Pearlstein v. New York Life Insurance

Hecht, J.

In February, 1924, defendant issued to plaintiff’s husband its policy of life insurance in the face amount of $2,500. The policy contained the following disability benefit provisions:

“ New York Life Insurance Company agrees to Pay to the Insured

“ A Monthly Income of Twenty-Five Dollars, and to waive payment of premiums under the said policy, as hereinafter provided, upon receipt of due proof that the Insured is totally and presumably permanently-, disabled before age 60, as hereinafter defined. * * *

Upon receipt at the Company’s Home Office, before default in payment of premium under the said policy, of due proof that the Insured is totally disabled as above defined, and will be *655continuously so totally disabled for life, * * * the following benefits will be granted:

(a) Waiver of Premium.— The Company will waive the payment of any premium under the said policy falling due during the period of continuous disability * * * .

(b) Income Payments.— The Company will pay to the Insured the monthly income stated above ($10 per $1,000 of the face of said policy) for each completed month from the commencement of and during the period of continuous total disability. * * *

11 Before making any income payment or waiving any premium under the said policy, the Company may demand due proof of the continuance of total disability, but such proof will not be required oftener than once a year after such disability has continued for two full years. Upon failure to furnish such proof, or if the Insured performs any work, or follows any occupation, or engages in any business for remuneration or profit, no further income payments shall be made nor premiums waived. * * * Any disability benefit due but unpaid at the time of the Insured’s death shall be payable to the person entitled to the proceeds of the said policy.”

The complaint alleges that the insured became totally and permanently disabled within the meaning of the foregoing disability benefit provision on January 2, 1945, and died while totally disabled, on April 23, 1947. Proof of the insured’s disability was not submitted to defendant until October 27, 1947, about five months after insured’s death. The action was brought to recover $700, representing disability income from January 2, 1945, to April 23, 1947, plus $217.59, representing the premium paid during the period of disability. Summary judgment was granted for defendant on the ground that the disability benefit provisions quoted above required that proof of the alleged total and permanent disability of the insured be submitted to the insurance company during the lifetime of the insured. I do not agree with this interpretation.

We have said more than once that insurance policies upon which the public rely for security in death, sickness or accident, should be plainly written, in understandable English, free from fine distinctions which few can understand until pointed out by lawyers and judges.” (Crane, Ch. J., in Mansbacher v. Prudential Ins. Co., 273 N. Y. 140, 143-144.)

“ But insurance contracts, above all others, should be clear and explicit in their terms. They should not be couched in *656language as to the construction of 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 their contracts may know and understand their meaning a-nd import. ’ ’ (Werner, J., in Janneck v. Metropolitan Life Ins. Co., 162 N. Y. 574, 577-578.)

‘ ‘ Where a provision in an insurance policy is ambiguous; where without giving to the language used a forced or unnatural meaning, a construction in favor of the insured may fairly be adopted, to that construction he is entitled.” (Andrews, J., in Silverstein v. Commercial Cas. Ins. Co., 237 N. Y. 391, 393.)

I think the ordinary policy holder, reading the above-quoted disability benefit provisions of this policy without the aid of a lawyer, would not clearly understand that the proof of disability must be submitted to defendant during the lifetime of the insured.

The insurance company which prepared the contract could easily have expressed that requirement so that the policy holder would clearly understand it.

In the "frequently quoted case of Whiteside v. North Amer. Accident Ins. Co. (200 N. Y. 320) the benefit provision required that written notice from the insured must be mailed to the company’s home office “ within ten days after the date of such injury, death or commencement of such sickness, as conditions precedent to recovery.”

In Perlman v. New York Life Ins. Co. (234 App. Div. 359 [1st Dept.]) the judgment was granted for this defendant because the disability benefit provision there, different from the one in suit, stated that ‘ ‘ The Company will pay to the Insured a monthly income of $10 per $1,000 of the face of the policy during his lifetime and continued disability, beginning immediately on receipt of said proof ”, and that it would waive premiums “ falling due after approval of said proof.” (Italics supplied.)

Defendant urges that it should have an opportunity to examine an insured during the period of alleged disability in order to prevent possible fraud. That is one reason why defendant should have expressly required proof during the lifetime of the insured; it does not justify a court in reading that construction against the insured into provisions which are not thus ‘ ‘ plainly written; in understandable English, free from fine distinctions which few can understand until pointed out by lawyers and judges.”

*657Disability benefit provisions similar to that in the case at bar have been construed not to require proof of disability during the lifetime of the insured by the Circuit Court of Appeals in the Eighth Circuit (Lydon v. New York Life Ins. Co., 89 F. 2d 78; Mutual Life Ins. Co. of N. Y. v. Drummond, 111 F. 2d 282; Minnesota Mut. Life Ins. Co. v. Marshall, 29 F. 2d 977) and by some of our sister States (Hablutzel v. Home Life Ins. Co. of N. Y., 332 Mo. 920; Bank of Commerce & Trust Co. v. Northwestern Nat. Life Ins. Co., 160 Tenn. 551; Lincoln Nat. Life Ins. Co. v. Cook, 194 Ark. 794).

Some of the decisions in favor of the insurance companies are based upon the particular provisions of the contracts therein which clearly set forth the requirement of notice during the lifetime of the insured. In Bergholm v. Peoria Life Ins. Co. (284 U. S. 489) the. company agreed to “ Pay for the Insured all premiums becoming due hereon after the receipt of such proof and during the continuance of the total and permanent disability ”. (Italics supplied.) The Supreme Court affirmed the decision for the insurance company because of the language employed in that policy. It pointed out that this result was not inconsistent with that reached by the Eighth Circuit in the Marshall case (supra) because the policy in that case provided that if the insured ‘ ‘ shall become totally and permanently disabled * * * and shall furnish satisfactory proof thereof, the Company will waive the payment of premiums thereafter becoming due ”, and that “ Upon the receipt of due proof of total and permanent disabilities * * * the Company will waive the payment of all premiums thereafter becoming due.” The provision in the policy in suit seems to me at least as favorable to the insured as that in the Marshall case. In Reingold v. New York Life Ins. Co. (85 F. 2d 776 [C. C. A. 9th]), the. provision was identical with that in Perlman v. New York Life Ins. Co. (234 App. Div. 359, supra).

It is true that some of our States have decided in favor of the insurance companies in interpreting disability provisions identical with or similar to the one at bar. (Anderson v. New York Life Ins. Co., 64 Cal. App. 2d 798; Bennett v. New York Life Ins. Co., 63 Idaho 427; Kantor v. New York Life Ins. Co., 219 Iowa 1005; Hayes v. Prudential Ins. Co. of America, 114 W. Va. 323.)

Some decisions of our City Court and Municipal Court are to the same effect. (Mutchnick v. John Hancock Mut. Life Ins. Co., 157 Misc. 598; Yohalem v. Columbian Nat. Life Ins. Co., *658136 Misc. 748; Kasarsky v. New York Life Ins. Co., 145 Misc. 732; cf. Herschman v. John Hancock Mut. Life Ins. Co., 158 Misc. 263.) The question being open in this court, I believe justice and reason impel the conclusion that the provision in the instant policy does not require proof of disability during the lifetime of the insured.

The judgment and order should be reversed, with $10 costs to appellant to abide the event, and motion denied.