Court Opinion

ID: 8825224
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:45:29.037368+00
Date Added: 2024-06-11T17:04:45.429908
License: Public Domain

SANBORN, Circuit Judge
(dissenting). The real question in this case is whether the parties to the insurance policy in controversy agreed thereby that it should be' contestable for 2 years from the date of the policy, or for 2 years from the date of the issue of the policy. The clause of contestability, which contains the answer to this question, reads:
“This policy shall be incontestable, except for nonpayment of premiums,, provided two years shall have elapsed from its date of issue.”
It cannot be successfully denied that this clause in itself expresses-an unambiguous agreement that the policy shall be contestable by the-company for 2 years from its date of issue. The date of a policy is not generally the date of its issqe. Normally and usually the date of' a policy is the date of the signature thereto of the officers of the corporation, and that date is almost universally, as it was in this case, a different date from the date of the issue of the policy.
Issue means “To deliver for use.” A policy is not issued when it is-dated and signed by the officers of the company, nor until it has been delivered to and accepted by the insured. The application for it is a request for a policy; the policy is a proposal of the company to insure-on the terms specified therein; the receipt and acceptance of such a policy by the insured first closes the contract. Until that acceptance-there may be negotiations, but no contract. Upon siuch receipt and acceptance on September 13, 1915, and not before, was’there a contract m this case, and then, and not until then, was this policy issued. Then-was it first “delivered for use,” 4 Words and Phrases, First Series, p. 3780; Jefferson Standard Life Ins. Co. v. Wilson, 260 Fed. 593, 171 C. C. A. 357; Logsdon v. Supreme Lodge of Fraternal Union of America, 34 Wash. 666, 76 Pac. 292, 293; Paine v. Pacific Mutual Life Ins. Co., 51 Fed. 689, 693, 2 C. C. A. 459; Equitable Life Assurance Co. v. McElroy, 83 Fed. 631, 642, 28 C. C. A. 365. The date of this policy,, therefore, differed from the date of its issue. The former was August 23, 1915, and the latter was September 13, 1915.
Not only this, but the parties to this policy expressly agreed, when-this policy was issued, that the date of the policy and its date of issue-should be at different times. They agreed that the policy should not take effect, and that was an agreement that its date of issue should not be, until it was delivered to and received by the insured during his con*23tinuance in good health, and that was not until the 13th day of September, 1915.
Nor was this all of their clear agreement upon this subject. They further expressly agreed that the date of the policy should be a date different from and earlier than the date of its issue. They agreed that “the applicant, upon request, may have policy antedated for a period not to exceed 6 months.” Pursuant to that provision the applicant requested, and the insurance company granted, its request to antedate the policy to August 23, 1915. Here was an agreement that the date of the policy should be anterior to — that it should be before — some date. What date was the date of the policy to be before ? The unavoidable answer is that it was to be before, to be anterior to “its date of issue.” So it is that the incontestability clause without ambiguity provides that the policy shall be contestable, not for 2 years from its date, but for 2 years from “its date of issue.” Its date was August 23, 1915. Its date of issue was September 13, 1915. The clear purpose and intention of the parties to this policy by the use of this incontestability clause was to give to the company 2 full years from the closing of the contract to contest the policy. It could not contest it before the policy contract was closed, before there was a contract. By the clear terms of the policy This term of contestability extends 2 years from the date the policy contract came into existence — 2 years “from its date of issue.”
If that clause be interpreted and enforced as it reads in the policy, the antedating clause is perfectly consistent with it, leaves the con-testability clause unmodified, and the company’s 2 years of contestability intact. But if, by construction, a substitution in the incontestability clause of the term “from the date of the policy” for the term “from its date of issue” be made, then the antedating clause which permits the insured to have the policy dated back not more than 6 months anterior to the date of its issue, gives to the insured the option to reduce the company’s period of contestability not exceeding 6 months, to make it 18 months, instead of two years, and the antedating clause thus conflicts with the incontestability clause as the latter is written in the policy, modifies the latter, and cuts down the 2 years of contestability 6 months at the option of the insured. In this state of the case, since the clauses as they read are rational, effective, and consistent, a modification of the incontestability clause by the substitution of “from the date of the policy” for “from its date of issue,” does not seem to be required or permissible, nor am I able to believe that the parties to this contract ever intended to make the contract which such a modification would create.
General rules of construction are that all the words and terms of a contract should have effect, if possible, and none should perish by construction, and that where a contract is susceptible of two constructions — one of which makes the different parts of it accordant and another which makes them discordant — the former should be preferred, because it cannot be assumed that the parties intended to insert inconsistent provisions. Burdon Central Sugar Refining Co. v. Payne, 167 U. S. 127, 142, 17 Sup. Ct. 754, 42 L. Ed. 105; Miller et al. v. *24Hannibal & St. Joe R. Co., 90 N. Y. 430, 433, 43 Am. Rep. 179; Barhydt v. Ellis, 45 N. Y. 107, 110. If the contestability clause and the antedating clause be enforced as the parties wrote them, without the change of the former “from its date of issue” to “from the date of the policy,” that clause and the antedating clause are consistent. Every word of each of the clauses has its normal effect, without impairing or modifying any of the terms of the other, and none of the words or terms of either perish by construction. If, by construction, the term “from its date of issue” be changed to “from the date of the policy,” the two clauses conflict, the two years of contestability the parties undoubtedly intended to secure to the company are reduced to 23 months and 10 days, and some of the clear terms of the contestability clause perish by construction.
Again, when the parties to this policy came to make this contract they had the perfect right to agree that the 2 years of contestability should run from the date of the policy or from “its date of issue.” The two dates were not the same, they knew these facts, the insurance company had adopted a policy which permitted the insured to have that policy dated not exceeding 6 months earlier than “its date of issue,” and had expressly agreed that the company should have the right to contest its policy for fraud for 2 years after “its date of issue.” The permission to date back the policy, by the clear terms of the contract as it then read, did not and could not modify or impair the right of the company to the full 2 years of contestability from the date of the issue of the policy, from the time when the contract was first made. The insured accepted the policy contract so reading, and in my opinion the parties to that contract are legally bound- by, and should be held to, its terms.
Eor the reasons which have now been stated, the contract and the facts of this case have failed to satisfy my mind that this court should substitute by construction, for the words “from its date of issue” in this policy, the words “from the date of the policy,” reduce the 2 years of contestability from the date of the making of the contract which the policy seems to me to have been intended to secure, and which, it seems to me, it did secure to the company to 23 months and 10 days, and thereby deprive the company of the defense of fraud in the procurement of this policy, which it has if its period of contestability under the policy was 2 years from “its date of issue,” which was the date the contract was made.