Stanback v. Winston Mutual Life Insurance, 220 N.C. 494 (1941)

Dec. 10, 1941 · Supreme Court of North Carolina

220 N.C. 494

CORA STANBACK v. WINSTON MUTUAL LIFE INSURANCE COMPANY.

(Filed 10 December, 1941.)

1. Insurance § 13a—

A contract of insurance will be construed from its four corners to ascertain and give effect to tbe intention of the parties as expressed in the language used, and its clear and unambiguous terms must be given their plain, oi’dinary and popular sense.

2. Insurance § 36e—

Construing the contract of insurance in suit from its four corners, it is held that a limitation set' forth in a subsequent part of the policy limiting insurer’s liability to one-fourth the amount otherwise due if insured should die from pneumonia within twelve months from the date' of the policy, applied to a prior provision that insurer should be liable only for one-half the amount of the policy if insured should die during the first six months the policy was in effect, and upon insured’s death from pneumonia within six months from the date of the policy, insurer is liable only for one-eighth the face amount of the policy.

3. Insurance § 13a—

While rules of punctuation may be used in construing an insurance contract to assist in determining the intent of the parties, the punctuation or absence of punctuation cannot control its construction as against the plain meaning of the instrument.

Appeal by defendant from Phillips, J., at May Term, 1941, of Richmond.

Civil action to recover on policy of life insurance.

Tbe parties having agreed in the court below that the trial judge should hear the case, find the facts and state conclusions of law, “without the intervention of a jury,” these facts are presented.

(1) On 30 September, 1940, defendant Winston Mutual Life Insurance Company issued to Sandy Stanback, the insured, 27 years of age at his next birthday, its policy of life insurance No. 29298, effective at noon on said date, and in which his mother, Cora Stanback, plaintiff herein, is beneficiary. In the policy the Insurance Company agreed, “subject to the terms and conditions below and in the following pages hereof, each of which is hereby made a part of this contract and binding on every person entitled to claim hereunder, to pay . . . the amount stipulated in the schedule below, except as is otherwise provided on this and the following pages, to the beneficiary ... of the insured . . .”

The schedule above referred to relates, first to “insurance if the insured is ten years of age or over,” in which event the “ultimate amount of insurance” is stated to be “$300.00”; and second to “amount of insurance if the insured is under ten years of age.” Then, after provisions not pertinent here, these paragraphs follow:

“Preliminary Provision: If, after this policy takes effect, death should occur during the first six months and the insured is ten years of age next birthday or over, no greater amount than one-half of the insurance provided herein shall be paid as a death benefit; if the age of the insured at date of this policy is less than ten years next birthday, the amount payable will be according to the Infantile Table above, except as is provided on the following pages.

“The conditions, privileges, benefits and the concessions to policy holders, and any endorsement either printed or written as made by the Company on any of the following pages are a part of this contract as fully as if recited over the signature hereto affixed.”

Then on the next page entitled “PRIVILEGES AND1 CONDITIONS,” is this paragraph: “4. Limitations. If the death of the Insured occurs during the first twelve months from date of this policy resulting directly or indirectly from . . . pneumonia, . . . (naming other diseases not pertinent here), one-fourth of the amount will be paid which would be payable under the policy conditions for death resulting from any other natural cause, unless settlement be made under paragraph (a) below; or if the death of the Insured occurs during the first nine months from date of this policy, resulting from pregnancy, childbirth or miscarriage, if legally married, one-fourth of the amount will be paid which would be payable under the policy conditions for death resulting from any other natural cause. In the case of death of the Insured, resulting directly or indirectly from injury sustained while in the act of violating any Federal, State or Municipal law, or as a punishment therefor, or the culpable or intentional act or negligence of the Insured or Beneficiary hereunder, the liability of this Company shall be limited to an amount not in excess of premiums paid hereon. Military and naval service or any occupation incident thereto in time of war is a risk not assumed under this policy, and if the Insured shall enter or be engaged in any military or naval service or any occupation incident thereto in time of war, and shall die while engaged in or as a result of such service, the liability of the Company under this policy shall be limited to the amount of the full legal reserve to the credit of this policy or to one-fifth of the amount payable hereunder, whichever amount is the greater, unless the Insured shall, within one calendar month from entering upon such service, secure a written permit therefor, to be signed by the President, Vice-President, or Secretary of the Company. An extra premium shall be charged for such permit to be fixed by the Company. Self-destruction within two years from the date hereof, whether the Insured be sane or insane, is not a risk assumed by the Company but in such event the Company will return the premiums actually paid hereon, (a) If the Insured, within two years prior to the date of this policy, has been rejected for insurance by this or any other company, order, or association or has been affected by any complaint or condition necessitating the attention of a physician, or had, during said period, any pulmonary disease, chronic bronchitis, pneumonia, cancer, disease of the heart, blood vessels, liver, or kidney, and death should occur within two years from date hereof, the maximum liability of the Company will not exceed the premiums paid, unless reference to such rejection, or medical attention or treatment, or complaint or condition, or ailment within the two years prior to the date of the policy, is endorsed on this policy by the Company, (b) No benefits will be payable hereunder for death resulting directly or indirectly from the drinking of intoxicating liquor, or drunkenness, immorality, childbirth if unmarried, or venereal disease or as a result directly or indirectly, of an altercation or fight, provoked or unprovoked, or while breaking the law or resisting an officer, or arrest, it being understood and agreed that death resulting from the foregoing causes or any one of them, directly or indirectly, is a risk not covered by this policy; the Company’s maximum liability hereunder for any' such death, therefore, shall not exceed the premiums paid. Except as is otherwise provided herein, all premiums paid, shall be forfeited to the Company in the event this policy shall become void.”

Then on last page this appears: “SPECIAL NOTICE AND PRIVILEGE. Tbe Insured is requested to examine carefully tbe terms and conditions of tbis Policy, and if its terms are not satisfactory, or if its conditions are not accepted and agreed to, tbe Policy may be surrendered for cancellation witbin one week after its date, at tbe office of tbe Company in tbe District where tbis Policy is delivered and all premiums paid bereon will be returned to tbe Insured. If not so returned, tbe Policyholder shall be deemed to have accepted tbis Policy and to have agreed to be bound by its terms and conditions. Tbe acceptance of tbis Policy shall be taken as evidence by tbe Company that it has been applied for, read, understood, and its terms and conditions agreed to and accepted by tbe Insured.”

(2) Sandy Stanback died as result of pneumonia on 11 February, 1941, witbin six months from tbe date of tbe execution of tbe policy of insurance, at which time be was “over tbe age of ten years” and the' policy — being in full force and effect — had been in effect less than six months.

(3) On 1 March, 1941, defendant tendered its check for $37.50 to plaintiff, as beneficiary, in full payment for tbe benefits under said policy, and plaintiff refused tbe tender.

Upon these facts, tbe court, being of that opinion, held that under tbe terms of tbe policy, “tbe beneficiary named therein is entitled to receive one-balf of tbe full benefit of tbe insurance provided therein,” rendered judgment in favor of plaintiff and against defendant for $150.00, with interest and costs.

Defendant appeals therefrom to Supreme Court and assigns error.

J ones ■& J ones for plaintiff, appellee.

McLeod & Webb for defendant, appellant.

’WiNBORNE, J.

Appellant concedes that if tbe insured bad died witbin six months from tbe time tbe policy took effect, as result of any other natural cause than those enumerated in paragraph “4. Limitations,” tbe beneficiary would be entitled to recover one-balf of tbe “ultimate amount of insurance specified in tbe policy,” that is, $150. But it contends that since tbe insured died of pneumonia witbin such period of six months— pneumonia being one of tbe causes of death named in said paragraph 4, tbe beneficiary would be entitled to receive only one-fourth of tbe amount of $150, which would be payable under tbe policy for death resulting from any other natural cause, that is, only tbe sum of $37.50.

We think tbis is tbe correct interpretation of tbe policy.

“An insurance policy is only a contract, and is interpreted by tbe rules of interpretation ’ applicable to other written contracts, and tbe intention of tbe parties is tbe object to be attained,” Varser, J., in McCain v. Ins. Co., 190 N. C., 549, 130 S. E., 186. See, also, Crowell v. Ins. Co., 169 N. C., 35, 85 S. E., 37; Powers v. Ins. Co., 186 N. C., 336, 119 S. E., 481.

In tbe Powers case, supra, Adams, J., speaking for tbe Court, said, "But tbe rule is equally well settled that contracts of insurance, like other contracts, are to be construed according to tbe sense and meaning of tbe terms wbicb tbe parties have used; and if tbey are clear and unambiguous tbeir terms are to be taken and understood in tbeir plain, ordinary and popular sense.” See, also, Bray v. Ins. Co., 139 N. C., 390, 51 S. E., 922.

“In determining tbe intention of tbe parties to an insurance policy, tbe policy should be considered and construed as a whole, and if it can reasonably be done, that construction will be adopted which will give effect to tbe whole instrument and to each of its various parts and provisions.” 29 Am. Jur., 176, Insurance, 160. In other words, tbe.policy should be taken by its four corners and considered as a whole. Penn v. Ins. Co., 160 N. C., 400, 76 S. E., 262.

Applying these principles, tbe policy in this case has a clear meaning. If tbe concluding clause of tbe “Preliminary Provision,” reading “except as is provided on tbe following pages,” relates to amounts payable only in instances where tbe insured at date of tbe policy is less than ten years of age at next birthday, “tbe terms and conditions ... on tbe following pages . . .,” to wbicb tbe contract is stated to be subject, particularly tbe “limitations” in paragraph 4, would have no tangible meaning, and would be nullified. Indeed, it would be strained ruling to bold, as a proper interpretation, that tbe parties intended to contract with relation to death of a child less than ten years of age (a) “from pregnancy, childbirth or miscarriage, if legally married,” or (b) while in act of violating any Federal, State or Municipal law, or as a punishment therefor, or (c) while engaged in military or naval service in time of war.

On tbe other band, if tbe clause be interpreted to relate to all that precedes it in tbe paragraph entitled “Preliminary Provision,” each clause of paragraph 4 “limitations” might reasonably have a subject to wbicb it would apply. Manifestly, when tbe policy is read as a whole, such is its clear meaning and tbe patent intention of tbe parties.

But it is contended by appellee that tbe first two clauses of tbe “Preliminary Provision” being separated by a semicolon, each is complete in itself. It is further contended that, hence, tbe exception being separated from the- latter of tbe two by a comma, qualifies tbe latter only, and, when tested by tbe ordinary rules of English grammar, or legal construction, cannot under any circumstances be construed to limit or modify the first clause. However, in this connection it is the law in this State that although the rules of punctuation may be used to assist in determining the intent of the parties, punctuation or the absence of punctuation in a contract or deed is ineffective to control its construction as against the plain meaning of the instrument. Bunn v. Wells, 94 N. C., 67; Redmond v. Comrs., 106 N. C., 122, 10 S. E., 845; Real Estate Co. v. Bland, 152 N. C., 225, 67 S. E., 483; 3 A. L. R., 1062, Annotations I and III on “Punctuation as affecting construction of contract.”

In accordance with this opinion, the judgment below is

Reversed.