Wells v. Guardian Life Insurance Co. of New York

Schenck, J. Tbis is an action to recover an alleged balance due on tbe face amount of a life insurance policy and an alleged balance due under tbe disability provisions of said policy, beard upon an agreed statement of facts. On or about 20 August, 1918, Tbe Germania Life Insurance Company of tbe City of New York issued and delivered to J'. S. "Wells a policy of life insurance in tbe sum of $2,500 wbicb provided for tbe payment of an annual premium of $125.13 of wbicb $4.62 was allocated to tbe disability benefit coverage and protection contained in said policy, in wbicb policy tbe daughter of tbe insured, Mary Ann Wells, was named as beneficiary. On 2 October, 1935, tbe beneficiary named in said policy was changed to Myrtle Warren Wells, wife of tbe insured (being tbe identical person as Mrs. J. S. Wells, plaintiff herein). Subsequent to tbe issuance of said policy all liability thereunder was duly and properly assumed by tbe defendant, Tbe Guardian Life. Insurance Company of New York. Among other provisions tbe said policy of insurance contained tbe following: “24. Total and Permanent Disability Benefits. Whenever tbe company shall receive due proof during tbe continuance of tbis policy and before default in payment of premium that tbe insured has become wholly and incurably disabled by bodily injury or disease, not due to any cause or condition existing at tbe time of delivery hereof or to military or naval service in time of war, so that be is and will be presumably thereby permanently and continuously prevented from engaging in any occupation whatsoever for remuneration or profit, and that such disability has existed continuously for not less than sixty days prior to furnishing such proof — tbe permanent loss of tbe sight of both eyes, tbe loss of both feet above tbe ankles, tbe loss of both bands above tbe [180] wrists, or a similar loss of one hand and one foot, to be regarded as constituting total and permanent disability without prejudice to other causes of disability — then the company will grant disability benefits as follows: “(A) If the disability occurred before the insured attained age 60: 1. Waiver of Premiums. Commencing with the policy year next following the receipt of such proof the company will at the beginning of each policy year waive payment of premium for such year during such disability, and the provisions and benefits of the policy shall be continued in force, except as hereinafter provided, as if such premiums were being paid in cash. 2. Disability Annuity. . Six months after the receipt of such proof, if the disability then exists, the company will begin to pay to the insured (with the written consent of the assignee, if any) a disability annuity of one-tenth of the face amount of this policy and will make such annuity payments annually on the anniversary of the first payment during such disability prior to maturity of the policy. Premiums waived and annuity payments made hereunder will not be an indebtedness on the policy and will not be deducted from any payment or payments to be made when the policy becomes a claim by death or matures as an endowment or in any settlement under the policy. . . .” On 1 April, 1929, the insured became totally and permanently disabled as contemplated by the policy provisions and filed with the defendant due and proper proofs of such disability, and the defendant duly acknowledged the said disability of the insured, admitted the disability claim, waived the annual premium due on 29 August, 1929, waived all subsequent premiums due between the said date and the date of the death of the insured on 30 October, 1936, and made the annual disability payments of $250.00 each provided in said policy of insurance on 1 December, 1929, and on the first day of each and every December thereafter down to and including 1 December, 1935. The insured, Julius S. Wells, died on 30 October, 1936, and at the time of his said death there was outstanding against said policy a policy loan in the sum of $1,091.10, which was subject to an unearned loan interest credit at the rate of 5 per cent for nine months and twenty-four days, said credit amounting to $44.55 and leaving $1,453.45 as the net balance due upon the face amount of said policy at the time of the death of said insured. The said policy of insurance was in full force and effect at the date of the death of the said insured. Subsequent to the death of the insured due demand was made upon the defendant by the beneficiary, Mrs. J. S. Wells (named as Myrtle Warren Wells in the change of beneficiary endorsement on said policy of insurance) for payment of the net death proceeds under said policy, and demand was likewise made upon the defendant by the said Mrs. [181] J. S. Wells, executrix of tbe estate of J. S. Wells, for proportionate disability payment alleged to have accrued and to have become due to tbe estate of tbe said J. S. Wells on account of tbe existing disability of J. S. Wells during tbe period from 1 December, 1935, until 30 October, 1936. Tbe defendant insurance company admitted liability unto tbe said Mrs. J. S. Wells, beneficiary, for tbe net amount of $1,453.45 due as net death benefits under tbe said policy, but denied tbe claim for alleged proportionate disability benefits, and asserted tbat under tbe terms of said policy and by general provisions of law said alleged proportionate disability benefits were not owing, valid, payable, or collectible. Tbe defendant insurance company offered to pay in full settlement of all liability under said policy tbe said net death benefits, which offer was declined by tbe plaintiff. Thereupon this suit was instituted for tbe recovery of tbe balance due on tbe face amount of tbe policy, less loan secured thereon, and for tbe proportionate part of tbe annuity from 1 December, 1935, to 30 October, 1936. At tbe time of tbe filing of its answer tbe defendant tendered into tbe registry of the court tbe amount ($1,453.45) alleged to be due by tbe defendant unto tbe plaintiff in her individual capacity under tbe terms of said policy. Tbe plaintiff contends “Tbat plaintiff, in her capacity as executrix of tbe estate of J. S. Wells, is likewise entitled to recover tbe proportionate part of tbe annual disability payment alleged to be allocable to tbe period from 1 December, 1935, to 30 October, 1936, tbe amount of said payment claimed by tbe plaintiff in her said capacity being tbat fractional part of $250.00 which is equal to tbat fractional part of tbe year from 1 December, 1935, to 1 December, 1936, which is represented by tbe period from 1 December, 1935, to 30 October, 1936.” Tbe defendant contends: “Tbat tbe disability payments provided by said policy of insurance are not apportionable, and tbat since tbe insured, Julius S. Wells, died prior to 1 December, 1936, tbe next annual payment date of disability benefits, no further disability benefit payments are due or payable to any one whomsoever in connection with tbe said policy of insurance.” His Honor was of tbe opinion tbat tbe plaintiff, individually, was entitled to recover tbe alleged balance due on tbe face of tbe policy, and tbat tbe plaintiff, as executrix, was entitled to recover tbe alleged balance due under tbe disability provisions of tbe policy, and awarded judgment accordingly. With tbe first provision of tbe judgment tbat tbe plaintiff, individually, recover tbe alleged balance due on tbe face of tbe policy (about which there was no controversy) we concur, but with tbe second provision of tbe judgment tbat tbe plaintiff, as executrix, recover tbe alleged balance due under tbe disability provisions of tbe policy we cannot concur. [182] Tbe terms of the policy under the facts of this case created “a disability annuity of one-tenth of the face amount of the policy,” payable to the insured by the insurer, and provided for the making of “such annuity payments annually on the anniversary of the first payment during such disability prior to the maturity of the policy.” The first annuity payment was made on 1 December, 1929, and the last annuity payment was made on 1 December 1935. The next annuity payment would have been due on 1 December, 1936, had the insured lived to that date, but on 30 October, 1936, the insured died, thereby terminating his disability and maturing the policy, hence there was no “anniversary of the first payment during such disability prior to the maturity of the policy” after 1 December, 1935. But plaintiff’s contention is that she, as executrix of the estate of J. S. Wells, is entitled to the proportionate part of the annuity from 1 December, 1935, to 30 October, 1936. This contention is contrary to the rule of the common law, which rule is stated as follows: “The general rule both of law and equity is that where an annuity, whether created inter vivos or by will, is payable on fixed days during the life of the annuitant, who dies before the. day, the personal representative is not entitled to a proportional part of the annuity. This principle of the non-apportionability of an annuity, properly and technically so called, rests upon the doctrine of the entirety of contracts, and proceeds upon the interpretation of the contract by which the grantor binds himself to pay a certain sum on fixed days (luring the life of the annuitant, and when the latter dies, such day not having arrived, the former is discharged from his obligation. It results in the general rule that' if the annuitant dies before or even on the day of payment, his representatives can claim no portion of the annuity for the current year.” 2 American Jurisprudence, Annuities, par. 27, p. 830. To the same effect is 3 C. J. S., Annuities, par. 6, p. 1383. At common law there were two, and only two, well recognized exceptions engrafted on the general rule that annuities were not apportionable, namely, where the annuity was given by a parent to an infant child and by a husband to a wife living separate and apart from him. However, the harshness of the rule has been modified in many jurisdictions by statute, and in some by judicial decisions. The common law, “which has not been otherwise provided for in whole or in part, not abrogated, repealed, or become obsolete,” is “declared to be in full force within this State.” C. S., 970. It is not for us by judicial decisions to change or alter the common law. If this is to be done it must be by legislative enactment. It is the function of the courts to interpret the law and that of the Legislature, within constitu-ional limits, to make or alter the law. [183] Tbe plaintiff contends that tbe common law bas been altered by tbe enactment of C. S., 2346, wbieb reads: “In all cases where rents, rent charges, annuities, pensions, dividends, or any other payments of any description, are made payable at fixed periods to successive owners under any instrument, or by any will, and where tbe right of any owner to receive payment is terminable by a death or other uncertain event, and where such right so terminates during a period in which a payment is growing due, the payment becoming due next after such terminating event shall be apportioned among the successive owners according to the parts of such periods elapsing before and after the terminating event.” This statute has no application to the facts of this case, since in the instrument creating the annuity there is no provision that the annuity shall be payable at fixed periods to successive owners. The contract is to make such annuity payments to the insured annually prior to the maturity of the policy. There is no provision for successive owners. The death of the insured matured the policy and no further annuity payments became due. Since the common law is in force in this State, and since under the common law annuities are not apportionable, with certain exceptions not affecting this case, and since the common law has not been changed or altered by legislative enactment, we are constrained to hold that his Honor erred in awarding judgment to the effect that the plaintiff, as executrix, recover of the defendant $229.15, with interest thereon, as the proportionate part of the annuity accruing from 1 December, 1935, to 30 October, 1936. The portion of the judgment adjudging that the plaintiff, individually, recover of the defendant $1,453.45, with interest, due on the face amount of the policy is affirmed, except that the provision for the recovery of interest is eliminated. The case is remanded for judgment in accord with this opinion. Modified and affirmed.