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Nabor v. Occidental Life Ins. Co.





APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND S. SARNOW, Judge, presiding. MR. JUSTICE ROMITI DELIVERED THE OPINION OF THE COURT:

The defendant insurer when sued on a policy of life insurance raised the affirmative defenses of misrepresentation and suicide. Since the insured died on the second anniversary date, the court ruled that the insurer was barred by the two-year provision of incontestability clause and the suicide clause from raising these defenses and awarded judgment for the plaintiff. It awarded 6 percent interest from the date of death, September 15, 1977, although the statute increasing the amount of interest to 6 percent became effective on October 1, 1977. We modify the award of interest and affirm.

The material facts are few and undisputed. The insurer, Occidental Life Insurance Company of California, issued an annual renewable level term life insurance policy on the life of Stephen P. Sniderman, an Illinois resident. The date of issue and the policy date were September 15, 1975. The insured died on September 15, 1977, the second anniversary date.

• 1 In compliance with statute (Ill. Rev. Stat. 1975, ch. 73, par. 836(1)(c)), *fn1 the policy contained the following provision:

"INCONTESTABILITY — This policy shall be incontestable after it has been in force during the lifetime of the Insured for two years from its date of issue, except for non-payment of premiums. This provision shall not apply to any rider providing benefits for disability or providing additional insurance specifically for death by accident."

It also provided that:

"SUICIDE — If the Insured dies by suicide, while sane or insane, within two years from the date of issue of this policy, the liability of the Company shall be limited to the amount of the premiums paid.

POLICY DATE — The policy date shall be used to determine premium due dates, policy anniversaries and policy years.


LIFE INSURANCE — If this policy is in force as annual renewable level term life insurance, the term period of this policy shall begin on the policy date and shall be a period of one year. Each renewal shall be for an additional term period of one year. No term period shall include the policy anniversary at the end of the period. This policy shall terminate at the end of each term period, subject to the renewal provisions.

PREMIUMS — Premiums are payable in advance from the policy date during the life of the Insured to the end of the term period. If a part of the premium ceases to be payable under the provisions of an attached rider, the premium shall then be reduced accordingly. The mode of premium payment may be changed on any policy anniversary to any other mode for which a premium is shown in the policy data. All premiums are payable at the Home Office of the Company or to an authorized agent or cashier of the Company, but only in exchange for an official receipt signed by the President or Secretary and countersigned by the person receiving the payment. If any premium remains unpaid after the grace period, this policy shall terminate."

The insurer has contended that by applying section 1.11 of "An Act * * * in relation to the construction of the statutes" (Ill. Rev. Stat. 1977, ch. 131, par. 1.11), which provides that a period of time is computed by excluding the first day and including the last, the two-year period must be computed by excluding the first day and including the last and that the policy term period would thus not have expired until September 15, 1977. The trial court disagreed and ruled that the defenses of suicide and misrepresentation were barred and entered judgment on the policy. It also ruled that the insured was entitled to 6 percent interest from the date of death.


It is well established, and undisputed by the parties, that a life insurer may be able to raise the defenses of misrepresentation and suicide if so provided in the policy, subject to any limitation established either by the policy or by statute. Equally, the parties do not contend that the policy provisions here do not control. Accordingly, we must look at the policy to determine whether these defenses are available to the insurer.

The insurer, relying on O'Rourke v. Prudential Insurance Co. of America (1938), 294 Ill. App. 30, 13 N.E.2d 287, appeal denied, contends that section 1.11 (Ill. Rev. Stat. 1977, ch. 131, par. 1.11) is applicable and that the two-year period provided in the incontestability and suicide clauses included September 15, 1977. O'Rourke, however, does not support that position, but rather supports the plaintiff. In O'Rourke, the policy provided for recovery "upon receipt of due proof of the death of the insured within ten years from the date of this policy, while it is in force." The court pointed out that such provisions had been construed in contrary ways by various courts>, thus indicating that the language was ambiguous. It then ruled that under those circumstances it was required to construe the policy in terms most favorable to the insured and against the company; this meant that under the facts of the particular case, the court was required to adopt the common rule of computing time that excludes the day named and includes the day on ...

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