did in order to afford appellee an opportunity of investigation of the claim.
There are several adequate answers to that contention. (1) Under the very terms of the contract itself, there was no requirement that proof of it should be made by any specific time. (2) If appellant is correct in his contention that disability, but not proof thereof, was required by Dec. 20, 1945, in the case at bar, then any contention by the company of inopportuneness for investigation is untenable for the reason that the matter was first brought to the attention of the company on May 21, 1947, again in October, 1947, again on June 26, 1948, and even as late as July 16, 1948, yet the appellee did not discuss the matter with insured, did not send him any company forms upon which to file proof, and, so far as this record shows, did not make any investigation whatever. The investigation could easily have been made because the insured was still living at time of filing suit on Sept. 20, 1948. (3) Appellant is not seeking any waiver of premiums. All premiums on the policy at bar have been fully paid by the insured. Even under appellee's contention (with which we do not agree) that proof was a condition precedent to recovery of disability benefits, still there was no time limit set by the policy as to when such proofs should be made. There was a time limit on when the disability must occur, but not on the time when proof thereof should be made.
III. As to forfeitures. In the Berry and Alexander cases and in the one at bar there is a separate clause providing expressly for forfeiture of the policy (except as to certain nonforfeiture values) in event of default in payment of premiums.
There is no forfeiture provision in the disability clause of the Berry policy or of the one at bar. It should not now be permitted to be read into the policy for two reasons: (1) Because the law does not favor forfeitures, particularly those by implication and (2) The company could easily have made an express stipulation of forfeiture for failure to furnish proof or to do any other act if not done by the 60th anniversary of the policy, yet the company did not do so. Not having done so, the law presumes that it was not so intended. This principle is clearly stated in Taber v. Royal Ins. Co. (Ala.), 26 So. 262; also in 33 C.J. 14, Section 661.
IV. As to Section 724 of Code 1942. If it should be held, however, that proof of disability had to be made in the policy at bar before Dec. 20, 1945, as a deadline, then such would act as a statute of limitation and would not be a uniform statute of limitation as required and would therefore be void in the face of Section 2294 of the Code of 1930 and Section 724 of the Code of 1942. These two sections are identical, as follows: "724. Period of limitations not to be changed by contract. — The limitations prescribed in this chapter shall not be changed in any way whatsoever by contract between parties, and any change in such limitations made by any contract stipulation whatsoever shall be absolutely null and void; the object of this statute being to make the period of limitations for the various causes of action the same for all litigants."
A statute of limitation is still that, no matter by what name called. It cannot be evaded or avoided by calling it a "condition precedent". If the purpose and effect is to cut off a right of recovery, then it is in reality a statute of limitation and must be uniform under the requirements of Section 724. And it would not be uniform in the case at bar because there is no fixed beginning point for the statute. One insured's recovery might be barred in one year and another might run five years. It opens wide the gate for persons by private contract to circumvent the statute of limitation and is in clear contravention of a long line of Mississippi decisions beginning with Dodson v. Telegraph Co., 95 Miss. 104, 52 So. 693, 694 and coming on down to a more recent case, that of National Casualty Co. v. Mitchell, 162 Miss. 197, 138 So. 808, rendered Jan. 11, 1932. The entire history of this line of decisions is ably covered by Judge Anderson in the Berry case, supra, on pages 889, 891 of 145 So.
Wells, Wells, Newman Thomas, for appellee.
I. The furnishing by the appellant to the appellee of proof of his alleged total and permanent disability before the anniversary date of the policy nearest the insured's attained age of 60 years was a condition precedent to any recovery of disability benefits on the contract sued on, and failure to submit such proof debars the appellant from receiving such benefits. Aetna Life Insurance Company v. Roberts, 174 Miss. 278, 164 So. 311; Bennett v. New York Life Insurance Co., 197 S.C. 498, 15 S.E.2d 743; Berry v. The Lamar Life Insurance Company, 165 Miss. 405, 142 So. 445, Suggestion of Error overruled, 165 Miss. 405, 145 So. 887; Birnbaum v. The Mutual Life Insurance Co. of N.Y., 170 Misc. 83, 9 N.Y.S.2d 928; Brotherhood of Railroad Trainmen v. Bridges, 164 Miss. 356, 144 So. 554; 45 C.J.S. Section 1066, p. 1299; Dovel v. National Life Ins. Co. (Ala.) 157 So. 882; Epstein v. Mutual Life of N.Y., 257 N YS. 772, 143 Misc. 587 affirmed 260 N.Y.S. 936, 236 App. Div. 843; Equitable Life Assur. Soc. v. Slaughter, 178 Miss. 366, 172 So. 300; Goldman v. New York Life Ins. Co., 115 N.J. Eq. 535, 171 A. 541; Insurance Law and Practice by Appleman, Volume 3, Section 1525, page 125; Jenkins v. Mutual Life Ins. Co. of New York, 130 Pa. Super. 442, 198 A. 486; Lincoln Nat. Life Insurance Co. v. Ghio, 111 F.2d 307 (C.C.A. 8); Lucas v. John Hancock Mutual Life Ins. Co., 116 Pa. Super. 298, 176 A. 514; Moscov v. Mutual Life of New York, 320 Ill. App. 281, 50 N.E.2d 970 affirmed 387 Ill. App. 378, 56 N.E.2d 399; Mutual Life Insurance Co. of N Y v. Hebron, 166 Miss. 145, 146 Fed. 445; Mutual Life Ins. Co. of N.Y. v. Landry, 148 F.2d 699 (CCA 5); N.Y. Life Insurance Co. v. Quinn, 171 Miss. 396, 157 So. 902; N.Y. Life Ins. Co. v. Alexander, 122 Miss. 813, 85 So. 93.
Reply of appellee to brief of appellant filed herein.
Appellant's point I. Was proof required before 60th anniversary? Aetna Life Ins. Co. v. Roberts, 174 Miss. 278, 164 So. 311; Equitable Life Assur. Soc. v. Slaughter, 178 Miss. 366, 172 So. 300; Epstein v. Mutual Life of N.Y., 257 N.Y.S. 772, 143 Misc. 587 affirmed 260 N.Y.S. 936, 236 App. Div. 843; Lincoln Nat. Life Ins. Co. v. Ghio, 111 F.2d 307 (C.C.A. 8); Moscov v. Mutual Life of N.Y., 320 Ill. App. 281, 50 N.E.2d 970 affirmed 387 Ill. App. 378, 56 N.E.2d 399; Mutual Life Ins. Co. of N.Y. v. Landry, 148 F.2d 699 (C.C.A. 5); New York Life Ins. Co. v. Alexander, 122 Miss. 813, 85 So. 93.
Appellant's point II. As to complaint of laches. Berry v. The Lamar Life Ins. Co., 165 Miss. 405, 142 So. 445, suggestion of error overruled, 165 Miss. 405, 145 So. 887; Lucas v. John Hancock Mutual Life Ins. Co., 116 Pa. Super. 298, 176 A. 514; Lyford v. New England Mutual Life Ins. Co., 122 Pa. Super. 16, 184 A. 468.
Appellant's point III. As to forfeitures. 33 C.J. page 14, Section 661.
Appellant's point IV. As to Section 724 of Code of 1942. Section 2294, Code 1930; Section 724, Code 1942; Berry v. Lamar Life Ins. Co., 165 Miss. 405, 142 So. 445; Mutual Life Ins. Co. of N.Y. v. Hebron, 166 Miss. 145, 146 So. 445.
On December 20, 1923, the Lamar Life Insurance Company issued and delivered a certain policy of insurance on the life of the appellant, Davis Shackleford Cox, who was then 38 years of age. The policy was in the face amount of $10,000 on the 20-year payment plan, and provided for the payment of an annual premium in the sum of $336.50, all of which premiums were fully paid without any default when the same became due and payable.
On October 12, 1942, the appellant Cox became totally disabled in contemplation of the provisions of the policy of insurance in regard to the waiver of premiums and the payment of monthly income disability benefits. However, he failed to submit proof to the insurer in regard to his total and permanent disability before the anniversary date of the policy nearest the insured's attained age of 60 years, and as provided for in the contract of insurance, the 60th birthday of the insured having been attained on September 24, 1945, and the nearest anniversary date thereto of the policy being on December 20, 1945.
After the insured became totally and permanently disabled, he went to Bonita Springs, Florida, for his health, where he remained for the next few years, and he overlooked the fact that his policy contained the provisions for permanent disability benefits, waiver of premiums, and monthly income during disability until he finally gave notice in 1947 to the insurance company through one of its agents, in Lowndes County, Mississippi.
Thereupon the insurer denied liability for the return of the annual premiums paid by the insured during the period of disability, and for the payment of the monthly income disability benefits, either prior to the giving of such notice or thereafter. Whereupon this suit was filed for the recovery of the annual premiums paid for the year 1942 and successively thereafter in like amount for each year until the policy was paid up under the twenty-payment plan, and for the sum of $100 per month, from October 12, 1942, to date of the final decree, together with legal interest thereon.
A general demurrer to the bill of complaint was interposed by the defendant insurance company, and upon the complainant declining to plead further after the demurrer had been sustained, a final decree was rendered dismissing the suit.
The provision of the policy which covers the benefits sued for reads as follows: "(Clause `B') — If after one full annual premium shall have been paid in cash, and while the policy is still in full force, without default in the payment of any subsequent premium, and not as paid-up or extended insurance under the non-forfeiture provisions, and before the anniversary date of the policy nearest the insured's attained age of sixty years, the insured shall furnish proof satisfactory to the Company that he has become incurably, wholly and permanently disabled by bodily injury or by disease from causes originating after the delivery of this policy, and entirely beyond the control of the insured, and will be, presumably, thereby permanently and continuously prevented from engaging in any and every occupation whatsoever for remuneration or profit and that such disability has then existed for not less than sixty days, then — . . .". (Here follow the stipulations for the waiver of the premiums and payment of the monthly income of $100 per month during the continuance of the disability.)
Although the allegations of the bill of complaint, which were admitted by the demurrer, disclosed that the insured had paid all the annual premiums while the policy was still in full force, and had become disabled on October 12, 1942, within the terms and provisions of the said Clause B of the policy, they did not disclose that "before the anniversary date of the policy nearest the insured's attained age of 60 years" he had furnished proof satisfactory to the company of such disability, but on the contrary the averments of the bill of complaint affirmatively disclosed that there was a failure either to give notice or to submit any proof of such disability.
A similar provision to the foregoing Clause B of the contract was involved in the case of Berry v. Lamar Life Ins. Co., 165 Miss. 405, 142 So. 445, 145 So. 887, and a compliance therewith was held to be a condition precedent to liability. The appellant Cox in his brief has called attention to the fact that in the Berry case some of the annual premiums were in default which accrued during the period of disability, whereas in the instant case all of the annual premiums were kept fully paid as they became due and payable. However, (Hn 1) it was just as essential that the insured in the instant case should have furnished proof to the company "before the anniversary date of the policy nearest the insured's attained age of 60 years" that he had become wholly and permanently disabled within the terms of the policy as that he should have been without default in the payment of any subsequent premium, after one full annual premium had been paid. A failure to comply with either of such provisions would be fatal to the claim for the recovery of these benefits.
In the case of Berry v. Lamar Life Insurance Company, supra [ 165 Miss. 405, 142 So. 446], the court pointed out that there is "sound reason why insurance companies should be permitted in their policies a provision requiring proof to be made before the waiver of the policy becomes effective . . .", and also that "it should have opportunity to investigate the facts at the time the disability occurs or accrues upon which the waiver of premiums depends." In the instant case, the insured had from October 12, 1942, until December 20, 1945, to furnish the proof of disability. Unfortunately for him, he overlooked that his policy contained the provisions now sought to be invoked.
We have carefully examined the several decisions, such as New York Life Insurance Co. v. Alexander, 122 Miss. 813, 85 So. 93, 15 A.L.R. 314; Equitable Life Assur. Soc. v. Slaughter, 178 Miss. 366, 172 So. 300; Aetna Life Ins. Co. v. Roberts, 174 Miss. 278, 164 So. 311, and the other cases cited by both the appellant and the appellee, and we are unable to escape the conclusion that the present case is controlled by the case of New York Life Ins. Co. v. Alexander, supra, and Berry v. Lamar Life Ins. Co., supra, and that the case of Aetna Life Ins. Co. v. Roberts, supra, is to be distinguished on the ground that, as pointed out by the court therein, the disability was the condition precedent upon which liability depended, and not the furnishing of satisfactory proof within the time provided for.
(Hn 2) Nor do we think that Section 724, Code of 1942, renders Clause B of the contract invalid, as changing by contract the statute of limitation within which an alleged liability may be asserted and sued on. The clause of the contract here under consideration prescribes the condition upon which the liability may arise, and does not undertake to change the limitation prescribed by our statutes as to when a suit may be brought after the liability accrues. Moreover, this question was decided adversely to the contention of the appellant in the Berry case.
From the foregoing views it follows that we are of the opinion that the action of the trial court in sustaining the demurrer to the bill of complaint was correct, and that the entry of a final decree which dismissed the bill upon the complainant declining to plead further should be affirmed.