Opinion
No. 37674.
June 30, 1949. On Rehearing March 20, 1950. Rehearing Denied April 24, 1950.
APPEAL FROM CIVIL DISTRICT COURT, PARISH OF ORLEANS, STATE OF LOUISIANA, HONORABLE PAUL E. CHASEZ, J.
Michel Musson, Harry P. Gamble, Jr., New Orleans, for plaintiff-appellant.
Rosen, Kammer, Wolff, Hopkins Burke, New Orleans, for defendant-appellee.
Plaintiff-appellant, Henry J. Robbert, the insured in a life insurance policy issued by the defendant-appellee, The Equitable Life Assurance Society of the United States, instituted this suit to recover total and permanent disability benefits alleged to be due under the terms and provisions of the policy and to recover the amount of premiums paid by him during the existence of such disability. He prays for judgment for the amount of the premiums paid and, under the provisions of Act No. 310 of 1910, for double the amount alleged to be due for disability benefits and for attorney's fees as a penalty for failure to pay.
After trial on the merits, the lower court rejected plaintiff's demands and dismissed his suit. He has appealed.
Plaintiff's suit is predicated on a provision of the insurance policy that "* * * if the insured becomes wholly and permanently disabled before age 60 the Society will waive subsequent premiums and pay to the Insured a Disability-Annuity of One Hundred Dollars a month * * *", subject to certain terms and conditions as set forth in the policy.
On January 7, 1939, while the insurance policy was in full force and effect, with all premiums paid, plaintiff became ill, and as a result of this illness was totally disabled until on or about August 31, 1939, approximately eight months later. He spent a part of this eight months' period in a hospital, part of it confined to bed at home, and part convalescing in the Parish of St. Tammany. During this entire period all premiums falling due, amounting to $293.55, were paid by the plaintiff.
On or about July 9, 1940, nearly a year after plaintiff had resumed the practice of his profession as an optometrist, he was informed by a friend that his insurance policy contained a provision for disability benefits — a fact of which he had previously been unaware. He then presented his claim for total and permanent disability benefits to the insurance company's cashier. His lack of knowledge of the provision regarding disability explains his delay in presenting his claim, but he does not contend or make any showing that the alleged disability rendered him incapable of presenting his claim or furnishing proof in support thereof during the eight months' period for which he is claiming disability benefits. Upon the insurance company's denial of liability, plaintiff instituted this suit on December 4, 1941.
Plaintiff alleges that due to his illness he was totally and permanently disabled within the meaning and terms of the insurance policy. The insurance company takes the position that, even if the disability was total while it lasted, it was not permanent within the meaning of the policy. Under the disposition which we have concluded should be made of this case, however, it is not necessary for us to decide this issue.
The terms and conditions of the policy with reference to total and permanent disability and waiver of premiums are as follows:
"Total and Permanent Disability
"(I) Disability Benefits before age 60 shall be effective upon receipt of due proof, before default in the payment of premium, that the Insured became totally and permanently disabled by bodily injury or disease after this policy became effective and before its anniversary upon which the Insured's age at nearest birthday is 60 years, in which event the Society will grant the following benefits: —
"(a) Waive Payment of All Premiums payable upon this policy falling due after the receipt of such proof and during the continuance of such total and permanent Disability; and
"(b) Pay to the Insured a Monthly Disability-Annuity as stated on the face hereof; the first payment to be payable upon receipt of due proof of such Disability and subsequent payments monthly thereafter during the continuance of such total and permanent Disability." (Italics ours.)
As we have heretofore pointed out, plaintiff alleges and contends that he became totally and permanently disabled within the meaning and terms of the policy on January 7, 1939, but he does not contend or allege that his disability was total and permanent within the meaning of the policy subsequently to August 31, 1939, or that it was such on July 9, 1940, the date on which he presented his claim.
The defendant insurance company contends that, under the above quoted terms and provisions of the policy, receipt of due proof of disability is a condition precedent to the liability of the company to make the disability payments of $100 per month and to waive any premiums; or, in other words that it was not liable for waiver of any premiums falling due during the disability before receipt of proof of such disability, or for any disability payments accruing before receipt of such proof.
It is so well settled that no citation of authority is necessary that, if the provisions of a life insurance policy are ambiguous and of doubtful meaning, the construction most favorable to the insured will be adopted. In other words, in such a case a liberal construction is given in favor of the insured. In the instant case, however, the terms of the policy are clear and free from ambiguity. The language used therein is susceptible of only one interpretation — that the obligation of the insurance company does not rest alone upon the existence of the disability, and that receipt of proof of such disability is a condition precedent to the insurance company's liability or obligation to waive premiums subsequently falling due and to pay disability benefits. To hold differently we would have to give to plain words a strained, abnormal, and uncommon meaning, and would, in effect, be rewriting the insurance contract. In Bergholm et al. v. Peoria Life Ins. Co., 284 U.S. 489, 52 S.Ct. 230, 231, 76 L.Ed. 416, after stating that, where the terms of the policy are of doubtful meaning, the construction most favorable to the insured will be adopted, the court said that "* * * This canon of construction is both reasonable and just, since the words of the policy are chosen by the insurance company; but it furnishes no warrant for avoiding hard consequences by importing into a contract an ambiguity which otherwise would not exist, or, under the guise of construction, by forcing from plain words unusual and unnatural meanings."
The policy in this case provides that, if the insured becomes wholly and permanently disabled before the age of 60, the society will waive subsequent premiums and pay to the insured a disability-annuity of $100 a month; that these disability benefits are effective upon receipt of due proof, and that the company will waive all premiums payable upon the policy which fall due after receipt of such proof. These words clearly mean that the company will waive all premiums falling due after receipt of proof of disability, and are susceptible of no other interpretation. Likewise, the policy explicitly provides that the society will pay the monthly disability-annuity, the first payment to be payable upon receipt of due proof of such disability. The "first payment" in such a case can mean only the first monthly payment of $100.
The appellate courts of five of our sister states — Minnesota, North Dakota, Georgia, Kansas, and Pennsylvania — and the Federal Circuit Court of Appeals for the Eighth District have had occasion to interpret the provisions of insurance policies which are identical with those of the policy which we are here considering. The defendant in each case was the same insurance company as the one here. In every instance the court concluded that the policy was clear and free of ambiguity, and that submission of proof of disability was a condition precedent to the liability of the insurer under the disability provisions of the policy. From our independent research we have found no case in which an appellate court construed this particular provision otherwise. These cases are so called "goose cases", all of the geese being of the same color and in perfect step. They are: Equitable Life Assur. Socof United States v. Mercantile Commerce Bank Trust Co. et al., 8 Cir., 143 F.2d 397; Equitable Life Assur. Soc. of United States v. Adams, 56 Ga. App. 5, 192 S.E. 90; Bott v. Equitable Life Assur. Soc. of the United States, 147 Kan. 671, 78 P.2d 860; Lindskog v. Equitable Life Assur. Soc. of United States, 209 Minn. 13, 295 N.W. 70; Mullaney v. Equitable Life Assur. Soc. of the United States, 66 N.D. 235, 264 N.W. 663; Equitable Life Assur. Soc. of United States v. McCausland et al., 331 Pa. 107, 200 A. 85.
In Equitable Life Assur. Soc. of United States v. Adams, supra, the plaintiff claimed to have become totally and permanently disabled in August, 1930. Notice or proof of disability was filed with the insurance company in September, 1935. Plaintiff contended that he was entitled to be paid disability benefits covering the period between the date of the commencement of disability in August, 1930, and the date of the filing of proof of disability in September, 1935, and also that he was entitled to recover premiums paid during this period. The court disallowed his claim, and in construing and interpreting the insurance policy, which had provisions identical to the ones we have here under consideration, said: "* * * But, in the instant case, according to the provisions of this policy, `the disability benefits * * * shall be effective upon receipt of due proof * * * that the insured became totally and permanently disabled after this policy became effective * * * the first payment to be payable upon receipt of due proof of such disability and subsequent payments monthly thereafter.' The policy in the instant case provides that disability benefits `shall be effective upon receipt of due proof.' The key word is `effective.' A rent contract is entered into, effective on a certain date. An increase in salary is made effective on a certain date. A law is enacted, effective on a certain date. In Mullaney v. Equitable Life Assurance Soc., 66 N.D. 235, 264 N.W. 663, 664, the Supreme Court of North Dakota, in dealing with the provisions of a policy identical with the provisions in this policy, discusses the word `effective': `The term "effective" as it relates to disability benefits does not differ in meaning from the same term when applied to the policy itself. Before any rights accrued to the insured, the policy itself had to become "effective"; that is, go into effect and be binding upon the parties. The contract could not become effective until all the steps required to make a contract had been complied with, or waived. The same way with the disability benefits. The right to these benefits does not go into effect until the prerequisites occur — the contract must remain in force, the insured must not be over sixty years of age, must be totally and permanently disabled, and due proof of such disability must be furnished the company. All these are necessary steps before the disability benefits become effective. The time this portion of the contract goes into effect — payment of disability benefits — is as much a fundamental element as is the disability itself.' The obligation of the company under the language of the present policy does not rest on the existence of the disability, standing alone, but it is the receipt by the company of proof of disability which is definitely made a condition precedent to a waiver by it of payment of the premium becoming due after the receipt of such proof. Bergholm v. Peoria Life Insurance Company, 284 U.S. 489, 52 S.Ct. 230, 76 L.Ed. 416. * * *" [ 56 Ga. App. 5, 192 S.E. 92.]
In Bott v. Equitable Life Assur. Soc. of United States, another of the cases cited supra, suit was instituted to recover permanent disability benefits under two insurance policies issued by the defendant. According to the allegations of the petition, three years and four months before his death, the insured suffered a complete nervous breakdown caused by a combination of diseases, and from that time was totally disabled until his death. The death benefits were duly paid by the insurance company, and suit was instituted to recover the permanent and total disability benefits of $25 per month under one of the policies and for the amount of the premiums paid during the period of disability. No proof of total and permanent disability was furnished to the insurance company during the deceased's lifetime. The Supreme Court of Kansas affirmed a judgment in favor of the insurer, saying: "These provisions [identical with the ones here] are free from ambiguity. The receipt by the company of the proof of the disability is definitely made a condition precedent to the waiver of the payment of the premiums in the two policies, or the payment of the monthly annuities in the larger policy. Bergholm v. Peoria Life Ins. Co., 284 U.S. 489, 52 S.Ct. 230, 76 L.Ed. 416." [ 147 Kan. 671, 78 P.2d 862.]
In the course of its opinion the Kansas court quoted from the case of Smith v. Missouri State Life Ins. Co., 134 Kan. 426, 7 P.2d 65, 67, 69, the following language which we think is pertinent here: "`* * * All actuarial calculations are based upon the payment of premium at the time specified in the contract, and by reason thereof the state is able to determine whether the company can make good its contracts. If the beneficiary may wait until more that a year after the claimed disability and the death of the insured to make the claim of total disability, which is generally a question of fact, then the certainty of liability of insurance companies cannot be established nor the amount of their reserve definitely determined. Anything that destroys the certainty of contracts necessarily affects the whole structure, and the sacredness of contracts should not be unnecessarily invaded or impaired by judicial interpretation.'"
The Federal Circuit Court of Appeals in Equitable Life Assur. Soc. of United States v. Mercantile Commerce Bank Trust Co. et al., supra, a case from the Eastern District of Missouri, in construing two life insurance policies having provisions identical to the ones here involved, said:
"* * * We agree with appellant's [the insurer's] contention that proof of claim by the insured is a condition precedent to the liability of the insurer under the provisions of the policies. The Missouri rule is that unless the language of an insurance policy is ambiguous the courts must give effect to its plain meaning. * * * On the other hand, if the language used is ambiguous it must be construed liberally in favor of the insured. * * * In the instant case the waiver of premiums is clearly limited by condition 1(a) of the policy to premiums `falling due after the receipt of such proof and during the continuance of such total and permanent Disability.' This language is not ambiguous. It excludes waiver of all premiums payable, or falling due, prior to receipt of such proof. * * *
"Neither is the provision for the payment of disability benefits ambiguous. Clause (1) of the policy, supra, provides that: `Disability Benefits before age 60 shall be effective upon receipt of due proof * * * (b) * * * the first payment to be payable upon receipt of due proof of such Disability and subsequent payments monthly thereafter during the continuance of such total and permanent Disability.' * * *
"It is said that clause 1(b) is ambiguous in that the words `the first payment' may be construed to include the sum of all monthly payments accruing during the period from the commencement of disability until the receipt of proof of such disability, or that it may mean the first monthly payment only; and that the clause must * * * be construed against the insurer in favor of the insured. We do not think that clause 1, when considered as a whole, is ambiguous. The insurer agrees to `(b) Pay to the Insured a Monthly Disability-Annuity as stated above; the first payment to be payable upon receipt of due proof,' etc. This clearly means the `first (monthly) payment.'" [143 F.2d 401.]
The Pennsylvania Supreme Court in Equitable Life Assur. Soc. of United States v. McCausland et 1., supra, in construing the same provision had this to say:
"The policy of insurance contained a provision for the payment of disability benefits, such benefits to be `effective upon receipt of due proof, before default in the payment of premium, that the insured became totally and permanently disabled by bodily injury or disease * * * in which event the Society will grant the following benefits: (a) Waive payment of all premiums payable upon this policy falling due after the receipt of such proof and during the continuance of such total and permanent disability; * * *'. * * *
"Where a policy of life insurance provides that disability benefits will be payable upon receipt of due proof that the insured has become totally and permanently disabled, and that the payment of all premiums falling due after the receipt of such proof and during the continuance of such disability will be waived, the furnishing of the proof of disability is a condition precedent. * * *" [ 331 Pa. 107, 200 A. 86.]
Appleman discusses the issue before us in the instant case thus: "The most important question which arises, however, in connection with disability contracts and proof of loss, is where the contract limits recovery of benefits to the time that proof of loss is received, or to a certain length of time after proof of loss is made. In such event, the courts have, on the whole, considered that the insured may not recover any benefits prior to that date, regardless of the date of the inception of the disability. * * *" 1 Appleman, Insurance Law and Practice, § 615, p. 755.
"* * * Of course, the existence of disability is always a condition precedent to liability on the part of the insurer for disability payments, but the majority of courts have held that the proof of disability is likewise such a requisite. And where the policy makes it clear that the insurer will not consider itself bound for disability payments accruing prior to the time that proof or notice of disability is made or given, delay on the part of the insured prevents recovery for any benefits accruing prior to such times." 3 Appleman, op. cit. supra, § 1395, pp. 16, 17.
Bergholm et al. v. Peoria Life Ins. Co., 284 U.S. 489, 52 S.Ct. 230, 76 L.Ed. 416, a leading case by the Supreme Court of the United States, held that receipt of proof by insurer of insured's disability was a condition precedent to waiver of premiums under a policy of insurance with provisions very similar to the ones here. The policy in that case provided, among other things, that the insurance company, upon receipt of satisfactory proof that the insured was totally and permanently disabled, would pay for the insured all premiums becoming due on the policy after receipt of such proof and during the continuance of the total and permanent disability of the insured. In that case the insured died on April 18, 1929, and judgment was sought for disability benefits from December 1, 1927, to April 1, 1929. Prior to the death of the insured, the policy had lapsed unless saved by the terms of the disability clause. From the evidence in the record, the court concluded that it could reasonably be found that the insured was totally and permanently disabled from a time before the premium first became in arrears, and that this condition continued until his death. Petitioners contended that this was enough to bring into effect the promise of the insurance company to pay the premiums which became due after the disability began, notwithstanding the fact that no proof of total and permanent disability was furnished to the insurance company. In holding that the insurance company was not liable, the court in the course of its opinion stated:
"* * * Here the obligation of the company does not rest upon the existence of the disability; but it is the receipt by the company of proof of the disability which is definitely made a condition precedent to an assumption by it of payment of premiums becoming due after the receipt of such proof. The provision to that effect is wholly free from * * * ambiguity * * *. It is true that where the terms of a policy are of doubtful meaning, that construction most favorable to the insured will be adopted. * * *
"Contracts of insurance, like other contracts, must be construed according to the terms which the parties have used, to be taken and understood, in the absence of ambiguity, in their plain, ordinary, and popular sense. Imperial Fire Ins. Co. v. Coos County, 151 U.S. 452, 462, 463, 14 S.Ct. 379, 38 L.Ed. 231. As long ago pointed out by this court, the condition in a policy of life insurance that the policy shall cease if the stipulated premium shall not be paid on or before the day fixed is of the very essence and substance of the contract, against which even a court of equity cannot grant relief. * * * And to discharge the insured from the legal consequences of a failure to comply with an explicitly stipulated requirement of the policy, constituting a condition precedent to the granting of such relief by the insurer, would be to vary the plain terms of a contract in utter disregard of long-settled principles." [ 284 U.S. 489, 52 S.Ct. 231.]
The general rule or doctrine as announced in the Bargholm case has been approved by this court in the cases of Compton v. Amicable Life Ins. Co. of Waco, Tex., 182 La. 991, 162 So. 751, 105 A.L.R. 1087, and Hickman et al. v. Pan-American Life Ins. Co., 186 La. 997, 173 So. 742. See also Jones v. Metropolitan Life Ins. Co., La.App., 157 So. 147, and Hardin v. Mutual Life Ins. Co. of New York, La.App., 12 So.2d 488, 490 (Court of Appeal, Second Circuit). In the Hardin case, notice of the insured's disability was not given to the insurer until about a year and a half after the disability had ceased. In refusing to allow the insured to recover under the disability provisions, the court stated: "There is no doubt in our minds as to the conclusion that the requirement upon the insured to furnish proof of disability constitutes a condition precedent, a suspensive condition. The burden was clearly upon the insured to perform the condition required by the policy, failing which performance there could be no liability or obligation upon the insurer to best the benefits provided."
There are many other cases involving provisions in insurance policies similar to those in the instant case which follow the doctrine of the Bergholm case to the effect that the submission of proof of disability is a condition precedent to liability on the part of the insurance company for total and permanent disability benefits, as well as to its obligation to waive premiums. Among these cases are: New York Life Ins. Co. v. Farrell, 187 Ark. 984, 63 S.W.2d 520; Massachusetts Mut. Life Ins. Co. v. Montague, 63 Ga. App. 137, 10 S.E.2d 279; Wead v. Aetna Life Ins. Co. of Hartford, Conn., 160 Kan. 274, 160 P.2d 258; Floyd M. Andrews, Inc., v. AEtna Life Ins. Co., 198 Minn. 1, 268 N.W. 415, 106 A.L.R. 1085; Berke et al. v. New York Life Ins. Co., 208 Minn. 210, 293 N.W. 248; Rowan et al. v. New York Life Ins. Co., Mo.App., 124 S.W.2d 577; Feinberg v. New York Life Ins. Co., 233 Mo.App. 707, 127 S.W.2d 82; Thomas v. Prudential Ins. Co. of America, 131 Neb. 274, 267 N.W. 446; Gunter v. Prudential Ins. Co. of America, 187 Okla. 11, 100 P.2d 851; Binder v. General American Life Ins. Co., 66 S.D. 305, 282 N.W. 521; Jenkins v. New York Life Ins. Co., 122 W. Va. 73, 7 S.E.2d 343.
What was said in another connection by Chief Justice Hughes of the United States Supreme Court in Williams v. Union Central Life Ins. Co., 291 U.S. 170, 180, 54 S. Ct. 348, 352, 78 L.Ed. 711, 92 A.L.R. 693, is pertinent here: "As there is no ambiguity in the provisions under consideration, there is no occasion for resort to the familiar principle that equivocal words should be construed against the insurer. While it is highly important that ambiguous clauses should not be permitted to serve as traps for policyholders, it is equally important, to the insured as well as to the insurer, that the provisions of insurance policies which are clearly and definitely set forth in appropriate language, and upon which the calculations of the company are based, should be maintained unimpaired by loose and ill-considered interpretations."
It might be well to observe that, if the failure of the insured to present proof of his disability in the instant case had been due to a disability which rendered him incapable of making or giving such proof, his case would then fall within the doctrine announced by this court in Hickman et al. v. Pan-American Life Ins. Co., supra, in which recovery was allowed when such failure was due to the insanity of the insured.
The opinion of this court in Turner v. Metropolitan Life Ins. Co., 189 La. 342, 179 So. 448, does not reflect that the contention was made by the insurance company that liability arose under the disability provisions of the policy involved as of the date of giving of notice during disability by the insured rather than as of the date of disability. The insurance company defended the claim of the insured on three grounds: First, that the proof and notice of injury were not made out and served within a reasonable time; second, that plaintiff was not totally and permanently disabled; and, third, that plaintiff was judicially estopped from claiming that he was totally and permanently disabled because of his injuries, by judicial allegations to the contrary which he made in another suit. That case, therefore, does not appear to be pertinent to the issue of this case. Our examination of the other cases relied upon by plaintiff-appellant shows that they involved policies with provisions entirely different from those in the one involved in the instant case, and are not controlling here.
For the reasons assigned, the judgment appealed from is affirmed, appellant to pay all costs.
HAMITER, J., concurs in part and dissents in part and assigns written reasons.
MOISE, J., dissents with written reasons.
O'NIELL, C. J., takes no part.
On Rehearing
Plaintiff having died after the original hearing of this case, his testamentary executor became a necessary party to this proceeding, under Section 1 of Rule XIV of this Court. The executor's application for a rehearing was granted and we now have this litigation before us for further consideration.
In addition to the facts substantially set forth in the original opinion, we find in the record an agreed statement of fact in which it is admitted that the policy was in full force, that the premiums were all paid during the disability period from January 7, 1939 to August 31, 1939, that the assured was during said period totally disabled by reason of illness as set forth in Article 5 of his petition, and that at all times during said disability period he was under the orders, care and attention of five physicians.
It was also shown that the policy was in effect for thirteen years prior to the time of the filing of the suit. Mr. Robert Crump, the agent of the company who sold the policy to plaintiff was still with the company and was the agent who called at the Hotel Dieu during his total disability and obtained from assured the policy for the purpose of having the company change the beneficiary. Mr. Kammer, Attorney for the insurer stated: (during the trial of the case on the merits) "We will admit that for the purpose of changing the beneficiary the policy had to be in the possession of the company for the interim."
Considering the admissions in the above referred to stipulations as to assured's total disability it is not necessary to further discuss this point. The policy contract likewise provides that disability for a period of three months shall be regarded as total disability.
In consultation it was discovered that a majority of the Court felt that a recovery should be had and that the original decree herein should not be reinstated. Chief Justice FOURNET wrote a dissent against the reinstatement of the original decree and because the decree was not reinstated that dissent remains unrecorded. We now quote this unrecorded dissent with approval:
"In the words of Justice HAMITER in his dissenting opinion on the original hearing of this case, `the numerous so-called "goose cases" from other jurisdictions to the contrary notwithstanding,' I cannot subscribe to the views expressed in the majority opinion.
"A careful study and analysis of the provisions of the policy in controversy, in my opinion, and as demonstrated by Justice HAMITER in his dissent (that was only released after the majority opinion on the original hearing had been signed in consultation), shows that the clause in controversy is susceptible of two interpretations. Under our civil law we are admonished in construing contracts, and particularly clauses susceptible of two interpretations, to give them the interpretation that carries out the object and purpose of the contract. Articles 1945 and 1951 of the Revised Civil Code. The object and purpose of the contract here under consideration is to indemnify the insured in the case of total permanent disability. Also, under our civil law we are admonished, in a doubtful case, to interpret the agreement against `him who has contracted the obligation.' Article 1957. These two civil law rules of interpretation are in accord with the general rule governing insurance contracts that a policy, whenever ambiguous, should be given a construction that is most favorable to the insured.
"While the `so-called goose cases' of other jurisdictions are sometimes persuasive and of great aid in deciding cases, when the contract is so clearly susceptible of two different interpretations, as ably demonstrated in the dissenting opinion above referred to, it is my opinion that it is the duty of the court to ignore such holdings and to exercise its own judicial prerogatives."
In the dissent of Mr. Justice HAMITER to the original opinion, the obscurity in the language of the policy clauses — the bone of contention — is clearly shown. To arrive at the conclusion reached by the majority opinion, the civil law precept must be ignored and this ambiguous clause interpreted in favor of the company and against the assured. Mr. Justice HAMITER stated: "It stipulates that the company will `Pay To The Insured a Monthly Disability-Annuity as stated on the face hereof; the first payment to be payable upon receipt of due proof of such Disability and subsequent payments monthly thereafter during the continuance of such total and permanent Disability. This stipulation, by adding the word `monthly' to the phrase `the first payment', can be interpreted as the majority has done. However, as written and without the addition, it logically can be construed also as obligating the company for disability benefits from the inception of the disability with the obligation dischargeable or payable only after receipt of due proof."
This interpretation is in keeping with the codal articles Nos. 1945, 1951, 1952 and 1957. Of course, proof must be submitted of a loss, a death, or total disability, in order to ascertain the truth, to render the policy provisions effectual. All disability must be specifically and clearly set out by proof. With this requirement the law of right will supercede might and the rule of common sense like the atmosphere we breathe will surround all mankind in a policy-protection after death or during total disability.
The codal articles also provide that "the reality of the cause is a kind of precedent condition to the contract, without which the consent would not have been given, because the motive being that which determines the will, if there be no such cause where one was supposed to exist, or if it be falsely represented, there can be no valid consent." Article 1824, R.C.C.
There was no valid consent by the assured to the forfeiture of the payment of disability and waiver of insurance premiums. If such were the case as held by the majority-original opinion, the company should have made this clear in the language of the contract, or given an explanation. The cause and motive for the contract indicates that plaintiff believed that he was purchasing a monthly disability annuity without deduction at maturity when payments became due, as provided for on the face of the policy, and without this understanding his consent would never have been obtained. R.C.C. Art. 1824. The company knew that assured was in the hospital. The company knew that the assured had a policy for permanent disability because it had that policy in its possession for a time during assured's disability for the purpose of changing the beneficiary. The company received all of the benefits and all of the profits but yet disavowed any responsibility whatsoever and refused to make any payment after admitting the permanent disability of the assured during the time from January 7, 1939 until August 31, 1939. For what purpose then did the assured comply with the contract, to each and to all of its provisions — as to age, payment of premiums, etc. His purchased protection becomes a meaningless abstraction. Courts will limit "man's inhumanity to man" in some degree by providing rules of interpretation of contracts. Our Code has provided under Articles 21 and 1965 the equitable provisions and the codal articles also provide the law. We have a sacred relationship of lawyer and client, physician and patient, but is there any more sacred relationship than insurer and assured? The lawyer gives legal advice and guidance to the client, the physician cases or cures infirmities of the body of a patient and the insured deals with man in most cases where the soul has left the body and provides for his loved ones protection after death or during total disability. We admit that the insurance company is unlike the doctor or lawyer and that it has its stockholders and policyholders to protect, and that it owes to them a fair and prudent administration and that it has the right to place in its policies provisions as to proof of loss or disability or death for the giving of notice of claims. The proof is one thing, a forfeiture of all protection is another. Timely proof of disability is for the purpose of preventing fraud and ill-practices on the part of an assured or his heirs, and further, not to place the insurance company at a disadvantage in obtaining the evidence for its defense. These are proper means of protection for the business and if in a given case like here where the records of the Hotel Dieu are available, where five physicians who attended the assured were all alive at the time of the trial on the merits and the general good reputation of the insured for integrity was beyond questioning, the cause of the policy provisions having been removed, no longer existed.
The organ of the Court in the majority opinion quoted authorities from numerous common law jurisdictions. In these jurisdictions they do not have the articles of our Code. The infiltration of these decisions menaces the clear provisions of our Civil Code and our settled rules of interpretation. It is not permissible under our Code to add any words to the contract, to free the clause from ambiguity. The words "monthly" must be added before the words "first payment" to give the provision the interpretation placed upon it by the original opinion. We should not make an interpretation fit a preconceived theory but make the theory conform to the law. The civil law rules of interpretation are traditional with Louisiana. We as judges worship our traditions. Our identity and individuality as a civil law state must be maintained if we are going to stabilize with consistency our jurisprudence. Our decisions should not be merged with the infiltration of technicalities of the law of other states so as to make the jurisprudence petrified by common law precedents. "Our anchor should be on the rockbed of our Civil Code, the most profound philosophical depository of juristic science."
Plaintiff has carried the burden of establishing his claim with legal certainty and, therefore
The judgment appealed from is annulled and set aside and it is now ordered that there be judgment in favor of plaintiff and against the defendant for total disability from January 7, 1939 to August 31, 1939, at $100.00 per month, together with legal interest thereon from date of judicial demand until paid; and for all costs of court.
HAWTHORNE and McCALEB, JJ., dissent with written reasons.
LE BLANC, J., dissents.
On Application for Second Rehearing
The majority opinion on rehearing contained the observation that, "The company received all of the benefits and all of the profits but yet disavowed any responsibility whatsoever and refused to make any payment after admitting the permanent disability of the assured during the time from January 7, 1939, until August 31, 1939."
Calling attention to the incorrectness of the asserted admission regarding permanent disability, counsel for defendant, in an application for a second rehearing, say: "* * * In our original brief, we admitted that Robbert was totally disabled from January to August, 1939, but stated that the fact that he had recovered from his illness conclusively showed that the disability was not permanent and that it had ceased before he made claim for total and permanent disability in July of 1940." This statement, along with others in the application, implies that we failed to give consideration to the defense urged that the assured was not permanently disabled within the meaning of the policy.
Regarding this defense the contract recites: "* * * and such total disability shall be presumed to be permanent when it is present and has existed continuously for not less than three months; * * *."
Although the question of permanency was not discussed at length in the majority opinion on rehearing, it was considered in reaching the conclusion announced. In the opinion we said: "Considering the admissions in the above referred to stipulations as to assured's total disability, it is not necessary to further discuss this point. The policy contract likewise provides that disability for a period of three months shall be regarded as total disability." Obviously, in this last sentence the word "total" was used inadvertently instead of the word "permanent", for the policy itself provides that the disability shall be presumed to be permanent when it has existed continuously for not less than three months.
As to when the insured is permanently disabled within the intendment of the contractual provision there appear to be two recognized conflicting views (this court had not previously passed upon the point), as is shown by 110 A.L.R. pages 631, et seq. The view which we adopted in rendering the decision herein is well stated on page 631 of that authority as follows: "* * * that the presumption created by the policy is conclusive, and that a disability which has lasted for the requisite period of time to render it presumably permanent within the meaning of the policy is nonetheless permanent, although it has since terminated; and that consequently an insured who has suffered such disability may, even after the termination thereof, recover benefits therefor as for permanent disability, for the period during which it actually lasted."
Considered in its entirety the instant policy indicates that the word "permanent", as contained in the contract, is not used in the sense of "forever". Thus, provision is made for the insurer, where disability payments have commenced, to investigate at stated intervals the health of the insured and to cease paying the benefits in the event the total disability ends. But should that event occur, thereby negativing an everlasting disability, the insured is not required to make restitution of the payments received.
A second rehearing is denied.
HAWTHORNE, J., is of the opinion that a rehearing should be granted.
McCALEB, J., dissents from the refusal of a rehearing.
LE BLANC, J., dissents from refusal to grant a second rehearing.
The provision of the policy relating to the waiver of premiums is free from ambiguity, and I agree that the only reasonable interpretation to be given it is that announced in the majority opinion. It clearly recites an agreement on the part of the company to waive payment of all premiums payable upon the policy falling due after receipt of proof of the disability.
But I do not agree that the disability-annuity provision is likewise unambiguous, the numerous so-called "goose cases" from other jurisdictions to the contrary notwithstanding. It stipulates that the company will "Pay to the Insured a Monthly Disability-Annuity as stated on the face hereof; the first payment to be payable upon receipt of due proof of such Disability and subsequent payments monthly thereafter during the continuance of such total and permanent Disability."
This stipulation, by adding the word "monthly" to the phrase "the first payment", can be interpreted as the majority has done. However, as written and without the addition, it logically can be construed also as obligating the company for disability benefits from the inception of the disability with the obligation dischargeable or payable only after receipt of due proof. Thus, preceding the semi-colon is a complete sentence expressing unqualifiedly an obligation to pay a monthly disability-annuity. Standing alone this could only mean payment for the entire disability. Then follows a recitation of the method by which the annuity is to be paid, it being that the first payment (not necessarily the first monthly payment) is payable upon receipt of due proof. This first payment, especially since the word "monthly" is not used in connection with it, may well be interpreted as covering all of the disability theretofore experienced, that is from its inception to the date of such first payment.
Being susceptible of two different interpretations, and hence ambiguous, the disability-annuity provision should be given that construction which is most favorable to the insured.
For these reasons I respectfully concur in part and dissent in part.
MOISE, Justice (dissenting).
Following the theoretical standard of prior interpretation without looking to the concrete conditions prevailing should not be exclusive of all other means of relief. One must separate the essentials of the contract, the prime motives thereof, and the incidentals. The insured purchased a policy, the prime motive and essential was to protect himself during permanent disability, and like all other insurance contracts, his protection began from the moment that the contract was completed, that is, the delivery of the policy, coupled with the payment of the premium. An incidental to the contract was the method to be effected in order to insure payment in case of disability — the submission of proof to the company. I do not believe that the contract should be interpreted so that a mere incidental payment should be made to supersede the policy provisions and the prime motive of the assured for its purchase.
The rule of reason should be applied here as is applied to policies of life and fire insurance. On such policies, after the payment of the premiums, the company contracts to pay the amount specified in the policy after death, and on a fire policy, the loss sustained by fire. Here, we have the essentials of the contract but the incidentals of the payments of these contracts are proof of death and of loss sustained through fire.
Article 1764 of the Revised Civil Code, dealing with what subject matter of contracts is to be considered provides: "Accidental stipulations, which belong neither to the essence nor the nature of the contract, but depend solely on the will of the parties. The term given for the payment of a loan, the place at which it is to be paid, and the nature of the rent payable on a lease, are examples of accidental stipulations."
The concrete essential of this contract is protection during disability and the accidental stipulation is the method of procedure in order to obtain the prime motive thereof, the submission of proof of disability. The condition for payment is that the policyholder should be under 60 years of age and there be no default in payment. The denial of payment by the company when there is a default in premium or the assured is over 60 years of age is the proper denial of liability. But here we have a provision of the policy that the effective date of payment shall be on the submission of proof and all prior payments during disability have been forfeited. The words "effective date" have been interpreted retroactively to deny the prime motive of the contract and the construction given as to the waiver of premium by the company gives to this company the unjust enrichment of the payments that plaintiff has made during disability.
For these reasons, I respectfully dissent.
The facts are fully set forth in the original opinion and it would reserve no useful purpose for me to restate them. The question for decision is whether the policy clearly provides that the obligation of the insurance company for disability benefits and waiver of premiums is conditioned upon receipt of proof during the existence of the disability. The affirmative answer, which was given in the original opinion, is supported by the unanimous jurisprudence of the State and Federal courts, including the Supreme Court of the United States.
A reexamination of the case has served only to reassure me of the correctness of our previous views. The policy does not unqualifiedly provide for the payment of the monthly disability annuity during disability. On the contrary, the obligation to pay is conditioned upon receipt of due proof of disability and it thereafter continues during the existence of the disability. The specific language of the policy is "(I) Disability Benefits before age 60 shall be effective upon receipt of due proof, * * *" The word "effective" is synonymous with "operative" (Webster's New International Dictionary) and, as used in the policy, denotes the beginning of the period for which benefits are to be allowed. See Rowan v. New York Life Ins. Co., Mo.App., 124 S.W.2d 577 and other cases of the same tenor cited in the original opinion.
I find it unnecessary to comment on appellant's claim for a return of premiums. This question was fully disposed of in the original opinion and merits no further discussion.
Hence, there can be no doubt that the obligation of the company for the monthly disability benefits does not come into existence until it has received due proof of the disability. However, it is said that, even if this be so, the giving of notice subsequent to the existence of disability restores the right of the insured to claim for such previous disability because clause I(b) of the disability provisions is ambiguous.
But Clause I(b) is not obscure. It provides that the insurer will "Pay To The Insured a Monthly Disability-Annuity as stated on the face here of; the first payment to be payable upon receipt of due proof of such Disability and subsequent payments monthly thereafter during the continuance of such total and permanent Disability." Obviously, the payments provided for are conditioned upon a compliance by the assured with clause (I) which distinctly make the disability benefits effective only upon receipt of due proof. The argument that the phrase in Clause I(b) that "the first payment to be payable upon receipt of due proof" is indefinite, being subject to the interpretation that it may mean the payment of a sum larger than a $100 monthly payment, is not well founded as the obligation of the insurer is plainly stated throughout the policy to be a monthly disability-annuity of $100.
After all, the insurance contract is the law between the parties and the Court should give legal effect to it according to the true intent of the parties, which is to be determined by the words of the contract when they are clear and lead to no absurd consequences. Article 1945, Civil Code, And, in construing the words used by the parties, they "* * * are to be understood, like those of a law, in the common and usual signification, without attending so much to grammatical rules, as to general and popular use." Article 1946, Civil Code.
By applying these fundamental principles, I have no difficulty in resolving that the language used in the policy is free from ambiguity. Accordingly, there is no reason to adopt a liberal construction in favor of the insured.
For these and the reasons set forth in the original opinion, I respectfully dissent.
I adhere to the views expressed in the original opinion, and am unable to understand how the cited articles of the Civil Code have any application to this case.