U.S. Supreme Court Mutual Life Ins. Co. v. Hurni Packing Co., 263 U.S. 167 (1923)
Mutual Life Ins. Co. v. Hurni Packing Company
Argued October 11, 1923
Decided November 12, 1923
263 U.S. 167
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
1. In case of ambiguity in a life insurance policy, that construction is to be adopted which is most favorable to the insured. P. 263 U. S. 174 .
2. The word "date," as applied to a written instrument, signifies primarily the time specified therein. P. 174.
3. Where a life insurance policy declared that it should be incontestable, except for nonpayment of premiums, provided two years should have elapsed "from its date of issue," held that the date intended was the one specified in the policy, although this (by agreement of the parties) was earlier than the dates of actual execution and delivery. P. 263 U. S. 175 .
4. A provision of a life insurance policy that it shall be incontestable after a specified period from its date of issue inures to the beneficiary of the policy, and applies where the period elapses after the death of the insured. P. 263 U. S. 176 .
280 F. 18 affirmed. .
Certiorari to a judgment of the circuit court of appeals which affirmed a judgment of the district court for the plaintiff, the present respondent, in an action to recover the amount of a life insurance policy.
MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
This is an action to recover the amount of a life insurance policy issued by the petitioner to Rudolph Hurni. At the conclusion of the evidence, the jury found for the plaintiff, respondent here, under the peremptory instruction of the court, and judgment was rendered accordingly. Upon appeal, this judgment was affirmed by the court of appeals. 280 F. 18.
There were two trials below. Upon appeal following the first, the court of appeals reversed the judgment in favor of plaintiff on the ground of material misrepresentation by the insured. 260 F. 641. Pending the second trial, plaintiff amended its reply to the answer and alleged for the first time that this defense was barred, under the terms of the policy, by defendant's failure to contest within two years.
The policy was applied for on September 2, 1915. It was in fact executed on September 7th, but antedated as of August 23, 1915, and was delivered to insured about September 13th. The insured died on July 4, 1917.
The application provides that "the applicant upon request may have the policy antedated for a period not to exceed six months." Underneath the heading of the application there was written the direction: "Date policy, August 23, 1915; age, 47." The testimonium clause, followed by the signatures of the officials, reads: "In witness whereof the company has caused this policy to be executed this 23d day of August, 1915." The policy acknowledges the receipt of the first premium and provides that a like amount shall be paid "upon each 23d day of August hereafter until the death of the insured."
The determination of the case depends upon the meaning of a clause in the policy as follows:
"Incontestability. -- This policy shall be incontestable, except for nonpayment of premiums, provided two years shall have elapsed from its date of issue."
The trial court held that the words "its date of issue" were to be construed as referring to the date upon the face of the policy, viz., August 23, 1915, and this was also the view of the court of appeals. The first action taken by the insurance company to avail itself of the misrepresentation of the insured was on the 24th day of August, 1917, one day beyond the period of two years after the conventional date of the policy. It is contended on behalf of the insurance company: (1) that the period of incontestability did not begin to run until the delivery of the policy, or, in any event, until its actual execution on September 7th, and (2) that the policy was matured by the death of the insured, and the rights of the parties thereby became fixed, so that the incontestability clause never became operative, even within the conventional limitation.
First. The rule is settled that, in case of ambiguity, that construction of the policy will be adopted which is most favorable to the insured. The language employed is that of the company, and it is consistent with both reason and justice that any fair doubt as to the meaning of its own words should be resolved against it. First National Bank v. Hartford Fire Insurance Co., 95 U. S. 673 , 95 U. S. 678 -679; Thompson v. Phenix Insurance Co., 136 U. S. 287 , 136 U. S. 297 ; Imperial Fire Insurance Co. v. County of Coos, 151 U. S. 452 , 151 U. S. 462 .
The word "date" is used frequently to designate the actual time when an event takes place, but, as applied to written instruments, its primary signification is the time specified therein. Indeed, this is the meaning which its derivation ( datus = given) most naturally suggests. In Bement & Dougherty v. Trenton Locomotive, etc., Co.,
32 N.J.Law, 513, 515, 516, it is said:
"The primary signification of the word date is not time in the abstract nor time taken absolutely, but, as its derivation plainly indicates, time given or specified, time in some way ascertained and fixed; this is the sense in which the word is commonly used. When we speak of the date of a deed, we do not mean the time when it was actually executed, but the time of its execution, as given or stated in the deed itself. The date of an item, or of a charge in a book account, is not necessarily the time when the article charged was in fact furnished, but simply the time given or set down in the account in connection with such charge."
This language was used in construing a provision of the New Jersey lien law to the effect that no lien should be enforced unless summons be issued "within one year from the date of the last work done, or materials furnished, in such claim," and, specifically applying it to that provision, the court concluded:
"And so 'the date of the last work done, or materials furnished, in such claim,' in the absence of anything in the act indicating a different intention, must be taken to mean the time when such work was done or materials furnished as specified in the plaintiffs' written claim."
Here, the words, referring to the written policy, are "from its date of issue." While the question, it must be conceded, is not certainly free from reasonable doubt, yet, having in mind the rule first above stated, that, in such case, the doubt must be resolved in the way most favorable to the insured, we conclude that the words refer not to the time of actual execution of the policy or the time of its delivery, but to the date of issue as specified in the policy itself. Wood v. American Yeomen, 148 Iowa, 400, 403-404; Anderson v. Mutual Life Insurance Co., 164 Cal. 712; Harrington v. Mutual Life Insurance Co., 21 N.D. 447; Yesler v. Seattle, 1 Wash. 308, 322-323. It was competent for the parties to agree that the effective
date of the policy should be one prior to its actual execution or issue, and this, in our opinion, is what they did. Plainly their agreement was effective to govern the amount of the premiums and the time of their future payment, reducing the former and shortening the latter, and, in the absence of words evincing a contrary intent, we are unable to avoid the conclusion that it was likewise effective in respect of other provisions of the policy, including the one here in question. This conclusion is fortified by a consideration of the precise words employed, which are "from its [that is, the policy's] date of issue," or, in other words, from the date of issue as specified in the policy. It was within the power of the insurance company, if it meant otherwise, to say so in plain terms. Not having done so, it must accept the consequences resulting from the fact that the doubt for which its own lack of clearness was responsible must be resolved against it.
Second. The argument advanced in support of the second ground relied upon for reversal, in substance, is that a policy of insurance necessarily imports a risk, and where there is no risk, there can be no insurance; that, when the insured dies, what had been a hazard has become a certainty, and that the obligation then is no longer of insurance, but of payment; that, by the incontestability clause, the undertaking is that, after two years, provided the risk continues to be insured against for the period, the insurer will make no defense against a claim under the policy, but that, if the risk does not continue for two years (that is, if the insured dies in the meantime), the incontestability clause is not applicable. Only in the event of the death of the insured after two years, it is said, will the obligation to pay become absolute. The argument is ingenious, but fallacious, since it ignores the fundamental purpose of all simple life insurance, which is not to enrich the insured, but to secure the beneficiary, who has therefore a real, albeit sometimes only a contingent, interest in the policy.
It is true, as counsel for petitioner contends, that the contract is with the insured, and not with the beneficiary, but nevertheless it is for the use of the beneficiary, and there is no reason to say that the incontestability clause is not meant for his benefit, as well as for the benefit of the insured. It is for the benefit of the insured during his lifetime, and upon his death immediately inures to the benefit of the beneficiary. As said by the Supreme Court of Illinois in Monahan v. Metropolitan Life Ins. Co., 283 Ill. 136, 141:
"Some of the rights and obligations of the parties to a contract of insurance necessarily become fixed upon the death of the insured. The beneficiary has an interest in the contract, and as between the insurer and the beneficiary, all the rights and obligations of the parties are not determined as of the date of the death of the insured. The incontestable clause in a policy of insurance inures to the benefit of the beneficiary after the death of the insured as much as it inures to the benefit of the insured himself during his lifetime. The rights of the parties under such an incontestable clause as the one contained in this contract do not become fixed at the date of the death of the insured."
In order to give the clause the meaning which the petitioner ascribes to it, it would be necessary to supply words which it does not at present contain. The provision plainly is that the policy shall be incontestable upon the simple condition that two years shall have elapsed from its date of issue -- not that it shall be incontestable after two years if the insured shall live, but incontestable without qualification and in any event. See Monahan v. Metropolitan Life Ins. Co., supra; Ramsey v. Old Colony Life Ins. Co., 297 Ill. 592, 601; Ebner v. Ohio State Life Ins. Co., 69 Ind.App. 32, 42-48; Hardy v. Phoenix Mut. Life Ins. Co., 180 N.C. 180.
Counsel for petitioner cites two cases which, it is said, sustain his view of the question: Jefferson Standard Life
Ins. Co. v. McIntyre, 285 F. 570, and Jefferson Standard Life Ins. Co. v. Smith, 157 Ark. 499. But the incontestability clause under review in those cases was unlike the one here. There, the clause was: "After this policy shall have been in force for one full year from the date hereof it shall be incontestable," etc. The decisions seem to have turned upon the use of the words "in force," the district judge in the first case saying:
"Are the policies 'in force,' as contemplated in the clause, after the death of the assured occurring prior to one year from the date of the policy? It seems to me that the proper construction of this clause is that it contemplates the continuance in life of the assured during that year; else why except the nonpayment of premiums?"
This amounts to little more than a quaere, since the question was then dismissed and the case decided upon another ground. We express neither agreement nor disagreement with the construction put by these decisions upon the provision therein considered, but, dealing alone with the provision here under review, we are constrained to hold that it admits of no other interpretation than that the policy became incontestable upon the sole condition that two years had elapsed.
Certain difficulties, both legal and practical, said to arise from this interpretation in respect of the enforcement of the rights of the insurer are suggested by way of illustration. But these we deem it unnecessary to review. It is enough to say that they do not in fact arise in the instant case, and they could not arise except as a result of the contract whose words the insurance company itself selected, and by which it is bound.
The judgment of the court of appeals is