New England Mutual Life Insurance v. Hurst

⁵⁹⁹ Parke, J., delivered the opinion of the Court. The New England Mutual Life Insurance Company issued on February 16th, 1916, an insurance policy on the life of John E. Hurst of W. in the amount of $20,000, which was made payable on death to designated beneficiaries. Attached to this policy, and issued in consideration of the payment of additional premiums and of the application by the assured, was a supplemental agreement. Omitting some immaterial formal parts, the agreement is of this form: “New England Mutual Life Insurance Company “Boston, Massachusetts. “Supplemental Agreement for Income and Waiver of Premiums During Total and Permanent Disability, and for Double Indemnity in Case of Death from Accident. “Last extra premium of $879.00 due August 28, 1935. “In consideration of * * * the New England Mutual Life Insurance Company issues this Supplemental Agreement to be attached to and made a part of its Policy No. 305,847 upon the life of John Edward Hurst of W. “Income and Waiver of Premiums During Total and Permanent Disability. “Upon receipt of due proof that Insured has become physically or mentally incapacitated so as to be wholly and permanently unable to engage in any occupation or profession or to perform any work whatsoever for compensation, gain, or profit, and that such disability has occurred while the Policy and this Agreement are in full force and prior to the policy anniversary nearest his sixty-fifth birthday, and has existed for a period of ninety days, the Company will pay to the Insured a Monthly Income of Two Hundred Dollars and will also waive the payment of every premium thereafter due upon the Policy and this Agreement, subject to the conditions herein set forth. “The total and irrecoverable loss of the sight of both eyes, or the severance of both hands at or above the ⁶⁰⁰ wrists, or if both feet at or above the ankles, or of one entire hand and one entire foot, shall be considered total and permanent disability. * * * “The Company shall have the right at any time or times during the first year after receipt of proof of such disability, and thereafter not oftener than once a year, to require satisfactory proof of the continuance of total disability.

Upon failure to furnish such proof, or if it shall appear at any time that the Insured is no longer totally and permanently disabled, this Agreement shall terminate, no further income will be paid nor premium waived, and all premiums thereafter due under the Policy shall be payable in conformity with its terms. “This provision shall terminate if and when the Insured shall engage in military or naval service in time of war, or in any work in connection with actual warfare, and shall not be effective if the disability of the Insured shall result from self-inflicted injury or from any aerial or submarine casualty.” A similar policy and supplemental agreement were issued on March 22nd, 1916, for smaller amounts by the same assurer to the assured. On February 4th, 1937, the assured brought an action at law against the assurer to recover, for the period which began with April 11th, 1936, and ended with November 20th, 1936, the disability benefits promised by both policies. The defendant filed the general issue pleas, and issues were joined and the trial was had before a jury. A verdict was returned for the amount of the monthly income for the five months which ended in September, and the appeal is taken from the judgment entered against the defendant on the verdict.

There are no questions on the rulings on the admissibility of testimony; and the single exception is to the action of the court on the prayers. The six prayers offered by the plaintiff were granted. The third prayer of the defendant instructed the jury in reference to the burden of proof. It was granted, but the other nine prayers of the defendant and its special exceptions to the granting of ⁶⁰¹ plaintiff’s first, second, fourth and sixth prayers were rejected on the grounds that the first three were a correct statement of the law and that the sixth prayer was a proper statement of the measure of damages— in that the computation of income was fixed at the date of the beginning of disability instead of the day of the defendant’s receipt of proof of loss.

The questions raised by the granted and rejected prayers do not involve matters of practice or of compliance with the formal requirements of recovery, but present the fundamental differences of the parties with reference to the proper construction of the contract in application to the disability of the plaintiff. The testimony on the record tends to show that some years after the writing of the policies of insurance the plaintiff began to drink, immoderately, intoxicating liquor. The habit continued until he became a dipsomaniac. From 1934 until April 11th, 1936, his condition became progressively worse, notwithstanding medical care and attention, and restraint and the treatment of specialists in sanitariums.

On April 5th, 1936, he became dangerously ill of chronic alcoholism. Medical attention was required, and he was confined to his home, and kept in bed so far as was possible for his attendants to enforce. After a slight improvement he became worse, and he was sent, on May 19th, to a local hospital for restraint and hospitalization. He remained there until June 25th, when he was taken to his home in the care of a special nurse and there received medical attention until July 9th, when, notwithstanding all precautions, he resumed his drinking and his condition became so grave that he was then removed to a sanitarium in North Carolina, to remain there until the nervous changes of defective will, judgment, memory and general moral fibre should be restored sufficiently, if this were possible, to enable him to be released.

The plaintiff remained continuously in the sanitarium until November 20th, 1936, when he left and returned to his home. He went to work within a week as a salesman for bond and stock brokers, and the testimony is that ⁶⁰² he was so employed without break, except that from August 3.0th, 1937, until September 11th, he was in the hospital to be treated for chronic alcoholism. As was expressed by the distinguished doctors who attended the plaintiff, chronic alcoholism is a disease which results after the continued abuse of drinking alcoholic liquor gives rise to an uncontrolled craving or desire which is accompanied by the lack of judgment, will power, and moral fibre on the part of the victim to combat the craving. The diagnosis was that the plaintiff was afflicted with this disease, and its coincident secondary physical, nervous and mental effects; and the prognosis was that he would not recover.

There is further testimony from which, if believed, the jury might find that, during the whole period embraced by his claim, he was thus physically or mentally, and at times both physically and mentally, continuously incapacitated, so as to be wholly unable to engage in any occupation or profession or to perform any work whatsoever for compensation, gain, or profit; and further that, at the beginning of this period, his disability was of such a nature that it was reasonably certain that it would continue without abatement or cessation; and that such disability did continue for a period of more than ninety consecutive days next ensuing the 11th of April, 1936. Other proof tended to establish that the disability of April 11th, 1936, had existed for a period of ninety days when the assurer was notified on July 29th, 1936, that a disability claim would be made, and was requested to supply the plaintiff with the requisite forms. The assurer furnished the forms, which were filled in by the attending physicians, and received by the assurer on September 21st. On September 28th, 1936, the medical director of the company disapproved the payment of the claim.

Upon this testimony and the construction of the policy to the effect that the condition for the payment of income that the assured “has become physically or mentally incapacitated so as to be wholly and permanently unable to engage in any occupation or profession or to perform ⁶⁰³ any work whatsoever for compensation, gain or profit” contemplates such a disability which exists for a period of ninety days, and is of such a nature that its duration is such as to be reasonably certain that the disability would continue for an indefinite and indeterminable time, the court at nisi prim submitted the case to the jury. If the construction of the policy be sound, the action of the court was right. After November 20th, the total and permanent nature of the disability ended. So, the disability did not exist when the action on the policies was brought on February 4th, 1937.

In fact, the plaintiff had been gainfully employed since within a week after November 20th, and he does not assert a right of recovery for any other than the period for which the action is brought. Thus the principal question is whether a total and permanent disability must subsist continuously in time from its beginning until the expiration of the term of assurance, so that, if action be brought, a recovery may not be had unless the testimony prove the total and permanent disability until the time of suit brought, and the certainty of the continuation of such disability until the coverage of the insurance policy terminates. The insurance company contends that the correct answer is in the affirmative, which is the opposite of the conclusion reached by the trial court. In the solution of the problem the rule which prevails in this jurisdiction is not that the policy of insurance is to be resolved more strongly against the insurer, but that the insurance contract is to be construed, without any predisposition toward either contractual party, so as to give effect to the intention of the parties, in accordance with the ordinary and usually accepted meaning of the language used, when considered in connection with the subject matter and the canons which are applicable in the construction of a written contract.

If the language be without ambiguity, the. court must give it effect notwithstanding an apparent hardship, since the parties have so chosen to agree. Frontier Mtge. Corp. v. Heft, 146 Md. 1, 12 , 125 A. 772 ; Brown- ⁶⁰⁴ stein v. New York Life Ins. Co., 158 Md. 51 , 148 A. 273 ; Landwehr v. Continental Life Ins.

Co., 159 Md. 207, 210, 211 , 150 A. 732 ; American Casualty Co. v. Purcella, 163 Md. 434, 436, 437 , 163 A. 870 . As a corollary to this rule is the complementary one to the effect that should there exist doubt as to the construction of an instrument drawn by one party upon the faith of which the other has incurred obligations, that construction should be adopted which will be favorable to the latter party. So, in contracts where the assurer prepares the contract with particular reference to the conditions and scope of the insurance, the accepted rule is to resolve any doubt or ambiguity in favor of the assured. McEvoy v. Security Fire Ins.

Co., 110 Md. 275 , 73 A. 157 . With these rules of construction in mind, the contract must be read as a single document, whose meaning must be gathered from all its associated parts when assembled as the unitary expression of the agreement of the parties. The difficulty of construction arises from the fact that the intention of the parties depends largely upon the sense in which “permanently” is used in the supplemental agreement. “Permanent” is a relative term. Thus the permanent situs of taxable personal property may not mean the continued and unchangeable location of the property at a given place, but would indicate a location which was not of a temporary or fleeting character.

Gromer v. Standard Dredging Co., 224 U. S. 362, 377 , 32 S. Ct. 499, 505 , 56 L. Ed. 801 (dissenting opinion); Hopkins v. Baker, 78 Md. 363, 370-374 , 28 A. 284 ; Hooper v. Baltimore, 12 Md. 464 ; Philadelphia, W. & B. R. Co. v. Appeal Tax Court, 50 Md. 397 . So, a permanent abode has .been defined to be a home or domicile which one is free to leave as interest or pleasure may suggest, but which he has no present intention of changing. Moffett v. Hill, 131 Ill. 239 , 22 N. E. 821, 823 . Again, permanent employment in a contract has a signification which is determined by the subject matter, the circumstances, and the relation of the parties when considered in con ⁶⁰⁵ nection with the terms of the contract.

It does not mean employment for life or for any definite number of years. Carnig v. Carr, 167 Mass. 544, 547 , 46 N. E. 117 ; Sullivan v. Detroit etc. R. Co., 135 Mich. 661, 671 , 98 N. W. 756, 760 ; Elderton v. Emmens, 4 C. B. 479 493, 496, 136 Eng. Reprint 594; Perry v. Wheeler, 12 Bush 541 , 75 Ky. 541, 548 . So, an injury to land may be permanent, though not continuing forever.

It is said that for the injury to be permanent it must be lasting as contradistinguished from a mere temporary inconvenience. Bassett v. Johnson, 2 N. J. Eq. 154, 162; Beaufort v. Crawshay, L. R. 1 C. P. 699, 713, 714; New York Life Ins. Co. v. McLean, 218 Ala. 401 , 118 So. 753, 754 . The relative quality of the term has given rise to difficulties in the construction of insurance policies, as is well illustrated by the pending appeal, and numerous decisions of the courts of last resort of other jurisdictions.

To determine the signification of the term in the policies at bar, it is necessary to analyze the contract and consider its provisions. In consideration of the performance by the assured of his undertakings, the assurer agrees to pay the assured a monthly income of a specified amount, and to waive the payment of every premium thereafter due upon the policy and the supplemental agreement upon receipt of due proof that the assured has become physically or mentally incapacitated so as to be wholly and permanently unable to engage in any occupation or profession or to perform any" work whatsoever for compensation, gain or profit and that such disability has existed for a period of ninety days, subject to the conditions: (a) That even though the assured be not in fact wholly and permanently incapacitated, the total and irrecoverable loss of the sight of both eyes, or the severance of both hands at or above the wrists, or of both feet at or above the ankles, or of one entire hand and one entire foot, shall be considered total and permanent disability; (b) That the Company shall have the right at any ⁶⁰⁶ time or times during the first year after receipt of proof of such disability, and thereafter not oftener than once a year, to require satisfactory proof of the continuance of total disability; (c) That upon failure to furnish such proof, or if it shall appear at any time that the insured is no longer totally and permanently disabled, the supplemental agreement shall terminate and no further income will be paid nor premium waived; (d) That all premiums thereafter due under the life insurance policy shall be payable in conformity with its terms: (e) That the supplemental agreement shall not be effective if the disability shall result from self-inflicted injury or from any aerial or submarine casualty. Thus, although the period of prescribed disability has existed for a period of ninety days, and the assurer has recognized its obligation and has been paying monthly the specified income and waived all premiums, the correlative rights of the assurer to pay, and the assured to receive, the income every month are not permanent in the sense they cannot end. The continuation of the payment and of the receipt of the monthly income depend progressively in time upon the future continuation of the subsisting period of current disability.

So long as the disability persists, the assurer must pay, but so soon as the disability ends the income of the assured ceases. Moreover, in the first year after the obligation occurs, the assured may require at any time, and as often as it desires, proof of the continuance of the disability. In the second and subsequent years the requirement may be enforced but once annually. The words of the contract in this connection are, “Upon failure to furnish such proof, or if it shall appear at any time that the Insured is no longer totally and permanently disabled, this Agreement shall terminate, no further income will be paid nor premium waived.” The parties to the contract, by their express stipulations with reference to such a contingency, contemplated the probability that the physical ⁶⁰⁷ or mental incapacity of the assured might end after the assured had rightly received consecutive payments of income under the agreement, during a period in which it was not reasonably anticipated that the assured’s requisite disability would end at an appreciable time.

Thus, by the clear import of the provisions of the contract, the phrase “permanently unable” did not mean, when read in connection with the context, that the disability of the assured must endure until his death. It is evident that if, by way of illustration, an assured become wholly incapacitated by insanity, and so remain in that state for a period of ninety days, without, so far as could be anticipated, any reasonable prospect of recovery, the assured would become entitled to the payment of the monthly income as it accrued due so long as his incapacity continued. If the assurer paid the income, it simply fulfilled its promise. If it failed or declined to pay, the liability to pay remained, and an action for the recovery of the amount of the income would lie.

Should the assured become sane and his capacity for professional or other work be regained, a contingency has arisen within the purview of the contract which provides for such a situation in express terms: “this Agreement shall terminate, no further income will be paid nor premium waived.” While thus relieved of the obligation to pay any “further income”, the assurer, in the contingency assumed that it had paid to the assured the income which had accrued due monthly during the period of total incapacity, would not have any right to recover such payments of the assured. On the other hand, if the assurer had defaulted in the payment to the assured of all or any of the monthly payments of income during such period of total incapacity, the breach of its contract would not better the position of the assurer, but it would remain liable to pay the assured the amount of such defaults in payment, although the assured had ceased to be incapacitated after such defaults. In short, the rights and obligations which were created by the execution of the ⁶⁰⁸ contract and which existed between the assured and the assurer before and at the time the assured’s disability-ended, are not discharged by non-performance and a delay in time short of that within the statute of limitations. A promisor is not relieved of a breach in the performance of past due several obligations because he has no later promise to perform.

Nor is it material when an action is brought, if not barred by some limitation imposed by the instrument or by statute, since the rights and obligations of the parties are determined by the contracts of insurance, and not by whether the action is deferred until total disability has ceased. The nature of the contract and the context lead the court to the conclusion that the word “permanently” was used in its relative signification of not being temporary but lasting indefinitely, so that the disability meant was the defined condition or state which would continue indefinitely without change and without reasonable grounds to anticipate an appreciable termination. As thus construed, there was legally sufficient testimony from which it could be found that the plaintiff was, during the period claimed, within the purview of the insurance policies and, so, the case