Insurance Co. of North America v. Aufenkamp

Digges, J., delivered the opinion of the Court. Eldridge and Davidson, JJ., concur in the result. Eldridge, J., filed a concurring opinion at page 516 infra, in which Davidson, J., concurs. On April 10, 1977, Easter Sunday, Melva J. Aufenkamp died from injuries sustained in a fall from the second story bedroom window of the apartment in Silver Spring, Maryland, where she resided with her spouse and son.

The husband, appellee Darrel D. Aufenkamp, submitted proof of loss and made a claim for proceeds under an insurance policy issued by the Insurance Company of North America, the appellant here, and upon the refusal of INA to discharge the benefits provided by the policy, this action in assumpsit was instituted by the named beneficiary husband in the Circuit Court for Montgomery County to enforce that contract. The "personal accident and special hazards insurance,” as it is titled, was issued by INA in the summer of 1970, and provides for the payment of specified benefits upon a loss suffered as a result of a "covered occurrence” which, as pertinent to this case, is defined in the policy as "bodily injury [suffered by the appellee, Mrs. Aufenkamp or their children] resulting directly and independently of all other causes from an accident...” (here referred to as the coverage clause). The benefits payable to the husband as the primary beneficiary in the event of a covered occurrence are keyed to the nature of the loss, which include loss of life, dismemberment and disability. In its declination to pay any moneys under the policy, INA, relying upon investigations ⁴⁹⁸ conducted by both the medical examiner and the police as well as medical history of the insured, asserted that the appellee was "ineligible for accidental death benefits” because the demise of his wife resulted from an intentional, self-inflicted injury which was not a risk assumed under the insurance contract.

The company’s position was founded upon the following provision of the policy which in this opinion we refer to as the suicide exclusion clause: Except as specifically provided for, the policy does not cover loss caused by or resulting, directly or indirectly, wholly or partially, from any one or more of the following: A. Intentionally self-inflicted injuries, suicide or any attempt thereat, while sane or insane.... After the case was put at issue by the insurer’s plea, the parties engaged in pre-trial discovery procedures by appellee’s request for admissions from, and his submission of interrogatories to, INA. When appellee demanded an admission that "on or about July 27, 1970, Darrel D. Aufenkamp submitted an application for life insurance to Insurance Company of North America which would cover himself and his wife Melva J. Aufenkamp,” the insurer answered, "admitted.” Likewise, in response to interrogatories as to whether application had been made "for a policy of life insurance,” whether the appellant "issuefd] a policy of life insurance to Melva J. Aufenkamp ...,” and whether, if issued, "the said life insurance policy was in full force and effect at the time [the wife] died,” the insurance company answered each query in the affirmative. Armed with these acknowledgements, the beneficiary moved for summary judgment, urging at the outset that "the sole issue raised by the [appellant] is whether or not an exclusion from the policy, which bars payment in the event of suicide, bars the [appellee] from recovering.” Mr. Aufenkamp then reasoned the suicide exclusion provision of the policy was rendered unenforceable (and thus that coverage existed) by ⁴⁹⁹ section 410(a)(5) of Article 48A, which he contended was made applicable to this policy by virtue of INA’s concessions that this was a life insurance contract.

This enactment provides: (a) No policy of life insurance shall be delivered or issued for delivery in this State if it contains a provision which excludes or restricts liability for death caused in a certain specified manner or occurring while the insured has a specified status, except that such a policy may contain provisions excluding or restricting coverage as specified therein in the event of death under any one or more of the following circumstances: (5) Death within two (2) years from the date of issue of the policy as a result of suicide, while sane or insane. [Code (1957, 1979 Repl. Vol.), Art. 48A, § 410(a)(5). 1 ] INA countered in its opposition to the motion for summary judgment that the policy issued by it was "a personal accident and special hazards insurance,” and therefore not governed by § 410 which, by its terms, is limited in application to life insurance. An order granting summary judgment in favor of the beneficiary was signed by the trial judge, who reasoned, as he later verbalized in denying INA’s motion for reconsideration, that the suicide exclusion clause was void by virtue of section 410 on either of two grounds: (i) that the insurance company had admitted these policies constituted life insurance, and (ii) that, "Article 48A ... demonstrates as a matter of law that a life insurance policy is here involved....” A timely appeal was noted to the Court of Special Appeals from the entry of the summary judgment, which ruling INA claims was based on answers to discovery requests that were nothing less than "a beartrap under the ⁵⁰⁰ leaves.” This Court issued its writ of certiorari prior to the intermediate appellate court’s consideration of the matter. In our view, the summary judgment entered by the circuit court can be supported neither by the theory that INA made a binding concession that the insurance policy here involved is one of life insurance, nor by the finding that the policy is made so as a matter of law by statutory definition.

As for the former, we are not the first to recognize that the term "life insurance,” in general usage, does not enjoy a well delineated and unambiguous signification. See National Life & Accident Ins. Co. v. Lokey, 166 Ala. 174 , 52 So. 45, 46-7 (1910); Julius v. Metropolitan Life Ins. Co., 299 Ill. 343 , 132 N.E. 435, 437 (1921); Jones v. Prudential Ins.

Co., 208 Mo. App. 679 , 236 S.W. 429, 432 (1922); Culbreth v. Prudence Life Insurance Company, 241 S.C. 46 , 127 S.E.2d 132, 135-36 (1962); American Trust & Bkg. Co. v. Lessly, 171 Tenn. 561 , 106 S.W.2d 551, 552 , 111 A.L.R. 59 (1937). The main issue presented by this appeal, to which we shall turn shortly, is in fact a product of this ambiguity.

Here, respondent in effect attempts to hold his adversary, by way of general references at discovery that this policy was one of life insurance, to a conclusion that the discovery concessions can only refer to life insurance as defined in Article 48A, section 63 (defining life insurance) and used in section 410 (a) (5) (limitation of liability in case of suicide), when in fact neither the technical usage nor the statutory definition was specified by the discovery requests. To be sure, a party need not understand the full legal ramifications of a factual concession before he is bound by the admission, but, as a prerequisite to being so constrained, the party certainly must be put on notice by sufficiently specific discovery requests of the factual nature of that which he is required to answer before he can be held to have yielded on the point. While the procedure established for pre-trial admissions serves the laudable goal of narrowing the factual issues to be tried so as to avoid the necessity of proof at trial of matters not in dispute, see Mullan Contracting Co. v. International Bus. Machs.

Corp., 220 Md. 248, 260 , 151 A.2d 906, 913 (1959), that objective is not advanced by the use of this proce ⁵⁰¹ dure to bind the unwary (by utilization of imprecise requests) to admissions not intended to be conceded. We cannot say that the interrogatories and admission tendered INA appropriately identified the inquiry and facts which the appellant was to answer and admit. The term "life insurance” in everyday parlance normally connotes a contract to pay benefits upon the death of some person, and this policy, be it accident or life insurance, falls within the embrace of this general usage, in that Mr. Aufenkamp is entitled to receive, under certain circumstances, insurance benefits upon the death of his wife. This is not to say, however, that the insurer has conceded that this insurance contract is technically a life insurance policy as defined in section 63 and used in section 410(a). 2 The alternate holding of the trial judge, and the primary contention of the respondent before this Court, that the insurance policy involved in this case is as a matter of law life insurance as that phrase is used in the insurance code, presents a somewhat more troublesome problem.

As an aid to the explanation of our disagreement with the circuit court’s ruling on this point, we preface our remarks on the propriety of that determination with the observation that, in our view, by focusing narrowly on the suicide exclusion clause of the policy, both the parties and the trial court have overlooked the dominant purpose of this insurance contract as reflected by the risk assumed. This myopia has resulted both in the failure to make certain factual determinations which ought to precede a judgment as a matter of law, and in the resolution of a legal question which may well not need to have been answered to properly resolve this contractual dispute. Probably as a result of the purported judicial admissions of INA that the present contract was one of life insurance, all concerned concentrated on whether this was such a policy (either by admission or as a matter of law by statutory definition), apparently on the assumption that if it ⁵⁰² were, coverage would exist under the policy since the suicide exclusion clause of the contract would be voided by section 410 (a) (5). Thus, INA’s failure to specifically ground its argument on the coverage clause of the policy may have contributed to the erroneous granting of a summary judgment which, in order to be proper, must have been predicated on the supposition that without the suicide exclusion clause, coverage would exist under the policy.

The factual question whether Mrs. Aufenkamp’s demise was a result of her own intentional act, under this approach, was seen to be of no consequence if, as argued by appellee, this was truly a life insurance compact. In this posture, the issue came before and was disposed of by the circuit court, and not surprisingly, the case is now before us with the issues identically framed. What has been overlooked, however, is that whether coverage exists under this insurance contract turns in the first instance upon the principal purpose of the policy exhibited in its coverage clause. See Bowles v. Mutual Ben.

Health & Accident Ass’n., 99 F.2d 44, 47-8 (4th Cir. 1938); Capitol Life Ins. Co. v. Di Iullo, 98 Colo. 116 , 53 P.2d 1183, 1184 (1936) (en banc); Brunswick v. Standard Acc. Ins. Co., 278 Mo. 154 , 213 S.W. 45, 47-48 (1919).

Only if it is determined that the insurer has contractually assumed the risk for the particular type of malady suffered in a given case will it be necessary to proceed to a determination whether that risk, otherwise undertaken in the clause which delineates the contingencies insured against, is specifically disclaimed elsewhere in the policy, and, if so, whether that exclusion is legally enforceable. Capitol Life Ins. Co. v. Di Iullo, supra; Brunswick v. Standard Acc. Ins.

Co., supra. Here, by centering initially on the exclusion clause, the legal determination that INA owes benefits under what on its face appears to be an accident policy is made when, in fact, there has been no judicial consideration of a threshold issue — whether suicide is a risk assumed by the insurer under the coverage clause. Indeed, the trial court effectively determined that this is a life insurance policy without ever having considered specifically the nature of the risk for which the ⁵⁰³ insurer is contractually liable, which is where inquiry should be directed to determine whether the policy is one of life insurance. As was stated by the Supreme Court of Colorado when faced with a similar issue, [t]here [may be] no liability on the part of the insurer, not because the insured committed suicide, but because there was no accident, and, as we have seen, the double indemnity clause provides for payment only in case of death by accident.

It does not cover nonaccidental death. It may just as reasonably be held that on a straight life insurance policy, providing for the payment of money on the death of the insured, the insurer is liable where there has been no death, as to hold that on a policy providing that money shall be paid in case of death by accident, the insurer is liable where there has been no accident. [Capitol Life Ins. Co. v. Dilullo, supra, 53 P.2d at 1184 . See also Brunswick v. Standard Acc.

Ins. Co., supra, 213 S.W. at 47-48 .] Thus, here, contractual liability has been determined even though a death, arguably a suicide, may not be a "covered occurrence” under the policy which includes, as applicable to this case, only "bodily injury resulting directly and independently of all other causes from an accident....” Under the view we take, the threshold question here should have been viewed as factual, and one that was not resolved: Was Mrs. Aufenkamp’s death the direct result, independent of all other causes, of an accident? If the death were determined to have been so caused, then nothing would have lingered for analysis, for liability under the policy would have clearly existed. The resolution of this factual dispute would not have necessarily disposed of this litigation, however, for if the trier of fact were to have concluded contrarily, that Mrs. Aufenkamp took her own life by jumping from her bedroom window, as a theoretical matter the insurance company would not necessarily have been free from liability under the contract.

This is so because of the generally recognized principle, to which this State ⁵⁰⁴ subscribes, that taking one’s own life while insane undeniably is accomplished without intention, see Knickerbocker Ins. Co. v. Peters, 42 Md. 414, 417-21 (1875) (coverage exclusion for death caused "by his own hand or act” held not to prevent recovery by insured who "killed himself in a fit of insanity impelled by an insane impulse he could not resist”), and thus is an "accident” within the meaning of that term as used in accident policies. See Couch on Insurance 2d § 41. 197, p. 222 (1962) (citing authorities). Therefore, unless otherwise excluded in the policy, suicide while insane normally is a risk contractually assumed under such an insurance agreement.

Here, of course, the insurance document excludes coverage for suicide while sane or insane, which disavowal, unless rendered void by statute or other public policy considerations, is enforceable. Accord, Bigelow v. Berkshire Life Ins. Co., 93 U.S. 284, 286 , 23 L. Ed. 918 (1876), and cases cited by 1 Appleman, Insurance Law and Practice § 363, p. 657-63 (1965). Appellee argues section 410 (a) (5) accomplishes such an avoidance, and it is only at this point in the analysis that the legal question whether that statute applies to this insurance contract (thus voiding the suicide exclusion clause) would have arisen.

In other words, it should not have been until the trier of fact had determined that Mrs. Aufenkamp’s death was not the result of a fortuitous mishap, but rather was caused by self-destruction impelled by an insane impulse and passion rendering it an "accident,” that the legal issue resolved below needed to have been addressed; only then would the validity of the suicide exclusion clause have become germane. The rather unusual posture that this case assumes, which we have, just paused to describe at length, is of little consequence in light of our disagreement with the circuit court’s interpretation of the insurance statutes applicable to this case. In seeking an affirmance of the summary judgment, Mr. Aufenkamp places great weight, as he must, on the statutory definition of life insurance contained in the insurance article: Life insurance is insurance on human lives, and includes also the granting of: ⁵⁰⁵ (1) Endowment benefits; (2) Additional benefits in the event of death by accident or accidental means; (3) Additional disability benefits in the event of dismemberment or loss of sight; (4) Additional disability benefits operating to safeguard the contract from lapse, or to provide a special surrender value, or special benefit, or annuity, in the event of total and permanent disability; and (5) Optional modes of settlement of proceeds of life insurance. Life insurance does not include workmen’s compensation insurance but does include burial insurance. [Md. Code (1957, 1979 Repl.

Vol.), Art. 48A, § 63 (emphasis added).] The respondent urges that this policy clearly provides coverage for the loss of the life of his wife, and to the extent that it does, should be viewed as encompassed within the broad statutory definition, "insurance on human life.” To counter the position of INA that this policy constitutes health insurance and thus that the statute governing limitation of liability for suicide is immaterial, Mr. Aufenkamp asserts that section 437 of the insurance code expressly makes the health insurance subtitle inapplicable to life insurance: Nothing in this subtitle shall apply to or affect: * * * (3) Life insurance, ... which contain only such provisions relating to health insurance as: (i) Provide additional benefits in case of dismemberment or loss of sight, or of death by accident or accidental means.... [Code (1957,1979 Repl. Vol.), Art. 48A, § 437.] Reliance on the just-quoted provision, in our view, neither adds nor detracts from the husband beneficiary’s primary ⁵⁰⁶ thrust that this is life insurance, for this statute contributes little to the resolution of the issue. While section 437 does indeed make the health insurance subtitle inapplicable to life insurance, including health related provisions normally found in such policies, it is not informative or definitive as to whether this policy is, as a threshold matter, in the nature of life or health insurance. We are convinced that the policy issued by INA is, consonant with the contract’s title, accident and special hazards insurance which, under the applicable statutory terminology is health, and not life, insurance.

In arriving at this determination, we observe preliminarily that the very structure of the insurance code leads us to conclude that the various types of insurance defined there, see Code (1957, 1979 Repl. Vol.), Art. 48A, §§ 63-74, constitute separate categories of insurance which for the most part are mutually exclusive. This is not to say that there is not, and that the legislature did not recognize, the overlap that inherently exists between the coverage under some of these varying types of insurance. This litigation, in fact, springs from an overlap between two types of insurance — life and health — which in some respects presents perhaps the best example of seemingly coinciding coverage.

See 1 Appleman, Insurance Law and Practice, § 16, p. 44 (1965). But we think both the structure of the insurance article in general as well as particular sections therein indicate that the General Assembly was cognizant of this ambiguity, and attempted to specifically define as either one or the other the risks normally undertaken and the benefits commonly incident to each type of insurance. In arriving at this conclusion, there is no intimation that a single policy of insurance cannot contain coverage falling into more than one statutory category. We recognize that commonly one insurance contract will insure against various risks and provide benefits for sundry kinds of harm, and the code, except for specific and well-delineated exceptions, does not affect this practice.

What we determine is that under an insurance policy covering various risks, each risk assumed will normally constitute a kind of insurance encompassed by only one stat ⁵⁰⁷ utory definition, and governed by the regulations applicable to that category alone. In 1963 the insurance code of this State was repealed and a new one enacted in its place that represented in large part the work product of the Governor’s Commission to Study the General Insurance Laws of Maryland. A perusal of this enactment, substantially identical in form with the present Article 48A, reveals that, in pursuit of the objective "to classify and recodify the subject matter of the insurance laws into a convenient and usable form,” Report of the Governor’s Commission to Study the General Insurance Laws of Maryland To: Legislative Council, p. iii, October, 1961, particular limitations and restrictions applicable to each of various types of insurance defined in the insurance code — life, health, property, casualty, surety and title — are collected in subtitles pertaining only to one of these delineated categories of insurance. See Code (1957, 1979 Repl.

Vol.), Art. 48A, subtitles 23-30. In addition, some effort has been made to define precisely the nature of various benefits normally payable under a given type of policy. In the case of life insurance, the definition contained in section 63 pertaining to that subtitle, in addition to describing the nature of the risk assumed by such a contract as insurance on human lives, includes among other payments, as noted earlier, "[additional benefits in the event of death by accident or accidental means,” "[additional disability benefits in the event of dismemberment or loss of sight,” and "[additional disability benefits operating to safeguard the contract from lapse, or to provide a special surrender value, or special benefit, or annuity, in the event of total and permanent disability.” Thus, payments which might otherwise be perceived to be health insurance, such as double indemnity benefits payable upon accidental death or various types of disability payments, are expressly designated as life insurance. In section 66, health insurance is defined as insurance of human beings against bodily injury, disablement, or death by accident or accidental ⁵⁰⁸ means, or the expense thereof, or against disablement or expense resulting from sickness, or childbirth, or against expenses incurred in prevention of sickness, or dental care, and every insurance appertaining thereto.

Health insurance does not include workmen’s compensation insurance. [Code (1957, 1979 Repl. Vol.), Art. 48A, § 66 (emphasis added).] This provision makes it clear that insurance coverage contingent on a death caused specifically as a result of an accident or through accidental means is denominated health insurance, even though conceptually it is possible to characterize this type of coverage, because it pays benefits upon a death, as life insurance. See Logan v. Fidelity and Casualty Co., 146 Mo. 114 , 47 S.W. 948 (1898). Therefore, what might otherwise be perceived to be life insurance is specifically delineated to be health insurance by section 66.

Accord, Culbreth v. Prudence Life Insurance Company, supra, 127 S.E.2d at 136 . It is apparent, then, that not all insurance benefits whose payment is triggered by the death of a person are properly conceived to provide life insurance coverage as defined in the statutes of this State. Moreover, section 437, on which as we have seen appellee strongly relies, furthers this statutory scheme (and complements section 63) by making the legislative regulations regarding health insurance inapplicable not only to life insurance but also to "additional benefits in case of dismemberment or loss of sight, or of death by accident or accidental means,” or coverage which operates "to safeguard such contracts against lapse, or to give a special surrender value or special benefit or an annuity in the event that the insured ... becomes totally and permanently disabled....” Code (1957, 1979 Repl. Vol.), Art. 48A, § 437(3) (i) and (ii).

Section 437, then, tracks by way of exclusion those benefits defined to be life insurance in section 63. Any lingering doubt as to the exclusivity of the subtitles corresponding to the various types of insurance, should be dispelled by knowledge that the following provision, originally contained in the 1963 bill ⁵⁰⁹ as introduced, which, when enacted, made substantial changes in the insurance code, was deleted prior to passage: 62. Definitions Not Mutually Exclusive. Certain insurance coverages may come within the definitions of two or more kinds of insurance as defined in this subtitle, and the inclusion of such coverage within one definition shall not exclude it as to any other kind of insurance within the definition of which such coverage may likewise be reasonably included. [See 1963 Laws of Maryland ch. 553, § 1, Art. 48A, § 62, indicating deletion prior to enactment.] Having established a legislative intent to create separate generic categories of insurance, each for the most part distinct from the other, it is clear that the death benefit contemplated by the insurance contract before us either constitutes a payment on life insurance or health insurance, for it cannot be both.

The issue here raised cannot be resolved by a simple examination of the terse and somewhat tautological statutory definition of life insurance, and a comparison of that definition with the fact that benefits under this policy are payable, in part, upon the death of a human being. Rather, the answer in our view is derived from an examination of the risks normally assumed by an insurer under a life or health policy, and a juxtaposition of those risks with those assumed by INA under this policy. While the distinction between life and health insurance is at times somewhat obscure, this obfuscation should not befuddle one into the belief that the two types of policies are essentially the same so as to render the statutory provisions pertinent to one applicable to both. The dissimilarity emerges from an understanding of the divergent risks assumed under life and health policies, a distinction which we believe to have been best stated by the Ohio Court of Appeals: Life insurance generally includes the occurrence of death by accident as one of the conditions which call for payment by the company, as well as death ⁵¹⁰ from other causes.