OPINION BY MR. JUSTICE ROBERTS, March 16, 1973:
This is an appeal from the order of the Court of Common Pleas of Lackawanna County denying plaintiff-appellant's motion for summary judgment and from the judgment entered below in favor of defendant-insurance company, upon said defendant's motion for summary judgment. The action below, in assumpsit, was for the recovery of the accidental (double indemnity) death benefits of a life insurance policy, of which appellant is the beneficiary. For the reasons set out below, we reverse.
In 1949, defendant-appellee issued to the insured (appellant's husband) a life insurance policy in the face amount of $15,000. The policy also contained a double indemnity proviso for an additional $15,000 if the death of the insured resulted from purely accidental means. This double indemnity provision, and the exceptions contained therein, are the subject of this appeal.
On January 30, 1959, while the policy was in effect, the insured Bartholomew Burne, was struck by an automobile while crossing a street in North Miami, Florida. Immediate and extensive brain surgery was required. From the moment of the accident until his death, Mr. Burne's existence was that of a complete and hopeless invalid, unable to speak, subject to seizures and requiring constant nursing and medical care. Vast sums of money were expended by appellant, and the most sophisticated medical techniques utilized, merely to keep her husband medically alive, albeit in a vegetative state, for 4 1/2 years.
The life insurance policy under consideration provides for double indemnity liability for death resulting from accident. However, the policy states that such accidental death benefits will be payable only if ". . . such death occurred . . . within ninety days from the date of the accident." One further exception in the double indemnity rider provides: "This Accidental Death Benefit shall not be payable * * * (10) if the death of the insured shall occur while any premium is being waived under any disability benefit attached to or incorporated in said policy. * * *" (It should be noted, however, that under the policy, no premiums are waived until the insured furnishes proof to the company that the insured has been totally incapacitated for at least six months.) On the basis of these exceptions, the trial court, en banc, granted defendant-appellee's motion for summary judgment. This appeal challenges the validity of these exceptions as applied to the facts of the instant case.
There are strong public policy reasons which militate against the enforceability of the ninety day limitation. The provision has its origins at a much earlier stage of medicine. Accordingly, the leading case construing the provision predates three decades of progress
The result reached by the trial court presents a gruesome paradox indeed — it would permit double indemnity recovery for the death of an accident victim who dies instantly or within ninety days of an accident, but would deny such recovery for the death of an accident victim who endures the agony of prolonged illness, suffers longer, and necessitates greater expense by his family in hopes of sustaining life even momentarily beyond the ninety day period. To predicate liability under a life insurance policy upon death occurring only on or prior to a specific date, while denying policy recovery if death occurs after that fixed date, offends the basic concepts and fundamental objectives of life insurance and is contrary to public policy. Hence, the ninety day limitation is unenforceable.
All must recognize the mental anguish that quite naturally accompanies these tragic occurrences. Surely that anguish ought not to be aggravated in cases of this kind with concerns of whether the moment of death permits or defeats the double indemnity claim. So too,
Aside from considerations of public policy, the ninety day provision possesses no persuasive decisional support. In granting appellee's motion for summary judgment, the trial court obviously relied upon a single thirty year old case, Sidebothom v. Metropolitan Life Insurance Co., 339 Pa. 124, 14 A.2d 131 (1940). That case, as well as virtually every other case which construed a ninety day limitation provision,
The factual situation in Sidebothom is illustrative of the principles underlying a ninety day provision. There the insured suffered injuries from two different exposures to carbon monoxide. While in the hospital he suffered further injuries from a fall from a hospital bed. In two crucial ways that case is distinguishable from the instant one. First, the injury involved in Sidebothom was not the type that with any degree of certainty could be regarded as fatal. In addition Sidebothom presented distinct causation problems, the deceased having suffered injuries both within and without the ninety day period. The instant case suffers from neither of these infirmities. It was clear from the moment of the accident that the husband would die as a result thereof, the only question being one of time. Nor was there any causation problem, it being conceded by the defendant that the sole cause of death was the injuries suffered by the husband when struck by the car.
It is well settled that if a provision in an insurance policy cannot reasonably be applied to a certain factual situation it should be disregarded. This sound rule of law was succinctly articulated as early as Grandin v. Rochester German Insurance Company, 107 Pa. 26 (1884), where the Court refused to mechanically apply an insurance provision, saying: "It will thus be seen that where the reason of a condition does not apply this court has refused to apply it. Other instances of the same might be cited were it necessary. We are not to suppose that conditions involving forfeitures are introduced into policies by insurance companies, which are purely arbitrary and without reason, merely as a trap to the assured or as a means of escape for the company
Demonstrative of the principle that if a general condition has no relevance to a particular fact situation it is not applied are jurisdictions construing insurance policy provisions allowing awards for the loss of a limb, only if the loss occurs within sixty days of the accident. Claimants have successfully recovered when they produced medical testimony which established that it was obvious before the end of the sixty day period that the insured victim would need an amputation, but the actual amputation was delayed by doctors until after the sixty days period for reasons of health. Westenhover v. Life & Casualty Insurance Co., 27 So.2d 391 (La. App. 1946); Interstate Life & Accident Co. v. Waters, 213 Miss. 265, 56 So.2d 493 (1952). Such rationale is directly applicable to the instant case. Here the appellant was prepared to prove through expert medical testimony that well within the ninety day period it was certain that the husband would die as a result of the injuries received; it was only due to extraordinary efforts on the part of attending physicians, implementing the most advanced medical techniques available, that the husband was kept scientifically alive.
The waiver of premium exception in the accidental death supplement, previously noted, suffers from precisely the same public policy infirmities as does the ninety day limitation. Further, the waiver-of-premium exception, when read in conjunction with the entire waiver-of-premium supplement, creates an obvious ambiguity. Simply, the two provisions when read together yield the following interpretation: If the insured is totally and continuously incapacitated for a period of at least six months, the premiums due on the policy are waived by the company; however, if during the post-six month waiver-of-premium period the insured should die by accident, no double indemnity benefits will be paid. It is unclear whether the policy provisions preclude double indemnity recovery only in those cases where death is caused by a second accident which occurred after the six month period, or whether the policy bars double indemnity recovery in all cases where the insured dies by accidental means during a period when premiums are being waived.
As this Court has stated on innumerable occasions: ". . . [T]he contract of insurance is to be read, in the event of any ambiguity in its language, in the light most strongly supporting the insured." Weissman v. Prashker, 405 Pa. 226, 233, 175 A.2d 63, 67 (1961). See, e.g., Cadwallader v. New Amsterdam Casualty Co.,
The judgment is reversed and it is directed that summary judgment be entered for the plaintiff-appellant.
Mr. Justice MANDERINO joins in this opinion and also files a concurring opinion.
CONCURRING OPINION BY MR. JUSTICE MANDERINO:
I concur and join in the majority opinion. It is true that courts must not rewrite contracts between private parties. This presupposes, however, that all terms of the contract are legal. There has never been any question historically that a bargain will be considered illegal if either its formation or its performance is criminal, tortious, or otherwise opposed to public policy. Restatement of Contracts § 512 (1932). A bargain can be illegal because it violates statutory provisions or because it violates the law as developed by the courts for reasons of public policy. A list of all illegal bargains is impossible because the variety of public illegal bargains is almost infinite. Restatement of Contracts § 512, Comments a and b (1932).
Historically and traditionally, bargains affecting domestic relationships have been closely scrutinized by the courts. Bargains providing financial inducements for a person to voluntarily accept restrictions on one's freedom concerning marriage, divorce, sexual relationships and other domestic relationships have frequently been stricken as opposed to public policy. Restatement of Contracts, Topic 10, § 581 to § 589 (1932). Likewise, financial inducements jeopardizing a person's life or health may constitute an illegal bargain opposed to public policy. Restatement of Contracts § 591 (1932).
In this case the bargain was to pay a sum of money to the wife upon the death of her husband and to pay an additional sum upon the death of the husband by accidental means. Provisions referring to the time of death are conditions which do not defeat the primary purpose of the bargain which can be enforced even though the illegal portion is ignored as opposed to public policy.
As the majority opinion has pointed out, the advancement of the medical and pharmaceutical sciences in recent years subjects a person's time of death to control by the living. Financial inducements of any kind hovering over the family deathbed are as repugnant as other ancient illegal financial inducements affecting domestic relationships.
In matters involving the payment of life insurance, the law has on other occasions been sensitive to prohibiting financial inducements from possibly tempting one person to decide another person's time of death. Traditionally, we have required the beneficiary of life insurance proceeds to have an insurable interest. We have not wanted strangers to be unduly preoccupied with a person's time of death. Neither should we permit a member of the family — in this case a wife — to be so preoccupied.
DISSENTING OPINION BY MR. JUSTICE POMEROY:
This case presents the question whether a contract of life insurance is to be interpreted and performed in accordance with the intent of the contracting parties as
In 1949 a policy of insurance was issued by appellee insurance company on the life of Bartholomew E. Burne, then 22 years of age, in the face amount of $15,000. Attached to and forming part of the policy was a supplemental agreement entered into on the date of issuance of the main policy, providing for an additional benefit, likewise in the amount of $15,000, in the event that death was accidental. This double indemnity provision read in part: "Such Accidental Death Benefit shall be due and payable only if the Company shall receive due proof . . . (4) that such death occurred prior to the anniversary of said Policy on which the Insured's age nearest birthday was sixty years and within ninety days from the date of the accident." (Emphasis supplied.)
The majority, in reversing the summary judgment below in favor of the insurer, necessarily attempts to hurdle two obstacles: first, it seeks a rationale that will permit recovery under the above quoted accidental death benefit provision, notwithstanding the fact that the insured died well beyond the 90-day period; and secondly, it tries to avoid in some manner a provision in the accidental death benefit endorsement which would make double indemnity unavailable should death occur "while any premium is being waived under any disability benefit attached to . . . [the policy]," notwithstanding that premiums were being waived at the time of the insured's death. I am of the opinion that the majority has not successfully jumped either hurdle but instead has trampled on some fundamental principles of contract law in the attempt.
I. The 90-Day Provision, The Intent of the Parties, and Public Policy
a. Intent of the Parties
In construing contracts arguably violative of public policy, we traditionally begin by determining the intent of the parties and only reach the question of public policy if then necessary. Block v. Mylish, 351 Pa. 611,
b. Public Policy
The Court's public policy argument itself suffers from an ambiguity. Is the reader to understand (1) that all 90-day provisions in accidental death benefit endorsements are invalid as violative of public policy, or (2) only those found in policies owned by insureds who in fact die outside 90 days but without "some possible uncertainty" as to causation? There is ample support for either reading.
The opinion of the court observes that to enforce the 90-day limitation would permit "a gruesome paradox indeed — it would permit double indemnity recovery for the death of an accident victim who dies instantly or within 90 days of an accident, but would deny such recovery for the death of an accident victim who endures the agony of prolonged illness, suffers longer, and necessitates greater expense . . . ." This type of "gruesome paradox" in no way depends on a distinction between those after 90-day deaths that present "some possible uncertainty" as to causation and those that do not. Neither does the evocation of the specter of human greed shaping medical decisions depend upon whether or not the insured in fact died outside the 90-day period and without uncertainty as to causation.
On the other hand, the opinion of the court goes to some length to distinguish the case at bar from Sidebothom v. Metropolitan Life Ins. Co., 339 Pa. 124, 14 A.2d 131 (1940), where there was "inherent uncertainty" as to whether in fact death was caused by the accident. Were the first interpretation intended (all 90-day provisions void), then it would be idle to distinguish a case in which a 90-day provision appeared; the case would simply be overruled. It would appear to follow that not all such clauses are meant to be stricken, and that the validity of such a provision thus depends entirely upon whether the insured, like Bartholomew
It is obvious that the Court is here determining the validity of a contract by means of hindsight. In so doing it fails to observe the fundamental principle that the judicial function in determining the validity of contractual terms must be limited to examination of circumstances known to the parties at the time of contracting. Thus the American Law Institute, in its section dealing with unconscionable contracts or terms, provides: "If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may limit the application of any unconscionable term as to avoid any unconscionable result." Restatement (Second) of Contracts § 234 (Tent. Draft No. 5, March 31, 1970) (emphasis added).
The majority finds, however, that such an external rule is here present and that it is violated: "To predicate liability under a life insurance policy upon death occurring only on or prior to a specific date, while denying policy recovery if death occurs after that fixed date, offends the basic concepts and fundamental objectives of life insurance . . . ." The "basic concept and fundamental objective" of life insurance, I should have supposed, was to provide a fund of money payable upon one's death to a designated beneficiary in accordance with terms and conditions and for the considerations mutually agreed upon between the insurer and the purchaser of the insurance (usually the insured). Here the basic policy was one for "ordinary life", and the proceeds of $15,000 were paid upon Burne's death to his widow, the appellant, as beneficiary. The present suit is to compel payment of the additional $15,000 under the accidental death benefit endorsement added to the policy for a small additional premium (less than 10% of the basic premium). This additional benefit was subject to two limitations as to time: (1) that death occur prior (in effect) to the insured's 60th birthday, and (2) that it occur "within 90 days from the date of the accident."
The court gratuitously attributes unworthy motives to spouses and relatives and suggests (with no support in the record) that medical decisions in hospitals might be influenced by the existence of the 90-day clause. Specifically, the majority argues that the decision whether or not to try to keep a patient alive might be dictated by the venal interest of the beneficiary in having death occur within 90 days of an accident. This rationale, however, would not be limited to the 90-day clause, but would apply as well to the 60-year-old
The court states, without benefit of legal or medical authority, that the Sidebothom holding, supra, like the 90-day clause itself, has been rendered obsolete by the advances in medical science in the last 30 years. I disagree. There is nothing in this record to suggest that Bartholomew Burne might not have lived four and one-half years after this accident had it occurred, say, in 1943 rather than in 1958. There is nothing to suggest that so few deaths now occur within 90 days of an accident as to make 90 days an unreasonable or unconscionable span by which to measure the attachment of coverage. A degree of arbitrariness may be involved in the stipulation of 90 days; that factor would be present in any time period, whether shorter or longer. The concededly valid purpose of the provision is to minimize uncertainty and dispute as to cause of a death allegedly
II. The Waiver of Premium Provision
The claim of the appellant should fail for yet another reason quite independent of what has been discussed before. Even assuming the invalidity of the 90-day provision, the beneficiary is, in my view, precluded from recovery by an exception in the accidental death endorsement referred to earlier, and quoted herewith: "EXCEPTIONS: This Accidental Death Benefit shall not be payable if the death of the Insured shall result . . . . (10) . . . while any premium is being waived under any disability benefit attached to or incorporated in said Policy . . . ."
Contrary to the majority, I am unable to read this waiver-of-premium benefit and the accidental death benefit as producing an ambiguity.
Any uncertainty which the majority finds in the interrelationship of the two clauses (accidental death and waiver-of-premium) is due altogether to the majority's own and, as I believe, erroneous invalidation of the 90-day
Being completely satisfied that the lower court was correct in disallowing the claim in this case, notwithstanding the obvious appeal to one's sympathies which it contains, I would affirm the judgment for appellee.
Mr. Chief Justice JONES joins in this dissenting opinion.
"§ 237 Standardized Agreements.
"(1) Except as stated in Subsection (3), where a party to an agreement signs or otherwise manifests assent to a writing and has reason to know that like writings are regularly used to embody terms of agreements of the same type, he adopts the writing as an integrated agreement with respect to the the terms included in the writing.
. . . .
"(3) Where the other party has reason to know that the party manifesting such assent believes or assumes that the writing does not contain a particular term, the term is not part of the agreement." In Grandin the insured specifically requested coverage of petroleum of which he was not the sole owner; he assumed that the contract he received did not require him to be sole owner. The insurer, author of the contract, had reason to know that the "party manifesting assent" would assume that such a term was not in the policy. Therefore, the term, although in fact included in the writing, is not a term of the contract because it was not so intended. See also U.C.C. § 2-207(2) (b), 12A P.S. § 2-207(2) (b).
Neither of those decisions, however, stands for the proposition for which the majority cites them. Both hold that a clause in a disability policy which insures against "loss of limb" means "loss of use of a limb" and does not mean "loss of limb by severance". Thus the fact that an amputation occurred after the 60-day period following the accident was irrelevant when loss of use of the limb had in fact occurred before the end of the 60-day period. In the policy at bar, the "loss" that is required prior to the end of the 90-day period is "loss of life"; that is to say, "death". Although it is possible to draft varying definitions of death, see Capron & Kass, A Statutory Definition of the Standards for Determining Human Death: An Appraisal and a Proposal, 121 U. Penn L. Rev. 87 (1972), a court should not undertake to attribute a meaning other than the normally accepted meaning to the term when it appears in a contract and there is no indication whatever that the parties meant anything other than the normal usage.
When an insurance company does define "loss" within a policy as meaning "loss by complete severance of a limb", only a complete severance within the policy time period will suffice. Cornellier v. American Casualty Co., 389 F.2d 641 (2d Cir. 1968); Huffman v. Occidental Life Ins. Co., 264 N.C. 335, 141 S.E.2d 496 (1965); Shelton v. Equitable Life Assurance Society, 28 Ill.App.2d 461, 171 N.E.2d 787 (1961). Cf. Huff v. Vulcan Life & Accident Ins. Co., 281 Ala. 615, 206 So.2d 861 (1968) (held: whether "loss by severance" includes severance at the wrist of all but a shard of skin is a jury question). See generally Anno., 39 A.L.R. 3d 1311.
In commenting on the enforceability of liquidated damage clauses in general, Professor Corbin has noted that the requirement is for a "reasonable pre-estimate", and that "[r]easonableness in retrospect is not always the same as reasonableness in prospect. Hindsight sometimes demonstrates the error in foresight. Here, too, it is often said that it is enough that it was a reasonable forecast and that it is immaterial what the later event turned out to be." A. Corbin, Corbin on Contracts § 1059, at 346-347 (1964) (emphasis added).
It thus appears that the General Assembly has placed primary responsibility for determining which insurance policy provisions are in accord with public policy in the Commissioner of Insurance. A review of the regulations published by that official reveals that (1) insurance policies are given close examination, (2) many provisions and types of policies are proscribed altogether, and (3) the 90-day clause which the majority here strikes down has not been condemned by the Commissioner. We must assume that this particular contract was approved by the Commissioner. Longenberger v. Prudential Ins. of America, 121 Pa.Super. 225, 183 A. 422 (1936).
Although the appellee-insurer has not advanced the proposition, I venture to suggest that the doctrine of primary administrative jurisdiction might well apply here and require the plaintiff-appellant to obtain first the views of the Commissioner of Insurance through an administrative proceeding as to whether the 90-day limitation at issue here violates public policy. See Weston v. Reading Company, 445 Pa. 182, 282 A.2d 714 (1971). Even were the Commissioner inclined to view this provision as violative of public policy, it is most unlikely that he would attempt to give his opinion retroactive effect, thus upsetting the statistical balance through which insurance rates have been established.