282 PACIFIC MUTUAL LIFE INS. CO . V. BUTLER. [190 PACIFIC MUTUAL LIFE INSURANCE COMPANY V. BUTLER. 4-3673
Opinion delivered Februaiy 4, 1935. 1. INSURANCE—FRAUD IN PROCURING REINSTATEMENT.—Where insured, to procure reinstatement of his pOlicy, .falsely stated that :he was in good health', the insurer Was justified in cancelling the reinstatement on the ground of fraud. • INSURANCE—NOTICE OF DISABILITY.—Under a•• policy 'in which a recovery for disability, was conditioned on the happening of disability and proof thereof within 120,.days,..the requirement of notice of the disability was a condition precedent to the granting of benefits; and where such notice' 'was' not given . within the required time, inSured Conld not recover disability benefits. 3. INSURANCE—CONTRACT LIMITATION.—Crawford '& -Moses' Dig.,• 6153, defining the time within which a cause of action on. an insurance policy may be brought, &es not .limit the right of parties to contract as to when or under what condition a cause of action on an insurance policy shall 'arise. • Appeal from Saline Circuit Court; Thos. E. Toler, Judge; reversed. Opens Ehrman, for appellant. Ernest Brine'r and Melbourne . M. Martin, for appellee. BUTLER, J. We adopt the statement of the case made by counsel for appellee as , follows ; "Appellee sued appellant on , a policy of life insurance, claiming to have suffered total and permanent disability thereunder. The amount sued for was $2,677, which appellee contends is the present worth of the payments provided in the policy of. $20 per month for his expectancy of 19.49 'years. The proof shows that the
ARK.] PACIFIC' * MUTUAL LIFE INS. CO. v. BUTLER. 283 pelicy lapsed for nonpayment of . Premium,' and appellee applied fer reiiistatement . within. five • dayS thereafter, paid the premium and. executed the reinstatement blank. In. the reintatement blank *signed by. him on November 23, 1932, he stated that he wà then in good . health. On March 22,1933, after he bad submitted to an X-ray examination 'and -diagnosis at . the hands of Dr • A. G. Mc-Gill, appellee notified appellant insurance' company of his claini for total and perManent disability under the terms of the . policy, and' asked for blanks on Which to reporthis claim.' On APO 10, 1933, appellee returned"the claim blanks, properly filled in to 'appellant insurance company, claireing-total . and permanent disability dating back to December 8, 1931. Appellant insurance coMpany thereupon caneeled tho reinstatement of said -policy, 'returned the premium paid 'and 'note's, and declined the claim. Snit waS thereujion brought by appellee for total and permanent disability'dating from December 8, 1931. The appellant insurance' company denied liabilitY under the policy by its answer: The jnry • returned a unanimous verdict for appellee in the sum of $900." A nnniber of grounds-of error were assigned in appellant's motion for a new trial, and preserved and argued in its brief which are unnecessary to notice, because, in our opinion, the undisputed fact8 in the case entitle the appellant to a- directed -verdict, and the trial court erred in refusing the same which was properly requested by the 'appelhmt, and exceptions properly saved to the overrnling of this 'motion. In the proof of total and permanent disability submitted by :appellee on April 10, 1.933, And in his "tetimony adduced at the trial, it affirmatively appears that he was not in good health on November 23, 1932,' at the : time he made application for reinstatement; and that the stateMent he made to the company to induce , his reinstatement that he was in good health was untrue. The company, therefore, was justified in canceling the reinstatement on the ground -of fraud in its procurement. • • The appellee contends that he had been permanently and totally disabled on the 8th day of December, 1931, more than two years before the *submission' of 'his -proof
284 PACIFIC MUTUAL LIFE INS. CO . 2). BUTLER. [190 of disability- on the 10th day of April, 1933, which was more than 120 days from November 18, 1932, the date of the lapse of his policy for the nonpayment of premiums. Under the permanent and total disability benefit clause of the policy premiums are not waived until after due proof of disability ; that part of the policy providing for the permanent total disability benefits is as follows : "Permanent Total Disability Benefits. "Should -the insured, before attaining_ the age of sixty years, become permanently, totally disabled, as hereinafter defined, while this policy is in full force and effect, and no premium is in default, the company agrees to waive the payment of all premiums, thereafter becoming due under the conditions of the policy, and to pay to 'the insured a monthly income of ten dollars for each thousand dollars of the face amount of this policy. Such .waiver of premium payment shall become operative, and , the first of such monthly income payments shall be made. immediately on receipt by. the company of due proof of such disability, and subsequent monthly income payments shall be made on the . first day of each month,- thereafter as long as the insured shall live ;• provided, however, as follows : 'That, immediately after the commencement of the permanent total disability, full particulars thereof shall be given in writing to the company at its borne office, together with the then address of the insured; and that, within . one hundred and twenty days after the commencement of -such disability, there shall be given the company at its-home office due-proof thereof ; and that, annually thereafter, due proof of the continuance of suc * h * d * i sability shall be given if required by the company. . " That no claim on account of permanent total dis: ability shall be valid if there is a failure to comply with any of the foregoing provisions." • The policy also contains the following reinstatement clause : "After any default in payment of premium this policy, if not surrendered to the company, may be restored to full force and effect at any time within five years from the date of such default on written application by the insured to the home' office of the company,
ARK.] PACIFIC MUTUAL LIFE INS. CO . V. BUTLER. 285 and the payment of premiums to date of restoration with interest thereon at the rate of six per centum per annum, provided the insured . shall, with such application, submit evidence of insurability satisfactory to the company." Appellee contends that this case is ruled by the case of Pacific Mutual Life ins. Co. v. Dupins, 188 Ark. 450, 66 S. W. (2d) 284, 'and to sustain this contention, quotes from the opinion as follows : "It is self-evident that appellee could hot notify appellant of something he did not know. At no time within the specified period did appellee knOw be was suffering from. the disastrous disease, afterwards made known to him .by his physician. This is the reason for the exception contained in the policy, which requires notice as soon as is reasonably possible to give it." It Will be noted that by this language an exception is referred to as being contained in the policy which is specifically stated in the same opinion in the following language : "The requirements of the policy appear in the statement of facts. By reference thereto, it will be seen that 'failure to give notiCe within the time provided in this policy shall not invalidate any claim, if it shall be shown not to have been reasonably possible to give such notice, and that notice was given as soon as was reasonably possible.' The question as to whether or not appellee gave the notice as soon as was reasonably possible . was snbinitted to the jury as a question of fact, and its findings in behalf of appellee should be sustained, if supported by substantial testimony." A comparison of the provisions of the Policy under consideration in that case, and the case of Pacific Mutual Life Ins. Co. v. thnith,166 Ark. 403, 266 S. W. 279, discloses that they are unlike those. in the instant.case quoted above.. The proVisions of The contract here involved do not contain "failure to eve 'notice within the time provided in this policy shall not invalidate any claim, if it shall be shown not to have been reasonably Possible to give such notice, and that notice was given as soon as was reasonably possible," the language upon which the decision turned. • On the contrary, in the case at bar the unqualified provision is made that, "immediately after
286 PACIFIC MUTUA LIFE INS. .Co. V. BUTLER. [190 the commencement of the permanent total disability, full particulars thereof shall be given in writing to the coin-pally at its home office, together with the• then address of - the insured; and that, within one hundred and twenty days after the commencement of such disability, there shall be given the company at its home office due proof thereof, etc.," with the further provision `that .nb•claim on account of permanent total disability shall be valid if there is a failure to comply with any of the foregoing provisions. " Here we have a contract similar to those before us in N. Y. Life Ins. Co. v. Farrell, 187 Ark. 984, 63 S. W. (2d) 520; N. Y. Life Ins. Co. v. Jackson, 188 Ark. 292, 65 S. W. (2d) 904, and the recent case of N. Y. Life his.. Co. v. Moose, ante p. 161. It is true, as has been held in a number of our cases, tha.t ordinarily liability attaches on the happening of the diSabilitY. But in those cases tbere was either no time fixed in the policy as to when the notice of disability shbuld be 'given, or, under the peculiar langnageused,.the provision for netice was treated as a condition subsequent', or'where, because of some intervening and unavoidable.casualty, giving Of the notice became impossible. Here, however, under the express terms of the policy, recovery for disability Was predicated upen the happening of that eVent, and- the proof thereof within one hundred and twenty days, and necessarily the requirement for notice . was, by the provisions of the policy, a condition precedent to the granting . of the benefits. - • • It may be thought that § 6153; Crawford & Hoses' Digest, applies to the provisions of the . policy herein-before discussed, and that its application render§ the provision for notice void. • We have not overlooked, nor have we failed to give effect to, this statute.. It has no application here. As is apparent from its provisions, it is intended to nullify any limitation of the time within which a cause of action arising out of insurance policies may be instituted to a time shorter than the period fixed by the statute of limitation of the State applicable to such •suits. In other words, the statute of limitation defining the time within which an insurance policy may be sued upon may not be shortened by :any provisions con-
ART:.1 PACIFIC MT.ITUAL .LIFE INS. CO . V: BUTLER: 987 tained in thepolicy. .The effect of, the statute is to make such, proyision, void; but the :statute does net limit 'the right •o contract as: to . When, or as Jo the conditions under which, a cause of action mayarise, and be said to exist. This competentund permissible for the parties to contract as to 'when the conditions upon which liability may arise, and' until , and unless the conditions are fulfilled there is no:liability. No cause of action exists, because the insurance contract so, . provides. When, however, , ,the conditions are met and the liability arises, the provisions of the statute become applicable, and in such cases, anT .provision requiring the. institution of suit thereon within at . shorter time than the applicable statute of proyides is void. . But the question here presented is not that . of time within Which suit, must be brought npon the cause of action, but is rather this : when, if at all, did the cause of action arise? , If, under the terms of thepolicy, no cause of action arose because of the failure . to comply with the conditions precedent essential to its aecrual, the. question presented is not one involving the statute of limitations,.and therefore §.6153, supra, has no application. . The law relative to this question is stated in the case of City Bank.v:.Bankers' Ltd. Mutual Casualty Co., 206 Wis. 1, 238 N. W. 819, Which Was:a' shit upon an indemnity policy of.insurance in paragraph 12 of which appeared the folloWing prevision : "The company shall not .be liable under the conditions of this policy for any less sustained during the life of the policy and not discovered until eighteen months . after the occurrence of such, loss." It was there insisted .by plaintiff that the provisions of the . policy contained in the clanse set out above limiting the right of recovery to its discovery within eighteen months after the loss is a contractual period of limitation, and conflicts with the general statute ef limitation, and wa .s therefore not operative. In overruling' that , contention, and in holding that the statute of limitation relating to such suits, did not annul the clause quoted, tbe Supreme Court of:Wisconsin there said : "It would be difficult to use language More clearly relating to 'coverage than. does the .quoted language. It
288 PACIFIC MUTUAL LIFE INS. CO . V. BUTLER. [190 relates wholly to liability, and not to the time within which liability may be enforced." It was there pointed out that no rule for tbe construction of insurance policies, however, liberally employed, could operate to create a liability again g t the insured contrary to the provisions of tbe insurance contract. • In the case of Mutual Bldg. Ass'n v. • American Surety Co., 214 Wis. 423, 253 N. W. 407, it was insisted that certain clauses of insurance there sued on in regard to the time for furnishing notice were void as violative of a section of the statutes of the State of Wisconsin prohibiting the issuance or delivery in the State . of any policy or contract of insurance containing any provisions "limiting the time for beginning an . action on a policy or contract to a time less than that provided by the statute of limitation of the State, or specially authorized by law." In overruling that contention, and in . eaforcing the provisions of the policy, the Supreme Court then said : • " That section relates to provisions of the policy of insurance as to the beginning of actions, and not to . prOvisions relating to notice, making proof of loss, or filing claims there-under. That statute has no applicability to this controversy." The same conclusion was reached and announced by the Supreme Court of Mississippi in the ease of Webster v. U. S. Fidelity & Guar. Co., 169 Miss. 462, 153 So. 159. The court reviewed a number of cases from various juris-dictions, an examination of which supports the conclusion reached in that case.. • Again, in the case of Berry v. Lamar Life Ins. Co., 1.65 Miss. 405, 142 So. 445, where the court had,. under consideration, an insurance contract providing . certain disability benefits only upon the insUred's furnishing satisfactory proof of total or permanent disability while the contract was in full force, " the right of the parties assuming contractual obligations to make stipulations amounting to conditions precedent to liability was expressly recognized, and it was held that the furnishing of proof as required in the contract was a condition of liability, and that the statute of limitations ' bad no application. To the same effect is the case of N. Y. Life
ARK.] 289 Ins. Co. v. Atexamter, 122 Miss. 813, 85 So. 93, 15 A. L. R. 314. " Webster v. U. S. F. &. G. Co., supra. As the express and unambiguous provisions of the contract in the instant case make the condition of giving notice within the tithe specified a condition precedent, and aS such notice was not given, it follows that the judgment of the trial court must be, and is, reversed, and the -case. is hereby dismissed. JOHNSON; C. J., and HUMPHREYS, J., dissent. . JoHNsoN, C. J., (dissenting). The general principles and authorities substantiating the reasons for my dissent here are fully set forth in my dissent in New, York Life Ins. Co. v. Moose, ante p. 161, and the curious are referred thereto. •
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.