This case comes to us on petition of the Benefit Association of Railway Employees, Inc., for certiorari to the Court of Appeals to review and revise the judgment of that court.
This is an action on an insurance policy which provides for certain benefits for disability resulting from illness. Charles Vardaman, the insured, filed a complaint in two counts in the circuit court, both counts claiming damages for breach of the insurance contract. The insurer demurred, and as to both counts of the complaint the demurrers were sustained. Plaintiff thereupon suffered a nonsuit and appealed to the Court of Appeals. That court reversed the lower court, holding that it erred in sustaining demurrers to the second count of the complaint, designated Count BB. We granted certiorari to review this action of the Court of Appeals.
The pleadings are not set out in extenso in the opinion of the Court of Appeals. As the case comes before us, however, we may look to the record to aid our understanding of the issues presented. Cranford v. National Surety Corporation, 231 Ala. 636, 166 So. 721.
In Count BB of the complaint it was alleged that the plaintiff was insured under a policy of insurance issued by defendant; that on March 2, 1948, the policy was in full force and effect; that on that date the plaintiff became wholly disabled on account of illness, and has since been wholly and continuously disabled; that such illness was covered under the terms of the policy, by which the defendant agreed to pay the plaintiff $80 per month for and on account of said illness for a period of eighteen months. It was also alleged that
The insurance policy was attached to and made a part of the complaint. The most pertinent provisions of the policy are as follows:
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The essential question for our determination concerns the effect of Insured's failure to give notice of disability within the time specified on his rights to the benefits provided by the insurance policy. On this point the Court of Appeals held that the failure to give notice at the time disability developed did not destroy the right, but
It is a cardinal principle that in construing the terms of an insurance policy, ambiguities must be resolved in favor of the insured. Especially is this true as to clauses which might work a forfeiture of the benefits of the policy. Sovereign Camp, W. O. W. v. Miller, 231 Ala. 336, 164 So. 742. To be effective forfeitures must be expressed in unmistakable terms. Taber v. Royal Ins. Co., 124 Ala. 681, 26 So. 252. As the rule has been stated by the Supreme Court of Arkansas in Smith v. Mutual Life Ins. Co. of New York, 188 Ark. 1111, 69 S.W.2d 874, 876:
This does not mean, however, that the parties may not contract as they see fit, so long as they do not offend some rule of law or contravene public policy, and this court will not attempt to alter the expressed intentions of the parties if they are clear and unambiguous. Northam v. Metropolitan Life Ins. Co., 231 Ala. 105, 163 So. 635, 111 A.L.R. 622.
In connection with the question now before us this court, in Prudential Ins. Co. v. Gray, 230 Ala. 1, 159 So. 265, 266, stated as follows:
This holding is in accord with the statement found in 29 Am.Jur., Insurance, § 1105, p. 829, which is as follows:
Guided by the stated principles, we must now look to the express provisions of the policy. It is significant that under Part V of the policy the insurer's liability is predicated upon the existence of a disability only —not upon the giving of notice that such disability exists. The importance of the distinction is clearly revealed by the opinion of this court in Metropolitan Life Ins. Co. v. Phillips, 236 Ala. 259, 182 So. 35. In that case by express provision of the policy the obligation to pay the benefits was made to depend upon the submission of proofs of disability. The requirement of proofs was held to be a condition precedent to liability for benefits. The provision in Part V of the instant insurance policy is of converse effect.
Standard Provisions (4) and (5) require that notice of disability caused by illness be given within ten days. Although it is stated therein that failure to give notice within the required time will not invalidate a claim if the giving of such notice was not reasonably possible, those sections do not provide that failure to give notice, though reasonably possible, will invalidate a claim. It may be argued that the provisions imply the latter meaning. To be given effect, however, such a provision must be expressed and not appear by implication only.
Under Section (a), Miscellaneous Provisions, compliance with all of the conditions of the policy is made a "condition precedent to recovery". Does this provision make the existence of all liability under the policy depend on strict compliance with the notice requirement? In our opinion it does not. We feel, rather, that the language selected and used by the insurer at this point must be interpreted to mean that no immediate right to receive payment or to bring suit exists under the policy until the notice requirement is satisfied. Such construction is in harmony with other provisions of the policy and with the previously stated rules of construction by which we are bound.
The case of Home Ins. Co. of New York v. Murphy, 223 Ala. 566, 137 So. 393, concerned a requirement in an automobile insurance policy that the insured give notice within sixty days of any loss. The policy contained the further provision: "No suit or action on this policy or for the recovery of any claim hereunder be sustainable in any court of law or equity unless the assured shall have fully complied with all of the foregoing requirements." Commenting on the requirement of notice in that policy, this court said:
We perceive no reason why the stated rule should not be applied in the instant case. The provision here, as in the Home Insurance Co. Case, contains no clear stipulation compelling forfeiture upon failure to give notice within the prescribed time.
On this basis we conclude that the demurrers to Count BB of the complaint should have been overruled. As the question is now before us it is not necessary that we consider whether plaintiff's allegations concerning the reasonable impossibility of his giving notice within ten days would have been sufficient if our holding had been otherwise. Nor is it necessary that we consider the effect of any defensive matter which may hereafter be pleaded.
The judgment of the Court of Appeals is due to be, and is hereby, affirmed.
LAWSON, GOODWYN and MERRILL, JJ., concur.