This action was brought upon a life insurance policy for one thousand dollars, issued by the defendant on the 5th day of July, 1890, upon the life of one Charles Janneck, and payable to the plaintiff, the beneficiary therein named. The plaintiff recovered a verdict in the trial court, *Page 576 and the unanimous affirmance in the Appellate Division of the judgment thereon precludes us from looking into the evidence to see whether it supports the verdict.
The only exceptions of sufficient importance to require discussion are those which arise upon the construction of the following clause of said policy: "Should the life insured beconvicted of a felony, or become so intemperate as to impair hishealth, or to induce delirium tremens, said company shall havethe unquestioned right, upon becoming satisfied of such fact, toterminate this contract immediately upon the tender to the partyin interest of the legal reserve, as hereinbefore described." The defendant acting upon information from which it became satisfied that the insured had become so intemperate as to impair his health, tendered to the beneficiary the legal reserve which had accrued upon said policy and notified her in writing that the contract was terminated. The plaintiff refused to accept the legal reserve thus tendered or to regard the contract as terminated, and periodically tendered to the defendant the premiums upon such policy as they became due until the death of the insured.
Under these conditions the plaintiff contends, and the courts below have held, that the language of the policy above quoted did not give the defendant the arbitrary right to terminate the contract, and that such right depends upon the existence of the fact which is relied upon to terminate it. It cannot be denied that it was entirely competent for the parties to make a contract which the insurer would have the unquestioned right to terminate at will. Did they make such a contract? The answer to this question must be found in such a construction of the language used as will effectuate the fair intent and meaning of the contract. In considering insurance contracts courts should be guided by two cardinal rules of universal application. The first is, that when the language is clear and unequivocal, the contract should be enforced according to its terms, without regard to the equitable considerations which may be urged in avoidance of it. The second is, that when the language of an insurance contract is so ambiguous as to render *Page 577 it susceptible of two interpretations, it should be most strongly construed against the insurer, because the latter has prepared the contract and is responsible for the language used. (Kratzenstein v. Western Assur. Co., 116 N.Y. 59; Allen v.St. Louis Ins. Co., 85 N.Y. 473; Herrman v. Merchants' Ins.Co., 81 N.Y. 184.) With these rules in mind let us analyze the language above referred to: "Said company shall have the unquestioned right, upon becoming satisfied of such fact, to terminate this contract," etc. What fact? Obviously the fact of conviction of a felony or of such a degree of intemperance on the part of the insured as to impair his health. The sentence begins, "Should the life insured be convicted of a felony, or becomeso intemperate as to impair his health or induce deliriumtremens," etc. We think this language assumes the existence ofthe fact as an essential pre-requisite to the exercise of the right reserved. Upon becoming satisfied of "such fact" and not otherwise has the insurer the right to terminate the contract. Let us suppose that the insurer in a given case should be, or claim to be, satisfied that the insured had been convicted of a felony, and should thereupon terminate the policy. Suppose further that the insured had not been convicted at all, or had only been convicted of a misdemeanor. Could the insurer in such a case successfully maintain that it had properly exercised its right to terminate and cancel the contract? We think not. Let us assume that the insured had never even tasted intoxicating liquors, and that the insurer had information from which it became satisfied that the insured had become so intemperate as to impair his health, and thereupon the insurer had proceeded to cancel the policy. Can it be seriously urged that such cancellation would clearly be supported by the language of this contract? In answering this inquiry in the negative, we do not deny the right of an insurance company to make just such a contract as the defendant claims to have made in the present instance. But insurance contracts, above all others, should be clear and explicit in their terms. They should not be couched in language as to the construction of *Page 578 which lawyers and courts may honestly differ. In a word, they should be so plain and unambiguous that men of average intelligence who invest in these contracts may know and understand their meaning and import.
It would have been perfectly simple for the insurer to have said that whenever it becomes satisfied that the insured has been convicted of a felony, or has become so intemperate as to impair his health, it should have the unquestioned right to terminate the contract, even though it should transpire that it had acted on mistaken information, or without evidence. But this the insurer did not say. On the contrary, it has used language which strongly indicates an intention to make the existence of the fact the test of the right to cancel the contract. We think the most favorable construction of this language to which the insurer is entitled leaves its true meaning in doubt, and under the rule above adverted to, that doubt should be resolved in favor of the insured. We, therefore, conclude that the defendant's exception to the refusal of the trial court to direct a verdict in its favor, and to the refusal of the court to instruct the jury that the defendant's construction of the contract was the true one, were not well taken, and that the judgment of the court below should, therefore, be affirmed, with costs.