Wright v. Fuller

George, J. When the-suit of the beneficiary in the insurance policy involved in this case was before this court (Fuller v. Wright, 147 Ga., cited supra), it was ruled: “Upon the adjudication of [226] insolvency of a domestic stock life-insurance company and the passing of an order of liquidation of its affairs on a petition filed by the insurance commissioner, the outstanding policies are ipso facto canceled, and a claim of loss thereafter occurring is not a provable claim by the beneficiary against the company.” In the course of the opinion it was said:. “A life-insurance company, when adjudged insolvent and dissolved, has broken its engagements with its policyholders, and becomes liable to them in damages for such breach. . . Upon such breach the policyholders become creditors for the value of their policies at the date of the dissolution of the company. . . The contract of the insurance company is with the insured, and the liability for the breach of an ordinary policy contract is to him, and not to the beneficiarjq whose right is to receive the amount of the policy as a death claim.” From the foregoing it will be seen that the beneficiary in the policy has no claim agairist the assets of the company, the death of the insured having occurred subsequently to the order of liquidation. It-is settled that the liability for the breach of the policy contract is to the insured (in this ease to her personal representative), and the question open for decision is the amount of such liability. This liability is to be determined as of the date of the order of liquidation. (Perhaps the true rule is that the day on which the insolvency occurred as adjudicated by the decree, rather than the date of the decree itself, fixes the time to which the several claims against the assets of an insurance company must be referred for adjustment. That precise question was not necessarily involved in Fuller v. Wright, supra, nor is it necessarily involved in this case.) The fact that the insured died more than twelve' months after the passing of the order of liquidation is and can be of no relevancy in fixing the amount of damages for the breach of the contract. For the purpose of avoiding confusion we will consider the question presented as if the insured were still in life. When the question is viewed in this light it is clear that the insured is entitled to recover full damages for the breach of the contract, and such damages can not be measured by the number of monthly payments of $25 each, as provided in the policy, which had accrued prior to the date of the adjudication of insolvency. The contract of insurance is to be liberally construed in favor of the insured. The insured in case of total and permanent disability was to receive the full amount of the policy [227] in twenty-five dollar monthly installments, or in any event the liability of the company was to be $5,000, the amount fixed in the policy. Her death before the full amount of the policy had been received by her, under the scheme of payment fixed in the contract, can in no event reduce the liability of the company. The parties to this contract did not anticipate a breach of it. If the insured had lived but sixty days after becoming totally and permanently disabled we do not think it could be said that the liability of the company was limited to the payment of two monthly installments of $25 each. TJnder the admitted facts she was certainly entitled to receive the monthly installments which had accrued and which should have been paid to her prior to the date of the adjudication of insolvency. We are further of the opinion that the obligation of the company was fixed, definite, and unalterable at the time of the adjudication of insolvency, and that the obligation was to pay to the insured $5,000 in monthly installments of $25 each. This contract can not be likened to a “paid-up policy” of insurance. The insured in a policy which has been fully paid up- is not a creditor of the company. How long the insured in a “paid-up policy” of insurance will continue to live can not be certainly determined. The event upon which the indemnity becomes demandable in the case of paid-up insurance is not the payment by the insured of all the premiums due according to the contract; the event upon which the indemnity becomes demand-able is the death of the insured. When the insured became totally and permanently disabled, the company immediately owed her the full amount of the policy, payable, however, in installments of $25 per month. It was in this light that the trial court viewed the question. He found the insured to be a creditor of the company, and the obligation of the company fixed, certain, and definite. The indemnity was due and demandable, but demandable according to the terms of the contract, that is, in monthly installments of $25 each. The judge therefore reduced the amount of the policy to its present cash value as of the date of the order of liquidation. The necessity for so doing was brought about by the breach of the contract, and the insured in no event contributed to the breach. The contention is advanced that the position of the company is analogous to a claim for future rent under a lease made by a bankrupt, which is held not to be a provable claim against the [228] bankrupt’s estate. In such, case the only “fixed liability” under a lease is the rent due at the time of the filing of the petition. A number of cases are cited to sustain this contention. Conceding that the cases sustain the contention made, there is slight analogy between the cases cited and the ease at bar. In the case of the lease the contract is wholly executory as to both parties, while in the case at bar the contract is wholly executed so far as the insured is concerned, and the event upon which her claim against the company was demandable has transpired. The landlord is not entitled to the return of his premises and-future rents thereon after bankruptcy. Great reliance is placed by plaintiff in error upon the decision in Mayer v. Attorney-General, 32 N. J. Eq. 815. An analysis of that case shows that the question involved was one of priority of payment out of the assets of an insolvent mutual insurance company. The contest was between certain death claims which had matured before the insolvency proceedings and certain endowment policies where all premiums had been paid prior to the insolvency proceedings. The ruling in the ease, is that the death claims were entitled to priority of payment over the endowment claims, upon the theory that the holders of endowment policies were yet members of the company, the company being a mutual one, while the holders of death claims were creditors of the company. The principle of the law of partnerships was applied. The ease cited does not, in our opinion, support the contention made, and does not militate against the ruling here made. Judgment affirmed. All the Justices concur.