Court Opinion

ID: 9287453
Source: CourtListenerOpinion
Date Created: 2022-11-29 16:44:42.529989+00
Date Added: 2024-06-11T17:12:24.492336
License: Public Domain

Feinberg, P. J., dissents. The rider attached to the policy provided for a conditional limitation upon the liability of the company to pay the face of the policy. The limitation, involving the contingency of the insured serving in the military or naval forces of any country “at war,” imposed two conditions: (1) that he obtain the consent in writing from the company, and (2) “pays to the Company the extra premiums required by the Company for and during such service. ’ ’ Failure to obtain the consent and pay the extra premiums required limited the liability of the company to pay only the premiums paid on the policy less any indebtedness to the company. That the company had a right to protect itself against a war risk is conceded, but the protective provision which limits the liability must be clear and definite, not vague and ambiguous. It is intended for the protection of the company, and the language employed by the company should be construed most strongly against the company under all the settled rules of construction. How much extra premium the insured was to pay the company is not defined or prescribed by any standard or measure which would make it reasonably clear to any ordinary person. Under the provision of the rider there is nothing to prevent the company from demanding an exorbitant extra premium. It could be prohibitive. Would the insured under such circumstances be at the mercy of the company, is a question that naturally arises. To permit it, in my judgment, would be taking an unfair advantage of the insured. Section 143 of the Illinois Insurance Code (ch. 73, par. 755, Ill. Rev. Stat. 1947 [Jones Ill. Stats. Ann. 66.818]) specifically makes it the duty of the director of insurance to withhold approval of any policy, certificate, endorsement, etc., filed with him, if, among other things, it contains “inconsistent, ambiguous or misleading clauses, or contains exceptions and conditions that unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the policy. ’ ’ If the courts will differ as to the proper construction of the rider in the instant case, as is apparent from the finding of the trial court and that of the majority opinion, then certainly no lay person can be expected to know the proper meaning of the rider in question and could be readily misled. In Arendt v. North American Life Ins. Co., 107 Neb. 716, the provision of the policy was like the one in the instant case, except that it provided with respect to the payment of the extra premium that it was not to exceed 3 per cent of the face of the policy. The court, after reviewing a number of authorities on the question, held at page 735: “. . . as the increased premium was not fixed or determined, so far as this contract is concerned, there can be no basis of computation. The contract of insurance simply says that it shall not exceed 3 per cent of the face of the policy. This is simply fixing the maximum but no determination of the exact amount. “. . . the provision for an increased premium of not exceeding 3 per cent of the face of the policy on the basis and computation prescribed by its terms is uncertain and indefinite, . . . .” The majority opinion cites Lofstead v. Bank Savings Life Ins. Co., 118 Kan. 95, in support of its position that the rider in the instant case is not ambiguous, and states that the Lof stead case discussed the Arendt case but refused to follow it. I do not so read the Lof stead case. It did not disagree with the Arendt case; it merely distinguished it. The war risk provision in the Lof stead case provided that in the event of failure of the insured to obtain the company’s consent and pay the extra premium therefor at the established rate, the company’s liability would be limited to the cash surrender value of the policy at the date of death. It is clear, the court held, that there was no uncertainty with respect to the extra premium. It was at the rate then established by the company, and not left to uncertainty as in the instant case. In discussing the Arendt case, the Supreme Court in the Lof stead case distinguished the provision in the Arendt case, and said: ‘ ‘ The contract furnished, no solution, because a factor necessary in computing the amount — extra premium — • was left indefinite. Because the face of the policy was not reducible by any definite method of computation to any definite sum, the court held it was not reduced at all. We have no such case here.” The rule in the Arendt case is sound and logical and should be applied to the instant case, where we find the rider more ambiguous than the one in the Arendt case. The judgment of the superior court should be affirmed.