Case Name: Berry v. Lamar Life Ins. Co.
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1932-06-06
Citations: 165 Miss. 405
Docket Number: No. 30006; No. 30006
Parties: Berry v. Lamar Life Ins. Co.
Judges: 
Reporter: Mississippi Reports
Volume: 165
Pages: 405–429

Head Matter:
Berry v. Lamar Life Ins. Co.
(Division B.
June 6, 1932.)
[142 So. 445.
No. 30006.]
(Division B.
Feb. 13, 1933.)
[145 So. 887.
No. 30006.]
Eor former opinion, see 142 So. 445.
W. D. Hilton, of Mendenhall, and J. Morgan Stevens, of Jackson, for appellant.
Green, Green & Jackson, of Jackson, for appellant, as Amicus Curiae.
W. D. Hilton, of Mendenhall, and J. Morgan Stevens, and Green, Green & Jackson, for appellant.
Wells, Jones, Wells & Lipscomb, of Jackson, for appellee.
Watkins, Watkins & Eager, of Jackson, for appellee.
Argued orally by Garner Green and J. Morgan Stevens, for appellant, and by Calvin Wells and W. H. Watkins, for appellee.

Opinion:
Ethridge, P. J.,
delivered the opinion of the court.
This is an appeal from the judgment of the court below sustaining a demurrer to the declaration filed by the appellant against the appellee for the recovery of five thousand dollars under an insurance policy on the life of Meyer E. Berry, the husband of the appellant. It was alleged in the declaration that the policy was issued upon the life of Meyer E. Berry for the above-mentioned sum, and that, among other things, provided that:
"The Lamar Life Insurance Company hereby agrees that if, prior to attaining the age of sixty years, while this contract is in full force by the payment of premiums, the insured shall furnish proof satisfactory to the Com pany that, from causes originating after delivery of this contract and entirely beyond the control of the insured, he has become totally and permanently disabled, and will by such disablement be prevented for life from engaging in any gainful occupation, this company shall by endorsement hereon agree to, (1) Waive the payment of premiums thereafter falling due during the continuance of such disability, during which period of waiver the right of the insured to surrender values and all other benefits under said contract shall continue with the same force and effect as if premiums were duly paid by the insured, and in addition thereto; (2) Pay to the insured, on the first day of the month, after satisfactory proof of disability has been furnished the company, the sum of fifty and no/100 dollars, and a like sum on the first day of each month thereafter during the life of the insured, and the continuation of such disability. Such monthly payments to the insured shall not be a charge against the policy and shall not be deducted in the settlement of any claim hereunder. ' '
The declaration charges that Meyer E. Berry became insane and totally disabled to follow a gainful occupation while the policy was in force, and that he died while insane. It was further alleged that by reason of his insanity he was unable to give notice and make proof of such disability, and that no member of his family knew of the terms of the contract until after his death. It was further alleged that three premium paying dates elapsed without the premiums having been paid, but that during this period the deceased, Meyer E. Berry, was, by reason of his insanity, unable to report or make such proof.
It was not alleged that the insurance company had- any knowledge or notice of the alleged insanity at any time prior to the death of said Meyer E. Berry. The premiums which were not paid were due August 8, 1929, August 8, 1930,"and August 8, 1931, and it was claimed in the declaration that, by reason of the insanity of Meyer E. Berry, and the resultant inability to make proof, the policy remained in force, although the insurance company had no knowledge of, and no proof had been submitted to the company of, said alleged disability.
The trial judge ruled that this case was controlled by the announcement of this court in the case of New York Life Insurance Co. v. Alexander, 122 Miss. 813, 85 So. 93, 15 A. L. R. 314, but indicated that, if it were not for this decision^ he would hold to the contrary.
It is frankly conceded by the appellant that, if the decision in that case is not overruled, the judgment of the court below in sustaining the demurrer was correct; but presents an elaborate and learned argument contending that said decision is unsound and should be overruled.
This decision was rendered by a full court without any dissent, and has been relied upon for several years in the insurance field. While the authorities in other states are conflicting as to such provisions under such circumstances, we see no reason to overrule the decision in New York Life Ins. Co. v. Alexander, supra. We are unable to see that it is manifestly wrong and mischievous in its results.
The life insurance business has become one of the most extensive businesses in the country, and such business depends almost entirely upon contracts. The power to make such contracts as the parties desire to make, when not prohibited by law or public policy, is a fundamental principle of the life insurance business, and is essential to its successful conduct.
There is, in our opinion, sound reason why insurance companies should be permitted in their policies a provision requiring proof to be made before the waiver of the policy becomes effective. It is, of course, necessary for the success of the life insurance business that unmerited or fraudulent claims should be rejected, and, in order to determine whether a claim is just and bona fide, it should have opportunity to investigate the facts at the time the disability occurs or accrues upon which the waiver of premiums depends. Suppose a party taking a policy should pay one or two annual premiums, a.nd then cease paying them without any notice to the company of any disability, continue to live many years; and then dies, and his family claims that there was a disability existing at the time which excused payment of premiums. It would manifestly be impossible, or, at least, exceedingly difficult and expensive, to develop the facts after a long time. ,
But, at all events, the parties were not prohibited from making this contract by any statute, nor by public policy of the state, and we have repeatedly announced that the court would enforce contracts made by parties, if not prohibited by law or public policy, according to the terms of the contracts.
It is contended also that section 2294, Code 1930, reading as follows: "The limitations prescribed in this chapter shall not be changed in any way whatsoever by contract between parties, and any change in such limitations made by any contract stipulation whatsoever shall be absolutely null and void; the object of this statute being to make the period of limitations for the various causes of-action the same for all litigants," prohibits the making of a contract, under such circumstances, as was upheld in New York Life Ins. Co. v. Alexander, supra, and that the existence of this statute was not called to the attention of the court, and the court therefore did not pass upon or adjudicate the legality of the requirement of giving notice and making proof, as a condition precedent to liability under the contract. In our opinion, this statute has no- application to this' case. It was designed to leave the statute of limitations in force as' the Legislature made it. It did not intend to prevent parties making stipulations amounting to- conditions precedent to liability in assuming obligations in contractual matters. In the case before ns, the furnishing of proof was a condition precedent to waiver of premiums.
We think it is a reasonable and .lawful provision. The Legislature has never undertaken to regulate for what length of time a party under such stipulation should have to make proof, or to excuse the making of proof, because of such physical or mental inability.
We are therefore of the opinion that the court below was correct, and that its judgment should be affirmed.
Affirmed.
On Suggestion of Error.
Ethridge, J.,
delivered the opinion of the court on suggestion of error.
This cause was affirmed on a former day of this court by Division B; the opinion appearing in volume 142 Southern Beporter, at page 445.
On suggestion of error, there was a difference of opinion among the judges of Division B as to the correctness of the original decision, and the judgment was" set aside and the cause was argued before the other division and considered by the court in banc.
After a full consideration of the case, the majority of the court is of the opinion that the former decision was correct.
The former opinion might be sufficient to rest upon in this case. But, as it was stated in the former opinion that the authorities in other states were conflicting, and that this state decided the question involved in New York Life Ins. Co. v. Alexander, 122 Miss. 813, 85 So. 93, 15 A. L. R. 314, and that case was authority for the decision in the case at bar, and inasmuch as it was insisted in the suggestion of error that the decision in this case was in conflict with the decision in National Casualty Co. v. Mitchell, 162 Miss. 197, 138 So. 808, we desire to say that the majority of the court thinks there is no conflict between the decision of the National Casualty Co. v. Mitchell, supra, and the case at bar, or in the authorities relied upon to support same.
In our opinion, they are clearly consistent with each other. In the case at bar, in addition to the clause set out in the original opinion, the policy provides that, if the premiums are not duly paid, the policy shall cease, except as provided in the nonforfeiting provisions of the policy. In the total disability benefit clause set forth, there was no stipulation with reference to the time in which certain matters were to be done and proof furnished b}^ the insured, except that it must be done while the policy was in force. As stated, the company did not waive payment of premiums on the happening of the disability therein provided for. The premium was only to be waived when proof of such disability was furnished to the company, which proof must be reasonably sufficient to satisfy the company that a disability had occurred. Until and unless such proof was filed, there was no waiver of premiums, and no- accrual of benefit. If the premiums were continued to be paid the proof of disability could be made at any time, and was not limited to any specific time. It is difficult to see how section 2294, Code 1930, can have any application whatever.
We think the decision in this case, and that in the case of New York Life Ins. Co. v. Alexander, supra, are supported by the decision of the United States Supreme Court in the case of Bergholm v. Peoria Life Ins. Co., 284 U. S. 489, 52 S. Ct. 230, 76 L. Ed. 416. This decision affirmed a judgment of the federal circuit court of appeals reported in 50 F. (2d) 67. We quote from the United States Supreme Court as follows:
"Beginning with February 27, 1927, premiums were to be paid quarterly, with a grace period of one month from any due date, during which period the policy was to continue in full force. In case of total and permanent disablement there was a provision for payment of a monthly income for life of one per cent of the amount of the principal sum. The policy expressly provided that 'if any premium is not paid on the date when due, this policy shall cease and determine, except as hereinafter provided.' The income disability clause which follows this language, provides: 'Upon receipt by the Company of satisfactory proof that the insured -is totally and permanently disabled as hereinafter defined the Company will
" 'I. Pay for the insured all premiums becoming due hereon after the receipt of such proof and during the continuance of the total and permanent disability of the insured and will also
" '2. Pay to the Insured a Monthly Income for life of one per cent, of this Policy; the first payment of such in'come to be paid immediately upon receipt of such proof.
" '3. . . .To entitle the Insured to the above Total and Permanent Disability Benefits this policy at the time of making claim for such benefits must be in full force and all premiums becoming due prior to the time of making claim must have been duly paid. . . .'
"The insured died on April 18, 1929'. Judgment was sought for disability benefits from December 1, 1927, to April 1, 1929, at the rate of fifty dollars per month, with interest. The last premium paid was due on May 27, 1927. The next, allowing a month's period of grace, should have been paid not Mer than September 27, 1927. Neither that nor any subsequent premium was ever paid. Long prior to the death of the insured, the policy therefore had lapsed, unless saved hv the terms of the disability clause above quoted. There is evidence in the record from which it reasonably mav be found that the insured was totally and permanently disabled' from a time before the premiums first became in arrears, and that this condition continued until his death; but no proof thereof was furnished to the company. The petitioners, nevertheless, contend that this is enough to bring into effect the promise of the company to pay the premiums which became due after the disability began. In support of this contention, Minnesota Mut. L. Ins. Co. v. Marshall [(C. C. A.) 29 F. (2d) 977], supra, is cited. The pertinent provisions of the policy there, however, differ from those found in the policy here under consideration. There the policy provided that if the insured, while the policy is in force and before default in payment of premiums, ' shall become totally and permanently disabled . . . and shall furnish satisfactory proof thereof, the Company will waive the payment of premiums thereafter becoming due,' and that 'upon the receipt of due proof of total and permanent disabilities . . . ' the Company will waive the payment of all premiums thereafter becoming due. ' The court held that the waiver took effect at the time of the disability, and did-mot depend upon the time when proof thereof was furnished. We do not need to controvert this construction of the words quoted, or question the soundness of the view of the court that the existence of the disability before the premium became in arrears, standing alone, was enough to create the waiver. In that view, the obligation to furnish proof was no part of the condition precedent to the waiver; but such proof might be furnished;withiu a reasonable time thereafter. Here the obligation of the company does not rest upon the existence of the disability; but it is the receint by the company of proof of the disability which is definitely made a condition precedent to an assumption by it of payment of the premiums becoming due after the receipt of such proof. The provision to that effect is wholly free from the ambiguity .which the court thought existed in the Marshall policy. Compare Brams v. N. Y. Life Ins. Co., 299 Pa. 11, 14, 148 A. 855. It is true thal where the terms of a policy are of doubtful meaning, that construction most favorable to the insured will be adopted. Mutual L. Ins. Co. v. Hurni Packing Co., 263 U. S. 167, 174, 68 L. Ed. 235, 31 A. L. R. 102, 44 S. Ct. 90; Stipcich v. Metropolitan Life Ins. Co., 277 U. S. 311, 322, 72 L. Ed. 895. Phis 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. ' '
See, also, 1 Joyce on Insurance, secs. 1100, 1103, and 1106, and case note in 15 A. L. R. at page 318; Brotherhood of Railroad Trainmen v. Bridges (Miss.), 144 So. 554.
The judgment of the court below will be affirmed.
Affirmed.