Court Opinion

ID: 3512433
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:23:16.239381+00
Date Added: 2024-06-11T13:44:48.496407
License: Public Domain

3. It is very earnestly contended that it was not the legislative intention to make the health and accident code, 1 Mason Minn. St. 1927, § 3415, et seq. apply to contracts supplemental to contracts of life insurance such as the one before us, and certain provisions of the statute which were not before cited to us have been called to our attention in connection with the reargument.
1 Mason Minn. St. 1927, § 3426(2), provides:
"Nothing in this act shall apply to or in any way affect contracts supplemental to contracts of life or endowment insurance where such supplemental contracts contain no provisions except such as operate to safeguard such insuranceagainst lapse or to provide a special surrender value thereforin the event that the insured shall be totally and permanentlydisabled by reason of accidental bodily injury or by sickness;
* * *" *Page 73 
This section was part of L. 1913, c. 156. It is in the same language as a like provision of the New York law. If our statute was copied from the New York law, we find no construction of the section by the courts of that state either before or after the adoption of our health and accident code. It is now claimed (though the record does not so show) that the exception noted in the quoted section covered all contracts that were then being made supplemental to contracts of life insurance and that it evinces a legislative intent not to include any such supplemental contracts within the provisions of the health and accident code.
The policy before us provides for money benefits in case of permanent and total disability and is admittedly without the literal terms of the exception noted in the statute cited. Much emphasis is placed upon the distinction between the terms used in the accident and health insurance code in describing the insurance provided for thereunder as "against loss or damage from the sickness, or the bodily injury or death of the insured by accident," and the protection afforded by contracts such as that before us "in the event of total and permanent disability," and we find that distinction somewhat carried out in 1 Mason Minn. St. 1927, § 3315 (4, 5) which contains general provisions classifying the insurance which may be written by various kinds of insurance companies. Subdivisions 4 and 5 read as follows:
"4. To make contracts of life and endowment insurance, to grant, purchase, or dispose of annuities of endowments of any kind, and to insure against accidents to or sickness of the assured.
"5. To insure against loss or damage by the sickness, bodily injury or death by accident of the assured, or of any other person employed by or for whose injury or death the assured is responsible."
Section 3315 also provides that a corporation having the requisite capital stock and authorized to transact the business specified in subd. 4 may also transact that specified in subd. 5. It is to be noted, however, that the authority defined in subd. 4 is not confined to accidental death or total and permanent disability. It is sufficiently broad to cover any accident or disability insurance. It *Page 74 
is true that subd. 5 refers to "loss or damage," as does the health and accident code, but surely death by accident and total and permanent disability constitute "loss or damage." Such losses are, of course, only part of the hazards covered by the broadest policies authorized by the health and accident code or included in the kinds of hazards which life insurance companies are authorized to insure against.
Perhaps the most persuasive provision of the statute which is now cited by the defendant is the amendment effected by L. 1925, c. 247, 1 Mason Minn. St. 1927, § 3402(3), which included in the authorized exception to the incontestability clause in life insurance contracts those
"provisions relative to benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident, * * *."
This exception to the incontestability clause was to be at the option of the company. These provisions of the statutes would have been more persuasive in favor of the defendant's position had the legislature not left § 3426(2) exactly as it was passed in 1913. They are not necessarily inconsistent with an intent to continue the exception in § 3426 just as it is, or that the health and accident code should apply to supplemental contracts not coming within the terms of the exception. If we were to construe § 3426 as defendant desires us to we would have to construe it as if all of the section from the first word "where" to the proviso were omitted. It would then provide generally that the health and accident code should not affect any contracts supplemental to life insurance. If such had been the legislative intent the provision commencing with "where" would have been omitted. Or if we were to adopt defendant's contention that the exception covering all supplemental contracts then in use evinced an intention to exclude all such supplemental contracts as should be subsequently incorporated in a life policy, we should have to construe it as if it contained an additional clause which would bring the money benefits provided for in the policy before us within the exception stated in the statute, and from time *Page 75 
to time as life insurance contracts might be supplemented by additional forms of disability or accident insurance we should have to enlarge by construction the provisions of this section. To do either would violate well established rules of construction as well as the dictates of common sense. To take the first suggested construction would be to fail to give any force whatever to the clause:
"where such supplemental contracts contain no provisions except such as operate to safeguard such insurance against lapse or to provide a special surrender value therefor in the event that the insured shall be totally and permanently disabled by reason of accidental bodily injury or by sickness * * *." 1 Mason Minn. St. 1927, § 3426(2).
To take the other theory would amount to additional legislation by this court. Such a construction is not to be tolerated.
Had § 3426(2) been omitted from the health and accident code we might the more readily have found the legislative intent to have been as defendant contends; but in that subdivision we have a specific exception of supplemental contracts when they contain no provisions except such as operate to safeguard against lapse or to provide a special surrender value in case of total or permanent disability. The implication is irresistible that where such supplemental contracts contain provisions not within the exception the health and accident code is intended to apply. The inclusion of the two named exceptions amounted to an exclusion from the exception of other supplemental contracts such as the one now before us. Cooke v. Iverson, 108 Minn. 388, 397, 122 N.W. 251, 52 L.R.A.(N.S.) 415. And the inclusion of a provision not covered by the exception takes the entire supplemental contract out of the exception.
It is quite clear that the legislature considered certain disability and accident provisions as appropriate to the preservation of life insurance benefits and in a measure to accelerate such benefits; it evinced an intention to except such provisions from the restrictions it placed upon health and accident policies. It saw no such reason for excepting provisions appropriate to ordinary disability *Page 76 
insurance, and it may very likely have assumed that to enlarge the exceptions beyond the extent specified would invite companies to evade the health and accident code by coupling such contracts with life insurance and thus free them from the restrictions of that code.
By the construction here adopted we give full force and effect to all of the statutory provisions. Section 3426 takes effect according to its terms, and the amendment of 1925 operates to exempt from the incontestability clause provisions relative to benefits in the event of total and permanent disability and to death by accident, all at the option of the company.
Subdivisions 4 and 5 of § 3315 do not, in our opinion, add much force to defendant's contention. The classification there made of business which may be done by insurance companies throws little if any light on the legislative intent in regard to the application of the health and accident code.
It is further contended that some of the requirements and prohibitions contained in the statute in regard to the two classes of insurance are so inconsistent and contradictory that the two codes may not be made applicable where supplemental contracts such as we have here are involved. We think that companies will find no difficulty with those requirements and prohibitions if their contracts are drawn with the consideration in mind that they are writing two different classes of insurance in one instrument and if the appropriate provisions of law are made to apply to the contract of life insurance and those provisions which are required by the health and accident code are made to apply to what is referred to in § 3426(2) as the supplemental contract. In the contract before us many provisions appropriate to life insurance only are made to apply to that insurance only.
Amongst other contentions made by the defendant was one that the insured might cancel the life insurance feature of his policy and continue the health and accident contract. The contract appears to provide the contrary. The disability and accident features may be canceled and the life insurance continued in force. Moreover, in view of the optional standard provisions relative to cancelation of the policy at the instance of the insurer, we see no danger of *Page 77 
such a situation arising. As we understand the policy before us, the disability provision may be discontinued by the insured and the premium reduced accordingly. The annual premium is allocated to three classes of insurance: life, accidental death, and total disability. The amount of premium charged for each kind of insurance is specified.
Much reliance is placed upon Reagan v. Philadelphia L. Ins. Co. 165 Minn. 186, 206 N.W. 162, and Orr v. Prudential Ins. Co. 274 Mass. 212, 174 N.E. 204, 205, 72 A.L.R. 872. The Reagan case went off on the question of nonpayment of the first premium, and the applicability of the health and accident code to the policy in question does not appear to have been the determining factor. If it had been, this court would doubtless have followed the Orr case [274 Mass. 215] in holding that the violation of the printing clause did not "destroy the conditions upon which the rights and obligations of the assured and insurer respectively arise and depend, and thereby create a right in the assured which would not exist if the provisions as to the voidability of the death benefit insurance were printed in type not obnoxious to the terms of the statute." The Orr case seems to go no further than that. It does not say that the Massachusetts health and accident code does not apply to contracts within its terms which are supplemental to life policies.
We adhere to our view that the health and accident code applies to the disability features of this contract.
2. For the first time, on this reargument, our attention has been called to that provision of the health and accident code which requires all indemnities except those for death to be paid to the insured. 1 Mason Minn. St. 1927, § 3417(11). This nullifies the provision in the policy that in case of the insanity of the insured such indemnity shall be paid to the beneficiary. Hence the plaintiff herein has no cause of action as we now construe the policy.
The order appealed from is reversed. *Page 78