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Johnson v. New York Life Ins. Co.

April 23, 1954

JOHNSON
v.
NEW YORK LIFE INS. CO.



Author: Duffy

Before DUFFY, SWAIM and SCHNACKENBERG, Circuit Judges.

DUFFY, Circuit Judge.

Plaintiff brought this action as the administrator of the estate of Max Johnson, deceased, to recover disability benefits claimed to be due under a policy of life insurance which defendant issued on the life of Max Johnson. Plaintiff also sought recovery of two annual premiums paid by Max Johnson claiming that same were waived under the terms of the policy. The district court had jurisdiction on the basis of diversity of citizenship. After answer defendant moved for summary judgment which motion was granted.

On December 30, 1930, defendant issued a policy of life insurance on the life of Max Johnson in the amount of $10,000, rating up his age to 45 years. The policy included disability benefits. On Page 1 of the policy there appeared in bold type:

"And upon receipt of due proof that the Insured is totally and presumably permanently disabled before rated-up age 60, the Company agrees to pay to the Insured one hundred dollars ($100.00) each month and to waive payment of premiums, as provided under 'Total and Permanent Disability.'"

On an inside page of the policy under the heading "Total and Permanent Disability," the following clauses are included:

"Written notice of claim hereunder must be received by the Company at its Home Office during the lifetime and during the continuance of total disability of the Insured. Failure to give such notice within such times, shall not invalidate any such claim if it shall be shown not to have been reasonably possible to give such notice within such times and that notice was given as soon as was reasonably possible.

"Due proof of claim must be received at the Home Office of the Company before the expiration of one year after default in payment of premium and in any event, whether or not there be a default not later than one year from the anniversary of the Policy on which the Insured's rated-up age at nearest birthday is 60 or one year after maturity of the Policy, whichever is the earlier date, otherwise the claim shall be invalid."

The policy was issued at rated-up age 45, which made December 30, 1945, the anniversary of the policy on which the insured's rated-up age at nearest birthday was 60, and after which date the disability provisions of the policy were no longer effective by the terms of the policy. The insured became disabled about January 1, 1944, but he did not give any notice of disability or make a claim until May 4, 1950.The insured died on May 19, 1951, and plaintiff was thereafter appointed administrator of his estate.

The defendant denied liability for disability payments on the ground that due proof of claim was not submitted on or before December 30, 1946, which date was one year from the anniversary of the policy on which the insured's ratedup age at nearest birthday was 60. Plaintiff claims that the due proof of claim clause relied on by defendant is inconsistent with the clause that prescribes that disability must begin before the anniversary date on which the insured attains 60 years, and that therefore an ambiguity is created which invites a construction of the policy as a whole in the light of the rule that insurance policies are construed most strongly against the insurer.

The insurance contract was executed in Illinois, and premium payments due thereunder were to be paid at a designated place in that State. We, therefore, interpret the insurance policy under Illinois law as interpreted by Illinois courts. Keehn v. Excess Insurance Co. of America, 7 Cir., 129 F.2d 503, 505.

The provisions of the policy appearing in bold type on page 1 seem to be somewhat in conflict with the provisions on page 2 as to notice of claim and proof of claim. The first part of the page 1 provision is:

"And upon receipt of due proof that the Insured is totally and presumably permanently disabled before rated-up age 60, the Company agrees to pay to the Insured one ...


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