Court Opinion

ID: 9659029
Source: CourtListenerOpinion
Date Created: 2023-08-23 21:27:16.008816+00
Date Added: 2024-06-11T18:14:03.221509
License: Public Domain

*477COLEMAN, Justice
(dissenting):
The policy sued on contains two provisions which give rise to the controversy. The provision first appearing in the policy is herein sometimes referred to as Clause 1, and the second provision will be referred to as Clause 2.
Clause 1 recites in pertinent part as follows :
“Benefits for Loss of Eyesight or Limbs ■ — -Upon receipt during the lifetime of the Insured of due proof that the Insured has suffered (a) . (b) the complete and irrecoverable loss of sight of both eyes prior to attainment of age 70 . total and permanent disability shall be deemed to exist, and the Company, upon surrender of the policy, will pay, in . case (b), a sum equal to twice the Amount of Insurance . all subject to the provisions of the policy.
“In all cases, benefits under this provision shall be allowed only if the loss (1) occurs while no premium is in default beyond the grace period, and (2) is caused solely by disease or injuries contracted or sustained after the Date of Issue. Such benefits shall not be allowed if any such loss is intentionally self-inflicted or if it results from an act of war (see Definition on this page) while the Insured is in the armed forces of any country, international organization or combination of countries.”
The defendant contends that it is not liable because the plaintiff’s loss of eyesight was not “caused solely by disease or injuries contracted or sustained after the Date of Issue.”
Clause 2 recites:
“Incontestability — This policy shall be incontestable one year from the Date of Issue, except for non-payment of premiums.”
Plaintiff contends that there is a conflict between Clause 1 and Clause 2 and that the policy must be construed in favor of the insured, the plaintiff.
Plaintiff relies on Independent Life Ins. Co. v. Carroll, 222 Ala. 34, 130 So. 402, wherein plaintiff sued as beneficiary in a policy of life insurance. In opinion on prior appeal (219 Ala. 79, 121 So. 88) it is said that insured died of apoplexy. In the second appeal (222 Ala., 130 So.) it is said that defendant interposed pleas setting up a breach of warranty as to the condition of health of insured to effect that at date of issue of the policy she had a named disease that materially increased the risk of loss, but failed to allege actual or intended fraud. The policy contained an incontestable clause as follows:
“. . . ‘This policy shall in incontestable from date of issue except for non-payment of premium, actual and intended fraud or for engaging in military or naval service in time of war, without permission from the company; if insured died by his or her own hand within one year from date thereof, whether sane or insane, or resulting from a crime or any attempt thereat only one-half of the premium actually paid to the company will be the company’s liability hereunder.’ ...” (222 Ala. at 36, 130 So. at 403)
The policy in Carroll contained a sound health clause to effect that no obligation was assumed by insurer unless on date of issue of policy insured was in sound health. This court held that the incontestable clause could not be defeated by the sound health clause. This court rejected defendant’s argument that by breach of the warranty of sound health there was no contract upon which the incontestable clause could rest. This court said:
“Appellant seeks to avoid the effect of the language of the incontestable clause *478by reference to another clause in the policy to the effect that ‘no obligation is assumed by the company unless on the date and delivery hereof the insured is alive and in sound health,’ etc.1 But it has been frequently held that such a clause is in legal effect a warranty (Independent Life Ins. Co. v. Seale, 219 Ala. 197, 121 So. 714), and constituting a part of the policy is to be read in connection with the whole. The usual rules of construction governing the interpretation of insurance policies are applicable to the construction of incontestable clauses therein, and if there is reasonable doubt as to the extent of the application of the incontestable clause it must be solved in favor of the beneficiary. 37 Corpus Juris, 540. The argument that by a breach of such warranty there was in fact no contract upon which an incontestable clause could rest, would but permit the phraseology of one clause to defeat the other, though both constitute parts of the same contract. The insistence is unsound.” (222 Ala. at 36, 37, 130 So. at 404)
The clause relied on by insurer in Carroll recites:
“ . . . ‘no obligation is assumed by the company unless on the date and delivery hereof the insured is alive and in sound health,’ etc. . . . ” (222 Ala. at 36, 130 So. at 404)
As here material and pertinent, the clause relied on by insurer in the instant case recites:
. . benefits under this provision shall be allowed only if the loss . (2) is caused solely by disease . contracted . . . after the Date of Issue.”
With respect to the question here presented, I am not able to distinguish the sound health clause in Carroll from the last quotation above taken from Clause 1 in the instant case. In no respect here material is there any difference between the incontestable clause in Carroll and the incontestable clause here. If there is any conflict or ambiguity between Clause 2 and Clause 1 in the instant case, that issue must be resolved in favor of the beneficiary, the plaintiff. See Carroll, supra.
The Court of Appeals of Alabama in Vann, infra, held that a sound health clause, that “ ‘No obligation is assumed by the company unless on . . . ’ ” the date of delivery insured is in sound health, did not create a defense where the requirement of sound health was not mentioned in the incontestable clause as an exception on which a contest could be founded after expiration of the contestable period. The court said:
“. . . It is the law, as contended by appellant, that a clause in a life insurance policy, to the effect that no obligation is assumed by the insurer, unless on the date of the delivery of the policy insured is alive and in sound health, is held to be a warranty within the terms of section 8364 of the Code of 1923. Authority for the foregoing is to be found in the case of Independent Life Ins. Co. v. Seale, 219 Ala. 197, 121 So. 714. The Supreme Court, in the case of Mutual L. Ins. Co. v. Mandelbaum, 207 Ala. 234, 92 So. 440, 29 A.L.R. 649, was at some pains to point out the distinction between a warranty and a condition precedent as applied to a life insurance policy, in view of section 8364 of the Code of 1923. Since that decision the courts have held that the representation, either in the application or policy, one or both, relating to the health of the insured at the time of the delivery of the policy, is a warranty and not a condition precedent. Being a warranty and a part of the contract, it must be construed in *479connection with the whole contract, which stipulates: ‘This policy shall be incontestable from the date of its issue except for non-payment of premiums, actual and intended fraud,’ etc. The whole policy was incorporated and made a part of the complaint. Therefore a plea which sets up as a defense that clause in the policy which says: ‘No obligation is assumed by the company unless on the date and delivery hereof the insured is alive and in sound health,’ etc., must go further and aver actual and intended fraud. . . .” Independent Life Ins. Co. v. Vann, 24 Ala.App. 93, 95, 96, 130 So. 520, 522.
The Court of Appeals of New York held that under an incontestability clause, the insurer was barred from defending on a ground not enumerated in the exceptions stated in the policy as grounds for contest after the close of the contestable period.1 The court said:
“. . . The incontestability clause applies to the policy as a whole. ‘It is not a stipulation absolute to waive all defenses and “to condone fraud.” On the contrary, it recognizes fraud and all other defenses but it provides ample time and opportunity within which they may be, but beyond which they may not be, established. It is in the nature of and serves a similar purpose as statutes of limitations and repose, the wisdom of which is apparent to all reasonable minds.’ Wright v. Mutual Benefit Life Ass’n, 118 N.Y. 237, 243, 23 N.E. 186, 187. It ‘is not a mandate as to coverage, a definition of the hazards to be borne by the insurer. It means only this, that within the limits of the coverage the policy shall stand, unaffected by any de*480iense that it was invalid in its inception, or thereafter became invalid by reason of a condition broken.’ Matter of Metropolitan Life Ins. Co. v. Conway, 252 N.Y. 449, 452, 169 N.E. 642. It is directed against a claim that the contract has been obtained by fraudulent misrepresentations or that there is a breach of a condition precedent or subsequent and absolutely bars rescission after the period within which liability may be contested. Columbian Nat. Life Ins. Co. v. Hirsch, 267 N.Y. 605, 196 N.E. 602; Killian v. Metropolitan Life Ins. Co., 251 N.Y. 44, 49, 166 N.E. 798.
“What Weinig bought, and what he had a right to understand that he bought, was a policy of life insurance with provisions for disability and double indemnity benefits, incontestable for any cause whatsoever after two years from the date of issue of the policy except for those reasons which were specifically stated and enumerated in the supplemental rider attached to and made a part of the policy.
“The judgment appealed from should be affirmed, with costs.” Berkshire Life Ins. Co. v. Weinig, 290 N.Y. 6, 10, 47 N.E.2d 418, 421.
This court has said:
“It is the duty of the courts to take the words of an insurance policy as they are found in it, and as persons with usual and ordinary understanding would construe them when used to express the purpose for which they were employed. Holloway v. State Farm Mutual Automobile Ins. Co., 275 Ala. 41, 151 So.2d 774; Franklin Life Ins. Co. v. Lewis, 36 Ala.App. 313, 55 So.2d 518.” Alabama Farm Bureau Mut. Cas. Ins. Co. v. Goodman, 279 Ala. 538, 541, 188 So.2d 268, 270.
In the ordinary meaning given to the language in the policy here, a reasonable man buying this policy may well understand that for one year after date of issue, he cannot recover for a loss caused by a disease which he had at date of issue, but he could and probably would reasonably understand that after one year has passed, the policy cannot be contested on the ground that he had a pre-existing disease which caused the loss.
The policy was prepared by insurer. A conflict or at least an ambiguity is created by the two clauses mentioned. Under the well recognized rule of construction, where a conflict or ambiguity appears in a writing, the writing is to be construed against the party who wrote it, in this case, the insurer.
The majority make a distinction between a contest of liability based on the ground of breach of warranty with the alleged consequence of no coverage, and a contest based on some other ground. The ordinary reasonable man reading the instant policy would not make such a distinction. If the insurer desired to make such a distinction it could have done so by appropriate words in the policy.
Being of opinion that Clause 1 and Clause 2 are in conflict, I would construe the policy in favor of the insured and reverse the decision of the Court of Civil Appeals. Therefore I dissent.
MADDOX, J., concurs.

. “The life policy proper contained the provision that ‘This policy will be incontestable after it has been in force during the lifetime of the insured for a period of two years from the date of its issue, except for non-payment of premiums; provided, however, that any provisions or conditions relating to benefits in event of total and permanent disability or accidental death contained in any supplementary agreement attached hereto shall become void for the causes and under the conditions stated therein.’ The policy and supplementary agreement were in full force and in good standing with all required premiums fully paid more than two years after the date of issue thereof. No grounds are stated in the policy proper by which liability under the supplementary agreement may be contestable after the period of two years after date of issue except the nonpayment of premiums. During disabilty, payment of premiums was agreed to be waived as above stated. The only ‘causes’ and ‘conditions’ stated in the supplementary agreement for and under which the ‘provisions or conditions relating to benefits in event of total and permanent disability * * * shall become void’ are: (1) failure of the insured to furnish proof of the continuance of the disability and to permit examinations by the company’s duly appointed medical examiner at such time or times as may be required by the company during the first two years after the receipt of proof of the disability; (2) recovery of the insured from his disability; (3) in the event the disability results ‘from causes arising during military or naval service in time of war, or from self-inflicted injury, or from participation in underground work, or in aerial or submarine expeditions or operations, either as a passenger or otherwise.’ None of those ‘causes’ and ‘conditions’ have any applicability under the facts in this case. It thus appears that fraud in the inception of the contract is not stated to be one of the ‘causes’ or ‘conditions’ for or under which the supplementary agreement shall become void. There is no reservation in the policy proper or in the so-called supplementary agreement of fraud in the inception of the contract as a ground for declaring the contract void if asserted more than two years after the date of issue of the policy. It is significant that the plaintiff stated at length and in detail the ‘causes’ and ‘conditions’ under which the supplementary agreement should become void. Had it been the intent of the plaintiff to except fraud in the inception of the contract from the operation of the two-year incontestability clause, it would have been a simple matter to have inserted a provision to that effect which it had the power to do; if there is any ambiguity in the meaning of the provisions of the contract, all doubt must be resolved in favor of the insured. Janneck v. Metropolitan Life Ins. Co., 162 N.Y. 574, 57 N.E. 182; Stroehmann v. Mutual Life Ins. Co., 300 U.S. 435, 439, 57 S.Ct. 607, 81 L.Ed. 732.” Berkshire Life Ins. Co. v. Weinig, 290 N.Y. 6, 8, 9, 10, 47 N.E.2d 418, 420, 421.