Court Opinion

ID: 6887875
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:33:40.293505+00
Date Added: 2024-06-11T16:05:45.994531
License: Public Domain

McCORD, Circuit Judge (dissenting).
I do not agree with my colleagues.
For the sum of twenty-five dollars paid in advance on October 3, 1938, the insurance policy here under consideration was issued to insured, and which payment kept the policy in force for nearly four months and until February 1, 1939; thereafter beginning on February 1, 1939, fifteen dollars quarterly was required to keep the policy in continuous effect. Par. (d) under Additional Provisions of the insurance contract. The policy is a quarterly term contract.
If the policy of insurance expired at noon on Sunday, I do not think Sunday gave to insured a day of grace or kept the policy in force one minute after noon of that day. Furthermore, I refuse to debate whether or not the burden was upon insurer or insured to show whether the policy was in force. To me there is no smoke or fog which obscures the life of the “term insurance” contract here under consideration and which was carried by a man who met death by drowning two hours after (the majority opinion holds) his insurance had expired.
The evidence is stipulated. Two of the receipts for premiums disclose that insured failed to keep his policy in force and paid *28premiums after the due dates. I shall advert only to the failure of insured to pay the March 1, 1940, premium until March 6, 1940. At noon of the last day on which the insurance was in force, of course the policy died. The term had expired. The liability under the policy died at exactly noon on that day. If the man was to become insured as against accident then he must enter into a new contract. He sought insurance on March 6, 1940, after his contract had (according to the insurer and the majority opinion) expired. It was discretionary with the insurance company whether it insured him again, for what period and for what amount and under what conditions. If he was reinstated all that word meant was that he carried the insurance according to the express terms of the old insurance contract, for the same amount, under the same terms and for the same period of time. For the six days from March 1st to March 6th there was no insurance carried or in effect. Reinstate does not and did not mean that the insurance company could accept premium payment for a quarter of a year and start the running of the quarter back to March 1st. Not at all. Reinstate meant and should be construed to mean that all the terms and conditions of the old insurance policy were put back in force. It does not mean that insured was to be taxed six days for which no insurance was carried and no liabilities were incurred by the insurance company. To be sure, the parties could have reinstated the same policy after it had been dead for a year but because the insurance company made out a receipt which recited a day and date when the next premium payment was due when in fact and in truth it was not due on that date could in no wise limit the term of the policy for which the number of days had been paid. Insurance company was not warranted in accepting the fifteen dollars, amount it charged for a quarterly period of insurance, and by receipt strip insured of six days of paid-up insurance. For the six days it gave nothing, was out nothing, and no risk of loss was incurred. The insurance receipts do not add to or take from the policy one single right. The March re-receipt reinstated the policy. It did not reinstate the six days that had passed and gone and were dead. The policy commences to live on the 6th of March and should expire on June 6, 1940. Insured paid for another quarter on June 1, 1940, which gave life to the policy until noon on September 6, 1940.
Suppose insured had waited sixty days after the due date on his term policy and then paid to insurance company the amount of a quarterly premium, could it be concluded that the insurance company could legally give him a receipt which dated the time of payment back sixty days and only insure him for one month? If this reasoning be sound, then if insured waited a full quarter and paid for a quarter, the insurance company would be warranted in dating the policy payment back ninety days and he would have no insurance.
The Lanier v. New York Life Ins. Co., 5 Cir., 88 F.2d 197, is not applicable law in this case. There the insurance company sought to cancel four life insurance contracts and does not deal with term insurance. Likewise, Ætna Life Ins. Co. v. Dunken, 266 U.S. 289, 45 S.Ct. 129, 69 L.Ed. 342. There, the issue was whether the contract was controlled by Missouri or Texas law. Since the contract here is a Florida contract, it must be controlled by the Florida decisions, and the last decision we are able to find is Prescott v. Mutual Ben. Health & Accident Association, 133 Fla. 510, 183 So. 311, 315, 119 A.L.R. 525. We agree with the majority opinion that this is a controlling case. While the issue there had to do with the right of the insurance company to terminate the contract at the expiration of the term, it was nevertheless a term policy such as we have here under consideration. I am constrained to believe that it upholds the views which I maintain should control in this case. That case cites with approval the case of Perkins v. Associated Indemnity Corporation, 189 Wash. 8, 63 P.2d 499, and-it quotes from that decision:
“Ordinarily, a life insurance policy is one issued to be paid on the death of the person insured after the payment of stipulated annual premiums. When a policy provides for its termination at a particular time like the one in the case at bar, it terminates at that time without any notice. The contract in the case at bar terminated at the expiration of the twelve-month period for which the premium had been paid unless an additional premium for an additional twelve months was paid before the expiration of the twelve months during which the policy was effective. Under the additional provisions, subdivision (8) of the contract, the *29policy was renewable subject to all of its provisions, from term to term, by payment of the premium in advance at the company’s premium rate in force at the time of renewal if the company consented to such renewal. It is optional with the insurer under the provisions of a contract like the one in the case at bar whether the policy will be periodically renewed upon each successive expiration. MacDonald v. Metropolitan Life Insurance Co., 304 Pa. 213, 155 A. 491, 77 A.L.R. 353. The contract provides:
“ ‘This policy may be renewed subject to all of its provisions, from term to term, with the consent of the Company, and by the payment of the premium in advance of the Company’s premium rate in force at time of renewals.’
“There was no absolute right of renewal. The right of renewal was subject to the consent of the insurer. Under the terms of the policy, it was optional with the insurer whether or not to renew the policy.
“The policy expired October 23, 1934. At no time prior to the date of expiration was a further premium ever paid, or deducted by the company. The policy in the case at bar was not written for an indefinite term like life insurance. Such indeterminate policies are written for life subject to forfeiture for nonpayment of premium, etc. Those contracts do not have to be renewed. They continue until one party or the other breaches the contract. The accident insurance policy in the case at bar is not such a policy. It was written for a definite term of twelve months, subject to renewal if both parties agreed to do so. In a life insurance policy and like indeterminate contracts, if it is desired to terminate the policy, it is necessary to give notice of cancellation.”
The Florida decision also cites with approval, as did the Perkins case, the case of MacDonald v. Metropolitan Life Insurance Co., 304 Pa. 213, 155 A. 491, 77 A.L.R. 353, wherein it is said:
“The question here is whether the reinstatement of the policy was from the expiration of the first six months (January 18, 1930), or from the countersigning of the receipt (March 1, 1930). The trial court, taking the latter view, entered judgment for plaintiff, from which the defendant brought this appeal. We find no reason to differ from this conclusion. While so far as appears there is no similar case in Pennsylvania, the weight of authority elsewhere sustains the conclusion of the trial court. . * * * To hold that the policy, reinstated for six months, began that term on January 18, is to pay the company for a risk during the six weeks which it did not incur. As the trial court says:
“ ‘If the contention of defendant is sound, then MacDonald, for the payment of the six months’ premium, received insurance for only four months and eighteen days. Likewise, if the contention of defendant is sound, the payment of the premium five months after the expiration of the original term would have given MacDonald insurance for one month only, and the payment of the premium six months after the expiration of the original term would have given him no insurance at all. * * * ’
“Where, as here, it is optional with the company whether or not to reinstate an expired policy, the act of so doing constitutes a new contract and starts a new period of coverage. * * * ”
“A construction which gives insured insurance for less period of time than that covered by the premium which he has’ paid should not be adopted.” 32 Corpus Juris 1165.
No extra charge was made for issuing the policy of insurance. The contract is unlike the insurance contract in the cases of Lanier v. New York Life Ins. Co. and Ætna Life Ins. Co. v. Dunken, supra. Moreover, the promise of additional insurance had already been lost to insured by failure to pay the quarterly premium when due, (See 3 under Standard Provisions of policy) and the company could cancel the policy at the end of any quarter. The reinstatement being dated back gave absolutely nothing for the uninsured days.
A contract of insurance will, if possible, be so construed as to protect the insured, and doubts, if any, will be resolved in his favor. Mutual Life Ins. Co. v. Hurni Packing Co., 263 U.S. 167, 44 S.Ct. 90, 68 L.Ed. 235, 31 A.L.R. 102; McMaster v. New York Life Ins. Co., 183 U.S. 25, 22 S.Ct. 10, 46 L.Ed. 64. Winer v. New York Life Ins. Co., cited by the majority does not touch the question here.
It will be found, I think, by a careful reading of the Prescott case and the cases cited therein approvingly, that my colleagues have failed to follow the last decision of the Supreme Court of Florida touching the issue here before us. I am of opinion they have sold the Erie-Tompkins case (Erie R. Co. v. Tompkins, 304 *30U.S. 64, 58 S.Ct 817, 82 L.Ed. 1188, 114 A.L.R. 1487) “down the river”.
The judgment of the lower court was right as rain. It should have been affirmed.
I dissent.