Opinion
No. 38267.
June 7, 1943. Rehearing Denied, July 6, 1943.
INSURANCE: Term Insurance: Effective Date Named in Policy Controls Over Delivery Date: Rule as to Ordinary Life Policies Rejected. In taking out a seven year term policy the insured had the policy made effective as of June 19, 1934, so as to obtain a lower premium than would apply to the delivery date of July 2. The policy plainly provided that the first year term would expire on June 19, 1935, and that the entire policy would expire seven years from June 19, 1934, the effective date of the policy. There was no ambiguity, and therefore no basis for following the rule applied to ordinary life policies that the later delivery date may be used to prevent forfeiture of the contract. The policy had expired when the insured died on June 28, 1941.
Appeal from Circuit Court of City of St. Louis. — Hon. Wm. L. Mason, Judge.
AFFIRMED.
Blumenfeld Abrams by Selden Blumenfeld and Adolph Schwartz for appellant.
(1) Where an insurance policy provides that the policy shall not become effective until the policy is actually delivered to the insured and the first premium paid by him while he is in good health, the contract is not consummated until such delivery and payment of premium, and the effective date of the policy, or the date when the coverage commences, is the date of such delivery and payment of premium, and this is so, regardless of a conflicting effective date fixed in the policy. Hampe, Public Administrator, v. Met. Life Ins. Co., 21 S.W.2d 926; Halsey v. American Cent. Life Ins. Co., 167 S.W. 951; Chestnut v. Security Mut. Life Ins. Co., 232 S.W. 203; Newman v. John Hancock Mut. Life Ins. Co., 7 S.W.2d 1015; Howard v. Aetna Life Ins. Co., 145 S.W.2d 113; Howard v. Aetna Life Ins. Co., 164 S.W.2d 360; Equitable Life Assur. Soc. of United States v. Tucker, 126 F.2d 396; Stinchcombe v. New York Life Ins. Co., 80 P. 213; Great Southern Life Ins. Co. v. Peddy, 151 S.W.2d 346; Cecil v. Kentucky Livestock Ins. Co., 176 S.W. 986; Bowen v. Prudential Ins. Co. of America, 144 N.W. 543. (2) The policy in this case required the extension of seven full years of effective insurance coverage, and so falls within the line of decisions following Halsey v. American Cent. Life Ins. Co., 258 Mo. 659, 167 S.W. 951, which hold that for each full year of premium paid an insured is entitled to and should receive a full year of effective insurance coverage. Halsey v. American Cent. Life Ins. Co., 167 S.W. 951; Chestnut v. Security Mut. Life Ins. Co., 232 S.W. 203; State ex rel. Mo. State Life Ins. Co. v. Allen, 243 S.W. 839; Johnson v. American Central Life Ins. Co. of Indianapolis, Ind., 249 S.W. 115; Hampe, Public Administrator, v. Met. Life Ins. Co., 21 S.W.2d 926; Howard v. Aetna Life Ins. Co., 145 S.W.2d 113; Howard v. Aetna Life Ins. Co., 164 S.W.2d 360; Penn Mut. Life Ins. Co. v. Forcier, 24 F. Supp. 851; Prudential Ins. Co. of America v. King, 101 F.2d 990; Equitable Life Assur. Soc. of United States v. Tucker, 126 F.2d 396; Shinall v. Prudential Ins. Co. of America, 14 P.2d 183; Lyke v. First Natl. Life Accident Ins. Co., 171 N.W. 603. (3) Where a policy of insurance contains provisions which are in conflict with each other, and are ambiguous and uncertain as to the effective date of the policy, and the same is so drawn as to require construction and be fairly susceptible of two different interpretations, the court is required to adopt that interpretation concerning the effective date of the policy that is most favorable to the insured. Landrigan v. Mo. State Life Ins. Co., 245 S.W. 382; Johnson v. American Central Life Ins. Co. of Indianapolis, Ind., 249 S.W. 115; Hampe, Public Administrator, v. Met. Life Ins. Co., 21 S.W.2d 926; Walker v. American Automobile Ins. Co., 70 280 S.W.2d 82; Wilson v. Kansas City Life Ins. Co., 128 S.W.2d 319; Manufacturers' Accident Indemnity Co. v. Dorgan, 58 F. 945; Prudential Ins. Co. of America v. Stewart, 237 F. 70. (4) Plaintiff is entitled to and should receive damages and attorneys' fees for defendant's vexatious refusal to pay plaintiff's claim under the policy here in issue. Hampe, Public Administrator, v. Met. Life Ins. Co., 21 S.W.2d 926.
Jones, Hocker, Gladney Grand and James C. Jones, Jr., for respondent; F.H. Pease of counsel.
(1) There was no conflict or ambiguity in the provisions of the application and the policy. When the policy was delivered and the first premium was paid, the insurance became effective from June 19, 1934, the date of the application. Hurt v. New York Life Ins. Co., 51 F.2d 936; New York Life Ins. Co. v. Tolbert, 55 F.2d 10; Martin v. New York Life Ins. Co., 234 P. 673. (2) A policy will, when possible, be construed so as to give effect to all of its terms and provisions. Mathews v. Modern Woodmen, 236 Mo. 326; Webb v. Mo. State Life Ins. Co., 134 Mo. App. 576, 115 S.W. 481; State ex rel. Prudential Ins. Co. v. Shain, 127 S.W.2d 675; Phillips v. American Natl. Assur. Co., 227 Mo. App. 1136, 58 S.W.2d 814; Calloway v. Henderson, 130 Mo. 77, 32 S.W. 34; Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523; Mercer v. South Atlantic Life Ins. Co., 69 S.E. 961; South St. Joseph Live Stock Co. v. St. Joseph Stock Yards Bank, 224 Mo. App. 40, 16 S.W.2d 722. (3) The provision of the application that the policy will not become effective until it is delivered and the first premium is paid, when read in conjunction with the provision of the policy that its effective date is June 19, 1934, means that when the policy is delivered and the first premium is paid the insurance relates back to and becomes effective from June 19, 1934. Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523; Lacy v. American Central Life Ins. Co., 115 S.W.2d 193; Rosenthal v. New York Life Ins. Co., 94 F.2d 675; Travelers Ins. Co. v. Wolfe, 78 F.2d 78; Shira v. New York Life Ins. Co., 90 F.2d 953. (4) Absent a prohibitory statute, an agreement that when the policy is delivered and paid for the insurance shall relate back to and become effective as of an earlier date is valid. Winters v. Reserve Loan Life Ins. Co., 221 Mo. App. 519, 290 S.W. 109; Howard v. Aetna Life Ins. Co., 145 S.W.2d 113; Mutual Life Ins. Co. v. Hurni Packing Co., 263 U.S. 167; Whitney v. Union Central Life Ins. Co., 47 F.2d 861. (5) In the following states and cases it was held that there was no ambiguity in the provision of the policy fixing its effective date or the date of the premiums payable thereunder, and a provision of the application that the policy was not to become effective until it is delivered and the first premium was paid, and that premiums were due and payable on the dates specified in the policy and not on the anniversary of the delivery of the policy and the payment of the first premium thereon: Arkansas — Craig v. Golden Rule Life Ins. Co., 41 S.W.2d 769; California — Thomas v. Northwestern Mut. Life, 142 Cal. 79, 75 P. 665; Methvin v. Fidelity Mut. Life Ins. Co., 129 Cal. 251, 61 P. 1112; Wall v. Equitable Life Assur. Soc., 91 P.2d 145; Anderson v. Mutual Life Ins. Co., 130 P. 726; Georgia — Mutual Life Ins. Co. v. Stegall, 1 Ga. App. 611, 58 S.E. 79; Illinois — Forch v. Western Life Indemnity Co., 157 Ill. App. 244; Indiana — Tibbitts v. Mutual Benefit Life, 159 Ind. 671, 65 N.E. 1033; Iowa — Tigg v. Register Life Annuity Ins. Co., 152 Iowa 720, 133 N.W. 322; Timmer v. New York Life Ins. Co., 270 N.W. 421; Kansas — Wolford v. Natl. Life Ins. Co., 114 Kan. 411, 219 P. 263; Kentucky — Wilkinson v. Commonwealth Life Ins. Co., 176 Ky. 833, 197 S.W.2d 557; Minnesota — First Natl. Bank v. New York Life Ins. Co., 192 Minn. 609, 255 N.W. 831, affirmed on reargument 192 Minn. 616, 258 N.W. 13; John Hancock Mut. Life Ins. Co., 194 Minn. 382, 260 N.W. 493; Montana — Johnson v. Met. Life Ins. Co., 83 P.2d 922; Michigan — Jewett v. Northwestern Mut. Life Ins. Co., 149 Mich. 79, 112 N.W. 734; Weller v. Manufacturers Life Ins. Co., 256 Mich. 532, 240 N.W. 34; Met. Life Ins. Co. v. Jawkowski, 280 N.W. 766; New Mexico — Martin v. New York Life Ins. Co., 234 P. 673; North Carolina — Wilkie v. New York Mut. Life Ins. Co., 146 N.C. 513, 60 S.E. 427; Ohio — Mougey v. Union Central Life Ins. Co., 123 Ohio St. 595, 176 N.E. 455; New York Life Ins. Co. v. Clutts, 125 Ohio St. 555, 182 N.E. 500; Oklahoma — Kansas City Life Ins. Co. v. Harper, 90 Okla. 116, 214 P. 924; Pennsylvania — McDonough v. Prudential Ins. Co., 85 Pa. Super. 63; Ford v. Fidelity Mut. Life Ins. Co., 314 Pa. 54, 170 A. 270; Rhode Island — Bryan v. Natl. Life Ins. Assn., 21 R.I. 149, 42 A. 513; South Carolina — Cantey v. Philadelphia Life Ins. Co., 166 S.C. 181, 164 S.E. 609; Brown v. Mutual Life Ins. Co., 195 S.E. 552; Tennessee — Berry v. Prudential Ins. Co., 134 S.W.2d 886; Texas — Great So. Life Ins. Co. v. Peddy, 162 S.W.2d 652; Utah — Fawcett v. Security Benefit Life Ins. Co., 104 P.2d 214; Washington — McKenney v. Phoenix Mut. Life Ins. Co., 138 Wn. 315, 244 P. 560; Federal — Hurt v. New York Life Ins. Co., 51 F.2d 936; New York Life Ins. Co. v. Tolbert, 55 F.2d 10; New York Life Ins. Co. v. Silverstein, 53 F.2d 986; McCambell v. New York Life Ins. Co., 288 F. 465; McConnell v. Provident Savs. Life Assur. Soc., 92 F.2d 769; Sellars v. Continental Life Ins. Co., 30 F.2d 42; Travelers Ins. Co. v. Wolfe, 78 F.2d 78; Shira v. New York Life Ins. Co., 90 F.2d 953; Trapp v. Metropolitan Life Ins. Co., 70 F.2d 976; Meadows v. Continental Assur. Co., 89 F.2d 256; Jones v. Jefferson Standard Life Ins. Co., 79 F.2d 640; Schwartz v. Northern Life Ins. Co., 25 282 F.2d 555. (6) If the court intended to hold, as a matter of law, in Halsey v. American Central Life Insurance Co., 258 Mo. 659, 167 S.W. 951, that an insured is entitled to a full year's insurance in return for the first premium, then that holding is unsound and should be repudiated. The parties to a contract of insurance may lawfully agree that for a stipulated premium the insurance shall run for a year or for more, or for less, than a year. Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523; Meadows v. Continental Assur. Co., 89 F.2d 256; Rosenthal v. New York Life Ins. Co., 94 F.2d 675; Cantey v. Philadelphia Life Ins. Co., 164 S.E. 609. (7) The holding in the Halsey case ( 258 Mo. 659, 167 S.W. 951) that insured was entitled to a year's insurance in return for the first premium was predicated on conflicting and ambiguous provisions of the Halsey policy which are not found in the policy in suit. Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523; National City Bank v. Mo. State Life Ins. Co., 332 Mo. 182, 57 S.W.2d 1066; Lacy v. American Central Life Ins. Co., 115 S.W.2d 193; Hussey v. Ohio Natl. Life Ins. Co., 119 S.W.2d 455; De Walt v. State Farm Mut. Auto. Ins. Co., 111 F.2d 699; Johnson v. Met. Life Ins. Co., 83 P.2d 922. (8) Halsey case ( 258 Mo. 659, 167 S.W. 951) is inapplicable to the case at bar because the insured in this case received an adequate consideration, i.e., a lower premium rate, for not obtaining a year's insurance in return for the first premium. Tabler v. General American Life Ins. Co., 342 Mo. 726, 117 S.W.2d 278; Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523; McQueeny v. Natl. Fidelity Life Ins. Co., 350 Mo. 469, 166 S.W.2d 461. (9) Halsey case ( 258 Mo. 659, 167 S.W. 951) does not apply when, at insured's request, the policy is dated back, even though the insured does not thereby secure the benefit of a lower premium rate. Timmer v. New York Life Ins. Co., 270 N.W. 425; Travelers Ins. Co. v. Wolfe, 78 F.2d 78; Johnson v. Met. Life Ins. Co., 83 P.2d 924. (10) Halsey case ( 258 Mo. 659, 167 S.W. 951) is inapplicable where the insured is entitled, by paying the first premium at the time of the application, to have the insurance become effective from the date of the application. National City Bank v. Mo. State Life Ins. Co., 332 Mo. 182, 57 S.W.2d 1066. (11) Halsey case ( 258 Mo. 659, 167 S.W. 951) is inapplicable where insured's age changes between application and delivery of policy so that if delivery date became anniversary date of policy the insured would, in contravention of Anti-Discrimination Statute (Sec. 5840, R.S. 1939), receive insurance at premium rate which was less than insurer's standard premium rate at age when policy was delivered. Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523; Tabler v. General American Life Ins. Co., 342 Mo. 726, 117 S.W.2d 278; Halsey case ( 258 Mo. 659, 167 S.W. 951) does not apply to a term policy of insurance; National City Bank v. Mo. State Life Ins. Co., 332 Mo. 182, 57 S.W.2d 1066; Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523; Petersen v. Met. Life Ins. Co., 84 S.W.2d 159; Medlin v. American Bankers Ins. Co., 227 Mo. App. 705, 59 S.W.2d 738; Vail v. Midland Life Ins. Co., 108 S.W.2d 147; Doty v. American Natl. Assur. Co., 165 S.W.2d 862; Penn Mut. Life Ins. Co. v. Forcier, 103 F.2d 166; Wall v. Equitable Life Assur. Soc., 91 P.2d 145. (12) Halsey case ( 258 Mo. 659, 167 S.W. 951) does not apply where the parties themselves have construed the policy as providing for the payment of premiums on the date specified in the policy rather than on the anniversary date of the delivery of the policy. Scotten v. Met. Life Ins. Co., 336 Mo. 724, 81 S.W.2d 313; Evans v. Equitable Life Assur. Soc., 109 S.W.2d 380; Lee v. Mo. State Life Ins. Co., 303 Mo. 492; Dougherty v. Mutual Life Ins. Co., 226 Mo. App. 570, 44 S.W.2d 206; Lacy v. American Central Life Ins. Co., 232 Mo. App. 1132, 115 S.W.2d 193; Insurance Co. v. Dutcher, 95 U.S. 269; Restatement of Law of Contracts, sec. 235 (e).
In the Circuit Court of the City of St. Louis, the appellant filed this action on a life insurance policy issued to Rudolph L. Weinert by the respondent, and payable in event of his death to his executors, administrators, or assigns, and on the date the policy was delivered, it was assigned by him to appellant. The case was tried on an agreed statement of facts, and the trial court entered a judgment for the respondent. From this judgment, the appellant has duly appealed.
The only issue in this case is whether or not the policy of insurance was in force at the date of the death of Rudolph L. Weinert on June 28, 1941. The policy in question was not an ordinary life policy, but was a term insurance for only seven years. The policy was issued in the year 1934, and appellant contends that although it was dated June 19, 1934, for a term of seven (7) years, it was not in force until July 2, 1934, the anniversary of the delivery date of the policy.
To support its contention, the appellant relies upon the cases of Halsey v. American Central Life Ins. Co., 258 Mo. 659, 167 S.W. 951; Hampe, Public Administrator, v. Metropolitan Life Ins. Co. (Mo. App.), 21 S.W.2d 926; Howard v. Aetna Life Ins. Co., 346 Mo. 1062, 145 S.W.2d 113, and 350 Mo. 17, 164 S.W.2d 360, and others too numerous to cite. Those cases rule that if the policy provides for the payment of premiums annually, or on or before certain days, occurring periodically after the date of the policy, and if the policy or application further provides that it shall not take effect until it is delivered and the first premium paid, then in event of an issue of liability for want of timely payment of premiums, the premium-paying periods are to be determined from the date of delivery.
The reason for this rule is that in every instance the contract expressed in the policy is ambiguous or there is some conflict of provision in the particular policy. In construing the contract of insurance, as expressed by the policy and the application, the cases relied upon by the appellant hold that where the contract is fairly susceptible to two different interpretations, the Court is required to adopt that interpretation concerning the effective date of the policy which is most favorable to the insured. This rule of law is based on the reason that if the policy of insurance contains ambiguous or inconsistent provision, the construction should be adopted, if possible, which will sustain rather than forfeit the contract. McMaster v. New York Life Insurance Co., 183 U.S. 25, 22 S.Ct. 10, 46 L.Ed. 64.
In every case in which the appellate courts of this State have so ruled, the policy under construction was an ordinary life policy, and not a term policy, and the respondent contends that for this reason, the cases relied upon by appellant are not in point.
The pertinent facts in the case at bar are as follows: On June 19, 1934, Rudolph L. Weinert made a written application to respondent for a policy of insurance on his life in the sum of Ten Thousand Dollars, for a term of seven years.
This application stated that the "Date of policy as of date of Application." It also had the following provision:
"That the insurance hereby applied for shall not take effect unless and until the policy is delivered to and received by the applicant and the first premium paid in full during his lifetime . . . provided, however, that if the applicant at the time of making this application, pays the agent in cash the full amount of the first premium for the insurance applied for . . . and receives from the agent a receipt therefor on the receipt form which is attached hereto, and if the company, after medical examination and investigation, shall be satisfied that the applicant was, at the time of making this application insurable . . . then said insurance shall take effect and be in force . . . from and after the time this application is made, whether the policy be delivered to and received by the applicant or not."
The policy was delivered to the insured on July 2, 1934, and on that date was assigned to the appellant. The policy provided:
"New York Life Insurance Company agrees to pay . . . Ten Thousand Dollars upon receipt of due proof of the death of Rudolph L. Weinert, the Insured, [853] within Seven years from the date this Policy takes effect (hereinafter called the term period).
"This contract is made in consideration of the application therefor and of the payment in advance of the sum of $257.50, the receipt of which is hereby acknowledged, constituting the first premium and maintaining this Policy for the period terminating on the 19th day of June, 1935, and of a like sum on said date and every twelve calendar months thereafter until premiums for seven full years in all shall have been paid from the date on which this Policy takes effect, or until the prior death of the insured.
"This Policy takes effect as of the 19th day of June, 1934, which day is the anniversary of the policy."
We find no ambiguity or inconsistent provisions in the contract of insurance. The policy provides that it is to take effect "as of the 19th day of June, 1934." It also provides for insurance "for the period terminating on the 19th day of June, 1935," and if the premiums are paid "on said date and every twelve calendar months thereafter until premiums for seven full years in all shall have been paid from the date on which this policy takes effect, . . .," it would expire June 19, 1941. The application stated the date of the policy should be the date of the application which was the 19th day of June, 1934.
The respondent says this case should be ruled by our case of Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523; National City Bank v. Missouri State Life Ins. Co., 332 Mo. 182, 57 S.W.2d 1066; Petersen v. Metropolitan Life Ins. Co. (Mo. App.), 84 S.W.2d 157; and Doty v. American National Life Ins. Co., 350 Mo. 192, 165 S.W.2d 862. Those cases do not deal with ordinary life policies but deal with term insurance, as does the policy under consideration; and those cases hold that the policy date controls the date of the subsequent premiums, which expressly expires by the terms of the policy on a definite date.
When we consider the fact that on June 19, 1934, the insured was fifty-three years old, and for insurance purposes, he became fifty-four on June 23, 1934, and that he was President of the appellant corporation, we think the facts come within the rule announced by us in the Prange case [ 46 S.W.2d 523, l.c. 526] wherein we said:
"Appellants say that the payment of $700.75 made by the insured on May 18th, the time when the policy was delivered to him, was the payment of an annual premium, which entitled the insurer to a full year's insurance; otherwise, they say, the insured paid for approximately a month and a half's insurance which he did not get. The contention ignores the plain language of the contract. In its inception the contract was not one for life, but an assurance for a term ending on April 4, 1923, . . .
"The insured was a business man of large affairs; no fraud or deceit was practiced upon him. When he accepted the policy on the 18th day of May, 1922, he must have known that for the payment he was then making he was getting nothing more than term insurance for a term beginning on that date and ending April 4, 1923. Whether he was receiving an adequate consideration for the payment rested entirely with him. He may have considered that the securing of the premium rate of age thirty-eight, by the predating of the policy, was more beneficial to him than a month and a half's insurance. Whether it was or not is not within our province to determine. Courts are without authority to rewrite contracts, even insurance contracts, although it may appear that in some respects they operate harshly or inequitably as to one of the parties; they discharge their full duty when they ascertain and give effect to the intentions of the parties, as disclosed by the contract which they have themselves made."
As previously stated, this was not an ordinary life insurance policy, but term insurance, with the duration of the term definitely and explicitly fixed by the provisions of the contract itself, and this irrespective of when the contract might become binding. By the terms of this contract it became effective as of June 19, 1934, and terminated June 19, 1941. The insured died June 28, 1941, on a date after the policy had expired. Since the policy was not in force on the date of the insured's death, it follows that the judgment of the trial court was for the right party and should be affirmed. It is so ordered. All concur.