Court Opinion

ID: 9658884
Source: CourtListenerOpinion
Date Created: 2023-08-23 21:20:49.087418+00
Date Added: 2024-06-11T18:14:01.318452
License: Public Domain

HOMEYER, Judge
(dissenting).
I dissent. The Lyke case referred to by the majority can hardly be considered precedent to affirm. This case decided in 1919 merely states as "undoubtedly the correct rule of law" a concession in respondent's brief that payment of an annual premium provides coverage from the time the policy became effective for an entire year. It then computes the policy year from the issue date of the policy as distinguished from the date of approval of the application for insurance by the company which would have resulted in a lapse. I do not believe this case should be interpreted to hold that an unambiguous date fixed for payment of premiums in the insurance contract and agreed to by the parties can be disregarded. In fact it indicates the contrary. See D & P Terminal, Inc. v. Western Life Insurance Company, 8 Or., 368 F.2d 743, 747.
Likewise what may have been believed to be a correct rule of law when that case was decided is not now even the majority view. See Annot., 44 A.L.R.2d 472 and Juster v. John Hancock Mutual Life Ins. Co., 194 Minn. 382, 260 N.W. 493, overruling Stramback v. Fidelity Mut. Life Ins. Co., 94 Minn. 281, 102 N.W. 731. Also Reid v. Bankers Life Co., 148 Neb. 604, 28 N.W.2d 542, overruling Cilek v. New York Life Ins. Co., 97 Neb. 56, 149 N.W. 49, 1071; Wall v. Mutual Life Ins. Co. of New York, 228 Iowa 119, 289 N.W. 901; Southland Life Ins. Co. v. Vela, 147 Tex. 478, 217 S.W.2d 660; Appleman, Insurance Law and Prac*28tice, § 7953, p. 165, 44 C.J.S. Insurance § 345, p. 1314, 43 Am.Jur.2d Insurance, § 544 et seq. The following statement appears in the Southland case, supra:
"As stated in Great Southern Life Insurance Co. v. Peddy, 139 Tex. 245, 162 S.W.2d 652, 653, The great weight of current decisions sustains the rule that when a policy specifically provides for the payment of premiums, and expressly specifies the date from which the premium period is to be computed, and makes that date the day on which recurring premiums are due and payable, such date will control, irrespective of the date on which the policy is delivered.' No public policy is violated by a contract between an insurance company and an insured whereby premiums are to be paid from the effective date of the policy rather than the date of its delivery, even though the effect thereof is to charge a premium for a period when the insured has no protection. It was pointed out in the case last-above cited, and in the case of Kurth v. National Life & Accident Insurance Co., Inc., Tex.Civ.App., 79 S.W.2d 338, writ refused, that it is to the interest of both parties to have a certain date upon which to calculate not only the due dates of premiums but the premium rate, cash and loan value, and the paid-up insurance benefits available to the insured. As observed in the case last cited, to fix an indefinite standard of obligation as between the insurer and the insured would play havoc with both."
The majority quotes language in the application dated July 6, 1961 as giving rise to an ambiguity between it and the policy proper. I do not so read it. Immediately preceding the paragraph from which the quotation is taken appears the following: "(14) Prorate first Premium Collect with application to next July 1. First Prem. $29.38 Annual Prem. thereafter $30.00. Is waiver of premium desired? Yes., No." The application was signed by the applicant and is part of the contract. It is clear that the first premium was for less than one year and computed from July 6th to the anniversary date of the policy *29and the applicant issued his check in payment thereof at that time. There is no ambiguity or uncertainty either in the application or in the policy issued as to the period covered by the premium payment and when the next premium was due. The policy explicitly states:
"THE DATE OF EXPIRY JULY 1, 1968. CONVERSION PERIOD TO DATE OF EXPIRY. THE DATE OF ISSUE JULY 6, 1961. ANNIVERSARY DATE JULY 1, 1962 and Annually Thereafter. POLICY YEARS AND POLICY ANNIVERSARIES SHALL BE COMPUTED FROM THE ANNIVERSARY DATE * * * The consideration for this policy is the application therefor and the payment of the first premium of $29.38 dollars for the balance of the year to the anniversary date above and the further payment of annual premium of THIRTY AND 00/100 dollars on the Anniversary Date, shown above, and on each subsequent anniversary date during the lifetime of the Insured, until premiums hereon have been paid to the Date of Expiry."
In my opinion the contract is clear and unambiguous and fixes the premium payment date after the initial premium as July 1, 1962, and on July 1st of each subsequent year during the term of the policy. The problem here is one of simple contract law. It was so stated in Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 161 A.2d 717, in what appears to be an identical factual situation. The court there said:
"When the terms of an insurance contract are clear, it is the function of a court to enforce it as written and not to make a better contract for either of the parties. * * * Absent statutory prohibitions, an insurance company has the right to impose whatever conditions it desires prior to assuming its obligations and such provisions ‘should be construed in accordance with the language used. * * * This rule applies with equal force to the selection of the dates on which premium *30payments are to be made. The parties may agree upon such dates and where the time of payment is thus specified by the terms of the policy, those terms control and the date so fixed is binding on both parties."
The majority relies heavily on the Haynes case to support an affirmance. In Haynes, the court found an ambiguity which is not here present. Likewise, the facts in Haynes were materially different. In Haynes, the court said:
"Here the parties did not clearly express their intention in the policies. The policies are silent as to when any monthly payment of premium is to be made. The policies provide for an annual payment * *
Later,
"here there was no day fixed for the payment of a monthly premium * * *. Not having clearly and definitely stated that the policies issued — however different from the policies applied for in increase of premium, deprival of extended insurance, or otherwise — should be in effect from February 24th, the company must accept the consequences resulting from its own failure to state the contract definitely and clearly. There are many cases where insured has been held bound to pay for a full premium period though a considerable part of the premium period had elapsed before the insurance was in force, but here at least an entire monthly premium period had elapsed before the insurance became effective. There was no quid pro quo whatever for the first month's premium if the time was measured from the only date mentioned in the policy, February 24th."
The Haynes case was analyzed by Judge Gibson in D & P Terminal, Inc. v. Western Life Ins. Co. (Nov. 1966) supra, in which analysis I concur. I :also believe applicable to the present situation the court's statement in that case:
*31"However, in the case before us, even if we assume arguendo that some ambiguity existed as to the initial span of coverage, as the years pass this initial ambiguity fades. The exact date of delivery is unrecorded on the policy, and perhaps is long forgotten; all that remains is the obvious date on the policy which calls for payment. In such a situation the insured must surely realize that he is expected to pay the premiums on these dates, and if he fails to do so the policy is subject to lapse. * * * We believe the policy is clear, the intention is clear, and any conceivable initial ambiguity was cured by the passage of time and the payment of five quarterly premiums.
The policy is not subject to doubts that must be resolved in plaintiff's favor. Under South Dakota law there was a lapse * *
The record here clearly shows after payment of the initial prorated premium subsequent annual premiums were paid respectively as noted in the records at the home office of the company as follows: June 26, 1962, July 2, 1963, June 30, 1964 and June 22. 1965.